Document ID: SEC-2007-1217-0001
Agency: sec
Document Type: Notice
Title: Self-regulatory organizations; proposed rule changes: National Association of SecuritiesDealers, Inc.
Posted Date: 2007-08-30T04:00Z

[Federal Register: August 30, 2007 (Volume 72, Number 168)]
[Notices]               
[Page 50153-50155]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr30au07-68]                         

[[Page 50153]]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-56314; File No. SR-NASD-2007-051]

 
Self-Regulatory Organizations; National Association of Securities 
Dealers, Inc. (n/k/a Financial Industry Regulatory Authority, Inc.); 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To 
Amend NASD Rule 7002B To Establish Fees for the Transfer of Transaction 
Fees Through the NASD/Nasdaq Trade Reporting Facility

August 23, 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 July 20, 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.\3\ 
NASD has designated this proposal as ``establishing or changing a due, 
fee, or other charge'' under Section 19(b)(3)(A)(ii) of the Act \4\ and 
Rule 19b-4(f)(2) thereunder,\5\ which renders the proposed rule change 
effective immediately upon filing. 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\ On July 26, 2007, the Commission approved a proposed rule 
change filed by NASD to amend NASD's Certificate of Incorporation to 
reflect its name change to Financial Industry Regulatory Authority 
Inc., or FINRA, in connection with the consolidation of the member 
firm regulatory functions of NASD and NYSE Regulation, Inc. See 
Securities Exchange Act Release No. 56146 (July 26, 2007) 72 FR 
42190 (August 1, 2007).
    \4\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \5\ 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

    NASD is proposing to amend NASD Rule 7002B to establish a fee for 
reports that are submitted to the NASD/Nasdaq Trade Reporting Facility 
(the ``NASD/Nasdaq TRF'') to process transaction fees charged by one 
member to another member pursuant to NASD Rule 6130(h). In addition, 
NASD is proposing technical, non-substantive amendments to the NASD 
Rule 7000 Series to change all references to the ``Trade Reporting 
Facility'' to the ``NASD/Nasdaq Trade Reporting Facility.''
    Below is the text of the proposed rule change. Proposed new 
language is in italics; proposed deletions are in brackets.
* * * * *
7000B. Charges For NASD/NASDAQ Trade Reporting Facility Services
7001B. Securities Transaction Credit

    NASD members that trade securities listed on the NYSE (``Tape A''), 
Amex (``Tape B''), or Nasdaq (``Tape C'') in over-the-counter 
transactions reported to the NASD/Nasdaq Trade Reporting Facility may 
receive from the NASD/Nasdaq Trade Reporting Facility transaction 
credits based on the transactions attributed to them. A transaction is 
attributed to a member if the member is identified as the executing 
party in a trade report submitted to the NASD/Nasdaq Trade Reporting 
Facility that the NASD/Nasdaq Trade Reporting Facility submits to the 
Consolidated Tape Association or the Nasdaq Securities Information 
Processor. An NASD member may earn credits from any of three pools 
maintained by the NASD/Nasdaq Trade Reporting Facility. The Tape A, 
Tape B, and Tape C pools represent 50% of the revenue paid by the 
Consolidated Tape Association or the Nasdaq Securities Information 
Processor with respect to the NASD/Nasdaq Trade Reporting Facility for 
each of Tape A, Tape B, and Tape C transactions after deducting the 
amount, if any, that the NASD/Nasdaq Trade Reporting Facility pays to 
the Consolidated Tape Association or the Nasdaq Securities Information 
Processor for capacity usage. An NASD member may earn credits from the 
pools according to the pro rata share of revenue attributable to over-
the-counter transactions reported to the NASD/Nasdaq Trade Reporting 
Facility by the member in each of Tape A, Tape B, and Tape C for each 
calendar quarter. Credits will be paid on a quarterly basis.

7002B. NASD/Nasdaq Trade Reporting Facility Reporting Fees

    The following charges shall be paid by participants for use of the 
NASD/Nasdaq Trade Reporting Facility. In the case of trades where the 
same market participant is on both sides of a trade report, applicable 
fees assessed on a ``per side'' basis will be assessed once, rather 
than twice.

------------------------------------------------------------------------
      Transaction related charges:
------------------------------------------------------------------------
Reporting of transactions in Nasdaq-     No charge.
 listed securities not subject to
 comparison through the NASD/Nasdaq
 Trade Reporting Facility.
Reporting of transactions in stocks
 reported to the Consolidated Tape
 Association not subject to comparison
 through the NASD/Nasdaq Trade
 Reporting Facility (``CTA Covered
 Transactions'').
Average daily volume of media            Fee per side for reports of CTA
 transaction reports for CTA Covered      Covered Transactions to which
 Transactions during the month that are   such participant is a party.
 submitted or introduced by such
 participant to the NASD/Nasdaq Trade
 Reporting Facility, in which the
 participant is identified as the
 reporting party.
0 to 5,000.............................  $0.029
More than 5,000........................  $0.029 for a number of reports
                                          equal to 5,000 times the
                                          number of trading days in the
                                          month.
                                         $0.00 for all remaining
                                          reports.
Reporting of all other transactions not  $0.029/side.
 subject to comparison through the NASD/
 Nasdaq Trade Reporting Facility.
Clearing report to transfer a            $0.03/side.
 transaction fee charged by one member
 to another member pursuant to Rule
 6130(h).
Comparison.............................  $0.0144/side per 100 shares
                                          (minimum 400 shares; maximum
                                          7,500 shares).
Late Report--T+N.......................  $0.288/side.
Query..................................  $0.50/query.

[[Page 50154]]

Corrective Transaction Charge..........  $0.25/Cancel, Error, Inhibit,
                                          Kill, or `No' portion of No/
                                          Was transaction, paid by
                                          reporting side; $0.25/Break,
                                          Decline transaction, paid by
                                          each party.
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7003B. Aggregation of Activity of Affiliated Members

    (a) For purposes of applying any provision of the Rule 7000B Series 
that reflects a charge assessed, or credit provided, by the NASD/Nasdaq 
Trade Reporting Facility, a member may request that the NASD/Nasdaq 
Trade Reporting Facility aggregate its activity with the activity of 
its affiliates. A member requesting aggregation of affiliate activity 
shall be required to certify to NASD the affiliate status of entities 
whose activity it seeks to aggregate prior to receiving approval for 
aggregation, and shall be required to inform NASD immediately of any 
event that causes an entity to cease to be an affiliate. In addition, 
NASD reserves the right to request information to verify the affiliate 
status of an entity.
    (b) For purposes of applying any provision of the Rule 7000B Series 
that reflects a charge assessed, or credit provided, by the NASD/Nasdaq 
Trade Reporting Facility, references to an entity (including references 
to a ``member,'' a ``participant,'' or a ``Trade Reporting Facility 
Participant'') shall be deemed to include the entity and its affiliates 
that have been approved for aggregation.
    (c) No Change.

7004B. Late Fees

    (a) All charges imposed by the NASD/Nasdaq Trade Reporting Facility 
that are past due 45 days or more will be subject to a late fee 
computed by taking the summation of one and one-half percent (1\1/2\%) 
of the amount past due for the first month plus one and one-half 
percent (1\1/2\%) of the amount past due for any month thereafter, 
compounded by late fees assessed for previous months.
    (b) 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, NASD 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. NASD 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
    NASD recently filed a proposed rule change for immediate 
effectiveness to allow NASD members to use the NASD/Nasdaq TRF to 
process transaction fees charged by one member to another member on 
trades in NMS stocks, as defined in Rule 600(b)(47) of Regulation NMS 
under the Act, effected otherwise than on an exchange.\6\ NASD Rule 
6130(h) provides that members may agree in advance to such transfers 
through the submission of a clearing report. Such report, inclusive of 
the transaction fee, will be submitted to the National Securities 
Clearing Corporation for processing. To facilitate the transfer of the 
transaction fee, the report submitted to the NASD/Nasdaq TRF shall 
provide, in addition to all other information required to be submitted 
by any other rule, a total per share or contract price amount, 
inclusive of the transaction fee. NASD Rule 6130(h) relates solely to 
transaction fees charged by one NASD member to another NASD member. 
Members cannot use the NASD/Nasdaq TRF to facilitate the transfer of 
fees for transactions with a customer (i.e., clients that are not 
brokers or dealers) or a non-member.
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    \6\ See Securities Exchange Act Release No. 56007 (July 3, 
2007), 72 FR 37807 (July 11, 2007) (notice of filing and immediate 
effectiveness of SR-NASD-2007-046). SR-NASD-2007-046 became 
operative on July 9, 2007.
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    NASD is proposing to establish the fee to be charged by the NASD/
Nasdaq TRF for the use of this service.\7\ Pursuant to NASD Rule 7002B, 
the fee will be $0.03 per side for each clearing report submitted to 
the NASD/Nasdaq TRF to transfer a transaction fee. This fee is in 
addition to any other fee applicable to the transaction.
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    \7\ NASD did not propose any fees for this service as part of 
SR-NASD-2007-046.
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    In addition, NASD is proposing technical, non-substantive 
amendments to the NASD Rule 7000 Series to change all references to the 
``Trade Reporting Facility'' to the ``NASD/Nasdaq Trade Reporting 
Facility.'' These changes are consistent with the NASD Rule 7000C 
Series (relating to the NASD/NSX Trade Reporting Facility), 7000D 
Series (relating to the NASD/BSE Trade Reporting Facility), and 7000E 
Series (relating to the NASD/NYSE Trade Reporting Facility).
    NASD has filed the proposed rule change for immediate 
effectiveness. The operative date of the proposed rule change will be 
August 1, 2007.
2. Statutory Basis
    NASD believes that the proposed rule change is consistent with the 
provisions of Section 15A of the Act,\8\ in general, and with Section 
15A(b)(5) of the Act,\9\ 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 NASD operates or controls. NASD believes that the fees are 
reasonably allocated among members based on their usage of the 
functionality to transfer explicit fees, and are generally consistent 
with other fees charged by the NASD/Nasdaq TRF for value added 
services.
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    \8\ 15 U.S.C. 78o-3.
    \9\ 15 U.S.C. 78o-3(b)(5).
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B. Self-Regulatory Organization's Statement on Burden on Competition

    NASD 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

    Written comments were neither solicited nor received.

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

    The proposed rule change has become effective pursuant to Section 
19(b)(3)(A)(ii) of the Act \10\ and Rule 19b-4(f)(2) \11\ thereunder, 
because it involves a member due, fee, or other charge. At any time 
within sixty (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

[[Page 50155]]

necessary or appropriate in the public interest, for the protection of 
investors, or otherwise in furtherance of the purposes of the Act.
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    \10\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \11\ 17 CFR 240.19b-4(f)(2).
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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, 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-2007-051 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-2007-051. 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, 100 F Street, NE., 
Washington, DC 20549, on official business days between the hours of 10 
a.m. and 3 p.m. Copies of such filing also will be available for 
inspection and copying at the principal office of FINRA. 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-2007-051 and should be 
submitted on or before September 20, 2007.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\12\
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    \12\ 17 CFR 200.30-3(a)(12).
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Nancy M. Morris,
Secretary.
[FR Doc. E7-17166 Filed 8-29-07; 8:45 am]

BILLING CODE 8010-01-P