Self-Regulatory Organizations; National Association of Securities Dealers, Inc.; Notice of Filing and Order Granting Accelerated Approval of Proposed Rule Change Regarding Pricing for Non-Members Using Nasdaq's Brut and Inet Facilities, 52356-52358 [E6-14598]
Download as PDF
<![CDATA[
52356
Federal Register / Vol. 71, No. 171 / Tuesday, September 5, 2006 / Notices
approval to implement the proposed
rule change retroactively as of August 1,
2006. The text of the proposed rule
change is set forth below. Proposed new
language is in italics; proposed
deletions are in [brackets].4
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–NASDAQ–2006–032 and
should be submitted on or before
September 26, 2006.
For the Commission, by the Division of
Market Regulation, pursuant to delegated
authority.17
Nancy M. Morris,
Secretary.
[FR Doc. E6–14651 Filed 9–1–06; 8:45 am]
BILLING CODE 8010–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–54376; File No. SR–NASD–
2006–093]
Self-Regulatory Organizations;
National Association of Securities
Dealers, Inc.; Notice of Filing and
Order Granting Accelerated Approval
of Proposed Rule Change Regarding
Pricing for Non-Members Using
Nasdaq’s Brut and Inet Facilities
August 28, 2006.
sroberts on PROD1PC70 with NOTICES
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 July 31,
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
Items I and II below, which Items have
been prepared by Nasdaq. The
Commission is publishing this notice to
solicit comments on the proposed rule
change from interested persons. In
addition, the Commission is granting
accelerated approval of the proposed
rule change.
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 and Inet Facilities to
trade non-Nasdaq securities. The filing
will apply to these non-members the
same rule change that Nasdaq is
instituting for members.3 Nasdaq seeks
17 17
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
3 See Securities Exchange Act Release No. 54375
(August 28, 2006) (File No. SR–NASD–2006–092).
1 15
VerDate Aug<31>2005
17:24 Sep 01, 2006
Jkt 208001
7010. System Services
(a)–(h) No change.
(i) ITS/CAES System, Brut, and Inet
Order Execution and Routing
(1)–(8) No change.
(9) The fees applicable to nonmembers using Nasdaq’s Brut and Inet
Facilities shall be the fees established
for members under Rule 7010(i), as
amended by SR–NASD–2005–019, SR–
NASD–2005–035, SR–NASD–2005–048,
SR–NASD–2005–071, SR–NASD–2005–
125, SR–NASD–2005–137, SR–NASD–
2005–154, SR–NASD–2006–013, SR–
NASD–2006–023, SR–NASD–2006–031,
SR–NASD–2006–057, [and] SR–NASD–
2006–078, and SR–NASD–2006–092 and
as applied to non–members by SR–
NASD–2005–020, SR–NASD–2005–038,
SR–NASD–2005–049, SR–NASD–2005–
072, SR–NASD–2005–126, SR–NASD–
2005–138, SR–NASD–2005–155, SR–
NASD–2006–014, SR–NASD–2006–024,
SR–NASD–2006–032, SR–NASD–2006–
058, [and] SR–NASD–2006–079, and
SR–NASD–2006–093.
(j)–(y) 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 had 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
Statutory Basis for, the Proposed Rule
Change
1. Purpose
In SR–NASD–2006–092,5 Nasdaq
amended NASD Rule 7010(i), which has
4 Changes are marked to the rule text that appears
in the electronic NASD Manual found at https://
www.nasd.com. The Nasdaq Exchange states that it
will not file conforming changes to its rules with
regard to order execution and routing by nonmembers, since persons that are not members of the
Nasdaq Exchange will not be permitted to use its
order execution and routing systems.
5 See supra note 3.
PO 00000
Frm 00040
Fmt 4703
Sfmt 4703
historically contained the fees for the
trading systems of The Nasdaq Stock
Market, to reflect the Nasdaq Exchange’s
commencing operations for trading of
securities listed on the Nasdaq
Exchange. During a transitional period,
the Nasdaq Exchange will operate for its
own listed stocks, while The Nasdaq
Stock Market, Inc. continues to operate
under authority delegated by NASD to
provide quotation, execution, and trade
reporting services for non-Nasdaq listed
securities. Nasdaq states that the Brut
and Inet platforms owned by Nasdaq
will be operated as facilities of the
Nasdaq Exchange for purposes of
trading Nasdaq-listed securities, and as
facilities of NASD for purposes of
trading non-Nasdaq securities.
Accordingly, SR–NASD–2006–092
amended NASD Rule 7010(i) to remove
fees and credits associated with trading
Nasdaq-listed stocks, which are now
contained in Rule 7018 of the Nasdaq
Exchange.6 Nasdaq states that NASD
Rule 7010(i) would continue to govern
fees and credits for the ITS/CAES
System (formerly the Nasdaq Market
Center) operated by Nasdaq for trading
non-Nasdaq securities, as well as Brut
and Inet to the extent that they are used
for trading non-Nasdaq securities. The
ITS/CAES System, Brut and Inet are
collectively referred to in the rule as the
Nasdaq Facilities.
SR–NASD–2006–092 also added a
sentence to the rule to provide that for
purposes of determining a member’s
volume in all securities under NASD
Rule 7010(i), the term ‘‘Nasdaq
Facilities,’’ shall also be deemed to
include the member’s volume in
Nasdaq-listed securities traded through
the facilities of the Nasdaq Exchange
(i.e., the Nasdaq Market Center, Brut
and Inet). Nasdaq states that this
clarification was necessary to ensure
that fees and credits for trading nonNasdaq securities remain at their
current levels during the transitional
period before the Nasdaq Exchange
begins to trade non-Nasdaq securities.
In SR–NASD–2006–092, Nasdaq also
changed its fees for routing orders to the
New York Stock Exchange (‘‘NYSE’’)
through its DOT system. NYSE recently
announced that it would impose a
significant fee increase on brokerdealers, such as Nasdaq’s Brut broker6 See Securities Exchange Act Release No. 54285
(August 8, 2006) (File No. SR–NASDAQ–2006–023)
(notice of filing and immediate effectiveness of
proposed rule change regarding technical and
conforming changes to Nasdaq Rule 7018).
Telephone conversation among John Yetter, Senior
Associate General Counsel, Nasdaq, David Liu,
Special Counsel, Division of Market Regulation
(‘‘Division’’), Commission, and Theodore S. Venuti,
Attorney, Division, Commission, on August 14,
2006.
E:\FR\FM\05SEN1.SGM
05SEN1
Federal Register / Vol. 71, No. 171 / Tuesday, September 5, 2006 / Notices
dealer, that route orders to the NYSE
floor through DOT, effective August 1,
2006.7 Nasdaq states that as a result, it
must pass these increased costs through
to market participants that make use of
the routing service. Specifically, for
orders that attempt to execute in the
Nasdaq Facilities prior to routing and
that are not charged a fee by the NYSE
specialist,8 Nasdaq is imposing a charge
of $0.0002 per share executed; however,
the total fee for all such orders routed
during a month is capped at $60,000 per
firm. For orders that are routed through
DOT but that do not attempt to execute
in the Nasdaq Facilities, the routing fee
is $0.0003 per share executed, with no
cap.
Finally, to encourage greater liquidity
provision with respect to securities that
are listed on both the NYSE and the
Nasdaq Exchange, SR–NASD–2006–092
increased the credit to liquidity
providers in these securities, from
$0.0005 or $0.0006 per share executed
to $0.0007 per share executed. Nasdaq
believes that the change would promote
greater competition between Nasdaq
and NYSE and enhance market quality
with respect to Nasdaq’s trading of these
dual-listed securities.
Nasdaq is submitting this filing to
apply the foregoing changes to nonNASD members using Nasdaq’s Brut
and Inet Facilities to trade non-Nasdaq
securities. These non-members cannot
use the facilities of the Nasdaq
Exchange to trade Nasdaq-listed
securities, but are currently permitted to
use Brut and Inet to trade non-Nasdaq
securities.
sroberts on PROD1PC70 with NOTICES
2. Statutory Basis
Nasdaq believes that the proposed
rule change is consistent with the
provisions of Section 15A of the Act,9 in
general, and with Section 15A(b)(5) of
the Act,10 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.
Nasdaq states that the proposed rule
change applies to non-members that use
7 See Securities Exchange Act Release No.
54142(July 13, 2006), 71 FR 41493 (July 21, 2006)
(File No. SR–NYSE–2006–46). Effective August 1,
2006, the NYSE is imposing a new charge of
$0.00025 per share executed, subject to a monthly
cap of $750,000.
8 Nasdaq states that the NYSE specialist fees are
distinct from the newDOT fees imposed by the
NYSE itself. Specialist fees are generally imposed
when orders routed to the NYSE remain unexecuted
for a period of time. The routing fee for orders that
are charged by the specialist remains $0.01 per
share executed.
9 15 U.S.C. 78o–3.
10 15 U.S.C. 78o–3(b)(5).
VerDate Aug<31>2005
17:24 Sep 01, 2006
Jkt 208001
Brut and Inet a fee change that is being
implemented for NASD members that
use Brut, Inet, and the ITS/CAES
System to trade non-Nasdaq securities.
Accordingly, Nasdaq believes that the
proposed rule change promotes an
equitable allocation of fees between
members and non-members using these
order execution facilities.
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.
52357
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
the principal office of the NASD. All
comments received will be posted
without change; the Commission does
not edit personal identifying
information from submissions. You
should submit only information that
you wish to make publicly available. All
submissions should refer to File
Number SR–NASD–2006–093 and
should be submitted on or before
September 26, 2006.
IV. Commission’s Findings and Order
Granting Accelerated Approval of
Proposed Rule Change
The Commission finds that the
proposed rule change is consistent with
the requirements of the Act and the
rules and regulations thereunder
applicable to a self-regulatory
organization.11 Specifically, the
III. Solicitation of Comments
Commission believes that the proposed
Interested persons are invited to
rule change is consistent with Section
submit written data, views, and
15A(b)(5) of the Act,12 which requires
arguments concerning the foregoing,
that the rules of the self-regulatory
including whether the proposed rule
organization provide for the equitable
change is consistent with the Act.
allocation of reasonable dues, fees, and
Comments may be submitted by any of
other charges among members and
the following methods:
issuers and other persons using any
Electronic comments:
facilities or system which it operates or
• Use the Commission’s Internet
controls.
comment form (https://www.sec.gov/
rules/sro.shtml); or
The Commission notes that this
• Send an e-mail to ruleproposal would retroactively modify
comments@sec.gov. Please include File
pricing for non-NASD members using
Number SR–NASD–2006–093 on the
Nasdaq’s Brut and Inet Facilities that
subject line.
would permit the schedule for nonNASD members to mirror the schedule
Paper Comments
applicable to NASD members that
• Send paper comments in triplicate
became effective July 31, 2006, pursuant
to Nancy M. Morris, Secretary,
to SR–NASD–2006–092.
Securities and Exchange Commission,
Nasdaq has requested that the
100 F Street, NE., Washington, DC
Commission find good cause for
20549–1090.
approving the proposed rule change
All submissions should refer to File
prior to the thirtieth day after
Number SR–NASD–2006–093. This file
publication of notice thereof in the
number should be included on the
Federal Register. The Commission notes
subject line if e-mail is used. To help the that the proposed fees for non-NASD
Commission process and review your
members are identical to those in SR–
comments more efficiently, please use
NASD–2006–092, which implemented
only one method. The Commission will those fees for NASD members and
post all comments on the Commission’s which became effective as of July 31,
Internet Web site (https://www.sec.gov/
2006. The Commission notes that this
rules/sro.shtml). Copies of the
change will promote consistency in
submission, all subsequent
Nasdaq’s fee schedule by applying the
amendments, all written statements
same pricing schedule with the same
with respect to the proposed rule
date of effectiveness for both NASD
change that are filed with the
members and non-NASD members.
Commission, and all written
Accordingly, the Commission finds
communications relating to the
good cause, pursuant to Section 19(b)(2)
proposed rule change between the
Commission and any person, other than
11 In approving this proposal, the Commission has
those that may be withheld from the
considered its impact on efficiency, competition,
public in accordance with the
and capital formation. 15 U.S.C. 78c(f).
12 15 U.S.C. 78o–3(b)(5).
provisions of 5 U.S.C. 552, will be
PO 00000
Frm 00041
Fmt 4703
Sfmt 4703
E:\FR\FM\05SEN1.SGM
05SEN1
52358
Federal Register / Vol. 71, No. 171 / Tuesday, September 5, 2006 / Notices
of the Act,13 for approving the proposed
rule change prior to the thirtieth day
after the date of publication of notice
thereof in the Federal Register.
V. Conclusion
It is therefore ordered, pursuant to
Section 19(b)(2) of the Act,14 that the
proposed rule change (SR–NASD–2006–
093) be, and hereby is, approved on an
accelerated basis.
For the Commission, by the Division of
Market Regulation, pursuant to delegated
authority.15
Nancy M. Morris,
Secretary.
[FR Doc. E6–14598 Filed 8–29–06; 8:45 am]
BILLING CODE 8010–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–54375; File No. SR–NASD–
2006–092]
Self-Regulatory Organizations;
National Association of Securities
Dealers, Inc.; Notice of Filing and
Immediate Effectiveness of Proposed
Rule Change Regarding the Pricing
Schedule for NASD Members Using the
ITS/CAES System, Brut, and Inet To
Trade Securities Not Listed on The
NASDAQ Stock Market LLC
August 28, 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 July 31,
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
Items I, II, and III below, which Items
have been prepared by Nasdaq. Nasdaq
filed the proposed rule change pursuant
to Section 19(b)(3)(A)(ii) of the Act,3
and Rule 19b–4(f)(2) thereunder,4 which
renders 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 Substance of
the Proposed Rule Change
Nasdaq proposes to modify the
pricing for NASD members using the
ITS/CAES System and Brut and Inet
(‘‘Nasdaq Facilities’’) to trade securities
that are not listed on The NASDAQ
Stock Market LLC (‘‘Nasdaq
Exchange’’).5 Nasdaq states that it will
implement the proposed rule change on
August 1, 2006. The text of the proposed
rule change is set forth below. Proposed
new language is in italics; proposed
deletions are in [brackets].6
7010. System Services
(a)–(h) No change.
Order Execution:
Order that accesses the Quote/Order of a market participant that
does not charge an access fee to market participants accessing
its Quotes/Orders through the Nasdaq Facilities:
Charge to member entering order:
Members with an average daily volume through the Nasdaq
Facilities in all securities during the month of (i) more
than 30 million shares of liquidity provided, and (ii) more
than 50 million shares of liquidity accessed and/or routed; or members with an average daily volume through the
Nasdaq Facilities in all securities during the month of (i)
more than 20 million shares of liquidity provided, and (ii)
more than 60 million shares of liquidity accessed and/or
routed.
Other members .................................................................................
Credit to member providing liquidity:
Members with an average daily volume through the Nasdaq
Facilities in all securities during the month of more than
30 million shares of liquidity provided.
Other members ..........................................................................
sroberts on PROD1PC70 with NOTICES
13 15
U.S.C. 78s(b)(2).
U.S.C. 78s(b)(2).
15 17 CFR 200.30–3(a)(12).
1 15 U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
3 15 U.S.C. 78s(b)(3)(A)(ii).
4 17 CFR 240.19b–4(f)(2).
VerDate Aug<31>2005
17:24 Sep 01, 2006
$0.0028 per share executed (or, in the case of executions against
Quotes/Orders at less than $1.00 per share, 0.1% of the total
transaction cost).
$0.0030 per share executed (or, in the case of executions against
Quotes/Orders at less than $1.00 per share, 0.1% of the total
transaction cost).
$0.0025 per share executed (or $0, in the case of executions against
Quotes/Orders at less than $1.00 per share).
$0.0020 per share executed (or $0, in the case of executions against
Quotes/Orders at less than $1.00 per share).
5 The Commission notes that Nasdaq filed a
proposed rule change to apply the same pricing
change to non-members. See Securities Exchange
Act Release No. 54376 (August 28, 2006) (File No.
SR–NASD–2006–093).
6 Nasdaq states that changes are marked to the
rule text that appears in the electronic NASD
Manual found at www.nasd.com, as further
amended on an immediately effective basis by SR–
14 15
Jkt 208001
(i) [Nasdaq Market Center]ITS/CAES
System, Brut, and Inet Order Execution
and Routing
(1) The following charges shall apply
to the use of the order execution and
routing services of the [Nasdaq Market
Center]ITS/CAES System, Brut, and Inet
(the ‘‘Nasdaq Facilities’’) by members
for all [Nasdaq-listed securities subject
to the Nasdaq UTP Plan and for]
Exchange-Traded Funds that are not
listed on The NASDAQ Stock Market
LLC [Nasdaq]. The term ‘‘ExchangeTraded Funds’’ shall mean Portfolio
Depository Receipts, Index Fund Shares,
and Trust Issued Receipts as such terms
are defined in Rule 4420(i), (j), and (l),
respectively, of The NASDAQ Stock
Market LLC. For purposes of
determining a member’s volume in all
securities under Rule 7010(i), the term
‘‘Nasdaq Facilities’’ shall also be
deemed to include the member’s volume
in Nasdaq-listed securities through the
facilities of The NASDAQ Stock Market
LLC.
PO 00000
Frm 00042
Fmt 4703
Sfmt 4703
NASD–2006–078 (June 30, 2006). See Securities
Exchange Act Release No. 54268 (August 3, 2006),
71 FR 45882 (August 10, 2006). Nasdaq states that
prior to the date when the Nasdaq Exchange begins
to trade securities that are not listed on the Nasdaq
Exchange, the Nasdaq Exchange will file a
conforming change to the rules of the Nasdaq
Exchange. The rules of the Nasdaq Exchange are
found at www.complinet.com/nasdaq.
E:\FR\FM\05SEN1.SGM
05SEN1
]]>Agencies
[Federal Register Volume 71, Number 171 (Tuesday, September 5, 2006)]
[Notices]
[Pages 52356-52358]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E6-14598]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-54376; File No. SR-NASD-2006-093]
Self-Regulatory Organizations; National Association of Securities
Dealers, Inc.; Notice of Filing and Order Granting Accelerated Approval
of Proposed Rule Change Regarding Pricing for Non-Members Using
Nasdaq's Brut and Inet Facilities
August 28, 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 July 31, 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 Items I and
II below, which Items have been prepared by Nasdaq. The Commission is
publishing this notice to solicit comments on the proposed rule change
from interested persons. In addition, the Commission is granting
accelerated approval of the proposed rule change.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------
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 and Inet Facilities to trade non-Nasdaq securities. The
filing will apply to these non-members the same rule change that Nasdaq
is instituting for members.\3\ Nasdaq seeks approval to implement the
proposed rule change retroactively as of August 1, 2006. The text of
the proposed rule change is set forth below. Proposed new language is
in italics; proposed deletions are in [brackets].\4\
---------------------------------------------------------------------------
\3\ See Securities Exchange Act Release No. 54375 (August 28,
2006) (File No. SR-NASD-2006-092).
\4\ Changes are marked to the rule text that appears in the
electronic NASD Manual found at https://www.nasd.com. The Nasdaq
Exchange states that it will not file conforming changes to its
rules with regard to order execution and routing by non-members,
since persons that are not members of the Nasdaq Exchange will not
be permitted to use its order execution and routing systems.
---------------------------------------------------------------------------
7010. System Services
(a)-(h) No change.
(i) ITS/CAES System, Brut, and Inet Order Execution and Routing
(1)-(8) No change.
(9) The fees applicable to non-members using Nasdaq's Brut and Inet
Facilities shall be the fees established for members under Rule
7010(i), as amended by SR-NASD-2005-019, SR-NASD-2005-035, SR-NASD-
2005-048, SR-NASD-2005-071, SR-NASD-2005-125, SR-NASD-2005-137, SR-
NASD-2005-154, SR-NASD-2006-013, SR-NASD-2006-023, SR-NASD-2006-031,
SR-NASD-2006-057, [and] SR-NASD-2006-078, and SR-NASD-2006-092 and as
applied to non-members by SR-NASD-2005-020, SR-NASD-2005-038, SR-NASD-
2005-049, SR-NASD-2005-072, SR-NASD-2005-126, SR-NASD-2005-138, SR-
NASD-2005-155, SR-NASD-2006-014, SR-NASD-2006-024, SR-NASD-2006-032,
SR-NASD-2006-058, [and] SR-NASD-2006-079, and SR-NASD-2006-093.
(j)-(y) 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 had 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
Statutory Basis for, the Proposed Rule Change
1. Purpose
In SR-NASD-2006-092,\5\ Nasdaq amended NASD Rule 7010(i), which has
historically contained the fees for the trading systems of The Nasdaq
Stock Market, to reflect the Nasdaq Exchange's commencing operations
for trading of securities listed on the Nasdaq Exchange. During a
transitional period, the Nasdaq Exchange will operate for its own
listed stocks, while The Nasdaq Stock Market, Inc. continues to operate
under authority delegated by NASD to provide quotation, execution, and
trade reporting services for non-Nasdaq listed securities. Nasdaq
states that the Brut and Inet platforms owned by Nasdaq will be
operated as facilities of the Nasdaq Exchange for purposes of trading
Nasdaq-listed securities, and as facilities of NASD for purposes of
trading non-Nasdaq securities. Accordingly, SR-NASD-2006-092 amended
NASD Rule 7010(i) to remove fees and credits associated with trading
Nasdaq-listed stocks, which are now contained in Rule 7018 of the
Nasdaq Exchange.\6\ Nasdaq states that NASD Rule 7010(i) would continue
to govern fees and credits for the ITS/CAES System (formerly the Nasdaq
Market Center) operated by Nasdaq for trading non-Nasdaq securities, as
well as Brut and Inet to the extent that they are used for trading non-
Nasdaq securities. The ITS/CAES System, Brut and Inet are collectively
referred to in the rule as the Nasdaq Facilities.
---------------------------------------------------------------------------
\5\ See supra note 3.
\6\ See Securities Exchange Act Release No. 54285 (August 8,
2006) (File No. SR-NASDAQ-2006-023) (notice of filing and immediate
effectiveness of proposed rule change regarding technical and
conforming changes to Nasdaq Rule 7018). Telephone conversation
among John Yetter, Senior Associate General Counsel, Nasdaq, David
Liu, Special Counsel, Division of Market Regulation (``Division''),
Commission, and Theodore S. Venuti, Attorney, Division, Commission,
on August 14, 2006.
---------------------------------------------------------------------------
SR-NASD-2006-092 also added a sentence to the rule to provide that
for purposes of determining a member's volume in all securities under
NASD Rule 7010(i), the term ``Nasdaq Facilities,'' shall also be deemed
to include the member's volume in Nasdaq-listed securities traded
through the facilities of the Nasdaq Exchange (i.e., the Nasdaq Market
Center, Brut and Inet). Nasdaq states that this clarification was
necessary to ensure that fees and credits for trading non-Nasdaq
securities remain at their current levels during the transitional
period before the Nasdaq Exchange begins to trade non-Nasdaq
securities.
In SR-NASD-2006-092, Nasdaq also changed its fees for routing
orders to the New York Stock Exchange (``NYSE'') through its DOT
system. NYSE recently announced that it would impose a significant fee
increase on broker-dealers, such as Nasdaq's Brut broker-
[[Page 52357]]
dealer, that route orders to the NYSE floor through DOT, effective
August 1, 2006.\7\ Nasdaq states that as a result, it must pass these
increased costs through to market participants that make use of the
routing service. Specifically, for orders that attempt to execute in
the Nasdaq Facilities prior to routing and that are not charged a fee
by the NYSE specialist,\8\ Nasdaq is imposing a charge of $0.0002 per
share executed; however, the total fee for all such orders routed
during a month is capped at $60,000 per firm. For orders that are
routed through DOT but that do not attempt to execute in the Nasdaq
Facilities, the routing fee is $0.0003 per share executed, with no cap.
---------------------------------------------------------------------------
\7\ See Securities Exchange Act Release No. 54142(July 13,
2006), 71 FR 41493 (July 21, 2006) (File No. SR-NYSE-2006-46).
Effective August 1, 2006, the NYSE is imposing a new charge of
$0.00025 per share executed, subject to a monthly cap of $750,000.
\8\ Nasdaq states that the NYSE specialist fees are distinct
from the newDOT fees imposed by the NYSE itself. Specialist fees are
generally imposed when orders routed to the NYSE remain unexecuted
for a period of time. The routing fee for orders that are charged by
the specialist remains $0.01 per share executed.
---------------------------------------------------------------------------
Finally, to encourage greater liquidity provision with respect to
securities that are listed on both the NYSE and the Nasdaq Exchange,
SR-NASD-2006-092 increased the credit to liquidity providers in these
securities, from $0.0005 or $0.0006 per share executed to $0.0007 per
share executed. Nasdaq believes that the change would promote greater
competition between Nasdaq and NYSE and enhance market quality with
respect to Nasdaq's trading of these dual-listed securities.
Nasdaq is submitting this filing to apply the foregoing changes to
non-NASD members using Nasdaq's Brut and Inet Facilities to trade non-
Nasdaq securities. These non-members cannot use the facilities of the
Nasdaq Exchange to trade Nasdaq-listed securities, but are currently
permitted to use Brut and Inet to trade non-Nasdaq securities.
2. Statutory Basis
Nasdaq believes that the proposed rule change is consistent with
the provisions of Section 15A of the Act,\9\ in general, and with
Section 15A(b)(5) of the Act,\10\ 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. Nasdaq states that the
proposed rule change applies to non-members that use Brut and Inet a
fee change that is being implemented for NASD members that use Brut,
Inet, and the ITS/CAES System to trade non-Nasdaq securities.
Accordingly, Nasdaq believes that the proposed rule change promotes an
equitable allocation of fees between members and non-members using
these order execution facilities.
---------------------------------------------------------------------------
\9\ 15 U.S.C. 78o-3.
\10\ 15 U.S.C. 78o-3(b)(5).
---------------------------------------------------------------------------
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-2006-093 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 SR-NASD-2006-093. 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 the
principal office of the NASD. All comments received will be posted
without change; the Commission does not edit personal identifying
information from submissions. You should submit only information that
you wish to make publicly available. All submissions should refer to
File Number SR-NASD-2006-093 and should be submitted on or before
September 26, 2006.
IV. Commission's Findings and Order Granting Accelerated Approval of
Proposed Rule Change
The Commission finds that the proposed rule change is consistent
with the requirements of the Act and the rules and regulations
thereunder applicable to a self-regulatory organization.\11\
Specifically, the Commission believes that the proposed rule change is
consistent with 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 facilities or system which it
operates or controls.
---------------------------------------------------------------------------
\11\ In approving this proposal, the Commission has considered
its impact on efficiency, competition, and capital formation. 15
U.S.C. 78c(f).
\12\ 15 U.S.C. 78o-3(b)(5).
---------------------------------------------------------------------------
The Commission notes that this proposal would retroactively modify
pricing for non-NASD members using Nasdaq's Brut and Inet Facilities
that would permit the schedule for non-NASD members to mirror the
schedule applicable to NASD members that became effective July 31,
2006, pursuant to SR-NASD-2006-092.
Nasdaq has requested that the Commission find good cause for
approving the proposed rule change prior to the thirtieth day after
publication of notice thereof in the Federal Register. The Commission
notes that the proposed fees for non-NASD members are identical to
those in SR-NASD-2006-092, which implemented those fees for NASD
members and which became effective as of July 31, 2006. 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, pursuant to Section 19(b)(2)
[[Page 52358]]
of the Act,\13\ for approving the proposed rule change prior to the
thirtieth day after the date of publication of notice thereof in the
Federal Register.
---------------------------------------------------------------------------
\13\ 15 U.S.C. 78s(b)(2).
---------------------------------------------------------------------------
V. Conclusion
It is therefore ordered, pursuant to Section 19(b)(2) of the
Act,\14\ that the proposed rule change (SR-NASD-2006-093) be, and
hereby is, approved on an accelerated basis.
---------------------------------------------------------------------------
\14\ 15 U.S.C. 78s(b)(2).
\15\ 17 CFR 200.30-3(a)(12).
For the Commission, by the Division of Market Regulation,
pursuant to delegated authority.\15\
Nancy M. Morris,
Secretary.
[FR Doc. E6-14598 Filed 8-29-06; 8:45 am]
BILLING CODE 8010-01-P
