[Federal Register Volume 66, Number 200 (Tuesday, October 16, 2001)]
[Notices]
[Pages 52649-52650]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 01-25936]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-44914; File No. SR-NASD-2001-68]


Self-Regulatory Organizations; Notice of Filing of a Proposed 
Rule Change by the National Association of Securities Dealers, Inc., to 
Raise the Per Share Charge for Use of SuperSOES By Non-NASD Members

October 9, 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 October 4, 2001, 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'' 
of ``Commission'') the proposed rule change as described in Items, I, 
II, and III below, which Items have been prepared by Nasdaq. 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.
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I. Self-Regulatory Organization's Statement of the Terms of 
Substance of the Proposed Rule Change

    Nasdaq proposes to increase the per share charge for use of the 
Nasdaq National Market Executive System (``NNMS'' or ``SuperSOES'') on 
a pilot basis. This rule filing applies this change to national 
securities trading Nasdaq-listed securities pursuant to grants of 
unlisted trading privileges (``UTP Exchanges''), which are not NASD 
members. The rule filing would become effective immediately upon 
approval by the Commission and would be implemented on the first day of 
the month immediately following Commission approval, and would remain 
in effect, on a pilot basis, until October 31, 2002. During the pilot 
period, Nasdaq will assess the effect of the rule change on market 
participants and Nasdaq and may file additional changes to the level or 
structure of its fees.\3\ The text of the proposed rule change is set 
forth below. Proposed new language is underlined; proposed deletions 
are in brackets.
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    \3\ Nasdaq also filed a companion rule filing (SR-NASD-2001-67) 
to apply the same rule change to NASD members and to introduce a 
liquidity provider rebate available to NASD members. See Securities 
Exchange Act Release No. 44910 (October 5, 2001). SR-NASD-2001-67 is 
effective upon filing, and Nasdaq will implement it for a pilot 
period commencing on November 1, 2001 and ending on October 31, 
2002.
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    * * *

7010. System Services

    (a)-(h) No change.
    (i) Transaction Execution Services
    (1) No change.
    (2) Nasdaq National Market Execution System (SuperSOES)
    The following charges shall apply to the use of the Nasdaq National 
Market Execution System:

Order Entry Charge--$0.10 per order entry (entering party only)
Per Share Charge--$0.001 per share executed for all fully or partially 
executed orders (entering party only)
Cancellation Fee--$0.25 per order cancelled (canceling party only)

    For a pilot period commencing on November 1, 2001 and lasting until 
October 31, 2002, the per share charge will be $0.002 per share 
executed for all fully or partially executed orders (entering party 
only).
    *  *  *

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
    On January 14, 2000, the Commission issued an order approving a 
rule change that: (1) Established the NNMS, a new platform for the 
trading of Nasdaq National Market (``NNM'') securities; (2) modified 
the rules governing the use of SelectNet for trading NNM issues; and 
(3) left unchanged trading of Nasdaq SmallCap securities through the 
Small Order Execution System (``SOES'') and SelectNet.\4\ Nasdaq began 
implementing these system changes on July 9, 2001 and completed 
implementation on July 30, 2001. Through these changes, the NNMS has 
become the primary trading platform for NNM securities, and SelectNet 
is intended to be used primarily for the transmittal and execution of 
``non-liability'' orders for market makers in NNM securities, as well 
as the transmittal and execution of ``liability'' order to market 
participants that do not participate in the automatic execution 
functionality of the NNMS. On Sepember 28, 2001, Nasdaq filed 
modifications to the pricing structure for SelectNet and the NNMS.\5\ 
These changes were designed as an interim modification to being the 
process of aligning the charges to market participants for using the 
NNMS and SelectNet more closely with the costs of providing these 
services and the benefits that they provide to market participants. In 
this filing, Nasdaq is

[[Page 52650]]

increasing the per share charge for orders entered and executed in the 
NNMS from $0.001 per share to $0.002 per share, in keeping with 
Nasdaq's ongoing efforts to align charges with costs and benefits.
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    \4\ Securities Exchange Act Release No. 42344 (Jan. 14, 2000), 
65 FR 16 (Jan. 25, 2000) (SR-NASD-99-11).
    \5\ See Securities Exchange Act Release No. 44899 (October 2, 
2001) (File No. SR-NASD-2001-63) and Securities Exchange Act Release 
No. 44898 (October 2, 2001) (File No. SR-NASD-2001-64) SR-NASD-2001-
63 applied the new fees to NASD members, effective upon filing, and 
was implemented on October 1, 2001. SR-NASD-2001-64 will apply the 
new fees to UTP Exchanges, and will be implemented on the first day 
of the month immediately following Commission approval.
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2. Statutory Basis
    Nasdaq believes that the proposed rule change is consistent with 
the Act, including Section 15A(b)(5) of the Act,\6\ which requires that 
the rules of the NASD provide for the equitable allocation of 
reasonable fees, dues, and other charges among members and issuers and 
other persons using any facility or system which the NASD operates or 
controls, and Section 15A(b)(6) of the Act,\7\ which requires rules 
that are not designed to permit unfair discrimination between 
customers, issuers, brokers or dealers. Nasdaq believes that the level 
of fees charged to market participants under the proposal is 
reasonable. Nasdaq anticipates that overall fees for the NNMS, 
SelectNet, and SOES, net of the liquidity provider rebate, will be 
comparable to overall fees for the NNMS, SelectNet, and SOES under the 
pricing changes contained in SR-NASD-2001-63\8\ and SR-NASD-2001-64.\9\ 
Such fees are, in turn, estimated to be slightly lower than overall 
fees for SelectNet and SOES prior to the introduction of the NNMS.
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    \6\ 15 U.S.C. 78o-3(b)(5).
    \7\ 15 U.S.C. 78o-3(b)(6).
    \8\ See SR-NASD-2001-63, supra note 5.
    \9\ See SR-NASD-2001-64, supra note 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

    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

    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 its 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. Persons making written submissions 
should file six copies thereof with the Secretary, Securities and 
Exchange Commission, 450 Fifth Street, N.W., 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 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-2001-68 and 
should be submitted by November 6, 2001.

    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. 01-25936 Filed 10-15-01; 8:45 am]
BILLING CODE 8010-01-M