[Federal Register Volume 68, Number 67 (Tuesday, April 8, 2003)]
[Notices]
[Pages 17134-17135]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 03-8442]


-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-47608; File No. SR-NASD-2003-43]


Self-Regulatory Organizations; Notice of Filing and Immediate 
Effectiveness of Proposed Rule Change by the National Association of 
Securities Dealers, Inc., To Modify Computer-to-Computer Interface Fees 
for NASD Members

April 1, 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 March 20, 2003 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. Nasdaq has 
designated this proposal as one establishing or changing a due, fee or 
other charge imposed by the self-regulatory organization under section 
19(b)(3)(A)(ii) of the Act \3\ and rule 19b-4(f)(2) thereunder,\4\ 
which renders the rule immediately effective upon filing with the 
Commission. The Commission is publishing this notice to solicit 
comments on the proposed rule change from interested persons.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \4\ 17 CFR 240.19b-4(f)(2).
---------------------------------------------------------------------------

I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    Nasdaq proposes to amend NASD rule 7010 to modify the fees paid by 
NASD members for bandwidth enhancements of Computer-to-Computer 
Interface (``CTCI'') lines.\5\ Nasdaq will implement this rule change 
on April 1, 2003.
---------------------------------------------------------------------------

    \5\ Nasdaq also submitted a proposed rule change to make an 
identical modification to the bandwidth enhancement fee paid by non-
members. See Securities Exchange Act Release No. 47607 (April 1, 
2003) (order granting Accelerated Approval to SR-NASD-2003-46).
---------------------------------------------------------------------------

    The text of the proposed rule change is below. New text is in 
italics. Deleted text is in [brackets].
* * * * *

7000. Charges for Services and Equipment

A. Rule 7010. System Services
    (a)-(e) No change.
(f) Nasdaq WorkstationTM Service
    (1) No change.
    [(3)] (2) 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 line with single hub     $975/month.
     and router. (For remote disaster
     recovery sites only.)
    Bandwidth Enhancement Fee (for T1    $[4000]600/month per 64kb
     subscribers only).                   increase above 128kb T1
                                          base[.].

[[Page 17135]]

 
    Installation Fee...................  $2000 per site for dual hubs
                                          and routers; $1000 per site
                                          for single hub and router.
    Relocation Fee (for the movement of  $1700 per relocation.
     TCP/IP-capable lines within a
     single location).
------------------------------------------------------------------------

[* As reflected in SR-NASD-00-80 and SR-NASD-00-81, Nasdaq began 
replacing x.25 CTCI circuits with TCP/IP CTCI circuits in January 
2001. Pursuant to SR-NASD-2001-87 and SR-NASD-2001-88, the fee for 
x.25 CTCI circuits--which had remained $200 per month per circuit--
was increased to $1,275 per month per circuit from February 1, 2002 
until the date of the termination of such circuits. Pursuant to SR-
NASD-2002-96, users of x.25 CTCI circuits will receive a credit of 
$625 per month per circuit from February 1, 2002 until the date of 
circuit termination.]

    (g)-(s) 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 had 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''), orders into Nasdaq's 
transaction execution systems, and mutual fund pricing data into 
Nasdaq's Mutual Fund Quotation Service. The CTCI network operates over 
the Enterprise Wide Network II (``EWN II'') and provides connectivity 
over powerful 56kb and T1 data lines. In addition, the CTCI network 
uses the industry-standard Transmission Control Protocol/Internet 
Protocol (``TCP/IP''), a transmission protocol that is robust, 
efficient, and well known among the technical community.
    As part of an ongoing effort to reduce costs incurred by Nasdaq's 
market participants to use its systems and services, Nasdaq proposes to 
reduce the fee for CTCI bandwidth enhancements \6\ from $4,000 to $600 
per month for each 64 kilobit (``kb'') increment of additional 
bandwidth provided over a T1 CTCI line (above the base level of 128 
kb). Nasdaq believes that the fee reduction will make it more 
economical for member firms who connect directly to Nasdaq to make the 
bandwidth upgrades needed to allow them to route higher volumes of 
orders to Nasdaq, as well as to build excess capacity that allows them 
to be prepared for volume spikes that occur during major market 
events.\7\
---------------------------------------------------------------------------

    \6\ The term ``bandwidth'' refers to the amount of data that can 
be transmitted over a CTCI line in one second. Accordingly, 
bandwidth enhancements allow a CTCI subscriber to send and receive a 
greater volume of data over a line.
    \7\ Nasdaq also proposes to delete a footnote from NASD rule 
7010(f) that describes pricing changes relating to x.25 CTCI 
circuits, which are no longer in use.
---------------------------------------------------------------------------

2. Statutory Basis
    Nasdaq believes that the proposed rule change is consistent with 
the provisions of section 15A of the Act,\8\ in general, and with 
section 15A(b)(5) of the Act,\9\ in particular, in that it provides 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.
---------------------------------------------------------------------------

    \8\ 15 U.S.C. 78o-3.
    \9\ 15 U.S.C. 78o-3(b)(5).
---------------------------------------------------------------------------

B. Self-Regulatory Organization's Statement on Burden on Competition

    Nasdaq believes that the proposed rule change does not impose 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

    The foregoing rule change has become effective pursuant to section 
19(b)(3)(A)(ii) of the Act \10\ and rule 19b-4(f)(2) thereunder \11\ 
because it establishes or changes a due, fee, or other charge. At any 
time within 60 days after the filing of this proposed rule change, the 
Commission may summarily abrogate the 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.
---------------------------------------------------------------------------

    \10\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \11\ 17 CFR 240.19b-4(f)(2).
---------------------------------------------------------------------------

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 also will be 
available for inspection and copying at the principal office of the 
NASD. All submissions should refer to File No. SR-NASD-2003-43 and 
should be submitted by April 29, 2003.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\12\
---------------------------------------------------------------------------

    \12\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 03-8442 Filed 4-7-03; 8:45 am]
BILLING CODE 8010-01-P