[Federal Register Volume 60, Number 235 (Thursday, December 7, 1995)]
[Notices]
[Pages 62912-62913]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-29778]



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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-36536; File No. SR-NASD-95-48]


Self-Regulatory Organizations; Order Approving Proposed Rule 
Change by National Association of Securities Dealers, Inc. Relating to 
Non-Member Subscriber Deposits for Nasdaq Level 2/3 Service and 
Equipment

November 30, 1995.

I. Introduction

    On October 11, 1995, the National Association of Securities 
Dealers, Inc. (``NASD'' or ``Association'') submitted to the Securities 
and Exchange Commission (``SEC'' or ``Commission''), pursuant to 
section 19(b)(1) of the Securities Exchange Act of 1934 (``Act'')\1\ 
and Rule 19b-4 thereunder,\2\ a proposed rule change to revise the non-
member subscriber deposit requirements contained in Part VIII, 
Paragraph G.1. and 2. of Schedule D to the NASD By-Laws.\3\ The 
proposed rule change reflects increased charges for the provision of 
telecommunications services and equipment and broadens the language to 
encompass the various fees associated with these services and 
equipment.

    \1\15 U.S.C. 78s(b)(1) (1988).
    \2\17 CFR 240.19b-4 (1991).
    \3\The Commission also received a separate, yet identical 
proposed rule change relating to member subscriber deposits for 
Nasdaq Level 2/3 service and equipment which became effective upon 
receipt by the Commission pursuant to Section 19(b)(3)(A) of the Act 
and subparagraph (e) of Rule 19b-4 thereunder because it established 
or changed a due, fee or other charge imposed by the NASD on its 
members. Securities Exchange Act Release No. 36396 (October 20, 
1995), 60 FR 54896.
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    Notice of the proposed rule change appeared in the Federal Register 
on October 26, 1995.\4\ No comment letters were received on the 
proposal. The Commission is approving the proposed rule change.

    \4\Securities Exchange Act Release No. 36397 (October 20, 1995), 
60 FR 54897.
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II. Description of Proposal

    The proposed rule change reflects increased charges for the 
provision of telecommunications services underlying Nasdaq Workstation 
II service, and clarifies the various component functions encompassed 
within the circuit installation fee so that the true nature of the 
charge is made clear to new subscribers. These requirements would 
pertain only to new subscribers or existing subscribers that have 
defaulted on the payment of their charges.
    This proposed rule change applies to subscribers who are not NASD 
members. A companion filing, which applies the proposed rule change to 
member subscribers, was filed separately for immediate 
effectiveness.\5\

    \5\See supra note 3.
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    The NASD represents that the subscriber deposit requirement helps 
hedge against uncollected balances owed by firms for Level 2/3 or 
Nasdaq Workstation equipment. The subscriber deposit in part represents 
actual expenses incurred by The Nasdaq Stock Market, Inc. as 
obligations to telecommunications providers.

III. Discussion

    The Commission believes that the proposed rule change is consistent 
with the Act and the rules and regulations promulgated thereunder. 
Specifically, the Commission believes that approval of the proposed 
rule change is consistent with sections 15A(b)(5),\6\ 

[[Page 62913]]
15A(b)(6),\7\ and 15A(b)(9)\8\ of the Act. Pursuant to sections 15A 
(b)(5) and (b)(6), the proposed rule change equitably allocates the 
fees between NASD members and non-NASD members. Because both members 
and non-members are subject to the same fee schedules and arrangements, 
there is no unfair discrimination between member and non-member 
subscribers. Pursuant to section 15A(b)(9), the proposed rule change 
does not impose any unnecessary or inappropriate burden on competition, 
but reflects an attempt to update a rule that contains provisions that 
are no longer applicable because they do not adequately represent 
current market practices or pricing. In light of the technological 
advancements in the telecommunications area, increased costs are 
commensurate with providing current and potential subscribers with 
access to the various communications services and equipment. However, 
the schedule of NASD charges for services and equipment is based on a 
per unit cost; therefore, members and non-members are subject to the 
same charges. Thus, the revision in subscriber deposit requirements 
does not impose any unnecessary or inappropriate burdens on 
competition.

    \6\Section 15A(b)(5) requires the Commission to determine that a 
registered national securities association's 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 which the association operates or controls.
    \7\Section 15A(b)(6) requires the Commission to determine that a 
registered national securities association's rules are designed to 
promote just and equitable principles of trade, to remove 
impediments to and perfect the mechanism of a free and open market 
and a national market system; and are not designed to permit unfair 
discrimination between customers, issuers, brokers, or dealers, to 
impose any schedule or fix rates of commissions, allowances, 
discounts, or other fees to be charged by its members, or to 
regulate by virtue of any authority conferred by the Act matters not 
related to the purposes of the Act or the administration of the 
NASD.
    \8\Section 15A(b)(9) requires the Commission to determine that a 
registered national securities association's rules do not impose any 
burden on competition not necessary or appropriate in furtherance of 
the purposes of the Act.
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IV. Conclusion

    For the above reasons, the Commission believes that the proposed 
rule change is consistent with the provisions of the Act, and in 
particular with sections 15A(b)(5), 15A(b)(6), and 15A(b)(9).
    It is therefore ordered, pursuant to section 19(b)(2) of the 
Act,\9\ that the proposed rule change (SR-NASD-95-48) be, and hereby is 
approved.

    \9\15 U.S.C. 78s(b)(2) (1988).

    For the Commission, by the Division of Market Regulation, pursuant 
to delegated authority.\10\

    \10\17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 95-29778 Filed 12-06-95; 8:45 am]
BILLING CODE 8010-01-M