January 11, 2006
Mr. John M. Schaible
Dear Mr. Schaible:
Citigroup Global Markets Inc. has informed the Division of Market Regulation ("Division") of the Securities and Exchange Commission ("Commission") by letter dated January 10, 2006 that Citigroup Financial Products Inc. will be acquiring (i) the stock of OnTrade, Inc. ("OnTrade"), the broker-dealer that is registered with the Commission and has previously operated through the date hereof the electronic communications network ("ECN") known as NexTrade ECN ("NexTrade ECN"), and (ii) certain assets of NexTrade Holdings, Inc., the parent company of OnTrade (collectively, the "Proposed Acquisition").
You have filed with the Commission the Cessation of Operations Report on Form ATS dated January 3, 2006 for NexTrade ECN, which is to take effect on the later of January 11, 2006 or the closing of the Proposed Acquisition.
The Division has previously taken the position that NexTrade ECN is an ECN as defined in Rule 600 of Regulation NMS1 and that OnTrade would be in compliance with the requirements applicable to the ECN Display Alternative set forth in Rule 602 of Regulation NMS2 with respect to any Nasdaq security for which a linkage between NexTrade ECN and a self-regulatory organization is operational. The Division set forth this position in a series of no-action letters; the original no-action letter, issued on April 2, 2004, was extended most recently on October 7, 2005. The Division stated in those no-action letters that it would not recommend that the Commission take enforcement action against OTC market makers or exchange market makers, each as defined in Regulation NMS,3 who are participants in NexTrade ECN if those market makers enter orders into the NexTrade ECN without modifying their public quotations, in compliance with the ECN Display Alternative.
This letter hereby withdraws the Division's no-action position with respect to NexTrade ECN upon the closing of the Proposed Acquisition.
Robert L.D. Colby
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