[Federal Register Volume 68, Number 242 (Wednesday, December 17, 2003)]
[Notices]
[Pages 70324-70328]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 03-31073]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-48902; File No. SR-NASD-2003-162]


Self-Regulatory Organizations; Notice of Filing of Proposed Rule 
Change and Amendment No. 1 Thereto by National Association of 
Securities Dealers, Inc. Relating to Prime and ADAP Data Feeds in NASD 
Rule 7010(q)

December 10, 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 October 29, 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 
(``SEC'' or ``Commission'') the proposed rule change as described in 
Items I, II, and III below, which Items have been prepared by Nasdaq. 
On December 5, 2003, Nasdaq filed Amendment No. 1 to the proposed rule 
change.\3\ The Commission is publishing this notice, as amended, to 
solicit comments on the proposed rule change from interested persons.
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    \1\ 1 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ See Letter from Mary M. Dunbar, Vice President and Deputy 
General Counsel, Nasdaq, to Katherine A. England, Assistant 
Director, Division of Market Regulation (``Division''), Commission, 
dated December 4, 2003. In Amendment No. 1, Nasdaq replaced in its 
entirety the original rule filing.
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I. Self-Regulatory Organization's Statement of the Terms of the 
Substance of the Proposed Rule Change

    Nasdaq filed with the Commission a proposed rule change to NASD 
Rule 7010(q). The proposed rule change would rename the Nasdaq Prime 
data feed as the TotalView Data Feed, expand it to include quotes and 
orders at all price levels associated with an individual issue traded 
on Nasdaq, and discontinue the Nasdaq Aggregated Depth at Price 
(``ADAP'') data feed.
    Nasdaq proposes to expand the TotalView Data Feed on or after April 
1, 2004 and to eliminate the ADAP data feed on or after February 16, 
2004; in each case, Nasdaq will issue a vendor alert announcing the 
actual date of the change at least three calendar days before it is 
implemented.\4\ Nasdaq previously issued a vendor alert in August 2004 
announcing its intention to seek these rule changes.\5\
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    \4\ Nasdaq has represented that even if it eliminates the ADAP 
data feed prior to the expansion of the TotalView Data Feed, 
distributors that wish to continue to distribute only the aggregate 
data (i.e., the aggregate size of attributable and non-attributable 
quotes and orders at five price levels) may do so by using the 
aggregate data available from the current Nasdaq Prime data feed. 
Telephone conversation among Mary M. Dunbar, Vice President and 
Deputy General Counsel, Nasdaq, Thomas Davin, Senior Vice President, 
Nasdaq, and David Hsu, Attorney, Division, Commission, on December 
10, 2003.
    \5\ See Nasdaq Vendor Alert 2003-51, which is available on 
www.nasdaqtrader.com.
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    Proposed new language is italicized; proposed deletions are in 
brackets.
* * * * *

Rule 7010. Charges for Services and Equipment

    (a)-(p) No change.
    (q) Nasdaq Data Entitlement Packages
    This subsection (q) sets out the charges for the data entitlement 
packages collectively known as ViewSuite. Subsections (q)(1) and (q)(2) 
describe the data entitlement packages and set out the regular charges 
for each. Subsection (q)(3) describes the Enterprise License Program, 
an optional pilot program that modifies the regular charges for 
participants as set out therein. Subsection (q)(4) describes the Non-
Display Enterprise License Pilot. Subsection (q)(5) describes the 
ViewSuite entitlement, a second pilot

[[Page 70325]]

program that suspends the regular charges set out in (q)(1) and (q)(2) 
during its operation. Thus, the monthly charges set out in (q)(1) and 
(q)(2) below are not in effect during the length of the pilot program 
set out in (q)[(4)](5). Subsection (q)(6) sets forth definitions and 
subsection (q)(7) addresses revenue sharing.
    (1) DepthView and PowerView
    (A) The DepthView entitlement package contains all [information 
disseminated through the Nasdaq Aggregated Depth at Price (ADAP) data 
feed: the five best price levels in Nasdaq on both the bid and offer 
side of the market. Each price level is dynamically updated and 
displays the aggregate size of ``displayed'' trading interest, 
attributable and non-attributable, at each price level.] aggregate data 
carried on the TotalView Data Feed, as defined in (q)(2). The Nasdaq 
PowerView entitlement package consists of DepthView and the Nasdaq 
Quotation Dissemination Service (NQDS) feed.
    (i) Except as provided in (q)(1)(A)(ii) [below], for DepthView, 
there [will] shall be a $50.00 monthly charge [to be paid] for each 
controlled device.[1]
    (ii) [t]The charge to [be paid by] a non-professional 
[2] subscriber of DepthView for each controlled device shall 
be $25.00 per month.
    (B)(i) Except as provided in [paragraph] (q)(1)(B)(ii) [below], for 
PowerView, there [will] shall be a $75.00 monthly charge [to be paid] 
for each controlled device.[3]
    (ii) [t]The charge to [be paid by] a non-professional subscriber 
[4] of PowerView for each controlled device [will] shall be 
$29.00 per month[5].
    (C) Distributors [6] of [ADAP data] aggregate data 
carried on the TotalView Data Feed [(either through DepthView or 
PowerView)] shall pay a charge of $1,000.00 per month.
    (D) Thirty-Day Free-Trial Offer. Nasdaq [will] shall offer all new 
individual subscribers and potential new individual subscribers a 30-
day waiver of the fees for any ViewSuite service (DepthView or 
PowerView) that such subscriber or potential subscriber chooses to try 
for the 30-day period. This waiver [does] shall not include the 
incremental fees assessed for the NQDS-only service[7], 
which are $30.00 for professional users and $9.00 for non-professional 
users per month. This fee waiver period [will] shall be applied on a 
rolling basis, determined by the date on which a new individual 
subscriber or potential individual subscriber is first entitled by a 
distributor to receive access to DepthView or PowerView. A distributor 
may only provide this waiver to a specific individual subscriber once.
    (i) DepthView. For the period of the offer, the DepthView fee of 
$50 per professional user and $25 per non-professional user per month 
[will] shall be waived.
    (ii) PowerView. For the period of the offer, the PowerView fee of 
$45 per professional user and $20 per non-professional user per month 
[will] shall be waived.
(2) TotalView
    The TotalView Data Feed [NQDS Prime data feed (hereinafter referred 
to as ``Prime'')] consists of the individual Nasdaq SuperMontage 
participant orders and quotes and the aggregate size of such orders and 
quotes at each price level [that make up the top five price levels] in 
[the] SuperMontage [System]. The TotalView entitlement package includes 
the information disseminated through the [Prime data feed] TotalView 
Data Feed in addition to the data contained in the PowerView 
entitlement package.
    (A) Distributors of TotalView data shall pay a charge of $7,500 per 
month.
    (B) For TotalView, there [will] shall be a charge of $150 per month 
per controlled device.[8]
    (C) 30-Day Free-Trial Offer. Nasdaq [will] shall offer all new 
individual subscribers and potential new individual subscribers a 30-
day waiver of the fees for TotalView. This waiver [does] shall not 
include the incremental fees assessed for the NQDS-only 
service[9], which are $30.00 for professional users and 
$9.00 for non-professional users per month. This fee waiver period 
[will] shall be applied on a rolling basis, determined by the date on 
which a new individual subscriber or potential individual subscriber is 
first entitled by a distributor to receive access to TotalView. A 
distributor may only provide this waiver to a specific individual 
subscriber once.
    [(i)] For the period of the offer, the TotalView fee of $120 per 
professional user and $141 per non-professional user per month shall 
[will] be waived.
(3) Enterprise License Pilot[.]
    For a nine-month period commencing on April 1, 2003, each 
distributor of DepthView, PowerView, and/or TotalView may purchase one 
or more enterprise licenses that entitle it to distribute the licensed 
product to its entitled Level 1 or NQDS subscribers[3] for a 
fixed monthly fee based on the formulae set forth in [subparagraphs] 
(q)(3)(A)-(F) [below]. The Enterprise License Pilot shall not apply to 
the Level 1 and NQDS data services. All distributors continue to be 
obligated to report and pay for all entitled Level 1 and NQDS 
subscribers throughout the pilot period. A distributor must purchase an 
enterprise license(s) within two months following the beginning of this 
program and must agree by contract to pay the fixed monthly fee for the 
remaining length of the nine-month period. The distributor must also 
pay applicable distributor fees set forth in [subparagraph] (q)(1)(C) 
or (q)(2)(A) [above].
    (A) DepthView Non-Professional Enterprise License:
    (i) The DepthView Non-Professional Enterprise License permits a 
distributor to provide DepthView to all of its entitled Level 1 non-
professional subscribers.
    (ii) The formula for the DepthView Non-Professional Enterprise 
License fee is 0.25 x number of entitled Level 1 non-professional 
subscribers in the Predicate Month[4] x $25.
    (B) DepthView Professional Enterprise License:
    (i) The DepthView Professional Enterprise License permits a 
distributor to provide DepthView to all of its entitled Level 1 
professional subscribers.
    (ii) The formula for the DepthView Professional Enterprise License 
fee is 0.25 x number of Level 1 professional subscribers in the 
Predicate Month x $50.
    (C) PowerView Non-Professional Enterprise License:
    (i) The PowerView Non-Professional Enterprise License permits a 
distributor to provide PowerView to all of its entitled NQDS non-
professional subscribers.
    (ii) The formula for the PowerView Non-Professional Enterprise 
License fee is 0.35 x number of NQDS non-professional subscribers in 
the Predicate Month x $20.
    (D) PowerView Professional Enterprise License:
    (i) The PowerView Professional Enterprise License permits a 
distributor to provide PowerView to all of its entitled NQDS 
professional subscribers.
    (ii) The formula for the PowerView Professional Enterprise License 
fee is 0.35 x number of NQDS professional subscribers in the Predicate 
Month x $45.
    (E) TotalView Non-Professional Enterprise License:
    (i) The TotalView Non-Professional Enterprise License permits a 
distributor to provide TotalView to all of its entitled NQDS non-
professional subscribers.
    (ii) The formula for the TotalView Non-Professional Enterprise 
License fee is 0.25 x number of NQDS non-

[[Page 70326]]

professional subscribers in the Predicate Month x $141.
    (F) TotalView Professional Enterprise License:
    (i) The TotalView Professional Enterprise License permits a 
distributor to provide TotalView to all of its entitled NQDS 
professional subscribers.
    (ii) The formula for the TotalView Professional Enterprise License 
fee is 0.25 x number of NQDS professional subscribers in the Predicate 
Month x $120.
(4) Non-Display Enterprise License Pilot[.]
    In addition or as an alternative to the Enterprise License Pilot, 
for a nine-month period commencing on April 1, 2003, each distributor 
of DepthView, PowerView, and/or TotalView may purchase one or more non-
display licenses that entitle it to provide non-display benefits of the 
product to users of controlled devices who do not display the data for 
an additional fee calculated based on the formulae set forth in 
[subparagraphs] (q)(4)(A)-(C). [below.\5\] The Non-Display Enterprise 
License Pilot shall not apply to the Level 1 and NQDS data services. 
All distributors continue to be obligated to report and pay for all 
entitled Level 1 and NQDS subscribers throughout the pilot period. A 
distributor must purchase a non-display license(s) within two months 
following the beginning of this program and must agree by contract to 
pay the fixed monthly fee for the remaining length of the period. The 
distributor must also pay applicable distributor fees set forth in 
[subparagraph] (q)(1)(C) or (q)(2)(A) [above].
    (A) DepthView Non-Display License. A distributor may provide non-
display benefits of DepthView to users of controlled devices who do not 
display the data for an additional fee calculated as 0.25 x the 
population of non-display controlled devices in March 2003 x $50 for 
professional users or $25 for non-professional users.
    (B) PowerView Non-Display License. A distributor may provide non-
display benefits of PowerView to users of controlled devices who do not 
display the data for an additional fee calculated as 0.35 x the 
population of non-display controlled devices in March 2003 x $45 for 
professional users or $20 for non-professional users.
    (C) TotalView Non-Display License. A distributor may provide non-
display benefits of TotalView to users of controlled devices who do not 
display the data for an additional fee calculated as 0.25 x the 
population of non-display controlled devices in March 2003 x $120 for 
professional users or $141 for non-professional users.
[(4)] (5) TotalView Entitlement Pilot
    For a one-year pilot period commencing on October 1, 2003, the 
DepthView, PowerView and TotalView entitlements described above in (q) 
(1) and (q))(2) [of this subsection (q)] shall be offered as a single 
entitlement, ``the [ViewSuite entitlement] TotalView entitlement,'' and 
not offered separately. The TotalView entitlement [ViewSuite 
entitlement] shall allow a subscriber to see all of the data in 
DepthView, PowerView and TotalView including [the ADAP data feed 
(aggregated depth at the top five price levels),] the NQDS feed[,] and 
the TotalView Data Feed [Prime (aggregated quotes of all participants 
in the top five price levels)].
    (A)(i) Except as provided in (q)(5)[(4)](A)(ii) [below], for the 
[ViewSuite] TotalView entitlement there shall be a $70 monthly charge 
for each controlled device[, as defined in subsection (q)(1)(A)(i) 
above].
    (ii) A non-professional subscriber[, as defined in subsection 
(q)(1)(A)(ii) above,] shall pay $14 per month for each controlled 
device.
    (B) The pilot [ViewSuite] TotalView entitlement shall not affect 
the distributor charges [for ADAP data or Prime data] set out in 
[subsections] (q)(1)(C) and (q)(2)(A) respectively. Those distributors 
who are presently receiving only aggregate data may at their option 
continue to receive that feed at the [ADAP] distributor charge set out 
in [subsection] (q)(1)(C) [above].

(6) Definitions

    (A) A ``controlled device'' is any device that a distributor of the 
Nasdaq data entitlement package(s) permits to: (i) Access the 
information in the Nasdaq data entitlement package(s); or (ii) 
communicate with the distributor so as to cause the distributor to 
access the information in the Nasdaq data entitlement package(s). If a 
controlled device is part of an electronic network between computers 
used for investment, trading or order routing activities, the burden 
shall be on the distributor to demonstrate that the particular 
controlled device should not have to pay for an entitlement. For 
example, in some display systems the distributor gives the end user a 
choice to see the data or not; a user that chooses not to see it would 
not be charged. Similarly, in a non-display system, users of controlled 
devices may have a choice of basic or advanced computerized trading or 
order routing services, where only the advanced version uses the 
information. Customers of the basic service then would be excluded from 
the entitlement requirement.
    (B) A ``distributor'' of a Nasdaq data feed is any firm that 
receives a Nasdaq data feed directly from Nasdaq or indirectly through 
another vendor and then distributes it either internally or externally. 
All distributors shall execute a Nasdaq distributor agreement. Nasdaq 
itself is a vendor of its data feed(s) and has executed a Nasdaq 
distributor agreement and pays the distributor charge.
    (C) A ``non-professional'' is a natural person who is neither: (i) 
registered or qualified in any capacity with the Commission, the 
Commodities Futures Trading Commission, any state securities agency, 
any securities exchange or association, or any commodities or futures 
contract market or association; (ii) engaged as an ``investment 
advisor'' as that term is defined in Section 201(11) of the Investment 
Advisors Act of 1940 (whether or not registered or qualified under that 
Act); nor (iii) employed by a bank or other organization exempt from 
registration under federal or state securities law to perform functions 
that would require registration or qualification if such functions were 
performed for an organization not so exempt.
    (D) ``Predicate Month'' shall mean December 2002 or, if a 
distributor reported no Level 1 or NQDS subscribers in December 2002, 
the most recent month after December 2002 in which the distributor did 
report Level 1 or NQDS subscribers.

(7) Revenue Sharing

    So long as NQDS is subject to the Nasdaq Unlisted Trading 
Privileges (UTP) Plan, the revenues from TotalView and PowerView that 
are directly attributable to the sale of NQDS under the currently 
approved pricing for NQDS shall be shared pursuant to the UTP Plan.
    Text of Footnotes to Subsections (q)(1) and (q)(2):
    [1. A controlled device is any device that a distributor of the 
Nasdaq Data Entitlement Package(s) permits to: (a) Access the 
information in the Nasdaq Data Entitlement Package(s); (b) communicate 
with the distributor so as to cause the distributor to access the 
information in the Nasdaq Data Entitlement Package(s). If a controlled 
device is part of an electronic network between computers used for 
investment, trading or order routing activities, the burden will be on 
the distributor to demonstrate that the particular controlled device 
should not have to

[[Page 70327]]

pay for an entitlement. For example, in some display systems the 
distributor gives the end user a choice to see the data or not--a user 
that chooses not to see it would not be charged. Similarly, in a non-
display system, users of controlled devices may have a choice of basic 
or advanced computerized trading or order routing services, where only 
the advanced version uses the information. Customers of the basic 
service would be excluded from the entitlement requirement.
    2. A ``non-professional'' is a natural person who is neither: (a) 
Registered or qualified in any capacity with the Commission, the 
Commodities Futures Trading Commission, any state securities agency, 
any securities exchange or association, or any commodities or futures 
contract market or association; (b) engaged as an ``investment 
advisor'' as that term is defined in Section 201(11) of the Investment 
Advisors Act of 1940 (whether or not registered or qualified under that 
Act); nor (c) employed by a bank or other organization exempt from 
registration under federal or state securities law to perform functions 
that would require registration or qualification if such functions were 
performed for an organization not so exempt.
    3. So long as NQDS is subject to the Nasdaq Unlisted Trading 
Privileges (UTP) Plan, the revenues garnered from use of PowerView that 
are directly attributable to the sale of NQDS under the currently 
approved pricing for NQDS will be shared pursuant to the UTP Plan.
    4. See footnote 2 (definition of non-professional).
    5. See footnote 3 (sharing of revenue pursuant to the UTP Plan).
    6. A distributor of a Nasdaq data feed is any firm that receives a 
Nasdaq data feed directly from Nasdaq or indirectly through another 
vendor and then distributes it either internally or externally. All 
distributors must execute a Nasdaq distributor agreement. Nasdaq itself 
is a vendor of its data feed(s) and will execute a Nasdaq distributor 
agreement and pay the distributor charge.
    7. The NQDS-only fees (incremental to the Level 1 charges) are $30 
for professional users and $9 for non-professional users.
    8. So long as NQDS is subject to the Nasdaq UTP plan, the revenues 
from TotalView that are directly attributable to the sale of NQDS under 
the currently approved pricing for NQDS will be shared pursuant to the 
UTP Plan.
    9. The NQDS-only fees (incremental to the Level 1 charges) are $30 
for professional users and $9 for non-professional users.]
    Text of Footnotes to Subsection (q)(3):
    [3. The Enterprise License Pilot does not apply to the Level 1 and 
NQDS data services. All distributors continue to be obligated to report 
and pay for all entitled Level 1 and NQDS subscribers throughout the 
pilot period.
    4. ``Predicate Month'' shall mean December of 2002 or, if a 
distributor reported no Level 1 or NQDS subscribers in December of 
2002, the most recent month after December of 2002 in which the 
distributor did report Level 1 or NQDS subscribers.
    5. The Non-Display License Pilot does not apply to the Level 1 and 
NQDS data services. All distributors continue to be obligated to report 
and pay for all entitled Level 1 and NQDS subscribers throughout the 
pilot period.]
* * * * *

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
    Currently, Nasdaq offers two data feeds to distributors to support 
the proprietary ViewSuite products that are offered to professional and 
non-professional subscribers. The Aggregated Depth at Price (``ADAP'') 
data feed includes the five best price levels in SuperMontage and the 
aggregate size of attributable and non-attributable quotes and orders 
at each of the five price levels, but does not include the individual 
quotes and orders that make up the aggregate size. The Prime data feed 
provides all of the information in the ADAP data feed plus the 
individual quotes and orders at the top five price levels in 
SuperMontage.\6\
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    \6\ If a market participant has multiple attributable orders at 
one price, the total number of shares available from that market 
participant at that price is displayed in Prime. The total number of 
shares making up unattributable quotes and orders at a given price 
display under the SIZE moniker.
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    In this rule filing, Nasdaq proposes to rename Prime as the Nasdaq 
TotalView Data Feed and expand it to include all of the Prime data feed 
information at all price levels in SuperMontage, rather than just the 
top five price levels. Nasdaq also proposes to discontinue the ADAP 
data feed since all of the data currently offered through it would be 
available in the new TotalView Data Feed. Nasdaq proposes no change to 
its distributor fees or its professional or non-professional subscriber 
fees.\7\ Under Nasdaq's proposal, current ADAP-only distributors that 
wish to continue to distribute only the aggregate data (i.e., the 
aggregate size of attributable and non-attributable quotes and orders 
at each price level) that is received either directly from Nasdaq via 
the new TotalView Data Feed or from another distributor may do so for 
the same distributor fee Nasdaq charges today.\8\
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    \7\ The currently applicable subscriber fees are set forth in 
proposed paragraph (q)(5) of NASD Rule 7010.
    \8\ The fee for distributing the aggregate data only from the 
TotalView data feed will remain $1,000 per month under NASD Rule 
7010(q)(1)(C). The fee for distributing the complete TotalView data 
feed will remain $7,500 per month under NASD Rule 7010(q)(2)(A).
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    Nasdaq believes that the proposed rule change offers many benefits 
to investors and market data vendors. First, expanding the Prime data 
feed to cover all price levels, rather than just the top five price 
levels, enhances the transparency of the Nasdaq market for both 
securities professionals and individual investors. Second, current 
Prime distributors will have an opportunity to reduce their 
telecommunications charges because the new TotalView Data Feed is 
expected to use less bandwidth than the Prime data feed. Although the 
TotalView Data Feed will carry more price levels, it will not have to 
accommodate message traffic for eliminating quotes that have fallen out 
of the top five levels in SuperMontage as the Prime data feed did. 
Third, because the TotalView Data Feed will contain all of the data 
that is currently carried in the NQDS data feed plus the aggregate size 
information, some data recipients may choose to discontinue receipt of 
the NQDS data feed as a way to save telecommunications costs.\9\
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    \9\ NQDS is the Nasdaq Quote Dissemination Service, a data feed 
that includes all quotes for Nasdaq issues. The NASD is required to 
provide the best bid and offer and quote size of each member acting 
as a market maker under SEC Rule 11Ac1-1(b)(1)(ii), 17 CFR 
240.11Ac1-1(b)(1)(ii). As the Securities Information Processor for 
the UTP Plan, Nasdaq also provides a data feed of the best bid and 
offer for each Nasdaq issue (the UTP Quote Data Feed or ``UQDF'') 
and last sale information (the UTP Trade Data Feed or ``UTDF''). The 
UQDF and UTDF information are sometimes referred to as Level 1. 
Nasdaq is required under current law to offer the preceding three 
products. In contrast, the ViewSuite products are proprietary and 
Nasdaq has no legal obligation to offer them.

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[[Page 70328]]

    Nasdaq also proposes to eliminate ADAP because the market for it as 
a separate data feed has been extremely limited. Nasdaq represents that 
the cost of maintaining a separate feed that carries redundant 
information is substantial, and Nasdaq does not recoup its costs from 
the few distributors choosing to take only ADAP. Nasdaq also believes 
that eliminating the ADAP feed will enable Nasdaq to reduce its overall 
costs, enabling greater opportunities to maintain low prices on all 
data products. Finally, Nasdaq represents that almost all of the 
current recipients of ADAP already receive the Prime data feed. Nasdaq 
believes that the elimination of ADAP feed will result in minimal 
disruption to the current recipients.
    The proposed rule change also corrects certain subsection and 
footnote designations that were inadvertently duplicated in the 
adoption of SR-NASD-2003-27 and SR-NASD-2003-111. SR-NASD-2003-27 added 
new subsections (q)(3) and (q)(4) and new footnotes 3, 4, and 5, 
although footnotes with such numbers already existed in the then-
effective rule. Nasdaq proposes to correct the duplicate footnote issue 
by eliminating all footnotes and adding the footnote text to the rule 
text or to the new subsection (q)(6) or (q)(7) as appropriate. SR-NASD-
2003-111 inadvertently added a second subsection designated as (q)(4), 
which is redesignated as (q)(5). Nasdaq also proposes other non-
substantive changes to the rule to make it more readable and 
consistent.
2. Statutory Basis
    Nasdaq believes that the proposed rule change is consistent with 
the provisions of section 15A of the Act,\10\ in general and with 
section 15A(b)(5) \11\ and 15A(b)(6) \12\ 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 association operates or 
controls, and it benefits investors and market data vendors. Under the 
proposal, one data feed will be expanded and another will be 
discontinued, but Nasdaq will not change its prices for either 
distributors or professional or non-professional subscribers. Nasdaq 
believes that expanding the Prime data feed to cover all price levels, 
rather than just the top five price levels, enhances the transparency 
of the Nasdaq market for both securities professionals and individual 
investors. In addition, Nasdaq believes that most market data 
distributors will have an opportunity to reduce their 
telecommunications charges and/or the number of feeds they receive.
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    \10\ 15 U.S.C. 78o-3.
    \11\ 15 U.S.C. 78o-3(b)(5).
    \12\ 15 U.S.C. 78o-3(b)(6).
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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. Nasdaq believes that the 
expansion of the Prime data feed to include all price levels will 
benefit distributors and subscribers by providing more data at the same 
price. Nasdaq also believes that this benefit substantially outweighs 
any potential additional cost to the few distributors receiving only 
the ADAP feed directly from Nasdaq that may have to increase the 
bandwidth of their telecommunications lines to receive the new 
TotalView data feed directly from Nasdaq. Nasdaq represents that the 
proposed rule change also would not violate any of Nasdaq's contractual 
obligations.

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

    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, 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. Comments should be submitted electronically at the 
following e-mail address: [email protected]. All comment letters 
should refer to File No. SR-NASD-2003-162. 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 No. SR-NASD-2003-162 and should be 
submitted by January 7, 2004.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\13\
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    \13\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 03-31073 Filed 12-16-03; 8:45 am]
BILLING CODE 8010-01-P