[Federal Register Volume 69, Number 146 (Friday, July 30, 2004)]
[Notices]
[Pages 45866-45868]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 04-17390]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-50074; File No. SR-NASD-2004-076]


Self-Regulatory Organizations; Notice of Filing and Immediate 
Effectiveness of Proposed Rule Change, and Amendments No. 1 and 2 
Thereto, by the National Association of Securities Dealers, Inc. To 
Rename Certain of Nasdaq's Systems and To Make Other Technical 
Corrections

July 23, 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 May 6, 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

[[Page 45867]]

have been prepared by Nasdaq. Nasdaq filed this proposal pursuant to 
section 19(b)(3)(A)(iii) of the Act,\3\ and Rule 19b-4(f)(3) 
thereunder,\4\ as one concerned solely with the administration of the 
self-regulatory organization, which renders the proposal effective upon 
filing with the Commission.
    Nasdaq filed Amendment No. 1 to the proposed rule change on July 2, 
2004.\5\ Nasdaq filed Amendment No. 2 to the proposed rule change on 
July 23, 2004.\6\ 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\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \4\ 17 CFR 240.19b-4(f)(3).
    \5\ See letter from Edward S. Knight, Executive Vice President, 
Nasdaq, to Katherine England, Assistant Director, Division of Market 
Regulation (``Division''), Commission, dated July 2, 2004 
(``Amendment No. 1''). In Amendment No. 1, Nasdaq made various 
technical and clarifying amendments to the proposed rule text.
    \6\ See letter from Mary M. Dunbar, Vice President and Deputy 
General Counsel, Nasdaq, to Katherine England, Assistant Director, 
Division, Commission, dated July 21, 2004 (``Amendment No. 2''). In 
Amendment No. 2, Nasdaq made additional clarifying amendments to the 
proposed rule text.
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I. Self-Regulatory Organization's Statement of the Terms of the 
Substance of the Proposed Rule Change

    Nasdaq proposes to rename certain of its systems and to make other 
technical corrections to certain of its rules. Nasdaq will implement 
the proposed rule change immediately. The text of the proposed rule 
change, as amended, is available at the Office of the Secretary, 
Nasdaq, at the Commission, and on the Commission's Web site, http://www.sec.gov.

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
    Nasdaq is generally discontinuing the use of the terms 
``SuperMontage,'' ``Nasdaq National Market Execution System,'' 
``NNMS,'' and ``ACT'' in its rules and replacing them in many instances 
with the term ``Nasdaq Market Center.'' The proposed rule change also 
makes several technical corrections to punctuation and paragraph 
designations and other conforming changes. These changes include, in 
NASD Rule 4701, a consolidation of former paragraphs (r), (d), (x) and 
(ee) into a single paragraph (r) with four subsections setting forth 
the four functionalities that the newly-named Nasdaq Market Center 
comprises: (1) An order execution service as already described in 
paragraph (r); (2) a trade reporting service formerly designated by the 
term ``Automated Confirmation Transaction'' Service or ``ACT'' and 
described in paragraph (d) and other rules; (3) for Nasdaq-listed 
securities, a quotation montage formerly designated by the term 
``Nasdaq Quotation Montage'' and described in paragraph (x); and (4) 
for Nasdaq-listed securities, an order display service formerly 
designated by the term ``Nasdaq Order Display Facility'' and described 
in paragraph (ee).\7\ In tandem with these changes, Nasdaq is also 
revising the terms by which its rules refer to certain participants in 
the former NNMS. For example, the former term ``NNMS Market Maker'' 
will be replaced by ``Nasdaq Market Maker.'' The former term ``NNMS 
ECN'' will be replaced by ``Nasdaq ECN.'' Nasdaq did not change certain 
proper names, including the names of preexisting agreements and 
equipment; rather, it will make corrections to the Rules as appropriate 
once the agreements and equipment are renamed.
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    \7\ The description of the proposed rule change has been 
supplemented pursuant to a telephone conversation between Thomas 
Moran, Office of General Counsel, Nasdaq and Ira Brandriss, 
Assistant Director, Division, Commission, on July 13, 2004. As 
further discussed below, Nasdaq represents that none of the proposed 
changes alters the operation of the systems described or the rights 
and obligations of those using them.
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    In addition, Nasdaq is making technical corrections to NASD Rules 
5210 and 5220. On March 2, 2004, the Commission approved Nasdaq's 
proposal to transition the trading of exchange-listed securities onto 
the SuperMontage trading platform from the Computer Assisted Execution 
System. The text of the SuperMontage rules approved as part of that 
proposal, as published in Exhibit A to Securities Exchange Act Release 
No. 49349 (March 2, 2004), 69 FR 10775 (March 8, 2004) (``Exhibit A''), 
contained minor technical errors. Exhibit A did not accurately reflect 
the text of NASD Rules 5210 and 5220 that had previously been approved 
by the Commission and were in effect.
    Specifically, Exhibit A added a definition of the term ``CAES'' as 
new NASD Rule 5210(i) when NASD Rule 5210(i) already was in effect. 
Prior to the filing of SR-NASD-2003-149, NASD Rule 5210(i) set forth 
the definition of the term ``Third Participating Market Center Trade-
Through.'' Therefore, Nasdaq is re-establishing the definition of the 
term ``Third Participating Market Center Trade-Through'' as NASD Rule 
5210(i) and re-lettering the definition of CAES from NASD Rule 5210(i) 
to NASD Rule 5210(j).
    Similarly, NASD Rule 5220(c) is added as a new provision, re-
lettering then-existing paragraphs (c) through (g) as (d) through (h). 
Exhibit A inadvertently failed to identify and re-letter two additional 
paragraphs--paragraphs (h) and (i)--that the Commission had already 
approved in connection with SR-NASD-1999-075.\8\ Therefore, Nasdaq is 
re-establishing the text of those provisions as NASD Rule 5220(i) and 
(j).
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    \8\ See Exchange Act Release No. 42536 (March 16, 2000), 69 FR 
15401 (March 22, 2000).
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    According to Nasdaq, nothing in the proposal to re-name Nasdaq's 
systems or to make other technical corrections alters the current 
operation of those systems or the rights and obligations of those using 
them. As such, the proposed rule change is solely administrative, 
technical, conforming and non-substantive in nature.
2. Statutory Basis
    Nasdaq believes that the proposed rule change is consistent with 
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 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. Clarifying 
the rules helps market participants.
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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 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 solicited or received with respect to the 
proposed rule change.

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

    The foregoing proposal has become effective pursuant to section

[[Page 45868]]

19(b)(3)(A)(iii) of the Act \11\ and Rule 19b-4(f)(3)\12\ thereunder as 
one concerned solely with the administration of the self-regulatory 
organization. At any time within 60 days of the filing of such proposed 
rule change, 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.\13\
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    \11\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \12\ 17 C.F.R. 240.19b-4(f)(3).
    \13\ For purposes of calculating the sixty-day abrogation 
period, the Commission considers the abrogation period to have begun 
on July 23, 2004, the date Nasdaq submitted Amendment No. 2. See 15 
U.S.C. 78s(b)(3)(C).
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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 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 Number SR-NASD-2004-076 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-
2004-076. 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 Commissions 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 the 
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 Number SR-
NASD-2004-76 and should be submitted on or before August 20, 2004.

    For the Commission by the Division of Market Regulation, 
pursuant to delegated authority.\14\
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    \14\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 04-17390 Filed 7-29-04; 8:45 am]
BILLING CODE 8010-01-P