Self-Regulatory Organizations; National Association of Securities Dealers, Inc.; Notice of Filing and Order Granting Accelerated Approval of Proposed Rule Change and Amendment No. 1 Thereto To Modify Certain Fees for Connecting to the Nasdaq Market Center and Nasdaq's Brut Facility for Non-Members, 33234-33236 [E5-2890]
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33234
Federal Register / Vol. 70, No. 108 / Tuesday, June 7, 2005 / Notices
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–51757; File No. SR–NASD–
2005–037]
Self-Regulatory Organizations;
National Association of Securities
Dealers, Inc.; Notice of Filing and
Order Granting Accelerated Approval
of Proposed Rule Change and
Amendment No. 1 Thereto To Modify
Certain Fees for Connecting to the
Nasdaq Market Center and Nasdaq’s
Brut Facility for Non-Members
May 27, 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 March 24,
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 and II below, which Items have
been prepared by Nasdaq. On May 10,
2005, Nasdaq submitted 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 and to grant accelerated
approval to the proposed rule change, as
amended.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
Nasdaq proposes to amend NASD
Rule 7010 to modify certain fees for
connecting to the Nasdaq Market Center
(‘‘NMC’’) and Nasdaq’s Brut Facility
(‘‘Brut’’). The text of the proposed
change to NASD Rule 7010 is below.
Additions are in italics and deletions
are in brackets.
*
*
*
*
*
7000. Charges for Services and
Equipment
7010. System Services
(a)—(e) No change
(f) Access Services.
The following charges are assessed by
Nasdaq for connectivity to the Nasdaq
Market Center (NMC) and, where
indicated, to Nasdaq’s Brut Facility
(Brut).
(1) and (2) No change.
(3) Computer to computer interface
(CTCI) and Financial Information
Exchange (FIX)
Options
Price
Option 1: Dual 56kb lines (one for redundancy), single hub and router, and optional single FIX
port.
Option 2: Dual 56kb lines (one for redundancy), dual hubs (one for redundancy), dual routers
(one for redundancy), and optional single FIX port.
Option 3: Dual T1 lines (one for redundancy), dual hubs (one for redundancy), dual routers
(one for redundancy), and optional single FIX port. Includes base bandwidth of 128kb.
FIX Trading Port (NMC and Brut) [Charge] ....................................................................................
FIX Port for Services Other than Trading .......................................................................................
Dedicated FIX server ......................................................................................................................
Dedicated FIX server (Brut) ............................................................................................................
Option 1, 2, or 3 with Message Queue software enhancement Bandwidth 20% ..........................
Disaster Recovery Option: Single 56kb line with single hub and router and optional single FIX
port. (For remote disaster recovery sites only.).
Bandwidth Enhancement Fee (for T1 subscribers only) ................................................................
Installation Fee ................................................................................................................................
Relocation Fee (for the movement of TCP/IP-capable lines within a single location) ...................
FIX connectivity through Options 1,
2, or 3 or the Disaster Recovery Option
will not be available to new subscribers
that are (i) NASD members after January
1, 2004, or (ii) not NASD members after
the effective date of SR–NASD–2003–
196.
(4) No change. (g)—(v) No change.
*
*
*
*
*
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
1 15
2 17
U.S.C. 78s(b)(1).
CFR 240.19b–4.
VerDate jul<14>2003
20:54 Jun 06, 2005
rule change. The text of these statements
may be examined at the places specified
in Item III 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 the
Statutory Basis for, the Proposed Rule
Change
1. Purpose
The proposed rule change would
apply to non-members certain rule
changes that were immediately effective
with respect to NASD members.4
According to Nasdaq, an important
objective of this proposal is to ensure
uniform treatment under the rules of
3 See Form 19b–4, dated May 10, 2005
(‘‘Amendment No. 1’’). Amendment No. 1 replaced
the original rule filing in its entirety.
Jkt 205001
PO 00000
Frm 00180
Fmt 4703
Sfmt 4703
$1275/month.
$1600/month.
$8000/month (CTCI or CTCI/FIX lines) $4000/
month (FIX-only lines).
$[300] 400/port/month.
$500/port/month.
$1,000/server/month.
3,000/server/month; initial term of not less than
12 months is required.
Fee for Option 1, 2, or 3 (including any Enhancement Fee) plus.
$975/month.
$600/month per 64kb increase above 128kb T1
base.
$2000 per site for dual hubs and routers.
$1000 per site for single hub and router.
$1700 per relocation.
members and non-members alike. As
further described below, these changes
modify certain fees and establish new
options for connecting to the NMC and
Brut.
Today, Nasdaq offers participants
Financial Information Exchange (‘‘FIX’’)
protocol connectivity for entering orders
to buy and sell securities into the NMC
and Brut. Effective April 1, 2005, the
port charge for such a connection will
be set at $400 per month for both the
NMC and Brut. For NMC users, this
represents a $100 per month increase
from the current $300 monthly charge;
for Brut users, this is a new charge,5
which is being instituted in order to
harmonize NMC and Brut charges for
similar services.
4 See
SR–NASD–2005–036.
assure service quality, a Brut FIX port has
been provisioned as a port pair, in which a
5 To
E:\FR\FM\07JNN1.SGM
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Federal Register / Vol. 70, No. 108 / Tuesday, June 7, 2005 / Notices
This charge better reflects the market
conditions and the costs associated with
providing the service. The $100/month
increase in the charge for an NMC FIX
port is necessary in light of the higherthan-expected infrastructure costs that
Nasdaq is currently incurring in
providing this service. In estimating its
costs, Nasdaq considers the cost of
necessary hardware, software,
maintenance and staff.
In response to subscriber demand,
Nasdaq also intends to make FIX
connectivity available for services other
than trading (i.e., other than the entry of
orders). As such, on April 1, 2005,
Nasdaq expects to enable FIX
connectivity to the NMC for the purpose
of accepting trade reports from those
participants that are eligible to submit
such reports to the NMC. In the future,
it may become possible to use such nontrading FIX connection for additional
Nasdaq services.
The proposed port charge for this
connection is slightly higher than the
charge for a trading port, which is a
reflection of current market conditions
and costs. It is based on the expected
level of demand for this type of service
and the expected infrastructure costs
(including hardware, software and staff
costs). Initially, this port will be used
for the purpose of accepting trade
reports from those participants that are
eligible to submit such reports to the
NMC. In the future, it may become
possible to use this connection for other
existing or to-be-established services. Of
course, Nasdaq will submit rule change
filings with respect to any new services
whenever required to do so pursuant to
Section 19(b)(1) of the Act 6 and Rule
19b-4 thereunder.7
Nasdaq is currently offering a
dedicated-to-a-specific-firm FIX server
that can be used to connect to the NMC.
A dedicated server is not necessary for
a proper FIX connection to the NMC,
but some participants may choose it as
an option.8 In response to participant
interest, Nasdaq is also making available
a dedicated FIX server for Brut. The
charge for a dedicated Brut FIX server
will reflect the costs of providing it. In
order to further ensure that all initial
redundant second port is included for use as
backup. Nasdaq does not intend to change this
practice at this time. Therefore, a Brut user will
receive both ports in the pair for a single payment
of $400/month.
6 15 U.S.C. 78s(b)(1).
7 17 CFR 240.19b–4.
8 See Securities Exchange Act Release No. 51170
(Feb. 9, 2005), 70 FR 7988 (Feb. 16, 2005) (SR–
NASD–2005–002) (explains that Nasdaq will
carefully monitor message traffic on all dedicated
and non-dedicated servers to ensure that dedicated
servers will not provide firms that receive them
with any transmission speed advantage).
VerDate jul<14>2003
20:54 Jun 06, 2005
Jkt 205001
costs of activating a dedicated server are
allocated properly, Nasdaq intends to
require a one-year minimum term for a
dedicated Brut FIX server. Users will be
responsible for the full first year’s
charges even if they wish to terminate
their contract early.
The monthly charge for a dedicated
FIX server at Brut is higher than the
charge for a dedicated FIX server at the
NMC. This difference in charges is in
large part a reflection of the differences
in the cost of necessary hardware,
maintenance fees, software licensing
fees, and staff support costs. A Brut
dedicated FIX server also entails higher
initial costs, and the requirement of a
12-month minimum term is designed to
reduce Nasdaq’s financial exposure in
the event that a user decides to
terminate the arrangement after less
than a year (although Nasdaq’s
expectation is that users that choose the
dedicated server option continue with
this option for longer than a year). The
initial and operating costs of an NMC
dedicated FIX server are lower, and in
the event of an early termination of this
option by a user, the equipment used to
provide such service can be more
readily (than the Brut equipment)
converted to other uses.
Nasdaq carefully monitors incoming
and outgoing message traffic on all
servers used for Brut access in order to
ensure that connectivity to and from
Brut is not degraded because of
insufficient capacity on such servers.
This process will not change with the
implementation of dedicated servers.
Nasdaq regularly reviews the
performance statistics for each user
connected to Nasdaq’s and Brut’s
servers. If it appears that a server is
reaching its capacity limits (for
example, if a particular user is
experiencing greater volumes than in
the past), Nasdaq would reassign servers
and users to ensure that there is no
degradation in the speed of
transmission. As a result, the choice a
user makes between a shared and a
dedicated server has no impact on
transmission speed. Nasdaq will install
additional non-dedicated servers
whenever necessary to provide a high
level of support across all FIX servers.
A dedicated FIX server at Brut would
also be capable of being converted to
provide access to the NMC if at any time
Nasdaq decided to make the appropriate
system modifications. The use of such a
server for connectivity to and from the
NMC would not confer any transmission
speed advantage or disadvantage upon
this server’s users.
PO 00000
Frm 00181
Fmt 4703
Sfmt 4703
33235
2. Statutory Basis
Nasdaq believes that the proposed
rule change is consistent with Section
15A of the Act,9 in general, and Section
15A(b)(5) 10 of the Act, in particular, in
that it 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 impose any
burden on competition that is not
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 has neither solicited nor
received comments on the proposed
rule change.
III. 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 rulecomments@sec.gov. Please include File
Number SR–NASD–2005–037 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–2005–037. 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
9 15
U.S.C. 78o–3.
U.S.C. 78o–3(b)(5).
10 15
E:\FR\FM\07JNN1.SGM
07JNN1
33236
Federal Register / Vol. 70, No. 108 / Tuesday, June 7, 2005 / Notices
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 offices 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–2005–037 and
should be submitted on or before June
28, 2005.
IV. Commission Findings and Order
Granting Accelerated Approval of
Proposed Rule Change
The Commission finds that the
proposed rule change, as amended, is
consistent with the requirements of the
Act and the rules and regulations
thereunder applicable to a selfregulatory organization.11 In particular,
the Commission believes that the
proposed rule change is consistent with
the requirements of Section 15A(b)(5) of
the Act,12 which requires that the rules
of the self-regulatory organization
provide for the equitable allocation of
reasonable dues, fees, and other charges
among members and issuers and other
persons using any facility or system
which it operates or controls.
Specifically, the Commission notes that
this proposal would permit the schedule
for non-NASD members to mirror the
schedule applicable to NASD members
that was effective pursuant to SR–
NASD–2005–036.
The Commission finds good cause for
accelerating approval of the proposed
rule change, as amended, prior to the
thirtieth day after publication in the
Federal Register. The Commission notes
that the proposed fees for non-NASD
members are identical to those in SR–
NASD–2005–036, which implemented
these fees for NASD members and
which became effective pursuant to
Section 19(b)(3)(A) of the Act.13 The
Commission notes that this change will
promote consistency in Nasdaq’s fee
schedule by applying the same pricing
schedule with the same date of
effectiveness for both NASD members
and non-NASD members. Accordingly,
the Commission finds good cause,
consistent with Section 19(b)(2) of the
Act,14 to approve the proposed rule
change, as amended, on an accelerated
basis.
V. Conclusion
It is therefore ordered, pursuant to
Section 19(b)(2) of the Act,15 that the
proposed rule change (SR–NASD–2005–
037), as amended, is approved.
For the Commission, by the Division of
Market Regulation, pursuant to delegated
authority.16
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. E5–2890 Filed 6–6–05; 8:45 am]
BILLING CODE 8010–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–51756; File No. SR–NASD–
2005–036]
Self-Regulatory Organizations;
National Association of Securities
Dealers, Inc.; Notice of Filing and
Immediate Effectiveness of Proposed
Rule Change and Amendment No. 1
Thereto To Modify Certain Fees for
Connecting to the Nasdaq Market
Center and Nasdaq’s Brut Facility
May 27, 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 March 24,
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. On May
10, 2005, Nasdaq submitted
Amendment No. 1 to the proposed rule
change.3 Nasdaq has designated this
proposal as establishing or changing a
due, fee, or other charge imposed by a
self-regulatory organization pursuant to
Section 19(b)(3)(A) of the Act,4 and Rule
19b–4(f)(2) thereunder,5 which renders
the proposal effective upon filing with
the Commission.6 The Commission is
publishing this notice to solicit
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 proposes to amend NASD
Rule 7010 to modify certain fees for
connecting to the Nasdaq Market Center
(‘‘NMC’’) and Nasdaq’s Brut Facility
(‘‘Brut’’). The text of the proposed
change to NASD Rule 7010 is below.
Additions are in italics and deletions
are in brackets.
*
*
*
*
*
7000. Charges for Services and
Equipment
7010. System Services
(a)—(e) No change
(f) Access Services.
The following charges are assessed by
Nasdaq for connectivity to the Nasdaq
Market Center (NMC) and, where
indicated, to Nasdaq’s Brut Facility
(Brut).
(1) and (2) No change.
(3) Computer to computer interface
(CTCI) and Financial Information
Exchange (FIX)
Options
Price
Option 1: Dual 56kb lines (one for redundancy), single hub and router, and optional single FIX
port.
Option 2: Dual 56kb lines (one for redundancy), dual hubs (one for redundancy), dual routers
(one for redundancy), and optional single FIX port.
Option 3: Dual T1 lines (one for redundancy), dual hubs (one for redundancy), dual routers
(one for redundancy), and optional single FIX port. Includes base bandwidth of 128kb.
FIX Trading Port (NMC and Brut) [Charge] ....................................................................................
FIX Port for Services Other than Trading .......................................................................................
11 The Commission has considered the proposed
rule’s impact on efficiency, competition and capital
formation. 15 U.S.C. 78c(f).
12 15 U.S.C. 78o–3(b)(5).
13 15 U.S.C. 78s(b)(3)(A).
14 15 U.S.C. 78s(b)(2).
15 15 U.S.C. 78s(b)(2).
VerDate jul<14>2003
20:54 Jun 06, 2005
Jkt 205001
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
3 See Form 19b–4, dated May 10, 2005
(‘‘Amendment No. 1’’). Amendment No. 1 clarified
the substance of and basis for the proposal.
4 15 U.S.C. 78s(b)(3)(A).
PO 00000
16 17
1 15
Frm 00182
Fmt 4703
Sfmt 4703
$1275/month.
$1600/month.
$8000/month (CTCI or CTCI/FIX lines)
$4000/month (FIX-only lines).
$[300] 400/port/month.
$500/port/month.
5 17
CFR 240.19b–4(f)(2).
is simultaneously filing, and requesting
accelerated approval for, another rule change
proposal, which would make the changes described
herein also applicable to non-members.
6 Nasdaq
E:\FR\FM\07JNN1.SGM
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]]>Agencies
[Federal Register Volume 70, Number 108 (Tuesday, June 7, 2005)]
[Notices]
[Pages 33234-33236]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E5-2890]
[[Page 33234]]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-51757; File No. SR-NASD-2005-037]
Self-Regulatory Organizations; National Association of Securities
Dealers, Inc.; Notice of Filing and Order Granting Accelerated Approval
of Proposed Rule Change and Amendment No. 1 Thereto To Modify Certain
Fees for Connecting to the Nasdaq Market Center and Nasdaq's Brut
Facility for Non-Members
May 27, 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 March 24, 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 and
II below, which Items have been prepared by Nasdaq. On May 10, 2005,
Nasdaq submitted 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 and to grant
accelerated approval to the proposed rule change, as amended.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
\3\ See Form 19b-4, dated May 10, 2005 (``Amendment No. 1'').
Amendment No. 1 replaced the original rule filing in its entirety.
---------------------------------------------------------------------------
I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
Nasdaq proposes to amend NASD Rule 7010 to modify certain fees for
connecting to the Nasdaq Market Center (``NMC'') and Nasdaq's Brut
Facility (``Brut''). The text of the proposed change to NASD Rule 7010
is below. Additions are in italics and deletions are in brackets.
* * * * *
7000. Charges for Services and Equipment
7010. System Services
(a)--(e) No change
(f) Access Services.
The following charges are assessed by Nasdaq for connectivity to
the Nasdaq Market Center (NMC) and, where indicated, to Nasdaq's Brut
Facility (Brut).
(1) and (2) No change.
(3) Computer to computer interface (CTCI) and Financial Information
Exchange (FIX)
------------------------------------------------------------------------
Options Price
------------------------------------------------------------------------
Option 1: Dual 56kb lines (one for $1275/month.
redundancy), single hub and router, and
optional single FIX port.
Option 2: Dual 56kb lines (one for $1600/month.
redundancy), dual hubs (one for redundancy),
dual routers (one for redundancy), and
optional single FIX port.
Option 3: Dual T1 lines (one for redundancy), $8000/month (CTCI or CTCI/
dual hubs (one for redundancy), dual routers FIX lines) $4000/month
(one for redundancy), and optional single (FIX-only lines).
FIX port. Includes base bandwidth of 128kb.
FIX Trading Port (NMC and Brut) [Charge]..... $[300] 400/port/month.
FIX Port for Services Other than Trading..... $500/port/month.
Dedicated FIX server......................... $1,000/server/month.
Dedicated FIX server (Brut).................. 3,000/server/month;
initial term of not less
than 12 months is
required.
Option 1, 2, or 3 with Message Queue software Fee for Option 1, 2, or 3
enhancement Bandwidth 20%. (including any
Enhancement Fee) plus.
Disaster Recovery Option: Single 56kb line $975/month.
with single hub and router and optional
single FIX port. (For remote disaster
recovery sites only.).
Bandwidth Enhancement Fee (for T1 subscribers $600/month per 64kb
only). increase above 128kb T1
base.
Installation Fee............................. $2000 per site for dual
hubs and routers.
$1000 per site for single
hub and router.
Relocation Fee (for the movement of TCP/IP- $1700 per relocation.
capable lines within a single location).
------------------------------------------------------------------------
FIX connectivity through Options 1, 2, or 3 or the Disaster
Recovery Option will not be available to new subscribers that are (i)
NASD members after January 1, 2004, or (ii) not NASD members after the
effective date of SR-NASD-2003-196.
(4) No change. (g)--(v) No change.
* * * * *
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 III 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 the
Statutory Basis for, the Proposed Rule Change
1. Purpose
The proposed rule change would apply to non-members certain rule
changes that were immediately effective with respect to NASD
members.\4\ According to Nasdaq, an important objective of this
proposal is to ensure uniform treatment under the rules of members and
non-members alike. As further described below, these changes modify
certain fees and establish new options for connecting to the NMC and
Brut.
---------------------------------------------------------------------------
\4\ See SR-NASD-2005-036.
---------------------------------------------------------------------------
Today, Nasdaq offers participants Financial Information Exchange
(``FIX'') protocol connectivity for entering orders to buy and sell
securities into the NMC and Brut. Effective April 1, 2005, the port
charge for such a connection will be set at $400 per month for both the
NMC and Brut. For NMC users, this represents a $100 per month increase
from the current $300 monthly charge; for Brut users, this is a new
charge,\5\ which is being instituted in order to harmonize NMC and Brut
charges for similar services.
---------------------------------------------------------------------------
\5\ To assure service quality, a Brut FIX port has been
provisioned as a port pair, in which a redundant second port is
included for use as backup. Nasdaq does not intend to change this
practice at this time. Therefore, a Brut user will receive both
ports in the pair for a single payment of $400/month.
---------------------------------------------------------------------------
[[Page 33235]]
This charge better reflects the market conditions and the costs
associated with providing the service. The $100/month increase in the
charge for an NMC FIX port is necessary in light of the higher-than-
expected infrastructure costs that Nasdaq is currently incurring in
providing this service. In estimating its costs, Nasdaq considers the
cost of necessary hardware, software, maintenance and staff.
In response to subscriber demand, Nasdaq also intends to make FIX
connectivity available for services other than trading (i.e., other
than the entry of orders). As such, on April 1, 2005, Nasdaq expects to
enable FIX connectivity to the NMC for the purpose of accepting trade
reports from those participants that are eligible to submit such
reports to the NMC. In the future, it may become possible to use such
non-trading FIX connection for additional Nasdaq services.
The proposed port charge for this connection is slightly higher
than the charge for a trading port, which is a reflection of current
market conditions and costs. It is based on the expected level of
demand for this type of service and the expected infrastructure costs
(including hardware, software and staff costs). Initially, this port
will be used for the purpose of accepting trade reports from those
participants that are eligible to submit such reports to the NMC. In
the future, it may become possible to use this connection for other
existing or to-be-established services. Of course, Nasdaq will submit
rule change filings with respect to any new services whenever required
to do so pursuant to Section 19(b)(1) of the Act \6\ and Rule 19b-4
thereunder.\7\
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\6\ 15 U.S.C. 78s(b)(1).
\7\ 17 CFR 240.19b-4.
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Nasdaq is currently offering a dedicated-to-a-specific-firm FIX
server that can be used to connect to the NMC. A dedicated server is
not necessary for a proper FIX connection to the NMC, but some
participants may choose it as an option.\8\ In response to participant
interest, Nasdaq is also making available a dedicated FIX server for
Brut. The charge for a dedicated Brut FIX server will reflect the costs
of providing it. In order to further ensure that all initial costs of
activating a dedicated server are allocated properly, Nasdaq intends to
require a one-year minimum term for a dedicated Brut FIX server. Users
will be responsible for the full first year's charges even if they wish
to terminate their contract early.
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\8\ See Securities Exchange Act Release No. 51170 (Feb. 9,
2005), 70 FR 7988 (Feb. 16, 2005) (SR-NASD-2005-002) (explains that
Nasdaq will carefully monitor message traffic on all dedicated and
non-dedicated servers to ensure that dedicated servers will not
provide firms that receive them with any transmission speed
advantage).
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The monthly charge for a dedicated FIX server at Brut is higher
than the charge for a dedicated FIX server at the NMC. This difference
in charges is in large part a reflection of the differences in the cost
of necessary hardware, maintenance fees, software licensing fees, and
staff support costs. A Brut dedicated FIX server also entails higher
initial costs, and the requirement of a 12-month minimum term is
designed to reduce Nasdaq's financial exposure in the event that a user
decides to terminate the arrangement after less than a year (although
Nasdaq's expectation is that users that choose the dedicated server
option continue with this option for longer than a year). The initial
and operating costs of an NMC dedicated FIX server are lower, and in
the event of an early termination of this option by a user, the
equipment used to provide such service can be more readily (than the
Brut equipment) converted to other uses.
Nasdaq carefully monitors incoming and outgoing message traffic on
all servers used for Brut access in order to ensure that connectivity
to and from Brut is not degraded because of insufficient capacity on
such servers. This process will not change with the implementation of
dedicated servers. Nasdaq regularly reviews the performance statistics
for each user connected to Nasdaq's and Brut's servers. If it appears
that a server is reaching its capacity limits (for example, if a
particular user is experiencing greater volumes than in the past),
Nasdaq would reassign servers and users to ensure that there is no
degradation in the speed of transmission. As a result, the choice a
user makes between a shared and a dedicated server has no impact on
transmission speed. Nasdaq will install additional non-dedicated
servers whenever necessary to provide a high level of support across
all FIX servers.
A dedicated FIX server at Brut would also be capable of being
converted to provide access to the NMC if at any time Nasdaq decided to
make the appropriate system modifications. The use of such a server for
connectivity to and from the NMC would not confer any transmission
speed advantage or disadvantage upon this server's users.
2. Statutory Basis
Nasdaq believes that the proposed rule change is consistent with
Section 15A of the Act,\9\ in general, and Section 15A(b)(5) \10\ of
the Act, in particular, in that it 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.
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\9\ 15 U.S.C. 78o-3.
\10\ 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 burden on competition that is not 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 has neither solicited nor received comments on the proposed
rule change.
III. 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-2005-037 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-
037. 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
[[Page 33236]]
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 offices 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-2005-037 and should be submitted on or before June 28, 2005.
IV. Commission Findings and Order Granting Accelerated Approval of
Proposed Rule Change
The Commission finds that the proposed rule change, as amended, is
consistent with the requirements of the Act and the rules and
regulations thereunder applicable to a self-regulatory
organization.\11\ In particular, the Commission believes that the
proposed rule change is consistent with the requirements of Section
15A(b)(5) of the Act,\12\ which requires that the rules of the self-
regulatory organization provide for the equitable allocation of
reasonable dues, fees, and other charges among members and issuers and
other persons using any facility or system which it operates or
controls. Specifically, the Commission notes that this proposal would
permit the schedule for non-NASD members to mirror the schedule
applicable to NASD members that was effective pursuant to SR-NASD-2005-
036.
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\11\ The Commission has considered the proposed rule's impact on
efficiency, competition and capital formation. 15 U.S.C. 78c(f).
\12\ 15 U.S.C. 78o-3(b)(5).
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The Commission finds good cause for accelerating approval of the
proposed rule change, as amended, prior to the thirtieth day after
publication in the Federal Register. The Commission notes that the
proposed fees for non-NASD members are identical to those in SR-NASD-
2005-036, which implemented these fees for NASD members and which
became effective pursuant to Section 19(b)(3)(A) of the Act.\13\ The
Commission notes that this change will promote consistency in Nasdaq's
fee schedule by applying the same pricing schedule with the same date
of effectiveness for both NASD members and non-NASD members.
Accordingly, the Commission finds good cause, consistent with Section
19(b)(2) of the Act,\14\ to approve the proposed rule change, as
amended, on an accelerated basis.
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\13\ 15 U.S.C. 78s(b)(3)(A).
\14\ 15 U.S.C. 78s(b)(2).
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V. Conclusion
It is therefore ordered, pursuant to Section 19(b)(2) of the
Act,\15\ that the proposed rule change (SR-NASD-2005-037), as amended,
is approved.
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\15\ 15 U.S.C. 78s(b)(2).
For the Commission, by the Division of Market Regulation,
pursuant to delegated authority.\16\
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\16\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. E5-2890 Filed 6-6-05; 8:45 am]
BILLING CODE 8010-01-P
