[Federal Register: March 10, 2003 (Volume 68, Number 46)]
[Notices]
[Page 11423-11424]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr10mr03-92]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-47437; File No. SR-NASD-2003-21]
Self-Regulatory Organizations; National Association of Securities
Dealers, Inc.; Notice of Filing and Immediate Effectiveness of Proposed
Rule Change Establishing a Pricing Schedule for the Use of Nasdaq
Trading Applications' Tools Plus Product for Non-NASD Members
March 4, 2003.
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 14, 2003, the National Association of Securities Dealers,
Inc. (``NASD'' or ``Association''), 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.
The Commission is publishing this notice to solicit comments on the
proposed rule change from interested persons.
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\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
Nasdaq proposes to establish a pricing schedule for the use of
Nasdaq Trading Applications' (``NTA'') Tools Plus product by persons
that are not NASD members. Nasdaq will implement this rule change 30
days after the date of this filing. Because Nasdaq proposes to charge
non-members the same prices for Tools Plus as it currently charges to
members under NASD Rule 7050(e)(2), there is no change in rule
language.
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 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 below in Sections A, B,
and C, 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
Nasdaq is proposing to establish a pricing schedule for the use of
NTA's Tools Plus product by persons that are not NASD members. The
proposed pricing schedule is identical to the one already established
for NASD members by NASD Rule 7050(e)(2).\3\ Tools Plus is a software
product that provides subscribers with order management and routing,
trade reporting, clearing, and regulatory compliance functionality. NTA
was formerly Nasdaq Tools, Inc., a subsidiary of Nasdaq that was merged
into Nasdaq in 2002.
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\3\ See Securities Exchange Act Release No. 47067 (December 20,
2002), 67 FR 79213 (December 27, 2002) (SR-NASD-2002-177);
Securities Exchange Act Release No. 46972 (December 9, 2002), 67 FR
77301 (December 17, 2002) (SR-NASD-2002-165); and Securities
Exchange Act Release No. 46973 (December 9, 2002), 67 FR 77305
(December 17, 2002) (SR-NASD-2002-164).
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In SR-NASD-2002-177, Nasdaq established a fee of $350 per terminal
per month for Tools Plus terminals with reduced functionality for use
by correspondent firms or floor brokers to route orders to specified
broker-dealers with whom they have an established relationship.\4\
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\4\ See Securities Exchange Act Release No. 47067 (December 20,
2002), 67 FR 79213 (December 27, 2002) (SR-NASD-2002-177).
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Unlike a full functionality Tools Plus terminal, the terminals
would not contain functionality to accept order flow, to compile
statistics on order execution, or to route orders to a wide range of
market centers. This prior filing established prices for use of this
product by NASD members, but did not cover non-members. Nasdaq
believes, however, that the most likely customers for the floor broker
terminal are regional securities exchanges, which may purchase such
terminals for use by their members, rather than the floor brokers
themselves. Accordingly, Nasdaq proposes to offer Tools Plus to non-
members at the same prices at which it is offered to members.\5\ Use of
floor
[[Page 11424]]
broker terminals would require payment not only of the monthly terminal
charge of $350 per terminal, but also the other charges associated with
Tools Plus, such as initial deposits, installation fees, connection and
port charges, training fees, and hourly rates for customized
programming. Finally, although Nasdaq does not currently foresee a
demand for the use of full functionality terminals by non-members, the
fee schedule for non-members also includes the prices for these
terminals, in case such demand does develop.\6\
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\5\ Nasdaq does not currently offer Tools Plus to non-members,
and it is unclear whether any demand for the product among non-
members will emerge. Telephone Conversation between John M. Yetter,
Assistant General Counsel, Office of General Counsel, Nasdaq, and
Susie Cho, Special Counsel, Division of Market Regulation
(``Division''), Commission, on February 27, 2003.
\6\ Nasdaq notes that a Tools Plus user cannot use a Tools Plus
terminal to route orders to a given market center unless the user
has a relationship with the market center that allows it to do so
under the rules governing access to that market center. For example,
a member of a regional securities exchange that was not an NASD
member could not use a Tools Plus terminal to route orders to
Nasdaq's SuperMontage system unless the regional exchange was itself
a SuperMontage participant (in which case, the member of the
exchange could route orders through the exchange, as provided in
NASD Rule 4710(e)). Telephone Conversation between John M. Yetter,
Assistant General Counsel, Office of General Counsel, Nasdaq, and
Susie Cho, Special Counsel, Division, Commission, on March 3, 2003.
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2. Statutory Basis
Nasdaq believes that the proposed rule change is consistent with
the provisions of Section 15A of the Act,\7\ in general, and with
Section 15A(b)(5) of the Act,\8\ in particular, in that it provides for
the equitable allocation of reasonable fees, dues, and other charges
among members and issuers and other persons using any facility or
system which the NASD operates or controls.
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\7\ 15 U.S.C. 78o-3.
\8\ 15 U.S.C. 78o-3(b)(5).
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B. Self-Regulatory Organization's Statement on Burden on Competition
Nasdaq believes that the proposed rule change will not 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 on the
proposed rule change contained in this filing.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
The foregoing rule change has become effective pursuant to Section
19(b)(3)(A) of the Act \9\ and Rule 19b-4(f)(6) \10\ thereunder because
the proposal: (i) Does not significantly affect the protection of
investors or the public interest; (ii) does not impose any significant
burden on competition; and (iii) does not become operative prior to 30
days after the date of filing or such shorter time as the Commission
may designate if consistent with the protection of investors and the
public interest. Nasdaq gave the Commission 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 of filing of the proposed rule change. At any time within 60 days
of the filing of such 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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\9\ 15 U.S.C. 78s(b)(3)(A).
\10\ 17 CFR 240.19b-4(f)(6).
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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 is consistent with the Act. Persons making written submissions
should file six copies thereof with the Secretary, Securities and
Exchange Commission, 450 Fifth Street, NW., Washington, DC 20549-0609.
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 will also be
available for inspection and copying at the principal office of the
NASD. All submissions should refer to file number SR-NASD-2003-21 and
should be submitted by March 31, 2003.
For the Commission, by the Division of Market Regulation,
pursuant to delegated authority.\11\
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\11\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 03-5565 Filed 3-7-03; 8:45 am]
BILLING CODE 8010-01-P