[Federal Register Volume 69, Number 122 (Friday, June 25, 2004)]
[Notices]
[Pages 35696-35698]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 04-14450]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-49898; File No. SR-NASD-2004-091]


Self-Regulatory Organizations; Notice of Filing of Proposed Rule 
Change by the National Association of Securities Dealers, Inc. To 
Discontinue the Use of the Nasdaq NEWS Feature of the Nasdaq 
Workstation II, and To Provide a Different Standard for the Beginning 
and End of a Trading Halt

June 21, 2004.
    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 June 15, 2004, 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. The Commission 
is publishing this notice to solicit comments on the proposed rule 
change from interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    Nasdaq proposes to discontinue the Nasdaq NEWS feature of the 
Nasdaq Workstation II (``NWII''). Should the Commission approve the 
proposed rule change, Nasdaq intends to implement the proposed rule 
change during August 2004, and will inform market participants of the 
exact implementation date via a Head Trader Alert on http://www.nasdaqtrader.com.
    The text of the proposed rule change is below. Proposed new 
language is in italics; proposed deletions are in brackets.\3\
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    \3\ The proposed rule change is marked to show changes from the 
rule as it appears in the electronic NASD Manual available at 
www.nasd.com.
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4120. Trading Halts
    (a) No change.
    (b) Procedure for Initiating a Trading Halt
    (1)-(3) No change.
    (4) Should Nasdaq determine that a basis exists under Rule 4120(a) 
for initiating a trading halt, the commencement of the trading halt 
will be effective [simultaneously with appropriate notice in the Nasdaq 
``NEWS'' frame] at the time specified by Nasdaq in a notice posted on a 
publicly available Nasdaq website. In addition, Nasdaq shall 
disseminate notice of the commencement of a trading halt through major 
wire services.
    (5) Trading in a halted security shall resume at the time specified 
by Nasdaq in a notice posted on a publicly available Nasdaq website 
[upon notice via the Nasdaq ``NEWS'' frame that a trading halt is no 
longer in effect]. In addition, Nasdaq shall disseminate notice of the 
resumption of trading through major wire services.
    (6)-(7) 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

[[Page 35697]]

the purpose of and basis for 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
    As part of an effort to streamline its operations, Nasdaq proposes 
to eliminate the Nasdaq NEWS function of the NWII. This function 
provides information that is readily available through other sources. 
Accordingly, Nasdaq has concluded that the function is not needed by 
NWII users.
    Nasdaq NEWS is a ``window'' on the NWII that users can open to 
retrieve security-specific information on corporate actions such as 
stock splits, name or symbol changes, additions to or deletions from 
the roster of Nasdaq-listed securities, or trade halt status, as well 
as information about the status of Nasdaq systems. The information 
provided through Nasdaq NEWS is available to market participants 
through other sources, however; depending on the nature of the 
information, these sources include major financial wire services and 
Nasdaq Web sites. Accordingly, the elimination of the service will not 
affect the quality or quantity of information that is readily available 
to market participants. Moreover, it should be noted that Nasdaq NEWS 
is currently provided automatically only to users of the NWII 
``presentation device,'' the desktop terminal provided by Nasdaq. It is 
available to market participants that access Nasdaq through a 
customized application programming interface (``API'') or through a 
service bureau only if the market participant or service bureau chooses 
to program for its availability, and it is Nasdaq's understanding that 
many such market participants do not in fact receive Nasdaq NEWS. 
Finally, Nasdaq NEWS is not accessible to market participants that 
access the market through the computer-to-computer interface (``CTCI'') 
or Financial Information Exchange (``FIX'') protocols.
    The Nasdaq NEWS function is currently referenced in NASD Rule 4120, 
concerning trading halts. Specifically, the rule provides that a 
trading halt commences simultaneously with the posting of a notice in 
Nasdaq NEWS, and that a trading halt ends at the time specified in a 
notice via Nasdaq NEWS. Accordingly, in order to reflect the 
elimination of the function, Nasdaq proposes to amend the rule to 
provide a different standard for the beginning and end of a trading 
halt.
    Nasdaq currently provides notice of trading halts not only through 
Nasdaq NEWS, but also through releases on major wire services, through 
the cessation of quotation dissemination through external vendor feeds, 
and through notices on www.nasdaqtrader.com. Nasdaq NEWS does not 
provide an audible or visual alert to Nasdaq Workstation subscribers; 
rather, a user would become aware of notices provided through Nasdaq 
NEWS only if the user opened the Nasdaq NEWS frame on the user's 
workstation and read the notices posted there. Moreover, as noted 
above, Nasdaq NEWS is not available to many market participants that 
access Nasdaq through CTCI, FIX, or service bureaus, or who opt not to 
program their API to access it. Accordingly, Nasdaq NEWS does not 
provide a faster or more reliable method of providing notice about 
trading halts than the other methods currently in use. Given these 
alternatives, Nasdaq is proposing to amend NASD Rule 4120 to provide 
that trading halts will begin and end at the time specified by Nasdaq 
in a notice posted on a publicly available Nasdaq Web site.\4\ In 
addition, the rule provides that Nasdaq will provide notice of the 
commencement and termination of trading halts through releases 
disseminated through major wire services. It should be noted, however, 
that such wire service notices generally do not contain the time of the 
commencement and termination; rather, they alert market participants to 
the fact of the halt and put them on notice to access the Web site for 
the relevant times. Accordingly, in the case of a trading halt 
commencing at 10:30 a.m., a notice (with the effective time of 10:30 
a.m.) would be posted on a Nasdaq Web site, and a wire service release 
(without the effective time) would be disseminated. In the case of the 
termination of a trading halt, a notice stating, for example, that 
quoting in the halted stock would resume at 1:15 p.m. and trading would 
resume at 1:20 p.m., would be posted on a Nasdaq Web site, and a wire 
service release (without these times) would be disseminated. Nasdaq 
believes the timeliness and breadth of dissemination of information 
provided to market participants through these methods will be 
indistinguishable from the status quo, in that the same information 
provided through Nasdaq NEWS is, and will in the future, be provided 
through a Nasdaq Web site.
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    \4\ The Web site currently used for this purpose is 
www.nasdaqtrader.com. However, Nasdaq is not specifically referring 
to this Web site in the text of NASD Rule 4120, to avoid the need to 
amend the rule at a later date if a different Web site is used for 
this purpose in the future. Nasdaq would, of course, provide advance 
notice to market participants if a change in the Web site used for 
this purpose was ever made.
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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,\5\ in general, and with 
Section 15A(b)(6) of the Act,\6\ 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. The proposal 
will allow Nasdaq to eliminate an obsolete communications functionality 
without impairing Nasdaq's ability to communicate with market 
participants concerning trading halts.
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    \5\ 15 U.S.C. 78o-3.
    \6\ 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

    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 the self-regulatory organization consents, the Commission will:
    A. By order approve such proposed rule change, or

[[Page 35698]]

    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. 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 No. SR-NASD-2004-091 on the subject line.

Paper Comments

     Send paper comments in triplicate to Jonathan G. Katz, 
Secretary, Securities and Exchange Commission, 450 Fifth Street, NW., 
Washington, DC 20549-0609.
    All submissions should refer to File Number SR-NASD-2004-091. 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 Section, 450 Fifth 
Street, NW., Washington, DC 20549. Copies of such filing also will be 
available for inspection and copying at the principal office of 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 No. SR-NASD-2004-091 and 
should be submitted on or before July 16, 2004.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\7\
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    \7\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 04-14450 Filed 6-24-04; 8:45 am]
BILLING CODE 8010-01-P