[Federal Register Volume 70, Number 70 (Wednesday, April 13, 2005)]
[Notices]
[Pages 19543-19545]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E5-1746]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-51498; File No. SR-NASD-2005-038]


Self-Regulatory Organizations; Notice of Filing and Order 
Granting Accelerated Approval of Proposed Rule Change by the National 
Association of Securities Dealers, Inc. to Modify the Pricing for Non-
NASD Members Using Nasdaq's Brut Facility

April 6, 2005.
    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 
March 28, 2005, 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. The Commission is 
publishing this notice to solicit comments on the proposed rule change 
from interested persons, and at the same time is granting accelerated 
approval of the proposed rule change.

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

    Nasdaq proposes to modify the pricing for non-NASD members using 
Nasdaq's Brut Facility. Nasdaq requests approval to implement the 
proposed rule change retroactively as of April 1, 2005. The text of the 
proposed rule change is available on the NASD's Web site (http://www.nasd.com), at the NASD's Office of the Secretary, and at the 
Commission's Public Reference Room.

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 III 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 On March 28, 2005, Nasdaq filed with the Commission SR-NASD-
2005-035, modifying the fee structure applicable to NASD members using 
the Nasdaq Market Center (``NMC'') or Nasdaq's Brut Facility 
(``Brut''). This filing seeks to impose, effective April 1, 2005, that 
exact same fee structure on non-NASD members using Brut. As set forth 
in SR-NASD-2005-035, fees in both the NMC and Brut are based upon 
multiple volume-based usage tiers that take into account the volume of 
a market participant across both systems. Currently, market 
participants must provide more than 500,000 shares of average daily 
liquidity each month to reduce their per-share execution costs or 
routing charges. In order to receive a higher liquidity provider 
credit, users must provide in excess of 1,000,000 shares of average 
daily liquidity each month in Nasdaq and/or Brut.
    Just like the fees applicable to NASD members in SR-NASD-2005-035, 
for non-NASD members, Nasdaq proposes in this filing to: \1\ Increase 
to just over 2,000,000 shares the amount of average daily liquidity 
needed to be provided by a market participant to have its per-share 
execution or routing costs reduced; and \2\ increase to 2,000,000 
shares the number of shares of average daily liquidity needed to be 
provided each month before a market participant becomes eligible for an 
increased liquidity provider credit. The resulting modified fee 
structure is summarized below:
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.

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            Charge to member entering order:
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Average daily shares of liquidity provided through the   .......................................................
 Nasdaq Market Center and/or Nasdaq's Brut Facility by
 the member during the month:.
Greater than 10 million................................  $0.0027 per share executed (but no more than $108 per
                                                          trade for trades in securities executed at $1.00 or
                                                          less per share).
Greater than 2,000,000 but less than or equal to         $0.0028 per share executed (but no more than $112 per
 10,000,000.                                              trade for trades in securities executed at $1.00 or
                                                          less per share).
2,000,000 or less......................................  $0.0030 per share executed (but no more than $120 per
                                                          trade for trades in securities executed at $1.00 or
                                                          less per share).
Average daily shares of liquidity provided through the   .......................................................
 Nasdaq Market Center and/or Nasdaq's Brut Facility by
 the member during the month:.
Greater than 20 million................................  $0.0025 per share executed (but no more than $100 per
                                                          trade for trades in securities executed at $1.00 or
                                                          less per share).
Greater than 2,000,000 but less than or equal to         $0.0022 per share executed (but no more than $88 per
 20,000,000.                                              trade for trades in securities executed at $1.00 or
                                                          less per share).
Less than or equal to 2,000,000........................  $0.0020 per share executed (but no more than $80 per
                                                          trade for trades in securities executed at $1.00 or
                                                          less per share).
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[[Page 19544]]


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                     Routed orders
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Any order entered by a member that is routed outside of  $0.004 per share executed.
 both the Nasdaq Market Center and Nasdaq's Brut
 Facility and that does not attempt to execute in
 Nasdaq's Brut Facility prior to routing.
Any other order entered by a member that is routed       .......................................................
 outside of both the Nasdaq Market Center and Nasdaq's
 Brut Facility.
Average daily shares of liquidity provided through the
 Nasdaq Market Center and/or Nasdaq's Brut Facility by
 the member during the month and average daily shares
 accessed through and/or routed from the Nasdaq Market
 Center and/or Nasdaq's Brut Facility by the member
 during the month (excluding orders routed outside of
 both the Nasdaq Market Center and Nasdaq's Brut
 Facility that do not attempt to execute in Nasdaq's
 Brut Facility prior to routing):
Greater than 20 million shares of liquidity provided     $0.0025 per share executed
 and greater than 50 million shares accessed or routed.
Greater than 10 million but less than or equal to 20     $0.0027 per share executed.
 million shares of liquidity provided and any amount
 accessed or routed, OR greater than 20 million shares
 of liquidity provided and 50 million or fewer shares
 accessed and/or routed.
Greater than 2,000,000 but less than or equal to         $0.0028 per share executed.
 10,000,000 shares of liquidity provided and any amount
 accessed and/or routed.
Less than or equal to 2,000,000 shares of liquidity      $0.0030 per share executed.
 provided and any amount accessed and/or routed.
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    Nasdaq believes that the proposed changes to its fee structure are 
reasonable, and draw an appropriate balance between the value-added 
benefits provided to the users by the Nasdaq Market Center and Brut 
systems and the fees imposed for such services.
2. Statutory Basis
    Nasdaq believes that the proposed rule change is consistent with 
the provisions of Section 15A of the Act,\3\ in general, and with 
Section 15A(b)(5) of the Act,\4\ 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 NASD operates or controls.
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    \3\ 15 U.S.C. 78o3.
    \4\ 15 U.S.C. 78o3(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

    Nasdaq states that written comments were neither solicited nor 
received.

III. 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-2005-038 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-2005-038. 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 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-2005-038 and should be submitted on or before May 
4, 2005.

IV. Commission's Findings and Order Granting Accelerated Approval of 
Proposed Rule Change

    The Commission finds that the proposed rule change is consistent 
with the requirements of the Act and the rules and regulations 
thereunder applicable to a self-regulatory organization.\5\ 
Specifically, the Commission believes the proposed rule change is 
consistent with Section 15A(b)(5) of the Act,\6\ which requires that 
the rules of the self-regulatory organization provide for the equitable 
allocation of reasonable dues, fees, and other charges among members 
and issuers and other persons using any facilities or system which it 
operates or controls.
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    \5\ The Commission has considered the proposed rule's impact on 
efficiency, competition and capital formation. 15 U.S.C. 78c(f).
    \6\ 15 U.S.C. 78o-3(b)(5).
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    The Commission notes that this proposal, which permits the 
retroactive application of the pricing and rebate schedule for non-NASD 
members that covers activity both on the NMC and Brut and is effective 
as of April 1, 2005, would permit the schedule for non-NASD members to 
mirror the schedule applicable to NASD members that was effective as of 
April 1, 2005 pursuant to SR-NASD-2005-035. The Commission believes 
that the fees are scaled according to objective criteria applied 
across-the-board to all categories of users, i.e., the pricing and 
rebate schedule will now apply equally to non-members as well as 
members, and is based on the volume of business they conduct on the NMC 
and Brut.
    The Commission finds good cause for approving the proposed rule 
change prior to the 30th day of the date of publication of notice of 
filing thereof in

[[Page 19545]]

the Federal Register. The Commission notes that the proposed pricing 
and rebate schedule for non-NASD members are identical to those in SR-
NASD-2005-035, which implemented a new pricing and rebate schedule for 
NASD members and which became effective as of April 1, 2005. The 
Commission notes that this change will promote consistency in Nasdaq's 
fee schedule by applying the same pricing and rebate schedule with the 
same date of effectiveness for both NASD members and non-NASD members. 
Therefore, the Commission finds that there is good cause, consistent 
with Section 19(b)(2) of the Act,\7\ to approve the proposed rule 
change on an accelerated basis.
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    \7\ 15 U.S.C. 78s(b)(2).
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V. Conclusion

    It is therefore ordered, pursuant to Section 19(b)(2) of the 
Act,\8\ that the proposed rule change (File No. SR-NASD-2005-038) be 
approved on an accelerated basis.
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    \8\ 15 U.S.C. 78s(b)(2).

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\9\
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    \9\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. E5-1746 Filed 4-12-05; 8:45 am]
BILLING CODE 8010-01-P