[Federal Register: April 24, 2003 (Volume 68, Number 79)]
[Notices]
[Page 20199-20200]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr24ap03-124]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-47688; File No. SR-NASD-2003-52]
Self-Regulatory Organizations; Notice of Filing of Proposed Rule
Change by the National Association of Securities Dealers, Inc. To
Establish a Fee for Receipt of Mutual Fund Quotation Service Data by
Distributors
April 17, 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 March 24, 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. 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 the
Substance of the Proposed Rule Change
Nasdaq proposes to establish a $1,000 per month distributor fee for
receipt of Nasdaq mutual fund information. The fee would be assessed on
all distributors, as defined in proposed Rule 7090(e)--i.e., those
firms that receive the data and distribute it to third parties. Nasdaq
will make the proposed rule change effective immediately upon
Commission approval.
The text of the proposed rule change is below. Proposed new
language is in italics.
Rule 7090. Mutual Fund Distributor Fee
(a)-(d) No change.
(e) Distributors receiving MFQS shall pay a monthly fee of $1,000.
For the purposes of this subsection only, the term ``distributor''
shall refer to any firm that receives the MFQS data feed and
distributes it to third parties. All such firms must execute a Nasdaq
Distributor Agreement.
* * * * *
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
The Nasdaq Mutual Fund Quotation Service (MFQS) collects daily Net
Asset Value information from approximately 18,000 mutual funds. This
data is distributed via the Nasdaq Level 1 data feed. Currently, Nasdaq
does not charge for the receipt or distribution of mutual fund data.
Nasdaq states that it creates value for distributors and their
subscribers by collecting and processing the mutual fund data,
producing the data feed, and providing data quality services. The
mutual fund data product is an important component of integrated
financial information services that are provided by major market data
vendors, financial web sites, and online brokerage services. Nasdaq
represents that the $1,000 per month fee will compensate it for these
value-added services without discouraging wide distribution of the
data.
Nasdaq is not charging recipients of the data feed who do not
distribute the data to third parties. Unlike other data feeds which can
be used for order routing, the MFQS data is only useful for display
purposes. Those firms that only distribute it internally obtain no
additional commercial advantage from resale of the data, and
accordingly Nasdaq is not charging them. Thus, while the term
``distributor'' is used elsewhere in the NASD's rules to include a firm
that receives a data feed and distributes it internally, \3\ in
[[Page 20200]]
proposed Rule 7090(e) Nasdaq is only using the term to refer to firms
that distribute the MFQS data to third parties.
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\3\ See, e.g., Rule 7010(q) footnote 8. Telephone conversation
between Eleni Constantine, Office General Counsel, Nasdaq and Gordon
Fuller, Counsel to the Assistant Director, Division of Market
Regulation, Commission, on April 14, 2003.
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The Market Data Distribution Department will identify the firms
that distribute the mutual fund data to third parties. These firms will
be required to confirm their usage and distribution of the data and
execute the appropriate amendment to the Nasdaq Distributor Agreement.
2. Statutory Basis
Nasdaq believes that the proposed rule change is consistent with
the provisions of section 15A of the Act,\4\ in general and with
section 15A(b)(5) \5\ of the Act, in particular, in that the proposal
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
fee will be assessed on all firms that receive the MFQS data and
distribute it to third parties, thus gaining a commercial advantage.
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\4\ 15 U.S.C. 78o-3
\5\ 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 on the proposed rule change were neither solicited
nor received.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
Within 35 days of the date of publication of this notice in the
Federal Register or within such longer period (i) as the Commission may
designate up to 90 days of such date if it finds such longer period to
be appropriate and publishes its reasons for so finding or (ii) as to
which the self-regulatory organization consents, the Commission will:
A. By order approve such proposed rule change, or
B. Institute proceedings to determine whether the proposed rule
change should be disapproved.
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 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-2003-52
should be submitted by May 15, 2003.
For the Commission, by the Division of Market Regulation,
pursuant to delegated authority.\6\
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\6\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 03-10103 Filed 4-23-03; 8:45 am]
BILLING CODE 8010-01-P