Document ID: SEC-2006-0953-0001
Agency: sec
Document Type: Notice
Title: Self-regulatory organizations; proposed rule changes: National Association of Securities Dealers, Inc.
Posted Date: 2006-07-27T04:00Z

[Federal Register: July 27, 2006 (Volume 71, Number 144)]
[Notices]               
[Page 42696-42698]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr27jy06-91]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-54160; File No. SR-NASD-2006-057]

 
Self-Regulatory Organizations; National Association of Securities 
Dealers, Inc.; Notice of Filing and Immediate Effectiveness of Proposed 
Rule Change and Amendment No. 1 Thereto Regarding the Pricing Schedule 
for NASD Members Using the Nasdaq Market Center and Nasdaq's Brut and 
INET Facilities

July 17, 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 May 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 prepared by Nasdaq. On June 12, 
2006, Nasdaq filed Amendment No. 1 to the proposed rule change.\3\ 
Pursuant to Section 19(b)(3)(A)(ii) of the Act \4\ and Rule 19b-4(f)(2) 
thereunder,\5\ Nasdaq has designated this proposal as establishing or 
changing a due, fee, or other charge, which renders the proposed rule 
change effective immediately upon filing. The Commission is publishing 
this notice, as amended, 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\ In Amendment No. 1, Nasdaq amended proposed Rule 7010(i)(7) 
to indicate that when a market participant enters an order into 
Nasdaq's Brut or INET systems that is sent to a Nasdaq Market Center 
market participant that charges an access fee to Brut or INET, the 
market participant entering the order shall be charged (i) the 
applicable execution fee of the Nasdaq Facilities, or (ii) in the 
case of executions against Quotes/Orders at less than $1.00 per 
share, a pass-through of the access fee charged to Brut or INET. 
Nasdaq also made conforming changes to the description of the 
proposed rule change.
    \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 Substance 
of the Proposed Rule Change

    Nasdaq proposes to modify the pricing for NASD members using the 
Nasdaq Market Center and Nasdaq's Brut and INET Facilities (the 
``Nasdaq Facilities''). Nasdaq implemented the proposed rule change on 
May 1, 2006.
    The text of the proposed rule change, as amended, is available on 
the NASD's

[[Page 42697]]

Web site (http://www.nasd.com), at the NASD's Office of the Secretary, 

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, 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 proposing to reduce its fees for routing orders from its 
three trading platforms--the Nasdaq Market Center, Brut, and INET--to 
the American Stock Exchange (``Amex''). Specifically, whereas Nasdaq 
now charges $0.01 per share executed for routing such orders, the fee 
will be reduced to $0.003 per share executed. However, an additional 
fee of $0.01 would be charged in cases where the Amex specialist 
charges a fee to execute the order (which generally occurs when the 
order remains on the specialist book for more than a certain amount of 
time before being executed).
    Nasdaq is also broadening the conditions under which a member may 
qualify for a reduced fee of $0.0028 per share executed to access 
liquidity and route orders in Nasdaq-listed securities and exchange-
traded funds. Currently, members qualify for the $0.0028 fee (a 
reduction from the otherwise applicable fee of $0.003 per share 
executed) if they (i) provide an daily average of more than 30 million 
shares of liquidity during a month and (ii) access and/or route a daily 
average of more than 50 million shares of liquidity during a month. 
With the proposed rule change, the reduced fee would also be available 
to members that (i) provide a daily average of more than 20 million 
shares of liquidity during a month and (ii) access and/or route a daily 
average of more than 60 million shares of liquidity during a month. 
Thus, the change will broaden the availability of the reduced fee to 
members that provide comparatively less liquidity but access and/or 
route comparatively more liquidity.
    Nasdaq is also adding rule text to clarify the fee to be charged 
with respect to orders that are entered into Brut or INET and then sent 
to a Nasdaq Market Center participant that charges an access fee to 
Brut or INET. When the execution price of the stock is greater than 
$1.00, Nasdaq charges its usual order execution fee of $0.0028 or 
$0.003, which will generally approximate the access fee charged to Brut 
or INET. In the case of stocks price at $1.00 or less, Nasdaq's order 
execution fee of 0.1% of the total transaction cost would not allow it 
to recoup the access fee charged to Brut or INET. Accordingly, in those 
cases, Nasdaq passes through the ECN access fee to the market 
participant that entered the order into Brut or INET.
2. Statutory Basis
    Nasdaq believes that the proposed rule change is consistent with 
the provisions of Section 15A of the Act,\6\ in general, and with 
Section 15A(b)(5) of the Act,\7\ 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 rule change 
reduces fees for routing to Amex in most cases, broadens the 
availability of a reduced fee to access liquidity and route orders, and 
clarifies the fee charged with respect to orders entered into Brut or 
INET and sent for execution to a Nasdaq Market Center participant that 
charges an access fee.''
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    \6\ 15 U.S.C. 78o-3.
    \7\ 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, as amended.

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 has become effective pursuant to Section 
19(b)(3)(A)(ii) of the Act \8\ and subparagraph (f)(2) of Rule 19b-4 
thereunder.\9\ At any time within 60 days of the filing of the proposed 
rule change, the Commission could have summarily abrogated such rule 
change if it appeared to the Commission that such action was necessary 
or appropriate in the public interest, for the protection of investors, 
or otherwise in furtherance of the purposes of the Act.\10\
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    \8\ 15 U.S.C. 78s(b)(3)(a)(ii).
    \9\ 17 CFR 240.19b-4(f)(2).
    \10\ The effective date of the original proposed rule change is 
May 1, 2006 and the effective date of the amendment is June 12, 
2006. 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 June 12, 2006, the date on which 
the NASD 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, 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-2006-057 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-2006-057. 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 Section, 100 F Street, 
NE., Washington, DC 20549. 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

[[Page 42698]]

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-2006-057 and should be 
submitted on or before August 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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Jill M. Peterson,
Assistant Secretary.
 [FR Doc. E6-11982 Filed 7-26-06; 8:45 am]

BILLING CODE 8010-01-P