[Federal Register Volume 68, Number 67 (Tuesday, April 8, 2003)]
[Notices]
[Pages 17136-17137]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 03-8443]



[[Page 17136]]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-47607; File No. SR-NASD-2003-46]


Self-Regulatory Organizations; Notice of Filing and Order 
Granting Accelerated Approval of Proposed Rule Change and Amendment No. 
1 Thereto by the National Association of Securities Dealers, Inc. to 
Modify Computer-to-Computer Interface Fees for Non-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 and 
II below, which Items have been prepared by Nasdaq. Amendment No. 1 was 
filed on March 31, 2003.\3\ The Commission is publishing this notice to 
solicit comments on the proposed rule change, as amended, from 
interested persons and to grant accelerated approval of the proposed 
rule change.
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    \1\ 5 U.S.C. 778s(b)(1).
    \2\ 17 CFR 240.19b-4
    \3\ See letter from John M. Yetter, Assistant General Counsel, 
NASD, to Katherine A. England, Assistant Director, Division of 
Market Regulation (``Division'') Commission, dated March 28, 2003 
(``Amendment No. 1''). In Amendment No. 1, Nasdaq proposed to 
implement the proposed rule change on April 1, 2003 and requested 
accelerated approval of the proposal.
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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 to modify the fees paid by 
persons that are not NASD members for bandwidth enhancements of 
Computer-to-Computer Interface (``CTCI'') lines.\4\ Nasdaq proposes to 
implement the rule change on April 1, 2003.\5\
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    \4\ Nasdaq also submitted a proposed rule change to make an 
identical modification to the bandwidth enhancement fee paid by NASD 
members. See Securities Exchange Act Release No. 47608 (April 1, 
2003) (Notice of Filing and Immediate Effectiveness of SR-NASD-2003-
43).
    \5\ See Amendment No. 1, supra note 3.
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    The text of the proposed rule change, as amended, 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 and    $975/month.
     router. (For remote disaster recovery
     sites only.).
    Bandwidth Enhancement Fee (for T1       $[4000] 600/month per 64kb
     subscribers only).                      increase 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     $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 III 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 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 has also proposed an 
identical pricing

[[Page 17137]]

decrease for NASD member firms \7\ and now proposes to offer this fee 
reduction to non-NASD members that use CTCI.\8\
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    \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\ See supra note 4.
    \8\ 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.
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2. Statutory Basis
    Nasdaq believes that the proposed rule change, as amended, is 
consistent with the provisions of Section 15A of the Act,\9\ in 
general, and with Section 15A(b)(5) of the Act,\10\ 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.
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    \9\ 15 U.S.C. 78o-3.
    \10\ 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 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. 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 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-2003-46 and should be submitted by April 29, 2003.

IV. Commission's Finding and Order Granting Accelerated Approval of 
Proposed Rule Changes

    After careful review the Commission finds that the proposed rule 
change and Amendment No. 1 are consistent with the requirements of 
Section 15A(b)(5) of the Act \11\ because it provides for the equitable 
allocation of reasonable dues, fees, and other charges among members, 
issuers, and other persons using any facility or systems which the 
association operates.\12\ Specifically, the proposed fee reduction 
makes CTCI bandwidth enhancements more economical to all market 
participants.
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    \11\ 15 U.S.C. 78o-3(b)(5).
    \12\ In approving this proposed rule change, the Commission 
notes that it has considered the proposed rule's impact on 
efficiency, competition, and capital formation. 15 U.S.C. 78c(f).
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    The Commission notes that Nasdaq has also submitted a proposed rule 
change to make an identical decrease to the bandwidth enhancement fee 
paid by NASD members that use CTCI.\13\ Although this proposal became 
effective upon filing with the Commission on March 20, 2003, Nasdaq has 
proposed to delay the implementation of the fee decrease for NASD 
members until April 1, 2003. Similarly, Nasdaq has proposed to 
implement the fee decrease on April 1, 2003 for non-NASD members who 
use CTCI. Therefore, Nasdaq has requested that the Commission find good 
cause for approving the proposed rule change, as amended, prior to the 
thirtieth day after the date of publication of notice of filing thereof 
in the Federal Register.
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    \13\ See supra note 4.
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    The Commission finds good cause for approving the proposed rule 
change, as amended, prior to the thirtieth day after publication in the 
Federal Register. The Commission believes that granting accelerated 
approval of the proposed rule change will allow for the equitable 
treatment of members and non-NASD members by allowing Nasdaq to 
implement the fee reduction for both NASD members and non-NASD members 
on April 1, 2003. Accordingly, the Commission finds good cause, 
consistent with Section 15A(b) \14\ and Section 19(b)(2) of the Act 
\15\ to approve the proposed rule change, as amended, on an accelerated 
basis.
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    \14\ 15 U.S.C. 78o-3(b).
    \15\ 15 U.S.C. 78s(b)(2).
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V. Conclusion

    It is therefore ordered, pursuant to Section 19(b)(2) of the 
Act,\16\ that the proposed rule change (SR-NASD-2003-46) and Amendment 
No. 1 thereto are hereby approved on an accelerated basis.
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    \16\ Id.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\17\
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    \17\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 03-8443 Filed 4-7-03; 8:45 am]
BILLING CODE 8010-01-U