[Federal Register Volume 69, Number 120 (Wednesday, June 23, 2004)]
[Notices]
[Pages 35091-35092]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 04-14228]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-49872; File No. SR-NASD-2004-075]


Self-Regulatory Organizations; National Association of Securities 
Dealers, Inc.; Notice of Filing and Immediate Effectiveness of Proposed 
Rule Change and Amendment No. 1 Thereto to Eliminate Certain 
Transaction Charges for ITS Securities

June 16, 2004.
    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 April 29, 2004, 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 
filed this proposed rule change pursuant to section 19(b)(3)(A)(ii) of 
the Act \3\ and Rule 19b-4(f)(2) thereunder,\4\ which renders the 
proposal effective upon filing with the Commission. On June 4, 2004, 
Nasdaq filed Amendment No. 1 to the proposed rule change.\5\ 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\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \4\ 17 C.F.R. 240.19b-4(f)(2).
    \5\ See letter from Mary M. Dunbar, Vice President and Deputy 
General Counsel, Nasdaq, to Katherine A. England, Assistant 
Director, Division of Market Regulation, Commission, dated June 3, 
2004. Amendment No. 1 clarifies the proposed rule text and replaces 
the proposed rule change in its entirety.
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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(d)(2) (``Computer Assisted 
Execution Service'') to eliminate certain transaction charges for the 
use of SuperMontage to trade Intermarket Trading System (``ITS'') 
securities. Nasdaq will implement the proposed rule change on May 3, 
2004.
    The text of the proposed rule change appears below. New language is 
in italics.
* * * * *
7010. System Services
    (a) through (c) No change.
    (d) Computer Assisted Execution Service
    The charges to be paid by members receiving the Computer Assisted 
Execution Service (CAES) shall consist of a fixed service charge and a 
per transaction charge plus equipment related charges.
    (1) No change.
    (2) Transaction Charges and Credits
    (A) No change.
    (B) No change.
    (C) There shall be no charge for an order entered by a member that 
accesses its own Quote/Order submitted under the same or a different 
market participant identifier of the member.
    (e) through (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 Commission recently approved Nasdaq's proposal to replace the 
Computer Assisted Execution System (``CAES'') with SuperMontage for the 
trading of all ITS securities.\6\ The purpose of this proposed rule 
change is to modify certain transaction charges under NASD Rule 7010(d) 
for the trading of ITS securities to conform with similar transaction 
charges under NASD Rule 7010(i) for Nasdaq-listed securities. 
Currently, under NASD Rule 7010(d)(2)(B), Nasdaq charges for orders to 
buy or sell ITS securities not listed on the New York Stock Exchange.

[[Page 35092]]

Nasdaq charges a per share fee based on the average daily share volume 
executed in CAES or through the ITS/CAES linkage during a month. The 
fees are as follows: (1) $0.0027 per share if the average daily share 
volume is 0 to 499,999; and (2) $0.0025 per share if the average daily 
share volume is 500,000 or more. Under the current rule, these fees are 
subject to a maximum charge of $75 per execution. Nasdaq is proposing 
to eliminate these transaction charges for orders entered by a member 
that accesses its own Quote/Order submitted under the same or a 
different market participant identifier of the member for the trading 
of all ITS securities. Nasdaq believes that the proposed rule change 
reflects more accurately the existing market price levels for similar 
services, and, as such, will result in a more equitable allocation 
among members of the charges associated with the trading of ITS 
securities. Nasdaq also expects that the proposal will encourage 
greater use of SuperMontage for trading ITS securities, thereby 
contributing to greater competition among the available venues for 
executions of orders for ITS securities.
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    \6\ See Securities Exchange Act Release No. 49349 (March 2, 
2004), 69 FR 10775 (March 8, 2004).
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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\ which requires that the rules of the 
NASD provide 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. Nasdaq believes 
that it has proposed a pricing structure that is responsive to market 
demands. In addition, Nasdaq believes that the proposed rule change 
supports the efficient use of existing systems and ensures that the 
charges associated with such use are allocated equitably.
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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 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.

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)(ii) of the Act \9\ and Rule 19b-4(f)(2) 
thereunder,\10\ because it establishes or changes a due, fee, or other 
charge imposed by the Association. At any time within 60 days of the 
filing of the 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.\11\
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    \9\ 15 U.S.C. 78s(b)(3)(a)(ii).
    \10\ 17 CFR 240.19b-4(f)(2).
    \11\ For purposes of calculating the 60-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 June 4, 2004, the date Nasdaq submitted Amendment No. 
1. See 15 U.S.C. 78s(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. Comments may be submitted by any of 
the following methods:
    Electronic comments:
     Use the Commission's Internet comment for (http://www.sec.gov/rules/sro.shtml); or
     Send an e-mail to [email protected]. Please include 
File Number SR-NASD-2004-075 on the subject line.
    Paper comments:
     Send paper comments in triplicate to Jonathan G. Katz, 
Secretary, Securities and Exchange Commission, 450 Fifth Street, NW, 
Washington, DC 20549-0609. All submissions should refer to File Number 
SR-NASD-2004-075. 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, please use only one method. The Commission 
will post all comments on the Commission's Internet Web site (http://www.sec.gov/rules/sro.shtml). 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 the filing also will be available for 
inspection and copying at the principal office of NASD. All comments 
received will be posted without change; the Commission does not edit 
personal identifying information from submissions. You should submit 
only information that you wish to make available publicly. All 
submissions should refer to File Number SR-NASD-2004-075 and should be 
submitted on or before July 14, 2004.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\12\
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    \12\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 04-14228 Filed 6-22-04; 8:45 am]
BILLING CODE 8010-01-P