[Federal Register Volume 70, Number 79 (Tuesday, April 26, 2005)]
[Notices]
[Pages 21483-21484]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E5-1975]



[[Page 21483]]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-51581; File No. SR-NASD-2005-041]


Self-Regulatory Organizations; National Association of Securities 
Dealers, Inc.; Notice of Filing and Immediate Effectiveness of Proposed 
Rule Change To Establish Fees for Members Using the New Nasdaq 
Workstation

April 20, 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 30, 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. Pursuant to 
Section 19(b)(3)(A) of the Act \3\ and Rule 19b-4(f)(1), (2), and (5) 
thereunder,\4\ Nasdaq has designated this proposal in part as 
constituting a stated policy, practice, or interpretation with respect 
to the meaning, administration, or enforcement of an existing rule, in 
part as establishing or changing a due, fee, or other charge, and in 
part as a proposal effecting a change in an existing order-entry or 
trading system of a self-regulatory organization, which renders the 
proposed rule change effective immediately upon filing. 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).
    \4\ 17 CFR 240.19b-4(f)(1), (2), and (5).
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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 to establish fees for the 
new Nasdaq Workstation and to file a Head Trader Alert regarding the 
Nasdaq Workstation and the new Nasdaq Information Exchange (``QIX'') 
protocol. Nasdaq will begin making the Nasdaq Workstation available to 
users on or about May 2, 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 New Nasdaq Workstation

    As announced in recent Nasdaq Head Trader alerts,\5\ Nasdaq is 
replacing its current front-end workstation, the Nasdaq Workstation 
II[reg] (the ``NWII''), with a new front-end offering. The 
new Nasdaq WorkstationSM will be available through a 
dedicated high-bandwidth circuit or an Internet broadband connection, 
but in contrast to the NWII, the new Nasdaq Workstation will not 
require use of a service delivery platform (``SDP''), a hardware unit 
located at the subscriber's premises. Nasdaq believes that the 
elimination of SDPs will result in substantial cost savings to users of 
the new Nasdaq Workstation in comparison with the NWII. The main 
version of the Nasdaq Workstation will be referred to as ``Nasdaq 
Workstation Trader,'' and can be used by members for order and 
quotation entry, trade reporting, and outbound order routing.\6\
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    \5\ See Nasdaq Head Trader Alert 2005-019 (March 1, 2005) and 
Nasdaq Head Trader Alert 2005-009 (January 25, 2005) (http://www.nasdaqtrader.com/dynamic/newsindex/headtraderalerts_2005.stm) 
and Nasdaq Head Trader Alert 2004-105 (July 30, 2004). Nasdaq filed 
Head Trader Alert 2005-009 as an exhibit to Securities Exchange Act 
Release No. 51170 (February 9, 2005), 70 FR 7988 (February 16, 2005) 
(SR-NASD-2005-002) and is filing Nasdaq Head Trader Alert 2005-019 
as an exhibit to this filing.
    \6\ Nasdaq's current Weblink ACT product, which is used for 
trade reporting, is being renamed ``Nasdaq Workstation Post Trade.''
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    The new Nasdaq Workstation will include all of the same 
functionality as the NWII, however, with the exception of a little-used 
market statistic query function. Accordingly, firms may continue to use 
the Workstation either as their primary trading medium or as a 
supplemental backup system. Nasdaq expects to discontinue support of 
the NWII by the end of October 2005. Firms that currently use the NWII 
will need to transition to the new Workstation or another front-end 
solution by that time. Nasdaq will contact all NWII customers to assist 
them in their transition. Customers will be provided with materials and 
training support for the transition.
    The fee for the new Nasdaq Workstation will be $435 per user per 
month, plus charges for any market data services received through the 
Workstation. The fee for the NWII is $525 per logon \7\ per month for 
the first 150 logons, but the NWII includes an entitlement to Total 
View data and UQDF/UTDF data, which otherwise cost $70 per user per 
month and $20 per user per month respectively. Thus, the fee for the 
new Workstation plus Total View data and UQDF/UTDF data is identical to 
the fee for Nasdaq's current NWII offering.
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    \7\ The term ``logon'' refers to an individual right of access, 
and therefore is equivalent to the term ``user'' in the new rule.
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    To ease the transition from NWII to the new Workstation, Nasdaq 
will allow current NWII users to use any form of the new Nasdaq 
Workstation without charge for a 60-day period commencing on the firm's 
scheduled first date of use of the new service, provided that users 
continue to pay charges for existing NWII service during that period.

QIX

    In SR-NASD-2005-002 \8\ and Nasdaq Head Trader Alert 2005-009, 
Nasdaq announced that its new QIX communication protocol would support 
a full range of ``post-trade'' trade reporting functionality. As of the 
date of this filing, however, trade reporting functionality through QIX 
has not been placed into production for any market participants. As a 
result of the low level of interest expressed by market participants in 
using QIX for trade reporting, Nasdaq has decided not to support trade 
reporting through QIX. As is currently the case, trades executed 
through the execution services of the Nasdaq Market Center, including 
trades stemming from quotes/orders submitted through QIX, will be 
reported to the Nasdaq Market Center automatically, without a need for 
specialized trade reporting functionality. Trade reporting 
functionality will continue to be available to market participants that 
need it through the computer-to-computer interface (``CTCI'') protocol, 
the new Nasdaq Workstation, and in the second quarter of this year, 
though FIX.
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    \8\ Securities Exchange Act Release No. 51170 (February 9, 
2005), 70 FR 7988 (February 16, 2005) (SR-NASD-2005-002).

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[[Page 21484]]

2. Statutory Basis
    Nasdaq believes that the proposed rule change is consistent with 
the provisions of Section 15A of the Act,\9\ in general, and Section 
15A(b)(5) \10\ of the Act, in particular, in that it 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. Nasdaq also believes that the 
proposed rule change will result in subscribers being eligible to 
receive the new Nasdaq Workstation at a price that, when added to the 
price for the TotalView and UQDF/UTDF data feeds, is identical to the 
current price for the NWII. Because the new Workstation will allow the 
elimination of SDPs supporting the NWII, however, Nasdaq believes the 
proposed rule change would result in substantial cost savings for 
subscribers that opt to receive the new Workstation service.
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    \9\ 15 U.S.C. 78o-3.
    \10\ 15 U.S.C. 78o-3(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 rule change has become effective pursuant to Section 
19(b)(3)(A) of the Act \11\ and subparagraphs (f)(1), (2), and (5) of 
Rule 19b-4 thereunder, because it constitutes a stated policy, 
practice, or interpretation with respect to the meaning, 
administration, or enforcement of an existing rule, establishes or 
changes a due, fee, or other charge, and effects a change in an 
existing order-entry or trading system.\12\ At any time within 60 days 
of the filing of the 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.
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    \11\ 15 U.S.C. 78s(b)(3)(A).
    \12\ 17 CFR 240.19b-4(f)(1), (2), and (5).
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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-2005-041 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-2005-041. 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-2005-041 and should be submitted on or before May 17, 2005.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\13\
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    \13\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. E5-1975 Filed 4-25-05; 8:45 am]
BILLING CODE 8010-01-P