[Federal Register Volume 68, Number 79 (Thursday, April 24, 2003)]
[Notices]
[Pages 20199-20200]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 03-10103]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-47688; File No. SR-NASD-2003-52]


Self-Regulatory Organizations; Notice of Filing of Proposed Rule 
Change by the National Association of Securities Dealers, Inc. To 
Establish a Fee for Receipt of Mutual Fund Quotation Service Data by 
Distributors

April 17, 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. 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 the 
Substance of the Proposed Rule Change

    Nasdaq proposes to establish a $1,000 per month distributor fee for 
receipt of Nasdaq mutual fund information. The fee would be assessed on 
all distributors, as defined in proposed Rule 7090(e)--i.e., those 
firms that receive the data and distribute it to third parties. Nasdaq 
will make the proposed rule change effective immediately upon 
Commission approval.
    The text of the proposed rule change is below. Proposed new 
language is in italics.

Rule 7090. Mutual Fund Distributor Fee

    (a)-(d) No change.
    (e) Distributors receiving MFQS shall pay a monthly fee of $1,000. 
For the purposes of this subsection only, the term ``distributor'' 
shall refer to any firm that receives the MFQS data feed and 
distributes it to third parties. All such firms must execute a Nasdaq 
Distributor Agreement.
* * * * *

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 Nasdaq Mutual Fund Quotation Service (MFQS) collects daily Net 
Asset Value information from approximately 18,000 mutual funds. This 
data is distributed via the Nasdaq Level 1 data feed. Currently, Nasdaq 
does not charge for the receipt or distribution of mutual fund data.
    Nasdaq states that it creates value for distributors and their 
subscribers by collecting and processing the mutual fund data, 
producing the data feed, and providing data quality services. The 
mutual fund data product is an important component of integrated 
financial information services that are provided by major market data 
vendors, financial web sites, and online brokerage services. Nasdaq 
represents that the $1,000 per month fee will compensate it for these 
value-added services without discouraging wide distribution of the 
data.
    Nasdaq is not charging recipients of the data feed who do not 
distribute the data to third parties. Unlike other data feeds which can 
be used for order routing, the MFQS data is only useful for display 
purposes. Those firms that only distribute it internally obtain no 
additional commercial advantage from resale of the data, and 
accordingly Nasdaq is not charging them. Thus, while the term 
``distributor'' is used elsewhere in the NASD's rules to include a firm 
that receives a data feed and distributes it internally, \3\ in

[[Page 20200]]

proposed Rule 7090(e) Nasdaq is only using the term to refer to firms 
that distribute the MFQS data to third parties.
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    \3\ See, e.g., Rule 7010(q) footnote 8. Telephone conversation 
between Eleni Constantine, Office General Counsel, Nasdaq and Gordon 
Fuller, Counsel to the Assistant Director, Division of Market 
Regulation, Commission, on April 14, 2003.
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    The Market Data Distribution Department will identify the firms 
that distribute the mutual fund data to third parties. These firms will 
be required to confirm their usage and distribution of the data and 
execute the appropriate amendment to the Nasdaq Distributor Agreement.
2. Statutory Basis
    Nasdaq believes that the proposed rule change is consistent with 
the provisions of section 15A of the Act,\4\ in general and with 
section 15A(b)(5) \5\ of the Act, in particular, in that the proposal 
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. The proposed 
fee will be assessed on all firms that receive the MFQS data and 
distribute it to third parties, thus gaining a commercial advantage.
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    \4\ 15 U.S.C. 78o-3
    \5\ 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 on the proposed rule change 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 longer period to 
be appropriate and publishes its reasons for so finding or (ii) as to 
which the self-regulatory organization 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-2003-52 
should be submitted by May 15, 2003.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\6\
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    \6\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 03-10103 Filed 4-23-03; 8:45 am]
BILLING CODE 8010-01-P