[Federal Register Volume 66, Number 10 (Tuesday, January 16, 2001)]
[Notices]
[Pages 3625-3627]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 01-1150]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-43815; File No. SR-NASD-00-81]


Self Regulatory Organizations; Notice of Filing of a Proposed 
Rule Change by the National Association of Securities Dealers, Inc. 
Relating to Computer to Computer Interface Fees For non-NASD Members

January 8, 2001.
    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 26, 2000, the National Association of Securities Dealers, 
Inc. (``NASD'') through its wholly owned subsidiary, The Nasdaq Stock 
Market, Inc. (``Nasdaq'') 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 Nasdaq.\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\ On December 26, 2000, Nasdaq filed Amendment No. 1 with the 
Commission. Amendment No. 1 noted that Nasdaq's Board of Directors 
approved the proposed rule change at its meeting on October 4, 2000, 
and the NASD Board of Governors reviewed the proposal at its meeting 
on October 5, 2000.
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I. Self-Regulatory Organization's Statement of the Terms of 
Substance of the Proposed Rule Change

    Nasdaq is proposing to amend NASD Rule 7010 to change the manner in 
which fees are assessed on non-NASD

[[Page 3626]]

members who use a Computer-to-Computer Interface (``CTCI'') to access 
Nasdaq services. This new fee structure has been created to reflect 
Nasdaq's adoption of a new Transmission Control Protocol/Internet 
Protocol (``TCP/IP'') standard for CTCI linkages that will allow 
transmission of CTCI data using Nasdaq's Enterprise Wide Network II 
(``EWNII''). Proposed new language is underlined, proposed deletions 
are in brackets. Nasdaq intends to impose these fees on a rolling basis 
on non-members as they are converted to the new protocol and T1 or 56kb 
lines.\4\ Proposed new language is in italics; proposed deletions are 
in brackets.
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    \4\ Nasdaq has filed a separate proposal to impose these same 
fees on NASD members who interact with Nasdaq through a CTCI. See 
Securities Exchange Act Release No. 43821 (January 8, 2001).
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7000  Charges for Services and Equipment

7010. System Services

    (a) through (e) No Change.
    (f) Nasdaq Workstation \TM\ Service
    (1) through (2) No Change.
    (3) The following charges shall apply for each CTCT subscriber:
    [Service Charge      $200/month per CTCI circuit]

 
              Options                               Price
 
Option 1: Dual 56kb lines (one for   $1275/month
 redundancy) and single hub and
 router
Option 2: Dual 56kb lines (one for   $1600/month
 redundancy), dual hubs (one for
 redundancy), and dual routers (one
 for redundancy)
Option 3: Dual T1 lines (one for     $8000/month
 redundancy), dual hubs (one for
 redundancy), and dual routers (one
 for redundancy). Includes base
 bandwidth of 128kb
Disaster Recovery Option: Single     $975/month
 56kb line with single hub and
 router. (For remote disaster
 recovery sites only.)
Bandwidth Enhancement Fee (for T1    $4000/month per 64kb increase above
 subscribers only)                    128kb T1 base
Installation fee                     $2000 per site for dual hubs and
                                      routers
                                     $1000 per site for single hub and
                                      router
Relocation Fee (for the movement of  $1700 per relocation
 TCP/IP--capable lines within a
 single location)
 

* * * * *

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 is proposing to amend NASD Rule 7010 to change the manner in 
which fees are assessed on NASD members who use a CTCI to access Nasdaq 
services. This new fee structure has been created to reflect Nasdaq's 
adoption of a new TCP/IP standard for CTCI linkages that will allow 
transmission of CTCI data using Nasdaq's EWNII. The CTCI network is a 
point-to-point dedicated circuit connection from the premises of 
brokerages and service providers to Nasdaq's processing facilities in 
Trumbull, Connecticut. Through CTCI, firms are able to enter trade 
reports to Nasdaq's Automated Confirmation Transaction Service 
(``ACT'') and orders to Nasdaq's ACES and Small Order Execution 
(``SOES'') systems. CTCI processes SelectNet transaction confirmation 
reports.
    In response to numerous requests from market participants that 
Nasdaq upgrade the speed and reliability of its current CTCI data 
transmission environment, Nasdaq has determined to sunset its existing 
CTCI X.25/bisysnch network.\5\ This network currently operates using an 
X.25 transmission protocol over 19.2 kilo bits per second (``kb'') 
transmission lines. This X.25 system will be replaced by linking 
current CTCI subscribers to Nasdaq's faster and more reliable EWNII. 
EWNII

[[Page 3627]]

operates over new more powerful 56kb and T1 data lines and transmits 
electronic information using the industry-standard TCP/IP transmission 
protocol. Once the transition to EWNII is completed, Nasdaq will 
terminate its current X.25/bisynch network. This upgrade will require 
all current X.25/19.2kb users to install either 56kb or T1 lines. 
Nasdaq believes that, in return, these lines will provide a minimum 
data transmission capability of almost three times that of the current 
19kb-based interface. Moreover, running a TCP/IP protocol over these 
faster 56Kb and T1 lines will allow Nasdaq to provide CTCI subscribers 
with linkages that are more robust, customizable, and efficient in the 
use of available network bandwidth.
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    \5\ Given the age of the current CTCI X.25 network, Nasdaq also 
anticipates deficiency in obtaining sufficient hardware to meet 
future CTCI needs using the X.25 infrastructure.
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2. Statutory Basis
    Nasdaq believes that the proposed rule changes are consistent with 
Section 15A(b)(5) of the Act, 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 NASD operates or controls.

B. Self-Regulatory Organization's Statement on Burden on Competition

    Nasdaq does not believe that the proposed rule change will impose 
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 did not solicit or receive written comments on the proposed 
rule change.

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 NASD 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. Persons making written 
submissions should file six copies thereof with the Secretary, 
Securities and Exchange Commission, 450 Fifth Street, NW., Washington, 
DC 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-00-81 and should be submitted by February 6, 2001.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\6\
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    \6\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 01-1150 Filed 1-12-01; 8:45 am]
BILLING CODE 8010-01-M