[Federal Register Volume 62, Number 95 (Friday, May 16, 1997)]
[Notices]
[Pages 27095-27096]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-12894]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-38608; File No. SR-NASD-97-17]


Self-Regulatory Organizations; Order Approving a 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

May 12, 1997.
    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'') submitted to the Securities and Exchange Commission 
(``SEC'' or ``Commission'') pursuant to Section 19(b) of the Securities 
Exchange

[[Page 27096]]

Act of 1934 (``Act''),\1\ and Rule 19b-4 thereunder,\2\ a proposed rule 
change to increase the monthly fee charged for Nasdaq Level 1 Service. 
On March 18, 1997, the Nasdaq Stock Market filed Amendment No. 1 to the 
proposal.\3\
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ 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 form Eugene A. Lopez, Assistant General 
Counsel, Office of General Counsel (``OGC''), Nasdaq, to Michael 
Walinskas, Senior Special Counsel, Office of Market Supervision 
(``OMS''), Division of Market Regulation (``Division''), Commission, 
dated March 17, 1997 (``Amendment No. 1'').
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    Notice of the proposal, as amended, was published for comment and 
appeared in the Federal Register on March 26, 1997.\4\ No comment 
letters were received on the proposed rule change.
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    \4\ See Securities Exchange Act Release No. 38417 (March 18, 
1997), 62 FR 14487 (March 26, 1997).
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    This order approves the Nasdaq proposal.

I. Description of the Proposal

    The Nasdaq Stock Market proposes to establish a fee increase for 
Nasdaq Level 1 Service \5\ to reflect the increased value of the data 
being disseminated via this Service. Under the new SEC Order Handling 
Rules,\6\ Nasdaq quotations now contain additional information that was 
not previously available to subscribers. That is, pursuant to SEC Rule 
11Ac1-4,\7\ 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.
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    \5\ This service includes the following data: (1) inside bid/ask 
quotations calculated for securities listed on The Nasdaq Stock 
Market and securities quoted on thee OTC Bulletin Board (``OTCBB'') 
Service; (2) the individual quotations or indications of interest of 
broker/dealers utilizing the OTCBB service; and (3) last sale 
information on securities classified as designated securities in the 
Rule 4630, 4640, and 4650 Series and securities classified as over-
the-counter equity securities in the Rule 6600 Series. See NASD Rule 
7010(a).
    \6\ See Securities Exchange Act Release No. 37619A (September 6, 
1996), 61 FR 48290 (September 12, 1996) (0rder Handling Rules 
Adopting Release).
    \7\ 17 CFR 240.11Ac1-4.
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    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. This fee increase will 
become effective immediately upon issuance of this order because over 
60% of Nasdaq securities as measured by median daily dollar volume now 
are subject to the new SEC order handling rules.\8\ Nasdaq believes 
that value of the Level 1 Service has increased substantially since 
Nasdaq's higher volume securities now are subject to the new rules.
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    \8\ Telephone conversation between Eugene A. Lopez, Assistant 
General Counsel, OGC, Nasdaq, and James T. McHale, Special Counsel, 
OMS, Division, Commission, on May 8, 1997. As originally proposed, 
Nasdaq was to delay implementation of the fee increase 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 Order Handling Rules.
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II. Discussion

    The Commission finds that the proposed rule change is consistent 
with the requirements of the Act and the rules and regulations 
thereunder applicable to a national securities association, and, in 
particular, the requirements of Section 15A(b)(5).\9\ Section 15A(b)(5) 
requires that the rules of a national securities association 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. The Commission 
believes that the increased fee for Nasdaq Level 1 Service is 
reasonable and results in an equitable allocation of the costs 
associated with gathering and disseminating the additional information 
required as a result of implementation of the new Order Handling Rules. 
Accordingly, the Commission finds that the Nasdaq's proposal is 
appropriate and consistent with the Act.
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    \9\ 15 U.S.C. 78o-3(b)(5).
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    It is therefore ordered, pursuant to Section 19(b)(2) of the 
Act,\10\ that the proposed rule change (SR-NASD-97-17) is approved.
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    \10\ 15 U.S.C. 78s(b)(2).

    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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[FR Doc. 97-12894 Filed 5-15-97; 8:45 am]
BILLING CODE 8010-01-M