[Federal Register Volume 81, Number 113 (Monday, June 13, 2016)]
[Rules and Regulations]
[Pages 38082-38084]
[FR Doc No: 2016-13864]

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DEPARTMENT OF HOMELAND SECURITY

Coast Guard

33 CFR Part 165

[Docket Number USCG-2016-0424]
RIN 1625-AA00

Safety Zone; Ohio River Mile 25.2 to Mile 25.6, Beaver, PA

AGENCY: Coast Guard, DHS.

ACTION: Temporary final rule.

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SUMMARY: The Coast Guard is establishing a temporary safety zone for
navigable waters of the Ohio River from mile 25.2-25.6. The safety zone
is needed to protect personnel, vessels, and the marine environment
from potential hazards created from a barge-based fireworks display.
Entry of vessels or persons into this zone is prohibited unless
specifically authorized by the Captain of the Port Pittsburgh.

DATES: This rule is effective on July 2, 2016 from 8:30 p.m. until
10:30 p.m.

ADDRESSES: To view documents mentioned in this preamble as being
available in the docket, go to http://www.regulations.gov, type USCG-
2016-0424 in the ``SEARCH'' box and click ``SEARCH.'' Click on Open
Docket Folder on the line associated with this rule.

FOR FURTHER INFORMATION CONTACT: If you have questions on this rule,
call or email MST1 Jennifer Haggins, Marine Safety Unit Pittsburgh,
U.S. Coast Guard, at telephone<PHONE_NUMBER>, email
<EMAIL_ADDRESS>
SUPPLEMENTARY INFORMATION:

I. Table of Abbreviations

CFR Code of Federal Regulations
DHS Department of Homeland Security
FR Federal Register
NPRM Notice of proposed rulemaking
Sec.  Section
U.S.C. United States Code

II. Background Information and Regulatory History

    The Coast Guard is issuing this temporary rule without prior notice
and opportunity to comment pursuant to authority under section 4(a) of
the

Administrative Procedure Act (APA) (5 U.S.C. 553(b)). This provision
authorizes an agency to issue a rule without prior notice and
opportunity to comment when the agency for good cause finds that those
procedures are ``impracticable, unnecessary, or contrary to the public
interest.'' Under 5 U.S.C. 553(b)(B), the Coast Guard finds that good
cause exists for not publishing a notice of proposed rulemaking (NPRM)
with respect to this rule because the Coast Guard received notice on
April 28, 2016 that this fireworks display would take place. After
receiving and fully reviewing the event information, circumstances, and
exact location, the Coast Guard determined that a safety zone is
necessary to protect personnel, vessels, and the marine environment
from potential hazards created from a barge-based fireworks display on
the navigable waterway. It would be impracticable to complete the full
NPRM process for this safety zone because it needs to be established by
July 2, 2016. The fireworks display has been advertised and the local
community has prepared for the event.

III. Legal Authority and Need for Rule

    The Coast Guard is issuing this rule under authority in 33 U.S.C.
1231. The Captain of the Port Pittsburgh (COTP) has determined that a
safety zone is needed on July 2, 2016. This rule is needed to protect
personnel, vessels, and the marine environment from potential hazards
created from a barge-based fireworks display.

IV. Discussion of the Rule

    This rule establishes a safety zone on July 2, 2016 from 8:30 p.m.
until 10:30 p.m. The safety zone will cover all navigable waters on the
Ohio River from mile 25.2 to mile 25.6. The duration of the safety zone
is intended to protect personnel, vessels, and the marine environment
from potential hazards created from a barge-based firework display. No
vessel or person will be permitted to enter the safety zone without
obtaining permission from the COTP or a designated representative.

V. Regulatory Analyses

    We developed this rule after considering numerous statutes and
Executive orders related to rulemaking. Below we summarize our analyses
based on a number of these statutes and Executive orders, and we
discuss First Amendment rights of protestors.

A. Regulatory Planning and Review

    Executive Orders 12866 and 13563 direct agencies to assess the
costs and benefits of available regulatory alternatives and, if
regulation is necessary, to select regulatory approaches that maximize
net benefits. Executive Order 13563 emphasizes the importance of
quantifying both costs and benefits, of reducing costs, of harmonizing
rules, and of promoting flexibility. This rule has not been designated
a ``significant regulatory action,'' under Executive Order 12866.
Accordingly, it has not been reviewed by the Office of Management and
Budget.
    This regulatory action determination is based on the size,
location, and duration of the safety zone. This safety zone impacts a
small portion of the waterway and for a limited duration of two hours.
Vessel traffic will be informed about the safety zone through local
notices to mariners. Moreover, the Coast Guard will issue broadcast
notices to mariners via VHF-FM marine channel 16 about the zone and the
rule allows vessels to seek permission to transit the zone.

B. Impact on Small Entities

    The Regulatory Flexibility Act of 1980, 5 U.S.C. 601-612, as
amended, requires Federal agencies to consider the potential impact of
regulations on small entities during rulemaking. The term ``small
entities'' comprises small businesses, not-for-profit organizations
that are independently owned and operated and are not dominant in their
fields, and governmental jurisdictions with populations of less than
50,000. The Coast Guard certifies under 5 U.S.C. 605(b) that this rule
will not have a significant economic impact on a substantial number of
small entities.
    While some owners or operators of vessels intending to transit the
safety zone may be small entities, for the reasons stated in section
V.A above, this rule will not have a significant economic impact on any
vessel owner or operator.
    Under section 213(a) of the Small Business Regulatory Enforcement
Fairness Act of 1996 (Pub. L. 104-121), we want to assist small
entities in understanding this rule. If the rule would affect your
small business, organization, or governmental jurisdiction and you have
questions concerning its provisions or options for compliance, please
contact the person listed in the FOR FURTHER INFORMATION CONTACT
section.
    Small businesses may send comments on the actions of Federal
employees who enforce, or otherwise determine compliance with, Federal
regulations to the Small Business and Agriculture Regulatory
Enforcement Ombudsman and the Regional Small Business Regulatory
Fairness Boards. The Ombudsman evaluates these actions annually and
rates each agency's responsiveness to small business. If you wish to
comment on actions by employees of the Coast Guard, call 1-888-REG-FAIR
(1-888-734-3247). The Coast Guard will not retaliate against small
entities that question or complain about this rule or any policy or
action of the Coast Guard.

C. Collection of Information

    This rule will not call for a new collection of information under
the Paperwork Reduction Act of 1995 (44 U.S.C. 3501-3520).

D. Federalism and Indian Tribal Governments

    A rule has implications for federalism under Executive Order 13132,
Federalism, if it has a substantial direct effect on the States, on the
relationship between the national government and the States, or on the
distribution of power and responsibilities among the various levels of
government. We have analyzed this rule under that Order and have
determined that it is consistent with the fundamental federalism
principles and preemption requirements described in Executive Order
13132.
    Also, this rule does not have tribal implications under Executive
Order 13175, Consultation and Coordination with Indian Tribal
Governments, because it does not have a substantial direct effect on
one or more Indian tribes, on the relationship between the Federal
Government and Indian tribes, or on the distribution of power and
responsibilities between the Federal Government and Indian tribes. If
you believe this rule has implications for federalism or Indian tribes,
please contact the person listed in the FOR FURTHER INFORMATION CONTACT
section above.

E. Unfunded Mandates Reform Act

    The Unfunded Mandates Reform Act of 1995 (2 U.S.C. 1531-1538)
requires Federal agencies to assess the effects of their discretionary
regulatory actions. In particular, the Act addresses actions that may
result in the expenditure by a State, local, or tribal government, in
the aggregate, or by the private sector of $100,000,000 (adjusted for
inflation) or more in any one year. Though this rule will not result in
such expenditure, we do discuss the effects of this rule elsewhere in
this preamble.

F. Environment

    We have analyzed this rule under Department of Homeland Security
Management Directive 023-01 and

Commandant Instruction M16475.lD, which guide the Coast Guard in
complying with the National Environmental Policy Act of 1969 (42 U.S.C.
4321-4370f), and have determined that this action is one of a category
of actions that do not individually or cumulatively have a significant
effect on the human environment. This rule involves a safety zone
lasting two hours that will prohibit entry on the Ohio River between
mile 25.2 and mile 25.6, during the barge-based firework event. It is
categorically excluded from further review under paragraph 34 (g) of
Figure 2-1 of the Commandant Instruction. An environmental analysis
checklist supporting this determination and a Categorical Exclusion
Determination are available in the docket where indicated under
ADDRESSES. We seek any comments or information that may lead to the
discovery of a significant environmental impact from this rule.

G. Protest Activities

    The Coast Guard respects the First Amendment rights of protesters.
Protesters are asked to contact the person listed in the FOR FURTHER
INFORMATION CONTACT section to coordinate protest activities so that
your message can be received without jeopardizing the safety or
security of people, places or vessels.

List of Subjects in 33 CFR Part 165

    Marine safety, Navigation (water), Reporting and recordkeeping
requirements, Security measures, Waterways.

    For the reasons discussed in the preamble, the Coast Guard amends
33 CFR part 165 as follows:

PART 165--REGULATED NAVIGATION AREAS AND LIMITED ACCESS AREAS

0
1. The authority citation for part 165 continues to read as follows:

    Authority: 33 U.S.C. 1231; 50 U.S.C. 191; 33 CFR 1.05-1, 6.04-1,
6.04-6, and 160.5; Department of Homeland Security Delegation No.
0170.1.

0
2. Add Sec.  165.T08-0424 to read as follows:

Sec.  165.T08-0424  Safety Zone, Ohio River, Beaver, PA.

    (a) Location. The following area is a safety zone: Ohio River mile
25.2 to mile 25.6.
    (b) Enforcement. This rule will be enforced, from 8:30 p.m. until
10:30 p.m. on July 2, 2016.
    (c) Regulations. (1) In accordance with the general regulations in
Sec.  165.23 of this part, entry into this zone is prohibited unless
authorized by the Captain of the Port Pittsburgh or a designated
representative.
    (2) Persons or vessels requiring entry into or passage through the
zone must request permission from the Captain of the Port Pittsburgh or
a designated representative. The Captain of the Pittsburgh
representative may be contacted at<PHONE_NUMBER>.
    (3) All persons and vessels shall comply with the instructions of
the Captain of the Port Pittsburgh or their designated representative.
Designated Captain of the Port representatives include United States
Coast Guard commissioned, warrant, and petty officers.
    (d) Information broadcasts. The Captain of the Port Pittsburgh or a
designated representative will inform the public through broadcast
notices to mariners of the enforcement period for the safety zone as
well as any changes in the planned schedule.

L. Mcclain, Jr.,
Commander, U.S. Coast Guard, Captain of the Port Pittsburgh.
[FR Doc. 2016-13864 Filed 6-10-16; 8:45 am]
 BILLING CODE 9110-04-P


Comment Info: =================

General Comment:Supplemental Materials Document Title:  Paperwork Reduction Act Submission for 1625-0009 24 pages


[Federal Register: November 7, 2005 (Volume 70, Number 214)]
[Notices]
[Page 67513-67523]
[DOCID:fr07no05-112]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-52723; File No. SR-NASD-2005-128]

Self-Regulatory Organizations; National Association of Securities
Dealers, Inc.; Notice of Filing of Proposed Rule Change To Establish
Rules Governing the Operation of the INET System

November 2, 2005.
    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 November 1, 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'') the proposed rule change as described in Items I, II,
and III below, which Items have been prepared by Nasdaq. The Commission
is publishing this notice to solicit comments on the proposed rule
change from interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of the
Substance of the Proposed Rule Change

    Nasdaq intends to purchase INET ATS, Inc. (``INET''), operator of
the INET ECN (the ``INET System'' or ``System''). Nasdaq proposes to
establish rules governing the operation of the INET System and fees for
System services. Below is the text of the proposed rule change.
Proposed new language is italicized.
* * * * *

4950. INET SYSTEM

4951. Definitions

    Unless stated otherwise, the terms described below shall have the
following meaning:
    (a) The terms ``The INET ECN System,'' ``INET System,'' or
``System,'' shall mean the automated system owned and operated by INET,
which is owned and operated by The Nasdaq Stock Market, Inc., which
enables Participants to execute transactions in System securities, to
have reports of the transactions automatically forwarded to the
appropriate National Market Trade Reporting System for dissemination to
the public and the industry, to ``lock in'' these trades by sending
both sides to the applicable clearing corporation(s) designated by the
System Participant(s) for clearance and settlement, and to provide
System Participants with sufficient monitoring and updating capability
to participate in an automated execution environment.
    (b) The term ``System Securities'' shall mean Nasdaq Market Center
eligible securities as that term is defined in NASD Rule 4701(s) and
ITS Securities securities as defined in NASD Rule 5210(c).
    (c) The term ``Participant'' shall mean an entity that fulfills the
obligations contained in NASD Rule 4952 regarding participation in the
System.
    (d) The term ``Nasdaq Market Center'' shall mean the automated
system owned and operated by The Nasdaq Stock Market, Inc. pursuant to
NASD Rule 4700 Series.

    (e) The term ``System Book Feed'' shall mean a data feed for System
eligible securities.
    (f) The term ``normal unit of trading'' shall mean one hundred
(100) shares.
    (g) The term ``mixed lot'' shall mean an order that is for more
than a normal unit of trading but not a multiple thereof.
    (h) The term ``odd-lot'' shall mean an order that is for less than
a normal unit of trading.
    (i) The term ``Immediate or Cancel'' or ``IOC'' shall mean, for
limit orders so designated, that if after entry into the System the
order (or a portion thereof) is not marketable, the order (or
unexecuted portion thereof) shall be canceled and returned to the
entering Participant.
    (j) The term ``Market Day'' or ``Limit Day'' shall mean, for orders
so designated, that if after entry into the System, the order is not
fully executed, the order (or the unexecuted portion thereof) shall
remain available for potential display/execution until 4:00 p.m.
Eastern Time on the day it was submitted unless cancelled before then
by the entering party.
    (k) The term ``Extended Day'' shall mean, for orders so designated,
that if after entry into the System, the order is not fully executed,
the order (or unexecuted portion thereof) shall remain available for
potential display and/or execution until 8:00 p.m. Eastern Time.
    (l) The term ``Expire Time'' shall mean, for orders so designated,
the time until which the System will hold the order for potential
execution.
    (m) The term ``Limit Order'' shall mean an order to buy or sell a
stock at a specified price or better.
    (n) The term ``Market Order'' shall mean an un-priced order to buy
or sell a stock at the market's current best price. A Market Order may
have a limit price beyond which the order shall not be executed.
    (o) The term ``Discretionary Order'' shall mean an order that has
both a displayed price and size, as well as a non-displayed
discretionary price range, at which the entering party, if necessary,
is also willing to buy or sell. The non-displayed trading interest is
not entered into the System book but is converted to an IOC order equal
in size to the displayed size and priced at the most aggressive price
in the discretionary price range when displayed shares become available
or an execution takes place at any price within the discretionary price
range. The generation of this IOC order is accompanied by the
cancellation of the displayed portion of the Discretionary Order. If
more than one Discretionary Order is available for conversion to an IOC
order, the system will convert all such orders at the same time and
priority will be given to the first IOC order(s) that reaches the
trading interest on the other side of the market. If an IOC order is
not executed in full, the unexecuted portion of the order is
automatically re-posted and displayed in the System book with a new
time stamp, its original displayed price, and its non-displayed
discretionary price range.
    (p) The term ``Reserve Order'' shall mean a limit order that has
both a round-lot displayed size as well an additional non-displayed
share amount. Both the displayed and non-displayed portions of the
Reserve Order are available for potential execution against incoming
orders. If the round-lot displayed portion of a Reserve Order is
reduced to less than 100 shares, the System will replenish the display
portion from reserve up to at least a single round-lot amount. A new
timestamp is created for the replenished portion of the order each time
it is replenished from reserve, while the reserve portion retains the
time-stamp of its original entry.
    (q) The term ``Pegged Order'' shall mean, for orders so designated,
an order that, after entry, has its price automatically adjusted by the
System in response to changes in the national best bid or offer
(``NBBO''), as appropriate. A Pegged Order can specify that its price
will equal the inside quote on the same side of the NBBO (``Primary
Peg'') or the opposite side of the NBBO (``Market Peg''). In addition,
Pegged Orders may also establish their pricing relative to the NBBO by
the selection of one or more $0.01 offset amounts that will adjust the
price of the order by the offset amount selected. A new timestamp is
created for the order each time it is automatically adjusted.
    (r) The term ``Displayed Order'' shall mean, for limit orders so
designated, an order that is displayed in the System, in whole or in
part, and is available for potential execution against all incoming
orders until executed in full or cancelled.
    (s) The term ``Non-Displayed Order'' shall mean, for limit orders
so designated, an order that is not displayed in the System, but
nevertheless remains available for potential execution against all
incoming orders until executed in full or cancelled.
    (t) The term ``Minimum Quantity Order'' shall mean, for orders so
designated, an order that requires that a specified minimum quantity of
shares be obtained, or the order is cancelled. Minimum Quantity Orders
may only be entered with a time-in-force designation of Immediate or
Cancel.

4952. System Participant Registration

    (a) Participation in INET requires current registration with the
System and is conditioned upon the Participant's initial and continuing
compliance with the following requirements:
    (1) execution of a System Subscriber Agreement;
    (2) satisfaction of INET new account policy and procedure
requirements;
    (3) membership in, or an access arrangement with a participant of,
a clearing agency registered with the Commission that maintains
facilities through which System compared trades may be settled;
    (4) acceptance and settlement of each System trade that the System
identifies as having been effected by such Participant, or if
settlement is to be made through another clearing member, guarantee of
the acceptance and settlement of such identified System trade by the
clearing member on the regularly scheduled settlement date;
    (5) compliance with all applicable rules and operating procedures
of the Association and the Commission.
    (6) In addition to the above, on or before 60 days after the System
becomes a facility of Nasdaq, all System Participants shall be members
of the Association.

4953. Order Entry Parameters

(a) INET System Orders

    (1) General--An INET System order is an order that is entered into
the System for display and/or execution as appropriate. Such orders are
executable against marketable contra-side orders in the System as set
forth in NASD Rule 4955.
    (A) All INET System Orders shall indicate whether they are a Market
Order or Limit Order and shall indicate if they are a buy, short sale,
short-sale exempt, or long sale. INET Systems Orders can be designated
as Immediate or Cancel (``IOC''), Market Day or Limit Day (``DAY''),
Extended Day (``XDAY''), or Expire Time (``ExT'').
    (B) An INET System order may also be designated as a Reserve Order,
a Pegged Order, a Non-Displayed Order, a Minimum Quantity Order, or a
Discretionary Order.
    (2) Short Sale Compliance--INET System orders to sell short shall
not be executed if the execution of such an order would violate
Regulation SHO under the Exchange Act, NASD Rule 3350 or, for routed
orders, the rules of

the applicable self-regulatory organization governing short selling or,
in the case of ITS Securities, Rule 10a-1 under the Exchange Act.
    (3) Routing--All INET System orders entered by participants
directing or permitting routing to other market centers shall be routed
for potential display and/or execution as set forth in NASD Rule 4956.

4954. Entry and Display of Orders

    (a) Entry of Orders--Participants can enter orders into the System,
subject to the following requirements and conditions:
    (1) Participants shall be permitted to transmit to the System
multiple orders at a single as well as multiple price levels. Each
order shall indicate the amount of reserve size (if applicable).
    (2) The System shall time-stamp an order which shall determine the
time ranking of the order for purposes of processing the order.
    (3) Orders can be entered into the System (or previously entered
orders cancelled) between the hours 7 a.m. to 8 p.m. Eastern Time.
    (A) Exception: Orders entered prior to 9:30 a.m. Eastern Time, or
after 4 p.m. Eastern Time, seeking to be routed to either the New York
or American Stock Exchanges shall be rejected.
    (B) Exception: Pegged and Market Orders may only be entered between
9:30 a.m. and 4 p.m. Eastern Time.
    (b) Display of Orders-- The System will display orders submitted to
the System as follows:
    (1) System Book Feed--orders resident in the System will be
displayed via the System Book Feed.
    (2) Best Priced Order Display--For each System Security, the best
priced order to buy and sell resident in the System will be displayed
via the National Stock Exchange. The System's display of its orders in
the National Stock Exchange shall not continue beyond September 30,
2006.
    (3) Exceptions--The following exceptions shall apply to the display
parameters set forth in paragraphs (1) and (2) above:
    (A) Odd-lots, Mixed Lots, and Rounding--The System Book Feed shall
be capable of displaying trading interest in odd-lot, round lot and
mixed-lot amounts and, for orders price under $1.00, in sub-penny
increments.
    (B) Minimum Increments ``The minimum trading increments for the
System shall be set forth in NASD Rule 4962.
    (C) Reserve Size--Reserve Size shall not be displayed in the
System, but shall be accessible as described in NASD Rule 4955.
    (D) Discretionary Orders--The discretionary portion of
Discretionary Orders shall be made available for execution only upon
the appearance of contra-side marketable trading interest, and shall be
executed pursuant to NASD Rule 4955 and NASD Rule 4951(o).
    (E) Non-Displayed Orders--Non-Displayed Orders are not displayed in
the System, and have lower priority within the System than an equally
priced Displayed Order, regardless of time stamp, and shall be executed
pursuant to NASD Rule 4955.
    (F) Trade-Through Compliance and Locked or Crossed Markets--If, at
the time of entry, a Displayed Order in an exchange-listed security
that the entering party has elected not to make eligible for routing
would lock the market, it will be converted by the System into a Non-
Displayed Order. If, at the time of entry, a similar Displayed Order
would cross the market or would cause a trade-through violation, the
order will be converted by the System to a Non-Displayed Order and re-
priced to the current low offer (for bids) or to the current best bid
(for offers). Such Non-Displayed Orders will be cancelled by the System
if the market moves through the price of the order after the order is
accepted.

4955. Order Processing

(a) INET Book Order Process

    INET System orders shall be executed through the INET Book Order
Process as set forth below:
    (1) Default Execution Algorithm--Price/Time--The System shall
execute equally priced or better priced trading interest within the
System in price/time priority in the following order:
    (A) Displayed Orders;
    (B) Non-Displayed Orders, the reserve portion of Reserve Orders, in
price/time priority among such interest;
    (C) The discretionary portion of Discretionary Orders as set forth
in NASD Rule 4951(o).
    (2) Decrementation--Upon execution, an order shall be reduced by an
amount equal to the size of that execution.
    (3) Price Improvement--any potential price improvement resulting
from an execution in the System shall accrue to the taker of liquidity.
Example:
    Buy order resides on INET book at 10.
    Incoming order to sell priced at 9 comes into INET System
    Order executes at 10 (seller get $1 price improvement)

4956. Routing

(a) INET Order Routing Process

    (1) The INET Order Routing Process shall be available to
Participants from 7 a.m. to 8 p.m. Eastern Time, and shall route orders
as described below:

(A) Exchange-Listed Routing Options

    The System provides five routing options for orders in exchange-
listed securities. Of these five, only two--DOT Immediate and DOT
Alternative--are available for orders ultimately sought to be directed
to either the New York Stock Exchange (``NYSE'') or the American Stock
Exchange (``AMEX''). The System also allows firms to send individual
orders to the NYSE Direct + System, and to elect to have orders not be
sent to the AMEX. The five System routing options for NYSE and/or Amex
listed orders are:
    (i) DOT Immediate (``DOTI'')--under this option, after checking the
INET System for available shares, orders are sent directly to the NYSE
or the AMEX as appropriate. When checking the INET book, the System
will seek to execute at the better price of either the limit price
specified in the order, or the best price displayed at that time at the
NYSE. If no liquidity is available in the INET System, the order will
be routed directly to the NYSE or AMEX at the limit order price. This
option may only be used for orders with time-in-force parameters of
either DAY, IOC, or market-on-open/close. Only limit orders may be used
with this option.
    (ii) DOT Alternative (``DOTA'')--under this option, after checking
the INET System for available shares, orders are sent to other
available market centers for potential execution before the destination
exchange. Any un-executed portion will thereafter be sent to the NYSE
or AMEX, as appropriate, at the order's original limit order price.
This option may only be used for orders with time-in-force parameters
of either DAY, IOC, or market-on-open/close. Only limit orders may be
used with this strategy.
    (iii) Reactive Electronic Only (``STGY'')--under this option, after
checking the INET System for available shares, orders are sent to other
available market centers for potential execution. When checking the
INET book, the System will seek to execute at the price it would send
the order to a non-INET destination market center. If shares remain un-
executed after routing, they are posted on the INET book and are not
sent to the NYSE or AMEX. Once on the INET book, should the order
subsequently be locked or crossed by another accessible market center,
the System shall route the order to the

locking or crossing market center for potential execution. With the
exception of the Minimum Quantity order type, all time-in-force
parameters and order types may be used in conjunction with this routing
option. This process is one of the routing strategies allowed by the
System for all securities.
    (iv) Electronic Only Scan (``SCAN'')--under this option, after
checking the INET System for available shares, orders are sent to other
available market centers for potential execution. When checking the
INET book, the System will seek to execute at the price it would send
the order to a non-INET destination market center. If shares remain un-
executed after routing, they are posted on the INET book and are not
sent to the NYSE or AMEX. Once on the INET book, should the order
subsequently be locked or crossed by another accessible market center,
the System will not route the order to the locking or crossing market
center. With the exception of the Minimum Quantity order type, all
time-in-force parameters and order types may be used in conjunction
with this routing option. This process is one of the routing strategies
allowed by the System for all securities.
    (v) Aggressive Electronic Only (``SPDY'')--under this option, after
checking the INET System for available shares, orders are sent to other
available market centers for potential execution. When checking the
INET book, the System will seek to execute at the price it would send
the order to a non-INET destination market center. If shares remain un-
executed after routing, they are posted on the INET book and are not
sent to the NYSE or AMEX. Once on the INET book, should the order
subsequently be locked or crossed by another accessible market center,
the System shall route the order to the locking or crossing market
center for potential execution. Market orders with the SPDY designation
will, during a locked or crossed market, have their price adjusted by
the System to match the best price displayed on the same side of the
market as the market order (i.e., a buy order to the bid, a sell to the
offer). If the order is for a security eligible for a de minimis
exception to the trade-through rule set forth in Section 8 (d)(i) of
the ITS Plan, the System will ignore AMEX prices when adjusting the
SPDY order. With the exception of the Minimum Quantity order type, all
time-in-force parameters and order types may be used in conjunction
with this routing option. This process is one of the routing strategies
allowed by the System for all securities.

(B) Nasdaq-Listed Routing Options

    The STGY, SPDY, and SCAN options are the only routing options
provided by the System for orders in Nasdaq-listed securities not
sought to be directed to either the NYSE or AMEX.

(C) Priority of Routed Orders

    Regardless of the routing option selected, orders sent by the INET
System to other markets do not retain time priority with respect to
other orders in INET's System and the System shall continue to execute
other orders while routed orders are away at another market center.
Once routed by the System, an order becomes subject to the rules and
procedures of the destination market including, but not limited to,
short-sale regulation and order cancellation. If a routed order is
subsequently returned, in whole or in part, that order, or its
remainder, shall receive a new time stamp reflecting the time of its
return to the System.

4957. Clearance and Settlement

    All transactions executed in the System shall be cleared and
settled by and between the System Participant and INET, through a
registered clearing agency using a continuous net settlement system.

4958. Obligation to Honor System Trades

    (a) If a Participant, or clearing member acting on a Participant's
behalf, is reported by the System, or shown by the activity reports
generated by the System, as constituting a side of a System trade, such
Participant, or clearing member acting on its behalf, shall honor such
trade on the scheduled settlement date.
    (b) INET and/or Nasdaq shall have no liability if a Participant, or
a clearing member acting on the Participant's behalf, fails to satisfy
the obligations in paragraph (a).

4959. Compliance with Rules and Registration Requirements

    (a) Failure by a Participant to comply with any of the rules or
registration requirements applicable to it and its use of the System
shall subject such Participant to censure, fine, suspension or
revocation of its registration as Participant or any other fitting
penalty under the Rules of the Association, or such other action, up to
and including termination of access to the System.
    (b) If a Participant fails to maintain a clearing relationship, or
to honor its obligations under NASD Rule 4958, it shall have its access
to the System restricted until such time as a clearing arrangement is
reestablished and/or the Participant meets its obligation to honor
System trades.
    (c) The authority and procedures contained in paragraph (b) do not
otherwise limit the Association's authority, contained in other
provisions of the Association's Rules, to enforce its rules or impose
any fitting sanction.

4960. Anonymity

    (a) Transactions executed in the System shall be cleared and
settled with INET. The transaction reports produced by the System will
indicate the details of the transactions, and shall not reveal contra
party identities other than INET.
    (b) INET shall reveal a Participant's identity in the following
circumstances:
    (1) when the National Securities Clearing Corporation (``NSCC'')
ceases to act for a participant, or the Participant's clearing firm,
and NSCC determines not to guarantee the settlement of the
Participant's trades;
    (2) for regulatory purposes or to comply with an order of an
arbitrator or court;
    (3) no later than the end of the day on the date a trade was
executed, when the participant's order has been decremented by another
order submitted by that same Participant; or
    (4) if both Participants to the transaction consent.

4961. Clearly Erroneous Transactions

    Commencing no later than 60 days after the System becomes a
facility of Nasdaq, all matters related to clearly erroneous
transactions executed in the System shall be initiated and adjudicated
pursuant to NASD Rule 11890.

4962. Minimum Quotation Increment

    The minimum quotation increment in the INET System for quotations
of $1.00 or above in Nasdaq-listed securities and in securities listed
on a national securities exchange shall be $0.01. The minimum quotation
increment in the INET System for quotations below $1.00 in Nasdaq-
listed securities and in securities listed on a national securities
exchange shall be $0.001.

4963. Normal Business Hours

    The INET System operates from 7 a.m. to 8 p.m. Eastern Time on each
business day.

4964. Limitation of Liability

    The Association and its subsidiaries, as well as Nasdaq and INET
and their subsidiaries, shall not be liable for any losses, damages, or
other claims arising out of the System or its use. Any losses, damages,
or other claims, related to a failure of the System to deliver,
display,

transmit, execute, compare, submit for clearance and settlement,
adjust, retain priority for, or otherwise correctly process an order,
Quote/Order, message, or other data entered into, or created by, the
System shall be absorbed by the member, or the member sponsoring the
customer, that entered the order, Quote/Order, message, or other data
into the System. Notwithstanding the foregoing, the System may, within
it sole discretion and for a period of time not to exceed 60 days after
the System becomes a facility of Nasdaq, compensate users for losses
arising out of the System or its use.
* * * * *
7010. System Services (a)-(v) No Change.

(w) INET System Order Execution

    (1) For a period of time not to exceed 60 days after INET becomes a
facility of Nasdaq, the following charges shall apply to the use of the
order execution services of Nasdaq's INET System by Participants for:

NASDAQ-Listed Securities

Order Execution

    Non-Directed Order that accesses the Quote/Order of a market
Participant through Nasdaq's INET System:
    Charge to Participant entering order:
    Average daily shares of liquidity provided through Nasdaq's INET
System by the Participant during the month:
    Greater than 60 million shares accessed or routed and 5 million
shares provided: $0.0027 per share executed
    Greater than 40 million shares but less than 60 million shares
accessed or routed and 5 million shares provided: $0.0028 per share
executed
    Less than 5 million shares provided or less than 40 million shares
accessed or routed: $0.0030 per share executed
Credit to Participant providing liquidity:
    Average daily shares of liquidity provided through Nasdaq's INET
System by the Participant during the month:
    Greater than 30 million shares provided or greater than 30 million
shares accessed or routed or greater than 50 million shares combined
provided, accessed or routed: $0.0025 per share executed
    Less than or equal to 30 million shares provided and less than or
equal to 30 million shares accessed or routed and less than or equal to
50 million shares combined provided, accessed, or routed: $0.002 per
share executed
    Any order that matches against another order of the same
Participant: $0.00025 per share per side.

Routed Orders

    Any other order entered by a Participant that is routed outside of
Nasdaq's INET System: $0.0025 per share executed

AMEX-listed Stocks

Order Execution

    Non-Directed Order that accesses the Quote/Order of a market
Participant through Nasdaq's INET System:
    Credit to Participant entering order: $0.001 per share executed
    Charge to Participant providing liquidity: $0.0009
    Any order that matches against another order of the same
Participant: No charge

Routed Orders

    Any order entered by a Participant that is routed outside of
Nasdaq's INET System through DOT: $0.01 per share executed
    Any order entered by a Participant that is routed outside of
Nasdaq's INET System other than through DOT: $0.0035 per share executed

AMEX-listed ETFs

Order Execution

    Non-Directed Order that accesses the Quote/Order of a market
Participant through Nasdaq's INET System:
    Charge to Participant entering order:
    Average daily shares of liquidity provided through Nasdaq's INET
System by the Participant during the month:
    Greater than 60 million shares accessed or routed and 5 million
shares provided: $0.0027 per share executed
    Greater than 40 million shares but less than 60 million shares
accessed or routed and 5 million share executed shares provided:
$0.0028 per share executed
    Less than 5 million shares provided or less than 40 million shares
accessed or routed: $0.0030 per share executed
    Credit to Participant providing liquidity:
    Average daily shares of liquidity provided through Nasdaq's INET
System by the Participant during the month:
    Greater than 30 million shares provided or greater than 30 million
shares accessed or routed or greater than 50 million shares combined
provided, accessed or routed: $0.0025 per share executed
    Less than or equal to 30 million shares provided and less than or
equal to 30 million shares accessed or routed and less than or equal to
50 million shares combined provided, accessed, or routed: $0.002 per
share executed
    Any order that matches against another order of the same
Participant: $0.00025 per share per side.

Routed Orders

    Any order entered by a Participant that is routed outside of
Nasdaq's INET System through DOT: $0.01 per share executed
    Any order entered by a Participant that is routed outside of
Nasdaq's INET System other than through DOT: $0.0035 per share executed

NYSE-listed stocks

Order Execution

    Non-Directed Order that accesses the Quote/Order of a market
Participant through Nasdaq's INET System:
    Credit to Participant entering order: $0.001 per share executed
    Charge to Participant providing liquidity: $0.0009
    Any order that matches against another order of the same
Participant: No charge

Routed Orders

    Any order entered by a Participant that is routed outside per of
Nasdaq's INET System through DOT: $0.0005 share executed
    Any order entered by a Participant that is routed outside of
Nasdaq's INET System other than through DOT: $0.0015 per share executed
* * * * *

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

Background

    On April 22, 2005, Nasdaq entered into definitive agreements to
purchase INET, a registered broker-dealer and member of the NASD \3\,
and operator of

the INET System. Nasdaq states that, once formally purchased by Nasdaq,
the INET System would immediately become a ``facility'' of a national
securities association subject to the standards set forth in Sections
15A \4\ and 19(b)(1) \5\ of the Act and would be required to operate
pursuant to formal system rules approved by the Commission. In order to
ensure that such rules are in place at the time of closing, Nasdaq has
filed this proposed set of INET System rules for Commission review and
approval that includes a description of the INET System, its various
features, fees, and order processing methods. Nasdaq proposes that
these rules would be implemented immediately upon formal closing of the
Nasdaq/INET transaction, and in no event more than two weeks after
Commission approval.\6\
---------------------------------------------------------------------------

    \3\ Nasdaq states that, as a member of the NASD, INET is, and
remains, subject to all NASD Rules applicable to its activities as a
broker-dealer. In addition, INET would continue to participate in
market surveillance and audit trail programs conducted by Nasdaq,
the NASD, and other self-regulatory organizations. INET would
continue to act as a counter-party to all trades taking place in its
system, for anonymity as well as clearance and settlement purposes.
INET would also continue to provide outbound order routing services
to other market centers for its subscribers.
    \4\ 15 U.S.C. 78o-3.
    \5\ 15 U.S.C. 78s(b)(1).
    \6\ Nasdaq states that it will provide to the Commission formal
written notice of the closing date of the transaction. Such closing
date shall be the start date for the calculation of any temporary
time period referred to in this filing. Nasdaq states that it will
thereafter submit rule filings to include such closing date in its
rules.
---------------------------------------------------------------------------

The INET System

1. Order Display/Matching System

    The INET System allows subscribers to enter market and priced limit
orders to buy and sell Nasdaq and exchange-listed securities. According
to Nasdaq, such orders may be in round-lots, mixed-lots, or odd-lots of
any size up to 999,999 shares. Nasdaq states that INET acts only as an
agent on behalf of its subscribers and engages in no proprietary
trading save that necessary to correct system errors. Subscribers may
enter multiple orders at single or multiple price levels. Subscribers
have the option to have a portion of their order held in reserve and
not displayed to the marketplace. INET, in turn, makes available to
System subscribers and market data vendors a data feed of all
displayable orders on both the bid and offer side of the market
(excluding reserve size share amounts) for all price levels at which
shares are available within its System.
    INET currently provides its best top-of-file prices, and other
prices, to the National Stock Exchange (``NSX''). In this filing,
Nasdaq proposes rules under which INET would be permitted to continue
to provide its best-priced orders to the NSX until the end of the third
quarter of 2006.\7\ At any time prior to that date, Nasdaq may file
with the Commission a rule proposal to move the INET System's best-
priced orders, and other orders including up to full depth of book, to
the Nasdaq Market Center for display, routing, and execution purposes.
If filed, Nasdaq states that it would seek immediate effectiveness of
the proposal. In addition, INET would continue to accept sub-penny
prices in $0.001 increments for securities priced under $1.00 a share.
Such sub-penny prices are viewable via the System data feed.
---------------------------------------------------------------------------

    \7\ Nasdaq states that, as is the case today, INET would remain
subject to all applicable rules and regulations of the NSX.
---------------------------------------------------------------------------

2. Access Standards

    Nasdaq states that, to obtain access to the INET System as a system
participant, a user must execute an INET subscriber agreement and be a
participant in, or have an access arrangement with a participant in, a
Commission-registered clearing agency. In addition, the INET subscriber
must also agree to:
    a. Comply with all applicable rules of the NASD and the Commission;
and
    b. Accept all INET System trades identified by the System as being
effected by the subscriber.
    According to Nasdaq, INET also currently provides access to
approximately 70 non-NASD member broker-dealers. Nasdaq states that it
intends, for a period of time not to exceed 60 days after the formal
close of the Nasdaq/INET transaction, to continue to provide such
entities with sponsored access to the INET System under generally the
same terms and conditions they enjoy today. This would be accomplished
through contractual agreements between INET and such subscribers.
Nasdaq states that, within 60 days after the formal closing of the
Nasdaq/INET transaction, all participants in the INET System must be
NASD members.

3. Order Types

    The INET System makes available to subscribers several order types.
These order types are described below.
    Limit Order--an order to buy or sell a stock at a specified price
or better.
    Market Order--an un-priced order to buy or sell a stock at the
market's current best price. A market order may have a limit price
beyond which the order shall not be executed.
    Reserve Order--a limit order that has both a round-lot displayed
size as well as an additional non-displayed share amount. Both the
displayed and non-displayed portions of the Reserve Order are available
for potential execution against incoming orders. If the round-lot
displayed portion of a Reserve Order is reduced to less than 100
shares, the System would replenish the display portion from reserve up
to at least a single round-lot amount.
    Pegged Order--a limit order that, after entry, has its price
automatically adjusted by the System in response to changes in the
national best bid or offer (``NBBO''), as appropriate. A Pegged Order
can specify that its price will equal the inside quote on the same side
of the NBBO (``Primary Peg'') or the opposite side of the NBBO
(``Market Peg''). In addition, Pegged Orders may also establish their
pricing relative to the NBBO by the selection of $0.01 offset amounts
that would adjust the price of the order by the offset amount selected.
Example Primary Pegged Order
    The market is $10.00 bid-$10.01 offer. INET receives a non-route
Primary Pegged buy order. INET would post the order at $10.00. If the
inside bid moves to $10.01, INET would modify the Pegged Order to the
$10.01 bid price. A new time stamp is created at the time of this
modification. If a sell order is subsequently entered at $10.01 or
lower, the pegged order would execute at $10.01.
Example Market Pegged Order
    The market is $10.00 bid-$10.01 offer. INET receives a Market
Pegged buy order. INET would post the order at $10.01. If the inside
offer moves to $10.02, INET would modify the Pegged Order to the $10.02
offer price. A new time stamp is created at the time of this
modification.
    Displayed Order--a limit order that is displayed in the System, in
whole or in part, and is available for potential execution against all
incoming orders until executed in full or cancelled.
    Non-Displayed Order--a limit order that is not displayed in the
System, but nevertheless remains available for potential execution
against all incoming orders until executed in full or cancelled.
    Minimum Quantity Order--an order that requires that a specified
minimum quantity of shares be obtained, or the order is cancelled.
Minimum Quantity Orders may only be entered with a time-in-force
designation of IOC.
Example Minimum Quantity Order
    The market is $10.00 bid-$10.01 offer. INET receives an order to
buy 1000

shares, Minimum Quantity of 500 shares, at $10.01. This order can only
have a time in force of IOC. The INET book has 2 sell orders each for
300 shares at $10.01. INET executed 600 shares at $10.01 (in two lots)
and cancels the remaining 400 shares back.
    Discretionary Order--an order that has both a displayed price and
size, as well as a non-displayed discretionary price range, at which
the entering party, if necessary, is also willing to buy or sell. The
non-displayed trading interest is not entered into the System book but
is converted to an IOC order equal in size to the displayed size and
priced at the most aggressive price in the discretionary price range
when displayed shares become available or an execution takes place at
any price within the discretionary price range. The generation of this
IOC order is accompanied by the cancellation of the displayed portion
of the Discretionary Order. If more than one Discretionary Order is
available for conversion to an IOC order, the system would convert all
such orders at the same time and priority would be given to the first
IOC order(s) that reaches the trading interest on the other side of the
market. If an IOC order is not executed in full, the unexecuted portion
of the order would be automatically re-posted and displayed in the
System book with a new time stamp, its original displayed price, and
its original non-displayed discretionary price range.
Example
    INET receives a Discretionary buy order, with a displayed limit
price of $10.00 and a display quantity of 1000 shares and a
discretionary price range of up to $15.00. INET posts the order as 1000
shares at $10.00. Thereafter, another market participant posts another
offer to buy at 300 shares at $11.00, creating a buy market as follows:

------------------------------------------------------------------------
                                                    Discretionary price
           Display              Reserve    Price           range
------------------------------------------------------------------------
300..........................         0    $11.00  None.
1000.........................         0    $10.00  $11.00-$15.00.
------------------------------------------------------------------------

Thereafter, another market participant enters a sell order for 500
shares at $11.00. The resulting executions are as follows:
    1. 300 shares execute immediately at $11.00.
    2. 200 shares to sell at $11.00 is posted to the book.
    3. Both the execution at $11.00 and the posting of the display
price of $11.00 are events that trigger the processing of the
discretionary portion of the Discretionary Order.
    4. INET would cancel the 1000 display portion of the Discretionary
Order and send an IOC order for 1000 shares priced at $15.00 to the
displayed 200 shares priced at $11.00.
    5. The 200 shares would execute at $11.00, and the 800 share
remainder of the Discretionary Order would be placed back into the INET
book at its original order price of $10.00. If there were multiple
Discretionary Orders available to interact with the 200 shares, all
such orders would be activated at the same time by the INET system and
whichever IOC order(s) first reached the 200 shares would get the
execution.

4. Time in Force Designations

    Orders entered into the INET System may be designated by the
entering party to remain in force and available for display and/or
potential execution for varying periods of time. Unless cancelled
earlier, once these time periods expire, the order (or the unexecuted
portion thereof) is returned to the entering party. These ``time in
force'' designations are described below: \8\
---------------------------------------------------------------------------

    \8\ In addition, Nasdaq states that the System also supports On-
Open and On-Close order types for orders being routed directly to
the NYSE, AMEX, and Nasdaq Market Center.
---------------------------------------------------------------------------

    Immediate or Cancel (IOC)--limit orders with this designation
execute immediately at the limit price if shares are available. If no
shares are available, the orders are immediately cancelled. If
partially executed, un-executed remainders of these orders are
immediately cancelled.
    Market Day or Limit Day (DAY)--limit orders with these designations
(or the unexecuted portions of such orders) are held by the INET System
and remain available for potential display/execution until 4 p.m.
eastern time on the day they are submitted unless cancelled before then
by the entering party. If not executed by 4 p.m., the order is
cancelled and sent back to the entering party.
---------------------------------------------------------------------------

    According to Nasdaq, these orders are not supported or executed
within the INET System itself. Instead, these order formats are
designed for processing at their destination market.
---------------------------------------------------------------------------

    Expire Time (ExT)--limit orders with this designation are held by
the system for potential execution until the expiration of the specific
time period indicated by the entering party, including time periods
outside of normal market hours.
    Extended Day (XDAY)--limit orders with this designation (or the
unexecuted portions of such orders) are held by the INET System and
remain available for potential execution until 8 p.m. eastern time.
    The INET System operates between the hours of 7 a.m. and 8 p.m.
Eastern Time. Orders with the above time in force designations may be
entered into the INET System, or previously entered orders cancelled,
starting at 7 a.m. eastern time. Only orders with the XDAY designation
would be retained by the system after 4 p.m. eastern time, with all
other order types being cancelled back to the entering party.

5. Routing

    The INET System provides the capability to route orders to other
available market centers. Routing functionality is available to System
users between the hours of 7 a.m. and 8 p.m. eastern time. In general,
the System provides users with five optional routing strategies for
exchange-listed securities. These strategies are summarized below:
DOT Immediate (DOTI)
    After checking the INET System for available shares, orders are
sent directly to the New York Stock Exchange (``NYSE'') via the DOT
system. When checking the INET book, the System looks to execute at the
better price of either the limit price specified in the order, or the
best price displayed at that time at the NYSE. If no liquidity is
available in the INET System the order is routed directly to the NYSE
via DOT at the limit order price for posting. A similar process is
followed for orders in stocks listed on the American Stock Exchange
(``AMEX''). This strategy may only be used for orders with time-in-
force parameters of either DAY, IOC, or market-on-open/close.
Example of DOTI Routable Order
    The current NBBO is $10.00 bid x $10.02 offer. Offer size is as
follows: 300 shares INET displayed, 200 shares INET non-displayed, 100
shares PCX, 200 shares NYSE. Participant A enters a buy order for 1000
shares at $10.02. The System would first IOC INET for 1000

shares at $10.02. Participant A would execute against 300 shares at
$10.02 displayed and the 200 shares non-displayed. The System would
route the remaining 500 shares to NYSE. Participant A would receive 200
shares from NYSE. The remaining 300 shares would reside on the NYSE
book, per routing instructions.
DOT Alternative (DOTA)
    After checking the INET System for available shares, the order
would be sent to various available market centers for potential
execution. Any remaining un-executed portion would thereafter be sent
to the NYSE or AMEX, as appropriate, at the limit order price for
posting. This strategy may only be used for orders with time-in-force
parameters of either DAY, IOC, or market-on-open/close.
Example of DOTA Routable Order
    The current NBBO is $10.00 bid x $10.02 offer. Offer size is as
follows: 300 shares INET displayed, 200 shares INET non-displayed, 100
shares PCX, 200 shares NYSE. Participant A enters a buy order for 1000
shares at $10.02. The System would first IOC INET at $10.02.
Participant A would execute against 300 shares at $10.02 displayed and
the 200 shares non-displayed. The System would route the remaining
shares to PCX. Participant A would receive 100 shares from PCX. The
System would then route 400 shares to the NYSE. Participant A would
receive 200 shares from the NYSE. The remaining 200 shares would reside
on the NYSE book, per routing instructions.
SCAN/STGY/SPDY
    In all of these routing options, after checking the INET System for
available shares, orders would be sent to various available market
centers for potential execution. For all these options, when checking
the INET book, the System would look to execute at the price it would
send the order to the non-INET destination market center and, if any
shares remain un-executed after routing, they are posted on the INET
book and are not sent to the NYSE or AMEX for posting.
    Once returned to the INET book after routing, an order with the
SCAN designation would not be routed out to an accessible market center
that subsequently locks or crosses the SCAN order. Orders with STGY and
SPDY would be routed to an accessible market center that subsequently
locks or crosses the STGY or SPDY order. While both STGY and SPDY
orders would route to locking or crossing markets, the SPDY order would
be re-priced by the System to match on then being displayed on the same
side of the market by the locking or crossing market center (i.e., a
buy order to the bid and a sell to the offer).
    With the exception of the Minimum Quantity Order type, all time-in-
force parameters and order types may be used with the STGY, SCAN, and
SPDY routing options. Nasdaq states that orders routed by INET to
another market do not retain time priority with respect to other orders
in INET's System and INET continues to execute other orders while the
routed order is away at another market. Nasdaq states that, once routed
by INET, an order becomes subject to the rules and procedures of the
destination market including, but not limited to, short-sale
regulation, and order cancellation. According to Nasdaq, orders routed
to a destination market that are subsequently returned in whole or in
part to the System would have their time priority based on the time
they are returned to the System.
Example of STGY Routable Order
    The current NBBO is $10.00 bid x $10.02 offer, size 200 shares at
the Nasdaq Market Center. INET has a non-display offer of 500 shares at
$10.01. Participant A enters an order onto INET to buy 1000 shares at
$10.02. The System would first IOC the INET book for any potential
orders at or better than the limit price. Participant A would execute
500 shares on INET at $10.01 (the non-display order on the book). The
System would then route the order to the Nasdaq Market Center at
$10.02. 200 shares execute at the Nasdaq Market Center at $10.02. 300
shares of the order remain unexecuted, and are entered onto the INET
book at $10.02. 5 seconds later, PCX enters the market with an offer of
$10.02. The System would cancel the order off the book, and route 300
shares at $10.02 to PCX. PCX executes 300 shares at $10.02. Participant
A receives an execution for the remaining 300 shares in the order.
Example of STGY Routable Order (Crossed Market)
    The current NBBO is $10.01 bid x $10.00 offer. INET has 500 shares
on the offer at $10.00. PCX has 300 shares on the offer at $10.00.
Participant A enters a market order to buy 1000 shares. The System
would price the order at $10.00 and IOC the INET book. Participant A
would receive 500 shares at $10.00. The System would route the
remaining shares to PCX. Participant A would receive 300 shares at
$10.00 from PCX. After attempting to exhaust the quotes, the remaining
200 shares would be posted to the INET book at $10.00.
Example of SCAN Routable Order:
    The current NBBO is $10.00 bid x $10.02 offer, size 200 shares at
the Nasdaq Market Center. INET has a non-display offer of 500 shares at
$10.01. Participant A enters an order onto INET to buy 1000 shares at
$10.02. The System would first IOC the INET book for any potential
orders at or better than the limit price. Participant A would execute
500 shares on INET at $10.01 (the non-display order on the book). The
System would route the order off the book with the remaining shares of
the order, 500, to the Nasdaq Market Center at $10.02. 200 shares
execute at the Nasdaq Market Center at $10.02. 300 shares of the order
remain unexecuted, and are entered onto the INET book at $10.02. 5
seconds later, PCX enters the market with an offer of $10.02. The
System would not route the order to PCX, but would keep the order on
the INET book, per Participant A's routing instructions.
Example of SPDY Routable Order (Crossed Market)
    The current NBBO is $10.01 bid x $10.00 offer. INET has 500 shares
on the offer at $10.01. PCX has 300 shares on the offer at $10.00.
Participant A enters a market order to buy 1000 shares. The System
would price the order at $10.01 and IOC the INET book. Participant A
would receive 500 shares at $10.01. The System would route the
remaining 500 shares to PCX. Participant A would receive 300 shares at
$10.00 from PCX. The remaining 200 shares would be posted to the INET
book at $10.01.
Other
    Nasdaq states that the System also allows firms to send individual
orders to the NYSE Direct + System, and to elect to have orders not be
sent to the AMEX.

6. Execution Algorithm

    Nasdaq states that the INET System has an execution algorithm based
on price/time priority. For each order, among equally-priced or better-
priced trading interest, the System executes against available contra-
side displayed share amounts in full, in price/time priority, before
then moving to any non-displayed shares which are likewise executed in
price/time priority. Below are examples of this algorithm:
Displayed Order
    The current NBBO is $10.00 bid x $10.02 offer. Participant A enters
a display order on INET to buy 1000 shares at $10.01. NBBO is changed
to $10.01 x $10.02. Participant B sees the 1000 share order at $10.01
and enters an

order to sell 500 shares at $10.01. The orders match at $10.01, with
500 shares matched. NBBO remains at $10.01 x $10.02 with the size on
the bid decremented to 500 shares, the amount of shares matched.
Limit Order (with Reserve)
    The current NBBO is $10.01 bid x $10.02 offer. Participant A enters
an order to buy 1000 shares, display 200, at $10.01. INET bid is
$10.01, 200 displayed, 800 non-displayed. Participant B enters a
display buy order for 1000 shares at $10.01. INET bid is $10.01, 1200
displayed, 800 non-displayed. Participant C enters an order to sell
1500 shares at $10.01. Participant C receives executions against orders
as follows: Participant A executes 200 shares at $10.01; Participant B
executes 1000 shares at $10.01 (display order receives priority over
non-display even though non-display order was there first); Participant
A executes 300 shares from non-display portion. Participant C has
executed a total of 1500 shares. Participant B has executed all 1000 of
its shares. Participant A has 200 shares remaining in its order, and is
now displayed, per original instructions.
Routable Order
    The current NBBO is $10.00 bid x $10.02 offer, size 200 shares at
the Nasdaq Market Center. INET has a non-display offer of 500 shares at
$10.01. Participant A enters an order onto INET to buy 1000 shares at
$10.02. The system would first IOC the INET book for any potential
orders at or better than the limit price. Participant A would execute
500 shares on INET at $10.01 (the non-display order on the book). The
System would then route the order off the book with the remaining
shares of the order, 500, to the Nasdaq Market Center at $10.02. 200
shares execute at the Nasdaq Market Center at $10.02. 300 shares of the
order remain unexecuted, and are entered onto the INET book at $10.02.

7. Clearly Erroneous Trade Procedures

    Nasdaq states that currently, INET adjudicates clearly erroneous
trade disputes for executions taking place exclusively within its
System. While generally reviewing clearly erroneous trade claims in
response to subscriber requests, INET currently reserves the right to
take action on its own initiative if it determines that a trade is
clearly erroneous and needs to be modified or cancelled. INET currently
also reserves the right to refuse to review potentially erroneous
transactions that are brought to its attention more than 20 minutes
after execution. In the normal course, INET limits its clearly
erroneous review to INET System trades that execute at prices that are
certain percentages away from the National Best Bid/Offer at the time
of execution. These percentages are provided below:
Execution Price Range Away From NBBO
$3 and under: 10%.
Over $3 and under $10: 5%.
$10 to $30: 3%.
Over $30: $1 or more.
    Nasdaq is proposing to continue the above process for a period of
60 days after the formal close of the Nasdaq/INET transaction. During
that interim period, Nasdaq states that it would prepare to incorporate
INET into the current clearly erroneous process of Nasdaq and Brut,
which is governed by NASD Rule 11890. Nasdaq states that this interim
period would ensure that sufficient notice is provided to System
subscribers about their rights and obligations related to clearly
erroneous trades under NASD Rule 11890, as well as allow Nasdaq to
train incoming INET staff to properly process such requests. Prior to
60 days after the formal close of the Nasdaq/INET transaction, Nasdaq
states that it would file with the Commission a rule proposal making
INET's clearly erroneous process specifically subject to NASD Rule
11890. Nasdaq states that it will seek immediate effectiveness of that
filing.

8. Other System Standards

    Nasdaq is also proposing to establish standards regarding
operational issues between the Nasdaq Market Center and INET. For
example, Nasdaq is proposing rules for the INET System codifying
standards regarding the obligation of users to honor system trades and
the removal of users for failing to maintain a required clearing
relationship.\9\ While Nasdaq is proposing that INET have in place at
closing a general limitation of liability rule, Nasdaq is also
proposing that INET continue, for a period of time not to exceed 60
days after the formal close of the Nasdaq/INET transaction, to have the
discretion to accommodate users of the System for losses arising out of
the System or its use. Before the end of that time period, Nasdaq
states that it will file a rule proposal with the Commission so that
the System's future accommodation of users would be subject to the same
standards already in place for the Nasdaq Market Center and Nasdaq's
Brut Facility.\10\ Nasdaq is also proposing to establish rules
governing the anonymity provided by the system, as well as rules
governing minimum quote increments. Nasdaq states that the System's
anonymity standards and proposed minimum quote increment standards are
substantially similar to those in place in the Nasdaq Market Center and
Nasdaq's Brut Facility and also provides for allowing sub-penny quotes
in securities priced under $1.00.
---------------------------------------------------------------------------

    \9\ See proposed NASD Rules 4958 and 4959.
    \10\ See NASD Rule 4705(j) and proposed NASD Rule 4964.
---------------------------------------------------------------------------

9. Pricing

    Nasdaq is also proposing the creation of a fee and rebate schedule
for the INET System. Nasdaq states that, with exception of eliminating
fee rates discounts based on the use of the services of the Instinet
broker-dealer, this fee and rebate schedule is the same as the one
applicable to current INET subscribers.\11\ Nasdaq proposes that this
fee schedule remain in place for a period of time not to exceed 60 days
after the formal close of the Nasdaq/INET transaction. Before the
termination of such 60-day period, Nasdaq will file with the Commission
an integrated fee and rebate structure governing the use of all
Nasdaq's main trading systems (i.e., the Nasdaq Market Center, Nasdaq's
Brut Facility, and Nasdaq's INET System).
---------------------------------------------------------------------------

    \11\ See proposed NASD Rule 7010(w).
---------------------------------------------------------------------------

10. Trade-Through Compliance and Locked and Crossed Markets

    Nasdaq states that, in order to ensure compliance with the trade-
through rule for listed securities,\12\ the INET system checks the
prices of orders in listed securities that are not made eligible for
routing by the entering party before and after an order is entered in
the System. The process is described in further detail below:
---------------------------------------------------------------------------

    \12\ See Section (8)(d) of the Plan for the Purpose of Creating
and Operating an Intermarket Communications Linkage Pursuant to
Section 11A(a)(3)(B) of the Act.
---------------------------------------------------------------------------

    At Order Entry--At the time of order entry, every order would be
checked to ensure that it does not lock or cross the market, or cause
an execution at a price that would constitute a violation of the trade-
through rule. If an order locks the market, it would be turned into a
non-display order so as not to quote a locked market. If an order
crosses the market, or would cause a trade-through violation, it would
be re-priced to the current low offer (for bids) or to the current best
bid (for offers), and turned into a non-display order so as to not
quote a locked market. Any non-display order that crosses the market
would be re-priced to the current low offer (for bids) or to the
current best bid (for offers).

Example
    The National Best Bid in a listed security is $83.55. INET
Subscriber enters a non-route order to sell at $83.54. The INET system
would automatically re-price the order to $83.55 and change it to non-
display.
    After Order Entry--An non-routable order entered for display would
not be affected by the trade-through rule after it is accepted. To
prevent trade-throughs, however, a non-display non-routable order
however, may be cancelled from the INET book with the reason code if
the market moves through the price of the order after the order is
accepted.
Example
    The National Best Bid in a listed security is $83.55. INET
Subscriber enters a non-display non-route order to sell at $83.55. The
National Best Bid in the security becomes $83.56. The non-display order
to sell at $83.55 would be cancelled since it cannot be executed
without causing a trade-through violation.
    Nasdaq states that INET's re-pricing and conversions to non-display
of orders are done with the knowledge of System subscribers and only
takes place in connection with orders that subscribers have elected not
to make eligible for routing.

11. Integration Plan

    Upon the closing of the INET transaction, Nasdaq will be the owner
and operator of three separate trading systems, the Nasdaq Market
Center, Nasdaq's Brut Facility, and Nasdaq's INET System. For a period
of time after the close, Nasdaq states that it will continue to
separately operate these systems, with each system providing distinct
order-display, execution, and routing services. Orders entered and
displayed in a particular system shall have time-priority only with
regard to other orders in that same system. For a period of time ending
no later than September 30, 2006, the INET System would continue to
post its top-of-file quotes through the facilities of NSX.
    Nasdaq's long-term vision is to have all of its systems integrated
into a single technology platform that would further enhance execution
quality for market participants. As part of that consolidation plan,
soon after the formal close of the Nasdaq/INET transaction, Nasdaq
states that it anticipates that it will merge the INET broker-dealer
into Nasdaq's Brut broker-dealer and that Brut as a single broker
dealer would operate both ECNs as separate systems, with separate order
processing and execution. As such, the NYSE would continue to serve as
the designated examining authority for financial responsibility
purposes for Nasdaq's broker-dealer. Nasdaq states that there would
continue to be no priority in one system for orders entered into the
other.
    According to Nasdaq, the next step in its current plan is to
combine all of its three execution systems into a single trading
platform. Nasdaq states that it expects to accomplish this process
sometime before the end of the third quarter of 2006. As part of this
process, Nasdaq would also combine all three of its system books into a
single integrated book where all orders interact and have time-priority
against each other. Nasdaq anticipates transitioning quotation and
execution activity from its systems and other market centers to its
single system in phases.
    Once Nasdaq's single integrated system is operational and fully
populated, Nasdaq states that it expects to continue to operate a
broker-dealer to act as Nasdaq's outbound access broker dealer to reach
orders displayed in other market centers.\13\
---------------------------------------------------------------------------

    \13\ Changes to text made pursuant to phone conversation between
Thomas P. Moran, Associate General Counsel, Nasdaq, and John C.
Roeser, Assistant Director, Division of Market Regulation,
Commission, on November 2, 2005.
---------------------------------------------------------------------------

2. Statutory Basis
    Nasdaq believes that the proposed rule change is consistent with
the provisions of Section 15A of the Act,\14\ in general, and Section
15A(b)(6) of the Act,\15\ in particular, in that it is designed to
prevent fraudulent and manipulative acts and practices, to promote just
and equitable principles of trade, remove impediments to a free and
open market and a national market system, and, in general, to protect
investors and the public interest.
---------------------------------------------------------------------------

    \14\ 15 U.S.C. 78o-3.
    \15\ 15 U.S.C. 78o-3(b)(6).
---------------------------------------------------------------------------

B. Self-Regulatory Organization's Statement on Burden on Competition

    Nasdaq does not believe that the proposed rule change will result
in any burden on competition that is not necessary or appropriate in
furtherance of the purposes of the Act. Nasdaq states that its proposed
operation of the INET System must be viewed against the backdrop of
today's competitive and dynamic market structure. According to Nasdaq,
the Commission's action in approving the Order Handling Rules,
Regulation ATS, the creation of NASD's Alternative Display Facility
(``ADF''), and the recent approval of Regulation NMS \16\ provide
increased opportunities for market participants to compete vigorously
for the trading of U.S. equity securities.
---------------------------------------------------------------------------

    \16\ See Securities Exchange Act Release Nos. 37619A (August 29,
1996), 61 FR 48290 (September 6, 1996) (Order Handling Release);
40760 (December 8, 1998), 63 FR 70844 (December 22, 1998)
(Regulation ATS Release); 46249 (July 24, 2002), 67 FR 49822 (July
31, 2002) (ADF Release); and 51808 (June 9, 2005), 70 FR 37496 (June
29, 2005) (Regulation NMS Release).
---------------------------------------------------------------------------

    Nasdaq states that the combination of Regulation NMS's articulation
of a framework that obligates market participants to seek the best
price and the availability of technology to display and reach that
price ensures that all market centers will be able to compete by
offering the best price. Nasdaq believes that the dynamic market
structure and the incentives that led to the creation of entities such
as the INET System ensure that all market centers will continue to
innovate and compete to serve their customers, and that new competitors
will be able to enter if they believe it would be profitable for them
to do so. In this dynamic competitive environment, Nasdaq believes that
its operation of the INET System will not place any burden on
competition.

C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others

    No written comments were either solicited or received.

III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action

    Within 35 days of the date of publication of this notice in the
Federal Register or within such longer period (i) as the Commission may
designate up to 90 days of such date if it finds such longer period to
be appropriate and publishes its reasons for so finding, or (ii) as to
which Nasdaq consents, the Commission will:
    (A) By order approve such proposed rule change; or
    (B) Institute proceedings to determine whether the proposed rule
change should be disapproved.

IV. Solicitation of Comments

    Interested persons are invited to submit written data, views, and
arguments concerning the foregoing, including whether the proposed rule
change is consistent with the Act. Comments may be submitted by any of
the following methods:

Electronic Comments

     Use the Commission's Internet comment form (http://www.sec.gov/rules/sro.shtml.
); or     Send an e-mail to<EMAIL_ADDRESS>Please include

File Number SR-NASD-2005-128 on the subject line.

Paper Comments

     Send paper comments in triplicate to Jonathan G. Katz,
Secretary, Securities and Exchange Commission, 100 F Street, NE.,
Washington, DC 20549-9303.
    All submissions should refer to File Number SR-NASD-2005-128. This
file number should be included on the subject line if e-mail is used.
To help the Commission process and review your comments more
efficiently, please use only one method. The Commission will post all
comments on the Commission's Internet Web site (http://www.sec.gov/rules/sro.shtml
). 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 also will be available for inspection and copying at the
principal office of Nasdaq. All comments received will be posted
without change; the Commission does not edit personal identifying
information from submissions. You should submit only information that
you wish to make available publicly. All submissions should refer to
File Number SR-NASD-2005-128 and should be submitted on or before
November 28, 2005.

    For the Commission, by the Division of Market Regulation,
pursuant to delegated authority.\17\
---------------------------------------------------------------------------

    \17\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Jonathan G. Katz,
Secretary.
[FR Doc. 05-22227 Filed 11-4-05; 8:45 am]

BILLING CODE 8010-01-P


[Federal Register: April 15, 2008 (Volume 73, Number 73)]
[Notices]
[Page 20288]
[DOCID:fr15ap08-74]

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DEPARTMENT OF ENERGY

Federal Energy Regulatory Commission

[Docket No. ER08-67-001]

Ameren Services Company; Notice Withdrawing Notice of Filing

April 9, 2008.
    This notice withdraws a Notice of Filing that published in the
Federal Register on Wednesday, March 5, 2008, in Commission Docket No.
ER08-67-001 (73 FR 11905). The correct version of this notice was
published in the Federal Register on March 6, 2008 (73 FR 12154).

Kimberly D. Bose,
Secretary.
 [FR Doc. E8-7910 Filed 4-14-08; 8:45 am]

BILLING CODE 6717-01-P