[Federal Register Volume 69, Number 183 (Wednesday, September 22, 2004)]
[Notices]
[Pages 56811-56812]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E4-2295]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-50391; File No. SR-NASD-2004-090]


Self-Regulatory Organizations; National Association of Securities 
Dealers, Inc.; Order Approving Proposed Rule Change and Amendment No. 1 
Thereto Relating to the Nasdaq Closing Cross

September 15, 2004.
    On June 9, 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''), 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 establish auxiliary procedures for 
administering the Nasdaq Closing Cross on certain significant trading 
days. On July 23, 2004, Nasdaq amended the proposed rule change.\3\ The 
proposed rule change, as amended, was published for comment in the 
Federal Register on August 2, 2004.\4\ The Commission received no 
comments on the proposal. This order approves the proposed rule change, 
as amended.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ See letter from Mary M. Dunbar, Vice President and Deputy 
General Counsel, Nasdaq, to Katherine A. England, Assistant 
Director, Division of Market Regulation, Commission, dated July 22, 
2004 (``Amendment No. 1''). In Amendment No. 1, Nasdaq restated the 
proposed rule change in its entirety.
    \4\ See Securities Exchange Act Release No. 50087 (July 26, 
2004), 69 FR 46195.
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    The proposed rule change would establish auxiliary procedures for 
administering the Nasdaq Closing Cross on days when significant trading 
volume is expected (``significant trading days''). There are three 
components of the Nasdaq Closing Cross: (1) The creation of Market On 
Close (``MOC''), Limit on Close (``LOC'') and Imbalance Only (``IO'') 
order types; (2) the dissemination of an order imbalance indicator; and 
(3) Closing Cross processing in the Nasdaq Market Center at 4 p.m. that 
executes the maximum number of shares at a single, representative price 
that is the Nasdaq Official Closing Price. On significant trading days, 
the proposed auxiliary procedures would permit Nasdaq: (i) To set 
earlier times for the end of the order entry periods for IO, MOC, and 
LOC orders set forth in NASD Rule 4709(a); (ii) to set an earlier time 
for the order modification and cancellation periods for IO, MOC, and 
LOC orders set forth in NASD Rule 4709(a); (iii) to set an earlier time 
for the dissemination times and frequencies for the order imbalance 
indicator set forth in NASD Rule 4709(b); and (iv) to adjust the 
threshold values set forth in NASD Rule 4709(c)(2)(D) to no greater 
than twenty percent.
    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.\5\ The Commission believes that the proposed rule change 
is consistent with section 15A(b) of the Act,\6\ in general, and 
furthers the objectives of section 15A(b)(6),\7\ 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. 
The Commission believes that the proposed auxiliary procedures will 
allow Nasdaq greater flexibility in the administration of the Nasdaq 
Closing Cross and help Nasdaq maintain a fair and orderly market during 
the close on significant trading days.
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    \5\ In approving this proposed rule change, the Commission has 
considered the proposed rule's impact on efficiency, competition, 
and capital formation. 15 U.S.C. 78c(f).
    \6\ 15 U.S.C. 78o-3(b).
    \7\ 15 U.S.C. 78o-3(b)(6).
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    For the foregoing reasons, the Commission finds that the proposed 
rule change, as amended, is consistent with the requirements of the Act 
and rules and regulations thereunder applicable to a national 
securities

[[Page 56812]]

association, and, in particular, section 15A(b) of the Act.\8\
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    \8\ 15 U.S.C. 78o-3(b).
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    It is therefore ordered, pursuant to section 19(b)(2) of the 
Act,\9\ that the proposed rule change (SR-NASD-2003-090), as amended by 
Amendment No. 1, is approved.
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    \9\ 15 U.S.C. 78s(b)(2).

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\10\
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    \10\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. E4-2295 Filed 9-21-04; 8:45 am]
BILLING CODE 8010-01-P