[Federal Register Volume 63, Number 243 (Friday, December 18, 1998)]
[Notices]
[Pages 70177-70178]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 98-33559]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-40783; File No. SR-NASD-98-84]


Self-Regulatory Organizations; Notice of Filing and Immediate 
Effectiveness of Proposed Rule Change by the National Association of 
Securities Dealers, Inc. Relating to SelectNet Fees

December 11, 1998.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act'') \1\ and Rule 19b-4 thereunder,\2\ notice is hereby given on 
November 9, 1998, the National Association of Securities Dealers, Inc. 
(``NASD'' or ``Association''), through its wholly-owned subsidiary the 
Nasdaq Stock Market, Inc. (``Nasdaq''), filed with the Securities and 
Exchange Commission (``Commission'') the proposed rule change as 
described in Items I, II, and III below, which Items have been prepared 
by the NASD. The Commission is publishing this notice to solicit 
comments on the proposed rule change from interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of 
Substance of the Proposed Rule Change

    Nasdaq is filing a proposed rule to extend, through March 31, 1999, 
the fees currently charged under NASD Rule 7010(1) for the execution of 
transactions in SelectNet. Under the proposed extension, SelectNet fees 
would continue to be assessed in the following manner: (1) $1.00 will 
be charged for each SelectNet order entered and directed to one 
particular market participant that is subsequently executed in whole or 
in part; (2) no fee will be charged to a member who receives and 
executes a directed SelectNet order; (3) the existing $2.50 fee will 
remain in effect for both sides of executed SelectNet orders that 
result from broadcast messages; and (4) a $0.25 fee will remain in 
effect for any member who cancels a SelectNet order. If no further 
action is taken, SelectNet fees will revert to their original $2.50 
per-side level on April 1, 1998.

II. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for the Proposed Rule Change

    In its filing with the Commission, the NASD 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. The NASD has prepared summaries, set forth below in 
Sections A, B, and C, 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

1. Purpose
    Nasdaq is proposing to again extend its current reduced SelectNet 
fees. The reasons for Nasdaq's prevailing SelectNet fee structure were 
fully explained in its original fee structure proposal filed with the 
Commission in February of this year.\3\ Since then, SelectNet usage has 
continued at significantly elevated levels, averaging over 150,000 
daily executions in September of 1998 and 180,000

[[Page 70178]]

executions each day in October of 1998. As such, Nasdaq believes that 
an extension of these reduced fees, through March 31, 1999, is 
warranted. Under the proposed extension, SelectNet fees would continue 
to be assessed in the following manner: (1) $1.00 will be charged for 
each SelectNet order entered and directed to one particular market 
participant that is subsequently executed in whole or part; (2) no fee 
will be charged to a member who receives and executes a directed 
SelectNet order; (3) the existing $2.50 fee will remain in effect for 
both sides of executed SelectNet orders that result from broadcast 
messages; and (4) a $0.25 fee will remain in effect for any member who 
cancels a SelectNet order. Nasdaq will continue to monitor and review 
SelectNet activity to determine if further extensions of its reduced 
SelectNet fee structure are appropriate. If no further action is taken, 
SelectNet fees will revert to their original $2.50 per-side level on 
April 1, 1999.
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    \3\ See Securities Exchange Act Release No. 39641 (February 10, 
1998), 63 FR 8241 (February 18, 1998). Nasdaq's current reduced fee 
structure was originally approved for a 90-day trial period, 
commencing the day the proposal was published in the Federal 
Register. The reduced fees were extended in May and September of 
1998 and would have expired on November 30, 1998, if not extended by 
this filing. See Securities Exchange Act Release No. 40427 
(September 10, 1998); 63 FR 49724 (September 17, 1998).
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2. Statutory Basis
    Nasdaq believes that the proposed rule change is consistent with 
Section 15A(b)(5) of the Act,\4\ which requires that the rules of the 
NASD provide for the equitable allocation of reasonable dues, fees and 
other charges among members and issuers and other persons using any 
facility or system that the NASD operates or controls.
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    \4\ 15 U.S.C. 78o-3(b)(5).
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B. Self-Regulatory Organization's Statement on Burden on Competition

    The NASD believes that the proposed rule change will not result in 
any burden on competition that is not necessary or appropriate in 
furtherance of the purposes of the Act.

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

    Comments were neither solicited nor received.

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

    This filing applies to the assessment of SelectNet fees to NASD 
members, and thus the proposed rule change is effective immediately 
upon filing pursuant to Section 19(b)(3)(A)(ii) of the Act \5\ and 
subparagraph (e)(2) of Rule 19b-4 under the Act \6\ because the 
proposal is establishing or changing a due, fee or other charge. At any 
time within 60 days of the filing of the proposed rule change, the 
Commission may summarily abrogate such rule if it appears to the 
Commission that such action is necessary or appropriate in the public 
interest, for the protection of investors, or otherwise in furtherance 
of the purposes of the Act.\7\
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    \5\ 15 U.S.C. 78s(b)(3)(A).
    \6\ 17 CFR 240.19b-4(e)(2).
    \7\ In reviewing this proposal, the Commission has considered 
the proposal's impact on efficiency, competition, and capital 
formation. See 15 U.S.C. 78c(f).
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IV. Solicitation of Comments

    Interested persons are invited to submit written data, views, and 
arguments concerning the foregoing, including whether the proposal is 
consistent with the Act. 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 in the Commission's 
Public Reference Room. 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-98-84 and should be 
submitted by January 8, 1999.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\8\
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    \8\ 17 CFR 200.30-3(a)(12).
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Jonathan G. Katz,
Secretary.
[FR Doc. 98-33559 Filed 12-17-98; 8:45 am]
BILLING CODE 8010-01-M