Document ID: SEC-2005-0441-0001
Agency: sec
Document Type: Notice
Title: Self-regulatory organizations; proposed rule changes: National Association of Securities Dealers, Inc.
Posted Date: 2005-12-27T05:00Z

[Federal Register: December 27, 2005 (Volume 70, Number 247)]
[Notices]
[Page 76482-76483]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr27de05-74]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-52978; File No. SR-NASD-2005-141]

Self-Regulatory Organizations; National Association of Securities
Dealers, Inc.; Notice of Filing and Immediate Effectiveness of Proposed
Rule Change and Amendment No. 1 Thereto To Modify the Execution Fees
for Quotes and Orders Executed in the Nasdaq Opening Cross

December 19, 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 December 5, 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. On December 9,
2005, Nasdaq filed Amendment No. 1 to the proposed rule change.\3\
Nasdaq has designated this proposal as establishing or changing a due,
fee, or other charge imposed by a self-regulatory organization pursuant
to Section 19(b)(3)(A) of the Act,\4\ and Rule 19b-4(f)(2)
thereunder,\5\ which renders the proposal effective upon filing with
the Commission. The Commission is publishing this notice to solicit
comments on the proposed rule change, as amended, from interested
persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ In Amendment No. 1, Nasdaq made non-substantive changes to
the text of the proposed rule change.
    \4\ 15 U.S.C. 78s(b)(3)(A).
    \5\ 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 execution fees for quotes and orders
in the Nasdaq Opening Cross. Nasdaq will implement the proposed rule
change on January 3, 2006. Additions are italicized, and deletions are
in brackets.
* * * * *

7010. System Services

    (a)-(h) No change
    (i) Nasdaq Market Center and Brut Facility Order Execution
    (1)-(3) No change.
    (4) Opening Cross

[For a period of three months commencing on the date Nasdaq implements
its Opening Cross (as described in Rule 4704(d)), members shall not be
charged Nasdaq Market Center execution fees, or receive Nasdaq Market
Center liquidity provider credits, for those quotes and orders executed
in the Nasdaq Opening Cross.]

    Commencing on January 1, 2006, members shall be assessed the
following Nasdaq Market Center execution fees for quotes and orders
executed in the Nasdaq Opening Cross:
    Market-on-Open, Limit-on-Open and Day orders executed in the Nasdaq
Opening Cross--$0.0005 per share executed for the net number of buy and
sell shares up to a maximum of $10,000 per firm per month
    All other quotes and orders executed in the Nasdaq Opening Cross--
No charge for execution
    (5) and (6) No change.
    (j)-(w) 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.

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

1. Purpose
    Nasdaq has determined to establish the following pricing for the
Nasdaq Opening Cross beginning January 3, 2006. Nasdaq will assess a
fee of $0.0005 per share executed during the Nasdaq Opening Cross for
all Market-on-Open, Limit-on-Open, and Day orders that are executed in
the Opening Cross. That fee will be assessed on the difference between
the total number of shares of buy (sell) interest minus the total
number of shares of sell (buy) interest executed by that firm for all
stocks.
    The fee will be capped at $10,000 per firm per month for all stocks
combined. At this time, Nasdaq will assess no fees and offer no rebates
for quotations and other orders executed during the Nasdaq Opening
Cross. Nasdaq will monitor the effectiveness of the proposed pricing
schedule in preserving and enhancing the success of the Nasdaq Opening
Cross to date.
2. Statutory Basis
    Nasdaq believes that the proposed rule change is consistent with
Section 15A of the Act,\6\ in general, and Section 15A(b)(5) \7\ of the
Act, 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 fees for Market-on-Open, Limit-on-Open, and Day orders
are consistent with the statute in that they are designed to result in
an execution charge approximating the execution charge for quotes and
orders entered and executed in the Nasdaq Market Center throughout the
trading day. Assessing no fee and offering no rebate for quotations and
other orders executed during the Nasdaq Opening Cross is consistent
with the statute because it is designed to encourage the entry of
Imbalance Only orders to minimize imbalances resulting from the Opening
Cross algorithm, and to preserve the Opening Cross liquidity provided
by quotations and orders from the continuous market.

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

    Nasdaq does not believe that the proposed rule change will impose
any

[[Page 76483]]

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 foregoing rule change has become effective pursuant to Section
19(b)(3)(A) of the Act \8\ and subparagraph (f)(2) of Rule 19b-4
thereunder.\9\ 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\ Nasdaq will
implement the proposed rule change on January 3, 2006.
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    \6\ 15 U.S.C. 78o-3.
    \7\ 15 U.S.C. 78o-3(b)(5).
    \8\ 15 U.S.C. 78s(b)(3)(A).
    \9\ 17 CFR 240.19b-4(f)(2).
    \10\ The effective date of the original proposed rule change is
December 5, 2005, and the effective date of Amendment No. 1 is
December 9, 2005. For purposes of calculating the 60-day period
within which the Commission may summarily abrogate the proposed rule
change, as amended, under Section 19(b)(3)(C) of the Act, the
Commission considers the period to commence on December 9, 2005, the
date on which Nasdaq submitted Amendment No. 1. See 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-2005-141 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-2005-141. 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 the
filing also will be available for inspection and copying at the
principal offices 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-2005-141 and should be submitted on or before
January 17, 2006.

    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. E5-7860 Filed 12-23-05; 8:45 am]

BILLING CODE 8010-01-P