[Federal Register Volume 68, Number 240 (Monday, December 15, 2003)]
[Notices]
[Pages 69732-69734]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 03-30836]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-48890; File No. SR-NASD-2003-174]


Self-Regulatory Organizations; Notice of Filing and Immediate 
Effectiveness of Proposed Rule Change by the National Association of 
Securities Dealers, Inc. To Amend the Fee Schedule for the Nasdaq 
National Market Execution System With Respect to Executions Across 
Multiple MPIDs of the Same Member

December 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 November 26, 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 rule immediately 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 the 
Substance of the Proposed Rule Change

    Nasdaq proposes to amend NASD Rule 7010(i) to modify the fee 
charged when Quotes/Orders submitted by the same member under different 
market participant identifiers (``MPIDs'') match and execute against 
each other in the Nasdaq National Market Execution System (``NNMS'' or,

[[Page 69733]]

``SuperMontage'').\5\ Nasdaq implemented the revised fee schedule on 
December 1, 2003. The text of the proposed rule change appears below. 
New text is italicized.
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    \5\ ``Quotes/Orders'' is defined under NASD Rule 4701(bb).
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* * * * *
    7000. CHARGES FOR SERVICES AND EQUIPMENT
    7010. System Services
    (a)-(h) No change.
    (i) Nasdaq National Market Execution System (SuperMontage)
    The following charges shall apply to the use of the Nasdaq National 
Market Execution System (commonly known as SuperMontage) by members:

 
 
 
Order Entry:
    Non-Directed Orders (excluding       No charge.
     Preferenced Orders).
    Preferenced Orders:
        Preferenced Orders that access   No charge.
         a Quote/Order of the member
         that entered the Preferenced
         Order).
        Other Preferenced Orders.......  $0.02 per order entry.
    Directed Orders....................  $0.10 per order entry.
Order Execution:
    Non-Directed or Preferenced Order
     that accesses the Quote/Order of a
     market participant that does not
     charge an access fee to market
     participants accessing its Quotes/
     Orders through the NNMS:
        Charge to member entering order  $0.003 per share executed (but
                                          no more than $120 per trade
                                          for trades in securities
                                          executed at $1.00 or less per
                                          share).
        Credit to member providing       $0.002 per share executed (but
         liquidity.                       no more than $80 per trade for
                                          trades in securities executed
                                          at $1.00 or less per share).
    Non-Directed or Preferenced Order    $0.001 per share executed (but
     that accesses the Quote/Order of a   no more than $40 per trade for
     market participant that charges an   trades in securities executed
     access fee to market participants    at $1.00 or less per share).
     accessing its Quotes/Orders
     through the NNMS.
    Directed Order.....................  $0.003 per share executed.
    Non-Directed or Preferenced Order    No charge.
     entered by a member that accesses
     its own Quote/Order submitted
     under the same or a different
     market participant identifier of
     the member.
Order Cancellation:
    Non-Directed and Preferenced Orders  No charge.
    Directed Orders....................  $0.10 per order cancelled.
 

    (j)-(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 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
    Nasdaq proposes to amend NASD Rule 7010(i) to modify the fee 
charged when multiple Quotes/Orders submitted by the same member under 
different MPIDs match and execute against each other in SuperMontage. 
Currently, Nasdaq does not charge a fee when a member executes a trade 
against itself in SuperMontage and the Quotes/Orders are submitted 
under the same MPID (``single MPID execution''). However, when the same 
scenario occurs but the Quotes/Orders are submitted by a member under 
different MPIDs (``multiple MPID execution''), Nasdaq charges the 
standard SuperMontage execution fee that applies when trading interest 
of different members matches and executes.
    Nasdaq proposes to amend NASD Rule 7010(i) so single MPID 
executions and multiple MPID executions are treated the same--there 
will be no charge. Therefore, Nasdaq proposes, beginning on December 1, 
2003, that there will be no charge when a Non-Directed Order or 
Preferenced Order submitted under one MPID of a member accesses the 
member's own Quote/Order submitted under a different MPID.\6\ Nasdaq 
states that its policy for not charging a fee when Quotes/Orders 
submitted by a member match and execute in SuperMontage is based on an 
expectation that, in its absence, members would internalize a greater 
percentage of orders through their own proprietary systems, rather than 
exposing them to the full market.
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    \6\ 6 Non-Directed Order and Preferenced Order are defined under 
NASD Rule 4701(p) and (aa), respectively.
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2. Statutory Basis
    Nasdaq believes that the proposed rule change is consistent 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. Nasdaq 
believes the proposal harmonizes its fee structure for trades that are 
``internalized'' by members through SuperMontage, irrespective of 
whether the trade is the result of a single MPID execution or multiple 
MPID execution.
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    \7\ 15 U.S.C. 78o-3.
    \8\ 15 U.S.C. 78o-3(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 were neither solicited nor received.

[[Page 69734]]

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. At any 
time within 60 days after filing of this 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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    \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 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. 
Comments should be submitted electronically at the following e-mail 
address: [email protected]. All comment letters should refer to 
File No. SR-NASD-2003-174. This file number should be included on the 
subject line if e-mail is used. To help the Commission process and 
review your comments more efficiently, comments should be sent in hard 
copy or by e-mail but not by both methods. 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-2003-174 should be 
submitted by January 5, 2004.

    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).

Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 03-30836 Filed 12-12-03; 8:45 am]
BILLING CODE 8010-01-P