[Federal Register Volume 67, Number 77 (Monday, April 22, 2002)]
[Notices]
[Pages 19608-19609]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 02-9778]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-45763; File No. SR-NASD-2002-08]


Self-Regulatory Organizations; Notice of Filing of Proposed Rule 
Change and Amendment No. 1 Thereto by the National Association of 
Securities Dealers, Inc. Relating to the Permanent Establishment of a 
Minimum Quotation Increment for Nasdaq Securities Quoting in Decimals

April 16, 2002.
    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 January 15, 2002, the National Association of Securities Dealers, 
Inc. (``NASD'' or ``Association''), through its subsidiary The Nasdaq 
Stock Market, Inc. (``Nasdaq''), filed with the Securities and Exchange 
Commission (``SEC'' or

[[Page 19609]]

``Commission'') the proposed rule change as described in Items I, II, 
and III below, which Items have been prepared by Nasdaq. On March 28, 
2002, Nasdaq amended the proposed rule change.\3\ 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\ See letter from Thomas P. Moran, Associate General Counsel, 
Nasdaq, to Katherine A. England, Assistant Director, Division of 
Market Regulation (``Division''), Commission, dated March 28, 2002 
(``Amendment No. 1''). In Amendment No. 1, Nasdaq made technical 
corrections to the proposed rule text.
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I. Self-Regulatory Organization's Statement of the Terms of 
Substance of the Proposed Rule Change

    Nasdaq proposes to amend NASD Rule 4613 to permanently adopt a 
$0.01 minimum quotation increment for Nasdaq securities as required 
under the Decimals Implementation Plan for the Equities and Options 
Markets (``Implementation Plan'' or ``Plan'') \4\ submitted to the 
Commission on July 26, 2000.\5\
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    \4\ See letter from Dennis L. Covelli, Vice President, New York 
Stock Exchange, Inc., to Annette Nazareth, Director, Division, 
Commission dated July 25, 2000.
    \5\ This date was changed from July 24, 2000, to reflect the 
actual date the Plan was submitted to the Commission. Telephone 
conversation between Thomas P. Moran, Associate General Counsel, 
Nasdaq, and Frank N. Genco, Attorney, Division, Commission, on 
January 31, 2002.
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    The text of the proposed rule change, as amended, appears below. 
New text is in italics; deletions are in brackets.
* * * * *
4613. Character of Quotations
    (a) Two-Sided Quotations
    (1) No change.
    (A) No change.
    (B) Minimum Price Variation for Decimal-based Quotations--The 
minimum quotation increment for Nasdaq securities authorized for 
decimal pricing [as part of the SEC-approved Decimals Implementation 
Plan for the Equities and Options Markets] shall be $0.01. Quotations 
failing to meet this standard shall be rejected.
    (b) through (e) 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 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
    On July 26, 2000,\6\ the NASD, jointly with other self-regulatory 
organizations, submitted to the Commission the Implementation Plan.\7\ 
As part of the Plan, the NASD committed to file with the Commission a 
proposal to permanently establish a minimum quotation increment for 
Nasdaq securities quoting in decimals.\8\ This filing seeks to 
establish that minimum quotation increment at $0.01 for Nasdaq issues. 
The proposed rule change would permit Nasdaq to continue to display and 
disseminate quotations in Nasdaq securities in decimal-based increments 
to two places beyond the decimal point (i.e., to the penny). This 
proposed rule change again informs market participants that decimal 
quotations submitted to Nasdaq that do not comport with the penny 
minimum quotation increment standard will be rejected by Nasdaq 
systems.
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    \6\ See supra note 5.
    \7\ See supra note 4.
    \8\ Nasdaq currently operates using this same one-penny minimum 
quotation standard. See Securities Exchange Act Release No. 43876 
(January 23, 2001), 66 FR 8251 (January 30, 2001) (SR-NASD-2001-07).
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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 the proposal 
is designed to prevent fraudulent and manipulative acts and practices, 
to promote just and equitable principles of trade, to foster 
cooperation and coordination with persons engaged in regulating, 
clearing, settling, processing information with respect to, and 
facilitating transactions in securities, to remove impediments to and 
perfect the mechanism of a free and open market and a national market 
system, and, in general, to protect investors and the public interest.
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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.

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

    No written comments were solicited or 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 Nasdaq consents, the Commission will:
    (A) By order approve such 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. Persons making written submissions 
should file six copies thereof with the Secretary, Securities and 
Exchange Commission, 450 Fifth Street NW., Washington DC 20549-0609. 
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 filings will also be 
available for inspection and copying at the principal office of the 
NASD. All submissions should refer to File No. SR-NASD-2002-08 and 
should be submitted by May 13, 2002.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\11\
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    \11\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 02-9778 Filed 4-19-02; 8:45 am]
BILLING CODE 8010-01-P