[Federal Register Volume 70, Number 118 (Tuesday, June 21, 2005)]
[Notices]
[Pages 35753-35755]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E5-3196]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-51836; File No. SR-NASD-2005-059]


Self-Regulatory Organizations; National Association of Securities 
Dealers, Inc.; Notice of Filing of Proposed Rule Change and Amendment 
No. 1 Thereto To Amend NASD Rule 7090 To Modify the Annual Listing and 
Administrative Fees

June 13, 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 May 10, 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. On June 8, 
2005, Nasdaq filed Amendment No. 1 to the proposed rule change.\3\ 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\ In Amendment No. 1, Nasdaq clarified that the proposed fee 
change for the News Media List also applies to unit investment 
trusts and made several non-substantive clarifications to the 
proposal.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    Nasdaq proposes to change the annual listing fees for mutual funds, 
money market funds, and unit investment trusts on the News Media List 
and Supplemental List of the Mutual Fund Quotation Service (``MFQS'').
    Should the Commission approve the proposed rule change, Nasdaq 
plans to implement the increased annual fees on July 1, 2005 on a 
prorated basis for new fund listings (including funds moving from the 
Supplemental List to the News Media List). Should the Commission 
approve this proposed rule change after July 1, 2005, Nasdaq will 
implement the new annual listing fees for the MFQS system on a prorated 
basis as soon as practicable following Commission approval. For 
existing listings, the new annual fee shall become effective on January 
1, 2006 during the 2006 annual maintenance process (or as soon as 
practicable thereafter, on a prorated basis, should the Commission 
approve the proposed rule change after January 1, 2006). For new and 
existing listings, the proposed new administrative fee shall become 
effective on July 1, 2005, or as soon as practicable if approved by the 
Commission thereafter.
    The proposed rule change also corrects typographical errors and 
modifies the administrative fee for requests to change the name and/or 
symbol of a fund or trust.
    The text of the proposed rule change is set forth below. Proposed 
new language is italicized; proposed deletions are in [brackets].
* * * * *

7090. Mutual Fund Quotation Service

    (a) Funds and Unit Investment Trusts included in the Mutual Fund 
Quotation Service (``MFQS'') shall be assessed an annual fee of 
$[400]475 per fund or trust authorized for the News Media Lists and 
$[275]350 per fund or trust authorized for the Supplemental List. Funds 
authorized during the course of an annual billing period shall receive 
a proration of these fees but no credit or refund shall accrue to funds 
or trust terminated during an annual billing period. In addition, there 
shall be a one-time application processing fee of $325 for each new 
fund or trust authorized.

[[Page 35754]]

    (b) If a Unit Investment Trust expires by its own terms during an 
annual billing period and is replaced within three months by a trust 
that is materially similar in investment objective, the replacing trust 
shall be charged a one-time application fee of $150. In addition, the 
replacing trust shall not be charged an annual fee if the expiring 
trust has already paid an annual fee for that annual billing period.
    (c) Funds included in [the]MFQS and pricing agents designated by 
such funds (``Subscriber''), shall be assessed a monthly fee of $100 
for each logon identification obtained by the Subscriber. A Subscriber 
may use a logon identification to transmit to Nasdaq pricing and other 
information that the Subscriber agrees to provide to Nasdaq.
    (d) Funds included in [the]MFQS shall be assessed a $2[0]5 
administrative fee to process a request to amend the name and/or the 
symbol of a fund or trust.
    (e) Distributors receiving MFQS shall pay a monthly fee of $1,000. 
For the purposes of this subsection only, the term ``distributor'' 
shall refer to any firm that receives the MFQS data feed and 
distributes it to third parties. All such firms must execute a Nasdaq 
Distributor Agreement.
* * * * *

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 proposes to amend NASD Rule 7090 to change the annual 
listing fees and the administrative fee for MFQS. MFQS was created to 
collect and disseminate data pertaining to the value of open-end and 
closed-end mutual funds, money market funds, and unit investment 
trusts. Currently, MFQS disseminates valuation data for over 20,000 
funds. Funds and trusts must meet minimum eligibility criteria in order 
to be included in the MFQS service. MFQS has two ``lists'' in which a 
fund or trust may be included: (1) The News Media List, and (2) the 
Supplemental List. The listing requirements for the News Media List are 
different than the listing requirements for the Supplemental List. If a 
fund or trust is listed on the News Media List, pricing information 
about the fund or trust is eligible for inclusion in the fund/trust 
tables of newspapers and is also eligible for dissemination over 
Nasdaq's Mutual Fund Dissemination Service (``MFDS'') data feed, which 
is distributed to market data vendors. If the fund or trust is listed 
on the Supplemental List, the pricing information about the fund or 
trust generally is not included in newspaper fund/trust tables, but is 
disseminated over Nasdaq's MFDS data feed. The Supplemental List, 
therefore, provides significant visibility for funds or trusts that do 
not otherwise qualify for inclusion on the News Media List.
    The current annual listing fee is $400 for the News Media List and 
$275 for the Supplemental List. These annual listing fees were last 
increased in 2000, more than five years ago.\4\ In order to provide the 
investment community with reliable and accurate information related to 
MFQS listings, Nasdaq has dedicated significant resources to the data 
processing, data display and administrative tasks performed for MFQS 
listings. In addition to the resources needed to operate and maintain 
the MFQS system, Nasdaq has also invested additional resources and 
funds for two significant improvements to the MFQS system that will be 
implemented in 2005 and 2006.
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    \4\ See Securities Exchange Act Release No. 42537 (March 16, 
2000), 65 FR 15678 (March 23, 2000) (SR-NASD-99-77).
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    First, Nasdaq plans to add new functionality to the MFQS Web site 
that will allow MFQS participants to download fund and trust pricing 
information directly from the MFQS Web site. Currently, the MFQS Web 
site only displays fund and trust pricing information. With the new 
download functionality, MFQS participants will be able to track their 
daily updates to funds and trusts electronically on their personal 
computers, and thus become more efficient in their distribution of 
accurate pricing for their respective funds. Nasdaq plans to implement 
the new download functionality in August 2005. Second, Nasdaq plans to 
offer new functionality for MFQS participants that will significantly 
reduce the time and resources needed for fund families or their 
designated agents to validate the assets and shareholder accounts for 
funds and trusts during the annual maintenance process for continued 
listing on MFQS. The current validation process for the assets and 
shareholder accounts for each fund and trust is performed manually. The 
new functionality will allow Nasdaq to collect this data and the funds 
will only have to affirm it on an as needed basis. Nasdaq is currently 
working to offer this new functionality and plans to implement it in 
January 2006.
    To reflect the increased costs associated with the development, 
implementation, and testing of the new functionalities, Nasdaq proposes 
to increase the annual listing fee for mutual funds, money market 
funds, and unit investment trusts on the News Media List from $400 per 
fund or trust per year to $475 per fund or trust per year. Nasdaq 
proposes to increase the annual listing fee for mutual funds, money 
market funds, and unit investment trusts on the Supplemental List of 
the MFQS system from $275 per fund per year to $350 per fund or trust 
per year.
    Nasdaq also proposes to increase the administrative fee for 
processing requests to change the name and/or symbol of a fund or trust 
that is currently listed on MFQS from $20 to $25. The current $20 fee 
was introduced in October 2002 to compensate Nasdaq for the personnel 
and system costs associated with making over 2,000 name and symbol 
changes for listed funds and trusts.\5\ Since 2002, the personnel and 
system costs associated with making these changes have increased 
because of overall increases in labor costs. Accordingly, Nasdaq 
believes that an increase of $5 is reasonable to compensate Nasdaq for 
the increased costs. The proposed rule change also corrects minor 
typographical errors in the rule text and clarifies that the 
administrative fee applies to both funds and trusts.
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    \5\ See Securities Exchange Act Release No. 46549 (September 25, 
2002), 67 FR 61705 (October 1, 2002) (SR-NASD-2002-101).
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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, which requires that the 
rules of the NASD provide 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

[[Page 35755]]

NASD operates or controls. Nasdaq believes that the proposed increase 
in the annual listing fees and the administrative fee is a fair means 
of recovering the costs associated with the maintenance and operation 
of MFQS and the development costs associated with the planned 
enhancements to the MFQS system. Nasdaq also believes that the proposal 
is consistent with Section 15A(b)(5) because the fee changes will be 
imposed only on those funds that benefit from the operation of the MFQS 
system.
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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, as amended.

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

    Within 35 days of the date of publication of this notice in the 
Federal Register or within such longer period (i) as the Commission may 
designate up to 90 days of such date if it finds such longer period to 
be appropriate and publishes its reasons for so finding or (ii) as to 
which the self-regulatory organization consents, the Commission will:
    A. By order approve such proposed rule change; or
    B. Institute proceedings to determine whether the proposed rule 
change should be disapproved.

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-2005-059 on the subject line.

Paper Comments

     Send paper comments in triplicate to Jonathan G. Katz, 
Secretary, Securities and Exchange Commission, Station Place, 100 F 
Street, NE., Washington, DC 20549-9303.

All submissions should refer to File Number SR-NASD-2005-059. 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 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-2005-059 and should be submitted on or before July 
12, 2005.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\8\
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    \8\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. E5-3196 Filed 6-20-05; 8:45 am]
BILLING CODE 8010-01-P