Document ID: SEC-2006-0048-0001
Agency: sec
Document Type: Notice
Title: Self-regulatory organizations; proposed rule changes: National Association of Securities Dealers, Inc.
Posted Date: 2006-01-17T05:00Z

[Federal Register: January 17, 2006 (Volume 71, Number 10)]
[Notices]               
[Page 2607-2608]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr17ja06-101]                         

[[Page 2607]]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-53082; File No. SR-NASD-2005-155]

 
Self-Regulatory Organizations; National Association of Securities 
Dealers, Inc.; Notice of Filing and Order Granting Accelerated Approval 
of a Proposed Rule Change and Amendment No. 1 Thereto To Modify the 
Pricing for Non-Members Using Nasdaq's Brut Facility

 January 9, 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 December 28, 2005, 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 and 
II below, which Items have been prepared by Nasdaq. On December 30, 
2005, Nasdaq submitted 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, and at the 
same time is granting accelerated approval of the proposed rule change, 
as amended.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ Partial Amendment No. 1 clarified that the proposed rule 
change is a pilot program.w
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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 non-members using 
Nasdaq's Brut Facility (``Brut''). Nasdaq requests approval to 
implement the proposed rule change, as amended, retroactively as of 
January 1, 2006, for a pilot period running through February 28, 2006. 
The text of the proposed rule change, as amended, is below. Proposed 
new language is in italics. Proposed deletions are in [brackets].
* * * * *
7010. System Services
    (a)-(h) No change.
    (i) Nasdaq Market Center and Brut Facility Order Execution
    (1)-(5) No change.
    (6) The fees applicable to non-members using Nasdaq's Brut Facility 
shall be the fees established for members under Rule 7010(i), as 
amended by SR-NASD-2005-019, SR-NASD-2005-035, SR-NASD-2005-048, and 
SR-NASD-2005-071, SR-NASD-2005-125, [and] SR-NASD-2005-137, and SR-
NASD-2005-154, and as applied to non-members by SR-NASD-2005-020, SR-
NASD-2005-038, SR-NASD-2005-049, SR-NASD-2005-072, SR-NASD-2005-126, 
[and] SR-NASD-2005-138, and SR-NASD-2005-155.
    (j)-(v) 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 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
    In SR-NASD-2005-137 and SR-NASD-2005-138,\4\ Nasdaq created a pilot 
program under which liquidity providers (i.e., market participants that 
post quotes or orders that are accessed by incoming orders) \5\ may 
receive a credit of $0.0005 per share executed with respect to forty 
stocks listed on the New York Stock Exchange.\6\
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    \4\ Securities Exchange Act Release Nos. 52939 (December 9, 
2005), 70 FR 75229 (December 19, 2005) (SR-NASD-2005-137) and 52938 
(December 9, 2005), 70 FR 75231 (December 19, 2005) (SR-NASD-2005-
138).
    \5\ Telephone conversation between John Yetter, Associate 
General Counsel, Exchange, and Michou Nguyen, Attorney, Division of 
Market Regulation, Commission, on January 4, 2006.
    \6\ Advanced Micro Devices Inc. (AMD); Apache Corp. (APA); AT&T 
Corp. (T); Avaya, Inc. (AV); Baker Hughes, Inc. (BHI); BJ Services 
Co. (BJS); Bristol-Myers Squibb Co. (BMY); Burlington Resources, 
Inc. (BR); Calpine Corp. (CPN); Charles Schwab Corp. (SCH); 
Citigroup Inc. (C); ConocoPhillips (COP); Corning Inc. (GLW); Devon 
Energy Corp. (DVN); EMC Corp. (EMC); Exxon Mobil Corp. (XOM); Ford 
Motor Co. (F); Gateway, Inc. (GTW); General Electric Co. (GE); 
Halliburton Co. (HAL); Hewlett-Packard Co. (HPQ); Johnson & Johnson 
(JNJ); JPMorgan Chase & Co. (JPM); Kohl's Corp. (KSS); LSI Logic 
Corp. (LSI); Micron Technology, Inc. (MU); Motorola, Inc. (MOT); 
Noble Corp. (NE); Occidental Petroleum Corp. (OXY); Office Depot 
Inc. (ODP); Pfizer Inc. (PFE); Phelps Dodge Corp. (PD); Pulte Homes, 
Inc. (PHM); Qwest Communications International Inc. (Q); 
Schlumberger Ltd. (SLB); Solectron Corp. (SLR); Sovereign Bancorp, 
Inc. (SOV); Time Warner, Inc. (TWX); Valero Energy Corp. (VLO); and 
Verizon Communications, Inc. (VZ).
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    As stated in the prior filings, Nasdaq notes that it planned to run 
the pilot for a period of at least three months; however, Nasdaq states 
that, because the authority for this proposal provided by the Nasdaq 
Board of Directors ran only through December 31, 2005, Nasdaq needed to 
obtain Board approval for a longer pilot. Having obtained such 
approval, Nasdaq filed to extend the pilot for NASD members through 
February 28, 2005.\7\ In this filing, Nasdaq is proposing to apply the 
same extension to non-NASD members that use Nasdaq's Brut Facility.
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    \7\ See SR-NASD-2005-154.
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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 the proposed rule change, as amended, 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. The proposed rule change, as amended, 
applies to non-members that use Nasdaq's Brut Facility a fee change 
that is being implemented for NASD members that use the Nasdaq Market 
Center and/or Nasdaq's Brut Facility. Accordingly, Nasdaq believes that 
the proposed rule change, as amended, promotes an equitable allocation 
of fees between members and non-members using Nasdaq's order execution 
facilities. Nasdaq states that the proposed change, as amended, will 
continue a pilot to make a liquidity provider credit available to all 
market participants that opt to provide liquidity through Nasdaq or 
Brut to support executions in any of forty stocks included in the pilot 
program.
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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

    Nasdaq states that written comments were neither solicited nor 
received.

[[Page 2608]]

III. 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 Number SR-NASD-2005-155 on the subject line.

Paper Comments

     Send paper comments in triplicate to Nancy M. Morris, 
Secretary, Securities and Exchange Commission, 100 F Street, NE., 
Washington, DC 20549-9303.

All submissions should refer to File Number SR-NASD-2005-155. 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-2005-155 and should be submitted on or before 
February 7, 2006.

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

    The Commission finds that the proposed rule change is consistent 
with the requirements of the Act and the rules and regulations 
thereunder applicable to a self-regulatory organization.\10\ 
Specifically, the Commission believes that the proposed rule change, as 
amended, is consistent with section 15A(b)(5) of the Act,\11\ which 
requires that the rules of the self-regulatory organization provide for 
the equitable allocation of reasonable dues, fees, and other charges 
among members and issuers and other persons using any facilities or 
system which it operates or controls.
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    \10\ The Commission has considered the proposed rule's impact on 
efficiency, competition and capital formation. 15 U.S.C. 78c(f).
    \11\ 15 U.S.C. 78o-3(b)(5).
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    The Commission notes that this proposal would retroactively modify 
pricing for non-NASD members using the Nasdaq's Brut Facility to extend 
a pilot running through February 28, 2005. This proposal would permit 
the schedule for non-NASD members to mirror the schedule applicable to 
NASD members that became effective January 1, 2006, pursuant to SR-
NASD-2005-154 and that Nasdaq stated it would implement on a pilot 
basis from January 1, 2006 to February 28, 2006.
    The Commission finds good cause for approving the proposed rule 
change, as amended, prior to the 30th day of the date of publication of 
the notice thereof in the Federal Register. The Commission notes that 
the proposed fees for non-NASD members are identical to those in SR-
NASD-2005-154, which implemented those fees for NASD members and which 
became effective as of January 1, 2006. The Commission notes that this 
change will promote consistency in Nasdaq's fee schedule by applying 
the same pricing schedule with the same date of effectiveness for both 
NASD members and non-NASD members. Therefore, the Commission finds that 
there is good cause, consistent with section 19(b)(2) of the Act,\12\ 
to approve the proposed rule change, as amended, on an accelerated 
basis.
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    \12\ 15 U.S.C. 78s(b)(2).
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V. Conclusion

    It is therefore ordered, pursuant to section 19(b)(2) of the 
Act,\13\ that the proposed rule change, as amended, (File No. SR-NASD-
2005-155), is approved on an accelerated basis.
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    \13\ 15 U.S.C. 78s(b)(2).

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\14\
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    \14\ 17 CFR 200.30-3(a)(12).
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Nancy M. Morris,
Secretary.
[FR Doc. E6-395 Filed 1-13-06; 8:45 am]

BILLING CODE 8010-01-P