[Federal Register Volume 70, Number 118 (Tuesday, June 21, 2005)]
[Notices]
[Pages 35747-35752]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E5-3192]
[[Page 35747]]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-51837; File No. SR-NASD-2005-062]
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 the Text of NASD
Trade Reporting Rules to Reflect the Implementation of SR-NASD-2003-159
June 13, 2005.
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 May 12, 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 June 9,
2005, Nasdaq filed Amendment No. 1 to the proposed rule change.\3\
Nasdaq has designated this proposal as concerned solely with the
administration of a self-regulatory organization, pursuant to Section
19(b)(3)(A)(iii) of the Act \4\ and Rule 19b-4(f)(3) thereunder,\5\
which renders the proposed rule change effective upon filing. 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.
\2\ Amendment No. 1 made minor technical changes to the proposed
rule change. The effective date of the original proposed rule change
is May 12, 2005, and the effective date of Amendment No. 1 is June
9, 2005. For purposes of calculating the 60-day period within which
the Commission may summarily abrogate the proposed rule change under
Section 19(b)(3)(C) of the Act, the Commission considers the period
to commence on June 9, 2005, the date on which Nasdaq filed
Amendment No. 1. See 15 U.S.C. 78s(b)(3)(C).
\4\ 15 U.S.C. 78s(b)(3)(A)(iii).
\5\ 17 CFR 240.19b-4(f)(3).
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I.Self-Regulatory Organization's Statement of the Terms of Substance of
the Proposed Rule Change
Nasdaq is modifying the text of trade reporting rules in order to
reflect the implementation of provisions of SR-NASD-2003-159\6\ that
had a delayed implementation date.
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\6\ See Securities Exchange Act Release Nos. 49404 (March 11,
2004), 69 FR 12727 (March 17, 2004) (SR-NASD-2003-159) (proposing
release) and 49581 (April 19, 2004), 69 FR 22578 (April 26, 2004)
(SR-NASD-2003-159) (approval order).
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The text of the proposed rule change is below. Proposed new
language is in italics; proposed deletions are in [brackets].\7\
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\7\ Changes are marked to the rule text that appears in the
electronic NASD Manual found at http://www.nasd.com.
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4630. Reporting Transactions in Nasdaq National Market Securities
* * * * *
4632. Transaction Reporting
(a)-(b) No change.
(c) Information To Be Reported
Each last sale report shall contain the following information:
(1)-(4) No change.
(5) The time of execution expressed in hours, minutes, and seconds
based on Eastern Time, unless another provision of the Association's
rules requires that a different time must be included on the report [if
the trade is reported more than 90 seconds after execution].
(6) For any transaction in an order for which a member has
recording and reporting obligations under Rules 6954 and 6955, the
trade report must include [:
(A) A] an order identifier, meeting such parameters as may be
prescribed by the Association, assigned to the order that uniquely
identifies the order for the date it was received (see Rule
6954(b)(1)).
[(B) The time of the execution expressed in hours, minutes, and
seconds. This information must be reported regardless of the period of
time between execution of the trade and the report to the Nasdaq Market
Center. All times reported to the Nasdaq Market Center shall be in
Eastern Time.]
(d)-(g) No change.
* * * * *
[IM-4632-2. Delayed Effective Date of Obligation to Include Time of
Execution on All Reports Submitted to the Nasdaq Market Center
On April 19, 2004, the Securities and Exchange Commission (``SEC'')
approved a proposed rule change filed by the Association (SR-NASD-2003-
159) requiring members to include the time of execution on all reports
submitted to the Nasdaq Market Center reporting service (formerly known
as the Automated Confirmation Transaction Service, or ``ACT''). In
response to comments from the Association's Small Firm Advisory Board,
Nasdaq agreed to delay the effective date of this requirement until one
year after the date of SEC approval. Therefore, the effective date of
this requirement is April 25, 2005.
Until April 25, 2005, members remain obligated to provide the time
of execution only in those circumstances specifically articulated in
the Association's rules. To prevent confusion, Nasdaq has not modified
the Association's rules to reflect the obligation to provide the time
of execution in all circumstances. These language modifications will be
made at a time closer to the actual effective date of the obligation.]
4640. Reporting Transactions in Nasdaq SmallCapSM Market Securities
* * * * *
4642. Transaction Reporting
(a)-(b) No change.
(c) Information To Be Reported
Each last sale report shall contain the following information:
(1)-(4) No change.
(5) The time of execution expressed in hours, minutes, and seconds
based on Eastern Time, unless another provision of the Association's
rules requires that a different time must be included on the report [if
the trade is reported more than 90 seconds after execution].
(6) For any transaction in an order for which a member has
recording and reporting obligations under Rules 6954 and 6955, the
trade report must include [:
(A) A] an order identifier, meeting such parameters as may be
prescribed by the Association, assigned to the order that uniquely
identifies the order for the date it was received (see Rule
6954(b)(1)).
[(B) The time of execution expressed in hours, minutes, and
seconds. This information must be reported regardless of the period of
time between execution of the trade and the report to the Nasdaq Market
Center. All times reported to the Nasdaq Market Center system shall be
in Eastern Time.]
(d)-(g) No change.
[IM-4642. Delayed Effective Date of Obligation to Include Time of
Execution on All Reports Submitted to the Nasdaq Market Center
On April 19, 2004, the Securities and Exchange Commission (``SEC'')
approved a proposed rule change filed by the Association (SR-NASD-2003-
159) requiring members to include the time of execution on all reports
submitted to the Nasdaq Market Center reporting service (formerly known
as the Automated Confirmation Transaction Service, or ``ACT''). In
response to comments from the Association's Small Firm Advisory Board,
Nasdaq agreed to delay the effective date of this requirement until one
year after the date of SEC approval. Therefore, the effective
[[Page 35748]]
date of this requirement is April 25, 2005.
Until April 25, 2005, members remain obligated to provide the time
of execution only in those circumstances specifically articulated in
the Association's rules. To prevent confusion, Nasdaq has not modified
the Association's rules to reflect the obligation to provide the time
of execution in all circumstances. These language modifications will be
made at a time closer to the actual effective date of the obligation.]
* * * * *
4650. Reporting Transactions in Nasdaq Convertible Debt Securities
* * * * *
4652. Transaction Reporting
(a)-(b) No change.
(c) Information To Be Reported
Each last sale report shall contain the following information:
(1)-(4) No change.
(5) The time of execution expressed in hours, minutes, and seconds
based on Eastern Time, unless another provision of the Association's
rules requires that a different time must be include on the report [if
the trade is reported more than 90 seconds after execution].
(6) For any transaction in an order for which a member has
recording and reporting obligations under Rules 6954 and 6955, the
trade report must include[:
(A) A] an order identifier, meeting such parameters as may be
prescribed by the Association, assigned to the order that uniquely
identifies the order for the date it was received (see Rule
6954(b)(1)).
[(B) The time of the execution expressed in hours, minutes, and
seconds. This information must be reported regardless of the period of
time between execution of the trade and the report to the Nasdaq Market
Center. All times reported to the Nasdaq Market Center system shall be
in Eastern Time.]
(d)-(g) No change.
[IM-4652. Delayed Effective Date of Obligation to Include Time of
Execution on All Reports Submitted to the Nasdaq Market Center
On April 19, 2004, the Securities and Exchange Commission (``SEC'')
approved a proposed rule change filed by the Association (SR-NASD-2003-
159) requiring members to include the time of execution on all reports
submitted to the Nasdaq Market Center reporting service (formerly known
as the Automated Confirmation Transaction Service, or ``ACT''). In
response to comments from the Association's Small Firm Advisory Board,
Nasdaq agreed to delay the effective date of this requirement until one
year after the date of SEC approval. Therefore, the effective date of
this requirement is April 25, 2005.
Until April 25, 2005, members remain obligated to provide the time
of execution only in those circumstances specifically articulated in
the Association's rules. To prevent confusion, Nasdaq has not modified
the Association's rules to reflect the obligation to provide the time
of execution in all circumstances. These language modifications will be
made at a time closer to the actual effective date of the obligation.]
* * * * *
5400. Nasdaq Stock Market and Alternative Display Facility Trade
Reporting
* * * * *
5430. Transaction Reporting
(a) When and How Transactions are Reported
(1)-(3) No change.
(4) Transaction Reporting to the Nasdaq Market Center Outside
Normal Market Hours
(A) Last sale reports of transactions in designated securities
executed between 8 a.m. and 9:30 a.m. Eastern Time shall be reported
within 90 seconds after execution and shall be designated as ``.T''
trades to denote their execution outside normal market hours.
Transactions not reported within 90 seconds shall also be designated as
.T trades[, and include the time of execution]. Transactions not
reported before 9:30 a.m. shall be reported after 4 p.m. and before
6:30 p.m. as .T trades[, and include the time of execution].[\1\]
(B) Last sale reports of transactions in designated securities
executed between the hours of 4 p.m. and 6:30 p.m. Eastern Time shall
be reported within 90 seconds after execution and be designated as
``.T'' trades to denote their execution outside normal market hours.
Transactions not reported within 90 seconds shall also be designated as
.T trades[, and include the time of execution]. Transactions not
reported before 6:30 p.m. shall be reported on an ``as of'' basis the
following day between 8 a.m. and 6 p.m.
(C) Last sale reports of transactions executed between midnight and
8 a.m. Eastern Time shall be reported between 8 a.m. and 9:30 a.m.
Eastern Time on trade date as ``.T'' trades[, and include the time of
execution]. Transactions not reported before 9:30 a.m. shall be
reported after 4 p.m. and before 6:30 p.m. as .T trades[, and include
the time of execution].[\2\]
(D) Last sale reports of transactions executed between 6:30 p.m.
and midnight Eastern Time shall be reported on the next business day
(T+1) between 8 a.m. and 6:30 p.m. Eastern Time and be designated ``as/
of'' trades[and include the time of execution].
(5)-(6) No change.
(7) All members shall append the .W trade report modifier to
transaction reports occurring at prices based on average-weighting, or
other special pricing formulae. [Members reporting transactions to the
Nasdaq Market Center with the .W modifier shall also include the time
of execution on the transaction report.]
(8)-(12) No change.
(13) To identify pre-opening and after-hours trades reported late,
Nasdaq will convert the .T modifier to .ST for any report submitted to
the Nasdaq Market Center more than 90 seconds after execution.[\3\]
(b) No change.
[\1\ Until Nasdaq implements the use of the .ST modifier, which
denotes the late reporting of a pre-opening or after-hours trade,
members shall report on the following day on an ``as/of basis,'' and
include the time of execution, last sale reports of transactions in
designated securities executed between 8 a.m. and 9:30 a.m. Eastern
Time that are not reported to the Nasdaq Market Center prior to 9:30
a.m. These reports shall include the time of execution.]
[\2\ Until Nasdaq implements the use of the .ST modifier, which
denotes the late reporting of a pre-opening or after-hours trade,
members shall report on the following day on an ``as/of basis'' last
sale reports of transactions in designated securities executed between
midnight and 8 a.m. Eastern Time that are not reported to the Nasdaq
Market Center prior to 9:30 a.m. These reports shall include the time
of execution.]
[\3\ Nasdaq expects to implement use of the .ST modifier for Nasdaq
listed securities in the fourth quarter of 2004, and will issue a
notice of the exact implementation date.]
* * * * *
6100. Trade Reporting Service
* * * * *
6130. Trade Report Input
(a)-(c) No change.
(d) Trade Information To Be Input
Each report to the Nasdaq Market Center shall contain the following
information:
(1)-(3) No change.
(4) The time of [E]execution expressed in hours, minutes, and
seconds based
[[Page 35749]]
on Eastern Time, unless another provision of the Association's rules
requires that a different time must be included on the report[time for
any transaction in Nasdaq or CQS securities not reported within 90
seconds of execution];
(5)-(12) No change.
(13) For any transaction in an order for which a member has
recording and reporting obligations under Rules 6954 and 6955, the
trade report must include[:
(A) A] an order identifier, meeting such parameters as may be
prescribed by the Association, assigned to the order that uniquely
identifies the order for the date it was received (see Rule
6954(b)(1)).
[(B) The time of the execution expressed in hours, minutes, and
seconds. This information must be reported regardless of the period of
time between execution of the trade and the report to the Nasdaq Market
Center. All times reported to the Nasdaq Market Center system shall be
in Eastern Time.]
(e)-(f) No change.
* * * * *
6400. Reporting Transactions in Listed Securities
* * * * *
6420. Transaction Reporting
(a) When and How Transactions are Reported
(1)(A) Registered Reporting Members shall transmit to the Nasdaq
Market Center, within 90 seconds after execution, last sale reports of
transactions in eligible securities executed between 9:30 a.m. and 4
p.m. Eastern Time otherwise than on a national securities exchange.
Transactions not reported within 90 seconds after execution shall be
designated as late[, and such trade reports must include the time of
execution].
(B) Registered Reporting Members shall transmit to the Nasdaq
Market Center, within 90 seconds after execution, last sale reports of
transactions in eligible securities executed in the United States
otherwise than on a national securities exchange between 4 p.m. and
6:30 p.m. Eastern Time; trades executed and reported after 4 p.m.
Eastern Time shall be designated as ``.T'' trades to denote their
execution outside normal market hours. Transactions not reported within
90 seconds after execution must be designated as .T trades[, and
include the time of execution on the trade report]. Transactions not
reported by 6:30 p.m. shall be reported on an ``as of'' basis the
following day between 8 a.m. and 6:30 p.m. Eastern Time.
(2)(A) Non-Registered Reporting Members shall, within 90 seconds
after execution, transmit to the Nasdaq Market Center, or by telephone
to the Nasdaq Market Center Operations Department if the Nasdaq Market
Center reporting service is unavailable due to system or transmission
failure, last sale reports of transactions in eligible securities
executed between 9:30 a.m. and 4 p.m. Eastern Time otherwise than on a
national securities exchange. Transactions not reported within 90
seconds after execution shall be designated as late[, and include the
time of execution].
(B) Non-registered Reporting Members shall, within 90 seconds after
execution, transmit to the Nasdaq Market Center, or by telephone to the
Nasdaq Market Center Operations Department if the Nasdaq Market Center
reporting service is unavailable due to system or transmission failure,
last sale reports of transactions in eligible securities executed in
the United States otherwise than on a national securities exchange
between the hours of 4 p.m. and 6:30 p.m. Eastern Time; trades executed
and reported after 4 p.m. Eastern Time shall be designated as ``.T''
trades to denote their execution outside normal market hours.
Transactions not reported within 90 seconds after execution must be
designated as .T trades[, and include the time of execution on the
trade report]. Transactions not reported by 6:30 p.m. shall be reported
on an ``as of'' basis the following day between 8 a.m. and 6:30 p.m.
(3)-(5) No change.
(6) All members shall report to Nasdaq using the .W modifier
transactions at prices based on average-weighting or other special
pricing formulae unrelated to the current or closing price of the
security on the primary market. [Members shall also include the time of
execution on the transaction report.]
(7) No change.
(8) All members shall append the .PRP trade report modifier to
transaction reports that reflect a price different from the current
market when the execution price is based on a prior reference point in
time. The transaction report shall include the prior reference time in
lieu of the actual time the trade was executed. The .PRP modifier shall
not be appended to a report of a transaction whose price is based on a
prior reference point in time if the trade is executed and reported
within 90 seconds from the prior reference point in time.\1\
(9) No change.
(10) To identify pre-opening and after-hours trades reported late,
Nasdaq shall convert the .T modifier to .ST for any report submitted to
the Nasdaq Market Center more than 90 seconds after execution.[\2\]
(b) No change.
(c) Information To Be Reported
Each last sale report shall contain the following information:
(1)-(4) No change.
(5) The time of execution expressed in hours, minutes, and seconds
based upon Eastern Time, unless another provision of the Association's
rules requires that a different time must be included on the report [if
the trade is reported more than 90 seconds after execution].
(d)-(f) No change.
\1\ Implementation of the .PRP modifier for listed securities is
delayed until June 6, 2005. [such time that the Consolidated Tape
Association approves use of the modifier and makes the necessary system
changes to accommodate the modifier.]
[\2\ Implementation of the .ST modifier for listed securities is
delayed until such time that the Consolidated Tape Association approves
use of the modifier and makes the necessary system changes to
accommodate the modifier.]
* * * * *
[IM-6420-2. Delayed Effective Date of Obligation to Include Time of
Execution on All Reports Submitted to the Nasdaq Market Center
On April 19, 2004, the Securities and Exchange Commission (``SEC'')
approved a proposed rule change filed by the Association (SR-NASD-2003-
159) requiring members to include the time of execution on all reports
submitted to the Nasdaq Market Center reporting service (formerly known
as the Automated Confirmation Transaction Service, or ``ACT''). In
response to comments from the Association's Small Firm Advisory Board,
Nasdaq agreed to delay the effective date of this requirement until one
year after the date of SEC approval. Therefore, the effective date of
this requirement is April 25, 2005.
Until April 5, 2005, members remain obligated to provide the time
of execution only in those circumstances specifically articulated in
the Association's rules. To prevent confusion, Nasdaq has not modified
the Association's rules to reflect the obligation to provide the time
of execution in all circumstances. These language modifications will be
made at
[[Page 35750]]
a time closer to the actual effective date of the obligation.]
* * * * *
6600. Over-the-Counter Equity Securities
* * * * *
6620. Transaction Reporting
(a) When and How Transactions are Reported
(1) OTC Market Makers shall, within 90 seconds after execution,
transmit to the Nasdaq Market Center last sale reports of transactions
in OTC Equity Securities executed between the hours of 9:30 a.m. and 4
p.m. Eastern Time. Transactions not reported within 90 seconds after
execution shall be designated as late[ and include the time of
execution].
(2) Non-Market Makers shall, within 90 seconds after execution,
transmit to the Nasdaq Market Center, or by telephone to the Nasdaq
Market Operations Department if the Nasdaq Market Center is unavailable
due to system or transmission failure, last sale reports of
transactions in OTC Equity Securities executed between the hours of
9:30 a.m. and 4 p.m. Transactions not reported within 90 seconds after
execution shall be designated as late[ and include the time of
execution].
(3) Transaction Reporting Outside Normal Market Hours
(A) Last sale reports of transactions in OTC Equity Securities
executed between 8 a.m. and 9:30 a.m. Eastern Time shall be transmitted
to the Nasdaq Market Center within 90 seconds after execution and shall
be designated as ``.T'' trades to denote their execution outside normal
market hours. Transactions not reported within 90 seconds must be
designated as .T trades[, and include the time of execution].
Transactions not reported before 9:30 a.m. shall be reported after 4
p.m. and before 6:30 p.m. as .T trades[, and include the time of
execution].[\1\]
(B) Last sale reports of transactions in OTC Equity Securities
executed between the hours of 4 p.m. and 6:30 p.m. Eastern Time shall
be transmitted to the Nasdaq Market Center within 90 seconds after
execution; trades executed and reported after 4 p.m. Eastern Time shall
be designated as ``.T'' to denote their execution outside normal market
hours. Transactions not reported within 90 seconds must be designated
as .T trades[ and include the time of execution on the trade report].
Transactions not reported before 6:30 p.m. shall be reported on an ``as
of'' basis the following day between 8 a.m. and 6:30 p.m.
(C) Last sale reports of transactions in OTC Equity Securities
executed outside the hours of 8 a.m. and 6:30 p.m. Eastern Time shall
be reported as follows:
(i) Last sale reports of transactions in American Depositary
Receipts (ADRs), Canadian issues, or domestic OTC Equity Securities
that are executed between midnight and 8 a.m. Eastern Time shall be
transmitted to the Nasdaq Market Center between 8 a.m. and 9:30 a.m.
Eastern Time on trade date[,] and be designated as ``.T'' trades to
denote their execution outside normal market hours[, and be accompanied
by the time of execution]. Transactions not reported before 9:30 a.m.
shall be reported after 4 p.m. and before 6:30 p.m. as .T trades[, and
include the time of execution].[\2\] The party responsible for
reporting on trade date, the trade details to be reported, and the
applicable procedures shall be governed, respectively, by paragraphs
(b), (c), and (d) below;
(ii) Last sale reports of transactions in ADRs, Canadian issues, or
domestic OTC Equity Securities that are executed between 6:30 p.m. and
midnight Eastern Time shall be transmitted to the Nasdaq Market Center
on the next business day (T+1) between 8 a.m. and 6:30 p.m. Eastern
Time[,] and be designated ``as/of'' trades to denote their execution on
a prior day[, and be accompanied by the time of execution]. The party
responsible for reporting on T+1, the trade details to be reported, and
the applicable procedures shall be governed, respectively, by
paragraphs (b), (c), and (d) below; and
(iii) Last sale reports of transactions in foreign securities
(excluding ADRs and Canadian issues) shall be transmitted to the Nasdaq
Market Center on T+1 regardless of time of execution.[\3\] 1 Such
reports shall be made between 8 a.m. and 1:30 p.m. Eastern Time in the
same manner as described in subparagraph (3)([B]C)(ii) above.
(4)-(7) No change.
(8) All members shall append the .W trade report modifier to
reports of Stop Stock Transactions, as such term is defined in Rule
6610, and include the time at which the member and the other party
agreed to the Stop Stock Price, as such term is defined in Rule 6610,
in lieu of including the time of execution on the trade report. The .W
modifier shall not be appended to a report of a Stop Stock Transaction
if the Stop Stock Transaction is executed and reported within 90
seconds of the time the member and the other party agree to the Stop
Price.[\4\]2
(9) To identify late pre-opening and after-hours trades reported
late, Nasdaq will convert the .T modifier to .ST for any report
submitted to ACT more than 90 seconds after execution.[\5\]
(b) No change.
(c) Information To Be Reported
Each last sale report shall contain the following information:
(1)-(4) No change.
(5) The time of execution expressed in hours, minutes, and seconds
based on Eastern Time, unless another provision of the Association's
rules requires that a different time must be included on the report.
(d)-(f) No change.
[\1\ Until Nasdaq implements the use of the .ST modifier, which
denotes the late reporting of a pre-opening or after-hours trade,
members shall report on the following day on an ``as/of basis'' last
sale reports of transactions in designated securities executed between
8 a.m. and 9:30 a.m. Eastern Time that are not reported to the Nasdaq
Market Center prior to 9:30 a.m. These reports shall include the time
of execution.]
[\2\ Until Nasdaq implements the use of the .ST modifier, which
denotes the late reporting of a pre-opening or after-hours trade,
members shall report on the following day on an ``as/of basis'' last
sale reports of transactions in designated securities executed between
midnight and 8 a.m. Eastern Time that are not reported to the Nasdaq
Market Center prior to 9:30 a.m. These reports shall include the time
of execution.]
[\3\]1 Member firms that have the operational capability to report
transactions in foreign securities (excluding ADRs and Canadian issues)
within 90 seconds of execution, between the hours of 8 a.m. and 5:15
p.m. Eastern time, may do so at their option. If a firm chooses this
option, it need not report the same transaction(s) on T+1 as prescribed
by subparagraph (3)(C)(ii)[(c)].
[\4\]2 Use of the .W modifier for Stop Stock Transactions for OTC
Equity Securities is delayed until the necessary system changes can be
made to accommodate the modifier. Nasdaq [expects these system changes
to be completed in the fourth quarter of 2004, and] will issue a notice
of the exact implementation date.
[\5\ Nasdaq expects to implement use of the .ST modifier for Nasdaq
listed securities in the fourth quarter of 2004, and will issue a
notice of the exact implementation date.] [IM-6620. Delayed Effective
Date of Obligation to Include Time of Execution on All Reports
Submitted to the Nasdaq Market Center
On April 19, 2004, the Securities and Exchange Commission (``SEC'')
approved a proposed rule change filed by the Association (SR-NASD-2003-
159) requiring members to include the time of execution on all reports
[[Page 35751]]
submitted to the Nasdaq Market Center reporting service (formerly known
as the Automated Confirmation Transaction Service, or ``ACT''). In
response to comments from the Association's Small Firm Advisory Board,
Nasdaq agreed to delay the effective date of this requirement until one
year after the date of SEC approval. Therefore, the effective date of
this requirement is April 25, 2005.
Until April 25, 2005, members remain obligated to provide the time
of execution only in those circumstances specifically articulated in
the Association's rules. To prevent confusion, Nasdaq has not modified
the Association's rules to reflect the obligation to provide the time
of execution in all circumstances. These language modifications will be
made at a time closer to the actual effective date of the obligation.]
* * * * *
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. 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 April 2004, the Commission approved a proposed rule change that
contained numerous modifications to the trade reporting rules for the
Nasdaq Market Center.\8\ The original version of SR-NASD-2003-159
contained rule language that would have immediately required firms to
include the time of execution on all trade reports submitted to Nasdaq,
rather than in the handful of special circumstances previously required
by the rules. In response to comments from the NASD's Small Firm
Advisory Board, however, Nasdaq amended the filing to delay
implementation of this generalized requirement until April 25, 2005.
Accordingly, the amended filing approved by the Commission contained
Interpretive Material appended to each trade reporting rule that
informed firms of the delayed effective date and stated Nasdaq's
intention to avoid confusion by maintaining the trade reporting rule
language regarding time of execution in its current state until the
time of implementation, at which point Nasdaq would submit an
additional implementing filing.
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\8\ See Securities Exchange Act Release Nos. 49404 (March 11,
2004), 69 FR 12727 (March 17, 2004) (SR-NASD-2003-159) (proposing
release) and 49581 (April 19, 2004), 69 FR 22578 (April 26, 2004)
(SR-NASD-2003-159) (approval order).
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In accordance with the full implementation of the reporting
obligation approved by the Commission in SR-NASD-2003-159, Nasdaq now
proposes to remove the Interpretive Material and to replace rule
language reflecting an obligation to report time of execution in
specified circumstances with clear language reflecting an obligation to
do so in all circumstances.
2. Statutory Basis
Nasdaq believes that the proposed rule change is consistent with
the provisions of Section 15A of the Act,\9\ in general, and with
Section 15A(b)(6) of the Act,\10\ in particular, in that it is designed
to prevent fraudulent and manipulative acts and practices, to foster
cooperation and coordination with persons engaging in regulating,
clearing, settling, processing information with respect to, and
facilitating transactions in securities, and to protect investors and
the public interest. Nasdaq believes the proposed rule change will
improve the regulation of the Nasdaq market by increasing the
information made available to NASD's automated surveillance systems.
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\9\ 15 U.S.C. 78o-3.
\10\ 15 U.S.C. 78o-3(b)(6).
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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, as amended.
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
The foregoing rule change has become effective pursuant to Section
19(b)(3)(A)(iii) of the Act \11\ and subparagraph (f)(3) of Rule 19b-4
thereunder.\12\ 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.
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\11\ 15 U.S.C. 78s(b)(3)(A)(iii).
\12\ 17 CFR 240.19b-4(f)(3).
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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:
Electronic Comments
Use the Commission's Internet comment form (http://www.sec.gov/rules/sro.shtml); or
Send an e-mail to [email protected]. Please include
File Number SR-NASD-2005-062 on the subject line.
Paper Comments
Send paper comments in triplicate to Jonathan G. Katz,
Secretary, Securities and Exchange Commission, Station Place, 100 F
Street, NE., Washington, DC 20549-9303. All submissions should refer to
File Number SR-NASD-2005-062. 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
[[Page 35752]]
Number SR-NASD-2005-062 and should be submitted on or before July 12,
2005.
For the Commission, by the Division of Market Regulation,
pursuant to delegated authority.\13\
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\13\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. E5-3192 Filed 6-20-05; 8:45 am]
BILLING CODE 8010-01-P