[Federal Register Volume 66, Number 67 (Friday, April 6, 2001)]
[Notices]
[Pages 18332-18333]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 01-8472]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-44144; File No. SR-NASD-00-81]
RIN


Self Regulatory Organizations; Order Granting Approval of 
Proposed Rule Change by the National Association of Securities Dealers, 
Inc. Relating to Computer to Computer Interface Fees for Non-NASD 
Members

April 2, 2001.

I. Introduction

    On December 26, 2000, the National Association of Securities 
Dealers, Inc. (``NASD'') through its subsidiary. The Nasdaq Stock 
Market, Inc. (``Nasdaq'') filed with the Securities and Exchange 
Commission (``SEC'' or ``Commission''), pursuant to section 19(b)(1) of 
the Securities Exchange Act of 1934 (``Act''),\1\ and Rule 19b-4 
thereunder,\2\ a proposed rule change relating to computer to computer 
interface fees for

[[Page 18333]]

non-NASD members,\3\ Notice of the proposed rule change appeared in the 
Federal Register on January 16, 2001.\4\ The Commission received no 
comments on the proposed rule change. This order approved the proposed 
rule change.
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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.
    \4\ See Securities Exchange Act Release No. 43815 (January 8, 
2001), 66 FR 3625 (January 16, 2001).
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II. Description of the Proposal

    Nasdaq proposes to amend NASD Rule 7010 to change the manner in 
which fees are assessed on non-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 non-members as they are 
converted to the new protocol and T1 or 56kb lines.\5\ Proposed new 
language is in italics; proposed deletions are in brackets.
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    \5\ Nasdaq filed a separate proposal to impose these same fees 
on NASD members who interact with Nasdaq through a CTCI. See 
Securities Exchange Act Release No. 43821 (January 8, 2001), 66 FR 
3627 (January 16, 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 CTCI subscriber:

    [Service Charge    $200/month per CTCI circuit]

----------------------------------------------------------------------------------------------------------------
                   Options                                                  Price J
----------------------------------------------------------------------------------------------------------------
Option 1:
    Dual 56kb lines (one for redundancy) and   $1,275/month.
     single hub and router.
Option 2:
    Dual 56kb lines (one for redundancy),      $1,600/month.
     dual hubs (one for redundancy), and dual
     routers (one for redundancy).
Option 3:
    Dual T1 lines (one for redundancy), dual   $8,000/month.
     hubs (one for redundancy), and dual
     routers (one for redundancy). Includes
     base bandwidth of 128kb.
Disaster Recovery Option:
    Single 56kb line with single hub and       $975/month.
     router. (For remote disaster recovery
     sites only.).
    Bandwidth Enhancement Fee (for T1          $4,000/month per 64kd increase above 128kb T1 base.
     subscribers only).
    Installation Fee.........................  $2,000 per site for dual hubs and router.
                                               $1,000 per site for single hub and router.
    Relocation Fee (for the movement of TCP/   $1,700 per relocation.
     IP-capable lines within a single
     location).
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* * * * *
    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's 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. This X.25 system will be replaced by linking 
current CTCI subscribers to Nasdaq's faster and more reliable EWNII. 
EWNII operates 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.

III. Discussion

    The Commission finds the proposed rule change is consistent with 
the Act and the rules and regulations promulgated thereunder.\6\ 
Specifically, the Commission finds that approval of the proposed rule 
change is consistent with section 15A(b)(5) of the Act,\7\ 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. The Commission notes that Nasdaq's upgrade of the 
speed and reliability of its current CTCI data transmission network 
should enable 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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    \6\ In approving this proposal, the Commission has considered 
the proposed rule's impact on efficiency, competition, and capital 
formation. 15 U.S.C. 78c(f)
    \7\ 15 U.S.C. 78o-3(b)(5).
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IV. Conclusion

    For the above reasons, the Commission finds that the proposed rule 
change is consistent with the provisions of the Act, in general, and 
with section 15A(b)(5),\8\ in particular.
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    \8\ Id.
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    It is Therefore Ordered, pursuant to section 19(b)(2) of the 
Act,\9\ that the proposed rule change, SR-NASD-00-81, as amended, be 
and hereby is approved on an accelerated basis.
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    \9\ 15 U.S.C. 78s(b)(2).

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\10\
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    \10\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 01-8472 Filed 4-5-01; 8:45 am]
BILLING CODE 8010-01-M