27712 Federal Register / Vol. 66, No. 97 / Friday, May 18, 2001 / Notices

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

2 17 CFR 240.19b–4.

3Securities Exchange Act Release No. 44246 (May

2, 2001), 66 FR 23289.

4 17 CFR 240.11Ac1–5.

5The Rule defines ‘‘covered order’’ as any market

order or any limit order (including immediate-orcancel orders) received by a market center during

regular trading hours at a time when a consolidated

best bid and offer is being disseminated, and, if

executed, is executed during regular trading hours.

Excluded from the definition of ‘‘covered order’’ is

any order for which the customer requests special

handling for execution, including, but not limited

to, orders to be executed at a market opening or

closing price, orders submitted with stop prices,

orders to be executed only at their full size, orders

4:30 p.m. The public is invited to

observe the roundtable discussions.

Seating is available on a first-come firstserve basis. The schedule, agenda, and

list of panelists for the roundtable will

be posted on the Commission’s Internet

website (http://www.sec.gov).

FOR FURTHER INFORMATION CONTACT:

Brian Bussey or Christine Richardson,

Office of the Chairman, at (202) 942–

0100.

Dated: May 14, 2001.

Jonathan G. Katz,

Secretary.

[FR Doc. 01–12542 Filed 5–17–01; 8:45 am]

BILLING CODE 8010–01–M

SECURITIES AND EXCHANGE

COMMISSION

[Release No. 34–44303; File No. SR–NASD–

2001–30]

Self-Regulatory Organizations; Notice

of Filing and Immediate Effectiveness

of Proposed Rule Change by the

National Association of Securities

Dealers, Inc. Establishing the Fee

Schedule for the Nasdaq ReSourceSM

Service

May 14, 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 May 8,

2001, the National Association of

Securities Dealers, Inc. (‘‘NASD’’)

through its 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. 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

Pursuant to the provisions of Section

19(b)(1) of the Act, and Rule 19b–4

thereunder, Nasdaq is herewith filing a

proposed rule change of the NASD to

establish the fee schedule Nasdaq’s new

ReSourceSM Service (‘‘Service’’). The

Service is voluntary and is designed to

assist NASD members in complying

with Rule 11Ac1–5 under the Act.

Below is the text of the proposed rule

change; proposed additions are

italicized.

* * * * *

7000. Charges for Services or Equipment

7010. System Services

(a)–(p) No Changes

(q) Nasdaq ReSourceSM Service

(1)(A) Subscribers to the Nasdaq

ReSourceSM shall be charged an

Activation Fee and an Annual

Subscription Fee, both of which

generally will vary depending upon a

subscriber’s trading volume, as

measured in accordance with

paragraphs (B) through (D) below, and

corresponding tier classification as

follows:

Tier Average monthly trade volume

1 .............. 500,000 or greater.

2 .............. 100,000–499,999

3 .............. 10,000–99,999

4 .............. 5,000–9,999

5 .............. 1,000–4,999

6 .............. 500–999

7 .............. 0–499

(B) During the first year of the

ReSourceSM Service (i.e., August 2001

through July 2002) Nasdaq will assign

subscribers to one of the tiers listed in

paragraph (A) above based on their

average monthly trading volume

reported to the tape, for the period from

September 1, 2000, through February

28, 2001, in Nasdaq National Market

securities for which the subscriber is

registered as a market maker.

(C) Members that subscribe to the

ReSourceSM Service other than at the

beginning of a ‘‘Subscription Year,’’ as

the term is defined below, will be

assigned to one of the tiers listed in

paragraph (A) above based on their

average monthly trading volume

reported to the tape, during the six

month period preceding the date of their

subscription, in Nasdaq National

Market securities for which the

subscriber is registered as a market

maker.

(D) Beginning in July of 2002, and on

an annual basis thereafter, Nasdaq will

review each subscriber’s average

monthly trading volume and assign the

subscriber to one of the tiers listed in

paragraph (A) above based on their

average monthly trading volume

reported to the tape, during the

preceding six month period, in Nasdaq

National Market securities for which the

subscriber is registered as a market

maker.

(2)(A) Activation Fees and Annual

Subscription Fees shall be as follows:

Tier Activation fee

Annual

subscription

fee

1 ................ $3,000 $35,000

Tier Activation fee

Annual

subscription

fee

2 ................ 3,000 30,000

3 ................ 2,000 20,000

4 ................ 1,000 10,000

5 ................ 1,000 7,500

6 ................ 1,000 5,000

7 ................ 1,000 2,500

(B) The Activation Fee shall be billed

after execution of the Addendum to

Nasdaq Workstation II Subscriber

Agreement for Nasdaq ReSourceSM

(‘‘Agreement’’).

(C) The Annual Subscription Fee shall

be charged after execution of the

Agreement, and at the beginning of each

Subscription Year thereafter. A

‘‘Subscription Year’’ shall mean a 12-

month period from August 1st to July

31st. The Annual Subscription Fee will

be pro-rated on a monthly basis for

those firms that subscribe to the Service

other than at the beginning of a

Subscription Year. Nasdaq will offer no

refunds of the Annual Subscription Fee.

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 May 2, 2001, the Commission

approved the Nasdaq Resource SM

Service, 3 which is designed to assist

NASD members in complying with

certain of their obligations pursuant to

Rule 11Ac1–5 4 (the ‘‘Rule’’) under the

Federal Register / Vol. 66, No. 97 / Friday, May 18, 2001 / Notices 27713

5The Rule defines ‘‘covered order’’ as any market

order or any limit order (including immediate-orcancel orders) received by a market center during

regular trading hours at a time when a consolidated

best bid and offer is being disseminated, and, if

executed, is executed during regular trading hours.

Excluded from the definition of ‘‘covered order’’ is

any order for which the customer requests special

handling for execution, including, but not limited

to, orders to be executed at a market opening or

closing price, orders submitted with stop prices,

orders to be executed only at their full size, orders

to be executed on a particular type of tick or bid,

orders submitted on a ‘‘not held’’ basis, orders for

other than regular settlement, and orders to be

executed at prices unrelated to the market price at

the time of execution. 17 CFR 240.11Ac1–5(a)(8). 6 17 CFR 240.11Ac1–5(a)(14). 7See NASD Rule 4632(d)(B) and NASD Notice to

Members 00–79.

8The initial compliance date for the reporting of

listed securities under Rule 11Ac1–5 was May 1,

2001. The Commission has temporarily exempted

(until July 31, 2001) all orders in Nasdaq securities.

Letter from Annette L. Nazareth, Director, Division

of Market Regulation, SEC, to Stuart J. Kaswell,

Senior Vice President and General Counsel,

Securities Indsutry Association, dated April 12,

2001. 9 15 U.S.C. 78o–3(b)(5).

Act. Generally, the Rule seeks to

improve the ability of public investors

to evaluate how their orders are handled

after being submitted to a broker-dealer

for execution. The Rule requires

‘‘market centers’’ that trade national

market system securities to prepare and

make publicly available standardized,

monthly reports containing statistical

information concerning the handling

and execution of their ‘‘covered

orders.’’5 A ‘‘market center’’ under the

Rule is defined as ‘‘any exchange market

maker, OTC market maker, alternative

trading system, national securities

exchange, or national securities

association.’’6 To facilitate cross-market

comparisons, the Rule establishes and

defines uniform measures of execution

quality, including effective spread, rate

of price improvement and

disimprovement, fill rate, and execution

speed. Nasdaq’s new voluntary service—

Nasdaq ReSource SM—assists NASD

member market centers in meeting their

reporting obligations under Rule

11Ac1–5. For members that subscribe to

the Service, Nasdaq will collect,

compile, and web-host the reports

required by the Rule. These reports will

be referred to as Execution Quality

Reports (‘‘XQ Reports’’SM) and will be

available on a free, publicly accessible

web site. Through certain existing

systems, Nasdaq already can capture a

portion of the data required to complete

XQ Reports. In order to ensure complete

XQ Reports, however, firms will be

required to submit to Nasdaq additional

data for certain categories of orders.

Member firms will be required to

provide an electronic file containing

execution and cancellation information

for orders routed to Nasdaq execution

systems, orders routed to ECNs, orders

routed to non-NASD members, and

certain orders executed as riskless

principal, depending upon which

method the subscriber chooses to report

riskless principal transactions.7

Generally, Nasdaq proposes a tiered

fee structure for the ReSource SM Service

that is based on a subscriber’s average

monthly trading volume reported to the

tape, over a certain specified number of

months, in Nasdaq National Market

securities for which the subscriber is

registered as a market maker. Firms that

generate higher trading volume will be

charged a proportionately higher fee to

account for the greater computer system

and Nasdaq staff resources needed to

provide the Service to these firms. The

seven different fee levels, or tiers, will

be based on monthly trading volume

averaged over a six-month period. The

six-month period is designed to account

for seasonal fluctuations in trading

volume and significant business

changes. The proposed tier structure is

as follows:

Tier Average monthly

trade volume

1 ................................ 500,000 or greater.

2 ................................ 100,000–499,999

3 ................................ 10,000–99,999

4 ................................ 5,000–9,999

5 ................................ 1,000–4,999

6 ................................ 500–999

7 ................................ 0–499

For the first year that Nasdaq offers

the ReSource SM Service (i.e., August

20001 8 through July 2002), Nasdaq will

assign subscribers to one of the above

tiers based on their average monthly

trading volume reported to the tape, for

the period from September 1, 2000,

through February 28, 2001, in Nasdaq

National Market securities for which

they are registered as market makers.

For members that subscribe other than

at the beginning of a Subscription Year,

as that term is defined in the fee

schedule and described below, Nasdaq

will place the subscriber in the

appropriate tier based on the

subscriber’s average monthly trading

volume during the six month period

preceding the subscription date.

Beginning with the first anniversary of

the Service in July of 2002, and on an

annual basis thereafter, Nasdaq will

conduct a review of each subscriber’s

average monthly trading volume during

the preceding six-month period, and

will assign the applicant to the

appropriate corresponding tier. Fees for the ReSource SM Service will

include an initial, one-time setup fee

(‘‘Activation Fee’’) and an Annual

Subscription Fee, both of which

generally will vary depending upon the

firm’s trading volume and

corresponding tier classification. The

Activation Fee is related to the costs

associated with assisting member firms

in establishing the proper hardware and

software configuration necessary to

submit data to Nasdaq, establishing the

necessary data feeds, and testing with

Nasdaq. The Activation Fee will be

billed upon receipt of an executed

Addendum to Nasdaq Workstation II

Subscriber Agreement for Nasdaq

ReSource SM (‘‘Agreement’’).

The Annual Subscription Fee is

related to the on-going costs associated

with compiling, calculating, and webhosting the statistical data required by

Rule 11Ac1–5. Member firms will be

billed for the Annual Subscription Fee

after submitting the executed

Agreement, and thereafter at the

beginning of each Subscription Year

(i.e., the 12-month period from August

1st to July 31st). The Annual

Subscription Fee will be pro-rated on a

monthly basis for those firms that

subscribe to the Service other than at

the beginning of a Subscription Year.

Nasdaq will offer no refunds of the

Annual Subscription Fee.

The proposed Activation Fees and

Annual Subscription Fees are as

follows:

Tier Activation fee

Annual

subscription

fee

1 ................ $3,000 $35,000

2 ................ 3,000 30,000

3 ................ 2,000 20,000

4 ................ 1,000 10,000

5 ................ 1,000 7,500

6 ................ 1,000 5,000

7 ................ 1,000 2,500

2. Statutory Basis

Nasdaq believes that the proposed

rule changes are consistent with Section

15A(b)(5) of the Act,9 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. Nasdaq

represents that the proposed fee

schedule complies with this statutory

standard because Nasdaq will charge

every member in a particular category or

tier an amount that is related to the

resources expended to provide the

ReSourceSM Service to such member.

For instance, the computer system and

staff resources required to provide the

Service to a market center member with

relatively high average monthly trading

27714 Federal Register / Vol. 66, No. 97 / Friday, May 18, 2001 / Notices

10 15 U.S.C. 78s(b)(3)(A)(ii).

11 17 CFT 240.19b–4(f)(2).

12 17 CFR 200.30–3(a)(12).

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

2 17 CFR 240.19b–4.

3 15 U.S.C. 78f(b)(4).

4 15 U.S.C. 78s(b)(3)(A)(ii).

5 17 CFR 240.19b–4(f).

volume is greater than that required for

a member with relatively low average

monthly trading volume.

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

The proposed rule change has become

effective pursuant to Section

19(b)(3)(A)(ii) of the Act,10 and Rule

19b–4(f)(2) thereunder,11 in that it

establishes or changes a due, fee, or

other charge. 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,

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, 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–2001–30 and should be

submitted by June 8, 2001.

For the Commission, by the Division of

Market Regulation, pursuant to delegated

authority.12

Jonathan G. Katz,

Secretary.

[FR Doc. 01–12545 Filed 5–17–01; 8:45 am]

BILLING CODE 8010–01–M

SECURITIES AND EXCHANGE

COMMISSION

[Release No. 34–44296; File No. SR–NYSE–

2001–09]

Self-Regulatory Organizations; Notice

of Filing and Immediate Effectiveness

of Proposed Rule Change by the New

York Stock Exchange, Inc. To Increase

the Fee for Administering the

Compliance Official Qualification

Examination (‘‘Series 14’’)

May 11, 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 May 3,

2001, the New York Stock Exchange,

Inc. (‘‘NYSE’’ or ‘‘Exchange’’), 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 the NYSE. 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 proposed rule change seeks to

increase the fee charged by the NYSE for

the Compliance Official Qualification

Examination (‘‘Series 14 Examination’’)

from $200 to $300.

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

Exchange 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

Exchange 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

Exchange Rule 342 (‘‘Offices—

Approval, Supervision and Control’’)

requires each member and member

organization to designate a person to

direct-to-day compliance activity. Such

persons, as well as those compliance

supervisors who direct ten or more

persons engaged in compliance activity,

must have overall knowledge of

securities laws and Exchange rules and

must pass the Series 14 Examination

that was initially implemented in

September 1989.

The fee for the Series 14 Examination

has been $200 since its inception in

1989. The Exchange now seeks to

increase the fee to $300. The fee

increase will defray expenses incurred

in developing, updating, and

administering the Series 14

Examination.

2. Statutory Basis

The Exchange believes that the

proposed rule change is consistent with

Section 6(b)(4) of the Act,3 in that the

proposed rule change is designed to

provide for the equitable allocation of

reasonable dues, fees and other charges

among the Exchange members, issuers

and other persons using its facilities.

B. Self-Regulatory Organization’s

Statement on Burden on Competition

The Exchange believes that the

proposed rule change will not 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

The Exchange has neither solicited

nor received comments on the proposed

rule change.

III. Date of Effectiveness of the

Proposed Rule Change and Timing for

Commission Action

The Exchange has designated the

proposed rule change as a fee change

pursuant to Section 19(b)(3)(A)(ii) of the

Act 4 and subparagraph (f) of Rule 19b–

4 thereunder.5 Accordingly, the

proposed rule change has become

effective upon filing. At any time within

60 days of the filing of such proposed