[Federal Register: July 6, 2005 (Volume 70, Number 128)]
[Notices]
[Page 38985-38987]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr06jy05-142]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-51932; File No. SR-NASD-2005-076]
Self-Regulatory Organizations; National Association of Securities
Dealers, Inc.; Notice of Filing and Immediate Effectiveness of Proposed
Rule Change To Modify the Fees for NASD Members Using the New Testing
Facility
June 28, 2005.
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 June 16, 2005, 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.\3\ Nasdaq has
designated this proposal as one establishing or changing a due, fee, or
other charge imposed by Nasdaq under Section 19(b)(3)(A)(ii) of the
Act,\4\ and Rule 19b-4(f)(2) thereunder,\5\ 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.
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\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
\3\ The Commission has made minor technical changes to this
notice with Nasdaq's consent. Telephone conversation between
Katherine A. England, Assistant Director, Jan Woo, Attorney,
Division of Market Regulation, Commission, and Eric Lai, Assistant
General Counsel, Nasdaq, dated June 23, 2005.
\4\ 15 U.S.C. 78s(b)(3)(A)(ii).
\5\ 17 CFR 240.19b-4(f)(2).
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
Nasdaq is filing this proposed rule change to simplify the fee
schedule for connectivity and testing fees for NASD members wishing to
access the Nasdaq Testing Facility (``NTF''). Nasdaq will implement the
change to NASD Rule 7050(d) on or about August 1, 2005. The text of the
proposed rule change is below. Proposed new language is in
[[Page 38986]]
italics; proposed deletions are in [brackets].
* * * * *
7000. CHARGES FOR SERVICES AND EQUIPMENT
7050. Other Services
(a)-(c) No change.
(d) Nasdaq Testing Facility
(1) Subscribers that conduct tests of their Nasdaq access protocols
connection (which includes computer-to-computer interface (CTCI), NWII
application programming interface (API), Financial Information Exchange
(FIX) interface, and Nasdaq Information Exchange (QIX) interface) or
market data vendor feeds through the Nasdaq Testing Facility (NTF)
shall pay the following charges:
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$285/hour......................... For [an] Active Connection testing
using current Nasdaq access
protocols[CTCI/NWII API/FIX
testing] during the normal
operating hours of the NTF;
$75/hour.......................... [For an Idle Connection for CTCI/
NWII API/FIX testing during the
normal operating hours of the NTF,
unless such an Idle Connection is
over a dedicated circuit;]
No Charge......................... For [an] Idle Connection testing
using current Nasdaq access
protocols [for CTCI/NWII API/FIX
testing if such an Idle Connection
is over a dedicated circuit during
the normal operating hours of the
NTF];
$333/hour......................... For Active Connection [CTCI/NWII API/
FIX] testing using current Nasdaq
access protocols [(for both Active
and Idle Connections)] at all times
other than the normal operating
hours of the NTF.
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(2)(A) An ``Active Connection'' commences when the user begins to
send and/or receive a transaction to and from the NTF and continues
until the earlier of disconnection or the commencement of an Idle
Connection.
(B) An ``Idle Connection'' commences after a Period of Inactivity
and continues until the earlier of disconnection or the commencement of
an Active Connection. If a Period of Inactivity occurs immediately
after subscriber's connection to the NTF is established and is then
immediately followed by an Idle Connection, then such Period of
Inactivity shall also be deemed a part of the Idle Connection.
(C) A ``Period of Inactivity'' is an uninterrupted period of time
of specified length when the connection is open but the NTF is not
receiving from or sending to subscriber any transactions. The length of
the Period of Inactivity shall be such period of time between [5]10
minutes and [10]60 minutes in length as Nasdaq may specify from time to
time by giving notice to users of the NTF.
(3)-(5) 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 parts of such statements.
A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
1. Purpose
Currently, the fees for the NTF are assessed based on Active
Testing, where the user is sending and receiving transactions, and Idle
Testing, where the user is connected to the NTF, but not sending or
receiving transactions. The current fees for Active Testing and Idle
Testing are $285 per hour and $75 per hour respectively. The proposed
rule change simplifies the NTF fee schedule by eliminating the Idle
Testing fees and modifying the parameters for Active Testing. Nasdaq
believes that the proposed rule change will make the NTF services more
cost-effective for Nasdaq's customers.
Nasdaq's customers have historically accessed the NTF through dial-
up connections using either Nasdaq's computer-to-computer interface
(CTCI) or the NWII application programming interface (API). As Nasdaq
transitions to new technology (i.e., FIX and QIX) \6\, Nasdaq believes
that users will increasingly access the NTF using high bandwidth
Internet or Extranet connections that are ``always on''. The Idle
Testing fee was originally designed to discourage customers from
needlessly taking a limited number of dial-up connections when no
testing was being performed. Some NTF users have created automated
connection mechanisms that automatically access the NTF on a periodic
basis. These firms sometimes unknowingly maintain idle connections and
only discover the problem after days or weeks of idly connecting to the
NTF. By eliminating the Idle Testing fee, these users will only be
charged when Active Testing occurs, and will not be charged for idle
connections.
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\6\ FIX (Financial Information Exchange) and QIX (Nasdaq
Information Exchange) are new messaging protocols that are used by
customers to communicate with Nasdaq's systems. See Securities
Exchange Act Release Nos. 48387 (August 21, 2003), 68 FR 51619
(August 27, 2003) (SR-NASD-2003-117); 48452 (September 5, 2003), 68
FR 53767 (September 12, 2003) (SR-NASD-2003-118); and 51170
(February 9, 2005), 70 FR 7988 (February 16, 2005) (SR-NASD-2005-
002).
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In addition to eliminating fees for Idle Testing, Nasdaq proposes
to change the time period for when an Idle Connection commences from
five to 10 minutes in length to 10 to 60 minutes in length. Initially,
the period during which a connection needs to remain inactive before it
will be deemed idle will be 60 minutes. Nasdaq, however, reserves the
right to adjust this time within a range of 10 to 60 minutes by giving
notice of the change to NTF subscribers. The proposed rule change also
clarifies that the fee schedule for access to the NTF applies to all
Active Connection testing regardless of the Nasdaq access protocols
used to access the NTF. Thus, the new modified NTF fee schedule will
also apply to QIX and other access protocols that Nasdaq may offer in
the future.
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 Sections
15A(b)(5) \8\ of the Act, 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. By modifying the NTF pricing
structure to be more responsive to subscriber needs
[[Page 38987]]
and market demands, Nasdaq believes the proposed rule supports
efficient use of existing systems and ensures that the charges
associated with such use are allocated equitably. The proposed rule
change will apply to NASD members seeking access to the NTF. This fee
schedule is identical to the new fee schedule that Nasdaq proposes to
charge persons that are not NASD members that also seek access to the
NTF.
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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 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.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
Because the foregoing rule change establishes or changes a due,
fee, or other charge imposed by the NASD, it has become effective
pursuant to Section 19(b)(3)(A) of the Act \9\ and Rule 19b-4(f)(2)
\10\ thereunder. 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 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. 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-2005-076 on the subject line.
Paper Comments
Send paper comments in triplicate to Jonathan G. Katz,
Secretary, Securities and Exchange Commission, Station Place, 100 F
Street, NE., Washington, DC 20549-9303.
All submissions should refer to File Number SR-NASD-2005-076. 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 such
filing also will be available for inspection and copying at the
principal office of Nasdaq. 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-2005-076 and should be submitted on or before July
27, 2005.
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. E5-3536 Filed 7-5-05; 8:45 am]
BILLING CODE 8010-01-P