[Federal Register Volume 66, Number 32 (Thursday, February 15, 2001)]
[Notices]
[Pages 10544-10545]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 01-3804]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-43943; File No. SR-NASD-00-79]


Self-Regulatory Organizations; Order Granting Accelerated 
Approval of Proposed Rule Change by the National Association of 
Securities Dealers, Inc., Relating to EWN II Fees for NASD Members

February 8, 2001.

Introduction

    On December 21, 2000, the National Association of Securities 
Dealers, Inc. (``NASD''), through its subsidiary, The Nasdaq Stock 
Market, Inc. (``Nasdaq''), submitted to the Securities and Exchange 
Commission (``Commission''), pursuant to section 19(b)(1) of the 
Securities Exchange Act of 1934 (``Act'') \1\ and Rule 19b-4 
thereunder,\2\ a proposed rule change relating to Enterprise Wide 
Network II (``EWN II'') Fees for NASD Members.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
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    The proposed rule change was published for comment in the Federal 
Register on January 16, 2001.\3\ No comments were received on the 
proposal. This order approves the proposal.
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    \3\ Securities Exchange Act Release No. 43814 (January 8, 2001), 
66 FR 3630.)
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II. Description of the Proposal

    In its proposed rule change, Nasdaq proposed to pass on costs 
associated with increased bandwidth demands of the EWN II to NASD 
members for the period December 1-12, 2000.\4\ In the September/October 
200 issue of Nasdaq's Subscriber Bulletin,\5\ Nasdaq announced that it 
had increased the bandwidth of its Enterprise Wide Network II from 128 
kilobits (``kb'') to 192 kb. This increased bandwidth provides Nasdaq 
with the ability to support increased share volume and new products and 
trading applications that will be introduced. A description of the 
history of EWN II and the recent bandwith increase may be found in SR-

[[Page 10545]]

NASD-00-73.\6\ The Subscriber Bulletin also announced that the 
increased cost of the expanded bandwidth ($375 per month per circuit) 
would be passed on to Nasdaq subscribers beginning December 1, 2000. 
Nasdaq absorbed all of increased costs for the month of November 2000.
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    \4\ Nasdaq previously filed under section 19(b)(3)(A)(ii) a 
proposed rule change to increase the fees beginning December 13, 
2000, which was immediately effective upon filing. Securities 
Exchange Act Release No. 43769 (December 22, 2000) (SR-NASD-00-73), 
66 FR 826 (January 4, 2001). Nasdaq also filed a parallel rule 
filing to effect amendments to the EWN II fee structure to apply to 
non-NASD members. Securities Exchange Act Release No. 43768 
(December 22, 2000) (SR-NASD-00-74), 66 FR 824 (January 4, 2001).
    \5\ Subscriber Bulletins are mailed to Nasdaq Workstation II 
subscribers and also may be found at www.nasdaqtrader.com/trader/news/subscriberbulletins.
    \6\ Securities Exchange Act Release No. 43769 (December 22, 
2000) (SR-NASD-00-73), 66 FR 826 (January 4, 2001).
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    Because the original filing relating to NASD members was made under 
section 19(b)(3)(A)(ii), which makes the rule change immediately 
effective upon filing with the Commission, the fee increase became 
effective as of December 13, 2000. In this filing, Nasdaq seeks to 
recover the costs associated with the expanded bandwidth for the period 
of December 1-12, 2000, as announced in the Subscriber Bulletin.

III. Commission's Findings and Order Granting Accelerated Approval 
of Proposed Rule Change

    The Commission has reviewed the Nasdaq's proposed rule change and 
finds, for he reasons set forth below, that the proposal is consistent 
with the requirements of section 15A of the Act \7\ and the rules and 
regulations thereunder applicable to a national securities exchange. 
Specifically, the Commission believes the proposal is consistent with 
sections 15A(b)(5) of the Act.\8\ Section 15A(b)(5) requires that the 
rules of a registered securities association 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. The fee increases proposed by Nasdaq 
would pass on the costs associated with increasing the capacity of EWN 
II to users of the Nasdaq Workstation II service.
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    \7\ 15 U.S.C. 78o-3.
    \8\ 15 U.S.C. 78o-3(b)(5).
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    The Commission believes that Nasdaq's proposal to increase NASD 
members' fees relating to the EWN II for the period December 1-12, 2000 
is a fair means of recovering the costs associated with increasing the 
bandwidth of the EWN II. The Commission finds that the proposal is 
consistent with section 15A(b)(5) \9\ insofar as the new fees reflect 
the additional cost that Nasdaq is incurring as a result of the 
expanded bandwidth. The Commission believes that such fee increases, 
necessitated by recent system volume increases, are a reasonable means 
by which Nasdaq intends to ensure adequate capacity of its EWN II 
system and thus, protect the ongoing integrity of the Nasdaq 
market.\10\
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    \9\ Id.
    \10\ In approving this rule, the Commission notes that it has 
also considered the proposed rule's impact on efficiency, 
competition, and capital formation. 15 U.S.C. 78c(f).
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    Nasdaq has requested that the Commission approve this proposed rule 
change on an accelerated basis.\11\ The original EWN II fee increases 
for members were effective upon filing with the Commission on December 
13, 2000, and have been subject to a full notice and comment 
period,\12\ and that this current proposal imposing the same fees for 
the period of December 1-12, 2000, has been subject to a full notice 
and comment period.\13\ No comments were received on either filing. 
Thus, the proposed rule change concerns issues that previously have 
been the subject to a full comment period pursuant to section 19(b) of 
the Act.\14\ For these reasons, the Commission believes accelerated 
approval of the proposal is appropriate. Accordingly, the Commission 
finds good cause for approving the proposed rule change (SR-NASD-00-79) 
prior to the thirtieth day after the date of publication of notice 
thereof in the Federal Register.
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    \11\ Telephone conversation between Mary Dunbar, Vice President, 
Nasdaq, and Geoffrey Pemble, Attorney, Division of Market 
Regulation, Commission, on February 7, 2001.
    \12\ Securities Exchange Act Release No. 43769 (December 22, 
2000) (SR-NASD-00-73), 66 FR 826 (January 4, 2001).
    \13\ Securities Exchange Act Release No. 43814 (January 8, 2001) 
(SR-NASAD-00-79), 66 FR 3630 (January 16, 2001).
    \14\ 15 U.S.C. 78s(b).
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IV. Conclusion

    It is therefore Ordered, pursuant to section 19(b)(2) of the 
Act,\15\ that the proposed rule change (SR-NASD-00-79) is approved.
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    \15\ 15 U.S.C. 78s(b)(2).
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    For the Commission, by the Division of Market Regulation, pursuant 
to delegated authority.\16\
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    \16\ 17 CFR 200.30-3(a)(12).

Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 01-3804 Filed 2-14-01; 8:45 am]
BILLING CODE 8010-01-M