[Federal Register Volume 68, Number 136 (Wednesday, July 16, 2003)]
[Notices]
[Pages 42150-42152]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 03-17924]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-48148; File No. SR-NQLX-2003-05]


Self-Regulatory Organizations; Notice of Filing and Immediate 
Effectiveness of Proposed Rule Change by Nasdaq Liffe Markets, LLC to 
Remove Rule 903(c)(7) From the Maintenance Listing Standards and To Add 
Rule 408(e) Relating to the Clearing Account Indicator

July 9, 2003.
    Pursuant to section 19(b)(7) of the Securities Exchange Act of 1934 
(``Act''),\1\ and Rule 19b-7 under the Act,\2\ notice is hereby given 
that on June 20, 2003, Nasdaq Liffe Markets, LLC (``NQLX'') filed with 
the Securities and Exchange Commission (``SEC'' or ``Commission'') the 
proposed rule changes described in Items I, II, and III below, which 
Items have been prepared by the NQLX. The Commission is publishing this 
notice to solicit comments on the proposed rule changes

[[Page 42151]]

from interested persons. On June 19, 2003, NQLX filed the proposed rule 
change with the Commodity Futures Trading Commission (``CFTC''), 
together with a written certification under section 5c(c) of the 
Commodity Exchange Act \3\ (``CEA'') in which NQLX indicated that the 
effective date of the proposed rule change would be June 27, 2003.
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    \1\ 15 U.S.C. 78s(b)(7).
    \2\ 17 CFR 240.19b-7.
    \3\ 7 U.S.C. 7a-2(c).
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I. Self-Regulatory Organization's Description of the Proposed Rule 
Change

    First, NQLX proposes removing NQLX Rule 903(c)(7) because the 
provision should have been removed as no longer relevant when previous 
rule modifications were made and filed with the SEC concerning NQLX's 
maintenance listing standards for security futures on single securities 
other than shares of exchange-traded funds, shares of registered 
closed-end management investment companies, or trust-issued 
receipts.\4\ Second, NQLX proposes adding new NQLX Rule 408(e) which 
would require a member or person associated with a member to timely 
provide the appropriate clearing account indicator for a trade through 
NQLX's post trade registration system if the member or person 
associated with the member fails to provide the appropriate clearing 
account indicator at the time of order entry.
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    \4\ See Securities Exchange Act Release No. 47675 (April 14, 
2003), 68 FR 19591 (April 21, 2003).
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    The text of the proposed rule change appears below. New text is in 
italics. Deleted text is in brackets.
* * * * *

Rule 408 Submitting Orders

    (a)-(d) No change.
    (e) If at the time of Order entry the Member or Person Associated 
with the Member fails to provide the appropriate Clearing Account 
Indicator as required by Rules 408(c)(6) and (d), then the Member or 
Person Associated with the Member must timely provide the appropriate 
Clearing Account Indicator for the trade through the Trade Registration 
System.
* * * * *

Rule 903 Maintenance Listing Standards: Physically-Settled Security 
Futures Contracts

    (a)-(b) No change.
    (c) Maintenance Standards-Underlying Securities are Single 
Securities Other than Shares of Exchange-Traded Funds, Shares of 
Registered Closed-End Management Investment Companies, or Trust-Issued 
Receipts: When the underlying of a physically-settled Security Futures 
Contract is a single security other than shares of exchange-traded 
funds, shares of registered closed-end management investment companies, 
or trust-issued receipts, to list a new delivery month of the Security 
Futures Contract, the single security must:
    (1)-(5) No change.
    (6) have a market price per security of at least $3.00 (calculated 
by the closing price reported on the primary market on which the 
underlying security trades) on the trading day immediately before 
listing a new delivery month[; and].
    [(7) to satisfy Rule 903(c)(6)(iv) for a second, consecutive six 
calendar-month period, the price of the underlying security must be at 
least $4.00.]
* * * * *

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

    NQLX has prepared statements concerning the purpose of, and basis 
for, the proposed rule change, burdens on competition, and comments 
received from members, participants, and others. The text of these 
statements may be examined at the places specified in Item IV below. 
These statements are set forth in sections A, B, and C below.

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

1. Purpose
    NQLX proposes removing NQLX Rule 903(c)(7) from its maintenance 
listing standards for security futures on single securities other than 
shares of exchange-traded funds, shares of registered closed-end 
management investment companies, or trust-issued receipts. NQLX 
previously amended Rule 903(c)(6) to allow for the listing of a new 
delivery month for a security futures product if the underlying 
securities have reported at least a $3.00 per share closing price on 
their primary market on the trading day immediately before the listing 
of the new delivery month.\5\ When NQLX Rule 903(c)(6) was amended, 
NQLX Rule 903(c)(7), which was a related provision, should have been 
removed as no longer applicable or relevant. Therefore, NQLX states 
that the proposed removal of NQLX Rule 903(c)(7) merely eliminates a 
provision that no longer serves any purpose, nor makes any sense, 
because of the previous amendments made to NQLX Rule 903(c)(6).
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    \5\ Id.
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    In addition, new NQLX Rule 403(e) is intended to make explicit 
that, if at the time of order entry, an NQLX member or person 
associated with an NQLX member fails to provide the appropriate 
clearing account indicator (e.g., the type of clearing account: firm 
account, customer account, or market maker account) as required by NQLX 
Rules 408(c)(6) and (d), then the member or person associated with the 
member must timely provide the appropriate clearing account indicator 
for the trade through NQLX's trade registration system before the 
clearing organization accepts and registers the trade. NQLX believes 
that new NQLX Rule 408(e) will help enhance its trade audit trail and 
trade processing and clearing by requiring members to ensure that 
proper clearing account indicators are provided to the clearing 
organization for executed trades.
    NQLX believes that these proposed rule changes are consistent with 
the requirements under section 6(h)(3) of the Act \6\ and the criteria 
under section 2(a)(1)(D)(i) of the CEA,\7\ as modified by joint orders 
of the Commission and the CFTC,\8\ and that its listing standards are 
no less restrictive than comparable listing standards for options 
traded on a national securities exchange or national securities 
association.\9\
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    \6\ 15 U.S.C. 78f(h)(3).
    \7\ 7 U.S.C. 2(a)(1)(D)(i).
    \8\ See Joint Order Granting the Modification of Listing 
Standards Requirements (American Depository Receipts), Securities 
Exchange Act Release No. 44725 (Aug. 20, 2001), and Joint Order 
Granting the Modification of Listing Standards Requirements 
(Exchange Traded Funds, Trust Issued Receipts and Shares of Closed-
End Funds), Securities Exchange Act Release No. 46090 (June 19, 
2002), 67 FR 42760 (June 25, 2002).
    \9\ 15 U.S.C. 78f(h)(3)(C).
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2. Statutory Basis
    NQLX files the proposed rule changes pursuant to section 19(b)(7) 
of the Act.\10\ NQLX believes that the proposed rule changes are 
consistent with the requirements of the Commodity Futures Modernization 
Act of 2000,\11\ including the requirement that trading in a listed 
security futures is not readily susceptible to manipulation of its 
price nor to causing or being used to manipulate the price of the 
underlying security, options on the security, or options on a group or 
index including the security.\12\ NQLX further believes that its 
proposed rule changes comply with the requirements under section

[[Page 42152]]

6(h)(3) of the Act \13\ and the criteria under section 2(a)(1)(D)(i) of 
the CEA,\14\ as modified by joint orders of the Commission and the 
CFTC. In addition, NQLX believes that its proposed rule changes are 
consistent with the provisions of section 6 of the Act,\15\ in general, 
and section 6(b)(5) of the Act,\16\ in particular, which requires, 
among other things, that the rules of an exchange be designed to 
prevent fraudulent and manipulative acts and practices, and, in 
general, to protect investors and the public interest.
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    \10\ 15 U.S.C. 78s(b)(7).
    \11\ P.L. 106-554, 114 Stat. 2763 (2000).
    \12\ 15 U.S.C. 78f(h)(3)(H).
    \13\ 15 U.S.C. 78f(h)(3).
    \14\ 7 U.S.C. 2(a)(1)(D)(i).
    \15\ 15 U.S.C. 78f.
    \16\ 15 U.S.C. 78f(b)(5).
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B. Self-Regulatory Organization's Statement on Burden on Competition

    NQLX does not believe that the proposed rule changes 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 of Comments on the Proposed 
Rule Change Received From Members, Participants, or Others

    NQLX neither solicited nor received written comment on the proposed 
rule changes.

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

    The proposed rule change has become effective on June 27, 2003. 
Within 60 days of the date of effectiveness of the proposed rule 
changes, the Commission, after consultation with the CFTC, may 
summarily abrogate the proposed rule changes and require that the 
proposed rule changes be refiled in accordance with the provisions of 
section 19(b)(1) of the Act.\17\
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    \17\ 15 U.S.C. 78s(b)(1).
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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, conflicts with the Act. Persons making written 
submissions should file nine copies of the submission with the 
Secretary, Securities and Exchange Commission, 450 Fifth Street, NW., 
Washington, DC 20549-0609. Comments also may be submitted 
electronically to the following e-mail address: [email protected]. 
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 these filings also will 
be available for inspection and copying at the principal office of 
NQLX. All submissions should refer to File No. SR-NQLX-2003-05 and 
should be submitted by August 6, 2003.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\18\
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    \18\ 17 CFR 200.30-3(a)(75).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 03-17924 Filed 7-15-03; 8:45 am]
BILLING CODE 8010-01-P