

[Federal Register: October 5, 2005 (Volume 70, Number 192)]
[Notices]               
[Page 58248]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr05oc05-112]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-52526; File No. SR-NASD-2005-057

 
Self-Regulatory Organizations; National Association of Securities 
Dealers, Inc.; Order Approving Proposed Rule Change Relating to Summary 
Orders in the Nasdaq Market Center

September 29, 2005.
    On April 22, 2005, 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 relating to Summary Orders in the Nasdaq Market 
Center. Nasdaq has proposed to allow all participants in the Nasdaq 
Market Center to enter attributable and non-attributable Summary 
Orders, and to make Summary Orders available for transactions in 
exchange-listed securities. Currently, the use of Summary Orders is 
restricted to Nasdaq Order-Delivery ECNs for transactions in Nasdaq-
listed securities.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
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    The proposed rule change was published for comment in the Federal 
Register on August 25, 2005.\3\ The Commission received no comments on 
the proposal.
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    \3\ See Securities Exchange Act Release No. 52303 (August 18, 
2005), 70 FR 49957 (``Notice'').
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    After careful review, the Commission finds that the proposed rule 
change is consistent with the requirements of the Act and the rules and 
regulations thereunder applicable to a self-regulatory organization.\4\ 
In particular, the Commission believes that the proposed rule change is 
consistent with Section 15A(b)(6) of the Act \5\ in that it 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.
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    \4\ The Commission has considered the proposed rule's impact on 
efficiency, competition and capital formation. 15 U.S.C. 78c(f).
    \5\ 15 U.S.C. 78o-3(b)(6).
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    The Commission notes that Summary Orders permit an order entering 
party to receive a warning if the price of the order would lock or 
cross the best prices then displayed in the Nasdaq Market Center by 
rejecting the order back to such order entering party.\6\ The 
Commission notes that Summary Orders give the order entering party the 
choice of either immediately executing against the available trading 
interest or providing liquidity through a posted order. The Commission 
notes that Nasdaq has stated that the significance of having such a 
choice lies in the potential for having reduced transaction costs as a 
liquidity provider.\7\ The Commission notes that Summary Orders are 
currently only available to Nasdaq Order-Delivery ECNs. The Commission 
notes that the proposal would extend the ability to enter Summary 
Orders, on either an attributable or non-attributable basis, to all 
Nasdaq Market Center participants. The Commission also notes that the 
proposal would extend the usage of Summary Orders to transactions in 
exchange-listed securities, in addition to Nasdaq-listed securities.
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    \6\ If the order does not lock or cross the best price, the 
system retains it for normal processing.
    \7\ Nasdaq has stated that liquidity providers may, in some 
cases, receive an execution fee rebate, thus reducing their 
transaction costs. See Notice.
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    The Commission believes that the proposal, by extending the 
availability of Summary Orders to all participants in the Nasdaq Market 
Center entering into transactions in Nasdaq-listed or exchange-listed 
securities, should increase the level of control Nasdaq Market Center 
participants have over the processing of their orders and allow them 
potentially to enter into more economically efficient transactions.
    It is therefore ordered, pursuant to Section 19(b)(2) of the 
Act,\8\ that the proposed rule change (File No. SR-NASD-2005-057) be, 
and hereby is, approved.
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    \8\ 15 U.S.C. 78s(b)(2).
    \9\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\9\
Jonathan G. Katz,
Secretary.
 [FR Doc. E5-5450 Filed 10-4-05; 8:45 am]

BILLING CODE 8010-01-P
