[Federal Register Volume 68, Number 71 (Monday, April 14, 2003)]
[Notices]
[Pages 17972-17974]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 03-9036]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-47648; File No. SR-NASD-2003-53]


Self-Regulatory Organizations; Notice of Filing and Immediate 
Effectiveness of Proposed Rule Change by the National Association of 
Securities Dealers, Inc. To Modify Nasdaq Test Facility Pricing Under 
Rule 7050 for NASD Members

April 8, 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 24, 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 proposed rule change effective upon filing with the 
Commission. 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.
    \3\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \4\ 17 CFR 240.19b-4(f)(2).
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    Nasdaq proposes to modify Nasdaq Test Facility pricing under Rule 
7050 for NASD members.\5\ Nasdaq will implement the proposed rule 
change on April 1, 2003. The text of the proposed rule change is below. 
Proposed new language is in italics; proposed deletions are in 
[brackets].
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    \5\ Nasdaq is also submitting a proposed rule change to 
establish an identical fee for non-members. See SR-NASD-2003-54.
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* * * * *

7050. Other Services

    (a) No change.
    (b) No change.
    (c) No change.
    (d) Nasdaq Testing Facility [(NTF)]
    (1) Subscribers that conduct tests of their computer-to-computer 
interface (CTCI), NWII application programming interface (API), or 
market data vendor feeds through the Nasdaq Testing Facility (NTF) [of 
The Nasdaq Stock Market, Inc. (Nasdaq)] shall pay the following 
charges:

$285/hour--For an Active Connection for CTCI/NWII API testing [between 
9 a.m. and 5 p.m. E.T. on business days] during the normal operating 
hours of the NTF;
$75/hour--For an Idle Connection for CTCI/NWII API testing during the 
normal operating hours of the NTF, unless such an Idle Connection is 
over a dedicated circuit;
No charge--For an Idle Connection for CTCI/NWII API testing if such an 
Idle Connection is over a dedicated circuit during the normal operating 
hours of the NTF;
$333/hour--For CTCI/NWII API testing (for both Active and Idle 
Connections) at all [other] times other than the normal operating hours 
of the NTF [on business days, or on weekends and holidays].
    (2)(A) An ``Active Connection'' commences when the user begins to 
send and/or receive a transaction to and from the NTF and continues 
until the earlier of disconnection or the commencement of an Idle 
Connection.
    (B) An ``Idle Connection'' commences after a Period of Inactivity 
and continues until the earlier of disconnection or the commencement of 
an Active Connection. If a Period of Inactivity occurs immediately 
after subscriber's connection to the NTF is established and is then 
immediately followed by an Idle Connection, then such Period of 
Inactivity shall also be deemed a part of the Idle Connection.
    (C) A ``Period of Inactivity'' is an uninterrupted period of time 
of specified length when the connection is open but the NTF is not 
receiving from or sending to subscriber any transactions. The length of 
the Period of Inactivity shall be such period of time between 5 minutes 
and 10 minutes in length as Nasdaq may specify from time to time by 
giving notice to users of the NTF.
    (3) The foregoing hourly fees shall not apply to market data vendor 
feed testing, or testing occasioned by:
    (A) new or enhanced services and/or software provided by Nasdaq[.] 
or

[[Page 17973]]

    (B) modifications to software and/or services initiated by Nasdaq 
in response to a contingency[.]; or
    (C) testing by a subscriber of a Nasdaq service that the subscriber 
has not used previously, except if more than 30 days have elapsed since 
the subscriber commenced the testing of such Nasdaq service.
    ([3]4) Subscribers that conduct CTCI/API or market data vendor feed 
tests using a dedicated circuit shall pay a monthly fee, in addition to 
any applicable hourly fee described in section (d)(1) above, in 
accordance with the following schedule:

----------------------------------------------------------------------------------------------------------------
             Service                          Description                          [Proposed] price
----------------------------------------------------------------------------------------------------------------
NTF Market Data.................  Test Market Data Vendor Feeds over  $1,100/circuit/month.
                                   a 56kb dedicated circuit.
NTF NWII API....................  NWII API service to an onsite test  $1,100/circuit/month.
                                   SDP over a 56kb dedicated circuit.
NTF CTCI........................  CTCI service over a 56kb dedicated  $1,100/circuit/month.
                                   circuit.
NTF Test Suite..................  NWII API service and CTCI service   $1,800/2 circuits/month.
                                   over two 56kb circuits (128 kb).
NTF Circuit Installation........  Installation of any service option  $700/circuit/installation.
                                   including SDP configuration.
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    ([4]5) New NTF subscribers that sign a one-year agreement for 
dedicated testing service shall be eligible to receive 90-calendar days 
free dedicated testing service.
    ([5]6) ``New NTF subscribers'' are subscribers that
    (A) have never had dedicated testing service; or
    (B) have not had dedicated testing service within the last 6 
calendar months.
* * * * *

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
    The proposed rule change seeks to make certain modifications to the 
pricing of testing services provided through the Nasdaq Test Facility 
(``NTF''). The objectives of the pricing changes are to reduce barriers 
to entry for new Nasdaq subscribers and to address feedback from 
subscribers regarding current test fees. In some instances, the current 
charges are not cost efficient for subscribers, and as a consequence, 
firms may choose not to test through NTF or elect not to connect to 
Nasdaq's systems at all. The proposed rule change seeks to encourage 
subscribers to make greater use of Nasdaq services.
    The proposed rule distinguishes between active and idle connections 
to the NTF. An active connection is in effect while transactions are 
actually being transmitted and for a brief period of inactivity 
thereafter. The existing hourly rate ($285 per hour) remains unchanged 
with respect to the times when the connection is active during the 
NTF's normal operating hours. However, if no transactions are being 
transmitted over an open connection, then, after a certain period of 
inactivity, that connection would be deemed idle and a newly 
established lower rate ($75 per hour) will apply. Initially, the period 
during which a connection needs to remain inactive before it will be 
deemed idle will be 10 minutes. However, Nasdaq reserves the right to 
adjust this time within a range of 5 to 10 minutes by giving notice of 
the change to NTF subscribers. The idle connection rate will not apply 
outside of NTF's normal operating hours, when the existing rate ($333 
per hour) remains unchanged for both active and idle connections.
    The proposed rule also eliminates idle connection charges during 
the NTF's normal operating hours for NTF subscribers with dedicated 
circuit connections and waives hourly charges during the times over an 
initial 30-day period when a subscriber is using NTF to test a Nasdaq 
service that the subscriber has not used previously.
2. Statutory Basis
    Nasdaq believes that the proposed rule change is consistent with 
the provisions of section 15A of the Act,\6\ including section 
15A(b)(5) of the Act,\7\ which requires that the rules of the NASD 
provide 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. By adopting a pricing 
structure that is responsive to subscriber needs and market demands, 
the proposed rule supports efficient use of existing systems and 
ensures that the charges associated with such use are allocated 
equitably.
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    \6\ 15 U.S.C. 78o-3.
    \7\ 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.

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 proposed rule change has become immediately effective pursuant 
to section 19(b)(3)(A)(ii) of the Act,\8\ and subparagraph (f)(2) of 
Rule 19b-4 thereunder,\9\ in that it establishes or changes a due, fee, 
or other charge imposed by the self-regulatory organization. At any 
time within 60 days of the filing of such 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.
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    \8\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \9\ 17 CFR 240.19b-4(f)(2).
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IV. Solicitation of Comments

    Interested persons are invited to submit written data, views, and 
arguments concerning the foregoing,

[[Page 17974]]

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 No. SR-NASD-2003-53 and should be 
submitted by May 5, 2003.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\10\
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    \10\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 03-9036 Filed 4-11-03; 8:45 am]
BILLING CODE 8010-01-P