Document ID: SEC-2006-0202-0001
Agency: sec
Document Type: Notice
Title: Self-regulatory organizations; proposed rule changes: National Association of Securities Dealers, Inc.
Posted Date: 2006-02-15T05:00Z

[Federal Register: February 15, 2006 (Volume 71, Number 31)]
[Notices]               
[Page 8027-8029]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr15fe06-145]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-53254; File No. SR-NASD-2006-008]

 
Self-Regulatory Organizations; National Association of Securities 
Dealers, Inc.; Notice of Filing of Proposed Rule Change To Re-establish 
a Fee Pilot for National Quotation Data Service

February 8, 2006.
    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 January 24, 2006, the National Association of Securities Dealers, 
Inc. (``NASD''), through its subsidiary, The Nasdaq Stock Market, Inc. 
(``Nasdaq''), 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 Nasdaq. The 
Commission is publishing this notice to solicit comments on the 
proposed rule change, as amended, from interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    Nasdaq proposes to re-establish retroactively through September 1, 
2005, a pilot program under NASD Rule 7010(h), which reduced from $50 
to $10 the monthly fee that non-professional users pay to receive 
National Quotation Data Service (``NQDS''). Nasdaq is simultaneously 
filing a separate rule proposal to re-establish the same pilot program 
prospectively through December 29, 2006, the date the pilot 
inadvertently was permitted to lapse. The text of the rule is below. 
There is no new proposed language.\3\
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    \3\ Changes are marked to the rule text that appears in the 
electronic NASD Manual found at http://www.nasd.com. Prior to the 

date when The Nasdaq Stock Market LLC (``Nasdaq LLC'' commences 
operations, Nasdaq LLC will file a conforming change to the rules of 
Nasdaq LLC approved in Securities Exchange Act Release No. 53128 
(January 13, 2006).
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7010. System Services
* * * * *
(h) National Quotation Data Service (NQDS)
    (1) Except as provided in subparagraph (2) of this section, the 
charge to be paid for each interrogation or display device receiving 
all or any portion of the information disseminated through the NQDS 
shall be $50.00 per

[[Page 8028]]

month. The NQDS information that will be provided through service 
consists of individual market maker quotations, Nasdaq Level 1 Service 
and the Last Sale Information Service.
    (2) The charge to be paid by a non-professional for each 
interrogation or display device receiving all or any portion of the 
NQDS information disseminated through an authorized vendor shall be 
$10.00 per month.
    (3) A ``non-professional'' is a natural person who is neither:
    (A) Registered or qualified in any capacity with the Commission, 
the Commodity Futures Trading Commission, any state securities agency, 
any securities exchange or association, or any commodities or futures 
contract market or association;
    (B) Engaged as an ``investment adviser'' as that term defined in 
Section 201(11) of the Investment Advisors Act of 1940 (whether or not 
registered or qualified under that Act); nor
    (C) Employed by a bank or other organization exempt from 
registration under federal or state securities laws to perform 
functions that would require registration or qualification if such 
functions were performed for an organization not so exempt.

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
    Nasdaq proposes to re-establish retroactively through September 1, 
2005, the fee reduction pilot program under NASD Rule 7010(h) that 
reduced from $50 to $10 the monthly fee that non-professional users pay 
to receive NQDS.
    NQDS delivers market maker quotations, Nasdaq Level 1 \4\ service 
(including calculation and display of the inside market), and last sale 
information that is dynamically updated on a real-time basis. NQDS data 
is used not only by firms, associated persons, and other market 
professionals, but also by non-professionals who receive the service 
through authorized vendors, including, for example, on-line brokerage 
firms. Prior to August 31, 2000, NQDS data was available through 
authorized vendors at a monthly rate of $50 for professionals and non-
professionals users alike. In August 2000, the NASD, through Nasdaq, 
filed a rule change to reduce from $50 to $10 the monthly fee that non-
professional users pay to receive NQDS data.\5\ The Commission approved 
the pilot on August 22, 2000, and the fee reduction commenced on August 
31, 2000 on a one-year pilot basis.\6\ On September 5, 2001, August 29, 
2002, August 15, 2003, and August 20, 2004, Nasdaq filed proposed rule 
changes to extend the pilot for additional one-year periods.\7\
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    \4\ Pursuant to NASD Rule 7010(e), Nasdaq separately distributes 
Level 1 data to non-professionals for a monthly fee of $1.00.
    \5\ See Securities Exchange Act Release No. 43190 (August 22, 
2000), 65 FR 52460 (August 29, 2000) (notice of filing and order 
granting accelerated approval of NASD-00-47).
    \6\ Id.
    \7\ See Securities Exchange Act Release Nos. 44788 (September 
13, 2001), 66 FR 48303 (September 19, 2001); 46446 (August 30, 
2002), 67 FR 57260 (September 9, 2002); 48386 (August 21, 2003), 68 
FR 51618 (August 27, 2003); and 50318 (September 3, 2004), 69 FR 
54821 (September 10, 2004).
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    Nasdaq has consistently supported broad, effective dissemination of 
market information to public investors. Thus, Nasdaq is proposing to 
re-establish the fee-reduction pilot for the remainder of 2006. The 
pilot would cover the period from January 24, 2006, through December 
29, 2006. Nasdaq notes that the existing pilot reduced by 80% the fees 
that non-professionals paid for NQDS data prior to August 31, 2000. 
Continuing the reduction of NQDS for non-professional users 
demonstrates Nasdaq's continued commitment to individual investors and 
responds to the dramatic increase in the demand for real-time market 
data by non-professional market participants. In addition, NASD member 
firms often supply real-time market data to their customers through 
automated means. Thus, NASD member firms' customers would benefit from 
the continued fee reduction.
2. Statutory Basis
    Nasdaq believes that the proposed rule change is consistent with 
the provisions of section 15A of the Act,\8\ in general, and with 
section 15A(b)(5) of the Act,\9\ in particular, in that it 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 Nasdaq operates or controls, and it does not unfairly 
discriminate between customers, issuers, brokers or dealers. Nasdaq 
also believes that the fee reduction enhances the public's access to 
market data that is relevant to investors when they make financial 
decisions and encourages increased public participation in the 
securities markets.
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    \8\ 15 U.S.C. 78o-3.
    \9\ 15 U.S.C. 78o-3(b)(5).
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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

    Written comments were neither solicited nor received.

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 NASD 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 is consistent with the Act. Comments may be submitted by any of 
the following methods:

Electronic Comments

     Use the Commission's Internet comment form (http://www.sec.gov/rules/sro.shtml.
); or     Send an e-mail to rule-comments@sec.gov. Please include 

File Number SR-NASD-2006-008 on the subject line.

Paper Comments

     Send paper comments in triplicate to Nancy M. Morris, 
Secretary, Securities and Exchange Commission, Station Place, 100 F 
Street, NE., Washington, DC 20549-1090.

[[Page 8029]]

    All submissions should refer to File Number SR-NASD-2006-008. This 
file number should be included on the subject line if e-mail is used. 
To help the Commission process and review your comments more 
efficiently, please use only one method. The Commission will post all 
comments on the Commission's Internet Web site (http://www.sec.gov/rules/sro.shtml
). 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 also will be available for inspection and copying at the 
principal office of the NASD. All comments received will be posted 
without change; the Commission does not edit personal identifying 
information from submissions. You should submit only information that 
you wish to make available publicly. All submissions should refer to 
File Number SR-NASD-2006-008 and should be submitted on or before March 
8, 2006.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\10\
J. Lynn Taylor,
Assistant Secretary.
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    \10\ 17 CFR 200.30-3(a)(12).
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 [FR Doc. E6-2110 Filed 2-14-06; 8:45 am]

BILLING CODE 8010-01-P