Document ID: SEC-2006-0042-0001
Agency: sec
Document Type: Notice
Title: Self-regulatory organizations; proposed rule changes: National Association of Securities Dealers, Inc.
Posted Date: 2006-01-17T05:00Z

[Federal Register: January 17, 2006 (Volume 71, Number 10)]
[Notices]               
[Page 2608-2610]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr17ja06-102]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-53081; File No. SR-NASD-2005-154]

 
Self-Regulatory Organizations; National Association of Securities 
Dealers, Inc.; Notice of Filing and Immediate Effectiveness of Proposed 
Rule Change and Amendment No. 1 Thereto To Modify Pricing for NASD 
Members Using the Nasdaq Market Center and Nasdaq's Brut Facility

January 9, 2006.
    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 December 28, 2005, the National Association of Securities Dealers, 
Inc. (``NASD''), through its subsidiary, The Nasdaq Stock Market, Inc. 
(``Nasdaq''), 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 prepared by Nasdaq. On December 
30, 2005, Nasdaq submitted Amendment No. 1 to the proposed rule 
change.\3\ Nasdaq has designated this proposal as one establishing or 
changing a due, fee, or other charge imposed by the self-regulatory 
organization under Section 19(b)(3)(A)(ii) \4\ of the Act and Rule 19b-
4(f)(2) thereunder,\5\ which renders the proposal effective upon filing 
with the Commission. The Commission is publishing this notice to 
solicit comments 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.
    \3\ Partial Amendment No. 1 (``Amendment No. 1'') clarified that 
the proposed rule change is a pilot program.
    \4\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \5\ 17 CFR 240.19b-4(f)(2).
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I. Self-Regulatory Organization's Statement of the Terms of the 
Substance of the Proposed Rule Change

    Nasdaq proposes to modify the pricing for NASD members using the 
Nasdaq Market Center and Nasdaq's Brut Facility (``Brut''). Nasdaq 
states that it will implement the proposed rule change on January 1, 
2006 for a pilot period running through February 28, 2006.
    The text of the proposed rule change, as amended, is below. 
Proposed new language is in italics; proposed deletions are in 
[brackets].
* * * * *

7010. System Services

    (a)-(h) No change.

[[Page 2609]]

    (i) Nasdaq Market Center and Brut Facility Order Execution
    (1)-(4) No change.
    (5) There shall be no charges or credits for order entry, 
execution, routing, or cancellation by members accessing the Nasdaq 
Market Center or Nasdaq's Brut Facility to buy or sell exchange-listed 
securities subject to the Consolidated Quotations Service and 
Consolidated Tape Association plans, other than:
    (A)-(D) No change.
    (E) for a pilot period beginning December 1, 2005 and ending 
[December 31, 2005]
    February 28, 2006, a credit of $0.0005 per share executed to a 
member providing liquidity for a transaction in the following stocks: 
Advanced Micro Devices Inc. (AMD); Apache Corp. (APA); AT&T Corp. (T); 
Avaya, Inc. (AV); Baker Hughes, Inc. (BHI); BJ Services Co. (BJS); 
Bristol-Myers Squibb Co. (BMY); Burlington Resources, Inc. (BR); 
Calpine Corp. (CPN); Charles Schwab Corp. (SCH); Citigroup Inc. (C); 
ConocoPhillips (COP); Corning Inc. (GLW); Devon Energy Corp. (DVN); EMC 
Corp. (EMC); Exxon Mobil Corp. (XOM); Ford Motor Co. (F); Gateway, Inc. 
(GTW); General Electric Co. (GE); Halliburton Co. (HAL); Hewlett-
Packard Co. (HPQ); Johnson & Johnson (JNJ); JPMorgan Chase & Co. (JPM); 
Kohl's Corp. (KSS); LSI Logic Corp. (LSI); Micron Technology, Inc. 
(MU); Motorola, Inc. (MOT); Noble Corp. (NE); Occidental Petroleum 
Corp. (OXY); Office Depot Inc. (ODP); Pfizer Inc. (PFE); Phelps Dodge 
Corp. (PD); Pulte Homes, Inc. (PHM); Qwest Communications International 
Inc. (Q); Schlumberger Ltd. (SLB); Solectron Corp. (SLR); Sovereign 
Bancorp, Inc. (SOV); Time Warner, Inc. (TWX); Valero Energy Corp. 
(VLO); and Verizon Communications, Inc. (VZ).
    (6) No change.
    (j)-(v) No change.
* * * * *

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, as 
amended, and discussed any comments it received on the proposed rule 
change, as amended. The text of these statements may be examined at the 
places specified in Item IV below. Nasdaq 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
    In SR-NASD-2005-137 and SR-NASD-2005-138,\6\ Nasdaq created a pilot 
program under which liquidity providers (i.e., market participants that 
post quotes or orders that are accessed by incoming orders) \7\ may 
receive a credit of $0.0005 per share executed with respect to forty 
stocks listed on the New York Stock Exchange.\8\
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    \6\ Securities Exchange Act Release Nos. 52939 (December 9, 
2005), 70 FR 75229 (December 19, 2005) (SR-NASD-2005-137) and 52938 
(December 9, 2005), 70 FR 75231 (December 19, 2005) (SR-NASD-2005-
138).
    \7\ Telephone conversation between John Yetter, Associate 
General Counsel, Exchange, and Michou Nguyen, Attorney, Division of 
Market Regulation, Commission, on January 4, 2006.
    \8\ Advanced Micro Devices Inc. (AMD); Apache Corp. (APA); AT&T 
Corp. (T); Avaya, Inc. (AV); Baker Hughes, Inc. (BHI); BJ Services 
Co. (BJS); Bristol-Myers Squibb Co. (BMY); Burlington Resources, 
Inc. (BR); Calpine Corp. (CPN); Charles Schwab Corp. (SCH); 
Citigroup Inc. (C); ConocoPhillips (COP); Corning Inc. (GLW); Devon 
Energy Corp. (DVN); EMC Corp. (EMC); Exxon Mobil Corp. (XOM); Ford 
Motor Co. (F); Gateway, Inc. (GTW); General Electric Co. (GE); 
Halliburton Co. (HAL); Hewlett-Packard Co. (HPQ); Johnson & Johnson 
(JNJ); JPMorgan Chase & Co. (JPM); Kohl's Corp. (KSS); LSI Logic 
Corp. (LSI); Micron Technology, Inc. (MU); Motorola, Inc. (MOT); 
Noble Corp. (NE); Occidental Petroleum Corp. (OXY); Office Depot 
Inc. (ODP); Pfizer Inc. (PFE); Phelps Dodge Corp. (PD); Pulte Homes, 
Inc. (PHM); Qwest Communications International Inc. (Q); 
Schlumberger Ltd. (SLB); Solectron Corp. (SLR); Sovereign Bancorp, 
Inc. (SOV); Time Warner, Inc. (TWX); Valero Energy Corp. (VLO); and 
Verizon Communications, Inc. (VZ).
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    As stated in the prior filings, Nasdaq notes that it planned to run 
the pilot for a period of at least three months; however, Nasdaq states 
that, because the authority for this proposal provided by the Nasdaq 
Board of Directors ran only through December 31, 2005, Nasdaq needed to 
obtain Board approval for a longer pilot. Having obtained such 
approval, Nasdaq is now filing to extend the pilot through February 28, 
2006.\9\
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    \9\ The change proposed by this filing applies to NASD members 
that use the Nasdaq Market Center and Brut; in SR-NASD-2005-155, 
Nasdaq proposes to make the same change applicable to non-members 
that use Brut.
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2. Statutory Basis
    Nasdaq believes that the proposed rule change, as amended, is 
consistent with the provisions of Section 15A of the Act,\10\ in 
general, and with Section 15A(b)(5) of the Act,\11\ in particular, in 
that the proposed rule change, as amended, provides for the equitable 
allocation of reasonable dues, fees, and other charges among members 
and issuers and other persons using any facility or system which the 
NASD operates or controls. Nasdaq states that the proposed rule change, 
as amended, will continue a pilot to make a liquidity provider credit 
available to all market participants that opt to provide liquidity 
through Nasdaq or Brut to support execution in any of forty stocks 
included in the pilot program.
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    \10\ 15 U.S.C. 78o-3.
    \11\ 15 U.S.C. 78o-3(b)(5).
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B. Self-Regulatory Organization's Statement on Burden on Competition

    Nasdaq does not believe that the proposed rule change, as amended, 
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

    Nasdaq states that written comments were neither solicited nor 
received.

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

    The foregoing rule change, as amended, is subject to Section 
19(b)(3)(A)(ii) of the Act \12\ and subparagraph (f)(2) of Rule 19b-4 
\13\ thereunder because it establishes or changes a due, fee, or other 
charge imposed by the self-regulatory organization. Accordingly, the 
proposal is effective upon Commission receipt of the filing. At any 
time within 60 days of the filing of such proposed rule change, the 
Commission may summarily abrogate such rule change if it appears to the 
Commission that such action is necessary or appropriate in the public 
interest, for the protection of investors, or otherwise in furtherance 
of the purposes of the Act.\14\
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    \12\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \13\ 17 CFR 240.19b-4(f)(2).
    \14\ The effective date of the original proposed rule change is 
December 28, 2005, and the effective date of Amendment No. 1 is 
December 30, 2005. For purposes of calculating the 60-day period 
within which the Commission may summarily abrogate the proposed rule 
change, as amended, the Commission considers the period to commence 
on December 30, 2005, the date on which the Exchange submitted 
Amendment No. 1. See 15 U.S.C. 78s(b)(3)(C).
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IV. Solicitation of Comments

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

[[Page 2610]]

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-NASD-2005-154 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 20549-9303.

All submissions should refer to File Number SR-NASD-2005-154. 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 such 
filing also will be available for inspection and copying at the 
principal office of the NASD. 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-NASD-2005-154 and should be submitted on or before 
February 7, 2006.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\15\
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    \15\ 17 CFR 200.30-3(a)(12).
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Nancy M. Morris,
Secretary.
[FR Doc. E6-401 Filed 1-13-06; 8:45 am]

BILLING CODE 8010-01-P