Document ID: SEC-2006-0203-0001
Agency: sec
Document Type: Notice
Title: Self-regulatory organizations; proposed rule changes: National Association of Securities Dealers, Inc.
Posted Date: 2006-02-15T05:00Z

[Federal Register: February 15, 2006 (Volume 71, Number 31)]
[Notices]               
[Page 8018-8020]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr15fe06-143]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-53257; File No. SR-NASD-2006-014]

 
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 and Inet Facilities

February 8, 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 January 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 February 1, 
2006, 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 clarifies that the proposed rule 
change was approved by the Nasdaq Board of Directors on February 1, 
2006 and not January 24, 2006.
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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 (``Nasdaq Facilities''). The filing 
will apply to these non-members the same unified pricing schedule that 
Nasdaq is instituting for members.\4\ Nasdaq requests approval to 
implement the proposed rule change, as amended, retroactively as of 
February 1, 2006.
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    \4\ SR-NASD-2006-013 (January 30, 2006).
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    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)-(6) No change.
    (7) The fees applicable to non-members using Nasdaq's Brut and Inet 
Facilit[y]ies 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, [and] 
SR-NASD-2005-154, and SR-NASD-2006-013, 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, [and] SR-NASD-2005-155, and 
SR-NASD-2006-014.
    (j)-(v) No change.
    (w) INET System Connectivity
    (1) No change.
    (2) The INET connectivity fees applicable to non-members [using 
Nasdaq's INET Facility] shall be the fees established for members under 
Rule 7010(w), as established by SR-NASD-2005-128 and amended by SR-
NASD-2005-147 and SR-NASD-2006-013, and as applied to non-members by 
SR-NASD-2005-128, [and] SR-NASD-2005-148, and SR-NASD-2006-014.
* * * * *

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
    On January 30, 2006, Nasdaq filed SR-NASD-2006-013 with the 
Commission, establishing a new fee and

[[Page 8019]]

credit schedule (effective February 1, 2006) for order execution and 
routing by NASD members that spans activity on the Nasdaq Market 
Center, Brut, and Inet (the ``Nasdaq Facilities''). Nasdaq proposes to 
establish that same fee and rebate structure for non-NASD members that 
use Brut and Inet. Nasdaq is seeking accelerated approval of the non-
member fee and rebate structure as well as a retroactive effective date 
of February 1, 2006.
    In SR-NASD-2005-128,\5\ Nasdaq's filing to establish rules for the 
newly acquired Inet ECN, Nasdaq committed that it would, within 60 days 
of the closing of the acquisition of Inet, file an integrated fee and 
credit structure governing the use of all of the Nasdaq Facilities. 
Nasdaq states that the fee and rebate structure is based on multiple 
volume-based usage tiers that take into account the combined volume of 
a market participant on all of the Nasdaq Facilities. Nasdaq believes 
that this integrated and uniform pricing structure would encourage 
activity on the Nasdaq Facilities and would not provide financial 
incentives to use one system versus the other. Nasdaq states that this 
non-member filing would ensure that both NASD members and non-NASD 
member users will pay equivalent fees and receive equivalent credits 
based on their trading activity and that the imposition of those fees 
would have begun on the same February 1, 2006 start date.
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    \5\ Securities Exchange Act Release Nos. 52902 (December 7, 
2005), 70 FR 73810 (December 13, 2005) (SR-NASD-2005-128) and 52723 
(November 2, 2005), 70 FR 67513 (November 7, 2005) (SR-NASD-2005-
128).
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    Nasdaq states that NASD Rules 4901 and 4952 currently provide that 
Brut and Inet will not be available to non-members after February 8, 
2006. However, Nasdaq anticipates submitting an immediately effective 
rule change to extend this date in a manner that would allow at least 
some of Brut and Inet's current non-member broker-dealer subscribers to 
continue using these systems during the transitional period prior to 
the date on which The NASDAQ Stock Market LLC (``NASDAQ LLC'') begins 
to operate as a national securities exchange (the ``Operational 
Date'').\6\ The Commission-approved rules of NASDAQ LLC \7\ provide 
that all users of the Nasdaq Facilities after the Operational Date must 
be members of NASDAQ LLC, and Nasdaq is making all non-member 
subscribers aware of the need to become members of NASDAQ LLC if they 
wish to continue to use any of the Nasdaq Facilities after the 
Operational Date.\8\ Nasdaq believes that this filing is necessary, 
however, to ensure that non-members using Brut and Inet prior to the 
Operational Date would be subject to the same fee structure as members, 
regardless of the duration of their actual period of usage. Therefore, 
Nasdaq believes that, even if the period of non-member usage is not 
extended beyond February 8, 2006, this filing would be needed to 
establish the fees and credits for non-members between February 1, 2006 
and February 8, 2006.
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    \6\ Nasdaq filed this rule change on February 7, 2006 (SR-NASD-
2006-002).
    \7\ Securities Exchange Act Release No. 53128 (January 13, 
2006), 71 FR 3350 (January 23, 2006) (File No. 10-131) (approving 
registration of Nasdaq Stock Market LLC as a National Securities 
Exchange).
    \8\ See Securities Exchange Act Release No. 53128 (January 13, 
2006), 71 FR 3550 (January 23, 2006) (File No. 10-131).
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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,\9\ in 
general, and with section 15A(b)(5) of the Act,\10\ 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 Brut and Inet a fee change that is 
being implemented for NASD members that use the Nasdaq Facilities. 
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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    \9\ 15 U.S.C. 78o-3.
    \10\ 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.

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-2006-014 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-2006-014. 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-2006-014 and should be submitted on or before March 
8, 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.\11\ 
Specifically, the Commission believes that the proposed

[[Page 8020]]

rule change, as amended, is consistent with section 15A(b)(5) of the 
Act,\12\ 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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    \11\ The Commission has considered the proposed rule's impact on 
efficiency, competition and capital formation. 15 U.S.C. 78c(f).
    \12\ 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 Facilities that would 
permit the schedule for non-NASD members to mirror the schedule 
applicable to NASD members that became effective February 1, 2006, 
pursuant to SR-NASD-2006-013.
    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-2006-013, which implemented those fees for NASD members and which 
became effective as of February 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,\13\ 
to approve the proposed rule change, as amended, on an accelerated 
basis.
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    \13\ 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,\14\ that the proposed rule change, as amended, (File No. SR-NASD-
2006-014), is approved on an accelerated basis.
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    \14\ 15 U.S.C. 78s(b)(2).

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\15\
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    \15\ 17 CFR 200.30-3(a)(12).
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J. Lynn Taylor,
Assistant Secretary.
[FR Doc. E6-2105 Filed 2-14-06; 8:45 am]

BILLING CODE 8010-01-P