Self-Regulatory Organizations; National Association of Securities Dealers, Inc.; Notice of Filing and Order Granting Accelerated Approval to the Proposed Rule Change and Amendment Nos. 1 and 2 Thereto Modifying Pricing for Non-Members Using Nasdaq's Brut Facility, 43487-43488 [E5-4002]

Agencies

• SECURITIES AND EXCHANGE COMMISSION

[Federal Register Volume 70, Number 143 (Wednesday, July 27, 2005)]
[Notices]
[Pages 43487-43488]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E5-4002]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-52091; File No. SR-NASD-2005-072]


Self-Regulatory Organizations; National Association of Securities 
Dealers, Inc.; Notice of Filing and Order Granting Accelerated Approval 
to the Proposed Rule Change and Amendment Nos. 1 and 2 Thereto 
Modifying Pricing for Non-Members Using Nasdaq's Brut Facility

July 20, 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 June 1, 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. Nasdaq originally 
filed the proposal as a ``non-controversial'' rule change pursuant to 
section 19(b)(3)(A) of the Act \3\ and Rule 19b-4(f)(6)(iii) 
thereunder.\4\ On June 9, 2005, Nasdaq filed an amendment to the 
proposed rule change.\5\ On July 1, 2005, Nasdaq filed Amendment No. 2, 
which replaced the text of the original filing in its entirety.\6\ The 
Commission is publishing this notice to solicit comments on the 
proposed rule change, as amended, from interested persons, and at the 
same time is granting accelerated approval of the proposed rule change.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ 15 U.S.C. 78s(b)(3)(A).
    \4\ 17 CFR 240.19b-4(f)(6)(iii).
    \5\ See Partial Amendment dated June 9, 2005 (``Amendment No. 
1). Amendment No. 1 made minor technical corrections to the 
discussion section and to the proposed rule text.
    \6\ See Amendment dated July 1, 2005 (``Amendment No. 2). 
Amendment No. 2. clarified that the proposed rule change was being 
submitted for consideration pursuant to Section 19(b)(2) instead of 
under Section 19(b)(3)(A) and Rule 19b-4(f)(6) thereunder.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    Nasdaq proposes to modify the pricing for non-NASD members using 
Nasdaq's Brut Facility. Nasdaq requested approval to implement the 
proposed rule change retroactively as of June 1, 2005. The text of the 
proposed rule change, as amended, is cited below. Proposed new language 
is italicized; proposed deletions are in brackets. The text of the 
proposed rule change is also available on Nasdaq's Web site (https://
www.nasdaq.com), at Nasdaq's Office of the Secretary, and at the 
Commission's Public Reference Room.

7010. System Services

    (a)-(h) No change.
    (i) Nasdaq Market Center and Brut Facility Order Execution
    (1)-(5) No change.
    (6) The fees applicable to non-members using Nasdaq's Brut Facility 
shall be the fees established for members under Rule 7010(i), as 
amended by SR-NASD-2005-019, SR-NASD-2005-035 [and] SR-NASD-2005-048 
and SR-NASD-2005-071, and as applied to non-members by SR-NASD-2005-
020, SR-NASD-2005-038, [and] SR-NASD-2005-049 and SR-NASD-2005-072.
    (j)-(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, as 
amended, and discussed any comments it received on the proposed rule 
change. The text of these statements may be examined at the places 
specified in item IV below. Nasdaq has prepared summaries, set forth in 
sections A, B, and C below, of the most significant aspects of such 
statements.

A. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    In SR-NASD-2005-071,\7\ which was filed on an immediately effective 
basis and applies to NASD members, Nasdaq has proposed to modify the 
fee schedule applicable to orders in Nasdaq-listed stocks and exchange-
traded funds listed on the American Stock Exchange that are entered 
into the Nasdaq Market Center or Nasdaq's Brut Facility and routed to 
another market center for execution. In this filing, Nasdaq is 
proposing to apply the same modification to non-NASD members that use 
Nasdaq's Brut Facility.
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    \7\ Securities Exchange Act Release No. 52089 (July 20, 2005).
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    Routing charges are tiered, based upon the volume of shares on the 
Nasdaq Market Center and Brut books that are accessed during a month 
and the volumes of shares routed, and the volume of liquidity provided. 
The routing charges are currently as follows: (i) If a market 
participant provides a daily average of 2,000,000 or fewer shares of 
liquidity during a month, its routing charge is $0.003 per share 
executed; (ii) if a market participant provides a daily average of more 
than 2,000,000 but fewer than 10,000,001 shares of liquidity during a 
month, its routing charge is $0.0028 per share executed; (iii) if a 
market participant provides a daily average of more than 10,000,000 but 
fewer than 20,000,001 shares of liquidity during a month, or provides a 
daily average of more than 20,000,000 shares of liquidity during a 
month but accesses and/or routes a daily average of 50,000,000 or fewer 
shares during the month, its routing charge is $0.0027 per share 
routed; and (iv) if a market participant provides a daily average of 
more than 20,000,000 shares of liquidity during a month and accesses 
and/or routes a daily average of more than 50,000,000 shares during the 
month, its routing charge is $0.0025 per share executed. In 
anticipation of the expected lower trading volumes at all market 
centers during the summer months, and in order to ensure that Nasdaq's 
pricing structure remains competitive, Nasdaq is lowering the 
50,000,000 share threshold for the $0.0027 and $0.0025 pricing tiers to 
40,000,000 shares. Thus, the most favorable routing fee would be 
available to any market participant that provides a daily average of 
more than 20,000,000 shares of liquidity during a month and access and/
or routes a daily average of

[[Page 43488]]

more than 40,000,000 shares during a month.
2. Statutory Basis
    Nasdaq believes that the proposed rule change, as amended, is 
consistent with the provisions of section 15A of the Act,\8\ in 
general, and section 15A(b)(5)\9\ of the Act, in particular, in that 
the proposed rule change provides for the equitable allocation of 
reasonable dues, fees and other charges among members and issuers and 
other persons using any facility or system which the NASD operates or 
controls. According to Nasdaq, the proposed rule change applies to non-
members that use Nasdaq's Brut Facility. The same fee change is also 
being implemented for NASD members that use the Nasdaq Market Center 
and/or Nasdaq's Brut Facility. Accordingly, the proposed change, as 
amended, promotes an equitable allocation of fees between members and 
non-members using Nasdaq's order execution facilities.
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    \8\ 15 U.S.C. 78o-3.
    \9\ 15 U.S.C. 78o-3(b)(5).
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B. Self-Regulatory Organization's Statement on Burden on Competition

    Nasdaq does not believe that the proposed rule change will result 
in 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

    Written comments were neither solicited nor received.

III. Solicitation of Comments

    Interested persons are invited to submit written data, views, and 
arguments concerning the foregoing, including whether the proposed rule 
change is consistent with the Act. Comments may be submitted by any of 
the following methods:

Electronic Comments

     Use the Commission's Internet comment form (https://
www.sec.gov/rules/sro.shtml); or
     Send an e-mail to rule-comments@sec.gov. Please include 
File Number SR-NASD-2005-072 on the subject line.

Paper Comments

     Send paper comments in triplicate to Jonathan G. Katz, 
Secretary, Securities and Exchange Commission, 100 F Street, NE., 
Washington, DC 20549-9303.
    All submissions should refer to File Number SR-NASD-2005-072. This 
file number should be included on the subject line if e-mail is used. 
To help the Commission process and review your comments more 
efficiently, please use only one method. The Commission will post all 
comments on the Commission's Internet Web site (https://www.sec.gov/
rules/sro.shtml). Copies of the submission, all subsequent amendments, 
all written statements with respect to the proposed rule change that 
are filed with the Commission, and all written communications relating 
to the proposed rule change between the Commission and any person, 
other than those that may be withheld from the public in accordance 
with the provisions of 5 U.S.C. 552, will be available for inspection 
and copying in the Commission's Public Reference Room. Copies of such 
filing also will be available for inspection and copying at Nasdaq's 
Office of the Secretary. 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-2005-072 and should be submitted on or before August 17, 2005.

IV. Commission's 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.\10\ Specifically, the Commission believes that the 
proposed rule change, as amended, is consistent with section 15A(b)(5) 
of the Act,\11\ 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 facilities or system which it operates or controls.
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    \10\ The Commission has considered the proposed rule's impact on 
efficiency, competition and capital formation. 15 U.S.C. 78c(f).
    \11\ 15 U.S.C. 78o-3(b)(5).
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    The Commission notes that this proposal, which would modify pricing 
for non-NASD members using the Nasdaq's Brut facility, would permit the 
schedule for non-NASD members to mirror the schedule applicable to NASD 
members that became effective as of June 1, 2005, pursuant to SR-NASD-
2005-071.
    The Commission finds good cause for approving the proposed rule 
change, as amended, prior to the 30th day of the date of publication of 
the notice thereof in the Federal Register. The Commission notes that 
the proposed fees for non-NASD members are identical to those in SR-
NASD-2005-071, which implemented those fees for NASD members and which 
became effective as of June 1, 2005. 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. Therefore, the Commission finds that 
there is good cause, consistent with section 19(b)(2) of the Act,\12\ 
to approve the proposed change on an accelerated basis.
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    \12\ 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,\13\ that the proposed rule change (File No. SR-NASD-2005-072), as 
amended, is approved on an accelerated basis.
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    \13\ 15 U.S.C. 78s(b)(2).

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\14\
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    \14\ 17 CFR 200.30-3(a)(12).
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Jill M. Peterson,
Assistant Secretary.
[FR Doc. E5-4002 Filed 7-26-05; 8:45 am]
BILLING CODE 8010-01-P