[Federal Register Volume 67, Number 127 (Tuesday, July 2, 2002)]
[Notices]
[Pages 44490-44492]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 02-16545]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-46111; File No. SR-NASD-2002-82]


Self-Regulatory Organizations; Notice of Filing and Immediate 
Effectiveness of Proposed Rule Change and Amendment No. 1 by the 
National Association of Securities Dealers, Inc. to Establish Fees 
Assessed on NASD 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 
(``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'' or ``Association''), 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, 2002, Nasdaq amended the proposal.\3\ Nasdaq filed the 
proposal pursuant to section 19(b)(3)(A) of the Act,\4\ and Rule 19b-
4(f)(2) thereunder \5\ as one establishing or changing a due, fee or 
other charge imposed by the self-regulatory organization, which renders 
the proposal effective upon filing with the Commission. 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. For purposes of calculating the 60-day 
abrogation period, the Commission considers the abrogation period to 
have commenced on June 19, 2002, the date Nasdaq filed Amendment No. 
1.
    \4\ 15 U.S.C. 78s(b)(3)(A).
    \5\ 17 CFR 240.19b-4(f)(2).
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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 assessed on NASD 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.\6\ Nasdaq will implement the 
proposed rule change on July 1, 2002.
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    \6\ In a companion filing, SR-NASD-2002-83, Nasdaq proposes to 
make identical changes to the CTCI TCP/IP fees charged to non-
members. See Securities Exchange Act Release No. 46112 (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 WorkstationTM 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.
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[[Page 44491]]


------------------------------------------------------------------------
                                            Fee for option 1, 2, or 3
  Option 1, 2, or 3 with message queue       (including any bandwidth
          software enhancement              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 do not. Fees for firms that do 
not use MQ Series remain unchanged.
2. Statutory Basis
    Nasdaq believes the proposed rule change is consistent with the 
Act, including section 15A(b)(5) of the Act,\7\ 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.
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    \7\ 15 U.S.C. 78o-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

    The proposed rule change has become effective pursuant to section 
19(b)(3)(A)(ii) of the Act \8\ and subparagraph (f)(2) of Rule 19b-4 
thereunder,\9\ because it establishes or changes a due, fee, or other 
charge imposed by the Association. At any time within 60 days of the 
filing of the proposed rule change, the Commission may summarily 
abrogate such rule change if it appears to the Commission that such 
action is necessary or appropriate in the public interest, for the 
protection of investors, or otherwise in furtherance of the purposes of 
the Act.
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    \8\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \9\ 17 CFR 240.19b-4(f)(2).
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IV. Solicitation of Comments

    Interested persons are invited to submit written data, views, and 
arguments concerning the foregoing, including whether the proposal 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

[[Page 44492]]

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 Association. All 
submissions should refer to file number SR-NASD-2002-82 and should be 
submitted by July 23, 2002.

    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. 02-16545 Filed 7-1-02; 8:45 am]
BILLING CODE 8010-01-P