[Federal Register Volume 62, Number 58 (Wednesday, March 26, 1997)]
[Notices]
[Pages 14487-14488]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-7642]


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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-38417; File No. SR-NASD-97-17]


Self-Regulatory Organizations; Notice of Filing of Proposed Rule 
Change and Amendment No. 1 Thereto by the National Association of 
Securities Dealers, Inc. Relating to Fees Charged for the Nasdaq Level 
1 Service

March 18, 1997.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act''), 15 U.S.C. 78s(b)(1), notice is hereby given that on March 3, 
1997, the National Association of Securities Dealers, Inc. (``NASD'') 
and the Nasdaq Stock Market, Inc. (``Nasdaq'') (hereinafter referred to 
collectively as ``Nasdaq'' or the ``Nasdaq Stock Market'') filed with 
the Securities and Exchange Commission (``Commission'' or ``SEC'') the 
proposed rule change as described in Items I, II, and III below, which 
Items have been prepared by Nasdaq. On March 18, 1997, the Nasdaq Stock 
Market filed Amendment No. 1 to the proposal.\1\ The Commission is 
publishing this notice to solicit comments on the proposed rule change, 
as amended, from interested persons.
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    \1\ In Amendment No. 1, Nasdaq clarifies that the filing is made 
on behalf of the NASD and the Nasdaq Stock Market, Inc. Amendment 
No. 1 also includes additional discussion regarding the statutory 
basis for the fee increase for Nasdaq Level 1 Service. Finally, 
Amendment No. 1 corrects several typographical errors in the 
original filing. See letter from Eugene A. Lopez, Assistant General 
Counsel, Office of General Counsel, The Nasdaq Stock Market Inc., to 
Michael Walinskas, Senior Special Counsel, Office of Market 
Supervision, Division of Market Regulation, Commission, dated March 
17, 1997 (``Amendment No. 1'').
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The proposed rule change amends NASD Rule 7010(a) to increase the 
monthly fee charged for Nasdaq Level 1 Service. Below is the text of 
the proposed rule change. Proposed new language is italicized and 
proposed deletions are bracketed.
Rule 7000. CHARGES FOR SERVICES AND EQUIPMENT
7010. System Services
(a) Nasdaq Level 1 Service
    The charge to be paid by the subscriber for each terminal receiving 
Nasdaq Level 1 Service is $20 [19] per month. This Service includes the 
following data:
* * * * *

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. 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

    The Nasdaq Stock Market proposes to establish a fee increase for 
Nasdaq Level 1 Service to reflect the increased value of the data being 
disseminated via this Service. Under the new SEC Order Handling Rules, 
Nasdaq quotations now contain additional information that was not 
previously available to subscribers. That is, pursuant to SEC Rule 
11Ac1-4, customer limit orders are now displayed in market maker 
quotations. In addition, Nasdaq's Level 1 Service includes price 
information from electronic communications networks (``ECNs'') that was 
not previously available through this Service. Thus, to reflect the 
increased value of the transparency of Nasdaq quotes under these new 
rules and the price discovery information available in the Nasdaq Stock 
Market, Nasdaq believes that the fee for such service should be 
increased.
    Nasdaq proposes to increase by $1.00 the current monthly fee for 
the receipt of Nasdaq quote and trade information, resulting in a $20 
fee per month per authorized device for Level 1 Service. As noted 
above, the Nasdaq Level 1 Service will include limit order information 
(i.e., the best priced orders to buy and sell) and ECN prices. This 
information provides valuable information to investors and other market 
participants and helps in price discovery. However, this fee increase 
will not become effective until the latter of April 1, 1997, or such 
time when more than half of Nasdaq securities as measured by median 
daily dollar volume are subject to the new SEC Order Handling Rules. 
Nasdaq believes that it is appropriate to delay the implementation of 
the increased fee until the Level 1 Service reflects a substantial 
increase in this new information. Once Nasdaq's higher volume 
securities are subject to the new rules, the value of the Level 1 
Service will have substantially increased and the fee should reflect 
that added value.
    Nasdaq believes that the above-referenced fee is consistent with 
the provisions of Section 15A(b)(5) of the Act.\2\ Section 15A(b)(5) 
specifies that the rules of a national securities association shall 
provide for the equitable allocation of reasonable dues, fees and 
charges among members, issuers and other persons using any facility or 
system that the association operates or controls. The increased fee to 
be charged for this valuable information results in an equitable 
allocation of the cost of providing this information in a way that the 
costs are applied fairly and uniformly to all users of the system. 
Nasdaq has attempted to equitably spread the costs associated with the 
information gathered pursuant to the new SEC Order Handling Rules over 
a broad base of end users, as was

[[Page 14488]]

done in the dissemination of OTC Bulletin Board information in 1991.\3\
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    \2\ 15 U.S.C. 78o-3.
    \3\ See Securities Exchange Act Release No. 29616 (August 27, 
1991), 56 FR 43826 (September 4, 1991).
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B. Self-Regulatory Organization's Statement on Burden on Competition

    The Nasdaq Stock Market does not believe that the proposed rule 
change will impose any inappropriate burden on competition.

C. Self-Regulatory Organization's Statement on Comments on the Proposed 
Rule Change Received From Members, Participants, or Others

    No written comments were solicited or received with respect to the 
proposed rule change.

III. Date of Effectiveness of the Proposed rule Change and Timing for 
Commission Action

    Within 35 days of the 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 the 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. Persons making written submissions 
should file six copies thereof with the Secretary, Securities and 
Exchange Commission, 450 Fifth Street, N.W., Washington, D.C. 20549. 
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 at the 
Commission's Public Reference Section, 450 Fifth Street, N.W., 
Washington, D.C. 20549. 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 No. SR-NASD-97-17 and should be 
submitted by April 16, 1997.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\4\
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    \4\ 17 CFR 200.30-3(a)(12).
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Jonathan G. Katz,
Secretary.
[FR Doc. 97-7642 Filed 3-25-97; 8:45 am]
BILLING CODE 8010-01-M