Self-Regulatory Organizations; Notice of Filing and Immediate Effectiveness of Proposed Rule Change by the National Association of Securities Dealers, Inc. To Modify Pricing for NASD Members Using Nasdaq's Brut Facility, 22166-22167 [E5-2043]
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22166
Federal Register / Vol. 70, No. 81 / Thursday, April 28, 2005 / Notices
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–51599; File No. SR–NASD–
2005–048]
Self-Regulatory Organizations; Notice
of Filing and Immediate Effectiveness
of Proposed Rule Change by the
National Association of Securities
Dealers, Inc. To Modify Pricing for
NASD Members Using Nasdaq’s Brut
Facility
April 22, 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 April 8,
2005, 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. Nasdaq
has designated this proposal as one
establishing or changing a due, fee or
other charge imposed by the selfregulatory organization under Section
19(b)(3)(A)(ii) 3 of the Act and Rule 19b–
4(f)(2) thereunder,4 which renders the
proposal effective upon filing with the
Commission. The Commission is
publishing this notice to solicit
comments on the proposed rule change
from interested persons.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
Nasdaq proposes to modify the
pricing for NASD members using
Nasdaq’s Brut Facility (‘‘Brut’’). Nasdaq
states that it will implement the
proposed rule change on April 11, 2005.
The text of the proposed rule change is
available on the NASD’s Web site
(https://www.nasd.com), at the NASD’s
Office of the Secretary, and at the
Commission’s Public Reference Room.
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
1 15
U.S.C. 78s(b)(1).
CFR 240.19b–4.
3 15 U.S.C. 78s(b)(3)(A)(ii).
4 17 CFR 240.19b–4(f)(2).
2 17
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16:00 Apr 27, 2005
Jkt 205001
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’s proposed rule change
contains two modifications to the fees
applicable to transactions in exchangelisted securities.
Nasdaq currently charges a fee of
$0.004 per share executed with respect
to any order to buy or sell exchangelisted securities that is routed by Brut to
an exchange using such exchange’s
proprietary order delivery system (such
as the New York Stock Exchange’s
(‘‘NYSE’’) SuperDOT system). This
proposed rule change would reduce this
fee for some orders and eliminate it
entirely for others.
Under the proposal, the fee for orders
to buy or sell exchange-listed securities
(assuming such securities are subject to
the Consolidated Quotations Service
and Consolidated Tape Association
Plans and are not Exchange Traded
Funds listed on the American Stock
Exchange) that are routed by Brut to an
exchange using the exchange’s
proprietary order delivery system would
be reduced to $0.0004 per share
executed. This fee would only be
charged, however, if the orders to which
it otherwise applies are routed outside
Brut and the Nasdaq Market Center
(‘‘NMC’’) without first attempting to
execute within Brut or the NMC. If an
order to which this fee would otherwise
apply first attempts to execute against
the book maintained by Brut or the
NMC, then this fee would no longer be
applicable.
By lowering (and eliminating in many
cases) the routing fees for certain orders
for exchange-listed securities received
by Brut, Nasdaq states that it seeks to
continue to improve Brut’s
competitiveness in attracting buy and
sell orders for exchange-listed
securities. Nasdaq believes that its
participants would benefit from the
increased liquidity in exchange-listed
securities that the proposal is designed
to stimulate. Furthermore, Nasdaq states
that all investors would benefit from
increased competition in this area.
Finally, Nasdaq believes that the
distinction for fee purposes between
orders that check the Brut (or NMC)
book before routing and those that are
designated for routing regardless of
available prices in such book would
encourage orders to check the Brut
PO 00000
Frm 00175
Fmt 4703
Sfmt 4703
book, which it believes would benefit
both the particular investor (who, as a
result, may find a better execution) and
the market as a whole.
At the same time, the proposed rule
change seeks to establish a new fee
designed to recover the commissions
billed by NYSE specialists to Brut for
certain types of limit orders. According
to Nasdaq, generally, NYSE specialists
charge Brut for executions of limit
orders that remained unexecuted on the
specialists’ books for more than 5
minutes. While the specialists’ fee
schedules vary, Nasdaq states that the
proposed Brut fee of $0.009 per share is
generally designed to recover for Brut
some of the associated cost.5
The new fee would apply when a
limit order is delivered to the NYSE via
the NYSE’s proprietary order delivery
system and the time to execute such an
order exceeds five minutes (measured as
the difference between the time of the
NYSE’s electronic acknowledgment of
the order and the time of execution).
The new fee would not apply, however,
to day orders executed in the specialists’
opening and to good-till-cancelled
orders if executed in the opening on the
day when they were entered. The new
fee would also not apply to any on-close
orders or market orders.
This filing applies only to fees
charged to NASD members. Nasdaq has
submitted a separate filing to make the
proposed rule changes contained in this
filing applicable to non-members.6
2. Statutory Basis
Nasdaq believes that the proposed
rule change is consistent with the
provisions of Section 15A of the Act,7 in
general, and with Section 15A(b)(5) of
the Act,8 in particular, in that the
proposed rule change provides for the
equitable allocation of reasonable dues,
fees, and other charges among members
and issuers and other persons using any
facility or system which the NASD
operates or controls.
B. Self-Regulatory Organization’s
Statement on Burden on Competition
Nasdaq does not believe that the
proposed rule change will result in any
burden on competition that is not
5 Such orders could also incur the $0.0004 per
share fee discussed above if they are routed outside
Brut and the NMC without first attempting to
execute within Brut or the NMC. Telephone
conversation between Alex Kogan, Associate
General Counsel, Nasdaq, John Roeser, Assistant
Director, Division of Market Regulation
(‘‘Division’’), Commission, and David Liu, Attorney,
Division, Commission, on April 20, 2005.
6 See SR–NASD–2005–049.
7 15 U.S.C. 78o–3.
8 15 U.S.C. 78o–3(b)(5).
E:\FR\FM\28APN1.SGM
28APN1
Federal Register / Vol. 70, No. 81 / Thursday, April 28, 2005 / Notices
necessary or appropriate in furtherance
of the purposes of the Act.
C. Self-Regulatory Organization’s
Statement on Comments on the
Proposed Rule Change Received From
Members, Participants, or Others
Nasdaq states that written comments
were neither solicited nor received.
III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
The forgoing rule change is subject to
Section 19(b)(3)(A)(ii) of the Act 9 and
subparagraph (f)(2) of Rule 19b–410
thereunder because it establishes or
changes a due, fee, or other charge
imposed by the self-regulatory
organization. Accordingly, the proposal
is effective upon Commission receipt of
the filing. At any time within 60 days
of the filing of such proposed rule
change, the Commission may summarily
abrogate such rule change if it appears
to the Commission that such action is
necessary or appropriate in the public
interest, for the protection of investors,
or otherwise in furtherance of the
purposes of the Act.11
IV. Solicitation of Comments
Interested persons are invited to
submit written data, views, and
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:
Electronic Comments
• 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–NASD–2005–048 on the
subject line.
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 the 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–2005–048 and
should be submitted on or before May
19, 2005.
For the Commission, by the Division of
Market Regulation, pursuant to delegated
authority.12
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. E5–2043 Filed 4–27–05; 8:45 am]
BILLING CODE 8010–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–51600; File No. SR–NSCC–
2005–01]
Self-Regulatory Organizations;
National Securities Clearing
Corporation; Order Granting Approval
of a Proposed Rule Change To Amend
Its Operational Capability Requirement
for Membership
Paper Comments
April 22, 2005.
• 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–2005–048. 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
I. Introduction
On January 19, 2005, the National
Securities Clearing Corporation
(‘‘NSCC’’) filed with the Securities and
Exchange Commission (‘‘Commission’’)
proposed rule change File No. SR–
NSCC–2005–01 pursuant to Section
19(b)(1) of the Securities Exchange Act
of 1934 (‘‘Act’’).1 Notice of the proposed
rule change was published in the
Federal Register on March 17, 2005.2
No comment letters were received. For
the reasons discussed below, the
12 17
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 Securities Exchange Act Release No. 51363
(March 11, 2005), 70 FR 13060.
9 15
U.S.C. 78s(b)(3)(A)(ii).
10 17 CFR 240.19b–4(f)(2).
11 15 U.S.C. 78s(b)(3)(C).
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1 15
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22167
Commission is now granting approval of
the proposed rule change.
II. Description
The proposed rule change amends
Section I.A.3. of Addendum B, Section
I.A.3. of Addendum I, Section I.3. of
Addendum Q, and Section I.2. of
Addendum R of NSCC’s Rules and
Procedures concerning the operational
capability requirements of applicants for
membership. NSCC’s current rules
specify that an applicant must ‘‘have
adequate personnel capable of handling
transactions with the Corporation
[NSCC] and adequate physical facilities,
books and records and procedures to
fulfill anticipated commitments to and
to meet the operational requirements of
the Corporation [NSCC] * * *.’’ NSCC
believes that these provisions may be
interpreted to impose upon NSCC an
obligation to make determinations with
respect to these particular aspects of
applicants’ and members’ operational
capability. NSCC ordinarily leaves such
determinations to the applicants’ and
members’ designated examining
authorities. The operational capability
that NSCC ordinarily focused upon
during the application process is the
applicant’s ability to appropriately
communicate with NSCC; that is, the
applicant’s ability to input data to NSCC
and to receive output from NSCC on a
timely and accurate basis.
NSCC believes that it is appropriate to
clarify these sections of its Rules and
Procedures so that they reflect the
practices of NSCC and so that there will
be no misunderstandings as to their
meaning. The text of the abovereferenced sections of NSCC’s Rules and
Procedures will be amended to delete
references to adequate personnel and
adequate facilities, books, and records
that are extraneous to the ability of
applicants to communicate with NSCC.
In place, these sections will state that an
applicant must ‘‘be able to satisfactorily
communicate with the Corporation
[NSCC] * * *.’’ NSCC will continue to
retain the right to examine any aspect of
an applicant’s or member’s business
pursuant to the provisions of NSCC Rule
15.
III. Discussion
Section 17A(b)(3)(F) of the Act
requires among other things that the
rules of a clearing agency be designed to
assure the safeguarding of securities and
funds in its custody or control or for
which it is responsible.3 The
Commission finds that NSCC’s proposed
rule change is consistent with this
requirement because it eliminates a
3 15
E:\FR\FM\28APN1.SGM
U.S.C. 78q–1(b)(3)(F).
28APN1
]]>Agencies
[Federal Register Volume 70, Number 81 (Thursday, April 28, 2005)]
[Notices]
[Pages 22166-22167]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E5-2043]
[[Page 22166]]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-51599; File No. SR-NASD-2005-048]
Self-Regulatory Organizations; Notice of Filing and Immediate
Effectiveness of Proposed Rule Change by the National Association of
Securities Dealers, Inc. To Modify Pricing for NASD Members Using
Nasdaq's Brut Facility
April 22, 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 April 8, 2005, 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. Nasdaq has
designated this proposal as one establishing or changing a due, fee or
other charge imposed by the self-regulatory organization under Section
19(b)(3)(A)(ii) \3\ of the Act and Rule 19b-4(f)(2) thereunder,\4\
which renders the proposal effective upon filing with the Commission.
The Commission is publishing this notice to solicit comments on the
proposed rule change from interested persons.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
\3\ 15 U.S.C. 78s(b)(3)(A)(ii).
\4\ 17 CFR 240.19b-4(f)(2).
---------------------------------------------------------------------------
I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
Nasdaq proposes to modify the pricing for NASD members using
Nasdaq's Brut Facility (``Brut''). Nasdaq states that it will implement
the proposed rule change on April 11, 2005. The text of the proposed
rule change is available on the NASD's Web site (https://www.nasd.com),
at the NASD's Office of the Secretary, and at the Commission's Public
Reference Room.
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's proposed rule change contains two modifications to the
fees applicable to transactions in exchange-listed securities.
Nasdaq currently charges a fee of $0.004 per share executed with
respect to any order to buy or sell exchange-listed securities that is
routed by Brut to an exchange using such exchange's proprietary order
delivery system (such as the New York Stock Exchange's (``NYSE'')
SuperDOT system). This proposed rule change would reduce this fee for
some orders and eliminate it entirely for others.
Under the proposal, the fee for orders to buy or sell exchange-
listed securities (assuming such securities are subject to the
Consolidated Quotations Service and Consolidated Tape Association Plans
and are not Exchange Traded Funds listed on the American Stock
Exchange) that are routed by Brut to an exchange using the exchange's
proprietary order delivery system would be reduced to $0.0004 per share
executed. This fee would only be charged, however, if the orders to
which it otherwise applies are routed outside Brut and the Nasdaq
Market Center (``NMC'') without first attempting to execute within Brut
or the NMC. If an order to which this fee would otherwise apply first
attempts to execute against the book maintained by Brut or the NMC,
then this fee would no longer be applicable.
By lowering (and eliminating in many cases) the routing fees for
certain orders for exchange-listed securities received by Brut, Nasdaq
states that it seeks to continue to improve Brut's competitiveness in
attracting buy and sell orders for exchange-listed securities. Nasdaq
believes that its participants would benefit from the increased
liquidity in exchange-listed securities that the proposal is designed
to stimulate. Furthermore, Nasdaq states that all investors would
benefit from increased competition in this area. Finally, Nasdaq
believes that the distinction for fee purposes between orders that
check the Brut (or NMC) book before routing and those that are
designated for routing regardless of available prices in such book
would encourage orders to check the Brut book, which it believes would
benefit both the particular investor (who, as a result, may find a
better execution) and the market as a whole.
At the same time, the proposed rule change seeks to establish a new
fee designed to recover the commissions billed by NYSE specialists to
Brut for certain types of limit orders. According to Nasdaq, generally,
NYSE specialists charge Brut for executions of limit orders that
remained unexecuted on the specialists' books for more than 5 minutes.
While the specialists' fee schedules vary, Nasdaq states that the
proposed Brut fee of $0.009 per share is generally designed to recover
for Brut some of the associated cost.\5\
---------------------------------------------------------------------------
\5\ Such orders could also incur the $0.0004 per share fee
discussed above if they are routed outside Brut and the NMC without
first attempting to execute within Brut or the NMC. Telephone
conversation between Alex Kogan, Associate General Counsel, Nasdaq,
John Roeser, Assistant Director, Division of Market Regulation
(``Division''), Commission, and David Liu, Attorney, Division,
Commission, on April 20, 2005.
---------------------------------------------------------------------------
The new fee would apply when a limit order is delivered to the NYSE
via the NYSE's proprietary order delivery system and the time to
execute such an order exceeds five minutes (measured as the difference
between the time of the NYSE's electronic acknowledgment of the order
and the time of execution). The new fee would not apply, however, to
day orders executed in the specialists' opening and to good-till-
cancelled orders if executed in the opening on the day when they were
entered. The new fee would also not apply to any on-close orders or
market orders.
This filing applies only to fees charged to NASD members. Nasdaq
has submitted a separate filing to make the proposed rule changes
contained in this filing applicable to non-members.\6\
---------------------------------------------------------------------------
\6\ See SR-NASD-2005-049.
---------------------------------------------------------------------------
2. Statutory Basis
Nasdaq believes that the proposed rule change is consistent with
the provisions of Section 15A of the Act,\7\ in general, and with
Section 15A(b)(5) of the Act,\8\ in particular, in that the proposed
rule change provides for the equitable allocation of reasonable dues,
fees, and other charges among members and issuers and other persons
using any facility or system which the NASD operates or controls.
---------------------------------------------------------------------------
\7\ 15 U.S.C. 78o-3.
\8\ 15 U.S.C. 78o-3(b)(5).
---------------------------------------------------------------------------
B. Self-Regulatory Organization's Statement on Burden on Competition
Nasdaq does not believe that the proposed rule change will result
in any burden on competition that is not
[[Page 22167]]
necessary or appropriate in furtherance of the purposes of the Act.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others
Nasdaq states that written comments were neither solicited nor
received.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
The forgoing rule change is subject to Section 19(b)(3)(A)(ii) of
the Act \9\ and subparagraph (f)(2) of Rule 19b-4\10\ thereunder
because it establishes or changes a due, fee, or other charge imposed
by the self-regulatory organization. Accordingly, the proposal is
effective upon Commission receipt of the filing. At any time within 60
days of the filing of such proposed rule change, the Commission may
summarily abrogate such rule change if it appears to the Commission
that such action is necessary or appropriate in the public interest,
for the protection of investors, or otherwise in furtherance of the
purposes of the Act.\11\
---------------------------------------------------------------------------
\9\ 15 U.S.C. 78s(b)(3)(A)(ii).
\10\ 17 CFR 240.19b-4(f)(2).
\11\ 15 U.S.C. 78s(b)(3)(C).
---------------------------------------------------------------------------
IV. Solicitation of Comments
Interested persons are invited to submit written data, views, and
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:
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-2005-048 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-2005-048. 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 the
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-2005-048 and should be submitted on or before May
19, 2005.
For the Commission, by the Division of Market Regulation,
pursuant to delegated authority.\12\
---------------------------------------------------------------------------
\12\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. E5-2043 Filed 4-27-05; 8:45 am]
BILLING CODE 8010-01-P
