[Federal Register Volume 63, Number 228 (Friday, November 27, 1998)]
[Notices]
[Page 65626]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-31585]



[[Page 65626]]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-40689; File No. SR-NASD-98-73]


Self-Regulatory Organizations; National Association of Securities 
Dealers, Inc.; Order Granting Approval of Proposed Rule Change Relating 
to Fees for Subscribers Who Receive Nasdaq Level 1 and Last Sale Data 
Through Automated Voice Response Services

November 19, 1998.
    On October 1, 1998, the National Association of Securities 
Dealers,Inc. (``NASD''), through its wholly-owned subsidiary, the 
Nasdaq Stock Market, Inc. (``Nasdaq'') submitted to the Securities and 
Exchange Commission (``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 amend NASD Rule 7010 to make 
permanent its current monthly pilot fee for subscribers who receive 
Nasdaq Level 1 and Last Sale data through automated voice response 
services.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
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    The proposed rule change appeared in the Federal Register on 
October 20, 1998.\3\ The Commission received no comments concerning the 
proposed rule change. This order approves the proposed rule change.
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    \3\ Securities Exchange Act Rel. No. 40546 (October 13, 1998), 
64 FR 56055. There was a misprint in the Federal Register version of 
this release. The Federal Register contained the following sentence: 
``Nasdaq believes that the charge for such services should not be 
made a permanent part of its fee structure.'' Id. at p. 56056 
(emphasis added). The correct text, as submitted to the Federal 
Register by the Commission, with emphasis added, is as follows: 
``Nasdaq believes that the charge for such services should now be 
made a permanent part of its fee structure.'' This sentence is not 
in the Federal Register release. The correction was published on 
November 17, 1998, in Securities Exchange Act Rel. No. 40546, 63 FR 
63967 (November 17, 1998).
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    Nasdaq is proposing to make permanent its $21.25 monthly per port 
fee for subscribers who receive Nasdaq Level 1 service through 
automated voice response services.\4\ These services provide callers 
with automated voice access to real-time Nasdaq pricing information. 
The monthly $21.25 fee has been in effect as a pilot fee for over 11 
years and was originally based on a formulation of a $5.00 premium 
above the combined $16.25 Level 1/Last Sale rate in effect at that 
time. This fee has not increased despite a subsequent increase of Level 
1/Last Sale Rates to the current $20.00 per month level. Given the 
continued usage of voice-based quote access services,\5\ Nasdaq 
believes that the charge for such services should now be made a 
permanent part of its fee structure.
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    \4\ A vendor's voice port count is defined as the maximum number 
of callers capable of accessing Nasdaq data at any given time. For 
example, if a vendor's voice port count is 100 (i.e., capable of 
handling a maximum of 100 callers at any given time) then the fee 
accessed would be $2,125 ($21.25 x 100). Conference call on October 
6, 1998, between Thomas P. Moran, Senior Attorney, Office of General 
Counsel, Nasdaq, and Mignon McLemore, Attorney and Robert B. Long, 
Attorney, Division of Market Regulation, Commission.
    \5\ There are currently 7,629 voice ports in service.
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    After careful review, the Commission finds that the proposed rule 
change is consistent with the provisions of Sections 15A(b)(5) \6\ and 
15A(b)(6) \7\ of the Act.\8\ The Commission believes the proposal is 
consistent with these provisions of the Act because the fee is 
reasonable and equitable and will apply in a non-discriminatory manner 
to all member firms that use the Nasdaq Level 1 automated voice 
response service.
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    \6\ Section 15A(b)(5) requires that an 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. 15 
U.S.C. 78o-3(b)(5).
    \7\ Section 15A(b)(6) requires that an association's rules not 
be designed to permit unfair discrimination between customers, 
issuers, brokers, or dealers. 15 U.S.C. 78o-3(b)(6).
    \8\ The Commission has considered the proposed rule's impact on 
efficiency, competition and capital formation. The Commission 
believes that disseminating real-time pricing information through 
automated voice response systems enhances market efficiency and 
promotes competition among the markets. 15 U.S.C. 78c(f).
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    The proposed fee has been in effect since the pilot's inception 11 
years ago.\9\ During this time members have paid this fee without 
complaint. Moreover, the NASD has kept the per port fee constant 
despite a $3.75 increase in Level 1/Last Sale rates. Thus, the 
Commission supports this fee becoming a permanent part of the NASD's 
fee structure. For the foregoing reasons, the Commission finds that the 
proposed rule change is consistent with the requirements of the Act and 
the rules and regulations thereunder.
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    \9\ The Commission notes that 11 years is a significant length 
of time to determine a pilot's viability. The Commission believes 
that gathering and analyzing market data to assess such factors as 
market interest and profitability should be done within a 
substantially shorter time frame.
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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-98-73) is approved.

    \10\ 15 U.S.C. 78s(b)(2).
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    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\11\

    \11\ 17 CFR 200.30-3(a)(12).
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[FR Doc. 98-31585 Filed 11-25-98; 8:45 am]
BILLING CODE 6717-01-M