Document ID: SEC-2007-0836-0001
Agency: sec
Document Type: Notice
Title: Self-regulatory organizations; proposed rule changes: NASDAQ Stock Market LLC
Posted Date: 2007-06-18T04:00Z

[Federal Register: June 18, 2007 (Volume 72, Number 116)]
[Notices]               
[Page 33550-33551]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr18jn07-92]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-55892; File No. SR-NASDAQ-2007-043]

 
Self-Regulatory Organizations; NASDAQ Stock Market LLC; Notice of 
Filing of Proposed Rule Change and Amendments No. 1 and 2 Thereto To 
Remove Provisions Governing the Operation of the ACES Service

 June 11, 2007.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act'') \1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that 
on April 25, 2007, the NASDAQ Stock Market LLC (``Nasdaq'' or 
``Exchange'') filed with the Securities and Exchange Commission 
(``Commission'') the proposed rule change as described in Items I, II, 
and III below, which Items have been substantially prepared by the 
Exchange. The Exchange filed Amendments No. 1 and 2 to the proposed 
rule change on May 29, 2007, and June 5, 2007, respectively. The 
Commission is publishing this notice to solicit comment on the proposed 
rule change, as amended, from interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    Nasdaq proposes to remove from its rules provisions governing the 
operations of the ACES communications service. Nasdaq's rule book 
contains rules pertaining to ``facilities'' of the exchange, and ACES 
is not such a ``facility'' within the meaning of the Act.
    Specifically, Nasdaq proposes to delete: (a) The entire Rule 6200 
Series (titled ACES), consisting of Rules 6210, 6220, 6230, 6240 and 
6250; and (b) the entire Rule 7026 (titled ACES). The Rule book will 
show the Rule 6200 Series and Rule 7026 as ``Reserved.''
    The text of the proposed rule change is available at Nasdaq, at the 
Commission's Public Reference Room, and at http://www.nasdaq.com.

II. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

    In its filing with the Commission, NASDAQ included statements 
concerning the purpose of and basis for the proposed rule change and 
discussed any comments it received on the proposed rule change. The 
text of these statements may be examined at the places specified in 
Item IV below. The Exchange has prepared summaries, set forth in 
Sections A, B, and C below, of the most significant aspects of such 
statements.

A. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    ACES is a neutral communications service that allows market 
participants to route orders to one another. ACES does not effect trade 
executions, and it does not report executed trades to ``the tape.'' 
Moreover, market participants receiving orders through ACES may execute 
them in any manner that they deem consistent with duties of best 
execution and other applicable industry obligations. As the ACES 
service can be of value to all market participants, both members and 
non-members of Nasdaq are permitted to use it.
    Sections 6(b) \3\ and 19(b)(1) \4\ of the Act and Rule 19b-4 
thereunder \5\ require a national securities exchange to file its rules 
with the Commission. Section 3(a)(27) of the Act \6\ and Rule 19b-4 
define the ``rules'' of an exchange with reference to its 
``facilities'': a rule includes ``any material aspect of the operation 
of the facilities'' of the exchange or any statement with respect to 
``the rights, obligations or privileges'' of exchange members or 
persons having or seeking access to the facilities of the exchange. \7\ 
Finally, Section 3(a)(2) of the Act defines ``facility,'' when used 
with respect to an exchange, to include:
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    \3\ 15 U.S.C. 78f(b).
    \4\ 15 U.S.C. 78s(b)(1).
    \5\ 17 CFR 240.19b-4.
    \6\ 15 U.S.C. 78c(a)(27).
    \7\ 17 CFR 240.19b-4.

its premises, tangible or intangible property whether on the 
premises or not, any right to the use of such premises or property 
or any services thereof for the purpose of effecting

[[Page 33551]]

or reporting a transaction on an exchange (including, among other 
things, any system of communication to or from the exchange, by 
ticker or otherwise, maintained by or with the consent of the 
exchange), and any right of the exchange to the use of any property 
or service.\8\
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    \8\ 15 U.S.C. 78c(a)(2) (emphasis added).

    As explained above, ACES does not effect trade executions, and it 
does not report executed trades to ``the tape.'' Rather, it merely 
allows market participants to route orders to one another for execution 
in any manner that in the participants' judgment is consistent with 
their applicable obligations. As such, the Exchange believes that ACES 
does not constitute a facility of a national securities exchange within 
the meaning of the Act, and therefore Nasdaq is not required to file 
rules regarding its operation.
    In the past, when Nasdaq's parent entity, The Nasdaq Stock Market, 
Inc., was a subsidiary of the National Association of Securities 
Dealers, Inc. (``NASD''), ACES rules were not included in the NASD 
Manual, based on an understanding that Commission staff did not 
consider ACES to be a facility of the NASD. During the process of 
registering Nasdaq as a national securities exchange, however, 
Commission staff requested that Nasdaq develop and file rules for ACES 
to allow Commission staff to enhance its understanding of ACES's 
operation. Subsequently, Nasdaq has concluded that these rules are not 
required to be maintained, and therefore Nasdaq is proposing their 
deletion. If, at a later date, Nasdaq proposes to modify the operations 
of ACES in a manner that would cause it to fit within the definition of 
a facility of the exchange, or if Nasdaq proposes to tie ACES fees to 
fees for or usage of exchange services, Nasdaq would file a proposed 
rule change with the Commission.
2. Statutory Basis
    As explained above, Nasdaq believes that the proposed rule change 
is consistent with the provisions of Section 6(b) of the Act \9\ in 
that the provisions to be removed from the Nasdaq rules are outside the 
scope of this Section.
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    \9\ 15 U.S.C. 78f(b).
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B. Self-Regulatory Organization's Statement on Burden on Competition

    Nasdaq does not believe that the proposed rule change will result 
in any burden on competition that is not necessary or appropriate in 
furtherance of the purposes of the Act.

C. Self-Regulatory Organization's Statement on Comments on the Proposed 
Rule Change Received From Members, Participants or Others

    Written comments on the proposed rule change were neither solicited 
nor received.

III. Date of Effectiveness of the Proposed Rule Change and Timing for 
Commission Action

    Within 35 days of the date of publication of this notice in the 
Federal Register or within such longer period (i) as the Commission may 
designate up to 90 days of such date if it finds such longer period to 
be appropriate and publishes its reasons for so finding, or (ii) as to 
which the Exchange consents, the Commission will:
    (A) By order approve the proposed rule change, or
    (B) Institute proceedings to determine whether the proposed rule 
change should be disapproved.

IV. Solicitation of Comments

    Interested persons are invited to submit written data, views, and 
arguments concerning the foregoing, including whether the proposed rule 
change is consistent with the Act. Comments may be submitted by any of 
the following methods:

Electronic Comments

     Use the Commission's Internet comment form (http://www.sec.gov/rules/sro.shtml.
); or     Send an e-mail to rule-comments@sec.gov. Please include 

File Number SR-NASDAQ-2007-043 on the subject line.

Paper Comments

     Send paper comments in triplicate to Nancy M. Morris, 
Secretary, Securities and Exchange Commission, 100 F Street, NE., 
Washington, DC 20549-1090.

All submissions should refer to File Number SR-NASDAQ-2007-043. This 
file number should be included on the subject line if e-mail is used. 
To help the Commission process and review your comments more 
efficiently, please use only one method. The Commission will post all 
comments on the Commission's Internet Web site (http://www.sec.gov/rules/sro.shtml
). Copies of the submission, all subsequent amendments, 

all written statements with respect to the proposed rule change that 
are filed with the Commission, and all written communications relating 
to the proposed rule change between the Commission and any person, 
other than those that may be withheld from the public in accordance 
with the provisions of 5 U.S.C. 552, will be available for inspection 
and copying in the Commission's Public Reference Room. Copies of the 
filing also will be available for inspection and copying at the 
principal office of the Exchange. All comments received will be posted 
without change; the Commission does not edit personal identifying 
information from submissions. You should submit only information that 
you wish to make available publicly. All submissions should refer to 
File Number SR-NASDAQ-2007-043 and should be submitted on or before 
July 9, 2007.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\10\
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    \10\ 17 CFR 200.30-3(a)(12).
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Nancy M. Morris,
Secretary.
 [FR Doc. E7-11626 Filed 6-15-07; 8:45 am]

BILLING CODE 8010-01-P