Federal Register / Vol. 65, No. 14 / Friday, January 21, 2000 / Notices 3513

22 15 U.S.C. 78s(b)(2).

23 17 U.S.C. 200.30–3(a)(12).

1 15 U.S.C. 78s(b)(1).

2 17 CFR 240.19b–4.

3See Securities Exchange Act Release No. 47707

(December 8, 1999), 64 FR 69811.

4Credit card information will be obtained

through a secure web site connection.

5Examples of fields, depending on the type of

report chosen, could include reported volume,

reported price , reported time, inside bid/ask, short

sale indicator, etc.

that independent research reports that

are eligible for the filing exemption will

be deemed to be filed with the NASD for

the purposes of Section 24(b) of the

1940 Act and Rule 24b–3 thereunder.

The staff of the Commission’s Division

of Investment Management supports

this aspect of the proposal. Amendment

No. 3 also amends paragraph (G)(ii) in

the proposed rule change to clarify that

a member may not alter an exempted

research report except as necessary to

make the report consistent with

applicable regulatory standards. The

Commission believes that this

clarification should help members to

understand that the exemption relates

solely to legal and regulatory standards,

and not industry or other standards.

Accordingly, the Commission believes

that it is consistent with Sections

15A(b)(6) and 19(b)(2) of the Act to

approve Amendment No. 3 to the

proposed rule change on an accelerated

basis.

V. Solicitation of Comments

Interested persons are invited to

submit written data, views and

arguments concerning Amendment Nos.

2 and 3, including whether the

proposed rule change is consistent with

the Act. Persons making written

submissions should file six copies

thereof with the Secretary, Securities

and Exchange Commission, 450 Fifth

Street, N.W., Washington, D.C. 20549–

0609. 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 at

the Commission’s Public Reference

Room. Copies of such filing will also be

available for inspection and copying at

the principal office of the NASD. All

submissions should refer to File No.

SR–NASD–98–32 and should be

submitted by February 11, 2000.

VI. Conclusion

It is therefore ordered, pursuant to

Section 19(b)(2) of the Act,22 that the

proposed rule change (SR–NASD–98–

32) is approved, as amended.

For the Commission, by the Division of

Market Regulation, pursuant to delegated

authority.23

Jonathan G. Katz,

Secretary.

[FR Doc. 00–1459 Filed 1–20–00; 8:45 am]

BILLING CODE 8010–01–M

SECURITIES AND EXCHANGE

COMMISSION

(Release No. 34-42341; File No. SR-NASD99-70)

Self-Regulatory Organizations; Order

Granting Approval of Proposed Rule

Change by the National Association of

Securities Dealers, Inc. To Establish a

FEE For Historical Research and

Administrative Reports Provided

Through Nasdaq’s Web Sites

January 14, 2000.

I. Introduction

On November 24, 1999, the National

Association of Securities Dealers, Inc.

(‘‘NASD’’ or ‘‘Association’’), through its

wholly owned subsidiary, the Nasdaq

Stock Market, Inc. (‘‘Nasdaq’’), filed

with the Securities and Exchange

Commission (‘‘Commission’’ or ‘‘SEC’’)

pursuant to Section 19(b)(1) of the

Securities Exchange Act of 1934

(‘‘Act’’) 1 and Rule 19b-4 thereunder,2 a

proposed rule change to establish a fee

for historical research and

administrative reports provided through

Nasdaq’s web sites. Notice of the

proposed rule change appeared in the

Federal Register on December 14,

1999.3 The Commission received no

comments on the proposed rule change.

This order approves the proposed rule

change.

II. Description of the Proposal

Nasdaq proposes to establish a fee

which it will charge to investors who

request historical research reports

pertaining to Nasdaq, Over-the-Counter

Bulletin Board (‘‘OTCBB’’) or other

Over-the-Counter (‘‘OTC’’) issues.

Nasdaq has provided such reports on an

ad hoc basis to customers requesting

this information by telephone. Investors

would contact a member of Nasdaq’s

staff via telephone, describe the type of

customized report desired, and arrange

for an appropriate billing and delivery

method before having the Nasdaq staff

member compile the report. Charges for

these reports were based on hourly rates

relative to the time required for

compilation and delivery of the reports.

Nasdaq believes the system was an

inefficient and time consuming

arrangement that was both burdensome

to Nasdaq staff and an impediment to

the accessibility of the information for

the investor.

As the number of individual investors

in today’s market directing their own

investment decisions has increased

significantly, the volume of requests for

this information also has increased. To

alleviate the demand upon staff

resources and increase the quality,

speed and availability of the

information, Nasdaq has developed an

automated request and delivery system

that will facilitate the delivery of these

reports in a timely and systematic

manner at a fixed price, based on a

standardized pricing methodology.

Investors will be able to access the

reports through the Internet on the

Nasdaq Trader.com (for Nasdaq issues)

and OTCBB.com (for OTCBB and other

OTC issues) web sites (or their successor

sites, by directing an Internet browser to

the appropriate web site. Once at the

proper location within the web site,

investors would choose from a list of

standardized reports, input the

necessary information pertaining to the

desired security or market participant,

and provide credit card information for

payment. 4 Once the request has been

completed, the report would be sent via

e-mail directly to the investor.

Nasdaq proposes to provide historical

research reports that fall into two

categories: ‘‘Daily Detailed Reports’’ and

‘‘Summary Level Activity Reports.’’

Examples of Daily Detailed Reports

include a Market Maker Price

Movement Report (displays all market

maker quote changes and the best bid

and offer throughout a chosen day for a

selected security) and a Time and Sales

Report (provides a record of mediareported trades in the selected security,

indicating the reported time, price and

share volume). Summary Level Activity

Reports would provide trade and/or

quote information over a monthly or

quarterly period.

Fees for the Daily Detailed Reports

would be set on a two-tiered basis to

reflect the amount of information

provided. Nasdaq proposes to assess a

fee of $7 for reports with 15 or fewer

fields of information 5 for each trading

3514 Federal Register / Vol. 65, No. 14 / Friday, January 21, 2000 / Notices

6For example, an investor requesting a report

containing 12 fields of information for a three

trading day period would be charged $21.

7After assessing the demand for this service,

Nasdaq may offer volume discounts to purchasers

of multiple reports if it determines that volume

discounts are economically feasible.

8 In approving this proposal, the Commission has

considered the proposed rule’s impact on

efficiency, competition and capital formation. 15

U.S.C. 78c(f).

9 15 U.S.C. 78o–3(b)(5).

10 15 U.S.C. 78o–3(b)(6).

11 15 U.S.C. 78s(b)(2).

12 17 CFR 200.30–3(a)(12).

1 15 U.S.C. 78s(b)(1).

2The Commission has modified the text of the

summaries prepared by NSCC.

day requested.6 Those reports with more

than 15 fields would cost $5 per

pertrading day of information. Some

reports may be available for purchase on

a single day basis, while others may be

available only as multiple-day packages

with a corresponding charge based on

the number of days provided. Fees for

Summary Level Activity Reports would

be fixed at $25 per report.

Nasdaq believes that this pricing

structure is a suitable assessment

method that will facilitate the creation

of an inexpensive and effective service

for investors. Furthermore, Nasdaq has

been testing this product and the

Internet delivery system (on

OTCBB.com) for several months by

providing selected reports to investors

at no charge and has found a high level

of satisfaction and interest among

investors for their continued

availability.

The second category of reports

available through Nasdaq Trader.com

and/or OTCBB.com, termed

‘‘Administrative Reports,’’ will be

available to NASD member firms only.

These reports are generally composed of

firm specific information which is

currently provided on an informal basis.

One example of this group of reports is

the ‘‘SEC 31(a) Report’’ which provides

member firms with the number of trades

transacted on a daily basis and the

anticipated SEC 31(a) fees that will be

assessed at the end of the month.

Another proposed report that could be

provided would estimate the total

Nasdaq monthly transaction fees for the

member firm based on the firm’s

historical volume.

These Administrative Reports would

assist members in auditing their own

internal systems, verifying back-end

processing, and projecting monthly

costs. The reports, which are provided

presently by Nasdaq in CD ROM form,

would be available through this secure

web site connection in a more costeffective and timely manner.

Subscribing member firms would be

charged a $25 fee per user, per month,

for access to each administrative

report.7

III. Discussion

The Commission finds the proposed

rule change is consistent with the Act

and the rules and regulations

promulgated thereunder.8 Specifically,

the Commission finds that approval of

the proposed rule change is consistent

with Sections 15A(b)(5) 9 and (6) 10 of

the Act. Specifically, Section 15A(b)(5)

requires the equitable allocation of

reasonable fees and charges among

members and other users of facilities

operated or controlled by a national

securities association. The Commission

finds that the fees which Nasdaq has

proposed for the historical research and

administrative reports delineated in the

proposal are reasonable, given the

reliability and accessibility of the

information.

Furthermore, Section 15A(b)(6)

requires rules that foster cooperation

and coordination with persons engaged

in facilitating transactions in securities

and that are not designed to permit

unfair discrimination between

customers, issuers, brokers or dealers.

Because the fees which Nasdaq

proposes to charge for the specified

historical research and administrative

reports will be assessed only to users of

the service, the Commission finds that

the proposal is both nondiscriminatory

and reasonable. The Commission also

believes that the proposal may help to

foster cooperation and coordination

with persons engaged in facilitating

transactions in securities by providing

beneficial information to subscribers on

a non-discriminatory basis for a

reasonable fee. In doing so, the proposal

may boost investor confidence, while

contributing to the integrity of the

securities markets.;

IV. Conclusion

For the above reasons, the

Commission finds that the proposed

rule change is consistent with the

Provisions of the Act, in general, and

with Sections 15A(b)(5) and (6), in

particular.

It is therefore ordered, pursuant to

Section 19(b)(2) of the Act,11 that the

proposed rule change (SR-NASD-99-70),

be and hereby is approved.

For the Commission, by the Division of

Market Regulation, pursuant to delegated

authority.12

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 00-1467 Filed 1-20-00; 8:45 am]

BILLING CODE 8010-01-M

SECURITIES AND EXCHANGE

COMMISSION

[Release No. 34–42336; File No. SR–NSCC–

99–13]

Self-Regulatory Organizations;

National Securities Clearing

Corporation; Notice of Filing and

Immediate Effectiveness of Proposed

Rule Change Relating to a Change in

Fees for its Insurance Processing

Service

January 12, 2000.

Pursuant to Section 19(b)(1) of the

Securities Exchange Act of 1934

(‘‘Act’’), 1 notice is hereby given that on

December 30, 1999, National Securities

Clearing Corporation (‘‘NSCC’’) 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 primarily by NSCC.

The Commission is publishing this

notice to solicit comments on the

proposed rule change from interested

parties.

I. Self-Regulatory Organization’s

Statement of the Terms of Substance of

the Proposed Rule Change

The proposed rule change consists of

changes to NSCC’s fee schedule relating

to its Insurance Processing Service

(‘‘IPS’’).

II. Self-Regulatory Organization’s

Statement of the Purpose of, and

Statutory Basis for, the Proposed Rule

Change

In its filing with the Commission,

NSCC included statements concerning

the purpose of and basis for the

proposed rule change and discussed any

comments its received on the proposed

rule change. The text of these statements

may be examined at the places specified

in Item IV below. NSCC has prepared

summaries, set forth in sections (A), (B)

and (C) below, of the most significant

aspects of these statements.2

(A) Self-Regulatory Organization’s

Statement of the Purpose of, and

Statutory Basis for, the Proposed Rule

Change

NSCC has determined to charge

members using its IPS transaction and

file fees for the transmission of IPS test

and production files. In addition, IPS

membership fees will be payable from

the date an applicant is approved for

membership using IPS. These charges

will be effective January 3, 2000.