[Federal Register Volume 67, Number 148 (Thursday, August 1, 2002)]
[Notices]
[Pages 49972-49973]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 02-19456]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-46260; File No. SR-NASD-2002-67]
Self-Regulatory Organizations; Notice of Filing and Immediate
Effectiveness of Proposed Rule Change and Amendment Nos. 1 and 2
Thereto by the National Association of Securities Dealers, Inc.
Relating to the Elimination of References to the Term ``Agency Quote''
From the Rules of the Nasdaq National Market Execution System and the
Nasdaq Order Display Facility
July 25, 2002.
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 28, 2002, the National Association of Securities Dealers, Inc.
(''NASD''), through its subsidiary, the Nasdaq Stock Market, Inc.
(``Nasdaq''), submitted to 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. On July 12,
2002, Nasdaq filed Amendment No. 1 to the proposal.\3\ On July 24,
2002, Nasdaq filed Amendment No. 2 to the proposal.\4\ 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\ See letter from Thomas P. Moran, Associate General Counsel,
Nasdaq, to Katherine A. England, Assistant Director, Division of
Market Regulation (``Division''), Commission, dated July 11, 2002
(``Amendment No. 1''). In Amendment No. 1, Nasdaq made corrections
to its proposed rule text which replaced the rule text in the
original filing entirely and added a footnote in its discussion to
clarify that this filing would remove language from Nasdaq rules
referring to the ``agency quote'' concept that contemplated allowing
market participants to represent agency trading interest via a
quotation separate from that used for their proprietary trading. The
rules retain, where appropriate, references to the term ``agency''
when used as a description of the capacity in which a market
participant is acting on behalf of a customer order.
\4\ See letter from Thomas P. Moran, Associate General Counsel,
Nasdaq, to Katherine A. England, Assistant Director, Division,
Commission, dated July 24, 2002 (``Amendment No. 2''). In Amendment
No. 2, Nasdaq made corrections to its proposed rule text in NASD
Rule 4701 and 4710. For purposes of calculating the 60-day
abrogation period and the 30-day operative date, the Commission
considers the period to have commenced on July 24, 2002, the date
Nasdaq filed Amendment No. 2.
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I. Self-Regulatory Organization's Statement of the Terms of
Substance of the Proposed Rule Change
Nasdaq proposes to eliminate all references to the term ``agency
quote'' that are contained in the Nasdaq National Market Execution
System and Nasdaq Order Display Facility (collectively
``SuperMontage''). The text of the proposed rule change, as amended, is
available at the Office of the Secretary, Nasdaq, and at the
Commission.
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 proposing to eliminate all references to the term
``agency quote'' that are contained in the SuperMontage. On February 3,
1999, Nasdaq filed SR-NASD-99-09, in which Nasdaq proposed to implement
a system to allow market makers to display customer limit orders under
a separate market participant identifier.\5\ Colloquially known as the
Agency Quote proposal, the Commission published the proposal for
comment on March 2, 1999.
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\5\ See Securities Exchange Act Release No. 41128 (March 2,
1999), 64 FR 12198 (March 11, 1999).
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Separately, on October 1, 1999, Nasdaq filed to amend the Nasdaq
National Market Execution System rules
[[Page 49973]]
to establish the SuperMontage.\6\ The proposed SuperMontage rules
contained reference to the concept of Agency Quote, as rule filing SR-
NASD-99-09 was pending before the Commission at the time Nasdaq filed
the SuperMontage proposal. Among other things, the SuperMontage
proposed to establish a mechanism for market participants to display
customer limit orders under a separate Nasdaq market maker ID
(``MMID''). On January 19, 2001, the Commission approved the
SuperMontage proposal, and the related rules that contained references
to the still-pending Agency Quote proposal.\7\ On December 31, 2001,
Nasdaq withdrew the Agency Quote proposal as the SuperMontage provided
equivalent functionality as an Agency Quote.\8\ The purpose of this
rule filing is to eliminate all references to the concept of ``Agency
Quote'' in the approved SuperMontage rules.
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\6\ See Securities Exchange Act Release No. 42166 (November 22,
1999), 64 FR 68125 (December 6, 1999).
\7\ See Securities Exchange Act Release No. 43863 (January 19,
2001), 66 FR 8020 (January 26, 2001).
\8\ Nasdaq allows for market makers to submit multiple quotes/
orders and, therefore, a separate agency quote is unnecessary.
Telephone conversation between Thomas P. Moran, Associate General
Counsel, Nasdaq, and Cyndi Nguyen, Attorney, Division, Commission,
on July 19, 2002
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2. Statutory Basis
Nasdaq believes the proposed rule change, as amended, is consistent
with the provisions of 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 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.
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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, as amended,
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
Nasdaq neither solicited nor received any written comments with
respect to the proposed rule change, as amended.
III. Date of Effectiveness of the Proposed Rule Change and Timing
for Commission Action
The foregoing proposed rule change, as amended, (1) does not
significantly affect the protection of investors or the public
interest; (2) does not impose any significant burden on competition;
and (3) by its terms, does not become operative until 30 days from the
date on which it was filed, or such shorter time as the Commission may
designate. The proposed rule change, as amended, has therefore become
effective pursuant to Section 19(b)(3)(A) of the Act \11\ and Rule 19b-
4(f)(6) thereunder.\12\ At any time within 60 days of the filing of
this proposed rule change, as amended, 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).
\12\ 17 CFR 240.19b-4(f)(6). Nasdaq has requested and the
Commission has waived the usual five-day pre-filing notice
requirement.
\13\ 17 CFR 240.19b-4(f)(6).
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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 proposal, as
amended, is consistent with the Act. Persons making written submissions
should file six copies thereof with the Secretary, Securities and
Exchange Commission, 450 Fifth Street, NW, Washington, DC 20549-0609.
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 will also be
available for inspection and copying at the principal office of the
NASD. All submissions should refer to file number SR-NASD-2002-67 and
should be submitted by August 22, 2002.
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\14\ 17 CFR 200.30-3(a)(12).
For the Commission, by the Division of Market Regulation,
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pursuant to delegated authority.\14\
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 02-19456 Filed 7-31-02; 8:45 am]
BILLING CODE 8010-01-P