Document ID: SEC-2006-1035-0001
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 45883-45885]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr10au06-135]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-54269; File No. SR-NASD-2006-079]

 
Self-Regulatory Organizations; National Association of Securities 
Dealers, Inc.; Notice of Filing and Order Granting Accelerated Approval 
of Proposed Rule Change and Amendment Nos. 1 and 2 Thereto Regarding 
Pricing for Non-Members Using 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 and 
II below, which Items have been prepared by Nasdaq. On July 25, 2006, 
Nasdaq filed Amendment No. 1 to

[[Page 45884]]

the proposed rule change. On July 26, 2006, Nasdaq filed Amendment No. 
2 to the proposed rule change. The Commission is publishing this notice 
to solicit comments on the proposed rule change, as amended, from 
interested persons. In addition, the Commission 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.
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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 and Inet Facilities. The filing will apply to these non-
members the same pricing change that Nasdaq is instituting for 
members.\3\ Nasdaq seeks approval to implement the proposed rule change 
retroactively as of July 3, 2006. The text of the proposed rule change, 
as amended, is set forth below. Proposed new language is in italics; 
proposed deletions are in [brackets].\4\
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    \3\ See Securities Exchange Act Release No. 54268 (August 3, 
2006) (File No. SR-NASD-2006-078).
    \4\ Changes are marked to the rule text that appears in the 
electronic NASD Manual found at http://www.nasd.com, as amended by SR-NASD-

2006-057 (May 1, 2006) on an immediately effective basis and as 
further proposed to be amended by SR-NASD-2006-058 (May 1, 2006). If 
SR-NASD-2006-058 is not approved by the Commission, Nasdaq will file 
a conforming amendment to SR-NASD-2006-079.
    The NASDAQ Stock Market LLC (``NASDAQ LLC'') will not file 
conforming changes to its rules with regard to order execution and 
routing by non-members, since persons that are not members of NASDAQ 
LLC will not be permitted to use its order execution and routing 
systems.
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7010. System Services

    (a)-(h) No change.
    (i) Nasdaq Market Center, Brut, and Inet Order Execution and 
Routing
    (1)-(7) No change.
    (8) The fees applicable to non-members using Nasdaq's Brut and Inet 
Facilities 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, SR-NASD-2005-071, SR-NASD-2005-125, SR-NASD-2005-137, SR-
NASD-2005-154, SR-NASD-2006-013, SR-NASD-2006-023, SR-NASD-2006-031, 
[and] SR-NASD-2006-057, and SR-NASD-2006-078 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, SR-NASD-2005-138, SR-NASD-2005-155, 
SR-NASD-2006-014, SR-NASD-2006-024, SR-NASD-2006-032, [and] SR-NASD-
2006-058, and SR-NASD-2006-079.
    (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 had 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-2006-078 \5\ Nasdaq increased its liquidity provider 
credit for NASD members using the Nasdaq Market Center and Nasdaq's 
Brut and Inet Facilities (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'').\6\ 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. Pursuant to SR-NASD-2006-078, 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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    \5\ See Securities Exchange Act Release No. 54268 (August 3, 
2006) (File No. SR-NASD-2006-078).
    \6\ 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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    Nasdaq is submitting this filing to apply these changes to non-
members using Nasdaq's Brut and Inet Facilities, because Nasdaq 
anticipates that these non-members will be allowed to continue to use 
these facilities until NASDAQ LLC begins to operate as a national 
securities exchange.
2. Statutory Basis
    Nasdaq believes that the proposed rule change, as amended, is 
consistent with the provisions of Section 15A of the Act,\7\ in 
general, and with Section 15A(b)(5) of the Act,\8\ 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. The proposed 
rule change, as amended, applies to non-members that use Brut and Inet 
a fee change that is being implemented for NASD members that use Brut, 
Inet, and the Nasdaq Market Center. 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.
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    \7\ 15 U.S.C. 78o-3.
    \8\ 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. 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-2006-079 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-2006-079. This file

[[Page 45885]]

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 publicly available. All submissions should refer to 
File Number SR-NASD-2006-079 and should be submitted on or before 
August 31, 2006.

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

    The Commission finds that the proposed rule change, as amended, is 
consistent with the requirements of the Act and the rules and 
regulations thereunder applicable to a self-regulatory organization.\9\ 
Specifically, the Commission believes that the proposed rule change, as 
amended, is consistent with Section 15A(b)(5) of the Act,\10\ 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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    \9\ In approving this proposal, the Commission has considered 
its impact on efficiency, competition, and capital formation. 15 
U.S.C. 78c(f).
    \10\ 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 Nasdaq's Brut and Inet Facilities 
that would permit the schedule for non-NASD members to mirror the 
schedule applicable to NASD members that became effective June 30, 
2006, pursuant to SR-NASD-2006-078.
    Nasdaq has requested that the Commission find good cause for 
approving the proposed rule change, as amended, prior to the thirtieth 
day after publication of notice thereof in the Federal Register. The 
Commission notes that the proposed fees for non-NASD members are 
identical to those in SR-NASD-2006-078, which implemented those fees 
for NASD members and which became effective as of June 30, 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. 
Accordingly, the Commission finds good cause, pursuant to Section 
19(b)(2) of the Act,\11\ for approving the proposed rule change, as 
amended, prior to the thirtieth day after the date of publication of 
notice thereof in the Federal Register.
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    \11\ 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,\12\ that the proposed rule change (SR-NASD-2006-079) and 
Amendments Nos. 1 and 2 thereto be, and hereby are, approved on an 
accelerated basis.
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    \12\ 15 U.S.C. 78s(b)(2).

    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. E6-13010 Filed 8-9-06; 8:45 am]

BILLING CODE 8010-01-P