[Federal Register Volume 67, Number 127 (Tuesday, July 2, 2002)]
[Notices]
[Pages 44488-44490]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 02-16543]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-46112; File No. SR-NASD-2002-83]


Self-Regulatory Organizations; Notice of Filing of Proposed Rule 
Change by the National Association of Securities Dealers, Inc. and 
Amendment No. 1 To Establish Fees Assessed on Non-Members for the Use 
of Computer-to-Computer Interface Transmission Control Protocol/
Internet Protocol Lines That Use Message Queue Series Software

June 25, 2002.
    Pursuant to section 19(b)(1) of the Securities Exchange Act of 1934

[[Page 44489]]

(``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that 
on June 14, 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. On June 19, 
Nasdaq amended the proposal.\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\ See June 19, 2002 letter from John M. Yetter, Assistant 
General Counsel, Nasdaq, to Katherine A. England, Assistant 
Director, Division of Market Regulation, Commission (``Amendment No. 
1''). In Amendment No. 1, Nasdaq completely deleted the text of the 
proposed rule language in the original filing, and provided new 
proposed rule text.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    Nasdaq proposes to establish the fees for non-members for the use 
of Computer-to-Computer Interface (``CTCI'') Transmission Control 
Protocol/Internet Protocol (``TCP/IP'') lines that use Message Queue 
Series (``MQ Series'') software.\4\ Nasdaq will implement the proposed 
rule change immediately upon approval by the Commission.
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    \4\ In a companion filing, SR-NASD-2002-82, Nasdaq proposes to 
make identical changes to the CTCI TCP/IP fees charged to members. 
See Securities Exchange Act Release No. 46111 (June 25, 2002).
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    The text of the proposed rule change is below. Proposed new 
language is in italics. Rule 7010. System Services
    (a)-(e) No change.
(f) Nasdaq Workstation\TM\ Service
    (1)-(2) No change.
    (3) The following charges shall apply for each CTCI subscriber*:

------------------------------------------------------------------------
                 Options                               Price
------------------------------------------------------------------------
Option 1: Dual 56kb lines (one for        $1275/month.
 redundancy) and single hub and router.
Option 2: Dual 56kb lines (one for        $1600/month.
 redundancy), dual hubs (one for
 redundancy), and dual routers (one for
 redundancy).
Option 3: Dual T1 lines (one for          $8000/month.
 redundancy), dual hubs (one for
 redundancy), and dual routers (one for
 redundancy). Includes base bandwidth of
 128kb.
Option 1, 2, or 3 with Message Queue      Fee for Option 1, 2, or 3
 software enhancement.                     (including any Bandwidth
                                           Enhancement Fee) plus 20%
Disaster Recovery Option: Single 56kb     $975/month
 line with single hub and router. (For
 remote disaster recovery sites only.).
Bandwidth Enhancement Fee (for T1         $4000/month per 64kb increase
 subscribers only).                        above 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 TCP/  $1700 per relocation
 IP-capable lines within a single
 location).
------------------------------------------------------------------------
*As reflected in SR-NASD-00-80 and SR-NASD-00-81, x.25 CTCI circuits are
  being replaced with TCP/IP CTCI circuits. Pursuant to SR-NASD-2001-87
  and SR-NASD-2001-88, the fee for x.25 CTCI circuits--which has
  remained $200 per month per circuit--is increased to $1,275 per month
  per circuit until the date of the termination of such circuits

    (g)-(r) No change.
* * * * *

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's CTCI network is a point-to-point dedicated circuit 
connection from the premises of brokerages and service providers to 
Nasdaq's Trumbull, Connecticut processing facilities. Through CTCI, 
firms are able to enter trade reports into Nasdaq's Automated 
Confirmation Transaction Service (``ACT'') and orders into Nasdaq's 
transaction execution systems.
    In response to numerous requests from market participants that 
Nasdaq upgrade the speed and reliability of its CTCI data transmission 
environment, Nasdaq began the process in January 2001 of ``sunsetting'' 
its CTCI x .25/bisynch network in favor of a new network that provides 
greater capacity and a more efficient transmission protocol. The new 
CTCI network operates over the Enterprise Wide Network II (``EWN II'') 
and provides connectivity over more powerful 56kb and T1 data lines. In 
addition, the new CTCI network uses the industry-standard TCP/IP 
transmission protocol, a protocol that is robust, efficient, and well 
known among the technical community. In May 2002, Nasdaq completed the 
``sunsetting'' process. All members and non-members that access Nasdaq 
through CTCI have now been transitioned to TCP/IP lines.
    As an optional enhancement, Nasdaq will support the use of MQ 
Series software over the TCP/IP lines. MQ Series is a commercially 
available messaging product that provides firms with the ability to 
integrate disparate systems over a common application programming 
interface (``API'') messaging infrastructure. There are over 20 
operating systems that are supported by MQ Series, including Windows, 
Solaris, Mac OS, and Linux. Firms that use MQ Series are able to 
establish networks with less effort, skill, and resources, thereby 
achieving a seamless interconnection of disparate communications 
systems, and can make use of a comprehensive family of APIs designed to 
make coding for any messaging task straightforward. The use of MQ 
Series by firms that link to Nasdaq through CTCI TCP/IP is entirely 
optional.
    In order to support the use of MQ Series by firms, Nasdaq has 
expended, and must continue to expend, resources to license, install, 
and maintain the software. Moreover, the system resources required to 
use MQ Series increase with the size of the TCP/IP line with which it 
is used. Accordingly, Nasdaq believes that it is appropriate to charge 
firms that opt to use MQ Series a higher fee for lines that use the 
software than for comparable lines that

[[Page 44490]]

do not. Fees for firms that do not use MQ Series remain unchanged.
2. Statutory Basis
    Nasdaq believes that the proposed rule change is consistent with 
the Act, including Section 15A(b)(5) of the Act,\5\ 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.
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    \5\ 15 U.S.C. 79o-3(b)(5).
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B. Self-Regulatory Organization's Statement on Burden on Competition

    Nasdaq believes that the proposed rule change will not result in 
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

    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.

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-2002-83 and 
should be submitted by July 23, 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. 02-16543 Filed 7-1-02; 8:45 am]
BILLING CODE 8010-01-P