[Federal Register Volume 67, Number 155 (Monday, August 12, 2002)]
[Notices]
[Pages 52504-52506]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 02-20281]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-46316; File No. SR-NASD-2002-90]


Self-Regulatory Organizations; Notice of Filing and Immediate 
Effectiveness of Proposed Rule Change and Amendment No. 1 Thereto by 
the National Association of Securities Dealers, Inc. Relating to the 
Modification of a Pilot Program To Provide Daily Share Volume Reports 
via NasdaqTrader.com

August 6, 2002.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act''),\1\ and Rule 19b-4 \2\ thereunder, notice is hereby given 
that on July 1, 2002, the National Association of Securities Dealers, 
Inc. (``NASD'' or ``Association'') through its subsidiary, The Nasdaq 
Stock Market, Inc. (``Nasdaq''), submitted to 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. Nasdaq filed Amendment No. 1 to the proposal with the 
Commission on August 1, 2002.\3\ Nasdaq filed the proposal pursuant to 
Section 19(b)(3) of the Act,\4\ and Rule 19b-4(f)(6) thereunder,\5\ 
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 letter from Jeffrey S. Davis, Associate General Counsel, 
Nasdaq, to Yvonne Fraticelli, Special Counsel, Division of Market 
Regulation, Commission, dated July 31, 2002 (``Amendment No. 1''). 
In Amendment No. 1, Nasdaq represented that the proposed 
modifications to Nasdaq PostDataSM, a trading data 
distribution facility, will be made available at no charge to all 
vendors and direct subscribers of Nasdaq. Nasdaq further represented 
that it had made information on the proposed modifications available 
to market date vendors, but that no vendors currently accept the 
PostDataSM feed or re-distribute that feed to their 
subscribers. In addition, Nasdaq requested that the Commission waive 
both the five-day pre-filing notice requirement and the 30-day 
operative delay provided under Rule 19b-4(f)(6) of the Act.
    \4\ 15 U.S.C. 78s(b)(3)(A).
    \5\ 17 CFR 240.19b-4(f)(6).
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I. Self-Regulatory Organization's Statement of the Terms of 
Substance of the Proposed Rule Change

    Nasdaq proposes to amend its Nasdaq PostDataSM 
(``PostDataSM'') pilot program to make the following 
additional information available through PostDataSM: (1) Buy 
volume reports; (2) sell volume reports; (3) crossed volume reports; 
and (4) consolidated activity volume reports. New text is italicized.
* * * * *

Rule 7010  System Services

    (a)-(o) No changes.
(q) NasdaqTrader.com Volume and Issue Data Package Fee
    The charge to be paid by the subscriber for each entitled user 
receiving the Nasdaq Volume and Issue Data Package via NasdaqTrader.com 
shall be $70 per month. The charge to be paid by market data vendors 
for this information shall be $35 per month for each end user receiving 
the information through the data vendor. The availability of this 
service through NasdaqTrader.com shall be limited to NASD members, 
Qualified Institutional Buyers \*\ and data vendors. The Volume and 
Issue Data package includes:

    \*\ For purposes of this service, see definition of ``Qualified 
Institutional Buyer'' found in Rule 144A of the Securities Act of 
1933.
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(1) Daily Share Volume reports

[[Page 52505]]

(2) Daily Issue Data
(3) Monthly Volume Summaries
(4) Buy Volume Report
(5) Sell Volume Report
(6) Crossed Volume Report
(7) Consolidated Activity Volume Report
* * * * *

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 11, 2002, the Commission approved, on a twelve-month 
pilot basis, the creation of PostDataSM, a voluntary trading 
data distribution facility accessible to NASD members, buy-side 
institutions and market data vendors through the NasdaqTrader.com 
website.\6\ PostDataSM currently consists of three reports 
provided in a single package: (1) Daily share volume reports, which 
provide subscribers with T+1 daily share volume in each Nasdaq 
security, listing the volume by any NASD member firm that voluntarily 
permits the dissemination of this information; (2) daily issue data, 
which contains a summary of the previous day's activity for every 
Nasdaq issue; and (3) monthly volume summaries, which provide monthly 
trading volume statistics for the top 50 market participants sorted by 
industry sector, security, or type of trading (e.g., block or total).
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    \6\ See Securities Exchange Act Release No. 45270 (January 11, 
2002), 67 FR 2712 (January 18, 2002) (Order approving File No. SR-
NASD-99-12) (``Pilot Approval Order'').
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    In response to requests from professional Nasdaq market 
participants to increase the availability and granularity of Nasdaq-
verified trading data provided through NasdaqTrader.com, Nasdaq has 
determined to expand the information made available to 
PostDataSM subscribers. Specifically, Nasdaq has determined 
to make available through PostDataSM the following four 
additional reports: buy volume reports, sell volume reports, crossed 
volume reports, and consolidated activity volume reports. According to 
Nasdaq, each report would offer information regarding total Nasdaq 
reported buy, sell, cross, or consolidated volume in the security, as 
well as rankings of registered market makers based upon various aspects 
of their activity in Nasdaq. In addition, the reports would provide 
recipients with information about the number and character of each 
market maker's trades. Finally, the reports would also provide the 
information described above with respect to block volume, be it buy, 
sell, cross or consolidated interest. Nasdaq notes that these new 
reports, as well as the existing reports, would include the volume 
reported by another exchange only if that volume is executed through a 
Nasdaq execution system.
    In its proposal to create PostData\SM\, Nasdaq represented that it 
would make product enhancements available to all PostData\SM\ users of 
the proposed products, whether the users were customers of Nasdaq or of 
a participating data vendor.\7\ Specifically, Nasdaq represented that 
if it offered a free product enhancement during the pilot program, it 
would make the enhancement available to all direct and indirect users 
at no cost, and that such modifications to PostData\SM\ during the 
pilot period would be limited to minor enhancements to the content of 
the package.\8\ In addition, Nasdaq represented that it would provide 
notice to vendors to allow vendors to implement programming changes if 
necessary.\9\ Nasdaq believes that the current proposal meets these 
requirements because (1) the proposed modifications to PostData\SM\ 
will be made available at no charge to all vendors and direct 
subscribers of Nasdaq and (2) Nasdaq has made information on the 
proposed modifications available to market date vendors.\10\
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    \7\ See Pilot Approval Order, supra note 6.
    \8\ Nasdaq also represented that it would seek Commission 
approval of any fees to be assessed for such enhancements. Id.
    \9\ See Amendment No. 1, supra note 3.
    \10\ See Amendment No. 1, supra note 3.
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2. Statutory Basis
    Nasdaq believes that the proposed rule change is consistent with 
the provisions of Sections 15A(b)(5) \11\ and 15A(b)(6) of the Act.\12\ 
Section 15A(b)(5) of the Act requires the equitable allocation of 
reasonable fees and charges among members and other users of facilities 
operated or controlled by a national securities association. Section 
15A(b)(6) of the Act requires rules that foster cooperation and 
coordination with persons engaged in facilitating transactions in 
securities and that are not designed to permit unfair discrimination 
between customers, issuers, brokers or dealers. Nasdaq believes that 
this program involves a reasonable fee assessed only to users and other 
persons utilizing the system and will provide useful information to all 
direct and indirect subscribers on a non-discriminatory basis.
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    \11\ 15 U.S.C. 78o-3(b)(5).
    \12\ 15 U.S.C. 78o-3(b)(6).
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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.

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 foregoing rule change, as amended, has become effective 
pursuant to Section 19(b)(3)(A) of the Act \13\ and subparagraph (f)(6) 
of Rule 19b-4 \14\ thereunder because it does not: (i) Significantly 
affect the protection of investors or the public interest; (ii) impose 
any significant burden on competition; (iii) become operative for 30 
days from the date on which it was filed, or such shorter time as the 
Commission may designate. 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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    \13\ 15 U.S.C. 78s(b)(3)(A).
    \14\ 17 CFR 240.19b-4(f)(6).
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    Nasdaq has requested that the Commission waive the five-day pre-
filing notice requirement and the 30-day operative delay. Under Rule 
19-4(f)(6) of the Act, a proposed ``non-controversial'' does not become 
operative for 30 days after the date of filing, unless the Commission 
designates a shorter time. The Commission believes that waiving the 
five-day pre-filing notice requirement and the 30-day operative delay 
is

[[Page 52506]]

consistent with the protection of investors and the public interest. 
Acceleration of the operative date will allow Nasdaq to provide the 
additional PostDataSM information to all users of 
PostData\SM\ immediately. For this reason, the Commission designates 
the proposal, as amended, to be effective and operative upon filing 
with the Commission.\15\
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    \15\ For purposes only of accelerating the operative date of 
this proposal, the Commission has considered the proposed rule's 
impact on efficiency, competition, and capital formation. 15 U.S.C. 
78c(f). In addition, for purposes of calculating the 60-day 
abrogation period, the Commission considers the period to commence 
on August 1, 2002, the date Nasdaq filed Amendment No. 1.
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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 proposed rule 
change, as amended, 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 the filing 
will also be available for inspection and copying at the principal 
office of the Association. All submissions should refer to File No. SR-
NASD-2002-90 and should be submitted by September 3, 2002.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\16\
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    \16\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 02-20281 Filed 8-9-02; 8:45 am]
BILLING CODE 8010-01-P