Proposed Rule Change to Amend Rule 6130C of the NASD/NSX Trade Reporting Facility Rules to Require Use of a Special Indicator Denoting That Certain Transactions are Reported in Accordance with Section 3 of Schedule A to the NASD By-Laws
NASD is filing with the Securities and Exchange Commission ("SEC" or "Commission") a proposed rule change to adopt new paragraph (f) of Rule 6130C (Trade Report Input) to require members reporting odd-lot transactions, sales where the buyer and seller have agreed to a price substantially unrelated to the current market for the security (also referred to as "away from the market sales"), and purchases or sales of securities effected upon the exercise of an over-the-counter ("OTC") option to the NASD/NSX Trade Reporting Facility (the "NASD/NSX TRF") to use a special indicator denoting that such transactions are reported in accordance with Section 3 of Schedule A to the NASD By-Laws. Because the systems changes required to enable the NASD/NSX TRF to support the proposed new trade report modifiers have not been completed, proposed Rule 6130C(f) specifies that prior to December 15, 2006, members cannot use the NASD/NSX TRF to report these transactions to NASD and must use another electronic mechanism to satisfy their reporting obligations. The text of proposed Rule 6130C(f) is substantially similar to paragraph (g) of Rule 6130, which was approved by the Commission on June 12, 2006 and will become effective on December 1, 2006. In this proposed rule change, NASD also is proposing technical conforming changes to Rule 6130(g).