[Federal Register Volume 70, Number 249 (Thursday, December 29, 2005)]
[Notices]
[Pages 77215-77218]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E5-8042]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-53005; File No. SR-NASD-2005-147]


Self-Regulatory Organizations; National Association of Securities 
Dealers, Inc.; Notice of Filing and Immediate Effectiveness of Proposed 
Rule Change Relating to Fees for NASD Members Using Nasdaq's INET 
Facility

December 22, 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 December 9, 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

[[Page 77216]]

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 the 
Substance of the Proposed Rule Change

    Nasdaq proposes to make additions and corrections to the fees 
governing Nasdaq's INET Facility for NASD members. Nasdaq states that 
it will implement the proposed rule change immediately.
    The text of the proposed rule change is below. Proposed new 
language is in italics; proposed deletions are in [brackets].
* * * * *
    7010. System Services
    (a)-(v) No Change.
    (w) INET System Order Execution
    (1) For a period of time not to exceed 60 days after INET becomes a 
facility of Nasdaq, the following charges shall apply to the use of the 
order execution services of Nasdaq's INET System by Participants for:

        NASDAQ-Listed Securities
Order Execution:
    Non-Directed Order that accesses
     the Quote/Order of a market
     Participant through Nasdaq's INET
     System:
        Charge to Participant entering
         order:
            Average daily shares of
             liquidity provided through
             Nasdaq's INET System by
             the Participant during the
             month:
            Greater than 60 million      $0.0027 per share executed.
             shares accessed or routed
             and 5 million shares
             provided.
            Greater than 40 million      $0.0028 per share executed.
             shares but less than 60
             million shares accessed or
             routed and 5 million
             shares provided.
            Less than 5 million shares   $0.0030 per share executed.
             provided or less than 40
             million shares accessed or
             routed.
        Credit to Participant providing
         liquidity:
            Average daily shares of
             liquidity provided through
             Nasdaq's INET System by
             the Participant during the
             month:
            Greater than 30 million      $0.0025 per share executed.
             shares provided or greater
             than 30 million shares
             accessed or routed or
             greater than 50 million
             shares combined provided,
             accessed or routed.
            Less than or equal to 30     $0.002 per share executed.
             million shares provided
             and less than or equal to
             30 million shares accessed
             or routed and less than or
             equal to 50 million shares
             combined provided,
             accessed, or routed.
            Any order that matches       $0.00025 per share per side.
             against another order of
             the same Participant.
Routed Orders:
        Any other order entered by a     $0.0025 per share executed.
         Participant that is routed
         outside of Nasdaq's INET
         System.
        Any other order entered by a     $0.001 per share executed.
         Participant that is routed to
         the NASDAQ Opening or Closing
         Cross.
           AMEX-Listed Stocks
Order Execution:
    Non-Directed Order that accesses
     the Quote/Order of a market
     Participant through Nasdaq's INET
     System:
        Credit to Participant entering   $0.0009 [$0.001] per share
         order:.                          executed.
        Charge to Participant providing  $0.001 [$0.0009] per share
         liquidity:                       executed.
        Any order that matches against   No charge.
         another order of the same
         Participant.
Routed Orders:
        Any order entered by a           $0.01 per share executed.
         Participant that is routed
         outside of Nasdaq's INET
         System through DOT.
        Any order entered by a           $0.0035 per share executed.
         Participant that is routed
         outside of Nasdaq's INET
         System other than through DOT.
            AMEX-Listed ETFs
Order Execution:
    Non-Directed Order that accesses
     the Quote/Order of a market
     Participant through Nasdaq's INET
     System:
        Charge to Participant entering
         order:
            Average daily shares of
             liquidity provided through
             Nasdaq's INET System by
             the Participant during the
             month:
            Greater than 60 million      $0.0027 per share executed.
             shares accessed or routed
             and 5 million shares
             provided.
            Greater than 40 million      $0.0028 per share executed.
             shares but less than 60
             million shares accessed or
             routed and 5 million
             shares provided.
            Less than 5 million shares   $0.0030 per share executed.
             provided or less than 40
             million shares accessed or
             routed.
        Credit to Participant providing
         liquidity:

[[Page 77217]]

 
            Average daily shares of
             liquidity provided through
             Nasdaq's INET System by
             the Participant during the
             month:
            Greater than 30 million      $0.0025 per share executed.
             shares provided or greater
             than 30 million shares
             accessed or routed or
             greater than 50 million
             shares combined provided,
             accessed or routed.
            Less than or equal to 30     $0.002 per share executed.
             million shares provided
             and less than or equal to
             30 million shares accessed
             or routed and less than or
             equal to 50 million shares
             combined provided,
             accessed, or routed.
        Any order that matches against   $0.00025 per share per side.
         another order of the same
         Participant.
Routed Orders:
        Any order entered by a           $0.01 per share executed.
         Participant that is routed
         outside of Nasdaq's INET
         System [through DOT] to the
         AMEX.
        Any order entered by a           $0.0035 per share executed.
         Participant that is routed
         outside of Nasdaq's INET
         System [other than through
         DOT] other than to the AMEX.
           NYSE-Listed stocks
Order Execution:
    Non-Directed Order that accesses
     the Quote/Order of a market
     Participant through Nasdaq's INET
     System:
        Credit to Participant entering   $0.0009 [$0.001] per share
         order:.                          executed.
        Charge to Participant providing  [$0.0009].$0.001 per share
         liquidity:.                      executed.
        Any order that matches against   No charge.
         another order of the same
         Participant.
Routed Orders:
        [Any order entered by a          [$0.0005]$0.01 per share
         Participant that is routed       executed
         outside of Nasdaq's INET
         System through DOT]Any order
         entered by a Participant that
         is routed outside of Nasdaq's
         INET System through DOT that
         is charged a fee by the
         specialist (billable).
        Charge to any order entered by
         a Participant that is routed
         outside of Nasdaq's INET
         System through DOT that is not
         charged a fee by the
         specialist (non-billable):
            Average daily shares of
             billable and non-billable
             NYSE DOT shares:
            Greater than 30 million      $0.0001.
             shares.
            Greater than 2 million       $0.0003.
             shares but less than or
             equal to 30 million shares.
            Greater than 250,000 shares  $0.0005.
             but less than or equal to
             2 million shares.
            Greater than 100,000 shares  $0.001.
             but less than or equal to
             250,000 shares.
            Less than or equal to        $0.01.
             100,000 shares.
            Any order entered by a       $0.0015 per share executed.
             Participant that is routed
             outside of Nasdaq's INET
             System other than through
             DOT.
 

    Upon Participant's request, added liquidity among Participants that 
are wholly owned by a common parent may be aggregated.

Market Data Revenue Sharing for AMEX Listed (Tape B) Securities

    Subscribers that add liquidity to the INET limit order book in Tape 
B securities (e.g. AMEX listed securities) will receive 50% of the 
market data revenue paid by the Consolidated Tape Association. INET 
will distribute the market data revenue based on the number of tape 
reportable transactions executed by the Participant, as paid to INET.
    Port Fees:
    Connectivity to Harborside Financial Center and Secaucus 
Datacenters
     $400 per month for each OUCH[supreg]/FIX pair
     $400 per month for each ITCH[supreg] data feed 
pair
     $400 per month for each DROP[supreg] pair
     $400 per month for each Compressed ITCH[supreg] 
data feed pair
     $1000 per month for each Multicast ITCH[supreg] 
data feed pair
     Internet Ports: An additional $200 per month for 
each Internet port that requires additional bandwidth.
    Connectivity to Chicago Datacenter
     $800 per month for each OUCH[supreg]/FIX pair
     $800 per month for each ITCH[supreg] data feed 
pair
     $800 per month for each DROP[supreg] pair
    All port fees, not including Internet Bandwidth surcharges, will be 
waived for Subscribers that for a calendar month have an average daily 
share volume for executed orders exceeding 30 million shares of added 
liquidity.
    INET Terminal Fees:
     Each ID is subject to a minimum commission fee 
of $50 per month unless it executes a minimum of 100,000 shares.
     Each ID receiving market data is subject to 
pass-through fees for use of these services. Pricing for these services 
is determined by the exchanges and/or market center.
     Each ID that is given web access is subject to a 
$50 monthly fee.
    Portal Fees:
     Each ID is subject to a monthly user fee of $150
     Each ID receiving market data is subject to 
pass-through fees for use of these services. Pricing for these services

[[Page 77218]]

is determined by the exchanges and/or market center.
* * * * *

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
    On December 7, 2005, the Commission approved rules and fees 
governing Nasdaq's INET Facility.\5\ This filing corrects, codifies, 
and establishes fee and rebate practices for INET subscribers that are 
NASD members. In summary, Nasdaq states that the filing: (1) Corrects 
the credit and fee schedule for American Stock Exchange (``Amex'') and 
New York Stock Exchange (``NYSE'') order executions that were 
incorrectly inverted in the original fee schedule; (2) codifies current 
INET fees for orders executed as part of the Nasdaq Opening or Closing 
Cross Process; (3) codifies current INET fee practices of revenue 
sharing for Tape B securities; (4) codifies the current INET fee 
structure governing connectivity and terminal charges for its 
facilities; and (5) establishes a new uniform, tiered fee-structure for 
orders routed to the NYSE through DOT.
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    \5\ See Securities Exchange Act Release No. 52902 (December 7, 
2005), 70 FR 73810 (December 13, 2005).
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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, 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 foregoing 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-2005-147 on the subject line.

Paper Comments

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

All submissions should refer to File Number SR-NASD-2005-147. 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-2005-147 and should be submitted on or before 
January 19, 2006.

    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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Jonathan G. Katz,
Secretary.
[FR Doc. E5-8042 Filed 12-28-05; 8:45 am]
BILLING CODE 8010-01-P