Document ID: SEC-2006-1658-0001
Agency: sec
Document Type: Notice
Title: Self-regulatory organizations; proposed rule changes: National Association of Securities Dealers, Inc.
Posted Date: 2006-12-20T05:00Z

[Federal Register: December 20, 2006 (Volume 71, Number 244)]
[Notices]               
[Page 76406-76407]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr20de06-143]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-54932; File No. SR-NASD-2006-132]

 
Self-Regulatory Organizations; National Association of Securities 
Dealers, Inc.; Notice of Filing and Immediate Effectiveness of Proposed 
Rule Change To Modify Pricing for NASD Members Using ITS/CAES and Inet

 December 13, 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 December 1, 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, II, 
and III below, which Items have been substantially prepared by Nasdaq. 
Nasdaq filed the proposed rule change pursuant to Section 
19(b)(3)(A)(ii) of the Act,\3\ and Rule 19b-4(f)(2) thereunder,\4\ 
which renders the proposal effective upon filing with the Commission. 
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\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \4\ 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 pricing for NASD members using the 
ITS/CAES System and Nasdaq's Inet facility (collectively, the ``Nasdaq 
Facilities''). Nasdaq states that it will implement this rule change on 
December 1, 2006. The text of the proposed rule change is set forth 
below. Proposed new language is in italics; proposed deletions are in 
[brackets].\5\
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    \5\ Nasdaq states that changes are marked to the rule text that 
appears in the electronic NASD Manual found at http://www.nasd.com, 

as further amended on an immediately effective basis by File No. SR-
NASD-2006-130 (filed on November 30, 2006).
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7010. System Services

    (a)-(h) No change.
    (i) ITS/CAES System and Inet Order Execution and Routing
    (1)-(6) No change.
    (7) The following charges shall apply to the use of the Nasdaq 
Facilities by members for routing to the NYSE for all securities[, 
including Exchange-Traded Funds]:

[Order charged a fee by the NYSE         [$0.01 per share executed]
 specialist].
Order that attempts to execute in the    [$0.0002 per share executed
 Nasdaq Facilities prior to routing:      (but no more than $25,000 per
 [and that is not charged a fee by the    month)]
 NYSE specialist or that is routed to
 NYSE via ITS].
Order for Exchange-Traded Fund.........  $0.0028 per share executed
All other orders.......................  $0.000225 per share executed
Order that does not attempt to execute   [$0.0003 per share executed
 in the Nasdaq Facilities prior to        (but no more than $75,000 per
 routing: [and that is not charged a      month)]
 fee by the NYSE specialist].
Order for Exchange-Traded Fund.........  $0.003 per share executed
All other orders.......................  $0.000275 per share executed

    (8) No change.
    (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 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 is modifying its price schedule for routing orders to the 
New York Stock Exchange LLC (``NYSE'') in response to significant 
pricing changes that were filed and announced by NYSE on November 30, 
2006 and implemented by it on December 1, 2006.\6\ Specifically, the 
NYSE filings establish an increased execution fee of $0.000275 per 
share executed for securities other than exchange-traded funds and a 
fee of $0.003 per share executed for most orders for exchange-traded 
funds, eliminate a $750,000 monthly fee cap, and eliminate specialist 
commissions on transactions.
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    \6\ See Securities Exchange Act Release Nos. 54856 (December 1, 
2006) (notice of filing and immediate effectiveness of File No. SR-
NYSE-2006-106 to increase transaction execution fees and eliminate 
fee cap) and 54850 (November 30, 2006) (notice of filing and 
immediate effectiveness of File No. SR-NYSE-2006-105 to eliminate 
specialist fees).
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    To ensure that its fees for routing orders to the NYSE accurately 
reflect the costs that Nasdaq will incur and provide appropriate 
incentives for Nasdaq market participants to seek liquidity on Nasdaq 
rather than routing directly to NYSE, Nasdaq is instituting the 
following fees:
     $0.003 per share executed for exchange-traded fund orders 
that route

[[Page 76407]]

to NYSE without attempting to execute in the Nasdaq Facilities;
     $0.0028 per share executed for exchange-traded fund orders 
that route to NYSE after attempting to execute in the Nasdaq 
Facilities;
     $0.000275 per share executed for orders in securities 
other than exchange-traded funds that route to NYSE without attempting 
to execute in the Nasdaq Facilities; and
     $0.000225 per share executed for orders in securities 
other than exchange-traded funds that route to NYSE after attempting to 
execute in the Nasdaq Facilities.
    As a further corollary to the changes made by NYSE, Nasdaq is 
eliminating the monthly fee caps that it had in place for orders routed 
to NYSE and eliminating the fee for orders charged a fee by the NYSE 
specialist.
2. Statutory Basis
    Nasdaq believes that the proposed rule change 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. Nasdaq states that the 
proposed rule change is a direct response to changes in the fees that 
Nasdaq pays when routing orders to the NYSE for execution.
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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 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 foregoing rule change is subject to Section 19(b)(3)(A)(ii) of 
the Act \9\ and subparagraph (f)(2) of Rule 19b-4 thereunder \10\ 
because it establishes or changes a due, fee, or other charge 
applicable only to a member imposed by the self-regulatory 
organization. Accordingly, the proposal is effective upon Commission 
receipt of the filing. At any time within 60 days of the filing of the 
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.
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    \9\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \10\ 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 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 No. SR-NASD-2006-132 on the subject line.

Paper Comments

     Send paper comments in triplicate to Nancy M. Morris, 
Secretary, Securities and Exchange Commission, Station Place, 100 F 
Street, NE., Washington, DC 20549-1090.

All submissions should refer to File No. SR-NASD-2006-132. 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 will also 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 No. SR-NASD-2006-132 and should be submitted on or before January 
10, 2007.

    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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Florence E. Harmon,
Deputy Secretary.
 [FR Doc. E6-21648 Filed 12-19-06; 8:45 am]

BILLING CODE 8011-01-P