[Federal Register Volume 66, Number 34 (Tuesday, February 20, 2001)]
[Notices]
[Pages 10926-10927]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 01-3239]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-43915; File No. SR-NASD-00-82]


Self-Regulatory Organizations; Notice of Filing of Proposed Rule 
Change by the National Association of Securities Dealers, Inc. Relating 
to the Assessment of Fees for Unit Investment Trusts Included in 
Nasdaq's Mutual Fund Quotation Service

February 1, 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 Securities Dealers, Inc. 
(``NASD'' or ``Association''), through its 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.
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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 proposing to amend NASD Rule 7090 pertaining to the fees 
assessed for Unit Investments Trusts (``UITS'') included in the Mutual 
Fund Quotation Service (``MFQS''). Proposed new language is underlined; 
proposed deletions are in brackets.
* * * * *

7090. Mutual Fund Quotation Service

    (a) Funds and Unit Investment Trusts included in the Mutual Fund 
Quotation Service (``MFQS'') shall be assessed an annual fee of $400 
per fund or trust authorized for the News Media Lists and $275 per fund 
or trust authorized for the Supplemental List. Funds or trusts 
authorized during the course of an annual billing period shall receive 
a proration of these fees but no credit or refund shall accrue to funds 
or trusts terminated during an annual billing period. In addition, 
there shall be a one-time application processing fee of $250 for each 
new fund or trust authorized.
    (b) If a Unit Investment Trust expires by its own terms during an 
annual billing period and is replaced within three months by a trust 
that is materially similar is share class and trust objective, the 
replacing trust shall not be charged a one-time application fee. In 
addition, the replacing trust shall not be charged an annual fee if the 
expiring trust has already paid an annual fee for that annual billing 
period.
    (c) [(b)] Funds included in the MFQS and pricing agents designated 
by such funds (``Subscriber''), shall be assessed a monthly fee of $75 
for each logon identification obtained by the Subscriber. A Subscriber 
may use a logon identification to transmit to Nasdaq pricing and other 
information that the Subscriber agrees to provide to Nasdaq.
* * * * *

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

1. Purpose
    Nasdaq's MFQS collects and disseminates data pertaining to the 
value of open-end and closed-end mutual funds and UITs. Currently, the 
MFQS disseminates the valuation data for over 11,000 funds. The MFQS 
facilitates this process by permitting funds included in the MFQS (or 
pricing agents designated by such funds) to use the browser-based 
technology to transmit directly to Nasdaq a multitude of pricing 
information, including information about a fund's net asset value, 
offer price, and closing market price.
    NASD Rule 7090 sets forth the fees assessed for the inclusion of 
mutual funds in the MFQS. NASD Rule 7090 currently provides for the 
assessment of an annual fee of $400 per fund authorized for the News 
Media Lists, $275 per fund authorized for the Supplemental List, and a 
one-time application processing fee of $250 for each new fund 
authorized for either list. Funds authorized during the course of an 
annual billing period are assessed prorated fees, but no credit or 
refund accrues to funds terminated during an annual billing period. The 
application fee partially offsets the costs Nasdaq

[[Page 10927]]

incurs for the Fund Operations personnel, who are required to review, 
record, and input each fund into the MFQS system to be available for 
update and subsequent dissemination to the electronic or newspaper 
subscribers.
    Nasdaq proposes to amend NASD Rule 7090 to assess application and 
annual fees for the inclusion of UITs in the same manner as it 
currently assesses those fees for funds, in all but one respect. Nasdaq 
proposes to eliminate the MFQS application fee in the limited 
circumstances where a UIT currently listed in MFQS expires and is 
replaced within a three-month period of time by a trust that is 
materially the same. This fee-waiver recognizes the fact that UITs, 
unlike open or closed-end funds, often exist in the market for finite 
periods of time, ranging from 12 months to 30 years.
    A replacement UIT will be deemed to be materially similar to an 
expiring UIT if it is of the same share class and objective of the 
trust it is replacing. Nasdaq's Fund Operations staff will be 
responsible for reviewing, validating and approving trusts to determine 
whether they meet these criteria. If the expiring trust is not replaced 
by a trust of the same material nature within three months after 
expiration, or if Nasdaq staff determines that the trust is not 
materially similar, the listing firm will be required to pay the 
application fee upon listing the new UIT. The fee-waiver will operate 
as follows:
     January 2001: Trust A originally lists with MFQS. 
Termination date for this trust is February 2002. This fund pays its 
application fee of $250.00 and annual listing fee of $275.00 for 2001.
     January 2002: Trust A pays its annual fee for 2002.
     February 2002: Trust A expires.
     March 2002: Trust A is replaced by Trust B, which is 
determined to be materially like Trust A. Trust B will not incur any 
application fee and will assume the annual listing fee paid by Trust A.
2. Statutory Basis
    Nasdaq believes that the proposed rule change is consistent with 
the provisions of Sections 15A(b)(6)\3\ and Section 11A \4\ of the Act. 
Section 15A(b)(6) requires that the rules of a registered national 
securities association be designed to prevent fraudulent and 
manipulative acts and practices, to promote just and equitable 
principals of trade, to foster cooperation and coordination with 
persons engaged in regulating, clearing, settling, processing 
information with respect to, and facilitating transactions in 
securities, to remove impediments to and perfect the mechanism of a 
free and open market and a national market system, and, in general, to 
protect investors and the public interest; and are not designed to 
permit unfair discrimination between customers, issuers, brokers, or 
dealers. In section 11A(a)(1)(C), Congress found that is in the public 
interest and appropriate for the protection of investors and the 
maintenance of fair and orderly markets to assure: (1) Economically 
efficient execution of securities transactions; (2) fair competition 
among brokers and dealers; (3) the availability to brokers, dealers and 
investors of information with respect to quotations and transactions in 
securities; (4) the practicability of brokers executing investors 
orders in the best market; and (5) an opportunity for investors orders 
to be executed without the participation of a dealer.
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    \3\ 15 U.S.C. 78o-3(b)(6).
    \4\ 15 U.S.C. 78k-1.
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    Nasdaq believes that the proposed rule change is consistent with 
the provisions of Sections 15A(b)(6) and 11A(a)(1)(C) of the Act 
because the proposal protects investors and the public interest by 
promoting better processing of price information in UITS. Nasdaq 
believes that the proposed listing fees will encourage the listing of 
UITs, thereby providing greater pricing information for a broader base 
of investments for which there is significant investor interest. Nasdaq 
also believes that the proposed listing fees will enable Nasdaq to 
identify, screen and list bona fide UITs with a meaningful investor 
base and trading interest.

B. Self-Regulatory Organization's Statement on Burden on Competition

    Nasdaq does not believe that the proposed rule change will result 
in any burden on competition.

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

    Nasdaq has neither solicited nor received written comments on the 
proposed rule change.

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

    Within 35 days of the date of publication of this notice in the 
Federal Register or within such longer period (i) as the Commission may 
designate up to 90 days of such date if it finds such longer period to 
be appropriate and publishes it reasons for so finding or (ii) as to 
which the NASD consents, the Commission will:
    (A) By order approve such proposed rule change, or
    (B) institute proceedings to determine whether the proposed rule 
change should be disapproved.

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. Person 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 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-00-82 and should 
be submitted by March 13, 2001.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\5\
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    \5\ 17 CFR 200.30-2(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 01-3239 Filed 2-16-01; 8:45 am]
BILLING CODE 8010-01-M