[Federal Register Volume 68, Number 46 (Monday, March 10, 2003)]
[Notices]
[Pages 11423-11424]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 03-5565]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-47437; File No. SR-NASD-2003-21]


Self-Regulatory Organizations; National Association of Securities 
Dealers, Inc.; Notice of Filing and Immediate Effectiveness of Proposed 
Rule Change Establishing a Pricing Schedule for the Use of Nasdaq 
Trading Applications' Tools Plus Product for Non-NASD Members

March 4, 2003.
    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 February 14, 2003, 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. 
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 establish a pricing schedule for the use of 
Nasdaq Trading Applications' (``NTA'') Tools Plus product by persons 
that are not NASD members. Nasdaq will implement this rule change 30 
days after the date of this filing. Because Nasdaq proposes to charge 
non-members the same prices for Tools Plus as it currently charges to 
members under NASD Rule 7050(e)(2), there is no change in rule 
language.

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 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 below in Sections A, B, 
and C, 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 is proposing to establish a pricing schedule for the use of 
NTA's Tools Plus product by persons that are not NASD members. The 
proposed pricing schedule is identical to the one already established 
for NASD members by NASD Rule 7050(e)(2).\3\ Tools Plus is a software 
product that provides subscribers with order management and routing, 
trade reporting, clearing, and regulatory compliance functionality. NTA 
was formerly Nasdaq Tools, Inc., a subsidiary of Nasdaq that was merged 
into Nasdaq in 2002.
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    \3\ See Securities Exchange Act Release No. 47067 (December 20, 
2002), 67 FR 79213 (December 27, 2002) (SR-NASD-2002-177); 
Securities Exchange Act Release No. 46972 (December 9, 2002), 67 FR 
77301 (December 17, 2002) (SR-NASD-2002-165); and Securities 
Exchange Act Release No. 46973 (December 9, 2002), 67 FR 77305 
(December 17, 2002) (SR-NASD-2002-164).
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    In SR-NASD-2002-177, Nasdaq established a fee of $350 per terminal 
per month for Tools Plus terminals with reduced functionality for use 
by correspondent firms or floor brokers to route orders to specified 
broker-dealers with whom they have an established relationship.\4\
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    \4\ See Securities Exchange Act Release No. 47067 (December 20, 
2002), 67 FR 79213 (December 27, 2002) (SR-NASD-2002-177).
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    Unlike a full functionality Tools Plus terminal, the terminals 
would not contain functionality to accept order flow, to compile 
statistics on order execution, or to route orders to a wide range of 
market centers. This prior filing established prices for use of this 
product by NASD members, but did not cover non-members. Nasdaq 
believes, however, that the most likely customers for the floor broker 
terminal are regional securities exchanges, which may purchase such 
terminals for use by their members, rather than the floor brokers 
themselves. Accordingly, Nasdaq proposes to offer Tools Plus to non-
members at the same prices at which it is offered to members.\5\ Use of 
floor

[[Page 11424]]

broker terminals would require payment not only of the monthly terminal 
charge of $350 per terminal, but also the other charges associated with 
Tools Plus, such as initial deposits, installation fees, connection and 
port charges, training fees, and hourly rates for customized 
programming. Finally, although Nasdaq does not currently foresee a 
demand for the use of full functionality terminals by non-members, the 
fee schedule for non-members also includes the prices for these 
terminals, in case such demand does develop.\6\
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    \5\ Nasdaq does not currently offer Tools Plus to non-members, 
and it is unclear whether any demand for the product among non-
members will emerge. Telephone Conversation between John M. Yetter, 
Assistant General Counsel, Office of General Counsel, Nasdaq, and 
Susie Cho, Special Counsel, Division of Market Regulation 
(``Division''), Commission, on February 27, 2003.
    \6\ Nasdaq notes that a Tools Plus user cannot use a Tools Plus 
terminal to route orders to a given market center unless the user 
has a relationship with the market center that allows it to do so 
under the rules governing access to that market center. For example, 
a member of a regional securities exchange that was not an NASD 
member could not use a Tools Plus terminal to route orders to 
Nasdaq's SuperMontage system unless the regional exchange was itself 
a SuperMontage participant (in which case, the member of the 
exchange could route orders through the exchange, as provided in 
NASD Rule 4710(e)). Telephone Conversation between John M. Yetter, 
Assistant General Counsel, Office of General Counsel, Nasdaq, and 
Susie Cho, Special Counsel, Division, Commission, on March 3, 2003.
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2. Statutory Basis
    Nasdaq believes that the proposed rule change is consistent with 
the provisions of Section 15A of the Act,\7\ in general, and with 
Section 15A(b)(5) of the Act,\8\ in particular, in that it provides 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.
    \8\ 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 on the 
proposed rule change contained in this filing.

III. Date of Effectiveness of the Proposed Rule Change and Timing for 
Commission Action

    The foregoing rule change has become effective pursuant to Section 
19(b)(3)(A) of the Act \9\ and Rule 19b-4(f)(6) \10\ thereunder because 
the proposal: (i) Does not significantly affect the protection of 
investors or the public interest; (ii) does not impose any significant 
burden on competition; and (iii) does not become operative prior to 30 
days after the date of filing or such shorter time as the Commission 
may designate if consistent with the protection of investors and the 
public interest. Nasdaq gave the Commission notice of its intent to 
file the proposed rule change, along with a brief description and text 
of the proposed rule change, at least five business days prior to the 
date of filing of the proposed rule change. At any time within 60 days 
of the filing of such 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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    \9\ 15 U.S.C. 78s(b)(3)(A).
    \10\ 17 CFR 240.19b-4(f)(6).
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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 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 
NASD. All submissions should refer to file number SR-NASD-2003-21 and 
should be submitted by March 31, 2003.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\11\
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    \11\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 03-5565 Filed 3-7-03; 8:45 am]
BILLING CODE 8010-01-P