Document ID: SEC-2008-0092-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: Financial Industry Regulatory Authority, Inc.
Posted Date: 2008-01-18T05:00Z

[Federal Register: January 18, 2008 (Volume 73, Number 13)]
[Notices]               
[Page 3500-3502]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr18ja08-94]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-57133; File No. SR-FINRA-2007-038]

 
Self-Regulatory Organizations; Financial Industry Regulatory 
Authority, Inc.; Notice of Filing and Immediate Effectiveness of 
Proposed Rule Change To Delay Implementation of Certain Rule Changes 
Approved in SR-NASD-2005-146

 January 11, 2008.
    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 21, 2007, Financial Industry Regulatory Authority, Inc. 
(``FINRA'') (f/k/a 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 substantially prepared by FINRA. 
FINRA filed the proposal as a ``non-controversial'' proposed rule 
change pursuant to Section 19(b)(3)(A)(iii) of the Act \3\ and Rule 
19b-4(f)(6) thereunder,\4\ which renders it effective upon filing with 
the Commission.\5\ The Commission is publishing this notice to solicit 
comments on the proposed rule change from interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \4\ 17 CFR 240.19b-4(f)(6).
    \5\ FINRA has requested that the Commission waive the 5 day pre-
filing notice and 30-day operative delay required by Rule 19b-
4(f)(6)(iii), 17 CFR 240.19b-4(f)(6)(iii). See discussion infra 
Section III.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    FINRA is proposing to delay the final implementation date of the 
rule changes approved in SR-NASD-2005-146,\6\ which is currently 
scheduled for January 14, 2008, until 60 days after Commission approval 
of SR-NASD-2007-041.
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    \6\ See Securities Exchange Act Release No. 55351 (February 26, 
2007), 72 FR 9810 (March 5, 2007) (order approving SR-NASD-2005-
146). See also NASD Notice to Members 07-19 (April 2007) (announcing 
the effective date of the rule changes in SR-NASD-2005-146).
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II. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

    In its filing with the Commission, FINRA 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 those statements may be examined at the places specified in 
Item IV below. FINRA has prepared summaries, set forth in Sections A, 
B, and C below, of the most significant parts of such statements.

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

1. Purpose
    On February 26, 2007, the Commission approved SR-NASD-2005-146, 
which, among other things, amended IM-2110-2 \7\ to expand the scope to 
apply to OTC equity securities and modify the minimum price-improvement 
standards for securities trading in decimals. The amendments relating 
to OTC equity securities and the minimum price-improvement provisions 
are scheduled to become effective on January 14, 2008.\8\
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    \7\ Currently, IM-2110-2 generally prohibits a member from 
trading for its own account in an exchange-listed security at a 
price that is equal to or better than an unexecuted customer limit 
order in that security, unless the member immediately thereafter 
executes the customer limit order at the price at which it traded 
for its own account or better.
    \8\ See Securities Exchange Act Release No. 56822 (November 20, 
2007), 72 FR 67326 (November 28, 2007) (notice of filing and 
immediate effectiveness of SR-FINRA-2007-023).
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    On June 27, 2007, FINRA filed a proposed rule change (SR-NASD-2007-
041) to amend the minimum price-improvement standards in IM-2110-2 that 
were approved as part of SR-

[[Page 3501]]

NASD-2005-146.\9\ FINRA has proposed to implement the changes in SR-
NASD-2007-041 on the final implementation date of SR-NASD-2005-146. SR-
NASD-2007-041 remains pending at the Commission.
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    \9\ See File No. SR-NASD-2007-041.
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    To provide additional time for the Commission to consider and act 
upon the proposed changes in SR-NASD-2007-041 and, if SR-NASD-2007-041 
is approved, allow firms sufficient time to make the required 
technological changes to implement the proposed changes in SR-NASD-
2007-041, FINRA is proposing that the final implementation date of SR-
NASD-2005-146 currently scheduled for January 14, 2008 be delayed until 
60 days after Commission approval of SR-NASD-2007-041.\10\ In doing so, 
the proposed minimum price-improvement provisions in SR-NASD-2007-041, 
if approved, would become effective on the final implementation date of 
SR-NASD-2005-146. FINRA will announce the final implementation date of 
SR-NASD-2005-146 and the effective date of the changes in SR-NASD-2007-
041 in a Regulatory Notice. FINRA has filed the proposed rule change 
for immediate effectiveness. FINRA proposes to implement the proposed 
rule change as described herein.
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    \10\ Certain other rule changes that were approved as part of 
SR-NASD-2005-146 became effective on July 26, 2007 and are not 
effected by this proposed rule change. See FINRA Member Alert dated 
June 20, 2007.
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2. Statutory Basis
    FINRA believes that the proposed rule change is consistent with the 
provisions of Section 15A(b)(6) of the Act,\11\ which requires, among 
other things, that FINRA rules 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. FINRA believes that the proposed rule change is 
consistent with the provisions of the Act noted above because extending 
the final implementation date of SR-NASD-2005-146 will ensure that the 
Commission has adequate time to act on the proposed changes in SR-NASD-
2007-041 and, if SR-NASD-2007-041 is approved, ensure firms have 
sufficient time to make the necessary changes to comply with the new 
price-improvement standards.
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    \11\ 15 U.S.C. 78o-3(b)(6).
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B. Self-Regulatory Organization's Statement on Burden on Competition

    FINRA 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 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 thirty 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, it has become 
effective pursuant to Section 19(b)(3)(A) of the Act \12\ and Rule 19b-
4(f)(6) \13\ thereunder.\14\
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    \12\ 15 U.S.C. 78s(b)(3)(A).
    \13\ 17 CFR 240.19b-4(f)(6).
    \14\ FINRA has requested that the Commission waive the 
requirement that it provide the Commission written notice of its 
intent to file the proposed rule change, along with a brief 
description and text of the proposed rule change, at least five 
business days prior to the date on which FINRA filed the proposed 
rule change pursuant to Rule 19b-4(f)(6)(iii). The Commission hereby 
grants this request. See 17 CFR 240.19b-4(f)(6)(iii).
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    A proposed rule change filed under Commission Rule 19b-4(f)(6) \15\ 
normally does not become operative prior to thirty days after the date 
of filing. FINRA requests that the Commission waive the 30-day 
operative delay, as specified in Rule 19b-4(f)(6)(iii), and designate 
the proposed rule change to become operative immediately to allow FINRA 
to delay the implementation date of SR-NASD-2005-146 currently 
scheduled for January 14, 2008 until 60 days after Commission approval 
of SR-NASD-2007-041. The Commission believes that waiving the 30-delay 
operative date is consistent with the protection of investors and the 
public interest because it would allow FINRA to delay immediately the 
implementation date of SR-NASD-2005-146, which is currently scheduled 
to become operative on January 14, 2008. For these reasons, the 
Commission designates the proposed rule change as operative upon 
filing.\16\
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    \15\ 17 CFR 240.19b-4(f)(6).
    \16\ For the purposes only of waiving the operative date of this 
proposal, the Commission has considered the proposed rule's impact 
on efficiency, competition, and capital formation. 15 U.S.C. 78c(f).
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    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 the 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-FINRA-2007-038 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-FINRA-2007-038. 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, 100 F Street, 
NE., Washington, DC 20549, on official business days between the hours 
of 10 a.m. and 3 p.m. Copies of such filing also will be available for 
inspection and copying at the principal office of FINRA. 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-FINRA-2007-038 and

[[Page 3502]]

should be submitted on or before February 8, 2008.
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    \17\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\17\
Florence E. Harmon,
Deputy Secretary.
 [FR Doc. E8-829 Filed 1-17-08; 8:45 am]

BILLING CODE 8011-01-P