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Notice

Self-Regulatory Organizations; Order Granting Approval of Proposed Rule Change and Notice of Filing and Order Granting Accelerated Approval of Amendment No. 1 Thereto by the National Association of Securities Dealers, Inc. Clarifying the Extent of Nasdaq's Authority To Halt Trading in a Security in Response to Extraordinary Market Activity

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Information about this document as published in the Federal Register.

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Start Preamble Start Printed Page 40761 July 27, 2001.

I. Introduction

On May 11, 2001, 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 clarify the extent of Nasdaq's authority to halt trading in a security in response to extraordinary market activity that Nasdaq believes may be caused by the misuse or malfunction of an electronic system that is operated by, or linked to, Nasdaq. Notice of the proposed rule change appeared in the Federal Register on May 22, 2001.[3] Nasdaq submitted an amendment to the proposed rule change on July 27, 2001.[4] The Commission received no comments on the proposed rule change. This order approves the proposed rule change, as amended, on a pilot basis through October 27, 2001.

II. Solicitation of Comments

Interested persons are invited to submit written data, views and arguments concerning the proposed Amendment No. 1, including whether the proposed rule change, 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-2001-37 and should be submitted by August 24, 2001.

III. Discussion and Commission Findings

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 national securities association [5] and, in particular, the requirements of Section 15A of the Act [6] and the rules and regulations thereunder. The Commission finds specifically that the proposed rule change is consistent with Section 15A(b)(6) of the Act [7] because it will provide Nasdaq with clearer authority to respond to and alleviate market disruptions and thereby protect investors and the public interest.

The Commission finds good cause for accelerating approval of Amendment No. 1 to the proposed rule change prior to the thirtieth day after publication in the Federal Register. The Commission notes that Amendment No. 1 makes no substantive changes, but merely requests that the Commission approve the proposed rule change on a three month pilot basis. Accordingly, the Commission finds that good cause exists, consistent with Sections 15A(b)(6) of the Act,[8] and Section 19(b) of the Act [9] to accelerate approval of Amendment No. 1 to the proposed rule change.

It is therefore ordered, pursuant to Section 19(b)(2) of the Act [10] , that the proposed rule change (SR-NASD-2001-37), as amended, be, and it hereby is, approved on a pilot basis through October 27, 2001.

Start Signature

For the Commission, by the Division of Market Regulation, pursuant to delegated authority.[11]

Margaret H. McFarland,

Deputy Secretary.

End Signature End Preamble

Footnotes

3.  See Securities Exchange Act Release No. 44307 (May 15, 2001), 65 FR 28209.

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4.  Letter from Thomas P. Moran, Associate General Counsel, Nasdaq, to Alton Harvey, Division of Market Regulation, dated July 27, 2001 (“Amendment No. 1”). Amendment No. 1 requests the Commission to approve the proposed rule change on a three month pilot basis expiring on October 27, 2001.

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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).

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[FR Doc. 01-19435 Filed 8-2-01; 8:45 am]

BILLING CODE 8010-01-M