[Federal Register: December 15, 2003 (Volume 68, Number 240)]
[Notices]
[Page 69732-69734]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr15de03-87]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-48890; File No. SR-NASD-2003-174]
Self-Regulatory Organizations; Notice of Filing and Immediate
Effectiveness of Proposed Rule Change by the National Association of
Securities Dealers, Inc. To Amend the Fee Schedule for the Nasdaq
National Market Execution System With Respect to Executions Across
Multiple MPIDs of the Same Member
December 8, 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 November 26, 2003, 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 has
designated this proposal as one establishing or changing a due, fee or
other charge imposed by the self-regulatory organization under Section
19(b)(3)(A)(ii) of the Act \3\ and Rule 19b-4(f)(2) thereunder,\4\
which renders the rule immediately effective upon filing with the
Commission. 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.
\3\ 15 U.S.C. 78s(b)(3)(A)(ii).
\4\ 17 CFR 240.19b-4(f)(2).
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I. Self-Regulatory Organization's Statement of the Terms of the
Substance of the Proposed Rule Change
Nasdaq proposes to amend NASD Rule 7010(i) to modify the fee
charged when Quotes/Orders submitted by the same member under different
market participant identifiers (``MPIDs'') match and execute against
each other in the Nasdaq National Market Execution System (``NNMS'' or,
[[Page 69733]]
``SuperMontage'').\5\ Nasdaq implemented the revised fee schedule on
December 1, 2003. The text of the proposed rule change appears below.
New text is italicized.
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\5\ ``Quotes/Orders'' is defined under NASD Rule 4701(bb).
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* * * * *
7000. CHARGES FOR SERVICES AND EQUIPMENT
7010. System Services
(a)-(h) No change.
(i) Nasdaq National Market Execution System (SuperMontage)
The following charges shall apply to the use of the Nasdaq National
Market Execution System (commonly known as SuperMontage) by members:
Order Entry:
Non-Directed Orders (excluding No charge.
Preferenced Orders).
Preferenced Orders:
Preferenced Orders that access No charge.
a Quote/Order of the member
that entered the Preferenced
Order).
Other Preferenced Orders....... $0.02 per order entry.
Directed Orders.................... $0.10 per order entry.
Order Execution:
Non-Directed or Preferenced 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 NNMS:
Charge to member entering order $0.003 per share executed (but
no more than $120 per trade
for trades in securities
executed at $1.00 or less per
share).
Credit to member providing $0.002 per share executed (but
liquidity. no more than $80 per trade for
trades in securities executed
at $1.00 or less per share).
Non-Directed or Preferenced Order $0.001 per share executed (but
that accesses the Quote/Order of a no more than $40 per trade for
market participant that charges an trades in securities executed
access fee to market participants at $1.00 or less per share).
accessing its Quotes/Orders
through the NNMS.
Directed Order..................... $0.003 per share executed.
Non-Directed or Preferenced Order No charge.
entered by a member that accesses
its own Quote/Order submitted
under the same or a different
market participant identifier of
the member.
Order Cancellation:
Non-Directed and Preferenced Orders No charge.
Directed Orders.................... $0.10 per order cancelled.
(j)-(s) 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
Nasdaq proposes to amend NASD Rule 7010(i) to modify the fee
charged when multiple Quotes/Orders submitted by the same member under
different MPIDs match and execute against each other in SuperMontage.
Currently, Nasdaq does not charge a fee when a member executes a trade
against itself in SuperMontage and the Quotes/Orders are submitted
under the same MPID (``single MPID execution''). However, when the same
scenario occurs but the Quotes/Orders are submitted by a member under
different MPIDs (``multiple MPID execution''), Nasdaq charges the
standard SuperMontage execution fee that applies when trading interest
of different members matches and executes.
Nasdaq proposes to amend NASD Rule 7010(i) so single MPID
executions and multiple MPID executions are treated the same--there
will be no charge. Therefore, Nasdaq proposes, beginning on December 1,
2003, that there will be no charge when a Non-Directed Order or
Preferenced Order submitted under one MPID of a member accesses the
member's own Quote/Order submitted under a different MPID.\6\ Nasdaq
states that its policy for not charging a fee when Quotes/Orders
submitted by a member match and execute in SuperMontage is based on an
expectation that, in its absence, members would internalize a greater
percentage of orders through their own proprietary systems, rather than
exposing them to the full market.
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\6\ 6 Non-Directed Order and Preferenced Order are defined under
NASD Rule 4701(p) and (aa), respectively.
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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 among members. Nasdaq
believes the proposal harmonizes its fee structure for trades that are
``internalized'' by members through SuperMontage, irrespective of
whether the trade is the result of a single MPID execution or multiple
MPID execution.
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\7\ 15 U.S.C. 78o-3.
\8\ 15 U.S.C. 78o-3(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.
[[Page 69734]]
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)(ii) of the Act \9\ and Rule 19b-4(f)(2) thereunder \10\
because it establishes or changes a due, fee or other charge. At any
time within 60 days after filing of this proposed rule change, the
Commission may summarily abrogate the 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)(ii).
\10\ 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 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.
Comments should be submitted electronically at the following e-mail address: rule-comments@sec.gov. All comment letters should refer to
File No. SR-NASD-2003-174. 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, comments should be sent in hard
copy or by e-mail but not by both methods. 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 will also be available for
inspection and copying at the principal office of the NASD. All
submissions should refer to file number SR-NASD-2003-174 should be
submitted by January 5, 2004.
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).
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 03-30836 Filed 12-12-03; 8:45 am]
BILLING CODE 8010-01-P