[Federal Register Volume 69, Number 155 (Thursday, August 12, 2004)]
[Notices]
[Pages 49920-49921]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 04-18414]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-50158; File No. SR-NASD-2004-117]


Self-Regulatory Organizations; National Association of Securities 
Dealers, Inc.; Notice of Filing and Immediate Effectiveness of a 
Proposed Rule Change Extending the Operative Date for the Short-Sale 
ACT Reporting Requirements for Certain Securities

August 5, 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 August 2, 2004, the National Association of Securities Dealers, Inc. 
(``NASD'' or ``Association''), 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. 
Nasdaq has filed this proposed rule change pursuant to Section 
19(b)(3)(A)(i) of the Act \3\ and Rule 19b-4(f)(1) thereunder,\4\ which 
renders the proposal effective upon filing with the Commission. 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.
    \3\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \4\ 17 CFR 240.19b-4(f)(6).
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    Nasdaq proposes to extend, for certain securities, the operative 
date of NASD IM-6130 (``Trade Reporting of Short Sales'') regarding 
members'' obligations to indicate on their transaction reports whether 
a sale is a short sale or a short sale exempt transaction. 
Specifically, Nasdaq proposes to extend the operative date to September 
26, 2004, with respect to securities eligible to be quoted on the Over 
the Counter Bulletin Board (``OTCBB'') or other non-Nasdaq equity 
securities. No changes to the text of the NASD rules are required by 
this proposed rule 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 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
    On May 20, 2004, Nasdaq filed a proposed rule change that 
established NASD IM-6130 regarding members' obligations to indicate on 
their transaction reports whether a transaction was a short sale or 
short exempt.\5\ That proposed rule change was immediately effective, 
but Nasdaq delayed its operative date for sixty days, until July 26, 
2004, to allow members adequate time to comply with their obligations.
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    \5\ See Securities Exchange Act Release No. 49833 (June 8, 2004) 
69 FR 33969 (June 17, 2004).
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    Based upon feedback received in a comment letter \6\ and from the 
staff of the Division of Market Regulation of the Commission, Nasdaq 
has determined to extend the operative date for NASD IM-6130 for an 
additional sixty days with respect to certain stocks. Specifically, a 
commenter stated that it will be unable to comply with its obligations 
under NASD IM-6130 with respect to securities eligible to be quoted on 
the OTCBB or in other non-Nasdaq equity securities.\7\ In response to 
such comments, Nasdaq proposes to allow firms, with respect to OTCBB 
and non-Nasdaq equity securities, an additional 60-day period to re-
program their systems in order to comply with NASD IM-6130. Therefore, 
the operative date for compliance with NASD IM-6130 will remain July 
26, 2004 for all Nasdaq National Market, SmallCap, and exchange-listed 
securities and the operative date for OTCBB and non-Nasdaq equity 
securities will be extended to September 24, 2004.
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    \6\ Letter from R. Cromwell Coulson, Chief Executive Officer, 
Pink Sheets LLC, to Jonathan G. Katz, Secretary, Commission, dated 
June 24, 2004 (``Pink Sheets Letter'').
    \7\ Id.
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    NASD will publish a Notice to Members announcing the new operative 
date for compliance with NASD IM-6130 for OTCBB and non-Nasdaq 
securities.
2. Statutory Basis
    Nasdaq believes that the proposed rule change is consistent with 
the provisions of Section 15A of the Act,\8\ in general and with 
Section 15A(b)(6) of the Act,\9\ in particular, in that it 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 the proposed rule 
change is consistent with the Act in that it clarifies short sale 
reporting requirements and promotes compliance with and regulation of 
short sale requirements.
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    \8\ 15 U.S.C. 78o-3.
    \9\ 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.

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

    The foregoing rule change has become effective pursuant to Section 
19(b)(3)(A)(i) of the Act,\10\ and Rule 19b-4(f)(1) thereunder,\11\ 
because it constitutes a stated practice with respect

[[Page 49921]]

to the enforcement of an existing NASD rule.
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    \10\ 15 U.S.C. 78s(b)(3)(A)(i).
    \11\ 17 CFR 240.19b-4(f)(1).
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    At any time within 60 days of the filing of the proposed rule 
change, pursuant to Section 19(b)(3)(A) of the Act,\12\ the Commission 
may summarily abrogate the proposed 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.
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    \12\ 15 U.S.C. 78s(b)(3)(A).
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IV. Solicitation of Comments

    Interested persons are invited to submit written data, views, and 
arguments concerning the proposed rule change. 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-2004-117 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-2004-117. 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 Room. 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 Number 
SR-NASD-2004-117 and should be submitted on or before September 2, 
2004.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\13\
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    \13\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 04-18414 Filed 8-11-04; 8:45 am]
BILLING CODE 8010-01-P