[Federal Register Volume 68, Number 108 (Thursday, June 5, 2003)]
[Notices]
[Pages 33753-33754]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 03-14112]



[[Page 33753]]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-47943; File No. SR-NASD-2003-84]


Self-Regulatory Organizations; Notice of Filing and Immediate 
Effectiveness of Proposed Rule Change, and Amendment No. 1 Thereto, by 
the National Association of Securities Dealers, Inc. To Amend the Fee 
Schedule for the Nasdaq Application of the Primex Auction System

May 29, 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 May 13, 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. On May 23, 
2003, the Exchange filed Amendment No. 1 to the proposed rule 
change.\3\ Nasdaq has designated this proposal as one establishing or 
changing a due, fee or other charge imposed by the Nasdaq under section 
19(b)(3)(A)(ii) of the Act \4\ and Rule 19b-4(f)(2) thereunder,\5\ 
which renders the rule immediately effective upon filing with the 
Commission. Nasdaq plans to begin assessing fees pursuant to the 
revised fee schedule beginning on June 1, 2003. The Commission is 
publishing this notice to solicit comments on the proposed rule change, 
as amended, from interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ See letter from Eleni Constantine, Office of General 
Counsel, Nasdaq to Katherine A. England, Assistant Director, 
Division of Market Regulation (``Division''), Commission, dated 
March 22, 2003 (``Amendment No. 1''). In Amendment No. 1, the 
Exchange made typographical corrections to the rule text originally 
submitted in the proposed rule change.
    \4\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \5\ 17 CFR 240.19b-4(f)(2). For purposes of determining the 
effective date and calculating the sixty-day period within which the 
Commission may summarily abrogate the proposed rule change under 
Section 19(b)(3)(C) of the Act, the Commission considers that period 
to commence on May 23, 2003, the date Nasdaq filed Amendment No. 1. 
See 15 U.S.C. 78s(b)(3)(C).
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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(r) to modify the fee 
schedule for the Nasdaq Application of the Primex Auction System 
(``Primex''). Nasdaq will make the new fees effective June 1, 2003.
    The text of the proposed rule change, as amended, is below. 
Proposed additions are in italics and proposed deletions are in 
[brackets.]
* * * * *
Rule 7010(r). Nasdaq Application of the Primex Auction System
    The following charges shall apply to the use of the Nasdaq 
Application of the Primex Auction System:
    (1) [No change.]
    (2) Monthly Access fees.
    Software:

  Workstation license or unique logon:        Per workstation logon:
 
Stations/logons 1......................  No charge if firm uses a
                                          dedicated circuit
Stations/logons 2-11...................  $100
Stations/logons 11 and above...........  $50
[Stations/logons 1-10..................  $200
Stations/logons 11-25..................  $100
Stations/logons 26 and above...........  $50]
 
     Proprietary interface license:                Per license:
 
API specification......................  $500
FIX (customized protocol)..............  $500
Network:
 
            Dedicated line:                         Per line:
 
256K...................................  $1,781
64K with non-guaranteed 256K...........  $1,564
burst capacity.........................  ...............................
56K....................................  $712
Installation/Unistall..................  $1,000 per Nasdaq Staff site
                                          visit
 

* * * * *

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
    The amendments modify NASD Rule 7010(r), which establishes the fee 
schedule for Primex. Specifically, the amendments reduce the monthly 
access fee for workstation logons so that the first workstation per 
firm is free, workstations 2 to 11 are charged $100 and workstations 11 
and up are charged $50.
    While the fee schedule for Primex was filed initially in December 
2001, the prices for the fee schedule were determined in 2000.\6\ 
Nasdaq represents that since that time transaction prices in the 
overall market have decreased and, as a result, the Primex fee schedule 
is no longer competitive. This proposal responds to the developments in 
the market and reduces the workstation fee.
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    \6\ See Securities Exchange Act Release No. 45285 (Jan. 15, 
2002), 67 FR 3521 (Jan. 24, 2002) (SR-NASD-2001-93). In this filing, 
which established the original fee schedule for Primex, Nasdaq 
indicated it would not charge any fees during the initial few months 
Primex was operating, and that it would notify members through a 
Head Trader Alert when it would begin assessing fees. Nasdaq began 
assessing fees on August 1, 2002 according to a revised fee 
schedule. Thus, fees were never charged under the original fee 
schedule. See Securities Exchange Act Release No. 46361 (August 15, 
2002), 67 FR 54246 (August 21, 2002) (SR-NASD-2002-102).
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    Customers choosing to connect to the Primex Auction System have 
several options including programming their own interface using 
Computer to Computer Interface (CTCI), Application Programming 
Interface (API) or FIX (a customized protocol), or using the Primex 
workstation available over a dedicated network.
    Since Primex was launched in December 2001, the monthly charges for 
the Primex workstation logons have been as follows:

Workstation logons 1-10 (per firm)--$200
Workstation logons 11-25 (per firm)--$100
Workstation logons 26 and up--$50

    Since the product launch, firms have complained that the 
workstation charges are too high and a disincentive for participation 
in the system. Primex's current transaction charge structure is based 
on the interaction of orders and Predefined Relative Indications (PRIs) 
residing in the system. Although there are currently 40,000 to 50,000 
orders flowing through the system on a daily basis, PRI submission has 
remained limited. The workstation is a user-friendly and easy way to 
submit PRIs into the system, and Primex and Nasdaq staff believe that 
the proposed reduction in logon charges will encourage more use of the 
workstation and PRIs.
2. Statutory Basis
    Nasdaq believes that the proposed rule change, as amended, is 
consistent

[[Page 33754]]

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 among members. The Nasdaq 
represents that the fee reduction recognizes the changes in pricing 
that have occurred in the market and are designed to make the fees for 
Primex competitive with other trading venues. In addition, the Nasdaq 
represents that the workstation fees will be charged consistently to 
all members that choose that particular connection option.
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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 Comments on the Proposed 
Rule Change Received From Members, Participants, or Others

    Written comments were neither solicited not 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 \9\ and Rule 19b-4(f)(2) thereunder \10\ 
because it establishes or changes a due, fee, or other charge for use 
of a Nasdaq system. At any time within 60 days after the filing of this 
proposed rule change, the Commission may summarily abrogate the rule 
change, as amended, 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)(ii).
    \10\ 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, 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, as 
amended, 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-2003-84 and should be 
submitted by June 26, 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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J. Lynn Taylor,
Assistant Secretary.
[FR Doc. 03-14112 Filed 6-4-03; 8:45 am]
BILLING CODE 8010-01-P