[Federal Register Volume 64, Number 199 (Friday, October 15, 1999)]
[Notices]
[Pages 56004-56005]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-26894]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-41993; File No. SR-NASD-99-47]


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

October 8, 1999.
    Pursuant 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 September 20, 1999, the National Association of Securities Dealers, 
Inc. (``NASD''), 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 and II below, which Items have been prepared by Nasdaq. On 
September 29, 1999, Nasdaq filed with the Commission Amendment No. 1 to 
the proposed rule change.\3\ Nasdaq has designated this proposed rule 
change as establishing or changing a due, fee or other charge under 
Section 19(b)(3)(A) of the Act,\4\ which renders the proposed rule 
change effective upon receipt of the filing by the Commission.\5\ The 
Commission is publishing this notice to solicit comments on the 
proposed rule change, as amended, from interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ Amendment No. 1 makes several technical, non-substantive 
changes to Nasdaq's proposal. See letter from Thomas Moran, 
Assistant General Counsel, Nasdaq, to Mignon McLemore, Attorney, 
Division of Market Regulation, Commission, dated September 28, 1999 
(``Amendment No. 1'').
    \4\ 15 U.S.C. 78s(b)(3)(A).
    \5\ The proposed rule change is deemed filed as of the date 
Amendment No. 1 was received by the Commission.
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I. Self-Regulatory Organization's Statement of the Terms of 
Substance of Proposed Rule Change

    Nasdaq is proposing to make changes to NASD Rule 7010, which sets 
forth the SelectNet fee schedule. Proposed new language is italicized; 
proposed deletions are in brackets.
* * * * *
7000. CHARGES FOR SERVICES AND EQUIPMENT
7010. System Services
(a)-(h) No Change
(i) SelectNet Service
[Effective February 1, 1998, t] The following charges shall apply to 
the use of SelectNet:
    Transaction Charge--$2.50/Side
    Directed Order Charge--$1.00 (per execution, entering party only)
    Cancellation Fee--$.25/per order

    For a pilot commencing October 1, 1999, and lasting until March 31, 
2000 an NASD member who enters a directed SelectNet order that is 
subsequently executed in whole or in part will have its monthly 
Directed Order Charges assessed as follows:

$1.00 per order for the first 50,000 directed orders executed that 
month
$0.70 per order for the next 50,000 directed orders executed that same 
month
$0.20 per order for all remaining directed orders executed that same 
month

Executions resulting from broadcast messages will continue to be 
assessed at a $2.50 per side rate.

[[Page 56005]]

(j)-(n) No Change
* * * * *

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 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

1. Purpose
    In a continuing effort to provide the most cost-effective trading 
environment of NASD members, Nasdaq is proposing a pilot program to 
reduce execution costs for any NASD member who engages in significant 
trading activity using Nasdaq's SelectNet system. Under the pilot, NASD 
members who send directed orders through SelectNet that are 
subsequently executed in whole or in part will be assessed monthly 
SelectNet directed orders fees as follows: Executions 0-50,000 that 
month will be assessed at a $1.00 per execution rate; Executions 
50,001-100,000 that same month will be assessed at a $0.70 per 
execution rate; and Executions 100,001 or higher that same month will 
be assessed at a $0.20 per execution rate. Executions resulting from 
broadcast messages will continue to be assessed at a $2.50 per side 
rate. The pilot, like previous Nasdaq SelectNet fee reductions,\6\ 
responds to dramatic increases in SelectNet execution rates and seeks 
to synchronize Nasdaq's fee structure with current market activity to 
achieve material reductions in market participants costs. This pilot 
program shall run from October 1, 1999, through March 31, 1999, unless 
further extended or modified by Nasdaq.
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    \6\ See Exchange Act Release No. 39248 (October 16, 1997); 62 FR 
55296 (October 23, 1997).
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2. Statutory Basis
    Nasdaq believes the proposed rule change is consistent with Section 
15A(b)(5) \7\ of the Act because it is designed to provide for the 
equitable allocation of reasonable dues, fees, and other charges among 
its members and issuers and other persons.
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    \7\ 15 U.S.C. 78o(b)(5).
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B. Self-Regulatory Organization's Statement on Burden on Competition

    Nasdaq does not believe that the proposed rule change will impose 
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 on the proposed rule change were neither solicited 
nor received.

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

    The foregoing rule change establishes or changes a due, fee, or 
other charge imposed by Nasdaq and, therefore, has become effective 
pursuant to Section 19(b)(3)(A)(ii) \8\ of the Act and subparagraph 
(f)(2) of Rule 19b-4 thereunder.\9\ At any time within 60 days of the 
filing of the proposed rule change,\10\ the Commission may summarily 
abrogate such 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.\11\
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    \8\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \9\ 17 CFR 240.19b-4(f)(2).
    \10\ See supra, note 4.
    \11\ In reviewing this proposal, the Commission has considered 
the proposal's impact on efficiency, competition, and capital 
formation. 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 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, N.W., Washington, D.C. 20549-
0609. 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 Room. Copies of such filing also will be 
available for inspection and copying at the principal office of the 
NASD.
    All submissions should refer to File No. SR-NASD-99-47 and should 
be submitted by November 5, 1999.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\12\
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    \12\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 99-26894 Filed 10-14-99; 8:45 am]
BILLING CODE 8010-01-M