[Federal Register Volume 60, Number 46 (Thursday, March 9, 1995)]
[Notices]
[Page 12994]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-5701]



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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-35438; File No. SR-NASD-95-01]


Self-Regulatory Organizations; Order Approving Proposed Rule 
Change by the National Association of Securities Dealers, Inc. Relating 
to Subscriber Fees For Non-NASD Members Receiving the Nasdaq 
Workstation<SUP>TM II Functionality

March 2, 1995.
    On January 9, 1995, the National Association of Securities Dealers, 
Inc. (``NASD'' or ``Association'') filed with the Securities and 
Exchange Commission (``Commission'' or ``SEC''), pursuant to Section 
19(b)(1) of the Securities Exchange Act of 1934 (``Act''),\1\ a 
proposed rule change to extend to non-NASD members (e.g., institutional 
investors) receiving the second generation of Nasdaq Workstation<SUP>TM 
functionality (``NWII'') the same subscriber fees that members must now 
pay. The Commission published notice of the proposed rule change in the 
Federal Register on February 2, 1995.\2\ No comments were received in 
response to the notice. For the reason discussed below, the Commission 
is approving the proposed rule change.

    \1\15 U.S.C. 78s(b)(1).
    \2\Securities Exchange Act Release No. 35284 (January 27, 1995), 
60 FR 6582.
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I. The Terms of Substance of the Proposed Rule Change

    On December 14, 1994, the NASD submitted a proposed rule change--
File No. SR-NASD-94-76--to the Commission that established a new fee 
schedule for NASD member firms receiving the second generation of 
NWII.\3\ The fee schedule contained in File No. SR-NASD-94-76 became 
effective upon receipt by the SEC in accordance with Section 
19(b)(3)(A)(ii) of the Act and Rule 19b-4(a) thereunder.\4\ As 
specified in File No. SR-NASD-94-76, the new subscriber fees for NWII 
will add to Sections A(9) and E(5) of Part VIII of Schedule D to the 
NASD By-Laws.

    \3\The computer facilities that support the provision of NWII 
are operated by the Nasdaq Stock Market, Inc. (``NSMI''), a wholly-
owned subsidiary of the NASD.
    \4\See Release No. 34-35189 (January 3, 1995), 60 FR 3014 
(January 12, 1995).
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    The NASD then filed the instant rule change to extend to non-NASD 
members (e.g., institutional investors) receiving NWII functionality 
the same subscriber fees that members must now pay: (a) a service 
charge of $100/month per server; (b) a display charge of $500/month per 
presentation device; and (c) a charge of $1,150/month for additional 
circuits. This rule change does not, however, entail any further 
modification to the fee schedule language for NWII that was set forth 
in File No. SR-NASD-94-76.
    The sole purpose of this rule change is to extend to non-NASD 
members receiving the NWII, the same fees that now apply to NASD 
members that subscribe to the NWII. Currently, non-NASD members can 
access Level 2 Nasdaq Workstation service by subscription to the 
original version of the Nasdaq Workstation service (``NWI''). The NASD, 
however, is in the process of replacing NWI with NWII.\5\ As the NWII 
roll-out proceeds, it will completely replace the existing NWI for all 
classes of subscribers. The instant rule change will ensure that the 
same NWII charges are paid by all subscribers, including those that are 
not members of the NASD.

    \5\The NWII roll-out will occur in five phases with the final 
phase scheduled for completion in mid-1996. Each phase consists of 
installing NWII at all subscriber sites in a defined geographic 
area. Thus, while the roll-out proceeds, some subscribers will 
continue to utilize NWI and will pay the existing charges for that 
service.
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II. Commission Findings

    The Commission believes that the 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 changes among members, issuers, and other persons using any 
facility or system that the Association operates or controls. This rule 
provides that the newly established fees for members receiving the NWII 
functionality will also be paid by non-member subscribers receiving the 
NWII.\6\ This, in turn, effectuates fairness in the recovery of the 
applicable costs from the entire subscriber base. As described in this 
notice, NWII is being implemented in phases with all current NWI 
subscribers in a defined area being converted to NWII. Also non-NASD 
members that are converted to NWII will be liable for the new fees; NWI 
subscribers (i.e., members and non-members) will continue to pay the 
NWI service fees until they are converted. The extension of the new 
NWII fees schedule to non-members will result in the imposition of 
uniform fees and an equitable allocation of operating costs among all 
subscribers receiving the NWII functionality.

    \6\NWI and NWII both permit the delivery of either Level 2 or 
Level 3 Nasdaq service. Subscription to Level 3 is limited to NASD 
members that meet the financial and operational requirements for 
market making. Subscription to Level 2 Nasdaq service is open to 
non-members as well as members because it does not provide the 
functionality needed to enter quotations as a market maker.
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    It is therefore ordered, pursuant to section 19(b)(2) of the Act, 
that the proposed rule change SR-NASD-95-01 be, and hereby is, 
approved.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\7\

    \7\17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 95-5701 Filed 3-8-95; 8:45 am]
BILLING CODE 8010-01-M