[Federal Register Volume 70, Number 174 (Friday, September 9, 2005)]
[Notices]
[Pages 53700-53701]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E5-4927]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-52377; File No. SR-NASD-2005-051]


Self-Regulatory Organizations; National Association of Securities 
Dealers, Inc.; Order Approving Proposed Rule Change To Create an 
Enterprise License Fee for the TotalView Entitlement

September 2, 2005.

I. Introduction

    On April 13, 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'') a proposed rule change pursuant to Section 19(b)(1) of 
the Securities Exchange Act of 1934 (``Act'') \1\ and Rule 19b-4 
thereunder,\2\ to create an enterprise license fee for the TotalView 
entitlement. On June 3, 2005, Nasdaq amended the proposed rule change. 
The proposed rule change, as modified by Amendment No. 1, was published 
for comment in the Federal Register on June 28, 2005.\3\ The Commission 
received one comment letter on the proposal.\4\ On August 16, 2005, 
Nasdaq filed a response to the comment letter.\5\ This order approves 
the proposed rule change, as amended.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ See Securities Exchange Act Release No. 51869 (June 17, 
2005), 70 FR 37144.
    \4\ See letter to Jonathan G. Katz, Secretary, Securities and 
Exchange Commission, from Christopher Gilkerson, Chair, SIA 
Technology & Regulation Committee, and Andrew Wels, Chair, SIA 
Market Data Subcommittee, dated July 19, 2005 (``SIA Letter'').
    \5\ See letter to Jonathan G. Katz, Secretary, Securities and 
Exchange Commission, from Edward S. Knight, Executive Vice President 
and General Counsel, Nasdaq, dated August 16, 2005 (``Nasdaq 
Response Letter'').
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II. Description of the Proposal

    Nasdaq proposes to establish a program whereby a broker-dealer 
distributor could obtain an enterprise license for the distribution of 
the TotalView market data entitlement for a fixed cost of either 
$25,000 per month for non-professional subscribers or of $100,000 per 
month for broker-dealer distributors that serve both non-professional 
and professional subscribers. This enterprise license pricing structure 
would mirror the pricing structure already established for individual 
professional and non-professional subscribers and is an alternative way 
to pay for the data.

[[Page 53701]]

    This program would only be available to broker-dealers registered 
under the Act, and would cover all TotalView usage fees with respect to 
both internal usage and re-distribution to customers with whom the firm 
has a brokerage relationship.\6\ Non-broker-dealer vendors and 
application service providers would not be eligible for the enterprise 
license, as such firms, according to Nasdaq, typically pass through the 
cost of market data user fees to their customers. This would enable 
firms to incorporate TotalView data into the software applications they 
make available to their institutional and retail customers, without 
providing them the opportunity to re-distribute TotalView data in 
competition with pure vendors.
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    \6\ Distributors who utilize the enterprise license would still 
be liable for the applicable distributor fees.
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    The enterprise license would cover fees for TotalView data received 
directly from Nasdaq as well as data received from third-party vendors 
(e.g., Bloomberg, Reuters). Upon signing up for the program, the 
relevant firm would be entitled to inform any third-party market data 
vendor it utilizes (through a Nasdaq-provided form) that, going 
forward, any TotalView data usage by the broker-dealer may be reported 
to Nasdaq on a non-billable basis.

III. Summary of Comments

    The Commission received one comment letter on the proposed rule 
change. The commenter expressed its support for enterprise license fees 
and also for the fact that the product, TotalView, ``does not come with 
data integration strings attached.'' However, the commenter stated its 
concerns that NQDS data would be linked with the TotalView data and 
that the cost of Brut data integrated in the TotalView entitlement is 
too high.\7\ In response, Nasdaq stated that the link between NQDS data 
and TotalView data was added to ensure compliance with the fee schedule 
established by the Operating Committee of the UTP Plan, which plan has 
been approved by the Commission. Nasdaq further noted that the cost of 
Brut data integrated in the TotalView entitlement has already been 
approved by the Commission.\8\
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    \7\ See SIA Letter.
    \8\ See Nasdaq Response Letter.
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IV. Discussion

    The Commission has carefully reviewed the proposed rule change, the 
SIA Letter and the Nasdaq Response Letter and finds that the proposed 
rule change is consistent with the requirements of the Act and the 
rules and regulations thereunder applicable to a national securities 
association,\9\ the requirements of Section 15A of the Act,\10\ in 
general, and Section 15A(b)(5) of the Act,\11\ in particular, which 
requires that the NASD's rules provide for an equitable allocation of 
reasonable charges among members for the use of any facility or system 
which the NASD operates or controls.
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    \9\ In approving the proposed rule change, the Commission has 
considered its impact on efficiency, competition, and capital 
formation. 15 U.S.C. 78c(f).
    \10\ 15 U.S.C. 78o-3.
    \11\ 15 U.S.C. 78o-3(b)(5).
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    The Commission believes that the program whereby a broker-dealer 
distributor could obtain an enterprise license for the distribution of 
the TotalView market data entitlement for a fixed cost of either 
$25,000 per month for non-professional subscribers or of $100,000 per 
month for broker-dealer distributors that serve both non-professional 
and professional subscribers satisfies the statutory standards outlined 
above and will provide increased flexibility to market data vendors, 
which may result in increased access to market data.

V. Conclusion

    It is therefore ordered, pursuant to Section 19(b)(2) of the 
Act,\12\ that the proposed rule change (SR-NASD-2005-051), as amended, 
be, and it hereby is, approved.
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    \12\ 15 U.S.C. 78s(b)(2).
    \13\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\13\
Jonathan G. Katz,
Secretary.
[FR Doc. E5-4927 Filed 9-8-05; 8:45 am]
BILLING CODE 8010-01-P