[Federal Register Volume 66, Number 10 (Tuesday, January 16, 2001)]
[Notices]
[Pages 3627-3629]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 01-1151]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-43821; File No. SR-NASD-80]


Self Regulatory Organization; Notice of Filing and Immediate 
Effectiveness of Proposed Rule Change by the National Association of 
Securities Dealers, Inc. Relating to Computer to Computer Interface 
Fees for NASD Members

January 8, 2001.
    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 26, 2000, 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 (``SEC'' or ``Commission'') the proposed rule change as 
described in Items I, II, and III below, which Items have been prepared 
by Nasdaq.\3\ 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\ On December 26, 2000, Nasdaq filed Amendment No. 1 with the 
Commission. Amendment No. 1 noted that Nasdaq's Board of Directors 
approved the proposed rule change at its meeting on October 4, 2000, 
and the NASD Board of Governors reviewed the proposal at its meeting 
on October 5, 2000.
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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 NASD Rule 7010 to change the manner in 
which fees are assessed on NASD members who use a Computer-to-Computer 
Interface (``CTCI'') to access Nasdaq services. This new fee structure 
has been created to reflect Nasdaq's adoption of a new Transmission 
Control Protocol/Internet Protocol (``TCP/IP'') standard for CTCI 
linkages that will allow transmission of CTCI data using Nasdaq's 
Enterprise Wide Network II (``EWNII''). Nasdaq intends to impose these 
fees on a rolling basis on members as they are converted to the new 
protocol and T1 or 56kb lines.\4\ Proposed new language is in italics; 
proposed deletions are in brackets.
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    \4\ Nasdaq has filed a separate proposal to impose these same 
fees on non-members who interact with Nasdaq through a CTCI. See 
Securities Exchange Act Release No. 43815 (January 8, 2001).
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* * * * *

7000  Charges for Services and Equipment

7010. System Services

    (a) through (e) No Change.
    (f) Nasdaq Workstation\TM\ Service
    (1) through (2) No Change.
    (3) The following charges shall apply for each CTCT subscriber:
    [Service Charge      $200/month per CTCI circuit]

[[Page 3628]]



 
              Options                               Price
 
Option 1:                            $1275/month
Dual 56kb lines (one for
 redundancy) and single hub and
 router:
Option 2:                            $1600/month
Dual 56kb lines (one for
 redundancy), dual hubs (one for
 redundancy), and dual routers (one
 for redundancy).
Option 3:                            $8000/month
Dual T1 lines (one for redundancy),
 dual hubs (one for redundancy),
 and dual routers (one for
 redundancy). Includes base
 bandwidth of 128kb
Disaster Recovery Option:            $975/month
Single 56kb line with single hub
 and router. (For remote disaster
 recovery sites only
Bandwidth Enhancement Fee (for T1    $4000/month per 64kb increase above
 subscribers only)                    128kb T1 base.
Installation Fee                     $2000 per site for dual hubs and
                                      routers
                                     $1000 per site for single hub and
                                      router
Relocation Fee (for the movement of  $1700 per relocation
 TCP/IP-capable lines within a
 single location)
 

* * * * *

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

    In its fling 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
    Nasdaq is proposing to amend NASD Rule 7010 to change the manner in 
which fees are assessed on NASD members who use a CTCI to access Nasdaq 
services. This new fee structure has been created to reflect Nasdaq's 
adoption of a new TCP/IP standard for CTCI linkages that will allow 
transmission of CTCI data using Nasdaq's EWNII. The CTCI network is a 
point-to-point dedicated circuit connection from the premises of 
brokerages and service providers to Nasdaq's processing facilities in 
Trumbull, Connecticut. Through CTCI, firms are able to enter trade 
reports to Nasdaq's Automated Confirmation Transaction Service 
(``ACT'') and orders to Nasdaq ACES and Small Order Execution 
(``SOES'') systems. CTCI also processes SelectNet transaction 
confirmation reports.
    In response to numerous requests from market participants that 
Nasdaq upgrade the speed and reliability of its current CTCI data 
transmission environment, Nasdaq has determined to sunset its existing 
CTCI X.25/bisynch network.\5\ This network currently operates using an 
X.25 transmission protocol over 19.2 kilo bits per second (``kb'') 
transmission lines. This X.25 system will be replaced by linking 
current CTCI subscribers to Nasdaq's faster and more reliable EWNII. 
EWNII operates over new more powerful 56kb and T1 data lines and 
transmits electronic information using the industry-standard TCP/IP 
transmission protocol. Once the transition to EWNII is completed, 
Nasdaq will terminate its current X.25/bisynch network. This upgrade 
will require all current X.25/19.2kb users to install either 56kb or T1 
lines. Nasdaq believes that, in return, these lines will provide a 
minimum data transmission capability of almost three times that of the 
current 19kb-based interface. Moreover, running a TCP/IP protocol over 
these faster 56Kb and T1 lines will allow Nasdaq to provide CTCI 
subscribers with linkages that are more robust, customizable, and 
efficient in the use of available network bandwidth.
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    \5\ Given the age of the current CTCI X.25 network, Nasdaq also 
anticipates difficulty in obtaining sufficient hardware to meet 
future CTCI needs using the X.25 infrastructure.
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2. Statutory Basis
    Nasdaq believes that the proposed rule changes are inconsistent 
with Section 15A(b)(5) of the Act, 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 which the NASD operates or controls.

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

    Nasdaq did not solicit or receive written comments on the proposed 
rule change.

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

    The proposed rule change has become effective pursuant to Section 
19(b)(3)(A)(ii) of the Act,\6\ and Rule 19b-4(f)(2) thereunder,\7\ in 
that it establishes or changes a due, fee, or other charge. At any time 
within 60 days of the filing of such proposed rule change, 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.
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    \6\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \7\ 17 CFR 240.19b-4(f)(2).
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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, as amended, 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 20549-0609. 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

[[Page 3629]]

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 will also be available for inspection and copying at the 
principal office of the NASD. All submissions should refer to File No. 
SR-NASD-00-80 and should be submitted by February 6, 2001.

    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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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 01-1151 Filed 1-12-01; 8:45 am]
BILLING CODE 8010-01-M