[Federal Register: March 7, 2007 (Volume 72, Number 44)]
[Notices]
[Page 10283-10285]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr07mr07-177]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-55379; File No. SR-NASD-2007-017]
Self-Regulatory Organizations; National Association of Securities
Dealers, Inc.; Notice of Filing and Immediate Effectiveness of Proposed
Rule Change to Amend the Alternative Display Facility Quotation Update
Fee
March 1, 2007.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act'') \1\ and Rule 19b-4 thereunder,\2\
[[Page 10284]]
notice is hereby given that on February 27, 2007, the National
Association of Securities Dealers, Inc. (``NASD'') filed with the
Securities and Exchange Commission (``Commission'') the proposed rule
change as described in Items I and II below, which Items have been
substantially prepared by NASD. NASD has 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) thereunder,\4\ which renders it 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).
\4\ 17 CFR 240.19b-4(f)(6).
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
NASD proposes to amend Rule 7010A in light of the current
participant quoting and trading activity on the Alternative Display
Facility (``ADF''). Below is the text of the proposed rule change.
Proposed new language is italicized and proposed deletions are in
[brackets].
7010A. System Services
(a) No Change.
(b) Quotation Updates
The following quotation update charges will apply based on the
average daily number of publicly disseminated trades reported to the
media through the ADF during the billing period. A ``quotation update''
includes any change to the price or size of a displayed quotation.
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Quotes updates
Average trades reported through Quotation update provided at no
the ADF per day charge charge
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Less than 1..................... $.02 per quotation None.
update.
Between 1 and 100,000........... $.01 per quotation 5 quotation
update. updates per
trade.
Between 100,001 and [150,000] $[.01].005 per [10]20 quotation
125,000. quotation update. updates per
trade.
Between 125,001 and 150,000..... $.005 per 25 quotation
quotation update. updates per
trade.
Greater than 150,000............ No Charge......... N/A.
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* * * * *
II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
In its filing with the Commission, NASD 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. NASD 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
The current ADF pricing structure imposes a quote fee of $0.01 per
quote for any ADF participant that has a daily average of 150,000 or
fewer trade reports and no quote fee for daily average trade reports
over that activity level. It also offers three tiers of free quotes.
Specifically, participants that generate between one and 100,000 trade
prints per day receive five free quotes per trade print, participants
that generate between 100,001 and 150,000 trade prints per day receive
ten free quotes per trade print, and those participants that generate
over 150,000 trade prints are not charged for quotation updates. This
pricing structure was designed in part to address the typical
electronic communications network (``ECN'') business model at the time,
given that ECNs were the only ADF participants.
NASD has seen an increase in the quote-to-trade ratios experienced
by certain ECNs and believes the impact of Regulation NMS could
potentially increase them even further. Thus, NASD proposes to amend
the ADF quote update pricing structure to address these changes.
Specifically, the new pricing structure would continue to require
participants with high quote-to-trade ratios to pay for a portion of
their quote activity, but at a reduced rate and with the benefit of
additional free quote updates. The new pricing system introduces five
pricing tiers. Participants that do not submit a single trade report to
NASD are not entitled to receive any free quotes. Participants that
generate between one and 100,000 trade prints per day receive five free
quotes per trade print, participants that generate between 100,001 and
125,000 trade prints per day receive 20 free quotes per trade print,
participants that generate between 125,001 and 150,000 trade prints per
day receive 25 free quotes per trade print, and those participants that
generate over 150,000 trade prints are not charged for quotation
updates.
NASD has filed the proposed rule change for immediate
effectiveness. This proposed rule change would be operational as of
February 1, 2007, and would therefore apply to February's quotation and
trading activity.
2. Statutory Basis
NASD believes that the proposed rule change is consistent with the
provisions of Section 15A(b)(5) of the Act,\5\ which requires, among
other things, that NASD rules provide for the equitable allocation of
reasonable dues, fees, and other charges among members and issuers and
other persons using any facility or system that NASD operates or
controls. NASD believes that the proposed rule change would more
equitably set the level of charges being imposed upon ADF participants
in light of changing market practices.
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\5\ 15 U.S.C. 78o-3(b)(5).
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B. Self-Regulatory Organization's Statement on Burden on Competition
NASD 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. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
Because the foregoing rule change does not: (1) Significantly
affect the protection of investors or the public interest; (2) impose
any significant burden on competition; and (3) become operative for 30
days from the date of this filing, or such shorter time as the
Commission may designate, it has become effective pursuant to Section
[[Page 10285]]
19(b)(3)(A) of the Act \6\ and Rule 19b-4(f)(6) thereunder.\7\
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\6\ 15 U.S.C. 78s(b)(3)(A).
\7\ 17 CFR 240.19b-4(f)(6)(iii). In addition, Rule 19b-
4(f)(6)(iii) requires that a self-regulatory organization submit to
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 of filing
of the proposed rule change, or such shorter time as designated by
the Commission. The Commission has decided to waive the five-day
pre-filing requirement.
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NASD has requested that the Commission waive the 30-day operative
delay in this case. 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 the benefits of this new
pricing structure to apply immediately. For this reason, the Commission
designates the proposed rule change to be operative upon filing with
the Commission.\8\
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\8\ For the purposes only of waiving the 30-day operative delay,
the Commission has considered the proposed rule's impact on
efficiency, competition, and capital formation. See 15 U.S.C.
78c(f).
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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.
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. Comments may be submitted by any of
the following methods:
Electronic Comments
Use the Commission's Internet comment form (http://www.sec.gov/rules/sro.shtml.
); or Send an e-mail to rule-comments@sec.gov. Please include
File Number SR-NASD-2007-017 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-2007-017. 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 (http://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
office 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 SR-
NASD-2007-017 and should be submitted on or before March 28, 2007.
For the Commission, by the Division of Market Regulation,
pursuant to delegated authority.\9\
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\9\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. E7-3952 Filed 3-6-07; 8:45 am]
BILLING CODE 8010-01-P