Document ID: SEC-2007-0164-0001
Agency: sec
Document Type: Notice
Title: Self-regulatory organizations; proposed rule changes: National Association of Securities Dealers, Inc.
Posted Date: 2007-02-02T05:00Z

[Federal Register: February 2, 2007 (Volume 72, Number 22)]
[Notices]               
[Page 5095-5097]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr02fe07-99]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-55180; File No. SR-NASD-2007-004]

 
Self-Regulatory Organizations; National Association of Securities 
Dealers, Inc.; Notice of Filing of a Proposed Rule Change to Amend NASD 
Rule 7010(k) Relating to Transaction Reporting and Compliance Engine 
Transaction Data

January 26, 2007.
    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 January 16, 2007, the National Association of Securities Dealers, 
Inc. (``NASD'') 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 NASD. 
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.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    NASD is proposing to amend NASD Rule 7010(k) relating to 
Transaction Reporting and Compliance Engine (``TRACE'') transaction 
data to offer the ability to receive, for a reduced fee, a ``snapshot'' 
of real-time TRACE transaction data (``TRACE data'') once each day 
rather than continuously throughout the day.
    The text of the proposed rule change is available on NASD's Web 
site at http://www.nasd.com/RulesRegulation/RuleFilings/2007RuleFilings/index.htm
, at NASD's principal office, 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, NASD included statements 
concerning the purpose of, and basis for, the proposed rule change and 
discussed any comments it received on the proposal. The text of these 
statements may be examined at the places specified in Item IV below. 
NASD has prepared summaries, set forth in Sections A, B, and C below, 
of the most significant aspects of such statements.

[[Page 5096]]

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

1. Purpose
    NASD proposes to amend its Rule 7010(k) to lower the fee related to 
the receipt of TRACE data by persons opting to receive the data once a 
day (``Snapshot TRACE data'') rather than on a continuous basis. 
Specifically, NASD is proposing to amend Rule 7010(k)(3)(A)(ii) to 
provide persons that choose to receive Snapshot TRACE data (``Snapshot 
TRACE data Subscribers'') the option of paying $250 per month for the 
receipt of Snapshot TRACE data rather than paying $1,500 per month to 
receive TRACE data continuously throughout the day as is the case 
today. A Snapshot TRACE data Subscriber would be able to choose the 
specific time of day it would receive Snapshot TRACE data each day, and 
NASD expects that many institutional Snapshot TRACE data Subscribers 
would choose to receive Snapshot TRACE data at or shortly after 4 p.m. 
(Eastern Standard Time) each day and use it to value certain positions 
held in their investment portfolios.
    Today, NASD's TRACE data dissemination, and the fees charged for 
it, contemplates only continuous intra-day dissemination of TRACE 
data.\3\ However, based on discussions with certain TRACE data vendors 
and institutional market participants, NASD believes that an additional 
program of single intra-day or end-of-day price dissemination also 
would be useful. This is especially true for those institutional 
investors that need only one price per security per day to assign a 
value to a particular position. Transaction data for these types of 
position valuation purposes typically has been made available through 
vendor services such as IDC and the Reuters Pricing Service. Vendors 
usually charge for pricing requests for securities held in individual 
portfolios either on a per-CUSIP basis or for a fixed monthly fee for a 
specified group of securities.
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    \3\ NASD has proposed adding the phrase ``receipt of 
continuous'' to the text of Rule 7010(k)(3)(a)(ii) that today sets 
forth the $1,500 per month fee for TRACE data to further clarify the 
distinction between the current and proposed frequency of delivery 
of TRACE data to persons subscribing to receive such data.
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    NASD believes, based on conversations its staff has undertaken with 
certain vendors of TRACE data and certain institutional market 
participants, that the current price charged to persons receiving TRACE 
data continuously throughout the day ($1,500 per month) is 
unnecessarily expensive for persons that would like to exclusively use 
TRACE data to value portfolio positions. In this regard, NASD notes 
that, to date, no institutional market participants have subscribed for 
the receipt of TRACE data continuously throughout the day.
    If the proposed rule change is approved by the Commission, NASD 
intends to work with third-party ``Retransmission Vendors'' that would 
redistribute Snapshot TRACE data to Snapshot TRACE data Subscribers. As 
is the case today with the distribution of TRACE data to desktop 
display applications, NASD does not intend to develop its own 
capabilities to distribute Snapshot TRACE data directly to Snapshot 
TRACE data Subscribers.
    NASD believes that the proposed fee of $250 per month for Snapshot 
TRACE data is reasonable, particularly as it is a charge more in line 
with what NASD perceives to be the more tailored information 
requirements of a subset of institutional market participants that 
today are foregoing TRACE data at the higher costs per month for 
continuous data.
    NASD would announce the effective date of the proposed rule change 
in a Notice to Members to be published no later than 60 days following 
Commission approval, if approval is given. The effective date would be 
not later than 45 days following publication of the Notice to Members 
announcing Commission approval.
2. Statutory Basis
    NASD believes that the proposed rule change is consistent with the 
provisions of Section 15A(b)(6) of the Act, which requires, among other 
things, that NASD rules must be designed to prevent fraudulent and 
manipulative acts and practices, to promote just and equitable 
principles of trade, and, in general, to protect investors and the 
public interest and Section 15A(b)(5) of the Act, which requires, among 
other things, that NASD rules provide for the equitable allocation of 
reasonable dues, fees, and other charges among members and issuers and 
other persons using any facility or system that NASD operates or 
controls. NASD believes that offering Snapshot TRACE data for a reduced 
charge should result in more persons subscribing to receive TRACE data 
with a concomitant increase in market transparency resulting from the 
wider dissemination and use of TRACE data.

B. Self-Regulatory Organization's Statement on Burden on Competition

    NASD does not believe that proposed rule change would 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

    Written comments were neither solicited nor received.

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

    Within 35 days of the date of publication of this notice in the 
Federal Register or within such longer period (i) as the Commission may 
designate up to 90 days of such date if it finds such longer period to 
be appropriate and publishes its reasons for so finding or (ii) as to 
which NASD consents, the Commission will:
    (A) By order approve such proposed rule change, or
    (B) Institute proceedings to determine whether the proposed rule 
change should be disapproved.

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-2007-004 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-2007-004. 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

[[Page 5097]]

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 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-2007-004 
and should be submitted on or before February 23, 2007.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\4\
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    \4\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. E7-1690 Filed 2-1-07; 8:45 am]

BILLING CODE 8010-01-P