Document ID: SEC-2005-0250-0001
Agency: sec
Document Type: Notice
Title: Self-regulatory organizations; proposed rule changes: National Association of Securities Dealers, Inc.
Posted Date: 2005-11-17T05:00Z

[Federal Register: November 17, 2005 (Volume 70, Number 221)]
[Notices]               
[Page 69791-69793]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr17no05-101]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-52757; File No. SR-NASD-2005-125]

 
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 the Nasdaq Market 
Center and Nasdaq's Brut Facility

November 9, 2005.
    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 October 26, 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, II, 
and III below, which Items have been prepared by Nasdaq. Nasdaq has 
designated this proposal as one establishing or changing a due, fee or 
other charge imposed by the self-regulatory organization under Section 
19(b)(3)(A)(ii) \3\ of the Act 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)(ii).
    \4\ 17 CFR 240.19b-4(f)(2).
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I. Self-Regulatory Organization's Statement of the Terms of the 
Substance of the Proposed Rule Change

    Nasdaq proposes to modify the pricing for NASD members using the 
Nasdaq Market Center and Nasdaq's Brut Facility (``Brut''). Nasdaq 
states that it implemented the proposed rule change on November 1, 
2005.
    The text of the proposed rule change 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) The following charges shall apply to the use of the order 
execution services of the Nasdaq Market Center and Nasdaq's Brut 
Facility by members for Nasdaq-listed securities subject to the Nasdaq 
UTP Plan and for Exchange-Traded Funds listed on a national securities 
exchange[the American Stock Exchange; provided, however; that Directed 
Orders are not available for such Exchange-Traded Funds]. The term 
``Exchange-Traded Funds'' shall mean Portfolio Depository Receipts, 
Index Fund Shares, and Trust Issued Receipts as such terms are defined 
in Rule 4420(i), (j), and (l), respectively.

                               Order Entry
------------------------------------------------------------------------

------------------------------------------------------------------------
Non-Directed Orders and Preferenced      No charge.
 Orders.
------------------------------------------------------------------------

                             Order Executon
------------------------------------------------------------------------

------------------------------------------------------------------------
Non-Directed or Preferenced Order that
 accesses the Quote/Order of a market
 participant that does not charge an
 access fee to market participants
 accessing its Quotes/Orders through
 the Nasdaq Market Center and/or
 Nasdaq's Brut Facility:
Charge to member entering order:
Average daily shares of liquidity
 provided through the Nasdaq Market
 Center and/or Nasdaq's Brut Facility
 by the member during the month:
    Greater than 10 million............  $0.0027 per share executed (but
                                          no more than $108 per trade
                                          for trades in securities
                                          executed at $1.00 or less per
                                          share).
    Greater than 2,000,000 but less      $0.0028 per share executed (but
     than or equal to 10,000,000.         no more than $112 per trade
                                          for trades in securities
                                          executed at $1.00 or less per
                                          share).
    2,000,000 or less..................  $0.0030 per share executed (but
                                          no more than $120 per trade
                                          for trades in securities
                                          executed at $1.00 or less per
                                          share).
Credit to member providing liquidity:

[[Page 69792]]

Average daily shares of liquidity
 provided through the Nasdaq Market
 Center and/or Nasdaq's Brut Facility
 by the member during the month:
    Greater than 20 million............  $0.0025 per share executed (but
                                          no more than $100 per trade
                                          for trades in securities
                                          executed at $1.00 or less per
                                          share).
    Greater than 2,000,000 but less      $0.0022 per share executed (but
     than or equal to 20,000,000.         no more than $88 per trade for
                                          trades in securities executed
                                          at $1.00 or less per share).
    Less than or equal to 2,000,000....  $0.0020 per share executed (but
                                          no more than $80 per trade for
                                          trades in securities executed
                                          at $1.00 or less per share).
Non-Directed or Preferenced Order that
 accesses the Quote/Order of a market
 participant that charges an access fee
 to market participants accessing its
 Quotes/Orders through the Nasdaq
 Market Center:
Charge to member entering order:
Average daily shares of liquidity
 provided through the Nasdaq Market
 Center and/or Nasdaq's Brut Facility
 by the member during the month:
    500,000 or less....................  $0.001 per share executed (but
                                          no more than $40 per trade for
                                          trades in securities executed
                                          at $1.00 or less per share).
    500,001 or more....................  $0.001 per share executed (but
                                          no more than $40 per trade for
                                          trades in securities executed
                                          at $1.00 or less per share,
                                          and no more than $10,000 per
                                          month).
Routed Orders
Any order entered by a member that is    $0.004 per share executed.
 routed outside of both the Nasdaq
 Market Center and Nasdaq's Brut
 Facility and that does not attempt to
 execute in Nasdaq's Brut Facility
 prior to routing.
Any other order entered by a member
 that is routed outside of both the
 Nasdaq Market Center and Nasdaq's Brut
 Facility.
Average daily shares of liquidity
 provided through the Nasdaq Market
 Center and/or Nasdaq's Brut Facility
 by the member during the month and
 average daily shares accessed through
 and/or routed from the Nasdaq Market
 Center and/or Nasdaq's Brut Facility
 by the member during the month
 (excluding orders routed outside of
 both the Nasdaq Market Center and
 Nasdaq's Brut Facility that do not
 attempt to execute in Nasdaq's Brut
 Facility prior to routing):
    Greater than 20 million shares of    $0.0025 per share executed.
     liquidity provided and greater
     than 40 million shares accessed
     and/or routed.
    Greater than 10 million but less     $0.0027 per share executed.
     than or equal to 20 million shares
     of liquidity provided and any
     amount accessed or routed, OR
     greater than 20 million shares of
     liquidity provided and 40 million
     or fewer shares accessed and/or
     routed.
    Greater than 2,000,000 but less      $0.0028 per share executed.
     than or equal to 10,000,000 shares
     of liquidity provided and any
     amount accessed and/or routed.
    Less than or equal to 2,000,000      $0.0030 per share executed.
     shares of liquidity provided and
     any amount accessed and/or routed.
------------------------------------------------------------------------

                           Order Cancellation
------------------------------------------------------------------------

------------------------------------------------------------------------
Non-Directed and Preferenced Orders....  No charge.
------------------------------------------------------------------------

    (2)-(4) No change.
    (5) There shall be no charges or credits for order entry, 
execution, routing, or cancellation by members accessing the Nasdaq 
Market Center or Nasdaq's Brut Facility to buy or sell exchange-listed 
securities subject to the Consolidated Quotations Service and 
Consolidated Tape Association plans, other than: (A) the charges in 
Rule 7010(i)(1) for Exchange-Traded Funds[ listed on the American Stock 
Exchange], (B) charges described in Rule 7010(d), (C) a fee of $0.0004 
per share executed for orders delivered by Nasdaq's Brut Facility to an 
exchange using the exchange's proprietary order delivery system if such 
orders do not attempt to execute in Nasdaq's Brut Facility or the 
Nasdaq Market Center prior to routing to the exchange, and (D) a fee of 
$0.009 per share executed for any limit order delivered by Nasdaq's 
Brut Facility to the New York Stock Exchange (``NYSE'') using the 
NYSE's proprietary order delivery system if such an order is not an on-
close order, is not executed in the opening, and remains at the NYSE 
for more than 5 minutes.
    (6) No change.
    (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 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.

[[Page 69793]]

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

1. Purpose
    Nasdaq is proposing to modify the fee schedule applicable to 
execution and routing of orders in exchange-traded funds (``ETFs'') 
listed on exchanges other than the American Stock Exchange (``Amex''). 
The change proposed by this filing applies to NASD members that use the 
Nasdaq Market Center and Brut; in SR-NASD-2005-126, Nasdaq is proposing 
to make the same change applicable to non-members that use Brut. Nasdaq 
states that currently, execution and routing of Nasdaq-listed stocks 
and Amex-listed ETFs is subject to the fee schedule in NASD Rule 
7010(i)(1), whereas execution and routing of other exchange-listed 
securities, including other exchange-listed ETFs, is generally not 
subject to per order routing and execution charges. Because an 
increasing number of ETFs are being listed on exchanges other than the 
Amex, however, Nasdaq states that it has concluded that it is necessary 
to apply the same fee schedule to all ETFs, to ensure that its fees are 
commensurate with the volumes of shares being routed and executed 
through its systems.\5\
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    \5\ The proposed rule change would also delete obsolete language 
regarding Directed Orders found in NASD Rule 7010(i)(1), to reflect 
the recent termination of Nasdaq's Directed Order functionality.
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2. Statutory Basis
    Nasdaq believes that the proposed rule change is consistent with 
the provisions of Section 15A of the Act,\6\ in general, and with 
Section 15A(b)(5) of the Act,\7\ in particular, in that the proposed 
rule change 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 change reflects the increased extent to 
which ETFs are being listed on exchanges other than the Amex and would 
result in the application of the same fee schedule to all ETFs, 
regardless of where they are listed.
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    \6\ 15 U.S.C. 78o-3.
    \7\ 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

    Nasdaq states that 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 \8\ and subparagraph (f)(2) of Rule 19b-4 \9\ thereunder 
because it establishes or changes a due, fee, or other charge 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 such 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.\10\
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    \8\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \9\ 17 CFR 240.19b-4(f)(2).
    \10\ 15 U.S.C. 78s(b)(3)(C).
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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-2005-125 on the subject line.

Paper Comments

     Send paper comments in triplicate to Jonathan G. Katz, 
Secretary, Securities and Exchange Commission, 100 F Street, NE., 
Washington, DC 20549-9303.
    All submissions should refer to File Number SR-NASD-2005-125. 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-2005-125 and should be submitted on or before 
December 8, 2005.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\11\
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    \11\ 17 CFR 200.30-3(a)(12).
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Jonathan G. Katz,
Secretary.
[FR Doc. E5-6355 Filed 11-16-05; 8:45 am]

BILLING CODE 8010-01-P