Document ID: SEC-2006-1454-0001
Agency: sec
Document Type: Notice
Title: Self-regulatory organizations; proposed rule changes: National Association of Securities Dealers, Inc.
Posted Date: 2006-11-09T05:00Z

[Federal Register: November 9, 2006 (Volume 71, Number 217)]
[Notices]               
[Page 65862-65863]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr09no06-149]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-54695; File No. SR-NASD-2006-116]

 
Self-Regulatory Organizations; National Association of Securities 
Dealers, Inc.; Notice of Filing and Immediate Effectiveness of Proposed 
Rule Change To Modify Pricing for NASD Members Using ITS/CAES, Brut and 
Inet

November 2, 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 September 29, 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 substantially prepared by Nasdaq. 
Nasdaq submitted the proposed rule change under Section 19(b)(3)(A) 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 
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).
    \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 ITS/
CAES, Brut, and Inet. Nasdaq implemented the proposed rule change on 
October 2, 2006. The text of the proposed rule change is available on 
the Nasdaq's Web site at http://www.nasdaq.com, at Nasdaq's Office of 

the Secretary and at the Commission's Public Reference Room.

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
    In response to a recently announced pricing change by NYSE Arca, 
Inc. (``NYSE Arca'') \5\ and to better reflect other pre-existing NYSE 
Arca charges, Nasdaq is instituting a price change for orders in non-
Nasdaq exchange-listed securities routed to NYSE Arca for execution. 
Specifically, most orders in non-Nasdaq securities routed to NYSE Arca 
will be assessed a routing fee of $0.0028 per share executed; the 
exception will be for orders for exchange-traded funds routed outside 
of the Intermarket Trading System (``ITS''),\6\ for which the fee will 
remain $0.003 per share executed. By contrast, the applicable fee had 
been $0.001 per share executed for orders in securities other than 
exchange-traded funds and $0.0007 per share executed for orders routed 
through the ITS. The price change reflects the higher costs that Nasdaq 
expects to incur to access liquidity at NYSE Arca.
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    \5\ See Securities Exchange Act Release No. 54686 (November 1, 
2006) (SR-NYSEArca-2006-68).
    \6\ Since October 1, 2006, the effective date of the ``Plan for 
the Purpose of Creating and Operating an Intermarket Communications 
Linkage Pursuant to Section 11A(a)(3)(B) of the Securities Exchange 
Act of 1934'' (``Linkage Plan''), connectivity between markets is 
provided pursuant to the Linkage Plan. The current ITS technology is 
used to effectuate both the ITS Plan and Linkage Plan. Therefore, 
the term ``ITS'' applies to the technology used to effectuate both 
the ITS Plan and the Linkage Plan.
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    To enhance the competitiveness of Nasdaq's DOT router to the NYSE, 
Nasdaq is also instituting a cap of $100,000 per month with respect to 
orders routed through DOT that do not attempt to execute against 
liquidity in Nasdaq trading systems prior to routing and that are not 
charged a fee by the

[[Page 65863]]

NSYE specialist (also known as non-billable orders). Nasdaq had 
previously instituted a $60,000 per month cap for non-billable orders 
that attempt to execute in Nasdaq before routing.\7\
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    \7\ The proposed rule change also deletes obsolete rule language 
regarding fees charged to persons that are not NASD members using 
Brut or Inet. Persons who are not NASD members are no longer 
permitted to use these systems for trading non-Nasdaq securities. 
Similarly, persons who are not members of The NASDAQ Stock Market 
LLC may not use Brut or Inet to trade Nasdaq-listed securities.
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2. Statutory Basis
    Nasdaq believes that the proposed rule change is consistent with 
Section 15A of the Act,\8\ in general, and furthers the objectives of 
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.
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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 impose 
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 has neither solicited nor received comments on the proposed 
rule change.

III. Date of Effectiveness of the Proposed Rule Change and Timing for 
Commission Action

    The proposed rule change has become effective pursuant 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 imposed by the Nasdaq. 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.
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    \10\ 15 U.S.C. 78s(b)(3)(a)(ii).
    \11\ 17 CFR 240.19b-4(f)(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 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-2006-116 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 20549-1090.

    All submissions should refer to File Number SR-NASD-2006-116. 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 offices of Nasdaq.
    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-2006-116 
and should be submitted on or before November 30, 2006.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\12\
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    \12\ 17 CFR 200.30-3(a)(12).
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Nancy M. Morris,
Secretary.
 [FR Doc. E6-18959 Filed 11-8-06; 8:45 am]

BILLING CODE 8011-01-P