30254 Federal Register / Vol. 66, No. 108 / Tuesday, June 5, 2001 / Notices

9See Securities Exchange Act Release No. 44142

(April 2, 2001), 66 FR 18331 (April 6, 2001) (order

approving File No. SR–NASD–01–03.) 10 15 U.S.C. 78o–3(b)(6).

11 17 CFR 200.30–30–3(a)(12).

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

2 17 CFR 240.19b–4.

secondary offerings to zero seconds

(plus system processing time).9

Nasdaq has now determined that it is

technically feasible to reduce the

interval delay to zero seconds (plus

system processing time) for all

transactions on SuperSOES. This would

mean that a market maker would be

available for executions as quickly as

the system an transmit instructions

between the execution and quote-update

engines, an operation that generally

requires from one to one an one-half

seconds. Nasdaq market participants

have indicated to Nasdaq that they

would support elimination of the

interval delay for all transactions on

SuperSOES because this would further

minimize the risk of queuing within the

system. Accordingly, the proposed rule

change would provide that market

makers will be required to execute

orders against their displayed quotes

whenever the SuperSOES system

delivers such orders.

Decrementation of Market Makers’

Quotations. The rules governing the

NNMS currently provide that an NNMS

market maker’s displayed quotation will

be decremented upon the execution of

an NNMS order in an amount equal to

or greater than a round lot, and that in

the event of the execution of an NNMS

order for a mixed lot (i.e., an order that

is for more than a round lot but not a

multiple thereof), the displayed

quotation size will be decremented only

by the number of shares represented by

the number of round lots contained in

the mixed-lot order.

The proposed rule change would

establish a mechanism for decrementing

the displayed quotation size to take

account of odd-lot orders and the

portion of mixed-lot orders that is not

covered by the current rule. Nasdaq has

determined that it is technically feasible

for SuperSOES to track the number of

shares executed against a displayed

quotation as the result of: (i) Orders in

an amount less than a round lot, and (ii)

the portion of an order for a mixed lot

that is in excess of the number of shares

represented by the number of round lots

contained in the mixed-lot order. When

the total quantity of such shares equals

a round lot, the size of the displayed

quotation would then be decremented

accordingly. Nasdaq market participants

have indicated that they would support

this change because it will guard against

the possibility that a market participant

could execute multiple odd-lot orders

against a market maker’s quote without

the size of the displayed quotation being

decremented.

2. Statutory Basis

Nasdaq believes that the proposed

rule change is consistent with Section

15A(b)(6) 10 of the Act, in that the

proposed rule change is designed to

promote just and equitable principles of

trade, foster cooperation and

coordination with persons engaged in

processing information with respect to

and facilitating transactions in

securities, as well as to remove

impediments to and perfect the

mechanism of a free and open market,

and, in general, to protect investors and

the public interest.

Nasdaq believes that eliminating the

interval delay between executions on

the NNMS will ensure that customer

orders are processed in the most

expeditious manner possible. Similarly,

providing a mechanism for

decrementing market makers’ displayed

quotations for all orders executed

against such quotations will allow the

NNMS to provide more up-to-date

information about the size of displayed

quotations. In turn, these improvements

in order processing and display will

improve market function and aid in the

crucial price discovery process.

B. Self-Regulatory Organization’s

Statement on Burden on Competition

Nasdaq 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.

C. Self-Regulatory Organization’s

Statement on Comments on the

Proposed Rule Change Received From

Members, participants or Others

No written comments were solicited

or received with respect to 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 self-regulatory

organization 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 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–2001–35 and should be

submitted by June 26, 2001.

For the Commission, by the Division of

Market Regulation, pursuant to delegated

authority.11

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 01–14029 Filed 6–4–01; 8:45 am]

BILLING CODE 8010–01–M

SECURITIES AND EXCHANGE

COMMISSION

[Release No. 34–44363; File No. SR–NASD–

2001–32]

Self-Regulatory Organizations; Notice

of Filing and Order Granting

Accelerated Approval of Proposed

Rule Change by the National

Association of Securities Dealers, Inc.

Relating to Level 1 Market Data Fees

May 29, 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 Nasdaq Stock Market, Inc.

(‘‘Nasdaq’’) filed with the Securities and

Exchange Commission (‘‘SEC’’ or

‘‘Commission’’) the proposed rule

changes as described in Items I and II

Federal Register / Vol. 66, No. 108 / Tuesday, June 5, 2001 / Notices 30255

3The current proposal replaces File No. SR–

NASD–2001–24, which Nasdaq filed on March 30,

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.

4The pilot program expired on April 2, 2001. See

Securities Exchange Act Release No. 42715 (April

24, 2000), 65 FR 52460 (May 1, 2000). In the current

proposal, Nasdaq requests that the permanent

adoption of the current pilot fees be made

retroactive to the expiration of the pilot.

5See Securities Exchange Act Release No. 41499

(June 9, 1999), 64 FR 32910 (June 19, 1999).

6 15 U.S.C. 78o–3(b)(5).

7 In reviewing this proposal, the Commission has

considered its impact on efficiency, competition,

and capital formation. 15 U.S.C. 78c(f), 8 15 U.S.C. 78o–3(b)(5). 9 15 U.S.C. 78k–1(a)(1)(C)(iii). 10 15 U.S.C. 78s(b)(2)

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 of the

proposed rule change.

I. Self-Regulatory Organization’s

Statement of the Terms of Substance of

the Proposed Rule Change

Nasdaq filed a proposed rule change

to amend NASD Rule 7010 of the

National Association of Securities

Dealers, Inc. (‘‘NASD’’ or

‘‘Association’’). Under the proposal,

Nasdaq will retroactively establish as

permanent the fees currently assessed

for Level 1 market data delivered to

non-professional users on a monthly or

per query basis.4 Nasdaq will make the

proposed rule change effective

immediately upon approval.

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 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

Nasdaq states that it has consistently

supported the broadest, most effective

dissemination of market information to

public investors. Towards that end, in

April of 1999, Nasdaq implemented a

one-year pilot program that reduced by

50% the user fees for Level 1 market

data delivered to non-professional users

on a monthly basis (from $4 to $2), and

also for Level 1 market data delivered to

non-professional users on a per query

basis (from $.01 to $.005).5

In April of 2000, Nasdaq further

reduced by 50% the user fees for Level

1 market data delivered to nonprofessional users on a monthly basis,

but maintained the current fees for

Level 1 market data delivered to nonprofessional users on a per query basis.

Under the current pilot, the nonprofessional per user fee was reduced

from $2 to $1 per month (equating to a

75% reduction in fees in two years), and

the per query fee was maintained at

$.005 per query.

Nasdaq believes that reducing market

data fees helps meet the demand for

realtime market data by nonprofessional market participants. In

addition, Nasdaq believes that reduced

Nasdaq rates lessen the costs to NASD

member firms of supplying real-time

market data to their customers through

automated means and encourages

current delayed-data vendors to offer

increased access to real-time Level 1

data to their subscribers.

2. Statutory Basis

Nasdaq believes that the proposed

rule change is consistent with the

provisions of Section 15A(b)(5) 6 of the

Act in that the proposal provides 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 association

operates or controls.

B. Self-Regulatory Organization’s

Statement on Burden on Competition

Nasdaq does not believe that the

proposed rule change will result in any

burden on competition.

C. Self-Regulatory Organization’s

Statement on Comments on the

Proposed Rule Change Received From

Members, Participants, or Others

Nasdaq has neither solicited nor

received written comments 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–2001–32 and should be

submitted by June 26, 2001.

IV. Commission’s Findings and Order

Grating Accelerated Approval of the

Proposed Rule Change

The Commission finds that the

proposed rule change is consistent with

the requirements of the Act 7 and the

rules and regulations thereunder

applicable to a national securities

association. Specifically, the proposed

rule change is consistent with Section

15A(b)(5) 8 in that the proposal should

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 Association operates or

controls. In addition, the proposed rule

change may further the national market

system’s goal in Section 11A(a)(1)(C)(iii)

of assuring the availability to investors

of market information.9

Technological developments over the

last few years have allowed vendors to

provide their customers with more

efficient and cost effective methods of

executing securities transactions. The

Commission expects that reduced

market data fees will further benefit the

investor by reducing the costs of

executing transactions. For the investor

to make sound financial decisions,

efficient and inexpensive access to realtime market data information is vital.

Thus, the Commission believes that a

retroactive application of a permanent

reduction in the non-professional

market data fees should enhance

investor access, and may encourage

increased investor participation in the

securities markets.

Pursuant to section 19(b)(2),10 the

Commission finds good cause for

approving the proposed rule change

prior to the thirtieth day after the date

30256 Federal Register / Vol. 66, No. 108 / Tuesday, June 5, 2001 / Notices

11 Id.

12 17 CFR 200.30–3(a)(12).

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

2 17 CFR 240.19b–4.

3See letter from James E. Buck, Senior Vice

President and Secretary, NYSE, to Nancy Sanow,

Assistant Director Division of Market Regulation,

Commission, dated May 21, 2001 (‘‘Amendment

No. 1’’). In Amendment No. 1, the NYSE amended

the proposed rule text to reflect the correct wording

of current NYSE Rule 36,

4See Securities Exchange Act Release No. 43658

(December 1, 2000), 65 FR 77408 (December 11,

2000).

5See Securities Exchange Act Release No. 44272

(May 5, 2001).

6As discussed above, the NYSE has proposed to

eliminate the separate capital requirement with

respect to ETF specialists. See also Securities

Exchange Act Release No. 44175 (April 11, 2001),

66 FR 19825 (April 17, 2001).

7Currently, NYSE Rule 36.30 allows specialists to

have telephone lines to the floor of an options or

futures exchange for the purpose of entering

hedging orders.

of publication of notice of the filing in

the Federal Register. The Commission

believes that granting accelerated

approval of the proposal will allow

Nasdaq to expenditiously implement

the permanent reduction in market data

fees, on a retroactive basis, without any

unnecessary delay and should confer a

benefit upon those firms that provide

real-time data to their customers and

subscribers. The Commission also notes

that it did not receive any comments on

the pilot program. Accordingly, the

Commission does not believe that the

current filing raises any regulatory

issues not raised by the previous filing.

It is therefore ordered, pursuant to

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

proposed rule change, as amended, (SR–

NASD–2001–32) is approved on an

accelerated basis.

For the Commission, by the Division of

market Regulation, pursuant to delegated

authority.12

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 01–14030 Filed 6–4–01; 8:45 am]

BILLING CODE 8010–01–M

SECURITIES AND EXCHANGE

COMMISSION

[Release No. 34–44352; File No. SR–NYSE–

2001–08]

Self-Regulatory Organizations; Notice

of Filing of Proposed Rule Change and

Amendment No. 1 Thereto by the New

York Stock Exchange, Inc. Amending

Its Rules To Provide for the Trading of

Exchange-Traded Funds on an

Unlisted Trading Privileges Basis

May 25, 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 April 25,

2001, the New York Stock Exchange,

Inc. (‘‘NYSE’’ or ‘‘Exchange’’) filed with

the Securities and Exchange

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

the proposed rule changes is described

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

have been prepared by the Exchange.

On May 22, 2001, the NYSE filed

Amendment No. 1 to the proposed rule

change.3 The Commission is publishing

this notice to solicit comments on the

proposed rule change, as amended, from

interested persons.

I. Self-Regulatory Organization’s

Statement of the Terms of Substance of

the Proposed Rule Change

The Exchange proposes to amend the

following NYSE rules and policies to

accommodate the trading of certain

exchange-trade funds (‘‘ETFs’’) on an

unlisted trading privileges (‘‘UTP’’)

basis: NYSE Rule 98, NYSE Rule 36,

paragraph (1) of the Guidelines to NYSE

Rule 105, NYSE Rule 111, NYSE Rule

13, NYSE Rules 104.20 and 104.21, and

the NYSE’s Market-On-Close/Limit-AtThe-Close and Pre-Opening Price

Indications Policies.

The text of the proposed rule change

is available upon request from the Office

of the Secretary, the NYSE or the

Commission.

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

placed 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

As part of its overall business strategy,

the Exchange believes that it

appropriate to trade ETFs on the NYSE

Floor. In December 2000, the Exchange

began trading an ETF on the S&P Global

100 (symbol IOO).4 The Exchange

intends to trade additional ETFs listed

by other ETF sponsors, on a UTP basis,

that are currently listed and trading on

other markets. These ETFs may include

the NASDAQ 100 Trust (symbol QQQ),

Standard and Poor’s Depositary Receipts

(symbol SPY) and the Dow Industries

DIAMONDS (symbol DIA). It should be

noted the UTP ETFs will trade at a post

separate from any other type of security

trading on the Exchange.

Summary of Proposed Rule and Policy

Changes

NYSE Rule 98

Exchange Rule 98 provides that

affiliates of a specialist organization can

receive an exemption from certain rules

applicable to specialists (principally

impacting proprietary trading and

investment banking), providing that

they establish a system of information

barriers between themselves and the

affiliated specialist. One of the

conditions for the NYSE Rule 98

exemption is that the specialist

organization be capitalized separately

and apart from any affiliate. The

Exchange is proposing to delete this

requirement in the case of a specialist

organization that is registered solely in

ETFs. The Exchange believes that the

question of adequacy of capital can be

appropriately addressed by the special

allocation committee 5 in allocating the

ETF. However, a specialist organization

that is registered only in ETF’s will

remain subject to the minimum capital

requirements specified in NYSE Rule

104.20.

NYSE Rule 105

Currently, Guideline (1) to NYSE Rule

105 prohibits affiliates of specialist

units from acting as a primary market

maker in the option on a specialty

security. The NYSE proposes to permit

an affiliate of a NYSE ETF specialist to

act in any market making capacity with

respect to options on an ETF as long as

NYSE rule 98 information barriers are

established.6 the Exchange believes that,

because ETFs are derivatively priced,

the conflicts of interest with respect to

market making in both the underlying

security and its corresponding option

are not present. The Exchange also

proposes to permit an affiliate of the

EFT specialist to act in a market making

capacity (but not as a specialist) in the

EFT itself on another market center so

long as NYSE Rule 98 information

barriers are established.

NYSE Rules 36.30 and 111

NYSE Rule 36.30 governs the

establishment of telephone or electronic

communications between the

Exchange’s trading floor and any other

location.7 The Exchange proposes to