Document ID: SEC-2006-1029-0001
Agency: sec
Document Type: Notice
Title: Self-regulatory organizations; proposed rule changes: National Association of Securities Dealers, Inc.
Posted Date: 2006-08-10T04:00Z

[Federal Register: August 10, 2006 (Volume 71, Number 154)]
[Notices]               
[Page 45882-45883]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr10au06-134]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-54268; File No. SR-NASD-2006-078]

 
 Self-Regulatory Organizations; National Association of 
Securities Dealers, Inc.; Notice of Filing and Immediate Effectiveness 
of Proposed Rule Change and Amendment Nos. 1 and 2 Thereto Regarding 
the Pricing Schedule for NASD Members Using the Nasdaq Market Center 
and Nasdaq's Brut and Inet Facilities

August 3, 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 June 30, 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 Nasdaq. On July 25, 
2006, Nasdaq filed Amendment No. 1 to the proposed rule change. On July 
26, 2006, Nasdaq filed Amendment No. 2 to the proposed rule change. 
Nasdaq filed the proposed rule change pursuant to Section 
19(b)(3)(A)(ii) of the Act,\3\ and Rule 19b-4(f)(2) thereunder,\4\ 
which renders the proposal effective upon filing with the Commission. 
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.
    \3\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \4\ 17 CFR 240.19b-4(f)(2).
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    Nasdaq proposes to modify the pricing for NASD members using the 
Nasdaq Market Center and Nasdaq's Brut and Inet Facilities (``Nasdaq 
Facilities'').\5\ Nasdaq states that it will implement the proposed 
rule change on July 3, 2006. The text of the proposed rule change, as 
amended, is set forth below. Proposed new language is in italic; 
proposed deletions are in [brackets].\6\
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    \5\ The Commission notes that Nasdaq filed a proposed rule 
change to apply the same pricing change to non-members. See 
Securities Exchange Act Release No. 54269 (August 3, 2006) (File No. 
SR-NASD-2006-079).
    \6\ Changes are marked to the rule text that appears in the 
electronic NASD Manual found at http://www.nasd.com, as further amended on 

an immediately effective basis by SR-NASD-2006-057 (May 1, 2006). 
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), 71 FR 3550 (January 23, 2006) (File 
No. 10-131).
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7010. System Services
    (a)-(h) No change.
    (i) Nasdaq Market Center, Brut, and Inet Order Execution and 
Routing
    (1)-(5) No change.
    (6) Except as provided in paragraph (7), the following charges 
shall apply to the use of the order execution and routing services of 
the Nasdaq Facilities by members for securities subject to the 
Consolidated Quotations Service and Consolidated Tape Association plans 
other than Exchange-Traded Funds (``Covered Securities''):

                             Order Execution
------------------------------------------------------------------------

------------------------------------------------------------------------
Order that accesses the Quote/
 Order of a Nasdaq Facility
 market participant:
    Charge to member entering    $0.0007 per share executed.
     order.
Credit to member providing
 liquidity:
    Members with an average      $0.0005 per share executed.
     daily volume through the
     Nasdaq Facilities in
     Covered Securities during
     the month of more than 5
     million shares of
     liquidity accessed,
     provided, or routed but
     less than 10 million
     shares of liquidity
     provided.
    Members with an average      $0.0006 per share executed.
     daily volume through the
     Nasdaq Facilities in
     Covered Securities during
     the month of 10 million or
     more shares of liquidity
     provided.
    Other members..............  No credit.
------------------------------------------------------------------------

                              Order Routing
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------------------------------------------------------------------------
Order routed to Amex...................  $0.003 per share executed
                                          (plus, in the case of orders
                                          charged a fee by the Amex
                                          specialist, $0.01 per share
                                          executed).
Order routed through the ITS...........  $0.0007 per share executed.
Order routed to NYSE...................  See DOT fee schedule in Rule
                                          7010(i)(7).
Order for NYSE-listed Covered Security   $0.001 per share executed.
 routed to venue other than the NYSE.
Order for Covered Security listed on     $0.003 per share executed.
 venue other than the NYSE and routed
 to venue other than Amex.
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    (7)-(9) No change.
    (j)-(y) No change.
* * * * *

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, as 
amended, and discussed any comments it received on the proposed rule 
change, as amended. 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.

[[Page 45883]]

A. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    Nasdaq is proposing to increase its liquidity provider credit for 
NASD members using the Nasdaq Facilities to trade securities listed on 
the New York Stock Exchange, the American Stock Exchange, and other 
exchanges. Specifically, the change applies to securities subject to 
the Consolidated Quotations Service and Consolidated Tape Association 
plans other than Exchange-Traded Funds (``Covered Securities'').\7\ 
Nasdaq currently offers a liquidity provider credit of $0.0005 per 
share to firms with an average daily volume through the Nasdaq 
Facilities in Covered Securities during a month of more than 5 million 
shares of liquidity accessed, provided, or routed. Effective July 3, 
2006, Nasdaq will offer an increased credit of $0.0006 per share for 
firms with an average daily volume through the Nasdaq Facilities in 
Covered Securities during a month of 10 million or more shares of 
liquidity provided. Nasdaq believes the change should encourage firms 
to make greater use of the Nasdaq Facilities for trading Covered 
Securities, particularly with regard to using the Nasdaq Facilities to 
provide liquidity to support executions.
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    \7\ Exchange-Traded Funds listed on venues other than Nasdaq are 
subject to the same fee schedule as Nasdaq-listed securities, under 
NASD Rule 7010(i)(1).
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2. Statutory Basis
    Nasdaq believes that the proposed rule change, as amended, 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 NASD operates or controls. Nasdaq states 
that the proposed rule change, as amended, would increase the liquidity 
provider credit available to firms that make substantial use of the 
Nasdaq Facilities for trading Covered Securities, thereby reducing 
overall trading costs.
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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, as amended, 
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

    The foregoing rule change is subject to section 19(b)(3)(A)(ii) of 
the Act \10\ and subparagraph (f)(2) of Rule 19b-4 thereunder \11\ 
because it establishes or changes a due, fee, or other charge 
applicable only to a member imposed by the self-regulatory 
organization. Accordingly, the proposal is effective upon Commission 
receipt of the filing. At any time within 60 days of the filing of the 
proposed rule change, the Commission may summarily abrogate such rule 
change if it appears to the Commission that such action is necessary or 
appropriate in the public interest, for the protection of investors, or 
otherwise in furtherance of the purposes of the Act.\12\
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    \10\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \11\ 17 CFR 240.19b-4(f)(2).
    \12\ 15 U.S.C. 78s(b)(3)(C). For purposes of calculating the 60-
day period within which the Commission may summarily abrogate the 
proposal, the Commission considers the period to commence on July 
26, 2006, the date on which the Exchange submitted Amendment No. 2.
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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. 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 No. SR-NASD-2006-078 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.
    All submissions should refer to File No. SR-NASD-2006-078. 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 will also 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 No. SR-NASD-2006-078 and should be submitted on or before August 
31, 2006.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\13\
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    \13\ 17 CFR 200.30-3(a)(12).
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J. Lynn Taylor,
Assistant Secretary.
 [FR Doc. E6-13008 Filed 8-9-06; 8:45 am]

BILLING CODE 8010-01-P