[Federal Register Volume 68, Number 230 (Monday, December 1, 2003)]
[Notices]
[Pages 67252-67253]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 03-29802]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-48821; File No. SR-NASD-2003-134]


Self-Regulatory Organizations; National Association of Securities 
Dealers, Inc.; Order Granting Approval of Proposed Rule Change and 
Amendment Nos. 1 and 2 thereto by the National Association of 
Securities Dealers, Inc. To Amend Rule 4710 to Allow Nasdaq National 
Market Execution System Order Entry Firms To Automatically Internalize 
in SuperMontage

November 21, 2003.
    On August 22, 2003, 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''), pursuant to Section 19(b)(1) of the Securities 
Exchange Act of 1934 (``Act'') \1\ and Rule 19b-4 thereunder,\2\ a 
proposed rule change to amend NASD Rule 4710 to allow the Nasdaq 
National Market Execution System (``NNMS'' or ``SuperMontage'') to 
automatically match any non-directed buy and sell quotes/orders entered 
by an NNMS Order Entry Firm against the quotes/orders of that same NNMS 
Order Entry Firm on the other side of the market if such a quote/order 
on the other side of the market is at the best bid/offer in Nasdaq. On 
September 26, 2003, Nasdaq amended the proposed rule change.\3\
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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 September 25, 
2003 (``Amendment No. 1'').
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    The proposed rule change and Amendment No. 1 were published for 
comment in the Federal Register on October 16, 2003.\4\ The Commission 
received no comments on the proposal, as amended. On November 19, 2003, 
Nasdaq filed Amendment No. 2 to the proposed rule change.\5\ This order 
approves the proposed rule change, as amended by Amendment Nos. 1 and 
2.\6\
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    \4\ See Securities Exchange Act Release No. 48606 (October 8, 
2003), 68 FR 59659 (``Notice'').
    \5\ See letter from Thomas P. Moran, Associate General Counsel, 
Nasdaq, to Katherine A. England, Assistant Director, Division, 
Commission, dated November 19, 2003 (``Amendment No. 2''). In 
Amendment No. 2, Nasdaq revised the text of the proposed rule change 
to correct a typographical error and to clarify that there would be 
no change to paragraphs (b)(1)(B)(iv)(c), (b)(1)(C) or (b)(1)(D) of 
NASD Rule 4710. This was a technical amendment and is not subject to 
notice and comment.
    \6\ Nasdaq represented that it would implement the proposed rule 
change, as amended, within 60 days after approval by the Commission. 
See Notice, supra note 4.
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    The Commission finds that the proposed rule change, as amended, is 
consistent with the requirements of the Act and the rules and 
regulations thereunder applicable to a national securities 
association.\7\ In particular, the Commission believes that the 
proposed rule change, as amended, is consistent with Section 15A(b) of 
the Act \8\ in general, and furthers the objectives of Section 
15A(b)(6) \9\ in particular, in that it 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. Specifically, the Commission 
finds that Nasdaq's proposal, as amended, provides NNMS Order Entry 
Firms with the same opportunity as other Nasdaq market participants to 
have their quotes/orders on opposite sides of the market match off 
against each other.
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    \7\ In approving the proposed rule change, as amended, the 
Commission has considered the proposed rule's impact on efficiency, 
competition, and capital formation. 15 U.S.C. 78c(f).
    \8\ 15 U.S.C. 78o-3(b).
    \9\ 15 U.S.C. 78o-3(b)(6).
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    For the foregoing reasons, the Commission finds that the proposed

[[Page 67253]]

rule change, as amended, is consistent with the requirements of the Act 
and rules and regulations thereunder.
    It Is Therefore Ordered, pursuant to Section 19(b)(2) of the 
Act,\10\ that the proposed rule change (SR-NASD-2003-134) and Amendment 
Nos. 1 and 2 are approved.
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    \10\ 15 U.S.C. 78s(b)(2).

    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. 03-29802 Filed 11-28-03; 8:45 am]
BILLING CODE 8010-01-P