[Federal Register Volume 67, Number 212 (Friday, November 1, 2002)]
[Notices]
[Pages 66695-66696]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 02-27804]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-46732; File No. SR-NASD-2002-137]


Self-Regulatory Organizations; Notice of Filing and Immediate 
Effectiveness of Proposed Rule Change and Amendment No. 1 Thereto by 
the National Association of Securities Dealers, Inc. Relating to 
Technical Corrections to the Trade or Move Process in the Nasdaq Order 
Collection and Display Facility (``SuperMontage'')

October 28, 2002.
    Pursuant to section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act''),\1\ and Rule 19b-4 \2\ thereunder, notice is hereby given 
that on October 4, 2002, the National Association of Securities 
Dealers, Inc. (``NASD''), through its subsidiary, the Nasdaq Stock 
Market, Inc. (``Nasdaq''), submitted to 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 October 21, 2002, Nasdaq filed an amendment to the proposed rule 
change.\3\ The proposed rule change, as amended, has been filed by 
Nasdaq as a ``non-controversial'' rule change under Rule 19b-4(f)(6) 
\4\ under the Act. 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 Jeffrey S. Davis, Associate General Counsel, 
Nasdaq to Terri Evans, Assistant Director, Division of Market 
Regulation, Commission dated October 18, 2002 (``Amendment No. 1''). 
In Amendment No. 1, Nasdaq redesignated certain provisions in NASD 
Rule 4613(e)(1) to correct erroneous references to NASD Rule 
4613(e)(2). In addition, the rule text was amended to replace all 
uses of the word ``message'' with the word ``order'' to eliminate 
inadvertent inconsistencies within Rule 4613(e)(1).
    \4\ 17 CFR 240.19b-4(f)(6). For purposes of determining the 
effective date and 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 that period 
to commence on October 21, 2002, the date Nasdaq filed Amendment No. 
1. See 15 U.S.C. 78s(b)(3)(C).
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    Nasdaq is filing with the Commission technical rule changes to NASD 
Rule 4613(e)(1) to harmonize the language with recent approved rule 
proposals.
    The text of the proposed rule change is available at the Office of 
the Secretary, the Nasdaq and at the Commission.

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. 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
    Nasdaq has filed numerous rule proposals relating to NASD Rule 
4613(e), and also has filed numerous rule proposals relating to 
SuperMontage. In the process of compiling the changes to Rule 4613(e), 
Nasdaq has discovered several

[[Page 66696]]

grammatical and technical errors in Rule 4613(e) that must be fixed.
    First, Nasdaq is changing the acronym ``MMID'' to ``MPID'' to be 
consistent with its use of those terms throughout the rules governing 
usage of the SuperMontage system. Second, Nasdaq is replacing 
references to ``messages'' to ``orders'' or ``Directed Orders,'' as 
appropriate. This change makes consistent the use of such terms across 
NASD Rule 4613(e)(1). In addition, Nasdaq is adding the word ``for'' 
when describing the minimum number of shares for which a Trade or Move 
Directed Order is required to be sent. Finally, Nasdaq is changing Rule 
4613(e)(1)(c)(ii)(a) to reflect that an ECN that wishes to lock or 
cross the market between 9:20:00 and 9:29:29 must send a Trade or Move 
Directed Order. The current rule language erroneously indicates that 
ECNs are obligated to send such Directed Orders up until 9:29:59. This 
technical change conforms the rule to the clear intent of SR-NASD-2002-
56, which was approved on August 23, 2002.\5\
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    \5\ See Securities Exchange Act Release No. 46410 (August 23, 
2002), 67 FR 55897 (August 30, 2002).
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2. Statutory Basis
    Nasdaq believes that the proposed rule change, as amended, is 
consistent with section 15A of the Act in general,\6\ and section 
15A(b)(6) of the Act in particular,\7\ in that the proposal is 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. Nasdaq believes that the proposed 
rule change, as amended, should enhance the interaction of the Trade or 
Move Rule with the SuperMontage opening, and that such enhancements 
would ensure a smooth opening of daily trading for the ultimate benefit 
of investors.
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    \6\ 15 U.S.C. 78o-3.
    \7\ 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, as amended, 
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

    No written comments were either solicited or received.

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

    The foregoing proposed rule change, as amended, (1) Does not 
significantly affect the protection of investors or the public 
interest; (2) does not impose any significant burden on competition; 
and (3) by its terms, does not become operative until 30 days from the 
date on which it was filed, or such shorter time as the Commission may 
designate. The proposed rule change, as amended, has therefore become 
effective pursuant to section 19(b)(3)(A) of the Act \8\ and Rule 19b-
4(f)(6) \9\ thereunder.
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    \8\ 15 U.S.C. 78s(b)(3)(A).
    \9\ 17 CFR 240.19b-4(f)(6).
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    Nasdaq has requested that the Commission waive the usual five-day 
notice and 30-day pre-operative waiting periods. The Commission 
believes that it is consistent with the protection of investors and the 
public interest to accelerate the operative date and to waive the five-
day notice period since the proposed rule change, as amended, makes 
only technical corrections to the rule text. For these reasons, the 
Commission designates the proposal, as amended, to be effective and 
operative upon filing with the Commission.\10\
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    \10\ For purposes of determining the effective date and 
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 that period to 
commence on October 21, 2002, the date Nasdaq filed Amendment No. 1. 
See 15 U.S.C. 78s(b)(3)(C). For purposes only of accelerating 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 the proposed rule 
change, as amended, 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.\11\
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    \11\ 17 CFR 240.19b-4(f)(6).
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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. 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 
filing will also be available for inspection and copying at the 
principal office of the NASD. All submissions should refer to File No. 
SR-NASD-2002-137 and should be submitted by November 22, 2002.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\12\
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    \12\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 02-27804 Filed 10-31-02; 8:45 am]
BILLING CODE 8010-01-P