Document ID: SEC-2006-1078-0001
Agency: sec
Document Type: Notice
Title: Self-regulatory organizations; proposed rule changes: National Association of Securities Dealers, Inc.
Posted Date: 2006-08-22T04:00Z

[Federal Register: August 22, 2006 (Volume 71, Number 162)]
[Notices]               
[Page 48959-48961]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr22au06-105]                         

-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-54318; File No. SR-NASD-2006-098]

 
Self-Regulatory Organizations; National Association of Securities 
Dealers, Inc.; Notice of Filing and Immediate Effectiveness of Proposed 
Rule Change To Make Certain Technical, Non-Substantive Changes to its 
Trade Reporting Rules

August 15, 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 August 10, 2006, the National Association of Securities Dealers, 
Inc. (``NASD'') 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 NASD. NASD has 
designated the proposed rule change as constituting a ``non-
controversial'' rule change pursuant to Section 19(b)(3)(A) of the Act 
\3\ and Rule 19b-4(f)(6) thereunder,\4\ which renders the proposal 
effective upon filing with the Commission. The Commission is publishing 
this notice to solicit comments on the proposed rule change from 
interested persons.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ 15 U.S.C. 78s(b)(3)(A).
    \4\ 17 CFR 240.19b-4(f)(6).
---------------------------------------------------------------------------

I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    NASD is proposing to make technical, non-substantive changes to 
certain NASD rules previously approved by the Commission in SR-NASD-
2006-055 that were amended by SR-NASD-2005-087, which became effective 
August 1, 2006.\5\ Below is the text of the proposed rule change.\6\ 
Proposed new language is

[[Page 48960]]

in italics; proposed deletions are in [brackets].
---------------------------------------------------------------------------

    \5\ NASD filed SR-NASD-2005-087 on July 11, 2005 and Amendment 
No. 1 on June 15, 2006. The Commission approved SR-NASD-2005-087, as 
amended, on June 30, 2006. See Securities Exchange Act Release No. 
54084 (June 30, 2006), 71 FR 38935 (July 10, 2006).
    \6\ The proposed changes indicated below are based on the rule 
text approved by the Commission as part of SR-NASD-2006-055 on June 
12, 2006, which, but for this subsequent filing (which became 
necessary due to the intervening approval and implementation of SR-
NASD-2005-087), would become effective on December 1, 2006.
---------------------------------------------------------------------------

* * * * *
4000. THE [NASDAQ STOCK MARKET] TRADE REPORTING FACILITY
* * * * *
[4600. NASDAQ MARKET MAKER REQUIREMENTS]
* * * * *
4630. Reporting Transactions in Designated [Nasdaq National Market] 
Securities
* * * * *
4632. Transaction Reporting
    (a) through (d) No Change.
(e) Transactions Not To Be Reported for Publication Purposes
    The following types of transactions shall not be reported to the 
Trade Reporting Facility for publication purposes:
    (1) through (6) No Change.
    (f) through (g) No Change.
* * * * *
4640 Series. Deleted in its entirety
* * * * *
4000A. NASD ALTERNATIVE DISPLAY FACILITY
* * * * *
4600A. TRADING IN NASDAQ SECURITIES
* * * * *
4632A. Transactions Reported by Members
    (a) through (j) No Change.
    (k) Transactions Not To Be Reported to NASD for Publication 
Purposes.
    The following types of transactions effected by NASD members shall 
not be reported to TRACS for publication purposes:
    (1) through (4) No Change.
    (5) purchases or sales of securities effected upon the exercise of 
an option pursuant to the terms thereof or the exercise of any other 
right to acquire securities at a pre-established consideration 
unrelated to the current market[.]; and
    (6) transactions reported on or through an exchange.
    (l) No Change.
* * * * *
6000. NASD SYSTEMS AND PROGRAMS
* * * * *
6100. CLEARING AND COMPARISON RULES [TRADE REPORTING SERVICE]
* * * * *
6130. Trade Report Input
    (a) through (f) No Change.
    (g) Reporting Certain Transactions for Purposes of Regulatory 
Transaction Fee Assessment
    The following types of transactions that are assessed a regulatory 
transaction fee in accordance with Section 3 of Schedule A to the NASD 
By-Laws must be reported to the [Nasdaq Market Center]System as 
prescribed below. Transactions must be submitted to the [Nasdaq Market 
Center]System by 6:30 p.m. Eastern Time (or the end of the [Nasdaq 
Market Center]System reporting session that is in effect at that time).
    (1) Odd-Lot Transactions
    Transactions for less than a normal unit of trading shall be 
reported to the [Nasdaq Market Center]System with a modifier of .RO to 
designate the transaction as submitted for purposes of the regulatory 
transaction fee under Section 3 of Schedule A to the NASD By-Laws. 
Transactions may be entered as clearing or non-clearing.
    (2) Away From the Market Sales
    Transactions where the buyer and seller have agreed to trade at a 
price substantially unrelated to the current market for the security, 
and consideration is given, shall be reported to the [Nasdaq Market 
Center]System with a modifier of .RA to designate the transaction as 
submitted for purposes of the regulatory transaction fee under Section 
3 of Schedule A to the NASD By-Laws. Transactions may be entered as 
clearing or non-clearing.
    (3) Exercises of OTC Options
    Transactions effected pursuant to the exercise of an OTC option 
shall be reported to the [Nasdaq Market Center]System with a modifier 
of .RX to designate the transaction as submitted for purposes of the 
regulatory transaction fee under Section 3 of Schedule A to the NASD 
By-Laws. Transactions may be entered as clearing or non-clearing.
* * * * *

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

    In its filing with the Commission, NASD 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. NASD 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
    On June 30, 2006, the Commission approved SR-NASD-2005-087.\7\ 
Among other things, SR-NASD-2005-087 proposed (1) amendments to the 
NASD Delegation Plan, NASD By-Laws, and NASD rules to reflect a 
proposed phased implementation strategy for the operation of the Nasdaq 
Exchange as a national securities exchange with respect to Nasdaq-
listed securities during a transitional period; and (2) rules for 
reporting transactions effected otherwise than on an exchange to the 
new Trade Reporting Facility. SR-NASD-2005-087 became effective on 
August 1, 2006.
---------------------------------------------------------------------------

    \7\ See Securities Exchange Act Release No. 54084 (June 30, 
2006), 71 FR 38935 (July 10, 2006).
---------------------------------------------------------------------------

    On June 12, 2006, the Commission approved SR-NASD-2006-055 which 
requires members to report all transactions that must be reported to 
NASD and that are subject to a regulatory transaction fee pursuant to 
Section 3 of Schedule A to the NASD By-Laws to the Nasdaq Market Center 
and/or the Trade Reporting and Comparison Service; provided, however, 
that certain identified transactions shall not be reported for 
publication purposes.\8\ SR-NASD-2006-055 will become effective on a 
date to be announced in a future Notice to Members, which is 
anticipated to be December 1, 2006.
---------------------------------------------------------------------------

    \8\ See Securities Exchange Act Release No. 53977 (June 12, 
2006), 71 FR 34976 (June 16, 2006) (approving SR-NASD-2006-055).
---------------------------------------------------------------------------

    These two rule filings amended several of the same NASD rules. 
Because of the timing of the approval and implementation dates of these 
two filings, NASD is filing this proposed rule change to make 
technical, non-substantive changes to those NASD rules previously 
approved by the Commission but not yet effective in SR-NASD-2006-055 
that were subsequently amended by the approval and implementation of 
SR-NASD-2005-087, which became effective on August 1, 2006.
    Specifically, the underlying rule text for NASD Rules 4632, 4632A, 
and 6130

[[Page 48961]]

contained in SR-NASD-2006-055 was subsequently amended by SR-NASD-2005-
087.\9\ In addition, in light of the changes implemented as part of SR-
NASD-2005-087, the transactions that are subject to a regulatory 
transaction fee pursuant to Section 3 of Schedule A to NASD By-Laws 
will no longer be reported to the Nasdaq Market Center as originally 
proposed in NASD Rule 6120(g), but to another NASD facility, either the 
Trade Reporting Facility or the OTC Reporting Facility, as defined in 
NASD Rule 6110. As a result, NASD is proposing changes to the rule text 
approved pursuant to SR-NASD-2006-055 to conform it to the recently 
approved rule changes as part of SR-NASD-2005-087. In addition, SR-
NASD-2006-055 proposed amendments to NASD Rule 4642, which was 
subsequently deleted in SR-NASD-2005-087, and therefore these rule 
changes are no longer necessary.
---------------------------------------------------------------------------

    \9\ The amendments to Section 3 of Schedule A to NASD By-Laws 
and NASD Rules 6420, 6620, and 6130A were unaffected by SR-NASD-
2005-087. Accordingly, these amendments will become effective in 
accordance with SR-NASD-2006-055 and the corresponding Notice to 
Members that will announce the effective date of the amendments, 
which is anticipated to be December 1, 2006.
---------------------------------------------------------------------------

    NASD has filed the proposed rule change for immediate 
effectiveness. The implementation date will be the implementation date 
of SR-NASD-2006-055, which is anticipated to be December 1, 2006.
2. Statutory Basis
    NASD believes that the proposed rule change is consistent with the 
provisions of Section 15A(b)(6) of the Act,\10\ which requires, among 
other things, that NASD rules must be designed to prevent fraudulent 
and manipulative acts and practices, to promote just and equitable 
principles of trade, and, in general, to protect investors and the 
public interest. NASD believes that the proposed rule change will 
enhance the integrity of the market by increasing the consistency and 
clarity of its rules.
---------------------------------------------------------------------------

    \10\ 15 U.S.C. 78o-3(b)(6).
---------------------------------------------------------------------------

B. Self-Regulatory Organization's Statement on Burden on Competition

    NASD does not believe that the proposed rule change will impose 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 were neither solicited nor received.

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

    Because the foregoing proposed rule change does not: (1) 
Significantly affect the protection of investors or the public 
interest; (2) impose any significant burden on competition; and (3) 
become operative for 30 days from the date on which it was filed, or 
such shorter time as the Commission may designate if consistent with 
the protection of investors and the public interest, provided that the 
Exchange has given the Commission written notice of its intent to file 
the proposed rule change at least five business days prior to the 
filing date of the proposal.\11\
---------------------------------------------------------------------------

    \11\ As required under Rule 19b-4(f)(6)(iii), NASD provided the 
Commission with notice of its intent to file the proposed rule 
change at least five business days prior to the date of filing of 
the proposal.
---------------------------------------------------------------------------

    At any time within 60 days of the filing of the 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.

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-NASD-2006-098 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-NASD-2006-098. 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-2006-098 and should be submitted on or before 
September 12, 2006.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\12\
---------------------------------------------------------------------------

    \12\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Nancy M. Morris,
Secretary.
[FR Doc. E6-13816 Filed 8-21-06; 8:45 am]

BILLING CODE 8010-01-P