Self-Regulatory Organizations; National Association of Securities Dealers, Inc.; Order Approving Proposed Rule Change Relating to TRACE Market Data Fees, 22735-22736 [E5-2079]

Download as PDF Federal Register / Vol. 70, No. 83 / Monday, May 2, 2005 / Notices 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 Section. 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–2005–013 and should be submitted on or before May 23, 2005. For the Commission, by the Division of Market Regulation, pursuant to delegated authority.13 Margaret H. McFarland, Deputy Secretary. [FR Doc. E5–2078 Filed 4–29–05; 8:45 am] BILLING CODE 8010–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–51611; File No. SR–NASD– 2005–026] Self-Regulatory Organizations; National Association of Securities Dealers, Inc.; Order Approving Proposed Rule Change Relating to TRACE Market Data Fees April 26, 2005. I. Introduction On February 11, 2005, the National Association of Securities Dealers, Inc. (‘‘NASD’’) filed with the Securities and Exchange Commission (‘‘Commission’’), pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (‘‘Act’’)1 and Rule 19b–4 thereunder,2 a proposed rule change relating to Transaction Reporting and Compliance Engine (‘‘TRACE’’) market data fees. The 13 17 CFR 200.30–3(a)(12). U.S.C. 78s(b)(1). 2 17 CFR 240.19b–4. 1 15 VerDate jul<14>2003 19:05 Apr 29, 2005 Jkt 205001 Commission published the proposed rule change for comment in the Federal Register on March 16, 2005.3 The Commission received one comment letter on the proposal.4 On April 25, 2005, NASD filed a response to the comment letter.5 This order approves the proposed rule change. II. Description of the Proposed Rule Change The proposed rule change would amend NASD Rule 7010(k) relating to TRACE transaction data to: (i) Terminate the Bond Trade Dissemination Service (‘‘BTDS’’) Internal Usage Authorization Fee and the BTDS External Usage Authorization Fee and, in lieu of both fees, establish a Vendor Real-Time Data Feed Fee; (ii) define the term ‘‘Tax Exempt Organization,’’ and amend the defined term ‘‘Non-Professional’’ for purposes of NASD Rule 7010(k)(3); and (iii) make other minor, technical amendments. The proposal is discussed in greater detail in the Commission’s notice soliciting public comment.6 III. Summary of Comments Received and NASD Response The Commission received one comment letter on the proposal.7 The SIA Letter supports NASD’s proposed rule change. However, the commenter requests that NASD clarify whether ‘‘market data subscribers who are natural persons using a brokerage account established in the name of an entity name they or their family control’’ are considered ‘‘NonProfessional’’ within the meaning of the rule.8 In addition, the commenter states, with regard to a reduced fee for Tax Exempt Organizations, that further review ‘‘may be warranted to determine the justifiable basis for a reduced fee, including a better description of the tax exempt organizations that would benefit from a reduced price structure, a better explanation as to why the reduced fee is necessary, and an analysis of the potential impact such a proposal may have on competition.’’9 3 Securities Exchange Act Release No. 51336 (March 9, 2005), 70 FR 12921 (March 16, 2005) (‘‘Notice’’). 4 See letter from Andrew C. Wels, Chairman, Technology & Regulation Market Data Subcommittee, Securities Industry Association (‘‘SIA’’), to Jonathan G. Katz, Secretary, Commission, received April 8, 2005 (undated) (‘‘SIA Letter’’). 5 See letter from Sharon K. Zackula, Associate General Counsel, NASD, to Katherine A. England, Assistant Director, Division of Market Regulation, Commission, dated April 25, 2005 (‘‘NASD Letter’’). 6 See Notice, supra note 3. 7 SIA Letter, supra note 4. 8 Id. at 3. 9 Id. at 4. PO 00000 Frm 00109 Fmt 4703 Sfmt 4703 22735 In response to the SIA Letter, NASD states that it ‘‘will consider identifying certain non-natural persons as ‘‘NonProfessionals’’ as part of its continuing review and interpretation of TRACE data fees and access.’’10 In addition, NASD states that ‘‘[t]he proposed definition of Tax-Exempt Organization limits significantly the number and type of organizations that may apply to receive Real-Time TRACE transaction data at the reduced fee and, by definition, limits the use of Real-Time TRACE transaction data solely for data access programs for the benefit of individual investors and not for commercial purposes.’’11 Given these restrictions, NASD does not believe that the proposal will result in any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act.12 The SIA Letter also stated that the rationale NASD followed in its proposal—that financial services industry employees should be considered non-professionals when they access data for personal, noncommercial uses—should be applied uniformly to all other individual subscribers of bond or equity market data no matter which self regulatory organization, directly or indirectly, controls the market data.13 The SIA Letter petitions the Commission for rulemaking to review the definitions of ‘‘Professional’’ and ‘‘Non-Professional’’ as interpreted for market data fee and administrative purposes by the Consolidated Tape Association, the NASDAQ UTP Plan, the New York Stock Exchange, NASDAQ, the Options Price Reporting Authority, and NASD.14 This petition will be considered separately from this proposal. IV. Discussion After careful consideration, the Commission finds that the proposed rule change is consistent with the requirements of the Act and the rules and regulations thereunder that are applicable to a national securities association.15 In particular, the Commission believes that the proposed rule change is consistent with section 10 NASD Letter at 2 (‘‘For purposes of TRACE fees, NASD has interpreted the term ‘‘NonProfessional’’ to further NASD’s goal of providing access to TRACE market data at no charge to persons who seek to use TRACE market data for personal, rather than commercial, purposes.’’). 11 Id. at 3. 12 See id. 13 SIA Letter at 1. 14 See id. 15 In approving this proposed rule change, the Commission notes that it has considered the proposed rule’s impact on efficiency, competition, and capital formation. See 15 U.S.C. 78c(f). E:\FR\FM\02MYN1.SGM 02MYN1 22736 Federal Register / Vol. 70, No. 83 / Monday, May 2, 2005 / Notices 15A(b)(6) of the Act,16 which requires, among other things, that the rules of an association be designed to prevent fraudulent and manipulative acts and practices, to promote just and equitable principles of trade, and, in general, to protect investors and the public interest, and section 15A(b)(5) of the Act,17 which requires, among other things, that rules of an association provide for the equitable allocation of reasonable dues, fees, and other charges among members, issuers, and other persons using any facility or system which the association operates or controls. Consolidating the two TRACE data fees into one fee and reducing the TRACE data fee for qualifying Tax-Exempt Organizations appears reasonable and should not adversely affect the use and distribution of TRACE data. In addition, the Commission believes that clarifying who is a ‘‘Non-Professional’’ and therefore is not subject to TRACE fees is reasonable and consistent with the goal of wide dissemination of TRACE transaction data. V. Conclusion It is therefore ordered, pursuant to section 19(b)(2) of the Act,18 that the proposed rule change (SR-NASD–2005– 026) be, and it hereby is, approved. For the Commission, by the Division of Market Regulation, pursuant to delegated authority.19 Margaret H. McFarland, Deputy Secretary. [FR Doc. E5–2079 Filed 4–29–05; 8:45 am] BILLING CODE 8010–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–51613; File No. SR–NYSE– 2004–42] Self-Regulatory Organizations; New York Stock Exchange, Inc.; Notice of Filing of Proposed Rule Change and Amendment No. 1 Thereto To Eliminate the Requirement That a Floor Official Approve Certain Transactions on the Exchange’s Automated Bond System 3 In April 26, 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 August 10, 2004, the New York Stock Exchange, Inc. (‘‘NYSE’’ or ‘‘Exchange’’) filed with 16 15 U.S.C. 78o–3(b)(6). U.S.C. 78o–3(b)(5). 18 15 U.S.C. 78s(b)(2). 19 17 CFR 200.30–3(a)(12). 1 15 U.S.C. 78s(b)(1). 2 17 CFR 240.19b–4. 17 15 VerDate jul<14>2003 19:05 Apr 29, 2005 strict price-and-time priority basis. ABS displays current market data and provides subscribers with immediate execution reports and locked-in trade comparisons. ABS also provides realtime last sale and quotation information to subscribers and market data vendors. At year-end 2004, ABS had a subscriber base of 37 member firms with an installed base of 115 screens. All bonds listed on the NYSE trade through ABS. Exchange bond volume for the I. Self-Regulatory Organization’s year 2004 was approximately $1.3 Statement of the Terms of Substance of billion par value. About 94% of NYSE the Proposed Rule Change bond volume was in straight, or nonThe NYSE proposes to amend convertible, debt and the remaining 6% Exchange Rule 86(g) relating to the of NYSE bond volume was in Exchange’s Automated Bond System convertible bonds. (‘‘ABS’’). The text of the proposed rule Exchange Rule 86 governs trading in change, as amended, is available on the ABS. Existing NYSE Rule 86(g) requires NYSE’s Web site (https://www.nyse.com), that all ABS transactions in nonat the NYSE’s principal office, and at convertible bonds that are made two the Commission’s Public Reference points or more away from the last sale, Room. or more than 30 days after the last sale, may be made only with the approval of II. Self-Regulatory Organization’s a Floor Official. As a practical matter, Statement of the Purpose of, and the Floor Official may require that the Statutory Basis for, the Proposed Rule bonds be bid up or offered down before Change approving such transactions.4 In its filing with the Commission, the The Exchange proposes to eliminate NYSE included statements concerning the current NYSE Rule 86(g). The the purpose of, and basis for, the requirement in Exchange Rule 86(g) for proposed rule change and discussed any Floor Officials to approve orders entered comments it received on the proposed at an increment of two points or greater rule change. The text of these statements from the last transaction has long been may be examined at the places specified made unnecessary by the fact that ABS in Item IV below. The Exchange has is an order-driven system in which prepared summaries, set forth in subscribing firms may enter only priced sections A, B, and C below, of the most orders, and a firm entering an order in significant aspects of such statements. ABS at a variation of two points or greater is already required to A. Self-Regulatory Organization’s immediately confirm the price of such Statement of the Purpose of, and order prior to the order’s acceptance Statutory Basis for, the Proposed Rule into ABS. The entering firm would no Change longer need to confirm an order entered 1. Purpose into ABS more than 30 days from the The NYSE’s Fixed Income Market is last trade of the bond issue, if the price centered on its ABS, a fully automated of the entered order were less than two trading and information system that points from the previous trade price. allows subscribing firms to enter, 4 If, for example, an order is entered into ABS to maintain, view, and execute bond buy 10 XYZ bonds at 93 when the last sale for XYZ orders through screen displays in their occurred at 90, the Floor Official could determine offices. Orders are maintained, that XYZ bond should be ‘‘bid up’’ at a decided displayed, and matched in ABS on a price increment away from the limit order for a 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 the NYSE. On March 30, 2005, the NYSE filed Amendment No. 1 to the proposed rule change.3 The Commission is publishing this notice to solicit comments on the proposed rule change, as amended, from interested persons. Jkt 205001 Amendment No. 1, which replaced and superceded the original filing in its entirety, the NYSE supplemented its rationale for the proposal by, among other things, describing the process that a Floor Official follows when considering whether to approve a transaction that would occur at a price that is at least two points or more than 30 days from the last transaction; recounting some of the history of bond trading on the NYSE; explaining that the Exchange has not found it necessary to reinstate the two-point/30-day provision for convertible bonds since it eliminated its applicability to convertible bonds in 1998; and noting that Exchange Rule 86(g) requires all orders to be entered into ABS at a limit price, and that ABS automatically asks a user to reconfirm the price of an order that is entered at a price two or more points away from the last sale. PO 00000 Frm 00110 Fmt 4703 Sfmt 4703 decided period of time, typically one ‘‘point’’ for one minute. The NYSE bond supervisor would then enter the bidding-up starting price, price increment, time increment, and final price into ABS, upon which a message appears on all ABS screens alerting subscribing firms that bidding up in XYZ has commenced. An ABS user could execute against that ‘‘bid’’ by entering an order to sell at 91 into the system. If, after one minute, the ‘‘bid’’ at 91 generated no interest among ABS users, the order would be bid at 92 for one minute. If that ‘‘bid’’ generated no interest, then the order would, after one minute, be bid at 93 or be matched (traded) at 93, depending on whether there was a contra-side order to sell at 93 in the ABS at that point in time. Telephone conversation between Fred Siesel, Consultant, NYSE, and Tim Fox, Attorney, Commission on April 18, 2005. E:\FR\FM\02MYN1.SGM 02MYN1

Agencies

SECURITIES AND EXCHANGE COMMISSION

[Federal Register Volume 70, Number 83 (Monday, May 2, 2005)]
[Notices]
[Pages 22735-22736]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E5-2079]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-51611; File No. SR-NASD-2005-026]


Self-Regulatory Organizations; National Association of Securities 
Dealers, Inc.; Order Approving Proposed Rule Change Relating to TRACE 
Market Data Fees

April 26, 2005.

I. Introduction

    On February 11, 2005, the National Association of Securities 
Dealers, Inc. (``NASD'') filed with the Securities and Exchange 
Commission (``Commission''), pursuant to Section 19(b)(1) of the 
Securities Exchange Act of 1934 (``Act'')\1\ and Rule 19b-4 
thereunder,\2\ a proposed rule change relating to Transaction Reporting 
and Compliance Engine (``TRACE'') market data fees. The Commission 
published the proposed rule change for comment in the Federal Register 
on March 16, 2005.\3\ The Commission received one comment letter on the 
proposal.\4\ On April 25, 2005, NASD filed a response to the comment 
letter.\5\ This order approves the proposed rule change.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ Securities Exchange Act Release No. 51336 (March 9, 2005), 
70 FR 12921 (March 16, 2005) (``Notice'').
    \4\ See letter from Andrew C. Wels, Chairman, Technology & 
Regulation Market Data Subcommittee, Securities Industry Association 
(``SIA''), to Jonathan G. Katz, Secretary, Commission, received 
April 8, 2005 (undated) (``SIA Letter'').
    \5\ See letter from Sharon K. Zackula, Associate General 
Counsel, NASD, to Katherine A. England, Assistant Director, Division 
of Market Regulation, Commission, dated April 25, 2005 (``NASD 
Letter'').
---------------------------------------------------------------------------

II. Description of the Proposed Rule Change

    The proposed rule change would amend NASD Rule 7010(k) relating to 
TRACE transaction data to: (i) Terminate the Bond Trade Dissemination 
Service (``BTDS'') Internal Usage Authorization Fee and the BTDS 
External Usage Authorization Fee and, in lieu of both fees, establish a 
Vendor Real-Time Data Feed Fee; (ii) define the term ``Tax Exempt 
Organization,'' and amend the defined term ``Non-Professional'' for 
purposes of NASD Rule 7010(k)(3); and (iii) make other minor, technical 
amendments. The proposal is discussed in greater detail in the 
Commission's notice soliciting public comment.\6\
---------------------------------------------------------------------------

    \6\ See Notice, supra note 3.
---------------------------------------------------------------------------

III. Summary of Comments Received and NASD Response

    The Commission received one comment letter on the proposal.\7\ The 
SIA Letter supports NASD's proposed rule change. However, the commenter 
requests that NASD clarify whether ``market data subscribers who are 
natural persons using a brokerage account established in the name of an 
entity name they or their family control'' are considered ``Non-
Professional'' within the meaning of the rule.\8\ In addition, the 
commenter states, with regard to a reduced fee for Tax Exempt 
Organizations, that further review ``may be warranted to determine the 
justifiable basis for a reduced fee, including a better description of 
the tax exempt organizations that would benefit from a reduced price 
structure, a better explanation as to why the reduced fee is necessary, 
and an analysis of the potential impact such a proposal may have on 
competition.''\9\
---------------------------------------------------------------------------

    \7\ SIA Letter, supra note 4.
    \8\ Id. at 3.
    \9\ Id. at 4.
---------------------------------------------------------------------------

    In response to the SIA Letter, NASD states that it ``will consider 
identifying certain non-natural persons as ``Non-Professionals'' as 
part of its continuing review and interpretation of TRACE data fees and 
access.''\10\ In addition, NASD states that ``[t]he proposed definition 
of Tax-Exempt Organization limits significantly the number and type of 
organizations that may apply to receive Real-Time TRACE transaction 
data at the reduced fee and, by definition, limits the use of Real-Time 
TRACE transaction data solely for data access programs for the benefit 
of individual investors and not for commercial purposes.''\11\ Given 
these restrictions, NASD does not believe that the proposal will result 
in any burden on competition that is not necessary or appropriate in 
furtherance of the purposes of the Act.\12\
---------------------------------------------------------------------------

    \10\ NASD Letter at 2 (``For purposes of TRACE fees, NASD has 
interpreted the term ``Non-Professional'' to further NASD's goal of 
providing access to TRACE market data at no charge to persons who 
seek to use TRACE market data for personal, rather than commercial, 
purposes.'').
    \11\ Id. at 3.
    \12\ See id.
---------------------------------------------------------------------------

    The SIA Letter also stated that the rationale NASD followed in its 
proposal--that financial services industry employees should be 
considered non-professionals when they access data for personal, non-
commercial uses--should be applied uniformly to all other individual 
subscribers of bond or equity market data no matter which self 
regulatory organization, directly or indirectly, controls the market 
data.\13\ The SIA Letter petitions the Commission for rulemaking to 
review the definitions of ``Professional'' and ``Non-Professional'' as 
interpreted for market data fee and administrative purposes by the 
Consolidated Tape Association, the NASDAQ UTP Plan, the New York Stock 
Exchange, NASDAQ, the Options Price Reporting Authority, and NASD.\14\ 
This petition will be considered separately from this proposal.
---------------------------------------------------------------------------

    \13\ SIA Letter at 1.
    \14\ See id.
---------------------------------------------------------------------------

IV. Discussion

    After careful consideration, the Commission finds that the proposed 
rule change is consistent with the requirements of the Act and the 
rules and regulations thereunder that are applicable to a national 
securities association.\15\ In particular, the Commission believes that 
the proposed rule change is consistent with section

[[Page 22736]]

15A(b)(6) of the Act,\16\ which requires, among other things, that the 
rules of an association be designed to prevent fraudulent and 
manipulative acts and practices, to promote just and equitable 
principles of trade, and, in general, to protect investors and the 
public interest, and section 15A(b)(5) of the Act,\17\ which requires, 
among other things, that rules of an association provide for the 
equitable allocation of reasonable dues, fees, and other charges among 
members, issuers, and other persons using any facility or system which 
the association operates or controls. Consolidating the two TRACE data 
fees into one fee and reducing the TRACE data fee for qualifying Tax-
Exempt Organizations appears reasonable and should not adversely affect 
the use and distribution of TRACE data. In addition, the Commission 
believes that clarifying who is a ``Non-Professional'' and therefore is 
not subject to TRACE fees is reasonable and consistent with the goal of 
wide dissemination of TRACE transaction data.
---------------------------------------------------------------------------

    \15\ In approving this proposed rule change, the Commission 
notes that it has considered the proposed rule's impact on 
efficiency, competition, and capital formation. See 15 U.S.C. 
78c(f).
    \16\ 15 U.S.C. 78o-3(b)(6).
    \17\ 15 U.S.C. 78o-3(b)(5).
---------------------------------------------------------------------------

V. Conclusion

    It is therefore ordered, pursuant to section 19(b)(2) of the 
Act,\18\ that the proposed rule change (SR-NASD-2005-026) be, and it 
hereby is, approved.
---------------------------------------------------------------------------

    \18\ 15 U.S.C. 78s(b)(2).

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\19\
---------------------------------------------------------------------------

    \19\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Margaret H. McFarland,
Deputy Secretary.
[FR Doc. E5-2079 Filed 4-29-05; 8:45 am]
BILLING CODE 8010-01-P

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