April 5, 2001

Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, DC 20549-1001
Attention: Mr. Jonathan G. Katz, Secretary

Re: Proposed Rule 19b-6 (SEC File No. S7-03-01)

Ladies and Gentlemen:

Bloomberg Tradebook LLC ("Bloomberg Tradebook")1 appreciates the opportunity to comment, in response to the request by the Securities and Exchange Commission (the "Commission") in Securities Exchange Act Release No. 43860 (February 5, 2001) (the "Release"), on the Commission's proposal to amend the requirements applicable to self-regulatory organization ("SRO") filings of proposed rule changes with the Commission by replacing Rule 19b-4 in its entirety with a new rule, Rule 19b-6 and replacing Form 19b-4 with new Form 19b-6.

Bloomberg Tradebook supports the Commission's goal of streamlining the rule-filing process for securities exchanges and securities associations. The process by which self-regulatory organizations put rule changes into effect is in need of simplification and the Commission has responded sensibly to that need in proposing Rule 19b-6 and the accompanying Form 19b-6. In the main, the proposed rule and form represent a significant improvement over the status quo and the Commission and its staff should be congratulated for this most worthy effort.

We believe at the same time that certain changes and additions to what the Commission has proposed would be appropriate and necessary. Annexed to this letter is a copy of portions of Rule 19b-6 and Form 19b-6, as published by the Commission in the Federal Register, which we have blacklined (the "Blackline") to show the changes we believe are needed (i) to ensure that each SRO rule filing is accompanied by adequate notice and a full description of potential burdens on competition, (ii) to provide effective means of deterring misuse of the expedited filing process, and (iii) to clarify the availability of judicial review of SRO rules that become effective on an expedited basis under Rule 19b-6. What follows is a discussion of the changes that Bloomberg Tradebook recommends be made to Rule 19b-6 and Form 19b-6, organized under subheads that correspond to the divisions and subdivisions of the rule and the form in the annexed blacklined copy.

Content of a proposed rule change (Form 19b-6 Notice, item D Note-Blackline, page A-8)

If the Commission and the public are to understand fully a rule change proposed by an SRO, Rule 19b-6 should explicitly require disclosure in reasonable detail of any aspect of an SRO facility that is likely to have a material bearing on whether the proposed rule change would or would not be consistent with the statutory standards applicable to the SRO.

There is, of course, a practical limit in the case of technologically oriented rule filings to the utility of textual descriptions alone, no matter how conscientiously they have been prepared. In some cases, for the Commission and the public to have a sufficient basis for understanding a proposed rule change, adequate disclosure of technical matters should be made, either in appendices to the text of a proposed rule change or on websites referenced in the filing. Depending on the circumstances, it may be important that disclosure be made of technical specifications, including, where appropriate, flow-charts and schematic diagrams, and specifications or system requirements, however denominated, that were used by the programmers in designing the system program code, to permit expert commenters to evaluate and critique the operation of a proposed system. At a minimum, moreover, the SRO should have to disclose, in terms its own members can understand and evaluate, a textual description of the operation of the system in enough detail to address the statutory standards. Generic descriptions that omit important aspects of a system's operation should not be permitted.

In view of the need to provide for appropriate detail in SRO rule filings, we suggest the addition of language to proposed Form 19b-6 identifying the need for disclosure of important technical details in the case of rule filings where that would be warranted.

Statement of basis and purpose of a proposed rule change (Form 19b-6-Blackline, page A-7)

We recommend that the instructions to Form 19b-6 specifically call for disclosure by the self-regulatory organization of any agreements or understandings, formal or informal, between the self-regulatory organization and the Commission or its staff as to the need for the proposed rule change or the desirability of the proposed rule change as a prerequisite to Commission acquiescence in or approval of any plans or proposals by the self-regulatory organization, including any plans to introduce new facilities or products. Particularly in light of the rapid changes in the form and nature of SROs, including the conversion of some into for-profit entities and the impending registration of Nasdaq as a national securities exchange, we believe it would be appropriate for an SRO to disclose whether the regulatory provisions it proposes to put into effect, including such features as trade-through rules, price priority rules and the like, were suggested to the SRO by the Commission or its staff as a necessary prerequisite to such other matters. In formulating comments on proposed rule changes, the public is entitled to know the background and other factors that may have affected the SRO's design of a regulatory provision. We have added to the Blackline language we recommend to achieve that result.

When a proposed rule change filed under Section 19(b)(3)(A) of the Exchange Act may take effect (§ 240.19b-6(b)-Blackline, page A-1)

Immediate effectiveness of a proposed rule change should take effect upon filing with the Commission pursuant to Section 19(b)(3)(A) of the Exchange Act together with the publication by the Commission of the Form 19b-6 Notice with respect to the proposed rule change. Conditioning immediate effectiveness of a proposed rule change filed pursuant to Section 19(b)(3)(A) both upon filing with the Commission and upon publication by the Commission of the Form 19b-6 Notice, ensures that a record of the SRO's filing will be immediately and publicly available for examination by interested persons. In the absence of public notice of the effectiveness of a rule, we believe securities industry participants would not have legally adequate notice of the rule and should not be bound by it. The purpose of the Federal Register is to give the public due and adequate notice of rules by which they will be bound.2 The Commission should not adopt an approach that abridges that protection.3

We suggest that the Commission consider also whether to require, as a condition of using the expedited procedure, that an SRO have published the proposed rule for comment to all its members before filing it with the Commission. That would at least provide some measure of protection against an inappropriate or ill-considered rule and would give the SRO an opportunity to consider the views of its members before filing it with the Commission.

In the Release, the Commission states that once a filing is complete, including Certification, the Commission "will post the proposal on the Commission's web page and send it to the Federal Register for publication." The 21-day comment period will commence from the date of publication of the proposal in the Federal Register. Although we understand the term "proposal" as used by the Commission in the text of the Release to mean the Form 19b-6 filed by an SRO with the Commission, the Release is not explicit about how much of the proposal, that is, how much of the Form 19b-6, will be posted on its web page. The amendment we are proposing would clarify this potential ambiguity and would tie effectiveness of the rule filing to the public dissemination of the Form 19b-6 Notice in the Federal Register.

Rule changes affecting access to facilities maintained by an SRO (§ 240.19b-6(b)(6) and (g)(1) and Form 19b-6, Item II (Section 19(b)(3)(A) Filing-Item (vi))-Blackline, pages A-2 and A-10)

Under the proposed Rule 19b-6, SROs would have the choice of filing many proposed rule changes governing trading to take effect pursuant either to Section 19(b)(2) or Section 19(b)(3)(A) of the Exchange Act. The Commission, however, would exclude from filing pursuant to Section 19(b)(3)(A) of the Exchange Act trading rules that would significantly affect investors or impose a significant burden on competition as well as trading rules that would make fundamental structural changes to an SRO's market. Bloomberg Tradebook believes that the proposed exclusion of trading rules that would make fundamental structural changes to an SRO's market should be expanded to exclude rules that would affect access to the facilities of an SRO, including data, trading facilities, communication facilities and facilities involving the execution, clearance and settlement of trades. As the Commission knows, several of the SROs enjoy a quasi-monopoly or monopoly status, as well as governmental protection of their competitive position that is not available to their members, including electronic communications systems. Rules governing access to basic trading facilities such as an order-entry, order-routing and execution systems are likely, virtually by definition, to have fundamental effects and to have an anti-competitive and/or discriminatory potential that should concern the Commission and not be the subject of rulemaking effective on filing. A rule change such as the recent proposal by the National Association of Securities Dealers, Inc. (the "NASD") to establish the Nasdaq Order Display Facility (the "SuperMontage") would obviously be a rule governing access to such facilities maintained by the NASD.

While that particular rule change would certainly also involve "fundamental structural changes" to the Nasdaq market, we suggest that a test as subjective as that might tempt SROs to "salami" the Commission by putting a fundamental structural change into effect slice by slice, each of which could be defended as not "fundamental" or "structural" but all of which, considered together, would have a fundamental structural effect. Particularly given some of the recent history, we suggest that broadening the exclusion in the manner we suggest would promote the Commission's stated objective, that a streamlined procedure for the immediate effectiveness of trading rules not become a means for circumventing the full notice-and-comment process necessary for considering rules that would have a significant impact on market structure or competition. Also, we recommend that the exclusion for fundamental structural changes refer not exclusively on a filing-by-filing basis but instead take into account the effect of a filing when considered together with other rules or filings of the SRO. We have added suggested language to incorporate that principle and a corresponding change to the definition of "trading rule" in paragraph (g)(1)(i) of proposed Rule 19b-6.

Certification (§ 240.19b-6(b)(7) and Form 19b-6-Blackline, pages A-2 and A-5)

In the Release, the Commission states that it will not consider a proposed rule change filed with the Commission on the date it is received by the Commission unless a properly completed Form 19b-6 is submitted to the Commission. Under Rule 19b-6, a properly completed Form 19b-6 requires that the chief executive officer, general counsel, or other officer or director of the SRO that exercises similar authority, certifies the accuracy and completeness of the statements made on Form 19b-6. Bloomberg Tradebook does not believe that Rule 19b-6, as proposed, provides adequate protection against incorrect certifications, particularly with respect to changes in trading rules that may be filed for immediate effectiveness pursuant to Section 19(b)(3)(A) of the Exchange Act. To protect investors and to ensure strict adherence to the filing requirements for proposed rule changes with the Commission for immediate effectiveness under Section 19(b)(3)(A) of the Exchange Act, Bloomberg Tradebook recommends the addition of a new Section 19b-6(b)(7) to Rule 19b-6 that would render a rule change void ab initio if the SRO had incorrectly certified its filing of that rule change with the Commission. In addition, the SRO would not have any responsibility or authority under Section 19(g)(2) of the Exchange Act or otherwise to enforce compliance with an improperly certified rule change. The purpose of the addition would be not only to protect investors and the integrity of the markets but to give the Commission the authority to encourage an SRO seeking immediate effectiveness for a rule change to submit a complete and accurate filing with the Commission.

Compliance with Form 19b-6 as a precondition to immediate effectiveness (Form 19b-6: General Instructions, item D-Blackline, page A-4 and -5)

Under proposed Rule 19b-6, rule changes filed by SROs pursuant to Section 19(b)(3)(A) of the Exchange Act would become effective immediately upon the filing of Form 19b-6 with the Commission. Bloomberg Tradebook recommends amending item D of the General Instructions to Form 19b-6 to state that compliance with all requirements of Form 19b-6 would be a precondition to the immediate effectiveness of any rule change filed pursuant to Section 19(b)(3)(A) of the Exchange Act. As worded in proposed Form 19b-6, General Instructions, item D, the Commission appears to imply that immediate effectiveness of a rule change is conditioned upon compliance with all of the requirements of Form 19b-6. We recommend item D be amended to make that point explicitly.

Judicial review of immediately effective rules (§ 240.19b-6(i)-Blackline, page A-2)

Bloomberg Tradebook recommends that proposed Rule 19b-6 be revised to state that where the Commission publishes a Form 19b-6 Notice with respect to a rule change filed by an SRO pursuant to Section 19(b)(3)(A) of the Exchange Act and the rule change becomes effective immediately and is not abrogated by the Commission within 60 days from the date the rule change is filed with the Commission, the Commission's publication of the Form 19b-6 notice of the filing of the rule change shall be deemed a final order of the Commission for purposes of judicial review pursuant to Section 25(a)(1) of the Exchange Act.

Section 25(a) of the Exchange Act provides judicial review to a person aggrieved by a final order of the Commission.4 The addition of the language we recommend in paragraph (i) of Rule 19b-6 would clarify that the right of judicial review as contemplated by Section 25(a) of the Exchange Act would apply after the 60 days for abrogation had elapsed. That would both provide for exhaustion of the administrative remedy of Commission abrogation before the right to seek judicial review would mature and, after the 60 days, acknowledge the applicability of the appellate remedy.

In addition, we ask that the Commission clarify that the immediate effectiveness of the rule change under Rule 19b-6 would constitute reasonable ground for failure to object to the order of the Commission within the meaning of Section 25(c)(1) of the Exchange Act. Given the pace of rule filings and the absence of the more elaborate procedural protections of the current Rule 19b-4 process, we think it appropriate that a party challenging the legality of an SRO rule that went effective without affirmative Commission approval not be required to justify a failure to discover the rule filing and evaluate its effects in time to object to the Commission.

Currently, significant SRO rule filings take considerably more than 60 days to be put into effect. That is precisely why the SROs pressed the Commission for an expedited procedure such as Rule 19b-6 would now provide. The effect of fast-track rule effectiveness, however, is to shorten the period of time in which members of the securities industry and members of the general public can discover that a rule filing has substantial problems. As a result, the risk of missing such a problem will be materially increased when the fast-track procedure goes into effect. The availability of that procedure may also increase the number of SRO rule filings, all of which will complicate the task of reviewing filings and determining whether to prepare comments in the short 21-day window period urging abrogation. For that reason, and in light of the congressional intent that members of the public be given the same protections they would have with respect to SEC rules under the Administrative Procedure Act,5 the Commission should recognize the need to accord adequate access to judicial remedies to persons adversely affected by an SRO rule change that became effective on filing and Federal Register notice.

SRO's Statement on Burden on Competition (Form 19b-6 Notice-Blackline, page A-7)

Sections 6(b)(8), 15A(b)(9), 15B(b)(2)(C) and 17A(b)(3)(I) of the Exchange Act require that SRO rules "not impose any burden on competition not necessary or appropriate in furtherance of the purposes of this title." Item 4 of Form 19b-4 sets forth in detail the required contents of an SRO's statement regarding the impact of a proposed rule on competition that must be included in the filing of a proposed rule change with the Commission.

In spite of an unambiguous statutory mandate and a filing requirement that provides express and explicit guidance, the record of the SROs in providing statements with respect to the impact of their proposed rule changes on competition does not inspire confidence. In the release proposing the creation of a corporate bond trade reporting and transaction dissemination facility, known by the acronym TRACE,6 Nasdaq states that it "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."7 In the release proposing the establishment of the Super Montage,8 the NASD provided, word for word, the identical formulaic response.9 In the release proposing an amendment to the delisting requirements under Rule 500,10 the New York Stock Exchange states that "[t]he Exchange believes that the proposal does not impose any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act."11 In all three instances, the SROs substituted a formulaic incantation for compliance with the statute and rule.

Given the importance of the statement of burdens on competition with respect to trading rules that will become immediately effective under the Commission's proposed rule, we urge the Commission to adopt the express prohibition we recommend for inclusion in Form 19b-6. Combined with our recommendation that full compliance with all the requirements of Form 19b-6 be a precondition for immediate effectiveness, we believe the revisions we recommend would assist the Commission in requiring the SROs to submit filings that will provide a sound basis for both the Commission and other interested parties to assess proposed rule changes.

Publish a blackline of the text of the proposed rule change-(Form 19b-6 Notice-Blackline, page A-8)

Bloomberg Tradebook believes the full blacklined rule, as amended, should be published in the Federal Register within five days of filing of the proposed rule change with the Commission. In addition, where necessary or appropriate for a clear understanding of the proposed rule change, the SRO must provide technical specifications and diagrams. We believe that both provisions will prove useful both to the Commission and to the public.

Conclusion

Bloomberg Tradebook supports the initiative the Commission has taken to streamline the rule-filing process for SROs. Although we support the Commission's goals as stated in the Release, we believe that those goals would not be best served by approving Rule 19b-6 and Form 19b-6 as proposed. Bloomberg Tradebook respectfully recommends that the Commission adopt the suggested revisions to both Rule 19b-6 and Form 19b-6 discussed above. If adopted, those revisions will provide the Commission with the authority it needs to encourage SRO compliance with their rulemaking responsibilities under the Exchange Act, provide the SROs with a clear and unambiguous statement of the requirements that must be met for rules to become immediately effective upon filing and clarify for parties that may be aggrieved by an expedited rule change their right to judicial review.

* * *

We appreciate the opportunity to make our views known to the Commission and the staff and we hope that our letter is helpful. If members of the Commission or of the staff believe we may be of further assistance in these matters, please let us know.

Very truly yours,

Bloomberg Tradebook LLC

By:Kevin M. Foley by RDB
Kevin M. Foley

cc: The Hon. Laura S. Unger, Acting Chairman
The Hon. Isaac C. Hunt, Jr., Commissioner
The Hon. Paul R. Carey, Commissioner
Annette L. Nazareth, Esq., Director, Division of Market Regulation
Robert L. D. Colby, Esq., Deputy Director, Division of Market Regulation
Belinda Blaine, Esq., Associate Director, Division of Market Regulation
Jack Drogin, Esq., Assistant Director, Division of Market Regulation
David M. Becker, Esq., General Counsel

¶ 240.19b-6 Filings with respect to proposed rule changes by self-regulatory organizations.

(a) Filings with respect to proposed rule changes by a self-regulatory organization shall be made on Form 19b-6 (17 CFR 249.19b-6). The Commission shall issue a release relating to a proposed rule change filed pursuant to this section within 10 business days of filing with the Commission (or within such longer period as to which the self-regulatory organization consents in writing).

(b) A proposed rule change may take effect upon filing with the Commission pursuant to section 19(b)(3)(A) of the Act, (15 U.S.C. 78s(b)(3)(A)) and the Commission's publication in the Federal Register of the Form 19b-6 Notice with respect to the proposed rule change if such rule change is properly designated by the self-regulatory organization as:

(1) Constituting a stated policy, practice or interpretation with respect to the meaning, administration, or enforcement of an existing rule;

(2) Establishing or changing a due, fee, or other charge;

(3) Concerned solely with the administration of the self-regulatory organization;

(4) Effecting a change in an existing service of a registered clearing agency that:

(i) Does not adversely affect the safeguarding of securities or funds in the custody or control of the clearing agency or for which it is responsible; and

(ii) Does not significantly affect the respective rights or obligations of the clearing agency or persons using the service;

(5) Effecting a minor change, or a change substantially the same as the rule of another self-regulatory organization that has previously been filed and approved pursuant to section 19(b)(2) of the Act (15 U.S.C. 78s(b)(2)), and:

(i) Does not significantly affect the protection of investors or the public interest;

(ii) Does not impose any significant burden on competition;

(iii) Does not unfairly discriminate between customers, issuers, and brokers or dealers; and

(iv) Does not relate to a trading rule; or

(6) Establishing or changing a trading rule, other than a trading rule that, alone or in conjunction with other rules or proposed rule changes of the self-regulatory organization, rule that would make fundamental structural changes to the market, and that significantly affects the protection of investors or the public interest or imposes a significant burden on competition and other than a trading rule that affects the access of persons (including, in the case of national securities exchanges or registered securities associations, through a member) to facilities maintained by the self-regulatory organization ("specified persons") or to a group or category of specified persons. As used in the preceding sentence, facilities maintained by a self-regulatory organization shall include, but shall not be limited to, data, quotation facilities, trading facilities, communication facilities and facilities involving the execution, clearance and settlement of a trade; provided that the self-regulatory organization certifies that it has established procedures for the effective surveillance of activity conducted pursuant to, and for the enforcement of, such trading rule.

(7) If a proposed rule change filed with the Commission pursuant to Section 19(b)(3)(A) of the Act (15 U.S.C. 78s(b)(3)(A)) is improperly certified by the self-regulatory organization that has filed the rule change, such rule change shall be void ab initio and the self-regulatory organization shall not have any responsibility or authority under Section 19(g)(2) of the Act (15 U.S.C. 78s(g)(2)) or otherwise to enforce compliance with the rule change.

(g) For purposes of this section:

(1) The term trading rule means a rule of a national securities exchange or a national securities association that governs the trading of securities on the exchange or association or through its facilities:

(i) The term trading rule shall include rules governing member trading, such as rules governing: use of or access to an order entry, routing, or execution system; member proprietary trading; display of quotations; market maker activities; trading units; order types; odd lot differentials; priority of orders, bids, and offers (but not customer orders, including limit orders), fast markets; trading hours; comparison; clearance and settlement of transactions; disagreements on executions; obligations of specialists to maintain fair and orderly markets; special offerings; exchange distributions; closing contracts; authority and actions of order book officials; activities of floor brokers; and trading activities of specialists and lead market makers.

(ii) The term trading rule shall not include rules governing member regulation, such as rules governing: transaction confirmations and account statements; member advertising, sales literature, and other customer communications; suitability and other sales practices; arbitration; disciplinary matters and sanctions; membership and eligibility requirements; financial responsibility (e.g., net capital and recordkeeping); margin and use of collateral; transaction reporting; discretionary handling of customer orders (including limit orders); position limits; market surveillance; listing standards; and self-regulatory organization corporate governance.

(h) Where a proposed rule change becomes effective pursuant to paragraph (b) of this section, no inference may be made regarding whether the proposed rule change is in the public interest, including whether it has an impact on competition.

(i) The Commission's publication of a Form 19b-6 Notice with respect to a proposed rule change that becomes effective pursuant to paragraph (b) of this section, and that the Commission does not abrogate, pursuant to Section 19(b)(3)(C) of the Act (15 U.S.C. 78s(b)(3)(C)), within 60 days from the date the proposed rule change is filed with the Commission shall be deemed a final order of the Commission for purposes of judicial review of the Commission's order pursuant to Section 25(a)(1) of the Act (15 U.S.C. 78y(a)(1)). The immediate effectiveness of the proposed rule pursuant to paragraph (b) of this section shall constitute reasonable ground for failure to object to the order of the Commission within the meaning of Section 25(c)(1) of the Act (15 U.S.C 78y(c)(1)).

(i) (j) After instituting a proceeding to determine whether a proposed rule change should be disapproved, the Commission will afford the self-regulatory organization and interested persons an opportunity to submit additional written data, views, and arguments and may afford, in the discretion of the Commission, an opportunity to make oral presentations.

(jk) Notice of orders issued pursuant to Section 19(b)(2) of the Act (15 U.S.C. 78s(b)(2)) will be given by prompt publication thereof, together with a statement of written reasons thereforetherefor. The Commission will promptly notify each self-regulatory organization upon issuing an order, pursuant to Section 19(b)(2) of the Act (15 U.S.C. 78s(b)(2), approving a proposed rule change by that self-regulatory organization.

(kl) Self-regulatory organizations shall retain at their principal place of business a file, available to all interested persons for public inspection and copying, of all filings made pursuant to this section and all correspondence and other communications reduced to writing (including comment letters) to and from such self-regulatory organization concerning any such filing, whether such correspondence and communications are received or prepared before or after the filing of the proposed rule change.

(lm) A proposed rule change by a self-regulatory organization may be filed electronically with the Commission, in a format acceptable to the Commission, provided that the self-regulatory organization promptly thereafter files with the Commission nine paper copies, one of which is manually signed.

Form 19b-6

File No. SR _____________________

Amendment No. _______________
(If Applicable)

Securities and Exchange Commission
Washington, DC 20549-1001, Form 19b-6,
Proposed Rule Change by:

______________________________
(Exact Name of Self-regulatory Organization)

Pursuant to Rule 19b-6 under the Securities Exchange Act of 1934.

General Instructions

. . . .

D. When Is a Proposed Rule Change Considered Filed?

To be considered filed, an SRO must include with its proposed rule change: a completed Form 19b-6 that includes the cover sheet, Notice, Certification, and applicable Exhibits. The proposed rule change will be considered filed on the date that the Commission receives it if the filing complies with all requirements of this Form 19b-6 and the requirements of Rule 19b-6. Any filing that does not comply with all of the requirements of this Form 19b-6 will not be considered filed with the Commission and will be returned to the self-regulatory organization.

The self-regulatory organization must provide all required information, presented in a clear and comprehensible manner, to enable the public to provide meaningful comment on the proposal and for the Commission to determine whether the proposal is consistent with the Act and applicable rules and regulations under the Act. It is the responsibility of the self-regulatory organization to prepare Items I and II of the Notice. For rule changes filed for immediate effectiveness pursuant to Section 19(b)(3)(A) of the Act (15 U.S.C. 78s(b)(3)(A)), compliance with all requirements of Form 19b-6 shall be a precondition to immediate effectiveness of the proposed rule change.

. . . .

Form 19b-6 Certification

The chief executive officer, general counsel, or other officer or director of the self-regulatory organization that exercises similar authority must review the Form 19b-6 (including the Notice and all required exhibits (See General Instructions)), complete the following certification, and sign the certification statement set forth below. The filing will not be considered filed with the Commission if the relevant items are not complete. This certification incorporates all statements made in the Notice. If a proposed rule change filed with the Commission pursuant to Section 19(b)(3)(A) of the Act (15 U.S.C. 78s(b)(3)(A)) is improperly certified by the self-regulatory organization that has filed the rule change, such rule change shall be void ab initio and the self-regulatory organization shall not have any responsibility or authority under Section 19(g)(2) of the Act (15 U.S.C. 78s(g)(2)) or otherwise to enforce compliance with the rule change.

Contact Information: Provide the name(s), telephone number(s) and e-mail address(es) of the person(s) on the staff of the self-regulatory organization prepared to respond to questions and comments on the proposed rule change:

Name(s): _____________________________

Telephone number(s): _________________

E-mail address(es): _______________________

. . . .

Form 19b-6 Notice

Securities and Exchange Commission
(Release No. 34-___; File No. SR-___)

Self-Regulatory Organization; [Notice of Filing of a] [Notice of Filing and Immediate Effectiveness of a] Proposed Rule Change by [Name of Self-Regulatory Organization] Relating to [brief description of proposed rule change]

Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 ("Act"), 15 U.S.C. 78s(b)(1), and Rule 19b-6 under the Act, 17 CFR 240.19b-6, notice is hereby given that on [date], the [name of self-regulatory organization] filed with the Securities and Exchange Commission ("Commission") the proposed rule change described in Items I and II below. The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons.

Section 19(b)(3)(A) Filings. If the proposed rule change is to take effect pursuant to Section 19(b)(3)(A) and Rule 19b-6(b), the following sentence, with appropriate footnote citation, should be included in the first paragraph:

[self-regulatory organization] filed the proposal pursuant to Section 19(b)(3)(A) of the Act, and Rule 19b-6(b) [applicable section] thereunder, which renders the proposal effective upon filing with the Commission.

For proposed rule changes filed pursuant to Section 19(b)(3)(A)(ii) and Rule 19b-6(b)(2), the sentence should read:

[self-regulatory organization] has designated this proposal as one establishing or changing a due, fee, or other charge imposed by [self-regulatory organization] under Section 19(b)(3)(A)(ii) of the Act, and Rule 19b-6(b)(2) thereunder, which renders the proposal effective upon filing with the Commission.

I. Self-Regulatory Organization's Description of the Proposed Rule Change

The [name of self-regulatory organization] has prepared statements concerning the purpose of, and basis for, the proposed rule change, burdens on competition, and comments received from members, participants, and others. These statements are set forth in Sections A, B, and C below. Section D below sets forth the text of the proposed rule change.

A. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change

1. Purpose

Provide a statement of the purpose of the proposed rule. The statement must:

. . . .

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

The information required by this section must be sufficiently detailed and specific to support the premise that the proposed rule change does not impose any unnecessary or inappropriate burden on competition. In responding A statement to the effect that the self-regulatory organization believes or has determined that the proposed rule change does not impose any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act is not a sufficient response to this section and will cause the proposed rule change to be deemed not to have been filed with the Commission for purposes of Section 19(b)(1) of the Act. If the competitive impacts of the proposed rule change are certain to be insignificant, an elaborate discussion is not warranted, but the self-regulatory organization must identify any such burdens and, as noted below, state why they are insignificant. In responding to this section, the self-regulatory organization must:

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

State whether or not comments were solicited or received. Summarize all comments received (solicited or unsolicited) and respond in detail to any significant issues raised about the proposed rule change.

If an issue is summarized and responded to in detail elsewhere in this notice, that response need not be duplicated if an appropriate cross-reference is made to the place where the response can be found.

D. Text of the Proposed Rule Change

InsertProvide the full text of the proposed rule change, as amended, blacklined with deletions in brackets and additions underlined. The full blacklined rule, as amended, must be published in the Federal Register within five days of filing of the proposed rule change with the Commission. If the self-regulatory organization is amending only part of the text of a lengthy rule, it may file only those portions of the text being amended if the filing is clearly understandable on its face.

Note: Disclosure must be made in reasonable detail of any aspect of a trading system or other self-regulatory system that would be likely to have a material bearing on whether the proposed rule change would or would not be consistent with the statutory standards applicable to the self-regulatory organization. In the case of technologically oriented rule filings, textual descriptions alone generally would not be sufficient to give the Commission and the public a sufficient basis for understanding the proposed rule change. In such cases, the self-regulatory organization should include disclosure, either in appendices to the text of a proposed rule change or by incorporation by reference of information posted on the self-regulatory organization's website, of the pertinent technical matters referenced in the filing, including, where appropriate, flow-charts and schematic diagrams, and specifications or system requirements, however denominated, that were used by the programmers in designing the system program code, to permit expert commenters to evaluate and critique the operation of a proposed system.

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

Section 19(b)(2) Rule Filing: If the proposed rule change is to be considered by the Commission pursuant to section 19(b)(2), the following paragraph should be used:

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 publication if it finds a longer period to be appropriate and publishes its reasons for the finding or (ii) as to which the self-regulatory organization consents, the Commission will:

A. By order approve the proposed rule change or

B. Institute proceedings to determine whether the proposed rule change should be disapproved.

Section 19(b)(3)(A) Filing. If the proposed rule change is to take, or to be put into, effect pursuant to section 19(b)(3)(A) and Rule 19b-6(b), the following paragraph should be used:

The foregoing rule change has become effective pursuant to section 19(b)(3)(A) (insert appropriate subparagraph) of the Act and Rule 19b-6(b) [insert appropriate subparagraph] under the Act. At any time within 60 days of the date of the filing of the proposed rule change, the Commission may summarily abrogate the rule change if the Commission believes that abrogation is necessary or appropriate in the public interest, for the protection of investors, or otherwise in furtherance of the purposes of the Act. The Commission shall make no determination of a proposed rule change's impact on competition, efficiency, or capital formation for purposes of section 3(f) of the Act (15 U.S.C. 78c(f)) where the proposed rule change takes effect upon filing pursuant to paragraph (b) of Rule 19b-6 under the Act, and no inference of such a finding shall be made therefrom.

In addition, the self-regulatory organization must designate whether the proposed rule change:

(i) Is a stated policy, practice, or interpretation with respect to the meaning, administration, or enforcement of an existing rule;

(ii) Establishes or changes a due, fee, or other charge;

(iii) Is concerned solely with administration of the self-regulatory organization;

(iv) Effects a change in an existing service of a registered clearing agency that (A) does not adversely affect the safeguarding of securities or funds in the custody or control of the clearing agency or for which it is responsible, and (B) does not significantly affect the respective rights or obligations of the clearing agency or person using the service;

(v) Effects a minor change, or a change substantially the same as the rule of another self-regulatory organization that has previously been filed and approved pursuant to section 19(b)(2) of the Act, and (A) does not significantly affect the protection of investors or the public interest; (B) does not impose any significant burden on competition; (C) does not unfairly discriminate between customers, issuers, and brokers or dealers; and (D) does not relate to a trading rule; or

(vi) Establishes or changes a trading rule, other than a trading rule that, alone or in conjunction with other rules or proposed rule changes of the self-regulatory organization, would make fundamental structural changes to the market, and that significantly affects the protection of investors or the public interest ofor imposes a significant burden on competition and other than a trading rule that affects the access of persons (including, in the case of national securities exchanges or registered securities associations, through a member) to facilities maintained by the self-regulatory organization ("specified persons") or to a group or category of specified persons. As used in the preceding sentence, facilities maintained by a self-regulatory organization shall include, but shall not be limited to, data, quotation facilities, trading facilities, communications facilities and facilities involving the execution, clearance and settlement of a trade; provided that the self-regulatory organization certifies that it has established procedures for the effective surveillance of activity conducted pursuant to, and for enforcement of, such trading rule.

Section 19(b)(3)(B) Filing. If the proposed rule change is to take, or to be put into, effect pursuant to section 19(b)(3)(B) and Rule 19b-6(b), the following paragraph should be used:

The foregoing rule change has become effective pursuant to section 19(b)(3)(B) of the Act. At any time within 60 days of the filing of the proposed rule change, the Commission may summarily abrogate the rule change if the Commission believes that abrogation is necessary or appropriate in the public interest, for the protection of investors, or otherwise in furtherance of the purposes of the Act.

In addition, the self-regulatory organization must set forth the basis upon which the Commission should, in the view of the self-regulatory organization, determine that the protection of investors, the maintenance of fair and orderly markets, or the safeguarding of securities and funds requires the proposed rule change to be put into effect summarily by the Commission.

. . . .

For the Commission, by the Division of Market Regulation, pursuant to delegated authority (17 CFR 200.30-3(a)(12)).

[Insert name of Secretary]

Secretary.

Footnotes

1 Bloomberg Tradebook operates a proprietary electronic communications network ("ECN") pursuant to Regulation ATS under the Securities Exchange Act of 1934 (the "Exchange Act") and a no-action letter from the staff of the Commission's Division of Market Regulation. Letter from Dr. Richard R. Lindsey to Roger D. Blanc (January 17, 1997), SEC No-Action Letter, 1997 SEC No-Act. LEXIS 55 (the "Bloomberg Tradebook No-Action Letter"). The Bloomberg Tradebook No-Action Letter was extended on several occasions, most recently on January 12, 2001. Bloomberg Tradebook is a registered broker-dealer and a member of the National Association of Securities Dealers, Inc. (the "NASD"). Bloomberg Tradebook offers its institutional and broker-dealer customers, and other broker-dealers that access the Tradebook system via private connections and Nasdaq's SelectNet, the opportunity to buy and sell equity securities through use of the BLOOMBERG PROFESSIONAL service (as defined below).

Bloomberg Tradebook is a wholly owned subsidiary of Bloomberg L.P. ("Bloomberg"). Bloomberg is engaged in the business of providing its customers with financial market information, news and analytics via its worldwide electronic network (the "BLOOMBERG PROFESSIONALTM service"). Bloomberg also serves its broker-dealer and institutional customers' communications needs and facilitates their transaction of business by offering various additional services, including electronic messaging, non-anonymous offerings, bids wanted and equity order-routing and indications of interest, and linkages to certain exchanges within and outside the United States. Approximately two million text messages and transaction messages involving billions of dollars of securities are sent and received by Bloomberg customers across the BLOOMBERG PROFESSIONAL service every business day. In addition, we expect in the future to provide access to additional points of liquidity as customer demand dictates.

2 Publication in the Federal Register provides legal notice to everyone and, in the absence of publication, actual notice may be required. 44 U.S.C. § 1507.
3 The Congress made it clear in the legislative history of the Securities Acts Amendments of 1975 that SRO rulemaking was to afford to the public all the procedural protections of agency rulemaking under the Administrative Procedure Act. See Securities Acts Amendments of 1975, Report of the Senate Comm. on Banking, Housing and Urban Affairs to Accompany S.249, S. Rep. No. 94-75, 94th Cong., 1st Sess. 29-30 (1975):

In order to facilitate expeditious Commission review and evaluation of [proposed rule changes] and to assure informed public comment on them, Section 19(b)(1) would require all self-regulatory organizations to file with the SEC in connection with any proposed rule change a "concise general statement of the basis and purpose" of the proposed rule change. It is the Committee's intention in adopting this standard to hold the self-regulatory organizations to the same standards of policy justification that the Administrative Procedure Act imposes on the SEC.

. . . [T]he Committee believes interested persons should have a meaningful opportunity to obtain accurate information about proposed changes in self-regulatory rules and to comment on the need or justification for these changes. Section 19(b)(1) would require the SEC to give notice and provide an opportunity for interested persons to participate in the process of reviewing a proposed change in a self-regulatory organization's rule. . . .

. . . The Committee believes the Commission has a responsibility to see that self-regulatory rules are fully responsive to regulatory needs. By explicitly providing that the Commission's oversight authority encompasses major self-regulatory policies, the bill would make this responsibility clear and substantially decrease the possibility of slippage between regulatory need and self-regulatory performance [emphasis added]. . . .

4 Cf., Kixmiller v. SEC, 492 F.2d 641 (D.C. Cir. 1974).
5 See note 2, supra.
6 Securities Exchange Act Release No. 42201 (Dec. 3, 1999).
7 Id., in text after n. 10.
8 Securities Exchange Act Release No. 42166 (Nov. 22, 1999).
9 Id., in text after n. 66.
10 Securities Exchange Act Release No. 39394 (Dec. 3, 1997).
11 Id., in text after n. 5.