Self-Regulatory Organizations; National Association of Securities Dealers, Inc.; Order Approving a Proposed Rule Change and Amendment Nos. 1 and 2 Thereto To Establish a Unitary Fee Schedule for Distribution of Real Time Data Feed Products Containing Nasdaq Market Center Data, 35151-35153 [05-11927]
Download as PDF
Federal Register / Vol. 70, No. 115 / Thursday, June 16, 2005 / Notices
to periodically assess the quality of
competing markets to assure that order
flow is directed to the markets
providing the most beneficial terms for
their customer orders.36 Broker-dealers
must examine their procedures for
seeking to obtain best execution in light
of market and technology changes and
modify those practices if necessary to
enable their customers to obtain the best
reasonably available prices.37 In doing
so, broker-dealers must take into
account price improvement
opportunities, and whether different
markets may be more suitable for
different types of orders or particular
securities.38
The Commission notes that the
proposed rule change would be
implemented on a pilot basis for six
weeks. During this time, the
Commission intends to evaluate the
impact of the proposal on the options
markets to determine whether it would
be beneficial to customers and to the
options markets as a whole before
approving any request to extend the
pilot program. The Commission believes
that the proposed rule change’s sixweek pilot period will allow the
Commission an opportunity of solicit
comments on the proposed rule change
prior to considering whether the
approve such pilot program for an
extended period. Therefore, the
Commission finds good cause,
consistent with Section 19(b)(2) of the
Act,39 to approve the proposal, as
amended, on an accelerated basis.
36 Order Handling Rules Release, 61 FR at 48322–
48333 (‘‘In conducting the requisite evaluation of its
internal order handling procedures, a broker-dealer
must regularly and rigorously examine execution
quality likely to be obtained from different markets
or market makers trading a security.’’). See also
Newton, 135 F.3d at 271; Market 2000; An
Examination of Current Equity Market
Developments V–4 (SEC Division of Market
Regulation January 1994) (‘‘Without specific
instructions from a customer, however, a brokerdealer should periodically assess the quality of
competing markets to ensure that its order flow is
directed to markets providing the most
advantageous terms for the customer’s order.’’);
Payment for Order Flow Final Rules, 59 FR at
55009.
37 Order Handling Rules, 61 FR at 48323.
38 Order Handling Rules, 61 FR at 48323. For
example, in connection with orders that are to be
executed at a market opening price, ‘‘[b]rokerdealers are subject to a best execution duty in
executing customer orders at the opening, and
should take into account the alternative methods in
determining how to obtain best execution for their
customer orders.’’ Disclosure of order Execution
and Routing Practices, Securities Exchange Act
Release No. 43590 (November 17, 2000), 65 FR
75414, 75422 (December 1, 2000) (adopting new
Rules 11Ac1–5 and 11Ac1–6 under the Act and
noting that alternative methods offered by some
Nasdaq market centers for pre-open orders included
the mid-point of the spread or at the bid or offer).
39 15 U.S.C. 78s(b)(2).
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15:42 Jun 15, 2005
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For these reasons, the Commission
believes that the proposal is consistent
with the requirements of Section 6(b)(5)
of the Act,40 and will not jeopardize
market integrity or the incentive for
market participants to post competitive
quotes.41
V. Conclusion
It is therefore ordered, pursuant to
Section 19(b)(2) of the Act,42 that the
proposed rule change (SR–ISE–2005–
18), as amended, which institutes the
pilot program until July 22, 2005, is
hereby approved on an accelerated
basis.
For the Commission, by the Division of
Market Regulation, pursuant to delegated
authority.43
J. Lynn Taylor,
Assistant Secretary.
[FR Doc. E5–3095 Filed 6–15–05; 8:45 am]
BILLING CODE 8010–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–51814; File No. SR–NASD–
2004–185]
Self-Regulatory Organizations;
National Association of Securities
Dealers, Inc.; Order Approving a
Proposed Rule Change and
Amendment Nos. 1 and 2 Thereto To
Establish a Unitary Fee Schedule for
Distribution of Real Time Data Feed
Products Containing Nasdaq Market
Center Data
June 9, 2005.
I. Introduction
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’’), 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 to establish a unitary fee
schedule for distribution of real time
data feed products containing Nasdaq
market center data. On February 17,
2005, Nasdaq filed Amendment No. 1 to
the original filing.3 Nasdaq filed
U.S.C. 78f(b)(5).
of this proposal is in no way an
endorsement of payment for order flow by the
Commission.
42 15 U.S.C. 78s(b)(2).
43 17 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.
PO 00000
40 15
41 Approval
Frm 00090
Fmt 4703
Sfmt 4703
35151
Amendment No. 2 on April 14, 2005.4
The proposed rule change, as amended,
was published for comment in the
Federal Register on April 28, 2005.5
The Commission received one comment
on the proposed rule change.6 This
order approves the proposed rule
change, as amended.
II. Description of the Proposal
Nasdaq proposes to modify NASD
Rule 7010 to establish a unitary fee
schedule for the distribution of Nasdaq
Market Center real time data feed
products. Nasdaq offers various data
products that firms may purchase and
redistribute either within their own
organizations or to outside parties.
According to Nasdaq, ‘‘distributor fees’’
are designed to encourage broad
distribution of the data, and allow
Nasdaq to recover what it describes as
the relatively high fixed costs associated
with supporting connectivity and
contractual relationships with
distributors. Nasdaq believes that
because the data products and
associated fees were established over
many years, the method of calculating
such fees should be updated.
Accordingly, Nasdaq proposes 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 proposed rule change
will 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, defined in the proposed rule
change to include 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 the
entity). The new distributor fees would
not apply to Nasdaq’s Web-based
historical data products, which are
governed by NASD Rule 7010(p), and
they would 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
4 Amendment No. 2 replaced and superseded the
original proposed rule change, as amended.
5 See Securities Exchange Act Release No. 51598
(Apr. 21, 2005), 70 FR 22162.
6 See letter from Gene L. Finn to Jonathan Katz,
Secretary, Securities and Exchange Commission
dated May 17, 2005 (‘‘Finn Letter’’).
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35152
Federal Register / Vol. 70, No. 115 / Thursday, June 16, 2005 / Notices
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 monthly Direct Access Fee, and (2)
either a monthly Internal Distribution
Fee or a monthly 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)
will not be liable for the Direct Access
Fee. Nasdaq represents that this fee will
allow it 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. Nasdaq states that 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 a real time data feed 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 a real time data feed
indirectly and distributes it both
internally and externally will pay the
External Distribution Fee.
Under the proposed pricing structure,
Nasdaq real time data feed products that
are available for distribution will be
divided into two categories: ‘‘Issuer
Specific Data’’ and ‘‘Market Summary
Statistics.’’ Issuer Specific Data will
further be divided into a ‘‘Dynamic
Intraday’’ subcategory and a ‘‘Daily’’
subcategory. Market Summary Statistics,
at present, will have one subcategory:
‘‘Intraday.’’ Each subcategory of real
time data feed product will be assigned
a Direct Access Fee, Internal
Distribution Fee, and External
Distribution Fee.
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15:42 Jun 15, 2005
Jkt 205001
The change will effect distributor fees
for the aforementioned products as
follows: Currently, 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 current monthly fee
for TotalView data in aggregate form is
$1,000 per distributor and in detailed
form is $7,500 per distributor. There is
no current monthly distributor fee for
OpenView. Under the proposed fee
structure, TotalView and OpenView,
whether in aggregate or detailed form,
will fall into the ‘‘Issue Specific DataDynamic Intraday’’ subcategory, for
which the proposed monthly fees are
$2,500 for Direct Access, $1,000 for
Internal Distribution, and $2,500 for
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
proposed fee structure, MFQS data will
fall into the ‘‘Issue Specific Data—
Daily’’ subcategory, 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,
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.
PO 00000
Frm 00091
Fmt 4703
Sfmt 4703
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 will offer its market data
distributors the option of reporting and
paying based on either a pro-rated or
full-month basis. The selection of prorated or full-month reporting will be the
business decision of each market data
distributor based on its needs and the
needs of its customers.
III. Discussion and Commission
Findings
After careful review of the proposal
and consideration of the comment letter,
the Commission finds that the proposed
rule change, as amended, is consistent
with the Act and the rules and
regulations thereunder applicable to a
national securities association.8 In
particular, the Commission believes that
the proposed rule change, as amended,
is consistent with section 15A(b)(5) of
the Act,9 which requires that the rules
of a national securities association
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 the association operates or
controls. Specifically, the Commission
believes that the proposed pricing
structure is reasonable and notes that it
would apply across-the-board to
distributors of the aforementioned
Nasdaq real time data feed products. In
approving the proposed rule change, the
Commission notes that, pursuant to
Section 19(b)(1) of the Act 10 and Rule
19b–4 thereunder,11 Nasdaq will be
required to file with the Commission
proposed rule changes relating to any
additional Nasdaq real time data feed
products to which it plans to apply the
new pricing structure in the future.
The Commission received one
comment letter on the proposal.12
Referring to ‘‘Section 7030—Special
Options’’ of the NASD Marketplace
Rules, the commenter stated that the
proposed rule change continues to
apply a discriminatory access fee to
nonprofessional online investors. The
8 The Commission has considered the proposed
rule’s impact on efficiency, competition and capital
formation. 15 U.S.C. 78c(f).
9 15 U.S.C. 78o–3(b)(5).
10 15 U.S.C. 78s(b)(1).
11 17 CFR 240.19b–4.
12 See Finn Letter, supra note 6.
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Federal Register / Vol. 70, No. 115 / Thursday, June 16, 2005 / Notices
commenter also set forth a series of
reasons why he believes generally that
nonprofessional access fees for online
investors should be eliminated, noting
that he has enumerated these reasons in
comment letters to the Commission in
the past. The Commission notes that the
continuance of fees for the data
products included in NASD Rule 7030
is not the subject of the proposed rule
change, although a different pricing
structure for the fees charged to
distributors for the Nasdaq Market
Index, which is being moved from
NASD Rule 7030 to Rule 7010, is being
proposed. With respect to the
commenter’s more general concerns
about nonprofessional access fees for
online investors, the Commission notes
that it has recently solicited public
comment as part of a comprehensive
review it has undertaken regarding
market data fees and revenues,13 and the
commenter’s views will be taken into
account in that review.
IV. Conclusion
It is therefore ordered, pursuant to
section 19(b)(2) of the Act,14 that the
proposed rule change (SR–NASD–2004–
185), as amended, is approved.
For the Commission, by the Division of
Market Regulation, pursuant to delegated
authority.15
J. Lynn Taylor,
Assistant Secretary.
[FR Doc. 05–11927 Filed 6–15–05; 8:45 am]
SSS Form 160, Request for Overseas Job
Assignment
SSS Form 163, Employment Verification
Form
SSS Form 164, Alternative Service Worker
Travel Reimbursement Request
SSS Form 166, Claim for Reimbursement
for Emergency Medical Care
Copies of the above identified forms
can be obtained upon written request to
the Selective Service System, Reports
Clearance Officer, 1515 Wilson
Boulevard, Arlington, Virginia, 22209–
2425.
No changes have been made to the
above identified forms. OMB clearance
is limited to requesting a three-year
extension of the current expiration
dates.
Written comments should be sent
within 60 days after the publication of
this notice, to: Selective Service System,
Reports Clearance Officer, 1515 Wilson
Boulevard, Arlington, Virginia, 22209–
2425.
A copy of the comments should be
sent to Office of Information and
Regulatory Affairs, Attention: Desk
Officer, Selective Service System, Office
of Management and Budget, New
Executive Office Building, Room 3235,
Washington, DC 20435.
Dated: June 1, 2005.
William A. Chatfield,
Director.
[FR Doc. 05–11896 Filed 6–15–05; 8:45 am]
BILLING CODE 8015–01–M
BILLING CODE 8010–01–P
DEPARTMENT OF TRANSPORTATION
SELECTIVE SERVICE SYSTEM
Forms Submitted to the Office of
Management and Budget for Extension
of Clearance
The following forms have been
sumbitted to the Office of Management
and Budget (OMB) for extension of
clearance in compliance with the
Paperwork Reduction Act (44 U.S.
Chapter 35):
SSS Form No. and Title:
SSS Form 152, Alternative Service
Employment Agreement
SSS Form 153, Employer Data Sheet
SSS Form 156, Skills Questionnaire
SSS Form 157, Alternative Service Job Data
Form
13 See Securities Exchange Act Release No. 50700
(Nov. 18, 2004), 69 FR 71256 (Dec. 8, 2004). See
also Securities Exchange Act Release No. 50699
(Nov. 18, 2004), 69 FR 71126 (Dec. 8, 2004).
14 15 U.S.C. 78s(b)(2).
15 17 CFR 200.30–3(a)(12).
15:42 Jun 15, 2005
Jkt 205001
[Docket No. PHMSA–03–14455]
Pipeline Safety: Public Meeting on
Applying, Interpreting, and Evaluating
Data From In-Line Inspection Devices
Selective Service System.
ACTION: Notice.
AGENCY:
VerDate jul<14>2003
Pipeline and Hazardous Materials
Safety Administration
Office of Pipeline Safety,
Pipeline and Hazardous Materials Safety
Administration, DOT.
ACTION: Notice; public meeting.
AGENCY:
SUMMARY: The Pipeline and Hazardous
Materials Safety Administration’s Office
of Pipeline Safety (OPS) is hosting a
public meeting to discuss concerns it
has with how operators are applying,
interpreting, and evaluating data
acquired from In-Line Inspection
Devices (ILI), and OPS’s expectations
about how operators should be
effectively integrating this data with
other information about the operator’s
pipeline. The meeting will be held
Thursday, August 11, 2005, in Houston,
TX, and is open to all interested parties.
PO 00000
Frm 00092
Fmt 4703
Sfmt 4703
35153
The public meeting will be held
Thursday, August 11, 2005, from 8:30
a.m. to 4.30 p.m.
ADDRESSES: The meeting will be held in
Houston, TX. The meeting location has
not been determined yet and will be
made available on https://ops.dot.gov
shortly.
FOR FURTHER INFORMATION CONTACT: Joy
Kadnar (PHMSA/OPS) at 202–366–
0568; joy.kadnar@dot.gov, regarding the
subject matter of this notice. For
information regarding meeting logistics,
please contact Veronica Garrison at
(202) 366–4996;
veronica.garrison@dot.gov or Janice
Morgan at (202) 366–2392;
janice.morgan@dot.gov.
SUPPLEMENTARY INFORMATION:
Subsequent to information acquired
from integrity management program
inspections and problems discovered
during accident investigations, OPS has
become concerned with performance
issues associated with in-line inspection
devices and how the data from these
devices is being integrated with other
information on the pipeline system. So
that OPS can share these concerns in a
public forum, OPS invites public
participation in a meeting to be held
Thursday, August 11, 2005, to discuss
the characterization—discrimination,
interpretation, and evaluation—of data
acquired from ILI devices.
ILI technology has been used for
approximately 20 years and has become
the preferred method used by pipeline
operators to ensure the integrity of their
pipeline assets. However, as
demonstrated by recent accidents on
hazardous liquid and natural gas
pipeline systems, some pipelines that
were inspected by ILI devices continue
to fail.
OPS will share its findings from these
accidents and from recent Integrity
Management Program (IMP) inspections.
OPS needs to determine if the problem
resides in the technology or in the
secondary and tertiary stages of the ILI
data evaluation—data characterization,
validation, and mitigation. Specifically,
is the problem data analysis, peer
review of technicians involved in data
review, lack of common standards for
data review, detection thresholds, data
validation, or the understanding of each
tool’s strengths and weaknesses? A
secondary objective of this meeting is
for OPS to understand how the
government, pipeline operators,
standards organizations, and ILI vendors
can help improve pipeline assessment
using ILI technology. At this public
meeting, OPS will highlight effective
practices and use this medium to share
these practices with the public.
DATES:
E:\FR\FM\16JNN1.SGM
16JNN1
Agencies
[Federal Register Volume 70, Number 115 (Thursday, June 16, 2005)]
[Notices]
[Pages 35151-35153]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 05-11927]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-51814; File No. SR-NASD-2004-185]
Self-Regulatory Organizations; National Association of Securities
Dealers, Inc.; Order Approving a Proposed Rule Change and Amendment
Nos. 1 and 2 Thereto To Establish a Unitary Fee Schedule for
Distribution of Real Time Data Feed Products Containing Nasdaq Market
Center Data
June 9, 2005.
I. Introduction
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''), 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 to establish a unitary fee
schedule for distribution of real time data feed products containing
Nasdaq market center data. 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 proposed rule change, as amended, was published for
comment in the Federal Register on April 28, 2005.\5\ The Commission
received one comment on the proposed rule change.\6\ This order
approves the proposed rule change, as amended.
---------------------------------------------------------------------------
\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.
\5\ See Securities Exchange Act Release No. 51598 (Apr. 21,
2005), 70 FR 22162.
\6\ See letter from Gene L. Finn to Jonathan Katz, Secretary,
Securities and Exchange Commission dated May 17, 2005 (``Finn
Letter'').
---------------------------------------------------------------------------
II. Description of the Proposal
Nasdaq proposes to modify NASD Rule 7010 to establish a unitary fee
schedule for the distribution of Nasdaq Market Center real time data
feed products. Nasdaq offers various data products that firms may
purchase and redistribute either within their own organizations or to
outside parties. According to Nasdaq, ``distributor fees'' are designed
to encourage broad distribution of the data, and allow Nasdaq to
recover what it describes as the relatively high fixed costs associated
with supporting connectivity and contractual relationships with
distributors. Nasdaq believes that because the data products and
associated fees were established over many years, the method of
calculating such fees should be updated. Accordingly, Nasdaq proposes
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 proposed rule change will 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, defined in the proposed rule change to include
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 the
entity). The new distributor fees would not apply to Nasdaq's Web-based
historical data products, which are governed by NASD Rule 7010(p), and
they would 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
[[Page 35152]]
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 monthly Direct Access
Fee, and (2) either a monthly Internal Distribution Fee or a monthly
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) will not be
liable for the Direct Access Fee. Nasdaq represents that this fee will
allow it 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. Nasdaq states that 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 a real time data feed
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 a real
time data feed indirectly and distributes it both internally and
externally will pay the External Distribution Fee.
Under the proposed pricing structure, Nasdaq real time data feed
products that are available for distribution will be divided into two
categories: ``Issuer Specific Data'' and ``Market Summary Statistics.''
Issuer Specific Data will further be divided into a ``Dynamic
Intraday'' subcategory and a ``Daily'' subcategory. Market Summary
Statistics, at present, will have one subcategory: ``Intraday.'' Each
subcategory of real time data feed product will be assigned a Direct
Access Fee, Internal Distribution Fee, and External Distribution Fee.
The change will effect distributor fees for the aforementioned
products as follows: Currently, 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 current monthly fee for TotalView data in aggregate form is
$1,000 per distributor and in detailed form is $7,500 per distributor.
There is no current monthly distributor fee for OpenView. Under the
proposed fee structure, TotalView and OpenView, whether in aggregate or
detailed form, will fall into the ``Issue Specific Data-Dynamic
Intraday'' subcategory, for which the proposed monthly fees are $2,500
for Direct Access, $1,000 for Internal Distribution, and $2,500 for
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.
---------------------------------------------------------------------------
\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 proposed fee structure, MFQS data
will fall into the ``Issue Specific Data--Daily'' subcategory, 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 will 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.
III. Discussion and Commission Findings
After careful review of the proposal and consideration of the
comment letter, the Commission finds that the proposed rule change, as
amended, is consistent with the Act and the rules and regulations
thereunder applicable to a national securities association.\8\ In
particular, the Commission believes that the proposed rule change, as
amended, is consistent with section 15A(b)(5) of the Act,\9\ which
requires that the rules of a national securities association 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 the association operates or controls. Specifically, the
Commission believes that the proposed pricing structure is reasonable
and notes that it would apply across-the-board to distributors of the
aforementioned Nasdaq real time data feed products. In approving the
proposed rule change, the Commission notes that, pursuant to Section
19(b)(1) of the Act \10\ and Rule 19b-4 thereunder,\11\ Nasdaq will be
required to file with the Commission proposed rule changes relating to
any additional Nasdaq real time data feed products to which it plans to
apply the new pricing structure in the future.
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\8\ The Commission has considered the proposed rule's impact on
efficiency, competition and capital formation. 15 U.S.C. 78c(f).
\9\ 15 U.S.C. 78o-3(b)(5).
\10\ 15 U.S.C. 78s(b)(1).
\11\ 17 CFR 240.19b-4.
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The Commission received one comment letter on the proposal.\12\
Referring to ``Section 7030--Special Options'' of the NASD Marketplace
Rules, the commenter stated that the proposed rule change continues to
apply a discriminatory access fee to nonprofessional online investors.
The
[[Page 35153]]
commenter also set forth a series of reasons why he believes generally
that nonprofessional access fees for online investors should be
eliminated, noting that he has enumerated these reasons in comment
letters to the Commission in the past. The Commission notes that the
continuance of fees for the data products included in NASD Rule 7030 is
not the subject of the proposed rule change, although a different
pricing structure for the fees charged to distributors for the Nasdaq
Market Index, which is being moved from NASD Rule 7030 to Rule 7010, is
being proposed. With respect to the commenter's more general concerns
about nonprofessional access fees for online investors, the Commission
notes that it has recently solicited public comment as part of a
comprehensive review it has undertaken regarding market data fees and
revenues,\13\ and the commenter's views will be taken into account in
that review.
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\12\ See Finn Letter, supra note 6.
\13\ See Securities Exchange Act Release No. 50700 (Nov. 18,
2004), 69 FR 71256 (Dec. 8, 2004). See also Securities Exchange Act
Release No. 50699 (Nov. 18, 2004), 69 FR 71126 (Dec. 8, 2004).
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IV. Conclusion
It is therefore ordered, pursuant to section 19(b)(2) of the
Act,\14\ that the proposed rule change (SR-NASD-2004-185), as amended,
is approved.
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\14\ 15 U.S.C. 78s(b)(2).
For the Commission, by the Division of Market Regulation,
pursuant to delegated authority.\15\
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\15\ 17 CFR 200.30-3(a)(12).
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J. Lynn Taylor,
Assistant Secretary.
[FR Doc. 05-11927 Filed 6-15-05; 8:45 am]
BILLING CODE 8010-01-P