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 Fees for the use of Nasdaq's Application Programming Interface Protocol by NASD Members, 9399-9401 [E6-2522]
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Federal Register / Vol. 71, No. 36 / Thursday, February 23, 2006 / Notices
if consistent with the protection of
investors and the public interest, it has
become effective pursuant to section
19(b)(3)(A) of the Act 10 and Rule 19b–
4(f)(6) 11 thereunder.12
A proposed rule change filed under
Rule 19b–4(f)(6) 13 normally does not
become operative prior to thirty days
after the date of filing. Nasdaq requests
that the Commission waive the 30-day
operative delay, as specified in Rule
19b–4(f)(6)(iii), and designate the
proposed rule change to become
operative immediately to allow
continued and uninterrupted access to
Nasdaq’s Brut and INET trading
facilities for non-NASD member broker/
dealers and their customers while such
broker/dealers take steps to become
members of the Nasdaq Exchange before
it becomes operational as a national
securities exchange. The Commission
hereby grants the request. The
Commission believes that waiving the
30-day operative delay is consistent
with the protection of investors and the
public interest because such waiver will
allow non-NASD member broker/
dealers to continue to participate in
Nasdaq’s Brut and INET systems
without interruption. The Commission
notes that by May 1, 2006, all Brut and
INET participants must either be NASD
members or Nasdaq Exchange members,
contingent on whether the Nasdaq
Exchange has begun operating as a
national securities exchange. In
addition, the Commission notes that
members of NASD, as well as broker/
dealers that are currently not NASD
members, will be able to apply to
become a Nasdaq Exchange member
during the period of transition before
the Nasdaq Exchange becomes
operational.14 For these reasons, the
Commission designates the proposed
rule change as effective and operative
immediately.15
At any time within 60 days of the
filing of the proposed rule change, the
Commission may summarily abrogate
such proposed rule change if it appears
to the Commission that such action is
10 15
U.S.C. 78s(b)(3)(A).
CFR 240.19b–4(f)(6).
12 Pursuant to Rule 19b–4(f)(6)(iii), Nasdaq has
given the Commission written notice of its intent
to file the proposed rule change, along with a brief
description and text of the proposed rule change,
at least five business days prior to the date on
which Nasdaq filed the proposed rule change. See
17 CFR 240.19b–4(f)(6)(iii).
13 17 CFR 240.19b–4(f)(6).
14 See Nasdaq Exchange Approval Order, 71 FR
at 3554 (referring to recently approved Nasdaq
Exchange Rule 1013(a)(6)).
15 For the purposes only of waiving the operative
date of this proposal, the Commission has
considered the proposed rule’s impact on
efficiency, competition, and capital formation. See
15 U.S.C. 78c(f).
rwilkins on PROD1PC63 with NOTICES
11 17
VerDate Aug<31>2005
16:15 Feb 22, 2006
Jkt 205001
necessary or appropriate in the public
interest, for the protection of investors,
or otherwise in furtherance of the
purposes of the Act.16
IV. 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–2006–021 on the
subject line.
Paper Comments
• Send paper comments in triplicate
to Nancy M. Morris, Secretary,
Securities and Exchange Commission,
Station Place, 100 F Street, NE.,
Washington, DC 20549–1090.
All submissions should refer to File
Number SR–NASD–2006–021. 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
Section, 100 F Street, NE., Washington,
DC 20549. Copies of such filing also will
be available for inspection and copying
at the principal office of Nasdaq. All
comments received will be posted
without change; the Commission does
not edit personal identifying
information from submissions. You
16 The effective date of the original proposed rule
change is February 7, 2006, and the effective date
of Amendment No. 1 is February 8, 2006. For
purposes of calculating the 60-day period within
which the Commission may summarily abrogate the
proposed rule change under section 19(b)(3)(C) of
the Act, the Commission considers such period to
commence on February 8, 2006, the date on which
Nasdaq filed Amendment No. 1. See 15 U.S.C.
78s(b)(3)(C).
PO 00000
Frm 00092
Fmt 4703
Sfmt 4703
9399
should submit only information that
you wish to make available publicly. All
submissions should refer to File
Number SR–NASD–2006–021 and
should be submitted on or before March
16, 2006.
For the Commission, by the Division of
Market Regulation, pursuant to delegated
authority.17
J. Lynn Taylor,
Assistant Secretary.
[FR Doc. E6–2520 Filed 2–22–06; 8:45 am]
BILLING CODE 8010–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–53317; File No. SR–NASD–
2005–156]
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 Fees for the use of
Nasdaq’s Application Programming
Interface Protocol by NASD Members
February 15, 2006.
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 December
30, 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
January 27, 2006, Nasdaq filed
Amendment No. 1 to the proposed rule
change.3 Nasdaq has designated this
proposal as establishing or changing a
due, fee, or other charge of a selfregulatory organization, pursuant to
section 19(b)(3)(A)(ii) of the Act,4 and
Rule 19b–4(f)(2) thereunder,5 which
renders the proposed rule change
effective upon filing with the
Commission. The Commission is
publishing this notice to solicit
17 17
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
3 Amendment No. 1 modified the proposal to
reflect the transition of the final non-member user
of the API protocol in the first week of January
2006. For purposes of calculating the 60-day
abrogation period, the Commission considers the
period to have commenced on January 27, 2006, the
date Nasdaq filed Amendment No. 1. 15 U.S.C.
78s(b)(3)(C).
4 15 U.S.C. 78s(b)(3)(A)(ii).
5 17 CFR 240.19b–4(f)(2).
1 15
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9400
Federal Register / Vol. 71, No. 36 / Thursday, February 23, 2006 / Notices
comments on the proposed rule change,
as amended, from interested persons.
I. Self-Regulatory Organization’s
Statement of the Terms of the Substance
of the Proposed Rule Change
Nasdaq proposes to amend NASD
Rule 7010 to modify fees for use of
Nasdaq’s Application Programming
Interface (‘‘API’’) protocol by NASD
members. Nasdaq will implement the
proposed rule change on January 1,
2006.
The text of the proposed rule change
is below. Proposed new language is in
italics; proposed deletions are in
brackets.
*
*
*
*
*
7000. CHARGES FOR SERVICES AND
EQUIPMENT
7010. System Services
(a)–(e) No change.
Service Charge .........................................................................................
Display Charge .........................................................................................
Additional Circuit/SDP Charge ..............................................................
PD and SDP Maintenance:
Monthly maintenance agreement ....................................................
Hourly fee for maintenance provided without monthly maintenance agreement.
ECN Direct Connection ...........................................................................
(B)—(C) No change.
[(D) DSL service (i) shall be provided
solely to NASD members without API
logons, (ii) shall be provided to only one
SDP per location, and (iii) may not be
used in connection with SDP T1 circuit
connections at the same location. A
subscriber with an SDP connected to
Nasdaq via T1 circuits that orders DSL
on or before June 1, 2004 shall not be
required to pay charges under Rule 7040
for initial disconnection of T1 circuits
and installation of DSL. In addition, if
such a subscriber cancels DSL service
within 10 business days of its first date
of DSL service, the subscriber shall not
be required to pay the early termination
fee or charges under Rule 7040 for
disconnection of DSL and reinstallation
of T1 circuits.]
(2)–(4) No change.
(g)–(w) No change.
*
*
*
*
*
rwilkins on PROD1PC63 with NOTICES
II. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
In its filing with the Commission,
Nasdaq included statements concerning
the purpose of and basis for the
proposed rule change and discussed any
comments it received on the proposed
rule change. The text of these statements
may be examined at the places specified
in Item IV below. Nasdaq has prepared
summaries, set forth in sections A, B,
and C below, of the most significant
aspects of such statements.
VerDate Aug<31>2005
16:15 Feb 22, 2006
Jkt 205001
$[2,035]8,000/month per service delivery platform (‘‘SDP’’) connected via T1 circuits.
[$1,000/month per SDP connected via Digital Subscriber Line
(‘‘DSL’’), plus $1,000 per DSL early termination fee if service is
terminated within 60 days of installation].
$525/month per logon for the first 150 logons.
$200/month for each additional logon.
$[3,235]8,000/month.
$55/presentation device (‘‘PD’’) logon or SDP/month.
$195 per hour (two hour minimum), plus cost of parts.
$1,200 per port pair per month.
A. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
1. Purpose
As described in SR–NASD–2005–
002,6 Nasdaq is in the process of
sunsetting its API protocol. Although
the API protocol supports a high volume
of message traffic, it requires the use of
a Service Delivery Platform (‘‘SDP’’), a
hardware unit located at the subscriber’s
premises, resulting in comparatively
higher communications and
infrastructure costs for firms using API.
As a result, Nasdaq has developed the
Nasdaq Information Exchange or ‘‘QIX,’’
a new proprietary protocol that does not
require use of an SDP. Nasdaq believes
that QIX offers the benefits of the API
protocol but at a significantly reduced
cost to its users. QIX has been available
for use in production since January
2005.
For the last ten months, Nasdaq has
been working with users of the API
protocol to transition them to QIX and/
or one of Nasdaq’s other
telecommunication protocols, the
Financial Information Exchange
(‘‘FIX’’), the Computer-to-Computer
Interface (‘‘CTCI’’), or internet-based
Nasdaq Workstations. Nevertheless,
several users of the API are not yet
ready to make their transition, and
therefore Nasdaq is extending the sunset
date into the first quarter of 2006. As the
number of API users decreases,
6 Securities Exchange Act Release No. 51170
(February 9, 2005), 70 FR 7988 (February 16, 2005).
PO 00000
Frm 00093
Fmt 4703
(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) Legacy Nasdaq Workstation TM
Service
(A) The following charges shall apply
to the receipt of Level 2 or Level 3
Nasdaq Service via equipment and
communications linkages prescribed for
the Nasdaq Workstation II Service:
Sfmt 4703
however, Nasdaq must spread the
significant fixed costs associated with
operation of the protocol over a smaller
customer base. As a result, an increase
in the fees associated with use of the
protocol is necessary to allow Nasdaq to
recoup a greater portion of its costs.
Specifically, effective January 1, 2006,
Nasdaq will increase the service charge
assessed for each SDP from $2,035 per
month to $8,000 per month. Nasdaq will
also increase the additional circuit/SDP
charge from $3,235 per month to $8,000
per month. As described in NASD Rule
7010(f)(1)(C), this charge is assessed
when subscribers make inefficient use
of their SDPs and/or the T1 circuits
used to connect SDPs to Nasdaq. Nasdaq
is, however, eliminating the $1,000 per
month charge for SDPs connected to
Nasdaq via DSL lines, because all users
of such SDPs have transitioned to other
access protocols.7
2. Statutory Basis
Nasdaq believes the proposed rule
change is consistent with the provisions
of section 15A of the Act,8 in general,
and sections 15A(b)(5) 9 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. The proposed rule
change will allow Nasdaq to recoup
7 This proposed rule change applies solely to
NASD members. The final non-member user of the
API protocol transitioned away from the protocol in
the first week of January 2006.
8 15 U.S.C. 78o–3.
9 15 U.S.C. 78o–3(b)(5).
E:\FR\FM\23FEN1.SGM
23FEN1
Federal Register / Vol. 71, No. 36 / Thursday, February 23, 2006 / Notices
more of the costs associated with
continued operation of the API protocol
for the benefit of a decreasing number
of subscribers.
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, as amended.
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. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
The proposed rule change has become
effective pursuant to section
19(b)(3)(A)(ii) of the Act 10 and
subparagraph (f)(2) of Rule 19b–4
thereunder,11 because it establishes or
changes a due, fee, or other charge
imposed by NASD. At any time within
60 days of the filing of the proposed rule
change, the Commission may summarily
abrogate such rule change if it appears
to the Commission that such action is
necessary or appropriate in the public
interest, for the protection of investors,
or otherwise in furtherance of the
purposes of the Act.
IV. Solicitation of Comments
For the Commission, by the Division of
Market Regulation, pursuant to delegated
authority.12
J. Lynn Taylor,
Assistant Secretary.
[FR Doc. E6–2522 Filed 2–22–06; 8:45 am]
BILLING CODE 8010–01–P
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–2005–156 on the
subject line.
Paper Comments
rwilkins on PROD1PC63 with NOTICES
subject line if e-mail is used. To help the
Commission process and review your
comments more efficiently, please use
only one method. The Commission will
post all comments on the Commission’s
Internet Web site (https://www.sec.gov/
rules/sro.shtml). Copies of the
submission, all subsequent
amendments, all written statements
with respect to the proposed rule
change that are filed with the
Commission, and all written
communications relating to the
proposed rule change between the
Commission and any person, other than
those that may be withheld from the
public in accordance with the
provisions of 5 U.S.C. 552, will be
available for inspection and copying in
the Commission’s Public Reference
Room. Copies of the filing also will be
available for inspection and copying at
the principal offices of 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 NASD–2005–156 and should be
submitted on or before March 16, 2006.
• Send paper comments in triplicate
to Nancy M. Morris, Secretary,
Securities and Exchange Commission,
100 F Street, NE., Washington, DC
20549–1090.
All submissions should refer to File
Number NASD–2005–156. This file
number should be included on the
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–53316; File No. SR–NASD–
2006–017]
Self-Regulatory Organizations;
National Association of Securities
Dealers, Inc.; Notice of Filing and
Immediate Effectiveness of Proposed
Rule Change Relating to Short Sale
Processing in Nasdaq’s INET Facility
February 15, 2006.
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 February
2, 2006, 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
12 17
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
10 15
U.S.C. 78s(b)(3)(A)(ii).
11 17 CFR 240.19b–4(f)(2).
VerDate Aug<31>2005
16:15 Feb 22, 2006
Items I and II below, which Items have
been substantially prepared by Nasdaq.
Nasdaq filed the proposed rule change
as a ‘‘non-controversial’’ rule change
under Rule 19b–4(f)(6) under the Act,3
which rendered the proposal effective
upon filing with the Commission. The
Commission is publishing this notice to
solicit comments on the proposed rule
change from interested persons.
I. Self-Regulatory Organization’s
Statement of the Terms of the Substance
of the Proposed Rule Change
Nasdaq proposes to clarify the method
by which its INET facility processes
orders to comply with short selling
restrictions. Nasdaq would like to
implement the proposed rule change
immediately. The text of the proposed
rule change is available on the NASD’s
Web site, https://www.nasd.com, at the
NASD’s Office of the Secretary, and at
the Commission’s Public Reference
Room.
II. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
In its filing with the Commission,
Nasdaq included statements concerning
the purpose of and basis for the
proposed rule change and discussed any
comments it received on the proposed
rule change. The text of these statements
may be examined at the places specified
in Item IV below. Nasdaq has prepared
summaries, set forth in Sections A, B,
and C below, of the most significant
aspects of such statements.
A. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
1. Purpose
According to the Exchange, Nasdaq’s
INET System currently provides users
the option of having the INET System
price adjust and/or cancel short sale
orders so as to comply with rules
governing short selling. Under the
proposal, Nasdaq is proposing to more
fully explain the INET System’s short
sale compliance method and to apply it
to all short sale orders entered into its
System that are subject to short selling
restrictions. As such, all orders to sell
short that are subject to a short selling
restriction would be processed as
follows:
For Nasdaq-listed securities, if an
order to sell short is entered on a down
bid that, if executed upon entry, would
violate NASD Rule 3350, the INET
System will automatically re-price the
1 15
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9401
3 17
E:\FR\FM\23FEN1.SGM
CFR 240.19b–4(f)(6).
23FEN1
]]>Agencies
[Federal Register Volume 71, Number 36 (Thursday, February 23, 2006)]
[Notices]
[Pages 9399-9401]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E6-2522]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-53317; File No. SR-NASD-2005-156]
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 Fees for the use of
Nasdaq's Application Programming Interface Protocol by NASD Members
February 15, 2006.
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 December 30, 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 January 27,
2006, Nasdaq filed Amendment No. 1 to the proposed rule change.\3\
Nasdaq has designated this proposal as establishing or changing a due,
fee, or other charge of a self-regulatory organization, pursuant to
section 19(b)(3)(A)(ii) of the Act,\4\ and Rule 19b-4(f)(2)
thereunder,\5\ which renders the proposed rule change effective upon
filing with the Commission. The Commission is publishing this notice to
solicit
[[Page 9400]]
comments on the proposed rule change, as amended, from interested
persons.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
\3\ Amendment No. 1 modified the proposal to reflect the
transition of the final non-member user of the API protocol in the
first week of January 2006. For purposes of calculating the 60-day
abrogation period, the Commission considers the period to have
commenced on January 27, 2006, the date Nasdaq filed Amendment No.
1. 15 U.S.C. 78s(b)(3)(C).
\4\ 15 U.S.C. 78s(b)(3)(A)(ii).
\5\ 17 CFR 240.19b-4(f)(2).
---------------------------------------------------------------------------
I. Self-Regulatory Organization's Statement of the Terms of the
Substance of the Proposed Rule Change
Nasdaq proposes to amend NASD Rule 7010 to modify fees for use of
Nasdaq's Application Programming Interface (``API'') protocol by NASD
members. Nasdaq will implement the proposed rule change on January 1,
2006.
The text of the proposed rule change is below. Proposed new
language is in italics; proposed 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) Legacy Nasdaq Workstation TM Service
(A) The following charges shall apply to the receipt of Level 2 or
Level 3 Nasdaq Service via equipment and communications linkages
prescribed for the Nasdaq Workstation II Service:
Service Charge......................... $[2,035]8,000/month per service
delivery platform (``SDP'')
connected via T1 circuits.
[$1,000/month per SDP connected
via Digital Subscriber Line
(``DSL''), plus $1,000 per DSL
early termination fee if
service is terminated within
60 days of installation].
Display Charge......................... $525/month per logon for the
first 150 logons.
$200/month for each additional
logon.
Additional Circuit/SDP Charge.......... $[3,235]8,000/month.
PD and SDP Maintenance:
Monthly maintenance agreement...... $55/presentation device
(``PD'') logon or SDP/month.
Hourly fee for maintenance provided $195 per hour (two hour
without monthly maintenance minimum), plus cost of parts.
agreement.
ECN Direct Connection.................. $1,200 per port pair per month.
(B)--(C) No change.
[(D) DSL service (i) shall be provided solely to NASD members
without API logons, (ii) shall be provided to only one SDP per
location, and (iii) may not be used in connection with SDP T1 circuit
connections at the same location. A subscriber with an SDP connected to
Nasdaq via T1 circuits that orders DSL on or before June 1, 2004 shall
not be required to pay charges under Rule 7040 for initial
disconnection of T1 circuits and installation of DSL. In addition, if
such a subscriber cancels DSL service within 10 business days of its
first date of DSL service, the subscriber shall not be required to pay
the early termination fee or charges under Rule 7040 for disconnection
of DSL and reinstallation of T1 circuits.]
(2)-(4) No change.
(g)-(w) 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 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
As described in SR-NASD-2005-002,\6\ Nasdaq is in the process of
sunsetting its API protocol. Although the API protocol supports a high
volume of message traffic, it requires the use of a Service Delivery
Platform (``SDP''), a hardware unit located at the subscriber's
premises, resulting in comparatively higher communications and
infrastructure costs for firms using API. As a result, Nasdaq has
developed the Nasdaq Information Exchange or ``QIX,'' a new proprietary
protocol that does not require use of an SDP. Nasdaq believes that QIX
offers the benefits of the API protocol but at a significantly reduced
cost to its users. QIX has been available for use in production since
January 2005.
---------------------------------------------------------------------------
\6\ Securities Exchange Act Release No. 51170 (February 9,
2005), 70 FR 7988 (February 16, 2005).
---------------------------------------------------------------------------
For the last ten months, Nasdaq has been working with users of the
API protocol to transition them to QIX and/or one of Nasdaq's other
telecommunication protocols, the Financial Information Exchange
(``FIX''), the Computer-to-Computer Interface (``CTCI''), or internet-
based Nasdaq Workstations. Nevertheless, several users of the API are
not yet ready to make their transition, and therefore Nasdaq is
extending the sunset date into the first quarter of 2006. As the number
of API users decreases, however, Nasdaq must spread the significant
fixed costs associated with operation of the protocol over a smaller
customer base. As a result, an increase in the fees associated with use
of the protocol is necessary to allow Nasdaq to recoup a greater
portion of its costs. Specifically, effective January 1, 2006, Nasdaq
will increase the service charge assessed for each SDP from $2,035 per
month to $8,000 per month. Nasdaq will also increase the additional
circuit/SDP charge from $3,235 per month to $8,000 per month. As
described in NASD Rule 7010(f)(1)(C), this charge is assessed when
subscribers make inefficient use of their SDPs and/or the T1 circuits
used to connect SDPs to Nasdaq. Nasdaq is, however, eliminating the
$1,000 per month charge for SDPs connected to Nasdaq via DSL lines,
because all users of such SDPs have transitioned to other access
protocols.\7\
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\7\ This proposed rule change applies solely to NASD members.
The final non-member user of the API protocol transitioned away from
the protocol in the first week of January 2006.
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2. Statutory Basis
Nasdaq believes the proposed rule change is consistent with the
provisions of section 15A of the Act,\8\ in general, and sections
15A(b)(5) \9\ 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. The proposed rule change will
allow Nasdaq to recoup
[[Page 9401]]
more of the costs associated with continued operation of the API
protocol for the benefit of a decreasing number of subscribers.
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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, as amended.
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. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
The proposed rule change has become effective pursuant to section
19(b)(3)(A)(ii) of the Act \10\ and subparagraph (f)(2) of Rule 19b-4
thereunder,\11\ because it establishes or changes a due, fee, or other
charge imposed by NASD. At any time within 60 days of the filing of the
proposed rule change, the Commission may summarily abrogate such rule
change if it appears to the Commission that such action is necessary or
appropriate in the public interest, for the protection of investors, or
otherwise in furtherance of the purposes of the Act.
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\10\ 15 U.S.C. 78s(b)(3)(A)(ii).
\11\ 17 CFR 240.19b-4(f)(2).
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IV. 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-2005-156 on the subject line.
Paper Comments
Send paper comments in triplicate to Nancy M. Morris,
Secretary, Securities and Exchange Commission, 100 F Street, NE.,
Washington, DC 20549-1090.
All submissions should refer to File Number NASD-2005-156. This
file number should be included on the subject line if e-mail is used.
To help the Commission process and review your comments more
efficiently, please use only one method. The Commission will post all
comments on the Commission's Internet Web site (https://www.sec.gov/
rules/sro.shtml). Copies of the submission, all subsequent amendments,
all written statements with respect to the proposed rule change that
are filed with the Commission, and all written communications relating
to the proposed rule change between the Commission and any person,
other than those that may be withheld from the public in accordance
with the provisions of 5 U.S.C. 552, will be available for inspection
and copying in the Commission's Public Reference Room. Copies of the
filing also will be available for inspection and copying at the
principal offices of 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
NASD-2005-156 and should be submitted on or before March 16, 2006.
For the Commission, by the Division of Market Regulation,
pursuant to delegated authority.\12\
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\12\ 17 CFR 200.30-3(a)(12).
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J. Lynn Taylor,
Assistant Secretary.
[FR Doc. E6-2522 Filed 2-22-06; 8:45 am]
BILLING CODE 8010-01-P
