Federal Register / Vol. 66, No. 101 / Thursday, May 24, 2001 / Notices 28767

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

2 17 CFR 240.19b–4.

3The current proposal replaces File No. SR–

NASD–2001–25, which NASD filed on April 2,

2001, and withdrew on April 23, 2001. See letter

from Jeffrey S. Davis, Assistant General Counsel,

Nasdaq, to Katherine England, Assistant Director,

Division of Market Regulation (‘‘Division’’),

Commission, dated April 20, 2001.

4On January 14, 2000, the Commission approved

rule changes that: (1) establish the NNMS, a new

platform for the trading of Nasdaq National Market

(‘‘NNM’’) securities; (2) modify the rules governing

the use of SelectNet for trading NNM issues; and

(3) leave unchanged the trading of Nasdaq

SmallCap securities on the Nasdaq’s Small Order

Execution System (‘‘SOES’’). See Securities

Exchange Act Release No. 42344 (January 14, 2000),

65 FR 3987 (January 25, 2000) (order approving File

No. SR–NASD–99–11). Nasdaq has already

established the fees to be assessed for use of the

NNMS and SelectNet after the NNMS begins

operating. See Securities Exchange Act Release No.

43001 (June 30, 2000), 65 FR 42741 (July 11, 2000)

(notice of filing and immediate effectiveness of File

No. SR–NASD–00–41) (‘‘June 30 Notice’’).

5See June 30 Notice, supra note 4. In its proposal,

Nasdaq requests retroactive application of the fees

provided under the pilot program, dating to the

expiration of the pilot on March 31, 2001.

6See Securities Exchange Act Release No. 39641

(February 10, 1998), 63 FR 8241 (February 18, 1998)

(File No. SR–NASD–98–06) (‘‘1998 Notice’’). The

pilot program was originally implemented for a 90-

day trial period, commencing the day the proposal

was published in the Federal Register.

7See June 30 Notice, supra note 4.

8Nasdaq expects the Implementation Date to

occur on July 9, 2001. Telephone conversation

between Jeffrey S. Davis, Assistant General Counsel,

Office of the General Counsel, Nasdaq, and Yvonne

Fraticelli, Special Counsel, Division, Commission,

on May 9, 2001.

9As noted above, Nasdaq established these fees

in a previous proposal. See June 30 Notice, supra

note 4.

10As noted above, Nasdaq established these fees

in a previous proposal. See June 30 Notice, supra

note 4.

SECURITIES AND EXCHANGE

COMMISSION

[Release No. 34–44321; File No. SR–NASD–

2001–31]

Self-Regulatory Organizations; Notice

of Filing and Order Granting

Accelerated Approval of Proposed

Rule Change by the National

Association of Securities Dealer, Inc.

Relating to SelectNet Fees

May 18, 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 4.

2001, the Nation Association of

Securities Dealers, Inc. (‘‘NASD’’ or

‘‘Association’’), 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 and II

below, which Items have been prepared

by Nasdaq.3 The Commission is

publishing this notice to solicit

comments on the proposed rule change

from interested persons. For the reasons

discussed below, the Commission is

granting accelerated approval to the

proposed rule change.

I. Self-Regulatory Organization’s

Statement of the Terms of Substance of

the Proposed Rule Change

Nasdaq proposes to retroactively

extend from April 2, 2001, until March

31, 2002, or through the date of

implementation (‘‘Implementation

Date’’) of the Nasdaq National Market

Execution System (‘‘NNMS’’),

whichever is sooner, the pilot program

under NASD Rule 7010(i), ‘‘SelectNet

Service,’’ which provides reduced fees

for members who enter directed

SelectNet orders.4 The current pilot

program expired on March 31, 2001.5

II. Self-Regulatory Organization’s

Statements 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 III 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

NASD Rule 7010(i) contains a pilot

program that provides reduced

SelectNet fees for members who enter

directed orders in SelectNet. The pilot

program, which went into effect in

1998,6 was extended most recently

through May 31, 2001.7 Nasdaq

proposes to retroactively apply the

SelectNet pricing structure provided

under the pilot program for the period

from April 2, 2001, until March 31,

2002, or the Implementation Date,

whichever is sooner.8 Nasdaq notes that

it explained the reasons for the

SelectNet fee structure provided under

the pilot program in its 1998 Notice.

Since then, Nasdaq states that SelectNet

usage has continued at elevated levels.

As such, Nasdaq believes that an

extension of the reduced SelectNet fees

through the Implementation Date is

warranted.

Under the proposed extension of the

pilot program, SelectNet fees will

continue to be assessed in the following

manner: (1) $1.00 will be charged for

each of the first 50,000 SelectNet orders

entered and directed to one particular

market participant that is subsequently

executed in whole or in part, $.70 for

the next 50,000 directed orders executed

that same month, and $.20 for all

remaining directed orders executed that

month; (2) no fee will be charged to a

member who receives and executes a

directed SelectNet order; (3) the existing

$2.50 fee will remain in effect for both

sides of executed SelectNet orders that

result from broadcast messages; and (4)

a $0.25 fee will remain in effect for any

member who cancels a SelectNet order.

Beginning on the Implementation

Date, Nasdaq will assess SelectNet fees

in the following manner: 9 (1) $.90 will

be charged for each SelectNet order

entered and directed to one particular

market participant that is subsequently

executed in whole or in part; (2) no fee

will be charged to a member who

receives and executes a directed

SelectNet order; (3) the existing $2.50

fee will remain in effect for both sides

of executed SelectNet orders that result

from broadcast messages; (4) market

participants will be assessed $.70 per

order for the first 25,000 orders

executed monthly, $.50 per order for the

next 25,000 orders executed monthly,

and $.10 for each remaining liability

order executed monthly; and (5) a $0.25

fee will remain in effect for any member

who cancels a SelectNet order.

Nasdaq will also charge the same fees

for trades of Nasdaq SmallCap and NNM

securities commencing on the

Implementation Date.10 To accomplish

this, Nasdaq will reduce the fees

charged for trades of SmallCap

securities through SOES. Beginning on

the Implementation Date, fees for NNMS

trades of NNM securities and SOES

trades of SmallCap securities will be

assessed in the following manner: (1) A

fee of $.50 per order executed for the

first 150,000 orders executed under

2000 shares, monthly; (2) a fee of $.30

for each remaining executed order of

less than 2000 shares, monthly; (3) a fee

of $.90 per order for all orders over 2000

28768 Federal Register / Vol. 66, No. 101 / Thursday, May 24, 2001 / Notices

11 15 U.S.C. 78o–3(b)(5).

12 15 U.S.C. 78o–3.

13 15 U.S.C. 78o–3(b)(5).

14See 1998 Notice, supra note 6.

15See June 30 Notice, supra note 4.

16 In approving this proposal, the Commission has

considered its impact on efficiency, competition,

and capital formation. 15 U.S.C. 78c(f)

17 15 U.S.C. 78o–3(b)(5).

18 15 U.S.C. 78s(b).

19 15 U.S.C. 78s(b)(2).

20 17 CFR 200.30–2(a)(12).

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

2 17 CFR 240.19b–4.

3On January 30, 2001, the Commission approved

similar proposals submitted by the Chicago Board

Options Exchange, Inc. (‘‘CBOE’’) and the

International Securities Exchange LLC (‘‘ISE’’). See

Securities Exchange Act Release No. 43904 (January

30, 2001), 66 FR 9112 (February 6, 2001). On

February 20, 2001, the Commission issued a notice

of filing and immediate effectiveness of a similar

proposal submitted by the Pacific Exchange, Inc.

(‘‘PCX’’). See Securities Exchange Act Release No.

43986 (February 20, 2001), 66 FR 12578 (February

27, 2001).

shares; and (4) no fee will be charged to

a member who receives an execution in

SOES or NNMS.

2. Statutory Basis

Nasdaq believes the proposed rule

change is consistent with section

15A(b)(5) 11 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 believes that the proposed

rule change will not result in any

burden on competition that is not

necessary or appropriate in furtherance

of the purpose of the Act.

C. Self-Regulatory Organization’s

Statement on Comments on the

Proposed Rule Change Received From

Members, Participants or Others

Comments were neither solicited nor

received on the proposed rule change.

III. 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 in

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–2001–31 and should be

submitted by June 14, 2001.

IV. Commission’s Findings and Order

Granting Accelerated Approval of the

Proposed Rule Change

After careful review, the Commission

finds that the proposed rule change is

consistent with the requirements of the

Act and the rules and regulations

thereunder applicable to a national

securities association, and, in particular,

the requirements of section 15A of the

Act.12 Specifically the Commission

finds that the proposal is consistent

with section 15A(b)(5) of the Act, which

requires that the rules of a national

securities association provide for the

equitable allocation of reasonable dues,

fees and charges among members and

issuers and other persons using any

facility or system which the association

operates or controls.13

The Commission notes that the pilot

program provided in NASD Rule

7010(i), which establishes reduced fees

for members who enter directed

SelectNet orders, was implemented in

February 1998 14 and was most recently

extended through March 31, 2001.15

The Commission finds that it is

consistent with the Act to permit

retroactive application of the pilot

program from the expiration of the

current pilot program and to extend the

pilot program through March 31, 2002,

or the Implementation Date, whichever

is sooner, to allow market participants

to continue to receive the benefit of the

reduced Select Net fees provided under

the pilot program.

The Commission finds good cause for

approving the proposed rule change

prior to the 30th day after the date of

publication of notice thereof in the

Federal Register.16 Specifically, the

Commission notes that accelerated

approval of the proposal will allow the

pilot program to continue without

interruption. Accordingly, the

Commission finds that it is consistent

with sections 15A(b)(5) 17 and 19(b) 18 of

the Act to approve the proposal on an

accelerated basis.

V. Conclusion

It is Therefore Ordered, pursuant to

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

proposed rule change (SR–NASD–2001–

31), as amended, is hereby approved on

an accelerated basis.

For the Commission, by the Division of

Market Regulation, pursuant to delegated

authority.20

Jonathan G. Katz,

Secretary.

[FR Doc. 01–13162 Filed 5–23–01; 8:45 am]

BILLING CODE 8010–01–M

SECURITIES AND EXCHANGE

COMMISSION

[Release No. 34–44311; File No. SR–Phlx–

2001–52]

Self-Regulatory Organizations; Notice

of Filing and Immediate Effectiveness

of Proposed Rule Change by the

Philadelphia Stock Exchange, Inc.,

Relating to an Interim Intermarket

Linkage Program

May 16, 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 14,

2001, the Philadelphia Stock Exchange,

Inc. (‘‘Phlx’’ or ‘‘Exchange’’) 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 selfregulatory organization. The

Commission is publishing this notice to

solicit comments on the proposed rule

changes from interested persons.

I. Self-Regulatory Organization’s

Statement of the Terms of Substance of

the Proposed Rule Change

The Phlx, pursuant to Rule 19b–4

under the Act, proposes to adopt a rule

authorizing implementation of ‘‘interim

linkages’’ with the other options

exchanges.3

II. Self-Regulatory Organization’s

Statement of the Propose 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. The text of

these statements may be examined at