Proposed Rule Change Relating to Extension of NASD's Short Sale Rule Contained in Rule 5100 and Short Sale Standard Contained in IM-5100

NASD is filing with the Securities and Exchange Commission ("SEC" or "Commission") a proposed rule change to extend retroactively to December 16, 2006, and prospectively through December 15, 2007, the pilot effectiveness of Rule 5100 (Short Sale Rule). NASD is also seeking to extend the pilot effectiveness of the penny ($0.01) legal short sale standard contained in Interpretive Material (IM) 5100. Without such extension, these pilots would have expired on December 15, 2006. NASD does not propose any substantive changes to the pilots.