[Federal Register Volume 68, Number 169 (Tuesday, September 2, 2003)]
[Notices]
[Pages 52262-52264]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 03-22231]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-48395; File No. SR-NASD-2003-124]


Self-Regulatory Organizations; Notice of Filing and Immediate 
Effectiveness of Proposed Rule Change by the National Association of 
Securities Dealers, Inc. To Institute an Hourly Maintenance Fee 
Associated With the Use of the Nasdaq Workstation II Service by Persons 
That Are Not NASD Members

August 22, 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 August 6, 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.\3\ Nasdaq has 
designated the proposed rule change as constituting a ``non-
controversial'' rule change under section 19(b)(3)(A)(iii) of the 
Act,\4\ and paragraph (f)(6) of Rule 19b-4 under the Act,\5\ which 
renders the proposal effective upon receipt of this filing by 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\ On August 12, 2003, Nasdaq filed an amendment to the 
proposed rule change, which it subsequently withdrew. Telephone 
conversation between John M. Yetter, Associate General Counsel, 
Nasdaq, and Frank N. Genco, Division of Market Regulation 
(``Division''), Commission, on August 19, 2003.
    \4\ 15 U.S.C. 78s(b)(3)(A).
    \5\ 17 CFR 240.19b-4(f)(6).
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    Nasdaq proposes to institute an hourly fee for maintenance services 
supplied for equipment used in connection with the Nasdaq 
WorkstationTM II (``NWII'') service.\6\ Nasdaq proposes to 
implement the proposed rule change thirty days after August 6, 2003.\7\
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    \6\ This filing applies to persons that are not NASD members. On 
August 6, 2003, Nasdaq also submitted a proposed rule change to 
implement an identical charge for NASD members. See File No. SR-
NASD-2003-123.
    \7\ In this filing, Nasdaq is also moving the text of the 
footnote to NASD Rule 7010(f) into the text of the rule to improve 
the clarity of the rule's presentation in the NASD Manual.

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[[Page 52263]]

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

7000. Charges for Services and Equipment

7010. System Services
    (a)-(e) No change.
(f) Nasdaq WorkstationTM Service
    (1) The following charges shall apply to the receipt of Level 2 or 
Level 3 Nasdaq Service via equipment and communications linkages 
prescribed for the Nasdaq.

Workstation II Service:
  Service Charge..........................  $2,035/month per service
                                             delivery platform (``SDP'')
  Display Charge..........................  $525/month per logon for the
                                             first 150 logons
                                            $200/month for each
                                             additional logon
  Additional Circuit/SDP Charge...........  $3,235/month[*]
PD and SDP Maintenance:
  Monthly maintenance agreement...........  $55/presentation device
                                             (``PD'') logon or SDP/month
  Hourly fee for maintenance provided       $195 per hour (two hour
   without monthly maintenance agreement.    minimum), plus cost of
                                             parts
 

    A subscriber that accesses Nasdaq Workstation II Service via an 
application programming interface (``API'') shall be assessed the 
Service Charge for each of the subscriber's SDPs and shall be assessed 
the Display Charge for each of the subscriber's logons, including 
logons of an NWII substitute or quote-update facility. API subscribers 
also shall be subject to the Additional Circuit/SDP Charge.
    A subscriber shall be subject to the Additional Circuit/SDP Charge 
when the subscriber has not maximized capacity on its SDP(s) by placing 
eight logons on an SDP and obtains an additional SDP(s); in such case, 
the subscriber shall be charged the Additional Circuit/SDP Charge (in 
lieu of the service charge) for each ``underutilized'' SDP(s) i.e., the 
difference between the number of SDPs a subscriber has and the number 
of SDPs the subscriber would need to support its logons, assuming an 
eight-to-one ratio). A subscriber also shall be subject to the 
Additional Circuit/SDP Charge when the subscriber has not maximized 
capacity on its T1 circuits by placing eighteen SDPs on a T1 circuit; 
in such case, the subscriber shall be charged the Additional Circuit/
SDP Charge (in lieu of the service charge) for each ``underutilized'' 
SDP slot on the existing T1 circuit(s). Regardless of the SDP 
allocation across T1 circuits, a subscriber will not be subject to the 
Additional Circuit/SDP Charge if the subscriber does not exceed the 
minimum number of T1 circuits needed to support its SDP, assuming an 
eighteen-to-one ratio.
    (2) No change.
    [* A subscriber shall be subject to the Additional Circuit/SDP 
Charge when the subscriber has not maximized capacity on its SDP(s) by 
placing eight logons on an SDP and obtains an additional SDP(s); in 
such case, the subscriber shall be charged the Additional Circuit/SDP 
Charge (in lieu of the service charge) for each ``underutilized'' 
SDP(s) (i.e., the difference between the number of SDPs a subscriber 
has and the number of SDPs the subscriber would need to support its 
logons, assuming an eight-to-one ratio). A subscriber also shall be 
subject to the Additional Circuit/SDP Charge when the subscriber has 
not maximized capacity on its T1 circuits by placing eighteen SDPs on a 
T1 circuit; in such case, the subscriber shall be charged the 
Additional Circuit/SDP Charge (in lieu of the service charge) for each 
``underutilized'' SDP slot on the existing T1 circuit(s). Regardless of 
the SDP allocation across T1 circuits, a subscriber will not be subject 
to the Additional Circuit/SDP Charge if the subscriber does not exceed 
the minimum number of T1 circuits needed to support its SDP, assuming 
an eighteen-to-one ratio.]
    (g)-(u) 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 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 NWII service allows market participants to access SuperMontage 
and other Nasdaq facilities through Nasdaq's Enterprise Wide Network II 
(``EWN II''). Each NWII subscriber location has at least one service 
delivery platform (``SDP'') that connects to the EWN II by a dedicated 
T1 circuit pair. The subscriber then connects the workstations used by 
its employees to the SDP. Workstations may be either Nasdaq Workstation 
presentation devices (``PDs'') provided by Nasdaq, or workstations and 
software supplied by the subscriber (often referred to as an 
``application programming interface'' device, or an ``NWII 
substitute'').
    Nasdaq currently allows subscribers to contract with Nasdaq for 
maintenance of their NWII PDs and SDPs on a monthly basis, at the rate 
of $55 per PD logon or SDP per month. Maintenance is provided by Nasdaq 
personnel in the New York metropolitan area and by a contractor in 
other areas of the country. Nasdaq is now proposing to supplement this 
monthly maintenance option with an hourly maintenance option for 
subscribers that may not wish to commit to a monthly maintenance 
agreement. The fee for maintenance provided without a monthly 
maintenance agreement will be $195 per hour, with a two-hour minimum 
charge for all service calls, plus the cost of parts supplied.
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 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.
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    \8\ 15 U.S.C. 78o-3.
    \9\ 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.

[[Page 52264]]

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 proposed rule change has become effective pursuant to 
section 19(b)(3)(A) of the Act \10\ and Rule 19b-4(f)(6) 
thereunder,\11\ because the proposal does not: (1) Significantly affect 
the protection of investors or the public interest; (2) impose any 
significant burden on competition; and (3) become operative until 30 
days from the date on which it was filed, or such shorter time as the 
Commission may designate if consistent with the protection of investors 
and the public interest, and Nasdaq provided the Commission with 
written notice of its intent to file the proposed rule change at least 
five business days prior to the date of filing of the proposed rule 
change,\12\ or such shorter time as designated by the Commission.
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    \10\ 15 U.S.C. 78s(b)(3)(A).
    \11\ 17 CFR 240.19b-4(f)(6).
    \12\ On July 28, 2003, Nasdaq provided the Commission with 
written notice of its intent to file the proposed rule change. See 
letter from John M. Yetter, Associate General Counsel, Nasdaq, to 
Katherine A. England, Assistant Director, Division, Commission, 
dated July 28, 2003.
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    At any time within 60 days of August 6, 2003, the Commission may 
summarily abrogate such 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.\13\
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    \13\ See 15 U.S.C. 78(b)(3)(C).
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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 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 filings will also be 
available for inspection and copying at the principal office of the 
NASD. All submissions should refer to File No. SR-NASD-2003-124 and 
should be submitted by September 23, 2003.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\14\
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    \14\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 03-22231 Filed 8-29-03; 8:45 am]
BILLING CODE 8010-01-P