[Federal Register Volume 69, Number 216 (Tuesday, November 9, 2004)]
[Notices]
[Pages 65003-65005]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E4-3074]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-50621; File No. SR-NASD-2004-151]


Self-Regulatory Organizations; Notice of Filing and Immediate 
Effectiveness of Proposed Rule Change by the National Association of 
Securities Dealers, Inc. Making Technical Modifications to the NASD 
Trade Reporting Rules

November 2, 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 October 12, 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. Nasdaq has 
designated this proposal as one concerned solely with the 
administration of the self-regulatory organization under Section 
19(b)(3)(A)(iii) of the Act \3\ and Rule 19b-4(f)(3) thereunder,\4\ 
which renders the rule effective upon Commission receipt of this 
filing. 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\ 7 CFR 240.19b-4.
    \3\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \4\ 17 CFR 240.19b-4(f)(3).
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    Nasdaq proposes to make technical modifications to the NASD trade 
reporting rules. These modifications do not in any way alter members' 
trade reporting obligations. The changes merely reflect technical 
language changes necessitated by the fact that SR-NASD-2004-076 (the 
``name change'' filing'') \5\ was filed without including the language 
changes previously approved as part of SR-NASD-2003-159.\6\ In 
addition, the filing makes two technical corrections to the text of 
NASD Rules 5430(b)(10) and 6620(e)(5) to correct placement errors made 
in SR-NASD-2004-076.\7\ The text of the proposed rule change is 
available at the NASD and at the Commission.
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    \5\ Securities Exchange Act Release No. 50074 (July 23, 2004), 
69 FR 45866 (July 30, 2004).
    \6\ Securities Exchange Act Release No. 49581 (April 19, 2004), 
69 FR 22578 (April 26, 2004).
    \7\ See footnote 5, supra.
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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. 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 proposes to make technical modifications to the NASD trade 
reporting rules. These modifications do not in any way alter members' 
trade reporting obligations. The changes merely reflect technical 
language changes necessitated by the fact that SR-NASD-2004-076 \8\ was 
filed without including the language previously approved as part of SR-
NASD-2003-159.\9\
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    \8\ Id.
    \9\ See footnote 6, supra.
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    On April 19, 2004, the Commission approved SR-NASD-2003-159,\10\ 
which filing created several new trade report modifiers and expanded 
the use of certain existing modifiers. For example, Nasdaq created the 
.ST modifier, which it will attach to late reports of pre-open and 
after-hours trades. The filing also proposed expanding use of the .W 
modifier to identify Stop Stock Transactions, and allowing the .PRP 
modifier to be used for exchange-listed securities. These modifications 
pertain only to reports submitted to Nasdaq's Automated Confirmation 
Transaction Service (``ACT''), and do not affect reports submitted to 
the NASD's alternative display facility. The appropriate language 
changes were included in the filing--SR-NASD-2003-159.\11\
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    \10\ Id.
    \11\ Id.
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    Subsequent to the Commission approving SR-NASD-2003-159, Nasdaq 
filed, as effective upon filing, SR-NASD-2004-076,\12\ re-naming 
certain Nasdaq systems. For example, Nasdaq's trade reporting system 
and its execution system were known as ACT and SuperMontage, 
respectively. SR-NASD-2004-076 \13\ eliminated the individual names of 
these systems, which are referred to collectively now as the Nasdaq 
Market Center. However, Nasdaq deliberately did not incorporate in the 
name-change filing the rule language changes approved in SR-NASD-2003-
159 \14\ because, at that time, there were some questions as to when, 
or if, some of the new modifiers would be implemented.
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    \12\ See footnote 5, supra.
    \13\ Id.
    \14\ See footnote 6, supra.
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    The .ST modifier, while approved by the Commission, could not be 
implemented until the respective participants of the Nasdaq UTP Plan 
and Consolidated Tape Association Plan (``CTA Plan'') approved the 
changes, which approval had not been obtained when the name-change 
filing was submitted. Nasdaq believed incorporating the rule language 
changes approved in SR-NASD-2003-159 \15\ in the name-change filing 
would create confusion because the language was not effective.
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    \15\ Id.
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    Since the filing of SR-NASD-2004-076,\16\ Nasdaq has obtained 
approval from the Nasdaq UTP Plan and CTA Plan participants to 
implement the .ST modifier and other modifiers approved in SR-NASD-
2003-159.\17\ Because of these developments, Nasdaq believes it is 
appropriate to include the language associated with these modifiers in 
the NASD rules. However, given that implementation of some of the 
changes will be delayed for an additional period of time, Nasdaq is 
adding footnotes after affected text to indicate that the rule

[[Page 65004]]

language modifications will become effective at a later date. These 
footnotes were not included in SR-NASD-2003-159,\18\ and thus are new 
language being added by the current filing.
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    \16\ See footnote 5, supra.
    \17\ See footnote 6, supra.
    \18\ Id.
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    Nasdaq also is adding new language to avoid confusion about when 
the time of execution must be included on all reports submitted to the 
Nasdaq Market Center. In SR-NASD-2003-159,\19\ the Commission approved 
Nasdaq's proposal to require the time of execution on all reports 
submitted to the Nasdaq Market Center, but Nasdaq also requested that 
the effective date of this obligation be delayed for one year after 
Commission approval. The filing contained the changes to the NASD rules 
that would be appropriate when the obligation is effective. For 
example, Nasdaq proposed removing language that indicated the time of 
execution is necessary only when a trade is reported late, and added 
language indicating that the time of execution is necessary on all 
reports. Including these language changes in the name-change filing 
also would have created confusion because the actual effective date of 
the obligation is not until April 25, 2005. To prevent such confusion, 
Nasdaq is adding interpretive material indicating that members will be 
required to provide the time of execution on all trade reports 
beginning on April 25, 2005, and that the necessary language changes 
will be made to the NASD rules at a later time.
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    \19\ Id.
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    Finally, Nasdaq is making non-substantive changes to NASD Rules 
5430(b)(10) and 6620(e)(5) to correct text placement errors made in SR-
NASD-2204-076.\20\ In particular, the language of section (10) of NASD 
Rule 5430(b) will be moved in its entirety to its correct location 
under subparagraph (a) of that same rule in conformity with SR-NASD-
2003-154,\21\ the rule filing that created it. For NASD Rule 6620, 
Nasdaq proposes to remove the incorrectly placed language of 
subparagraph (e)(5) that duplicates the correct rule language already 
in place in subparagraph (b)(5) of that same rule.
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    \20\ See footnote 5, supra.
    \21\ 21 Securities Exchange Act Release No. 48823 (November 21, 
2003), 68 FR 67249 (December 1, 2003).
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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,\22\ in general, and with 
Section 15A(b)(6) of the Act,\23\ in particular, in that it is designed 
to prevent fraudulent and manipulative acts and practices, to foster 
cooperation and coordination with persons engaged in regulating, 
clearing, settling, processing information with respect to, and 
facilitating transactions in securities, and to protect investors and 
the public interest. Nasdaq believes the proposal is consistent with 
these obligations because it consolidates the rule language changes of 
two previously approved NASD filings and clarifies the effective date 
of certain of the proposals.
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    \22\ 15 U.S.C. 78o-3.
    \23\ 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

    Nasdaq neither solicited nor received written comments with respect 
to the proposed rule change.

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

    The foregoing rule change has become effective upon filing pursuant 
to Section 19(b)(3)(A)(iii) of the Act,\24\ and Rule 19b-4(f)(3) 
thereunder,\25\ in that it is concerned solely with the administration 
of the self-regulatory organization.
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    \24\ 15 U.S.C. 78s (b)(3)(A)(iii).
    \25\ 17 CFR 240.19b-4(f)(3).
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    At any time within 60 days of the filing of the 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.

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-2004-151 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-2004-151. 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 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-2004-151 and should be submitted on or before November 30, 2004.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\26\
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    \26\ 17 CFR 200.30-3(a)(12).
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Jill M. Peterson,
Assistant Secretary.
 [FR Doc. E4-3074 Filed 11-8-04; 8:45 am]
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