[Federal Register Volume 69, Number 215 (Monday, November 8, 2004)]
[Notices]
[Pages 64797-64799]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E4-3038]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-50604; File No. SR-NASD-2004-155]


Self-Regulatory Organizations; Notice of Filing and Immediate 
Effectiveness of Proposed Rule Change by the National Association of 
Securities Dealers, Inc. to Establish Access Fees for Non-NASD Members 
Using Nasdaq's Brut Facility

October 28, 2004.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934

[[Page 64798]]

(``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that 
on October 18, 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 and 
II below, which Items have been prepared by Nasdaq. On October 26, 
2004, Nasdaq submitted Amendment No. 1 to the proposed rule change.\3\ 
Nasdaq has filed the proposal pursuant to Section 19(b)(3)(A)(iii) of 
the Act \4\ and Rule 19b-4(f)(6) thereunder,\5\ which renders the 
proposal effective upon filing with the Commission. 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 Edward S. Knight, Executive Vice President 
and General Counsel, Nasdaq, to Katherine A. England, Assistant 
Director, Division of Market Regulation, Commission, dated October 
26, 2004 (``Amendment No. 1''). Amendment No. 1 made technical 
corrections to the proposed rule text of the originally filed 
proposed rule change.
    \4\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \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 establish access fees for non-NASD members using 
its Brut trading facility. The text of the proposed rule change is 
available at the Office of the Secretary, Nasdaq, and at the 
Commission.

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 represents that, on September 7, 2004, Nasdaq completed its 
purchase of the Brut ECN (``Brut''). Once purchased by Nasdaq, Brut 
became a ``facility'' of a national securities association,\6\ thereby 
making the pricing for Brut's services subject to Section 15A(b)(5) of 
the Act, which requires that the fees of a national securities 
association be equitably allocated among members and issuers and other 
persons using the facility.\7\ In a separate filing in October 2004, 
Nasdaq established such a fee structure for NASD members who access 
orders residing in Brut's system.\8\ In that proposal, Nasdaq created a 
tiered fee structure in which the per share fee charged to a member to 
access liquidity in Brut varies based on the amount of liquidity added 
to Brut by that member. Members that provide an average daily volume of 
50,000 shares or less over a calendar month are charged $0.003 per 
share when accessing liquidity in the Brut system for that same month. 
Members that provide an average daily volume of 50,001 shares or more 
over a calendar month are charged $0.0027 per share when accessing 
liquidity in the Brut system for that same month. In this filing, 
Nasdaq proposes to make the same fee structure applicable to non-NASD 
members that use the Brut system, likewise starting in October 2004. 
Nasdaq notes that Brut has only twelve non-NASD members using its 
system and believes that this proposal would ensure that all users 
(members and non-members) are subject to a uniform and objective 
pricing schedule.
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    \6\ See Section 3(a)(2) of the Act, 15 U.S.C. 78c(a)(2).
    \7\ 15 U.S.C. 78o-3(b)(5). Nasdaq currently operates Brut 
pursuant to a Temporary Conditional Exemption (``Exemption'') issued 
by the Commission pursuant to Section 36(a) of the Act. See 
Securities Exchange Act Release No. 50311 (September 3, 2004), 69 FR 
54818 (September 10, 2004). The Exemption requires Nasdaq to file 
proposed rule changes under Section 19(b) of the Act if it seeks to 
modify Brut's fee schedule.
    \8\ See Securities Exchange Act Release No. 50502 (October 7, 
2004), 69 FR 61275 (October 15, 2004) (SR-NASD-2004-149).
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2. Statutory Basis
    Nasdaq believes that the proposed rule change, as amended, is 
consistent with the provisions of Section 15A of the Act,\9\ in 
general, and with Section 15A(b)(5) of the Act,\10\ in particular, in 
that the proposed rule change 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.
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    \9\ 15 U.S.C. 78o-3.
    \10\ 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, as amended, 
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, as amended, is subject to 
Section 19(b)(3)(A)(iii) of the Act \11\ and Rule 19b-4(f)(6) 
thereunder \12\ because the proposal: (i) Does not significantly affect 
the protection of investors or the public interest; (ii) does not 
impose any significant burden on competition; and (iii) does not become 
operative prior to 30 days after the date of filing or such shorter 
time as the Commission may designate if consistent with the protection 
of investors and the public interest; provided that Nasdaq has given 
the Commission notice of its intent to file the proposed rule change, 
along with a brief description and text of the proposed rule change, at 
least five business days prior to the date of filing of the proposed 
rule change, or such shorter time as designated by the Commission. At 
any time within 60 days of the filing of such proposed rule change, 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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    \11\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \12\ 17 CFR 240.19b-4(f)(6).
    \13\ See Section 19(b)(3)(C) of the Act, 15 U.S.C. 78s(b)(3)(C).
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    Nasdaq has requested that the Commission waive the five-day pre-
filing notice requirement and the 30-day operative delay. The 
Commission believes that waiving the 30-day operative delay is 
consistent with the protection of investors and the public interest 
because such waiver will permit Nasdaq to make Brut's fee structure 
consistent for both NASD members and non-NASD members. In addition, the 
Commission has determined to waive the five-day pre-filing notice 
requirement. For these reasons, the Commission designates the proposal 
to be effective and operative upon filing with the Commission.\14\
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    \14\ For purposes only of accelerating the operative date of 
this proposal, the Commission has considered the proposed rule's 
impact on efficiency, competition, and capital formation. 15 U.S.C. 
78c(f).

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[[Page 64799]]

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. Comments may be 
submitted by any of the following methods:

Electronic Comments

     Use the Commission's Internet comment form (http://www.sec.gov/rules/sro.shtml); or
     Send an e-mail to [email protected]. Please include 
File Number SR-NASD-2004-155 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-2004-155. 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 Section, 450 Fifth 
Street, NW., Washington, DC 20549. Copies of such filing also will be 
available for inspection and copying at the principal office of the 
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-2004-155 and should be submitted on or before November 29, 2004.
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    \15\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\15\
Margaret H. McFarland,
Deputy Secretary.
 [FR Doc. E4-3038 Filed 11-5-04; 8:45 am]
BILLING CODE 8010-01-P