Notice to Members 06-67

SEC Approves Amendments to NASD Rules to Align Them with Regulation NMS

Effective Date: Regulation NMS Trading Phase Date, Currently Scheduled to Occur February 5, 2007
The SEC has extended the Trading Phase Date to March 5, 2007.

On September 28, 2006, the Securities and Exchange Commission (Commission or SEC) approved amendments to NASD Rules, including the rules governing the Alternative Display Facility (ADF),1 in order to align them with Regulation NMS.2 In addition, the SEC approved amendments to rules governing quoting, trade reporting, and clearing applicable to the ADF and extended this functionality to all NMS stocks, including stocks listed on the New York Stock Exchange (NYSE), American Stock Exchange (Amex), and certain other exchanges. Furthermore, the amendments reorganize ADF trade reporting rules and make changes to ADF rules to enhance their clarity. The SEC also approved changes to the ADF Trading Center Certification Record, which became effective upon SEC approval on September 28, 2006.

The Rules, as amended (See Exhibit 5 of the rule filing), and the ADF Trading Center Certification Record (See Exhibit 3 of the rule filing) are available at The amendments to NASD Rules become effective on the Regulation NMS Trading Phase Date, currently scheduled to occur on February 5, 2007.

Questions concerning this Notice may be directed to Kathleen A. O'Mara, Associate General Counsel, Office of General Counsel, at (202) 728-8071; Peter Santori, Chief Counsel, Market Regulation Department, at (240) 386-5126; or Chris Stone, Associate Chief Counsel, Transparency Services, at (202) 728-8457.

The SEC has extended the Trading Phase Date to March 5, 2007. See the SEC release.

1 The ADF is a quotation collection, trade comparison and trade reporting facility developed by NASD in accordance with the Commission's SuperMontage Approval Order and in conjunction with NASDAQ's registration as a national securities exchange. The ADF, which currently is operating on a pilot basis, provides ADF market participants the ability to post quotations in NASDAQ securities and provides all members that participate in the ADF the ability to view quotations and report transactions in NASDAQ securities to the exclusive Securities Information Processor (SIP) for NASDAQ-listed issues for consolidation and dissemination of data to vendors and ADF market participants.

2 Securities Exchange Act Release No. 54537 (September 28, 2006), 71 FR 59173 (October 6, 2006) (File No. SR-NASD-2006-91).