[Federal Register Volume 69, Number 224 (Monday, November 22, 2004)]
[Notices]
[Pages 67979-67980]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E4-3272]


-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-50670; File No. SR-NASD-2004-167]


Self-Regulatory Organizations; Notice of Filing and Immediate 
Effectiveness of Proposed Rule Change and Amendment No. 1 Thereto by 
the National Association of Securities Dealers, Inc. To Establish 
Combined Nasdaq Market Center and Brut Pricing for NASD Members

November 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 October 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. On November 8, 
2004, Nasdaq submitted Amendment No. 1 to the proposed rule change.\3\ 
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) \4\ of the Act and Rule 19b-4(f)(2) 
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.
---------------------------------------------------------------------------

    \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 November 
8, 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)(ii).
    \5\ 17 CFR 240.19b-4(f)(2).
---------------------------------------------------------------------------

I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    Nasdaq proposes to establish a new pricing and rebate schedule for 
NASD members that spans activity on both the Nasdaq Market Center 
(``NMC'') and Nasdaq's Brut Facility (``Brut''), to be implemented on 
November 1, 2004. The text of the proposed rule change, as amended, 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 is proposing to establish a new pricing and rebate schedule 
for NASD members for Nasdaq-listed securities that spans activity on 
both the NMC and Brut. The fee and rebate structure is based on 
multiple volume-based usage tiers that take into account the combined 
NMC and Brut volume of a member. A member will pay varying fees for 
having orders routed away from the systems or when accessing liquidity 
(``take-outs'') based upon the member's combined volume activity in the 
NMC and Brut.
    Likewise, rebates for providing liquidity will be based on the 
combined total of liquidity provided to both systems. Nasdaq believes 
that this pricing structure will encourage activity on both the NMC and 
Brut and will not provide financial incentives to use one system versus 
the other. The new combined NMC/Brut fee structure for Nasdaq-listed 
securities is provided below:

     Rebate Schedule for Executions in NASDAQ Market Center and Brut
------------------------------------------------------------------------
                                                             Liquidity
                                                             provider
Average daily shares of liquidity provided on NASDAQ and/   rebate per
                         or BRUT                               share
                                                             executed
------------------------------------------------------------------------
Greater than 20 million.................................         $0.0025
Between 1-20 million....................................          0.0022
Less than or equal to 1 million.........................          0.0020
------------------------------------------------------------------------


[[Page 67980]]


                  Fee Schedule for Take-Out and Routing
------------------------------------------------------------------------
                                                            Fee to take
Average daily shares of liquidity provided on NASDAQ and/ liquidity/Brut
                         or BRUT                            routing fee
                                                            (per share)
------------------------------------------------------------------------
Greater than 10 million.................................          0.0027
Greater than 500,000 but less than or equal to 10                 0.0028
 million................................................
Less than or equal to 500,000...........................          0.0030
------------------------------------------------------------------------

    Nasdaq represents that it will continue to charge a $0.001 per 
share NMC order delivery charge on NMC orders delivered to fee-charging 
ECNs participating in NMC. This charge is currently capped at $10,000 
per month for firms providing more than 500,000 shares per day, on 
average, over the course of the month. Nasdaq also represents that, in 
conjunction with the adoption of this pricing structure, Brut will 
cease charging an access fee on orders delivered to it from the NMC. In 
addition, Nasdaq represents that it currently does not charge when a 
firm executes against its own quote or order. Nasdaq represents that, 
upon the implementation of the above pricing schedule, Nasdaq will 
begin charging for these executions at the rates listed above.
2. Basis
    Nasdaq believes that the proposed rule change, as amended, is 
consistent with the provisions of Section 15A of the Act,\6\ in 
general, and with Section 15A(b)(5) of the Act,\7\ in particular, in 
that the proposed rule change provides for the equitable allocation of 
reasonable dues, fees, and other charges among members.
---------------------------------------------------------------------------

    \6\ 15 U.S.C. 78o-3.
    \7\ 15 U.S.C. 78o-3(b)(5).
---------------------------------------------------------------------------

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

    Nasdaq states that written comments were neither solicited nor 
received.

III. Date of Effectiveness of the Proposed Rule Change and Timing for 
Commission Action

    The forgoing rule change is subject to Section 19(b)(3)(A)(ii) of 
the Act \8\ and subparagraph (f)(2) of Rule 19b-4 \9\ thereunder 
because it establishes or changes a due, fee, or other charge imposed 
by the self-regulatory organization. Accordingly, the proposal is 
effective upon Commission receipt of the filing. 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.\10\
---------------------------------------------------------------------------

    \8\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \9\ 17 CFR 240.19b-4(f)(2).
    \10\ 15 U.S.C. 78s(b)(3)(C).
---------------------------------------------------------------------------

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 form (http://www.sec.gov/rules/sro.shtml); or
     Send an e-mail to [email protected]. Please include 
File Number SR-NASD-2004-167 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-2004-167. 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-2004-167 and should be submitted on or before 
December 13, 2004.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\11\
---------------------------------------------------------------------------

    \11\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Margaret H. McFarland,
Deputy Secretary.
 [FR Doc. E4-3272 Filed 11-19-04; 8:45 am]
BILLING CODE 8010-01-P