Document ID: SEC-2006-1664-0001
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 76407-76409]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr20de06-144]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-54934; File No. SR-NASD-2006-130]

 
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 Extend a Pricing Pilot 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 November 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, II, 
and III below, which Items have been substantially prepared by Nasdaq. 
On December 6, 2006, Nasdaq submitted Amendment No. 1 to the proposed 
rule change. 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, as amended, 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 extend a pricing pilot 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

[[Page 76408]]

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 amended by SR-NASD-2006-126 (November 13, 2006) on an immediately 
effective basis.
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7010. System Services

    (a)-(h) No change.
    (i) ITS/CAES System and Inet Order Execution and Routing
    (1)-(5) No change.
    (6) Except as provided in paragraph (7), the following charges 
shall apply to the use of the order execution and routing services of 
the Nasdaq Facilities by members for securities subject to the 
Consolidated Quotations Service and Consolidated Tape Association plans 
other than Exchange-Traded Funds (``Covered Securities''):

                             Order Execution
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------------------------------------------------------------------------
Order that accesses the Quote/Order of
 a Nasdaq Facility market participant:
    Charge to member entering order:
        On or after [December 1,         $0.0007 per share executed.
         2006]January 2, 2007.
    For a pilot period during the
     months of November and December
     2006:
        Members with an average daily    $0.0007 per share executed.
         volume through the Nasdaq
         Facilities in Covered
         Securities during the month of
         (i) more than 100,000 shares
         of liquidity provided, and
         (ii) more than 100,000 shares
         of liquidity accessed and/or
         routed.
        Members with an average daily    $0.001 per share executed.
         volume through the Nasdaq
         Facilities in Covered
         Securities during the month of
         (i) between 50,000 and 100,000
         shares of liquidity provided,
         and (ii) between 50,000 and
         100,000 shares of liquidity
         accessed and/or routed.
        Other members..................  $0.0015 per share executed.
Credit to member providing liquidity     $0.0007 per share executed.
 for a Covered Security listed on NYSE
 and The NASDAQ Stock Market LLC.
    Credit to a member providing
     liquidity for other Covered
     Securities:
        Members with an average daily    $0.0005 per share executed.
         volume through the Nasdaq
         Facilities in Covered
         Securities during the month of
         more than 5 million shares of
         liquidity accessed, provided,
         or routed.
        Members with an average daily    $0.0006 per share executed.
         volume through the Nasdaq
         Facilities in Covered
         Securities during the month of
         10 million or more shares of
         liquidity provided.
        Other members..................  No credit.
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                              Order Routing
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------------------------------------------------------------------------
Order routed to Amex...................  $0.0028 per share executed
                                          (plus, in the case of orders
                                          charged a fee by the Amex
                                          specialist, $0.01 per share
                                          executed).
Order routed to NYSE...................  See NYSE fee schedule in Rule
                                          7010(i)(7).
All other orders.......................  $0.0028 per share executed.
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    (7)--(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 proposes to extend for one month a pricing pilot for non-
Nasdaq listed securities traded through the Nasdaq Facilities. 
Effective November 1, 2006,\6\ Nasdaq introduced a higher pricing tier 
of $0.0015 per share executed for members to access liquidity when 
those members provide an average of less than 50,000 shares of 
liquidity per day and access and/or route an average of less than 
50,000 shares of liquidity per day in non-Nasdaq securities through the 
Nasdaq Facilities during the month. In addition, Nasdaq introduced an 
intermediate pricing tier of $0.001 per share executed for members to 
access liquidity when those members provide an average of between 
50,000 shares and 100,000 shares of liquidity per day and access and/or 
route an average of between 50,000 shares and 100,000 shares of 
liquidity per day.\7\ Nasdaq states that it is continuing to evaluate 
the effect of the pricing change on market participants' liquidity 
provision, and therefore is extending the pilot pricing for one month. 
Nasdaq states that it will determine whether to submit an additional 
filing regarding these fees by January 2, 2006.
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    \6\ See Securities Exchange Act Release No. 54742 (November 13, 
2006), 71 FR 67179 (November 20, 2006) (SR-NASD-2006-122).
    \7\ Nasdaq continues to charge $0.0007 per share executed for 
all other members to access liquidity (i.e., when those members 
provide an average of more than 100,000 shares of liquidity per day 
and access and/or route an average of more than 100,000 shares of 
liquidity per day).

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[[Page 76409]]

2. Statutory Basis
    Nasdaq 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 the NASD operates or controls. Nasdaq states that the 
proposed rule change extends for an additional month a pilot that 
introduced a higher fee for accessing Nasdaq Facility liquidity in 
cases where a market participant's use of the Nasdaq Facilities does 
not meet certain minimal thresholds. Nasdaq believes that this change 
is consistent with an equitable allocation of fees because lower 
overall fees are charged to market participants that enhance market 
quality by providing liquidity.
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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

    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. In particular, for the reasons 
discussed in SR-NASD-2006-122, Nasdaq does not believe that the 
proposed change to fees to access liquidity in non-Nasdaq securities 
through the Nasdaq Facilities will impose a burden on competition by 
other markets that route orders to the Nasdaq Facilities for execution.

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 \10\ and subparagraph (f)(2) of Rule 19b-4 thereunder \11\ 
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.\12\
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    \10\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \11\ 17 CFR 240.19b-4(f)(2).
    \12\ 15 U.S.C. 78s(b)(3)(C). For purposes of calculating the 60-
day period within which the Commission may summarily abrogate the 
proposal, the Commission considers the period to commence on 
December 6, 2006, the date on which the Exchange submitted Amendment 
No. 1.
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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-2006-130 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-2006-130. 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-2006-130 and should be submitted on or before January 
10, 2007.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\13\
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    \13\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. E6-21650 Filed 12-19-06; 8:45 am]

BILLING CODE 8011-01-P