[Federal Register Volume 60, Number 46 (Thursday, March 9, 1995)]
[Notices]
[Page 12994]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-5701]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-35438; File No. SR-NASD-95-01]
Self-Regulatory Organizations; Order Approving Proposed Rule
Change by the National Association of Securities Dealers, Inc. Relating
to Subscriber Fees For Non-NASD Members Receiving the Nasdaq
WorkstationTM II Functionality
March 2, 1995.
On January 9, 1995, the National Association of Securities Dealers,
Inc. (``NASD'' or ``Association'') filed with the Securities and
Exchange Commission (``Commission'' or ``SEC''), pursuant to Section
19(b)(1) of the Securities Exchange Act of 1934 (``Act''),\1\ a
proposed rule change to extend to non-NASD members (e.g., institutional
investors) receiving the second generation of Nasdaq WorkstationTM
functionality (``NWII'') the same subscriber fees that members must now
pay. The Commission published notice of the proposed rule change in the
Federal Register on February 2, 1995.\2\ No comments were received in
response to the notice. For the reason discussed below, the Commission
is approving the proposed rule change.
\1\15 U.S.C. 78s(b)(1).
\2\Securities Exchange Act Release No. 35284 (January 27, 1995),
60 FR 6582.
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I. The Terms of Substance of the Proposed Rule Change
On December 14, 1994, the NASD submitted a proposed rule change--
File No. SR-NASD-94-76--to the Commission that established a new fee
schedule for NASD member firms receiving the second generation of
NWII.\3\ The fee schedule contained in File No. SR-NASD-94-76 became
effective upon receipt by the SEC in accordance with Section
19(b)(3)(A)(ii) of the Act and Rule 19b-4(a) thereunder.\4\ As
specified in File No. SR-NASD-94-76, the new subscriber fees for NWII
will add to Sections A(9) and E(5) of Part VIII of Schedule D to the
NASD By-Laws.
\3\The computer facilities that support the provision of NWII
are operated by the Nasdaq Stock Market, Inc. (``NSMI''), a wholly-
owned subsidiary of the NASD.
\4\See Release No. 34-35189 (January 3, 1995), 60 FR 3014
(January 12, 1995).
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The NASD then filed the instant rule change to extend to non-NASD
members (e.g., institutional investors) receiving NWII functionality
the same subscriber fees that members must now pay: (a) a service
charge of $100/month per server; (b) a display charge of $500/month per
presentation device; and (c) a charge of $1,150/month for additional
circuits. This rule change does not, however, entail any further
modification to the fee schedule language for NWII that was set forth
in File No. SR-NASD-94-76.
The sole purpose of this rule change is to extend to non-NASD
members receiving the NWII, the same fees that now apply to NASD
members that subscribe to the NWII. Currently, non-NASD members can
access Level 2 Nasdaq Workstation service by subscription to the
original version of the Nasdaq Workstation service (``NWI''). The NASD,
however, is in the process of replacing NWI with NWII.\5\ As the NWII
roll-out proceeds, it will completely replace the existing NWI for all
classes of subscribers. The instant rule change will ensure that the
same NWII charges are paid by all subscribers, including those that are
not members of the NASD.
\5\The NWII roll-out will occur in five phases with the final
phase scheduled for completion in mid-1996. Each phase consists of
installing NWII at all subscriber sites in a defined geographic
area. Thus, while the roll-out proceeds, some subscribers will
continue to utilize NWI and will pay the existing charges for that
service.
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II. Commission Findings
The Commission believes that the rule change is consistent with the
requirements of Section 15A(b)(5) of the Act. Section 15A(b)(5)
specifies that the rules of a national securities association shall
provide for the equitable allocation of reasonable dues, fees, and
other changes among members, issuers, and other persons using any
facility or system that the Association operates or controls. This rule
provides that the newly established fees for members receiving the NWII
functionality will also be paid by non-member subscribers receiving the
NWII.\6\ This, in turn, effectuates fairness in the recovery of the
applicable costs from the entire subscriber base. As described in this
notice, NWII is being implemented in phases with all current NWI
subscribers in a defined area being converted to NWII. Also non-NASD
members that are converted to NWII will be liable for the new fees; NWI
subscribers (i.e., members and non-members) will continue to pay the
NWI service fees until they are converted. The extension of the new
NWII fees schedule to non-members will result in the imposition of
uniform fees and an equitable allocation of operating costs among all
subscribers receiving the NWII functionality.
\6\NWI and NWII both permit the delivery of either Level 2 or
Level 3 Nasdaq service. Subscription to Level 3 is limited to NASD
members that meet the financial and operational requirements for
market making. Subscription to Level 2 Nasdaq service is open to
non-members as well as members because it does not provide the
functionality needed to enter quotations as a market maker.
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It is therefore ordered, pursuant to section 19(b)(2) of the Act,
that the proposed rule change SR-NASD-95-01 be, and hereby is,
approved.
For the Commission, by the Division of Market Regulation,
pursuant to delegated authority.\7\
\7\17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 95-5701 Filed 3-8-95; 8:45 am]
BILLING CODE 8010-01-M