[Federal Register Volume 67, Number 117 (Tuesday, June 18, 2002)]
[Notices]
[Pages 41554-41556]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 02-15251]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-46066; File No. SR-NASD-2002-73]


Self-Regulatory Organizations; Notice of Filing of Proposed Rule 
Change by the National Association of Securities Dealers, Inc. Relating 
to Nasdaq Testing Facility Fees, and To Add the Ability To Test 
Computer-to-Computer Interface, Application Programming Interface, and 
Market Data Vendor Feeds Over Dedicated Circuits

June 12, 2002.
    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 June 4,

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2002, the National Association of Securities Dealers, Inc. (``NASD''), 
through its subsidiary, The Nasdaq Stock Market, Inc. (``Nasdaq''), 
filed with the Securities and Exchange Commission (``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 apply the fee schedule described in a proposed 
amendment to NASD Rule 7050 to non-member subscribers. Nasdaq filed a 
separate proposal to amend NASD Rule 7050 to add subparagraph (d), 
which establishes a new category of monthly fees and one-time 
installation fees applicable to member subscribers that choose to test 
their communication interfaces and/or market data vendor feeds with 
Nasdaq's central processing facilities over a dedicated circuit or 
circuits, as opposed to a dial-up connection.\3\ Now, with this 
proposed rule change, Nasdaq proposes to apply the same schedule of 
fees in SR-NASD-2002-72 to non-member subscribers that use a dedicated 
circuit or circuits to test their communication interfaces and/or 
market data vendor feeds with Nasdaq's central processing facilities. 
The text of the proposed rule change is below. Proposed additions are 
in italics; proposed deletions are in brackets.
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    \3\ See Securities Exchange Act Release No. 46065 (June 12, 
2002)(SR-NASD-2002-72).
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7050. Other Services
    (a) No change.
    (b) No change.
    (c) No change.
    (d) [Testing Services] Nasdaq Testing Facility (NTF)--
    (1) Subscribers that conduct tests of their computer-to-computer 
interface (CTCI), [or digital interface (DIS/CHPS)] NWII application 
programming interface (API), or market data vendor feeds [with the 
central processing facilities] through the Nasdaq Testing Facility 
(NTF) of The Nasdaq Stock Market, Inc. (N[SMI]asdaq) shall pay the 
following charges:


$250/hour--For CTCI/[DIS/CHIPS]NWII API testing between 9:00 a.m. 
and 5:00 p.m. E.T. on business days;
$333/hour--For CTCI/NWII API testing at all other times on business 
days, or on weekends and holidays.

    (2) The foregoing hourly fees shall not apply to market data vendor 
feed testing, or testing occasioned by:
    (A) new or enhanced services and/or software provided by 
N[SMI]asdaq or
    (B) modifications to software and/or services initiated by 
N[SMI]asdaq in response to a contingency.
    (3) Subscribers that conduct CTCI/API or market data vendor feed 
tests using a dedicated circuit shall pay a monthly fee, in addition to 
any applicable hourly fee described in section (d)(1) above, in 
accordance with the following schedule:

 
----------------------------------------------------------------------------------------------------------------
           Service                            Description                             Proposed price
----------------------------------------------------------------------------------------------------------------
NTF Market Data..............  Test Market Data Vendor Feeds over a 56kb  $1,100/circuit/month.
                                dedicated circuit.
NTF NWII API.................  NWII API service to an onsite test SDP     $1,100/circuit/month.
                                over a 56kb dedicated circuit.
NTF CTCI.....................  CTCI service over a 56kb dedicated         $1,100/circuit/month.
                                circuit.
NTF Test Suite...............  NWII API service and CTCI service over     $1,800/2 circuits/month.
                                two 56kb circuits (128 kb).
NTF Circuit Installation.....  Installation of any service option         $700/circuit/installation.
                                including SDP configuration.
----------------------------------------------------------------------------------------------------------------

    (4) New NTF subscribers that sign a one-year agreement for 
dedicated testing service shall be eligible to receive 90-calendar days 
free dedicated testing service.
    (5) ``New NTF subscribers'' are subscribers that
    (A) have never had dedicated testing service; or
    (B) have not had dedicated testing service within the last 6 
calendar months.
* * * * *

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
    Nasdaq proposes to establish a new category of monthly fees and 
one-time installation fees applicable to non-member subscribers that 
choose to test their communication interfaces and/or market data vendor 
feeds with Nasdaq's central processing facilities over a dedicated 
circuit or circuits, as opposed to a dial-up connection. These fees 
would be charged in addition to the hourly fees currently charged. Many 
subscribers have requested that Nasdaq expand its Nasdaq Testing 
Facility (``NTF'') services to include dedicated lines and the ability 
to test market data vendor feeds in addition to computer-to-computer 
interface (``CTCI'') and application programming interfaces (``API''). 
Nasdaq filed this proposal in response to those requests.
    Members and non-member subscribers currently access the NTF over a 
dial-up connection to test CTCI and API with their systems. Subscribers 
are currently unable to test market data vendor feeds through the NTF. 
Nasdaq proposes to provide new services for the NTF that will allow 
subscribers to test CTCI and API as well as market data vendor feeds 
over a dedicated circuit or circuits. These new services will allow 
firms that have trading environments integrating CTCI, API, and Nasdaq 
vendor data to test their systems more completely. Member firms 
typically perform application testing to ensure that the software the 
firm has developed to interface with Nasdaq systems works properly. 
Software may be developed to take advantage of a Nasdaq market 
enhancement or to enhance a firm's internal systems or software 
applications. The subscriber determines the scope, purpose, and 
longevity of the test. Nasdaq participates in the testing process by 
providing a test environment that closely approximates the production 
environment for the systems the subscriber wishes to test as well as 
test scripts used for testing relevant functionality.
    The proposed schedule of monthly and installation fees has been 
calculated to cover the actual costs of installing

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and providing a dedicated circuit or circuits for testing of subscriber 
communications interfaces with Nasdaq's central processing facilities. 
Such costs include an installation cost and a monthly infrastructure 
cost that Nasdaq incurs through its network service provider, in 
addition to costs for hardware, licensing and labor required to 
maintain the test network. New subscribers, described in the proposed 
rule as ``New NTF Subscribers,'' will receive 90 calendar-days free 
service if they choose to sign a one-year agreement for service. New 
NTF Subscribers are subscribers who have never purchased dedicated test 
circuits or who have not had dedicated test service in over six months. 
Subscribers that do not wish to sign a one-year agreement may purchase 
services on a month-to-month basis. As has always been the case, no 
testing fee would be assessed in circumstances where major systems/
software changes instituted by Nasdaq have prompted the subscriber's 
test. In addition, Nasdaq will not charge subscribers hourly fees for 
market data vendor feed testing.
2. Statutory Basis
    Nasdaq believes that the proposed rule change is consistent with 
the provisions of Section 15A of the Act,\4\ in general, and with 
Section 15A(b)(5) of the Act,\5\ in particular, in that it provides for 
the equitable allocation of reasonable dues, fees and other charges 
among member and non-member subscribers using the NTF. The fees will be 
charged to member and non-member subscribers that choose to test their 
communication systems interfaces with Nasdaq's central processing 
facilities over a dedicated circuit or circuits. Member and non-member 
subscribers will be charged the same fees for the same service. Nasdaq 
believes the fees are reasonable in that they have been calculated to 
recover Nasdaq's actual costs of installation and maintenance of the 
dedicated circuit(s).
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    \4\ 15 U.S.C. 78o-3.
    \5\ 15 U.S.C. 78o-3(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 result 
in any burden on competition that is not necessary or appropriate in 
furtherance of the purposes of the Act, as amended.

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

    Written comments were neither solicited nor received.

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.
    The Commission is considering granting accelerated approval of this 
proposed rule change after the expiration of a 15-day comment period.

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, 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 number SR-NASD-2002-73 and 
should be submitted by July 3, 2002.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\6\
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    \6\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 02-15251 Filed 6-17-02; 8:45 am]
BILLING CODE 8010-01-P