[Federal Register Volume 64, Number 22 (Wednesday, February 3, 1999)]
[Notices]
[Pages 5329-5331]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-2484]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-40983; File No. SR-NASD-98-99]


Self-Regulatory Organizations; Notice of Filing and Immediate 
Effectiveness of Proposed Rule Change by the National Association of 
Securities Dealers, Inc. Relating to Establishment of a Fee to Provide 
Proprietary Regulatory and Trading Data to NASD Members via 
NasdaqTrader.com

January 27, 1999.
    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 that 
on December 31, 1998,\3\ 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 (``SEC'' or ``Commission'') the 
proposed rule change as describe in Items I, II, and III below, which 
Items have been prepared by Nasdaq. Nasdaq has designated this proposal 
as one establishing or changing a due, fee or other charge imposed by 
the NASD under Section 19(b)(3)(A)(ii) of the Act,\4\ which renders the 
proposal effective

[[Page 5330]]

upon filing by the Commission. 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.
    \3\ The Exchange filed Amendment No. 1 with the Commission on 
January 21, 1999. The amendment corrects an inaccurate reference to 
the Act. See Letter from Thomas P. Moran, Senior Attorney, The 
Nasdaq Stock Market, Inc., to Mignon McLemore, Division of Market 
Regulation, SEC, dated January 21, 1999.
    \4\ 15 U.S.C. 78s(b)(3)(A)(ii).
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I. Self-Regulatory Organization's Statement of the Terms of 
Substance of the Proposed Rule Change

    Nasdaq is proposing to amend Rule 7010 of the NASD Rules, to 
establish a fee for a compliance and trading data report distribution 
facility accessible to NASD members through its ``NasdaqTrader.com'' 
website. Below is the text of the proposed rule change. Proposed new 
language is italicized.

Rule 7010 System Services

    (a)-(n) No Changes
    (o) NasdaqTrader.com Trading and Compliance Data Package Fee
    The charge to be paid by an NASD Member Firm for each entitled user 
receiving Nasdaq Trading and Compliance Data Package via 
NasdaqTrader.com is $75 per month (monthly maximum of 25 Historical 
Research Reports) or $100 per month (monthly maximum of 100 Historical 
Research Reports). The Nasdaq Trading and Compliance Data Package 
includes:
    (1) Daily Share Volume Report for a Broker/Dealer (Member Firm's 
information only)
    (2) Monthly Compliance Report Cards (Member Firm's information 
only)
    (3) Monthly Summaries
    (4) Historical Research Reports
    (i) Market Maker Price Movement Report
    (ii) Equity Trade Journal (Member Firm's information only)
    The Association may modify the contents of the Nasdaq Trading and 
Compliance Data Package from time to time based on subscriber interest.
* * * * *

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 and 
discussed any comments it received on 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

    Nasdaq is proposing to establish a fee for a trading and compliance 
data distribution facility accessible to NASD members through its 
``NasdaqTrader.com'' website. Under the proposal, NASD member firms 
will be able to obtain data regarding their own trading volume in 
securities in which they report volume as well as information 
concerning their compliance with NASD rules. Use of this service will 
be voluntary, and fees from NASD members who subscribe will be used to 
offset the costs associated with the maintenance of the secured content 
as well as the product's portion of the ongoing maintenance and 
administration of the Nasdaq web-security infrastructure.
    Specifically, NASD member firms who elect to receive Nasdaq's 
Trading and Compliance Data Package (``Data Package'') will be able to 
obtain the following: (1) Daily Share Volume Reports displaying the 
firm's own T+1 daily trading volume for each issue in which the firm 
reports volume; (2) Monthly Compliance Report Cards outlining the 
firm's own compliance status in the areas of trade reporting, firm 
quote compliance and best execution obligations; (3) Monthly Summaries, 
which provide monthly trading volume statistics for the top 50 market 
participants broken down by industry sector, security, or type of 
trading (e.g., block or total); and (4) Historical Research Reports 
consisting of Market Maker Price Movement Reports (``MMPMR''), which 
show all of a Market Maker's quote updates (i.e., price, size and 
inside quote at time of update) for a security on a specified date, and 
Equity Trade Journals (``ETJs'') detailing all trades reported through 
the Automated Confirmation Transaction Service by the NASD member firm 
for a selected security and date. Due to capacity restrictions, Data 
Package users seeking Historical Research Reports will be limited to 
either 25 or 100 monthly reports depending on the subscription fee 
paid.
    Recognizing the proprietary and confidential nature of the data 
contained in the Data Package, Nasdaq has established a secure 
information display and retrieval environment through the combined use 
of user IDs, passwords and digital certificates. To further protect 
NASD member firms' proprietary data, the service is designed so that 
firm-specific reports regarding compliance and trading activity will 
only be made available to the member firm itself. Nasdaq believes that 
the proposed rule change is consistent with the provisions of Section 
15A(b)(5) \5\ of the Act in that the Data Package fee provides 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.\6\
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    \5\ 15 U.S.C. 78o-3(b)(5).
    \6\ Initially, the proposal inaccurately referenced another 
Section of the Act. Amendment No. 1 corrected this mistake. See 
supra note 3.
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B. Self-Regulatory Organization's Statement on Burden on Competition

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

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

    Written comments were neither solicited nor received.

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

    The foregoing rule change has become effective immediately pursuant 
to Section 19(b)(3)(A)(ii) \7\ of the Act and subparagraph (e) of Rule 
19b-4 thereunder \8\ in that it establishes or changes a due, fee or 
other charge.
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    \7\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \8\ 17 CFR 240.19(b-4(e).
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    At any time within 60 days of the filing of a rule change pursuant 
to Section 19(b)(3)(A) of the Act, the Commission may summarily 
abrogate the rule change 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.

IV. Solicitation of Comments

    Interested persons are invited to submit written data, views, and 
arguments concerning the foregoing, including whether the proposed rule 
change is consistent with the Act. Persons making written submissions 
should file six copies thereof with the Secretary, Securities and 
Exchange Commission, 450 Fifth Street, NW, Washington, DC 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

[[Page 5331]]

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 the file number in the caption above and 
should be submitted by February 24, 1999.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\9\
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    \9\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 99-2484 Filed 2-2-99; 8:45 am]
BILLING CODE 8010-01-M