[Federal Register Volume 67, Number 161 (Tuesday, August 20, 2002)]
[Notices]
[Pages 54003-54005]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 02-21128]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-46350; File No. SR-NASD-2002-86]


Self-Regulatory Organizations; Notice of Filing of Proposed Rule 
Change and Amendment No. 1 by the National Association of Securities 
Dealers, Inc. To Establish and Set a Fee for a New Data Feed for the 
Nasdaq InterMarket

August 14, 2002.
    Pursuant to section 19(b)(1) of the Securities Exchange Act of 1934

[[Page 54004]]

(``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that 
on June 27, 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'' or ``SEC'') the proposed rule change as described in 
Items I, II, and III below, which Items have been prepared by Nasdaq. 
On July 19, 2002, 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 July 19, 2002 letter from Jeffrey S. Davis, Associate 
General Counsel, Nasdaq, to Joseph Morra, Special Counsel, Division 
of Market Regulation, Commission (``Amendment No. 1''). In Amendment 
No. 1, Nasdaq substituted new proposed rule language for the 
language provided in the original filing.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    Nasdaq proposes to amend NASD Rule 7010(c), to make available a new 
data feed of market participant quotations from the Nasdaq InterMarket, 
Nasdaq's facility for over-the-counter trading of exchange-listed 
securities, and set a fee for purchase of that feed. The text of the 
proposed rule change is below. Proposed additions are in italics.

7010   System Services

    (a)--(b) No Change.
    (c) (1)--(2) No Change.
    (3) The charge to be paid by the subscriber for each terminal 
receiving the iM Quotes Service shall be $6 per month.
    (d)--(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
    Today, Nasdaq provides the quotation information for participants 
in the Nasdaq InterMarket to the Securities Industry Automation 
Corporation (``SIAC''). SIAC, in turn, disseminates this real-time 
information via its Consolidated Quotation Service (``CQS'') data feed 
along with the best bids and offers (``BBOs'') from exchanges that 
participate in the Consolidated Quotations Plan (``CQ Plan''). Because 
Nasdaq operates as a national securities association, and not as an 
exchange, it is required and permitted to disseminate its InterMarket 
market participant quotations through SIAC, the securities information 
processor for the CQ Plan.
    Once Nasdaq is an exchange, it will no longer be able to 
disseminate market participant quotations through SIAC because Rule 
11Ac1-1 under the Act \4\ only provides for the dissemination of 
exchanges' BBOs through the consolidated data streams. As an exchange, 
Nasdaq's BBO will be disseminated through SIAC and factored into SIAC's 
calculation of the National BBO in NYSE- and Amex-listed issues.
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    \4\ 17 CFR 240.11Ac1-1.
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    Because Nasdaq InterMarket participants rely on the real-time 
market participant quotations, it is critical that Nasdaq continue to 
provide this information after it has registered as an exchange. Market 
participant quotations facilitate market participants' order routing 
decisions and are a source of market transparency regarding the depth 
and interest in the InterMarket that is useful to both traders and 
investors. Nasdaq is developing the ``iM Quotes'' data feed that will 
provide broker-dealers and market data vendors with access to real-time 
InterMarket participant quotations once Nasdaq is an exchange. Twenty-
two market data distributors, including a number of broker-dealers, 
have already ordered the iM Quotes data feed.
    The $6 monthly per terminal fee will apply to all subscribers that 
access the iM Quotes market participant data on a real-time basis, 
either through a market data vendor like Bloomberg, ILX, or Reuters or 
through internal dissemination systems operated by broker-dealers. The 
$6 charge will include all issues quoted through the InterMarket 
including both Amex- and NYSE-listed issues. Today, subscribers to Amex 
and/or NYSE data are entitled to the corresponding InterMarket 
participant quotations that are disseminated by SIAC through the CQS 
data feed, although some market data vendors do not offer that data to 
their subscribers.
    The proposed fee was derived, in part, on the anticipated traffic 
through the service in comparison to existing Nasdaq data feed 
services. Average daily message traffic in the iM Quotes feed is 
anticipated to be about 900,000 messages per day. This is about 11% of 
the average daily traffic associated with NQDS, the data feed that 
supports market participant quotations in Nasdaq-listed issues. The $6 
iM Quotes fee is 15% of the proposed fee of $40 for QuoteView, which is 
the data entitlement, based on the NQDS data feed. In addition, Nasdaq 
considered the current costs of operating the NQDS data feed, and 
projected the annual operating costs for iM Quotes, adjusting for 
anticipated differences in traffic.
    While the new data service will be introduced as early as September 
of 2002, Nasdaq will defer the effective date for this fee until 
January 1, 2003.
2. Statutory Basis
    Nasdaq believes that the proposed rule change is consistent with 
the provisions of section 15A of the Act,\5\ in general, and with 
section 15A(b)(5) of the Act,\6\ in particular, in that it provides for 
the equitable allocation of reasonable dues, fees and other charges 
among member and issuers and other persons using any facility or system 
which the association operates or controls.
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    \5\ 15 U.S.C. 78o-3.
    \6\ 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

[[Page 54005]]

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-2002-86 and 
should be submitted by September 10, 2002.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\7\
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    \7\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 02-21128 Filed 8-20-02; 8:45 am]
BILLING CODE 8010-01-P