Self-Regulatory Organizations; Notice of Filing of Proposed Rule Change and Amendment Nos. 1 and 2 Thereto by the National Association of Securities Dealers, Inc. To Establish a Unitary Fee Schedule for Distribution of Real Time Data Feed Products Containing Nasdaq Market Center Data, 22162-22165 [E5-2041]
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22162
Federal Register / Vol. 70, No. 81 / Thursday, April 28, 2005 / Notices
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:
SECURITIES AND EXCHANGE
COMMISSION
Electronic Comments
Self-Regulatory Organizations;
Chicago Board Options Exchange,
Inc.; Order Approving Proposed Rule
Change To Revise Certain Membership
Rules Related to the Testing and
Orientation Requirements for
Nominees of Member Organizations
Approved Solely as Clearing Members
• Use the Commission’s Internet
comment form (https://www.sec.gov/
rules/sro.shtml); or
• Send an e-mail to rulecomments@sec.gov. Please include File
Number SR–BSE–2004–51 on the
subject line.
[Release No. 34–51590; File No. SR–CBOE–
2005–10]
April 21, 2005.
On January 25, 2005, the Chicago
Board Options Exchange, Inc. (‘‘CBOE’’
or ‘‘Exchange’’) filed with the Securities
• Send paper comments in triplicate
and Exchange Commission
to Jonathan G. Katz, Secretary,
(‘‘Commission’’), pursuant to Section
Securities and Exchange Commission,
19(b)(1) of the Securities Exchange Act
450 Fifth Street, NW., Washington, DC
of 1934 (‘‘Act’’) 1 and Rule 19b–4
20549–0609.
thereunder,2 a proposed rule change to
All submissions should refer to File
revise membership rules related to the
Number SR–BSE–2004–51. This file
testing and orientation requirements for
number should be included on the
certain members and to make other nonsubject line if e-mail is used. To help the substantive changes. The proposed rule
Commission process and review your
change was published for comment in
comments more efficiently, please use
the Federal Register on March 17,
only one method. The Commission will 2005.3 The Commission received no
post all comments on the Commission’s comments on the proposal. This order
Internet Web site (https://www.sec.gov/
approves the proposed rule change.
rules/sro/shtml). Copies of the
Pursuant to the proposed rule change,
submission, all subsequent
the Exchange will revise Exchange Rule
amendments, all written statements
3.8(a)(iii) to provide that nominees of a
with respect to the proposed rule
member organization approved solely as
change that are filed with the
a Clearing Member are not required to
Commission, and all written
have an authorized trading function.
communications relating to the
The effect of the rule change is to
eliminate the requirement that
proposed rule change between the
Commission and any person, other than nominees of Clearing Members attend
the Exchange’s Member Orientation
those that may be withheld from the
Program and pass the Exchange’s
public in accordance with the
Trading Member Qualification Exam.
provisions of 5 U.S.C. 552, will be
Clearing Members who wish to engage
available for inspection and copying in
in trading activities on the Exchange
the Commission’s Public Reference
Room. Copies of such filing also will be will still be required to designate a
nominee who has an authorized trading
available for inspection and copying at
the principal office of the Exchange. All function. The proposed rule change also
makes certain other technical changes to
comments received will be posted
internal Exchange procedures for
without change; the Commission does
categorizing its members.
not edit personal identifying
The Commission finds that the
information from submissions. You
proposed rule change is consistent with
should submit only information that
you wish to make available publicly. All the requirements of the Act and the
rules and regulations thereunder
submissions should refer to File
applicable to a national securities
Number SR-BSE–2004–51 and should
be submitted on or before May 19, 2005. exchange and, in particular, the
requirements of Section 6(b)(5) of the
For the Commission, by the Division of
Act,4 which requires that the rules of the
Market Regulation, pursuant to delegated
exchange be designed to prevent
authority.12
fraudulent and manipulative acts and
Margaret H. McFarland,
practices, to promote just and equitable
Paper Comments
Deputy Secretary.
[FR Doc. E5–2044 Filed 4–27–05; 8:45 am]
BILLING CODE 8010–01–P
12 17
CFR 200.30–3(a)(12).
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16:00 Apr 27, 2005
Jkt 205001
U.S.C. 78s(b)(1).
CFR 240.19b–4.
3 See Securities Exchange Act Release No. 51361
(March 11, 2005), 70 FR 13058.
4 15 U.S.C. 78f(b)(5).
PO 00000
1 15
2 17
Frm 00171
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principles of trade, and in general, to
protect investors and the public interest.
The Commission finds that removing
the requirements that nominees of
member organizations approved solely
as Clearing Members attend the
Exchange’s Member Orientation
Program and pass the Exchange’s
Trading Member Qualification Exam is
consistent with the requirements of
Section 6(b)(5) of the Act because the
exemption only applies to the nominees
of member organizations that are not
engaged with trading with the public.
It is therefore ordered, pursuant to
Section 19(b)(2) of the Act,5 that the
proposed rule change (SR–CBOE–2005–
10) be, and it hereby is, approved.
For the Commission, by the Division of
Market Regulation, pursuant to delegated
authority.6
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. E5–2042 Filed 4–27–05; 8:45 am]
BILLING CODE 8010–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–51598; File No. SR–NASD–
2004–185]
Self-Regulatory Organizations; Notice
of Filing of Proposed Rule Change and
Amendment Nos. 1 and 2 Thereto by
the National Association of Securities
Dealers, Inc. To Establish a Unitary Fee
Schedule for Distribution of Real Time
Data Feed Products Containing
Nasdaq Market Center Data
April 21, 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 December
14, 2004, 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. On
February 17, 2005, Nasdaq filed
Amendment No. 1 to the original filing.3
Nasdaq filed Amendment No. 2 on April
14, 2005.4 The Commission is
publishing this notice to solicit
5 15
U.S.C. 78s(b)(2).
CFR 200.30–3(a)(12).
1 15 U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
3 Amendment No. 1 replaced and superseded the
original proposed rule change in its entirety.
4 Amendment No. 2 replaced and superseded the
original proposed rule change, as amended.
6 17
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Federal Register / Vol. 70, No. 81 / Thursday, April 28, 2005 / Notices
comments on the proposed rule change,
as amended, from interested persons.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
Nasdaq is filing a proposed rule
change to modify NASD Rule 7010 to
establish a unitary fee schedule for the
distribution of Nasdaq Market Center
real time data feed products.
The text of the proposed rule change
is below.5 Proposed new language is
italicized; proposed deletions are in
[brackets].6
*
*
*
*
*
Rule 7010. System Services
(a)–(k) No change
(l) Market Data Distributor [or Vendor
Annual Administrative] Fees
(1) Nasdaq Market Data Distributors
[or Vendors] shall be assessed the
following annual administrative fee:
Delayed distributor ..............
0–999 real-time terminals ...
1,000–4,999 real-time terminals ...................................
5,000–9,999 real-time terminals ...................................
10,000+ real-time terminals
(3) A ‘‘distributor’’ of Nasdaq data is
any entity that receives a feed or data
file of Nasdaq data directly from
Nasdaq or indirectly through another
entity and then distributes it either
internally (within that entity) or
externally (outside that entity). All
distributors shall execute a Nasdaq
distributor agreement. Nasdaq itself is a
vendor of its data feed(s) and has
executed a Nasdaq distributor
agreement and pays the distributor
charge.
(4) ‘‘Direct Access’’ means a
telecommunications interface with
Nasdaq for receiving Nasdaq data via a
Nasdaq-operated website, system or
application, the MCI Financial Extranet,
or via an Extranet access provider or
other such provider that is fee-liable
under Rule 7010(v), but does not
include Nasdaq Workstation II/API
Service that is fee liable under Rule
7010(f)(1).
(m)–(p) No Change.
(q) Nasdaq TotalView
(1) TotalView Entitlement. The
TotalView entitlement allows a
subscriber to see all individual Nasdaq
Market Center participant orders and
quotes displayed in the system as well
as the aggregate size of such orders and
quotes at each price level in the
execution functionality of the Nasdaq
Market Center, including the NQDS
feed.
5 With the permission of Nasdaq, the Commission
made a typographical, non-substantive correction to
the text of the proposed rule change. See telephone
conversation between Jeff Davis, Associate General
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1,250[.00]
2,250[.00]
3,750[.00]
The Association may waive all or part
of the foregoing charges.
(2) The charge to be paid by
Distributors of the following Nasdaq
market center real time data feeds shall
be:
Monthly direct access fee
Issue Specific Data:
Dynamic Intraday ................................................................................................
Total View
Open View
Daily ....................................................................................................................
MFQS
Market Summary Statistics:
Intraday ...............................................................................................................
Real Time Index
$250[.00]
500[.00]
Monthly internal
distributor fee
Monthly external
distributor fee
$2,500
$1,000
$2,500
500
0
500
500
50
1,500
(A) No Change.
[(B) Distributors of individual
participant data in the TotalView
Entitlement shall pay a charge of $7,500
per month. Distributors of only the
aggregate data in the TotalView
Entitlement shall pay a charge of $1,000
per month.]
(B[C]) 30-Day Free-Trial Offer. Nasdaq
shall offer all new individual
subscribers and potential new
individual subscribers a 30-day waiver
of the user fees for TotalView. This
waiver shall not include the incremental
fees assessed for the NQDS-only service,
which are $30 for professional users and
$9 for non-professional users per month.
This fee waiver period shall be applied
on a rolling basis, determined by the
date on which a new individual
subscriber or potential individual
subscriber is first entitled by a
distributor to receive access to
TotalView. A distributor may only
provide this waiver to a specific
individual subscriber once.
For the period of the offer, the
TotalView fee of $[3]40 per professional
user and $5 per non-professional user
per month shall be waived.
(2) [Definitions.
(A) ]A ‘‘controlled device’’ is any
device that a distributor of the Nasdaq
data entitlement package(s) permits to:
(i) access the information in the Nasdaq
data entitlement package(s); or (ii)
communicate with the distributor so as
to cause the distributor to access the
information in the Nasdaq data
entitlement package(s). If a controlled
device is part of an electronic network
between computers used for investment,
trading or order routing activities, the
burden shall be on the distributor to
demonstrate that the particular
controlled device should not have to
pay for an entitlement. For example, in
some display systems the distributor
gives the end user a choice to see the
data or not; a user that chooses not to
see it would not be charged. Similarly,
in a non-display system, users of
controlled devices may have a choice of
basic or advanced computerized trading
or order routing services, where only the
advanced version uses the information.
Customers of the basic service then
would be excluded from the entitlement
requirement.
[(B) A ‘‘distributor’’ of a Nasdaq data
feed is any firm that receives a Nasdaq
data feed directly from Nasdaq or
indirectly through another vendor and
then distributes it either internally or
externally. All distributors shall execute
a Nasdaq distributor agreement. Nasdaq
itself is a vendor of its data feed(s) and
has executed a Nasdaq distributor
agreement and pays the distributor
charge.]
(3) No Change.
(4) No Change.
(r)–(w) No Change.
*
*
*
*
*
Counsel, Nasdaq, and Raymond Lombardo,
Attorney, Division of Market Regulation,
Commission, April 21, 2005.
6 The proposed changes are marked from NASD
Rule 7010 as it appears in the NASD Manual
available at www.nasd.com.
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Federal Register / Vol. 70, No. 81 / Thursday, April 28, 2005 / Notices
Rule 7030. Special Options
Receive only printer .............................
Local Posting .........................................
Dual Keyboard .......................................
[Nasdaq Market Index] .........................
Non-Continuous Access to Nasdaq
Level 1 and Last Sale Information.
*
*
*
*
.................................................................................................................................
Permits subscriber to use Nasdaq Level 3 terminals to enter quotations simultaneously into an internal computer system.
.................................................................................................................................
[Permits vendor to process Nasdaq Level I and Last Sale data feeds solely for
the purpose of supplying subscribers with distribute real-time calculations
of the Nasdaq market indexes to all of its subscribers, including those that
do not otherwise subscribe to real-time Nasdaq Level 1 or NQDS services.].
Permits vendor to process and distribute Nasdaq Level 1 and Last Sale information to its subscribers on a non-continuous or query-response basis.
*
Rule 7060. Partial Month Charges
Distributors may elect to have [T]the
charges for the month of
commencement or termination of
service [will] be billed on a full month
basis or prorated based on the number
of trade days in that month.
*
*
*
*
*
Rule 7090. Mutual Fund Quotation
Service
(a)–(d) No change.
[(e) Distributors receiving MFQS shall
pay a monthly fee of $1,000. For the
purposes of this subsection only, the
term ‘‘distributor’’ shall refer to any firm
that receives the MFQS data feed and
distributes it to third parties. All such
firms must execute a Nasdaq Distributor
Agreement.]
*
*
*
*
*
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
Nasdaq offers various data products
that firms may purchase and
redistribute either within their own
organizations or to outside parties.
Nasdaq assesses ‘‘distributor fees’’ that
are designed to encourage broad
distribution of the data, and allow
Nasdaq to recover the relatively high
fixed costs associated with supporting
connectivity and contractual
relationships with distributors. Because
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16:00 Apr 27, 2005
Jkt 205001
the data products and associated fees
were established over many years, the
method of calculating such fees must be
updated. Nasdaq is proposing to
establish a revised monthly distributor
pricing structure for its real time data
feed products that it believes will
allocate equitably data fees across the
customer base of data distributors and
consumers of Nasdaq market data.
Specifically, the current proposal
would establish a distributor fee pricing
structure for four real time data feed
products: TotalView, OpenView,
Mutual Fund Quotation Service
(‘‘MFQS’’), and Real Time Index. The
proposed fees will be assessed to
distributors of these real time data feed
products, those vendors that receive the
real time data feeds that can be retransmitted in an uncontrolled format.
The distributor fees do not apply to
Nasdaq’s web-based historical data
products, which are governed by NASD
Rule 7010(p), and they do not apply to
data feeds that are produced pursuant to
the national market system plan
governing Nasdaq stocks (‘‘Nasdaq UTP
Plan’’). The proposed distributor pricing
is also distinct from any per display
device or per user population fees for
data products such as TotalView.
The proposed pricing structure is
comprised of two components for each
Nasdaq real time data feed product: (1)
a Direct Access Fee, and (2) either an
Internal Distribution Fee or an External
Distribution Fee. The Direct Access Fee
will apply to any organization that
receives a real time data product
directly from Nasdaq via a data feed.
Distributors receiving Nasdaq real time
data indirectly (i.e., via re-transmission
from another entity) are not liable for
the Direct Access Fee. This fee allows
Nasdaq to recover the fixed costs of
establishing and maintaining
relationships with direct access
distributors.
The Internal Distribution Fee will
apply to any organization that receives
a real time data feed product (either
directly from Nasdaq or through a
vendor) and distributes the data solely
within its own organization. The
External Distribution Fee will apply to
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Frm 00173
Fmt 4703
Sfmt 4703
$100/month.
$10/month.
$15/month.
[2,000/month]
$.005/query.
any organization that receives a real
time data feed product (either directly
from Nasdaq or through a vendor) and
distributes the data outside its own
organization. The External Distribution
Fee is higher than the Internal
Distribution Fee because external
distributors typically have broader
distribution of the data than internal
distributors. An organization that
receives real time data directly from
Nasdaq will pay the Direct Access Fee
plus the higher of either the Internal
Distribution or External Distribution Fee
but not both. An organization that only
receives real time data feeds indirectly
and distributes it within its organization
will pay the Internal Distribution Fee;
an organization that receives data
indirectly and distributes it outside its
organization will pay the External
Distribution Fee, and an organization
that receives real time data feeds
indirectly and distributes it both
internally and externally will pay the
External Distribution Fee.
Nasdaq real time data feed products
that are available for distribution would
be divided into two categories and each
will have a Direct Access Fee, Internal
Distribution Fee, and External
Distribution Fee assigned. Nasdaq Total
View, OpenView, and MFQS will be
labeled as ‘‘Issuer Specific Data’’ and
Nasdaq Real Time Index will be labeled
as ‘‘Market Summary Statistics.’’
Currently, there is no monthly
distribution fee for OpenView and the
monthly distribution fee for Nasdaq
TotalView (set forth at Rule 7010(q)) is
based on whether the data distributor
receives the TotalView data in an
aggregate or detailed form. The monthly
fee for TotalView data in aggregate form
is $1,000 per distributor and in detailed
form is $7,500 per distributor. Under the
proposed fee structure, TotalView and
OpenView, whether in aggregate or
detailed form, will be labeled as ‘‘Issue
Specific Data-Dynamic Intraday’’ data
for which the proposed monthly fees are
$2,500 for Direct Access, $1,000 for
Internal Distribution, and $2,500 for
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Federal Register / Vol. 70, No. 81 / Thursday, April 28, 2005 / Notices
External Distribution.7 Organizations
that currently purchase detailed
TotalView information, particularly
internal distributors and non-direct
connection recipients, will pay less in
the future; organizations that currently
purchase aggregate TotalView data,
particularly those that access the data
directly, will pay higher fees.
The current monthly fee for
distribution of the MFQS is $1,000 for
each external distributor. Under the new
fee structure, MFQS data will be labeled
as ‘‘Issue Specific Data—Daily’’ data for
which the proposed monthly fees are
$500 for Direct Access, $500 for
External Distribution, and no charge for
Internal Distribution. The proposed
pricing will benefit external distributors
that do not take their data directly from
Nasdaq. Organizations that take their
data directly from Nasdaq but only
distribute it internally will pay the
Direct Access Fee.
Under the current monthly fee
structure set forth in NASD Rule 7030,
the fee for Real-Time Index data is
$2,000 for external distributors. Under
the proposed fee structure, Real-Time
Index data will be labeled as ‘‘Market
Summary Statistics—Intraday.’’ The
proposed monthly fees for Market
Summary Statistics will involve a Direct
Access fee of $500, an Internal
Distribution Fee of $50, and an External
Distribution fee of $1,500. The proposed
pricing will decrease the costs of nondirect connection external distributors,
but increase them for organizations that
distribute the data internally.
Nasdaq is also proposing a more
flexible policy for distributor reporting
of, and payment for, market data usage.
NASD Rule 7060 currently provides that
such reporting be based on a pro-rated
accounting of the specific installation
and termination dates for service.
Because some data distributors prefer to
report data usage on a ‘‘full-month’’
basis, Nasdaq proposes to offer its
market data distributors the option of
reporting and paying based on either a
pro-rated or full-month basis. The
selection of pro-rated or full-month
reporting will be the business decision
of each market data distributor based on
its needs and the needs of its customers.
7 Nasdaq believes that because OpenView
provides the same depth and scope of information
for exchange-listed securities as TotalView does for
Nasdaq-listed securities, and entails similar costs, it
is appropriate to put into place the same
distribution fee structure for OpenView at this time.
Telephone conversation between Bill O’Brien,
Senior Vice President, Market Data Distribution,
Nasdaq, and Ira Brandriss, Assistant Director,
Division of Market Regulation, Commission, April
21, 2005.
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16:00 Apr 27, 2005
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2. Statutory Basis
Nasdaq believes that the proposed
rule change is consistent with the
provisions of Section 15A of the Act,8 in
general and with Section 15A(b)(5) of
the Act,9 in particular, in that the
revised and updated fee schedule
provides for the equitable allocation of
reasonable charges among the persons
distributing and purchasing Nasdaq real
time market center data. The proposed
pricing structure will enable Nasdaq to
respond more rapidly to customer
requests for additional or varied
dissemination of information. Nasdaq
believes that encouraging the
redistribution of the Nasdaq real time
market center data will improve
transparency and thereby benefit the
investing public.
B. Self-Regulatory Organization’s
Statement on Burden on Competition
Nasdaq does not believe that the
proposed rule change will impose any
inappropriate 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, as amended, is consistent with
the Act. Comments may be submitted by
any of the following methods:
• Send an e-mail to rulecomments@sec.gov. Please include File
Number SR–NASD–2004–185 on the
subject line.
Paper Comments:
• Send paper comments in triplicate
to Jonathan G. Katz, Secretary,
Securities and Exchange Commission,
450 Fifth Street, NW., Washington, DC
20549–0609.
All submissions should refer to File
Number SR–NASD–2004–185. 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 (https://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 the NASD. 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–2004–185 and
should be submitted on or before May
19, 2005.
For the Commission, by the Division of
Market Regulation, pursuant to delegated
authority.10
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. E5–2041 Filed 4–27–05; 8:45 am]
BILLING CODE 8010–01–P
Electronic Comments:
• Use the Commission’s Internet
comment form (https://www.sec.gov/
rules/sro.shtml); or
PO 00000
8 15
9 15
U.S.C. 78o–3.
U.S.C. 78o–3(b)(5).
Frm 00174
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10 17
Sfmt 4703
22165
E:\FR\FM\28APN1.SGM
CFR 200.30–3(a)(12).
28APN1
]]>Agencies
[Federal Register Volume 70, Number 81 (Thursday, April 28, 2005)]
[Notices]
[Pages 22162-22165]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E5-2041]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-51598; File No. SR-NASD-2004-185]
Self-Regulatory Organizations; Notice of Filing of Proposed Rule
Change and Amendment Nos. 1 and 2 Thereto by the National Association
of Securities Dealers, Inc. To Establish a Unitary Fee Schedule for
Distribution of Real Time Data Feed Products Containing Nasdaq Market
Center Data
April 21, 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 December 14, 2004, 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. On February
17, 2005, Nasdaq filed Amendment No. 1 to the original filing.\3\
Nasdaq filed Amendment No. 2 on April 14, 2005.\4\ The Commission is
publishing this notice to solicit
[[Page 22163]]
comments on the proposed rule change, as amended, from interested
persons.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
\3\ Amendment No. 1 replaced and superseded the original
proposed rule change in its entirety.
\4\ Amendment No. 2 replaced and superseded the original
proposed rule change, as amended.
---------------------------------------------------------------------------
I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
Nasdaq is filing a proposed rule change to modify NASD Rule 7010 to
establish a unitary fee schedule for the distribution of Nasdaq Market
Center real time data feed products.
The text of the proposed rule change is below.\5\ Proposed new
language is italicized; proposed deletions are in [brackets].\6\
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\5\ With the permission of Nasdaq, the Commission made a
typographical, non-substantive correction to the text of the
proposed rule change. See telephone conversation between Jeff Davis,
Associate General Counsel, Nasdaq, and Raymond Lombardo, Attorney,
Division of Market Regulation, Commission, April 21, 2005.
\6\ The proposed changes are marked from NASD Rule 7010 as it
appears in the NASD Manual available at www.nasd.com.
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* * * * *
Rule 7010. System Services
(a)-(k) No change
(l) Market Data Distributor [or Vendor Annual Administrative] Fees
(1) Nasdaq Market Data Distributors [or Vendors] shall be assessed
the following annual administrative fee:
Delayed distributor..................................... $250[.00]
0-999 real-time terminals............................... 500[.00]
1,000-4,999 real-time terminals......................... 1,250[.00]
5,000-9,999 real-time terminals......................... 2,250[.00]
10,000+ real-time terminals............................. 3,750[.00]
The Association may waive all or part of the foregoing charges.
(2) The charge to be paid by Distributors of the following Nasdaq
market center real time data feeds shall be:
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Monthly direct Monthly internal Monthly external
access fee distributor fee distributor fee
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Issue Specific Data:
Dynamic Intraday................................... $2,500 $1,000 $2,500
Total View
Open View
Daily.............................................. 500 0 500
MFQS
Market Summary Statistics:
Intraday........................................... 500 50 1,500
Real Time Index
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(3) A ``distributor'' of Nasdaq data is any entity that receives a
feed or data file of Nasdaq data directly from Nasdaq or indirectly
through another entity and then distributes it either internally
(within that entity) or externally (outside that entity). All
distributors shall execute a Nasdaq distributor agreement. Nasdaq
itself is a vendor of its data feed(s) and has executed a Nasdaq
distributor agreement and pays the distributor charge.
(4) ``Direct Access'' means a telecommunications interface with
Nasdaq for receiving Nasdaq data via a Nasdaq-operated website, system
or application, the MCI Financial Extranet, or via an Extranet access
provider or other such provider that is fee-liable under Rule 7010(v),
but does not include Nasdaq Workstation II/API Service that is fee
liable under Rule 7010(f)(1).
(m)-(p) No Change.
(q) Nasdaq TotalView
(1) TotalView Entitlement. The TotalView entitlement allows a
subscriber to see all individual Nasdaq Market Center participant
orders and quotes displayed in the system as well as the aggregate size
of such orders and quotes at each price level in the execution
functionality of the Nasdaq Market Center, including the NQDS feed.
(A) No Change.
[(B) Distributors of individual participant data in the TotalView
Entitlement shall pay a charge of $7,500 per month. Distributors of
only the aggregate data in the TotalView Entitlement shall pay a charge
of $1,000 per month.]
(B[C]) 30-Day Free-Trial Offer. Nasdaq shall offer all new
individual subscribers and potential new individual subscribers a 30-
day waiver of the user fees for TotalView. This waiver shall not
include the incremental fees assessed for the NQDS-only service, which
are $30 for professional users and $9 for non-professional users per
month. This fee waiver period shall be applied on a rolling basis,
determined by the date on which a new individual subscriber or
potential individual subscriber is first entitled by a distributor to
receive access to TotalView. A distributor may only provide this waiver
to a specific individual subscriber once.
For the period of the offer, the TotalView fee of $[3]40 per
professional user and $5 per non-professional user per month shall be
waived.
(2) [Definitions.
(A) ]A ``controlled device'' is any device that a distributor of
the Nasdaq data entitlement package(s) permits to: (i) access the
information in the Nasdaq data entitlement package(s); or (ii)
communicate with the distributor so as to cause the distributor to
access the information in the Nasdaq data entitlement package(s). If a
controlled device is part of an electronic network between computers
used for investment, trading or order routing activities, the burden
shall be on the distributor to demonstrate that the particular
controlled device should not have to pay for an entitlement. For
example, in some display systems the distributor gives the end user a
choice to see the data or not; a user that chooses not to see it would
not be charged. Similarly, in a non-display system, users of controlled
devices may have a choice of basic or advanced computerized trading or
order routing services, where only the advanced version uses the
information. Customers of the basic service then would be excluded from
the entitlement requirement.
[(B) A ``distributor'' of a Nasdaq data feed is any firm that
receives a Nasdaq data feed directly from Nasdaq or indirectly through
another vendor and then distributes it either internally or externally.
All distributors shall execute a Nasdaq distributor agreement. Nasdaq
itself is a vendor of its data feed(s) and has executed a Nasdaq
distributor agreement and pays the distributor charge.]
(3) No Change.
(4) No Change.
(r)-(w) No Change.
* * * * *
[[Page 22164]]
Rule 7030. Special Options
Receive only printer.................... ................................ $100/month.
Local Posting........................... Permits subscriber to use Nasdaq $10/month.
Level 3 terminals to enter
quotations simultaneously into
an internal computer system.
Dual Keyboard........................... ................................ $15/month.
[Nasdaq Market Index]................... [Permits vendor to process [2,000/month]
Nasdaq Level I and Last Sale
data feeds solely for the
purpose of supplying
subscribers with distribute
real-time calculations of the
Nasdaq market indexes to all of
its subscribers, including
those that do not otherwise
subscribe to real-time Nasdaq
Level 1 or NQDS services.].
Non-Continuous Access to Nasdaq Level 1 Permits vendor to process and $.005/query.
and Last Sale Information. distribute Nasdaq Level 1 and
Last Sale information to its
subscribers on a non-continuous
or query-response basis.
* * * * *
Rule 7060. Partial Month Charges
Distributors may elect to have [T]the charges for the month of
commencement or termination of service [will] be billed on a full month
basis or prorated based on the number of trade days in that month.
* * * * *
Rule 7090. Mutual Fund Quotation Service
(a)-(d) No change.
[(e) Distributors receiving MFQS shall pay a monthly fee of $1,000.
For the purposes of this subsection only, the term ``distributor''
shall refer to any firm that receives the MFQS data feed and
distributes it to third parties. All such firms must execute a Nasdaq
Distributor Agreement.]
* * * * *
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
Nasdaq offers various data products that firms may purchase and
redistribute either within their own organizations or to outside
parties. Nasdaq assesses ``distributor fees'' that are designed to
encourage broad distribution of the data, and allow Nasdaq to recover
the relatively high fixed costs associated with supporting connectivity
and contractual relationships with distributors. Because the data
products and associated fees were established over many years, the
method of calculating such fees must be updated. Nasdaq is proposing to
establish a revised monthly distributor pricing structure for its real
time data feed products that it believes will allocate equitably data
fees across the customer base of data distributors and consumers of
Nasdaq market data.
Specifically, the current proposal would establish a distributor
fee pricing structure for four real time data feed products: TotalView,
OpenView, Mutual Fund Quotation Service (``MFQS''), and Real Time
Index. The proposed fees will be assessed to distributors of these real
time data feed products, those vendors that receive the real time data
feeds that can be re-transmitted in an uncontrolled format. The
distributor fees do not apply to Nasdaq's web-based historical data
products, which are governed by NASD Rule 7010(p), and they do not
apply to data feeds that are produced pursuant to the national market
system plan governing Nasdaq stocks (``Nasdaq UTP Plan''). The proposed
distributor pricing is also distinct from any per display device or per
user population fees for data products such as TotalView.
The proposed pricing structure is comprised of two components for
each Nasdaq real time data feed product: (1) a Direct Access Fee, and
(2) either an Internal Distribution Fee or an External Distribution
Fee. The Direct Access Fee will apply to any organization that receives
a real time data product directly from Nasdaq via a data feed.
Distributors receiving Nasdaq real time data indirectly (i.e., via re-
transmission from another entity) are not liable for the Direct Access
Fee. This fee allows Nasdaq to recover the fixed costs of establishing
and maintaining relationships with direct access distributors.
The Internal Distribution Fee will apply to any organization that
receives a real time data feed product (either directly from Nasdaq or
through a vendor) and distributes the data solely within its own
organization. The External Distribution Fee will apply to any
organization that receives a real time data feed product (either
directly from Nasdaq or through a vendor) and distributes the data
outside its own organization. The External Distribution Fee is higher
than the Internal Distribution Fee because external distributors
typically have broader distribution of the data than internal
distributors. An organization that receives real time data directly
from Nasdaq will pay the Direct Access Fee plus the higher of either
the Internal Distribution or External Distribution Fee but not both. An
organization that only receives real time data feeds indirectly and
distributes it within its organization will pay the Internal
Distribution Fee; an organization that receives data indirectly and
distributes it outside its organization will pay the External
Distribution Fee, and an organization that receives real time data
feeds indirectly and distributes it both internally and externally will
pay the External Distribution Fee.
Nasdaq real time data feed products that are available for
distribution would be divided into two categories and each will have a
Direct Access Fee, Internal Distribution Fee, and External Distribution
Fee assigned. Nasdaq Total View, OpenView, and MFQS will be labeled as
``Issuer Specific Data'' and Nasdaq Real Time Index will be labeled as
``Market Summary Statistics.'' Currently, there is no monthly
distribution fee for OpenView and the monthly distribution fee for
Nasdaq TotalView (set forth at Rule 7010(q)) is based on whether the
data distributor receives the TotalView data in an aggregate or
detailed form. The monthly fee for TotalView data in aggregate form is
$1,000 per distributor and in detailed form is $7,500 per distributor.
Under the proposed fee structure, TotalView and OpenView, whether in
aggregate or detailed form, will be labeled as ``Issue Specific Data-
Dynamic Intraday'' data for which the proposed monthly fees are $2,500
for Direct Access, $1,000 for Internal Distribution, and $2,500 for
[[Page 22165]]
External Distribution.\7\ Organizations that currently purchase
detailed TotalView information, particularly internal distributors and
non-direct connection recipients, will pay less in the future;
organizations that currently purchase aggregate TotalView data,
particularly those that access the data directly, will pay higher fees.
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\7\ Nasdaq believes that because OpenView provides the same
depth and scope of information for exchange-listed securities as
TotalView does for Nasdaq-listed securities, and entails similar
costs, it is appropriate to put into place the same distribution fee
structure for OpenView at this time. Telephone conversation between
Bill O'Brien, Senior Vice President, Market Data Distribution,
Nasdaq, and Ira Brandriss, Assistant Director, Division of Market
Regulation, Commission, April 21, 2005.
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The current monthly fee for distribution of the MFQS is $1,000 for
each external distributor. Under the new fee structure, MFQS data will
be labeled as ``Issue Specific Data--Daily'' data for which the
proposed monthly fees are $500 for Direct Access, $500 for External
Distribution, and no charge for Internal Distribution. The proposed
pricing will benefit external distributors that do not take their data
directly from Nasdaq. Organizations that take their data directly from
Nasdaq but only distribute it internally will pay the Direct Access
Fee.
Under the current monthly fee structure set forth in NASD Rule
7030, the fee for Real-Time Index data is $2,000 for external
distributors. Under the proposed fee structure, Real-Time Index data
will be labeled as ``Market Summary Statistics--Intraday.'' The
proposed monthly fees for Market Summary Statistics will involve a
Direct Access fee of $500, an Internal Distribution Fee of $50, and an
External Distribution fee of $1,500. The proposed pricing will decrease
the costs of non-direct connection external distributors, but increase
them for organizations that distribute the data internally.
Nasdaq is also proposing a more flexible policy for distributor
reporting of, and payment for, market data usage. NASD Rule 7060
currently provides that such reporting be based on a pro-rated
accounting of the specific installation and termination dates for
service. Because some data distributors prefer to report data usage on
a ``full-month'' basis, Nasdaq proposes to offer its market data
distributors the option of reporting and paying based on either a pro-
rated or full-month basis. The selection of pro-rated or full-month
reporting will be the business decision of each market data distributor
based on its needs and the needs of its customers.
2. Statutory Basis
Nasdaq believes that the proposed rule change is consistent with
the provisions of Section 15A of the Act,\8\ in general and with
Section 15A(b)(5) of the Act,\9\ in particular, in that the revised and
updated fee schedule provides for the equitable allocation of
reasonable charges among the persons distributing and purchasing Nasdaq
real time market center data. The proposed pricing structure will
enable Nasdaq to respond more rapidly to customer requests for
additional or varied dissemination of information. Nasdaq believes that
encouraging the redistribution of the Nasdaq real time market center
data will improve transparency and thereby benefit the investing
public.
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\8\ 15 U.S.C. 78o-3.
\9\ 15 U.S.C. 78o-3(b)(5).
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B. Self-Regulatory Organization's Statement on Burden on Competition
Nasdaq does not believe that the proposed rule change will impose
any inappropriate 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, as amended, is consistent with the Act. Comments may be
submitted by any of the following methods:
Electronic Comments:
Use the Commission's Internet comment form (https://
www.sec.gov/rules/sro.shtml); or
Send an e-mail to rule-comments@sec.gov. Please include
File Number SR-NASD-2004-185 on the subject line.
Paper Comments:
Send paper comments in triplicate to Jonathan G. Katz,
Secretary, Securities and Exchange Commission, 450 Fifth Street, NW.,
Washington, DC 20549-0609.
All submissions should refer to File Number SR-NASD-2004-185. 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 (https://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 the NASD. 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-2004-185 and should be submitted on or before May
19, 2005.
For the Commission, by the Division of Market Regulation,
pursuant to delegated authority.\10\
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\10\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. E5-2041 Filed 4-27-05; 8:45 am]
BILLING CODE 8010-01-P
