In response to Regulation NMS and the desire of investors for more efficient trading, many exchanges are automating their equity trading systems. The Commission is extending the compliance dates to give these exchanges additional time to develop their new trading systems, and to give the securities industry time to establish the access to these trading systems.

The initial compliance date for the rules has been extended from June 29, 2006, to a series of five dates, beginning on Oct. 16, 2006. In addition, the Commission, by separate order, has exempted until April 1, 2007, those self-regulatory organizations (SROs) that participate in the joint industry plans for distributing market data from compliance with the amended formula for allocating market data revenues to the SROs.

Each of these compliance dates represents an essential functional step on the way to full implementation of Rules 610 and 611. The extended dates give automated trading centers more than seven additional months beyond the original June 29, 2006, compliance date to bring their Regulation NMS-compliant trading systems into full operation. The seven-month extension is in addition to the one-year period originally provided when Regulation NMS was published in June 2005. Accordingly, the extended dates are designed to provide all automated trading centers with sufficient time to meet the new intermediate compliance dates for posting final technical specifications and commencing full operation of their new or modified trading systems.

In addition, the extended dates give all securities industry participants a nearly eleven-month extension of the original June 29, 2006, compliance date, including seven months after automated trading centers publicly post their final technical specifications. This extension is designed to facilitate a non-disruptive and cost-effective implementation of the new regulatory requirements by the securities industry.

Finally, the exemption until April 1, 2007, for SROs to comply with the amended formula for allocating market data revenues will give trading centers additional time to implement systems that are capable of displaying automated quotations that meet the requirements of Regulation NMS. Under the amended formula, 50% of market data revenues will be allocated to SROs that display automated quotations at the best prices for NMS stocks.

Rule 610 is intended to assure fair access to quotations, limit fees for accessing quotations, and require SROs to prohibit their members from displaying quotations that lock or cross quotations previously displayed by other markets. Rule 611 requires trading centers to establish policies and procedures to prevent "trade-throughs" – the execution of trades at prices inferior to the best-priced quotations displayed by automated trading centers. Automated trading centers must operate trading systems that comply with the automated response and other requirements of Regulation NMS. The trading systems can be operated by an SRO or operated by a broker-dealer that displays its quotes on the NASD’s Alternative Display Facility.

The extended compliance dates for Rule 610 and Rule 611 are as follows.

Oct. 16, 2006 (Specifications Date): Final date for publication of final technical specifications for the Regulation NMS-compliant trading systems of all automated trading centers that intend to qualify their quotations for trade-through protection under Rule 611 during the Pilot Stocks Phase and All Stock Phase (as defined below).

Feb. 5, 2007 (Trading Phase Date): Final date for full operation of Regulation NMS-compliant trading systems of all automated trading centers intending to qualify their quotations for trade-through protection under Rule 611 during the Pilot Stocks Phase and All Stocks Phase. The period from Feb. 5, 2007, to May 21, 2007, is the "Trading Phase".

May 21, 2007 (Pilot Stocks Phase Date): Start of full industry compliance with Rule 610 and Rule 611 for 250 NMS stocks (100 NYSE stocks, 100 Nasdaq stocks, and 50 Amex stocks). The period from May 21, 2007 to July 9, 2007 is the "Pilot Stocks Phase".

July 9, 2007 (All Stocks Phase Date): Start of full industry compliance with Rule 610 and Rule 611 for all remaining NMS stocks. The period from July 9, 2007, to Oct. 8, 2007, is the "All Stocks Phase".

Oct. 8, 2007 (Completion Date): Completion of phased-in compliance with Rule 610 and Rule 611.