Federal Register / Vol. 60, No. 3 / Thursday, January 5, 1995 / Notices 1815

4 17 CFR 200.30–3(a)(12).

1The computer facilities that support the

provision of ACT are operated by The Nasdaq Stock

Market, Inc. (‘‘NSMI’’), a wholly owned subsidiary

of the NASD.

2See Securities Exchange Act Release No. 27551

(December 19, 1989); 54 FR 53408 (December 28,

1989).

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. Copies of such filing will also

be available for inspection and copying

at the principal office of the NASD. All

submissions should refer to the file

number in the caption above and should

be submitted by January 26, 1995.

For the Commission, by the Division of

Market Regulation, pursuant to delegated

authority.4

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 95–191 Filed 1–4–95; 8:45 am]

BILLING CODE 8010–01–M

[Release No. 34–35157; File No. SR–NASD–

94–73]

Self-Regulatory Organizations; Notice

and Immediate Effectiveness of

Proposed Rule Change by National

Association of Securities Dealers, Inc.

Relating to an Increase in the

Automated Confirmation Transaction

Service Fees

December 27, 1994.

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

Securities Exchange Act of 1934

(‘‘Act’’), 15 U.S.C. 78s(b)(1), notice is

hereby given that on December 8, 1994

the National Association of Securities

Dealers, Inc. (‘‘NASD’’ or ‘‘Association’’)

filed with the Securities and Exchange

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

the proposed rule change as described

in Items I, II, and III below, which Items

have been prepared by the NASD. The

Commission is publishing this notice to

solicit comments on the proposed rule

change from interested persons.

I. Self-Regulatory Organization’s

Statement of the Terms of Substance of

the Proposed Rule Change

The NASD is proposing to increase,

by 15%, all existing service fees paid by

NASD members that participate in the

Automated Confirmation Transaction

Service (‘‘ACT’’ or ‘‘Service’’).1 The

revised fees, which will take effect

January 1, 1995, will be set forth in

Section A(10) of Part VIII of Schedule D

to the NASD By-Laws. The full text of

the proposed rule change reflecting the

15% increase in ACT fees is set forth

below. (New language is underlined and

deletions are bracketed).

Part VIII—Schedule for NASD Charges

for Services and Equipment

A. System Services

* * * * *

10. Automated Confirmation

Transaction Service

The following charges shall be paid

by the participant for use of the

Automated Confirmation Transaction

Service (ACT):

Transaction related charges:

Comparison ................................................. [$0.0125] $0.0144/side per 100 shares (minimum 40 shares; maximum 7,500 shares).

Late report—T+1 ........................................ [$0.25] $0.288/side.

Browse/query .............................................. [$0.25] $.288/query.1

Terminal fee ............................................... [$50.00] $57.00/month (ACT only terminals).

CTCI fee ...................................................... [$500.00] $575.00/month.

Service desk ................................................ [$50.00] $57.50/month.2

Trade reporting ........................................... [$.025] $0.029/month (applicable only to reportable transactions not subject to trade comparison through ACT).3

Risk Management Charges ......................... [$.03] $0.035/side and [$15] $17.25/month per correspondent firm.

1Each Act query incurs the [$0.25] $0.288 fee; however, the first accept or decline processed for a transaction is free, to insure that no

more than [$0.25] $0.288 is charged per comparison. Subsequent queries for more data on the same security will also be processed free.

Any subsequent query on a different security will incur the [$0.25] $0.288 query charge. 2No change.

3No change.

II. Self-Regulatory Organization’s

Statement of the Purpose of, and

Statutory Basis for, the Proposed Rule

Change

In its filing with the Commission, the

NASD 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. The NASD 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

The purpose of this proposed rule

change is to effect a 15% across-theboard increase in each of the service

fees related to usage of ACT. This

increase, which would take effect on

January 1, 1995, constitutes the first

increase in ACT fees since the Service

became operational in the fourth quarter

of 1989.2 The necessity for this fee

change traces to expanded ACT usage as

a result of (i) increased trading volumes

in The Nasdaq Stock Market (‘‘Nasdaq’’)

and in the segment of the over-thecounter (‘‘OTC’’) equities market

supported by the OTC Bulletin Board

service (‘‘OTCBB’’) and (ii) the NASD

mandate of real-time trade reporting in

Nasdaq SmallCap issues and OTC

equities. The aforementioned factors

have caused ACT processing to

consume a much larger share of network

capacity than was originally projected

in 1989.

In this regard, a positive correlation

exists between Act usage and growth in

trade volume as well as the number of

securities subject to the NASD’s trade

reporting requirements. Between 1989

and 1993, the total share volume of

Nasdaq grew from 33.5 to 66.5 billion

shares, an increase of 98.5%. For the

first ten months of 1994, the

corresponding figure is approximately

62 billion shares. With respect to growth
1816 Federal Register / Vol. 60, No. 3 / Thursday, January 5, 1995 / Notices

3Additionally, ACT processes trade reports and

effects trade comparisons on approximately 1,000

OTC equities that are not quoted in the OTCBB.

This subset of OTC equities is characterized by

moderate trade volume and the regular submission

of trade reports by member firms.

4The EWN will increase the capacity of the

communications network supporting Nasdaq more

than fivefold (9,600 baud to 56,000 baud). The

software driving NWII is windows-based and will

contain a number of data management features that

are not available in the original Nasdaq Workstation

service that resides in the 9600 baud network.

5Section (a)(2) of the Rules of Practice and

Procedure for the Automated Confirmation

Transaction Service defines an ACT participant to

be a member firm registered with the NASD in a

market making capacity, or a member firm that

functions as an order entry firm, a clearing brokerdealer, correspondent executing broker-dealer, or

introducing broker-dealer. Because ACT

participation is defined in this manner, ACT fees

are only assessed against those member firms that

actually use the Service.

6 During the second half of 1995, ACT fees and

ACT-related network costs will be reviewed to

determine if the 1995 increase was sufficient to

recover those costs. That review may reveal that a

further increase is necessary. 7 17 CFR 200.30–3(a)(12).

in the number of Nasdaq-listed

securities, there were 4,965 Nasdaq

listings at year-end 1989 compared with

5,731 in October, 1994; this represents

an increase of 15.5%. Real-trade

reporting for OTC equities was initiated

in December, 1993 with a total of 3,652

issues in the OTCBB at year-end. By

October, 1994, this figure increased to

5,168 issues, which represents an

increase of 41.5%.3 Thus, at the present

time, NASD members routinely use the

Service to report and compare trades in

nearly 11,000 securities. The foregoing

information was factored into the

calculation of the revised ACT fees.

Additionally, the proposal is designed

to recoup certain network costs

attributable to provisions of ACT

through the Enterprise Wide Network

(‘‘EWN’’).4 The EWN is the

communications component of Nasdaq’s

system upgrade which will deliver the

second generation of Nasdaq

Workstation service functionality

(‘‘NWII’’) to market participants. NWII is

currently being phased-in. While the

NWII phase-in proceeds, ACT

functionality must be provided via the

EWN as well as the older network.

Therefore, a portion of the fee increase

will recoup the network costs associated

with providing ACT to member firms

using the NWII service.5

The NASD believe that the proposed

rule change is consistent with the

requirements of Section 15A(b)(5) of the

Act. Section 15A(b)(5) specifies that the

rules of a national securities association

shall provide for the equitable allocation

of reasonable dues, fees, and other

charges among members, issuers, and

other persons using any facility or

system that the association operates or

controls. In this instance, the increased

fees being proposed relate to a package

of automation services available only to

NASD member firms that qualify as

ACT participants. The proposed fee

increase is the first such increase since

ACT became operational in 1989 and is

necessary to offset the network costs

associated with delivering ACT to

approximately 1300 member firms.6 As

noted above, the increased network

costs which this proposal is designed to

recoup have occurred as a result of the

NASD’s expanded trade reporting

requirements, the growth in trade

volume experienced by the Nasdaq and

OTCBB market segments in recent years,

and the roll-out of the NWII. In light of

these factors, the NASD and NSMI

submit that the proposed increase in

ACT fees is necessary and appropriate

to achieve an equitable allocation of

reasonable fees among NASD members

using the Service.

(B) Self-Regulatory Organization’s

Statement on Burden on Competition

The NASD 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

The foregoing rule change has become

effective pursuant to Section 19(b)(3)(A)

of the Act and subparagraph (e) of

Securities Exchange Act Rule 19b–4

because the proposal constitutes a

change in a due, fee, or other charge for

a package of automated services

provided only to NASD member firms.

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.

IV. Solicitation of Comments

Interested persons are invited to

submit written data, views, and

arguments concerning the foregoing.

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. 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 with also be

available for inspection and copying at

the principal office of the NASD. All

submissions should refer to the file

number in the caption above (SR–

NASD–94–73) and should be submitted

by [insert date 21 days from the date of

publication].

For the Commission, by the Division of

Market Regulation, pursuant to delegated

authority.7

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 94–192 Filed 1–4–95; 8:45 am]

BILLING CODE 8010–01–M

[Release No. 34–35167; File No. SR–NASD–

94–75]

Self-Regulatory Organizations; Notice

of Filing and Immediate Effectiveness

of Proposed Rule Change by National

Association of Securities Dealers, Inc.

Relating to the Modification of Filing

Fees Under Sections 43(e) and 44(e) of

the NASD’s Code of Arbitration

Procedure

December 28, 1994.

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

Securities Exchange Act of 1934

(‘‘Act’’), 15 U.S.C. 78s(b)(1), notice is

hereby given that on December 13, 1994,

the National Association of Securities

Dealers, Inc. (‘‘NASD’’ or ‘‘Association’’)

filed with the Securities and Exchange

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

the proposed rule change as described

in Items I, II, and III below, which Items

have been prepared by the NASD. The

NASD has designated this proposal as

one establishing or changing a fee under

Section 19(b)(3)(A)(ii) of the Act, which

renders the rule effective upon the

Commission’s receipt of this filing. The

Commission is publishing this notice to

solicit comments on the proposed rule

change from interested persons.