[Federal Register Volume 70, Number 70 (Wednesday, April 13, 2005)]
[Notices]
[Pages 19545-19547]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E5-1747]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-51499; File No. SR-NASD-2005-035]


Self-Regulatory Organizations; Notice of Filing and Immediate 
Effectiveness of Proposed Rule Change by the National Association of 
Securities Dealers, Inc. to Modify Pricing for NASD Members Using the 
Nasdaq Market Center and 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, II, 
and III below, which Items have been prepared by Nasdaq. 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) \3\ of the Act and Rule 19b-4(f)(2) thereunder,\4\ 
which renders the proposal effective upon filing with the Commission. 
The Commission is publishing this notice to solicit comments on the 
proposed rule change 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 CFR 240.19b-4(f)(2).
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    Nasdaq proposes to modify the pricing for NASD members using the 
Nasdaq Market Center and Nasdaq's Brut Facility. Nasdaq states that it 
will implement the proposed rule change on 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 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 Nasdaq Market Center and Brut Facility combined fee structure 
is 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.
    Nasdaq stated that, in this filing, it proposes 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 \5\ is 
summarized below:
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    \5\ The fees currently in Rule 7010(i) are applicable to non-
members that use Nasdaq's Brut Facility. Nasdaq will seek to apply 
the same fee schedule proposed here for non-members that use Brut. 
Accordingly, Nasdaq is submitting a separate filing (SR-NASD-2005-
038) to make the proposed rule changes contained in this filing 
applicable to non-members.

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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).

[[Page 19546]]

 
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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------------------------------------------------------------------------
        Routed orders
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Any order entered by a member  $0.004 per share executed.
 that is routed outside of
 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        $0.0025 per share executed.
 shares of liquidity provided
 and greater than 50 million
 shares accessed or routed.
Greater than 10 million but    $0.0027 per share executed.
 less than or equal to 20
 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     $0.0028 per share executed.
 less than or equal to
 10,000,000 shares of
 liquidity provided and any
 amount accessed and/or
 routed.
Less than or equal to          $0.0030 per share executed.
 2,000,000 shares of
 liquidity provided and any
 amount accessed and/or
 routed.
------------------------------------------------------------------------

    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,\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 and issuers and other persons 
using any facility or system which the NASD operates or controls.
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    \6\ 15 U.S.C. 78o-3.
    \7\ 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

    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\
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    \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).
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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 form (http://www.sec.gov/rules/sro.shtml); or
     Send an e-mail to [email protected]. Please include 
File Number SR-NASD-2005-035 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-2005-035. 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

[[Page 19547]]

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-2005-035 and should be 
submitted on or before May 4, 2005.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\11\
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    \11\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. E5-1747 Filed 4-12-05; 8:45 am]
BILLING CODE 8010-01-P