Document ID: SEC-2006-0204-0001
Agency: sec
Document Type: Notice
Title: Self-regulatory organizations; proposed rule changes: National Association of Securities Dealers, Inc.
Posted Date: 2006-02-15T05:00Z

[Federal Register: February 15, 2006 (Volume 71, Number 31)]
[Notices]               
[Page 8020-8027]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr15fe06-144]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-53256; File No. SR-NASD-2006-013]

 
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 Establish a Unified Pricing 
Schedule for NASD Members Using the Nasdaq Market Center and Nasdaq's 
Brut and Inet Facilities

February 8, 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 January 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 prepared by Nasdaq. On February 1, 
2006, Nasdaq submitted Amendment No. 1 to the proposed rule change.\3\ 
Nasdaq has designated this proposal as one establishing or changing a 
due, fee, or other charge imposed by the self-regulatory organization 
under Section 19(b)(3)(A)(ii) \4\ of the Act 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.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ Partial Amendment No. 1 (``Amendment No. 1'') clarifies that 
the proposed rule change was approved by the Nasdaq Board of 
Directors on February 1, 2006 and not January 24, 2006.
    \4\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \5\ 17 CFR 240.19b-4(f)(2).
---------------------------------------------------------------------------

I. Self-Regulatory Organization's Statement of the Terms of the 
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 (``Nasdaq 
Facilities''). Nasdaq states that it will implement the proposed rule 
change on February 1, 2006.
    The text of the proposed rule change, as amended, is below. 
Proposed new language is in italics; proposed deletions are in 
[brackets].\6\
---------------------------------------------------------------------------

    \6\ Changes are marked to the rule text that appears in the 
electronic NASD Manual found at http://www.nasd.com. Prior to the 

date when The NASDAQ Stock Market LLC (``NASDAQ LLC'') commences 
operations, NASDAQ LLC will file a conforming change to the rules of 
NASDAQ LLC approved in Securities Exchange Act Release No. 53128 
(January 13, 2006), 71 FR 3550 (January 23, 2006) (File No. 10-131).
---------------------------------------------------------------------------

* * * * *

7010. System Services

    (a)-(b) No change.
    (c)(1) No change.
    (2) Exchange-Listed Securities Transaction Credit
    NASD members that trade securities listed on the NYSE (``Tape A'') 
and Amex (``Tape B'') in over-the-counter transactions may receive from 
the NASD transaction credits based on the number of transactions 
attributed to them. A transaction is attributed to a member if (i) for 
Tape B securities, the transaction is executed through CAES, ITS, or 
Nasdaq's Brut or Inet Facilit[y]ies, and the member acts as liquidity 
provider (i.e., the member sells in response to a buy order or buys in 
response to a sell order) or (ii) for Tape A and Tape B securities, the 
transaction is not executed through CAES, ITS, or Nasdaq's Brut or Inet 
Facilit[y]ies, and the member is identified as the executing party in a 
trade report submitted to the NASD that the NASD submits to the 
Consolidated Tape Association. An NASD member may earn credits from one 
or both pools maintained by the NASD, each pool representing 50% of the 
revenue paid by the Consolidated Tape Association to the NASD for each 
of Tape A and Tape B transactions after deducting the amount that the 
NASD pays to the Consolidated Tape Association for capacity usage. An 
NASD member may earn credits from the pools according to the member's 
pro rata share of all over-the-counter transactions attributed to NASD 
members in each of Tape A and Tape B for each calendar quarter.
    (d)-(h) No change.
    (i) Nasdaq Market Center, [and] Brut, and Inet [Facility] Order 
Execution and Routing
    (1) The following charges shall apply to the use of the order 
execution and routing services of the Nasdaq Market Center, [and 
Nasdaq's] Brut, and Inet [Facility] (the ``Nasdaq Facilities'') by 
members for all Nasdaq-listed securities subject to the Nasdaq UTP Plan 
and for Exchange-Traded Funds that are not listed on Nasdaq [a national 
securities exchange]. The term ``Exchange-Traded Funds'' shall mean 
Portfolio Depository Receipts, Index Fund Shares, and Trust Issued 
Receipts as such terms are defined in Rule 4420(i), (j), and (l), 
respectively.

[[Page 8021]]

------------------------------------------------------------------------

------------------------------------------------------------------------
                              [Order Entry]
------------------------------------------------------------------------
[Non-Directed Orders and Preferenced     [No charge]
 Orders].
----------------------------------------
                             Order Execution
------------------------------------------------------------------------
[Non-Directed or Preferenced] Order
 that accesses the Quote/Order of a
 market participant that does not
 charge an access fee to market
 participants accessing its Quotes/
 Orders through the Nasdaq Facilities
 [Market Center and/or Nasdaq's Brut
 Facility]:
Charge to member entering order:
[Average daily shares of liquidity
 provided through the Nasdaq Market
 Center and/or Nasdaq's Brut Facility
 by the member during the month:]
[Greater than 10 million]..............  [$0.0027 per share executed
                                          (but no more than $108 per
                                          trade for trades in securities
                                          executed at $1.00 or less per
                                          share)]
Members with an average daily volume     $0.0028 per share executed
 through the Nasdaq Facilities in all     [(but no more than $112 per
 securities during the month of (i)       trade for trades in securities
 more than 30 million shares of           executed at $1.00 or less per
 liquidity provided, and (ii) more than   share)]
 50 million shares of liquidity
 accessed and/or routed [Greater than
 2,000,000 but less than or equal to
 10,000,000].
2,000,000 or less] Other members.......  $0.0030 per share executed
                                          [(but no more than $120 per
                                          trade for trades in securities
                                          executed at $1.00 or less per
                                          share)]
Credit to member providing liquidity:
[Average daily shares of liquidity
 provided through the Nasdaq Market
 Center and/or Nasdaq's Brut Facility
 by the member during the month:]
Members with an average daily volume     $0.0025 per share executed
 through the Nasdaq Facilities in all     [(but no more than $100 per
 securities during the month of more      trade for trades in securities
 than 30 million shares of liquidity      executed at $1.00 or less per
 provided.                                share)]
[Greater than 20 million]..............
[Greater than 2,000,000 but less than    [$0.0022 per share executed
 or equal to 20,000,000].                 (but no more than $88 per
                                          trade for trades in securities
                                          executed at $1.00 or less per
                                          share)]
Other members [Less than or equal to     $0.0020 per share executed
 2,000,000].                              [(but no more than $80 per
                                          trade for trades in securities
                                          executed at $1.00 or less per
                                          share)]
[Non-Directed or Preferenced] Order
 that accesses the Quote/Order of a
 market participant that charges an
 access fee to market participants
 accessing its Quotes/Orders through
 the Nasdaq Market Center:
Charge to member entering order:
[Average daily shares of liquidity
 provided through the Nasdaq Market
 Center and/or Nasdaq's Brut Facility
 by the member during the month:]
Members with an average daily volume     $0.001 per share executed (but
 through the Nasdaq Facilities in all     no more than $10,000 per
 securities during the month of more      month) [$40 per trade for
 than 500,000 shares of liquidity         trades in securities executed
 provided.                                at $1.00 or less per share)]
[500,000 or less]......................
Other members [500,001 or more]........  $0.001 per share executed [(but
                                          no more than $40 per trade for
                                          trades in securities executed
                                          at $1.00 or less per share,
                                          and no more than $10,000 per
                                          month)]
----------------------------------------
         [Routed] Order[s] Routing for Nasdaq-Listed Securities
------------------------------------------------------------------------
Any order entered by a member that is    The greater of (i) $0.004 per
 routed outside of [both] the Nasdaq      share executed or (ii) a pass-
 [Market Center and Nasdaq's Brut]        through of all applicable
 Facilit[y]ies and that does not          access fees charged by
 attempt to execute in the Nasdaq['s      electronic communications
 Brut] Facilit[y]ies prior to routing.    networks that charge more than
                                          $0.003 per share executed.
Any other order entered by a member
 that is routed outside of [both] the
 Nasdaq [Market Center and Nasdaq's
 Brut] Facilit[y]ies:
[Average daily shares of liquidity
 provided through the Nasdaq Market
 Center and/or Nasdaq's Brut Facility
 by the member during the month and
 average daily shares accessed through
 and/or routed from the Nasdaq Market
 Center and/or Nasdaq's Brut Facility
 by the member during the month
 (excluding orders routed outside of
 both the Nasdaq Market Center and
 Nasdaq's Brut Facility that do not
 attempt to execute in Nasdaq's Brut
 Facility prior to routing):]
[Greater than 20 million shares of       [$0.0025 per share executed]
 liquidity provided and greater than 40
 million shares accessed and/or routed]
[Greater than 10 million but less than   [$0.0027 per share executed]
 or equal to 20 million shares of
 liquidity provided and any amount
 accessed or routed, OR greater than 20
 million shares of liquidity provided
 and 40 million or fewer shares
 accessed and/or routed]

[[Page 8022]]

Members with an average daily volume     The greater of (i) $0.0028 per
 through the Nasdaq Facilities in all     share executed or (ii) a pass-
 securities during the month of (i)       through of all applicable
 more than 30 million shares of           access fees charged by
 liquidity provided, and (ii) more than   electronic communications
 50 million shares of liquidity           networks that charge more than
 accessed and/or routed [Greater than     $0.003 per share executed.
 2,000,000 but less than or equal to
 10,000,000 shares of liquidity
 provided and any amount accessed and/
 or routed].
Other members [Less than or equal to     The greater of (i) $0.0030 per
 2,000,000 shares of liquidity provided   share executed or (ii) a pass-
 and any amount accessed and/or routed].  through of all applicable
                                          access fees charged by
                                          electronic communications
                                          networks that charge more than
                                          $0.003 per share executed.
----------------------------------------
      Order Routing for Exchange-Traded Funds Not Listed On Nasdaq
------------------------------------------------------------------------
Order routed to the New York Stock       See DOT fee schedule in Rule
 Exchange (``NYSE'') through its DOT      7010(i)(6).
 system.
Any other order entered by a member      $0.004 per share executed.
 that is routed outside of the Nasdaq
 Facilities and that does not attempt
 to execute in the Nasdaq Facilities
 prior to routing.
Order routed to the American Stock       $0.01 per share executed.
 Exchange (``Amex'') after attempting
 to execute in the Nasdaq Facilities.
Order routed through the Intermarket     $0.0007 per share executed.
 Trading System (``ITS'') after
 attempting to execute in the Nasdaq
 Facilities.
Order routed to venues other than the    $0.0035 per share executed.
 NYSE and Amex after attempting to
 execute in the Nasdaq Facilities.
----------------------------------------
                          [Order Cancellation]
------------------------------------------------------------------------
[Non-Directed and Preferenced Orders]..  [No charge].
------------------------------------------------------------------------

    (2) For purposes of assessing Nasdaq [Market Center and Brut] 
Facilit[y]ies fees and credits hereunder, (A) a Discretionary Order 
that executes prior to being displayed as a Quote/Order will always be 
deemed to be accessing liquidity unless it is executed by (or receives 
delivery of) a displayed Discretionary Order at a price in the 
discretionary price range of the displayed Discretionary Order, and (B) 
a Discretionary Order that executes after being displayed as a Quote/
Order will always be deemed to be providing liquidity, unless the 
displayed Discretionary Order executes against (or is delivered to) a 
Quote/Order or Non-Directed Order that has not been designated 
``Immediate or Cancel,'' at a price in its discretionary price range.
    (3) No change.
    (4) Opening Cross.
    [Commencing on January 1, 2006, m]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, Good-     $0.0005 per share executed for
 till-Cancelled, Immediate-or-Cancel,     the net number of buy and sell
 and Day orders executed in the Nasdaq    shares up to a maximum of
 Opening Cross.                           $10,000 per firm per month.
All other quotes and orders executed in  No charge for execution.
 the Nasdaq Opening Cross.
------------------------------------------------------------------------

    (5) Except as provided in paragraph (6), the following charges 
shall apply to the use of the order execution and routing services of 
the Nasdaq Facilities by members for [There shall be no charges or 
credits for order entry, execution, routing, or cancellation by members 
accessing the Nasdaq Market Center or Nasdaq's Brut Facility to buy or 
sell exchange-listed] securities subject to the Consolidated Quotations 
Service and Consolidated Tape Association plans[,] other than Exchange-
Traded Funds (``Covered Securities''):
    [(A) the charges in Rule 7010(i)(1) for Exchange-Traded Funds,]
    [(B) charges described in Rule 7010(d),]
    [(C) a fee of $0.0004 per share executed for orders delivered by 
Nasdaq's Brut Facility to an exchange using the exchange's proprietary 
order delivery system if such orders do not attempt to execute in 
Nasdaq's Brut Facility or the Nasdaq Market Center prior to routing to 
the exchange,]
    [(D) a fee of $0.009 per share executed for any limit order 
delivered by Nasdaq's Brut Facility to the New York Stock Exchange 
(``NYSE'') using the NYSE's proprietory order delivery system if such 
an order is not an on-close order, is not executed in the opening, and 
remains at the NYSE for more than 5 minutes]
    [(E) for a pilot period beginning December 1, 2005 and ending 
February 28, 2006, a credit of $0.0005 per share executed to a member 
providing liquidity for a transaction in the following stocks: Advanced 
Micro Devices Inc. (AMD); Apache Corp. (APA); AT&T Corp. (T); Avaya, 
Inc. (AV); Baker Hughes, Inc. (BHI); BJ Services Co. (BJS); Bristol-
Myers Squibb Co. (BMY); Burlington Resources, Inc. (BR); Calpine Corp. 
(CPN); Charles Schwab Corp. (SCH); Citigroup Inc. (C); ConocoPhillips 
(COP); Corning Inc. (GLW); Devon Energy Corp. (DVN); EMC Corp. (EMC); 
Exxon Mobil Corp. (XOM); Ford Motor Co. (F); Gateway, Inc. (GTW); 
General Electric Co. (GE); Halliburton Co. (HAL); Hewlett-Packard Co. 
(HPQ); Johnson & Johnson (JNJ); JPMorgan Chase & Co. (JPM); Kohl's 
Corp. (KSS); LSI Logic Corp. (LSI); Micron Technology, Inc. (MU); 
Motorola, Inc. (MOT); Noble Corp. (NE); Occidental Petroleum Corp. 
(OXY); Office Depot Inc. (ODP); Pfizer Inc. (PFE); Phelps Dodge Corp. 
(PD); Pulte Homes, Inc. (PHM); Qwest Communications International Inc. 
(Q); Schlumberger Ltd. (SLB); Solectron Corp. (SLR); Sovereign Bancorp, 
Inc. (SOV); Time Warner, Inc. (TWX); Valero Energy Corp. (VLO); and 
Verizon Communications, Inc. (VZ).]

[[Page 8023]]

------------------------------------------------------------------------

------------------------------------------------------------------------
                             Order Execution
------------------------------------------------------------------------
Order that accesses the Quote/Order of
 a Nasdaq Facility market participant:
    Charge to member entering order....  $0.0007 per share executed.
Credit to member providing liquidity:
    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.
    Other members......................  No credit.
----------------------------------------
                              Order Routing
------------------------------------------------------------------------
Order routed to Amex...................  $0.01 per share executed.
Order routed through the ITS...........  $0.0007 per share executed.
Order routed to NYSE...................  See DOT fee schedule in Rule
                                          7010(i)(6).
Order for NYSE-listed Covered Security   $0.0015 per share executed.
 routed to venue other than the NYSE.
Order for Covered Security listed on     $0.0035 per share executed.
 venue other than the NYSE and routed
 to venue other than Amex.
------------------------------------------------------------------------

    (6) The following charges shall apply to the use of the Nasdaq 
Facilities by members for routing to the NYSE through its DOT system 
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    No charge.
 Nasdaq Facilities prior to routing and
 that is not charged a fee by the NYSE
 specialist.
Order that does not attempt to execute
 in the Nasdaq Facilities prior to
 routing and that is not charged a fee
 by the NYSE specialist:
Average daily shares of liquidity
 routed through Nasdaq's DOT linkage by
 the member during the month:
    More than 30 million...............  $0.0001 per share executed.
    Between 2,000,001 and 30 million...  $0.0003 per share executed.
    Between 250,001 and 2 million......  $0.0005 per share executed.
    Between 100,001 and 250,000........  $0.001 per share executed.
    100,000 or less....................  $0.01 per share executed.
------------------------------------------------------------------------

    [(6)](7) The fees applicable to non-members using Nasdaq's Brut 
Facility shall be the fees established for members under Rule 7010(i), 
as amended by SR-NASD-2005-019, SR-NASD-2005-035, SR-NASD-2005-048, SR-
NASD-2005-071, SR-NASD-2005-125, SR-NASD-2005-137, and SR-NASD-2005-
154, and as applied to non-members by SR-NASD-2005-020, SR-NASD-2005-
038, SR-NASD-2005-049, SR-NASD-2005-072, SR-NASD-2005-126, SR-NASD-
2005-138, and SR-NASD-2005-155.
    (j)-(v) No change.
    (w) INET System [Order Execution] Connectivity
    (1) [For a period of time not to exceed 60 days after INET becomes 
a facility of Nasdaq, t]T he following charges shall apply to 
telecommunication protocols [the] used [of the order execution services 
of] to access Nasdaq's INET System [by Participants for]:

------------------------------------------------------------------------

------------------------------------------------------------------------
                       [NASDAQ-listed securities]
------------------------------------------------------------------------
                            [Order Execution]
------------------------------------------------------------------------
[Non-Directed Order that accesses the
 Quote/Order of a market Participant
 through Nasdaq's INET System:].
[Charge to Participant entering order:]
[Average daily shares of liquidity
 provided through Nasdaq's INET System
 by the Participant during the month:].
[Greater than 60 million shares          [$0.0027 per share executed].
 accessed or routed and 5 million
 shares provided].
[Greater than 40 million shares but      [$0.0028 per share executed].
 less than 60 million shares accessed
 or routed and 5 million shares
 provided].
[Less than 5 million shares provided or  [$0.0030 per share executed].
 less than 40 million shares accessed
 or routed].
[Credit to Participant providing
 liquidity:].
[Average daily shares of liquidity
 provided through Nasdaq's INET System
 by the Participant during the month:].
[Greater than 30 million shares          [$0.0025 per share executed].
 provided or greater than 30 million
 shares accessed or routed or greater
 than 50 million shares combined
 provided, accessed or routed].
[Less than or equal to 30 million        [$0.002 per share executed].
 shares provided and less than or equal
 to 30 million shares accessed or
 routed and less than or equal to 50
 million shares combined provided,
 accessed, or routed].

[[Page 8024]]

[Any order that matches against another  [$0.00025 per share per side.].
 order of the same Participant].
----------------------------------------
                             [Routed Orders]
------------------------------------------------------------------------
[Any other order entered by a            [$0.0025 per share executed].
 Participant that is routed outside of
 Nasdaq's INET System].
[Any other order entered by a            [$0.001 per share executed]
 Participant that is routed to the
 NASDAQ Opening or Closing Cross].
----------------------------------------
                          [AMEX-listed stocks]
------------------------------------------------------------------------
                            [Order Execution]
------------------------------------------------------------------------
[Non-Directed Order that accesses the
 Quote/Order of a market Participant
 through Nasdaq's INET System:].
[Credit to Participant entering order:]  [$0.0009 per share executed].
[Charge to Participant providing         [$0.001 per share executed].
 liquidity:].
[Any order that matches against another  [No charge].
 order of the same Participant].
----------------------------------------
                             [Routed Orders]
------------------------------------------------------------------------
[Any order entered by a Participant      [$0.01 per share executed].
 that is routed outside of Nasdaq's
 INET System through DOT].
[Any order entered by a Participant      [$0.0035 per share executed].
 that is routed outside of Nasdaq's
 INET System other than through DOT].
----------------------------------------
                           [AMEX-listed ETFs]
------------------------------------------------------------------------
                            [Order Execution]
------------------------------------------------------------------------
[Non-Directed Order that accesses the
 Quote/Order of a market Participant
 through Nasdaq's INET System:].
[Charge to Participant entering order:]
[Average daily shares of liquidity
 provided through Nasdaq's INET System
 by the Participant during the month:].
[Greater than 60 million shares          [$0.0027 per share executed].
 accessed or routed and 5 million
 shares provided].
[Greater than 40 million shares but      [$0.0028 per share executed].
 less than 60 million shares accessed
 or routed and 5 million shares
 provided].
[Less than 5 million shares provided or  [$0.0030 per share executed].
 less than 40 million shares accessed
 or routed].
[Credit to Participant providing
 liquidity:].
[Average daily shares of liquidity
 provided through Nasdaq's INET System
 by the Participant during the month:].
[Greater than 30 million shares          [$0.0025 per share executed].
 provided or greater than 30 million
 shares accessed or routed or greater
 than 50 million shares combined
 provided, accessed or routed].
[Less than or equal to 30 million        [$0.002 per share executed].
 shares provided and less than or equal
 to 30 million shares accessed or
 routed and less than or equal to 50
 million shares combined provided,
 accessed, or routed].
----------------------------------------
[Any order that matches against another  [$0.00025 per share per side.].
 order of the same Participant].
----------------------------------------
                             [Routed Orders]
------------------------------------------------------------------------
[Any order entered by a Participant      [$0.01 per share executed].
 that is routed outside of Nasdaq's
 INET System to the AMEX].
[Any order entered by a Participant      [$0.0035 per share executed].
 that is routed outside of Nasdaq's
 INET System other than to the AMEX].
----------------------------------------
                          [NYSE-listed stocks]
------------------------------------------------------------------------
                            [Order Execution]
------------------------------------------------------------------------
[Non-Directed Order that accesses the
 Quote/Order of a market Participant
 through Nasdaq's INET System:].
[Credit to Participant entering order:]  [$0.0009 per share executed].
[Charge to Participant providing         [$0.001 per share executed].
 liquidity:].
[Any order that matches against another  [No charge].
 order of the same Participant].
----------------------------------------
                             [Routed Orders]
------------------------------------------------------------------------
[Any order entered by a Participant      [$0.01 per share executed].
 that is routed outside of Nasdaq's
 INET System through DOT that is
 charged a fee by the specialist
 (billable)].

[[Page 8025]]

[Charge to any order entered by a
 Participant that is routed outside of
 Nasdaq's INET System through DOT that
 is not charged a fee by the specialist
 (non-billable):].
[Average daily shares of billable and
 non-billable NYSE DOT shares:].
[Greater than 30 million shares].......  [$0.0001].
[Greater than 2 million shares but less  [$0.0003].
 than or equal to 30 million shares].
[Greater than 250,000 shares but less    [$0.0005].
 than or equal to 2 million shares].
[Greater than 100,000 shares but less    [$0.001].
 than or equal to 250,000 shares].
[Less than or equal to 100,000 shares].  [$0.01].
[Any order entered by a Participant      [$0.0015 per share executed].
 that is routed outside of Nasdaq's
 INET System other than through DOT].
------------------------------------------------------------------------

    [Upon Participant's request, added liquidity among Participants 
that are wholly owned by a common parent may be aggregated. INET will 
distribute the market data revenue based on the number of tape 
reportable transactions executed by the Participant, as paid to INET.]

[Market Data Revenue Sharing for AMEX Listed (Tape B) Securities]

    [Subscribers that add liquidity to the INET limit order book in 
Tape B securities (e.g. AMEX listed securities) will receive 50% of the 
market data revenue paid by the Consolidated Tape Association.]
    Port Fees:

Connectivity to Harborside Financial Center and Secaucus Datacenters

     [$400 per month for each OUCH[supreg]/FIX pair
     $400 per month for each ITCH[supreg] data feed pair
     $400 per month for each DROP[supreg] pair]
     $400 per month for each [Compressed ITCH[supreg] data 
feed] port pair, other than
     [$1000 per month for each] Multicast ITCH[supreg] data 
feed pairs, for which the fee is $1000 per month
    Internet Ports: An additional $200 per month for each Internet port 
that requires additional bandwidth.

Connectivity to Chicago Datacenter

     $800 per month for each [OUCH[supreg]/FIX] port pair
     [$800 per month for each ITCH[supreg] data feed pair
     $800 per month for each DROP[supreg] pair]
    All port fees, not including Internet Bandwidth surcharges, will be 
waived for Subscribers that for a calendar month have an average daily 
share volume for executed orders exceeding 30 million shares of added 
liquidity.
    INET Terminal Fees:
    Each ID is subject to a minimum commission fee of $50 per month 
unless it executes a minimum of 100,000 shares.
    Each ID receiving market data is subject to pass-through fees for 
use of these services. Pricing for these services is determined by the 
exchanges and/or market center.
     Each ID that is given web access is subject to a $50 
monthly fee.
    Portal Fees:
    Each ID is subject to a monthly user fee of $150.
    Each ID receiving market data is subject to pass-through fees for 
use of these services. Pricing for these services is determined by the 
exchanges and/or market center.
    (2) 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, as 
amended, and discussed any comments it received on the proposed rule 
change, as amended. 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 establish a new fee and credit schedule for 
order execution and routing that spans activity on the Nasdaq 
Facilities.\7\ In SR-NASD-2005-128,\8\ Nasdaq's filing to establish 
rules for the newly acquired Inet ECN, Nasdaq committed that it would, 
within 60 days of the closing of the acquisition of Inet, file an 
integrated fee and credit structure governing the use of all of the 
Nasdaq Facilities. Nasdaq states that the fee and rebate structure is 
based on multiple volume-based usage tiers that take into account the 
combined volume of a market participant on all of the Nasdaq 
Facilities. Nasdaq believes that this integrated and uniform pricing 
structure will encourage activity on the Nasdaq Facilities and will not 
provide financial incentives to use one system versus the other. Nasdaq 
notes that under the new structure, the volumes required to receive 
certain discounted fees or enhanced credits are higher than is the case 
under current pricing for the Nasdaq Market Center and Brut. Nasdaq 
states that this is a function of the fact that the combined volume of 
the three systems would be markedly higher than that of any system in 
isolation, so an adjustment of the tier thresholds would be necessary 
to prevent the combining of the systems from resulting in unwarranted 
fee decreases. As stated in a Current Report on Form 8-K and related 
press release filed by Nasdaq with the Commission, Nasdaq does not 
currently anticipate that the new pricing structure would have a 
material impact on its financial results.\9\
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    \7\ This filing would apply to NASD members. Nasdaq has 
submitted SR-NASD-2006-014 to apply the same pricing structure to 
non-members.
    \8\ Securities Exchange Act Release Nos. 52902 (December 7, 
2005), 70 FR 73810 (December 13, 2005) (SR-NASD-2005-128) and 52723 
(November 2, 2005), 70 FR 67513 (November 7, 2005) (SR-NASD-2005-
128).
    \9\ See Current Report on Form 8-K of The Nasdaq Stock Market, 
Inc. (January 6, 2006) (available at http://www.sec.gov/Archives/edgar/data/1120193/
 000119312506002815/0001193125-06-002815-

index.htm).
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    Specific features of the new pricing structure for Nasdaq-listed 
securities and exchange-traded funds (``ETFs'') are as follows:
     Members with an average daily volume through the Nasdaq 
Facilities in all securities (i.e., listed on Nasdaq or elsewhere) 
during the month of (i) more than 30 million shares of liquidity 
provided, and (ii) more than 50 million shares of liquidity accessed 
and/or routed would pay $0.0028 per share to access liquidity from 
market participants that do not charge an access fee; all others would 
pay $0.003 per

[[Page 8026]]

share to access liquidity from market participants that do not charge 
an access fee.\10\
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    \10\ Telephone conversation between John Yetter, Associate 
General Counsel, Exchange, and David Liu and Michou Nguyen, 
Attorneys, Division of Market Regulation (``Division''), Commission, 
on February 2, 2006.
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     Members with an average daily volume through the Nasdaq 
Facilities in all securities during the month of more than 30 million 
shares of liquidity provided and that do not charge an access fee would 
receive a credit of $0.0025 per share when providing liquidity; others 
that do not charge an access fee would receive $0.002 per share; and 
members that charge an access fee would not receive a credit.
     Members with an average daily volume through the Nasdaq 
Facilities in all securities during the month of more than 500,000 
shares of liquidity provided would pay $0.001 per share to access 
liquidity from market participants that charge an access fee, with a 
cap of $10,000 per month; all others would pay $0.001 per share with no 
cap.
    When routing orders for Nasdaq-listed securities that check the 
books of the Nasdaq Facilities before routing, members with an average 
daily volume through the Nasdaq Facilities in all securities during the 
month of (i) more than 30 million shares of liquidity provided, and 
(ii) more than 50 million shares of liquidity accessed and/or routed 
would pay the greater of $0.0028 per share or the applicable access 
fees of electronic communications networks (ECNs) that charge more than 
$0.003 per share. Other members would pay the greater of $0.003 per 
share or the applicable access fees of ECNs that charge more than 
$0.003 per share. Finally, members routing orders for Nasdaq-listed 
securities that do not first check the books of the Nasdaq Facilities 
would pay the greater of $0.004 per share or the applicable access fees 
of ECNs that charge more than $0.003 per share. Thus, in most cases, 
Nasdaq would pass through to its market participants the cost that it 
is charged when routing to ECNs that charge more than $0.003 per share.
    The fees for routing ETFs not listed on Nasdaq would be as follows: 
(i) $0.01 per share for an order executed to the American Stock 
Exchange (``Amex'') after checking the Nasdaq Facilities, (ii) $0.0035 
per share for an order executed on venues other than the New York Stock 
Exchange (``NYSE'') and Amex after checking the Nasdaq Facilities, 
(iii) $0.0007 for an order executed through the Intermarket Trading 
System (``ITS'') after checking the Nasdaq Facilities, and (iv) $0.004 
per share for an order that is executed without checking the Nasdaq 
Facilities.\11\ Fees for ETF orders executed on the NYSE are described 
below.\12\
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    \11\ Id.
    \12\ Id.
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    Specific features of the new pricing structure for non-Nasdaq-
listed securities other than ETFs (``Covered Securities'') would be as 
follows:
     All members would pay $0.0007 per share for orders that 
access liquidity from the Nasdaq Facilities.
     Members with an average daily volume through the Nasdaq 
Facilities in Covered Securities during the month of more than 5 
million shares of liquidity accessed, provided, or executed\13\ would 
receive a credit of $0.0005 per share of liquidity provided; others 
would not receive a liquidity provider credit. As a result, Nasdaq 
would be ending the liquidity provider credit pilot for 40 NYSE-listed 
stocks under Rule 7010(i)(5)(E).\14\
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    \13\ Id.
    \14\ See Securities Exchange Act Release Nos. 53081 (January 9, 
2006), 71 FR 2608 (January 17, 2006) (SR-NASD-2005-154) and 53082 
(January 9, 2006), 71 FR 2607 (January 17, 2006) (SR-NASD-2005-155).
---------------------------------------------------------------------------

     The fees for routing Covered Securities would be as 
follows: (i) $0.01 per share for an order executed on Amex, (ii) 
$0.0035 per share for an order for a security listed on a venue other 
than the NYSE and executed on a venue other than Amex, (iii) $0.0015 
per share for an NYSE-listed Covered Security executed on a venue other 
than the NYSE, and (iv) $0.0007 per share for an order executed on the 
ITS.\15\
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    \15\ Telephone conversation between John Yetter, Associate 
General Counsel, Exchange, and David Liu and Michou Nguyen, 
Attorneys, Division, Commission, on February 2, 2006.
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    Fees for orders in NYSE-listed Covered Securities and NYSE-listed 
ETFs routed to the NYSE through its DOT system are described below:
     Orders that are routed through DOT after accessing the 
Nasdaq Facilities and that are not charged a fee by the NYSE specialist 
would be free. Members would pay a fee of $0.01 per share for orders 
that are charged a fee by the NYSE specialist.
     The fee for orders routed through DOT without accessing 
the Nasdaq Facilities would depend on a member's volume of usage of 
Nasdaq's DOT linkage. Members routing an average daily volume of more 
than 30 million shares during the month would pay $0.0001 per share 
executed; members routing between 2,000,001 and 30 million shares would 
pay $0.0003 per share executed; members routing between 250,001 and 2 
million shares would pay $0.0005 per share executed; members routing 
between 100,001 and 250,000 shares would pay $0.001 per share executed; 
and members routing 100,000 shares or less would pay $0.01 per share 
executed.
    Other changes being effected by the proposed rule change would be 
as follows:
     Nasdaq would be eliminating fee and credit caps currently 
in place for trades priced under $1. Nasdaq states that the caps were 
instituted as a response to high trading volumes in certain low-priced 
stocks several years ago and have less relevance to the current trading 
environment.
     Good-till-Cancelled and Immediate-or-Cancel orders would 
be added to the list of order types that pay a $0.0005 per share fee 
when executed in Nasdaq's Opening Cross. Other fees for the Opening 
Cross and the Closing Cross would be unchanged.
     The Nasdaq Market Center and Brut would no longer share 
market data revenue associated with transactions in securities listed 
on the NYSE that are executed through these systems. Nasdaq represents 
that Inet does not currently share such revenue.
     Most Inet fees contained in Rule 7010(w) would be deleted. 
However, fees for use of Inet's telecommunications protocols would be 
maintained. Since Inet continues to use different telecommunications 
protocols and is operated out of its own data centers, Nasdaq believes 
that it is appropriate to maintain Inet's current connectivity pricing. 
Nasdaq believes that the telecommunications charges associated with 
accessing Inet are comparable to those associated with accessing the 
Nasdaq Market Center and Brut. However, Nasdaq would be deleting some 
redundant language from the rule language describing these fees.
    Nasdaq would be deleting unnecessary references to order entry 
fees, order cancellation fees, and preferenced orders.
2. Statutory Basis
    Nasdaq believes that the proposed rule change, as amended, is 
consistent with the provisions of Section 15A of the Act,\16\ in 
general, and with Section 15A(b)(5) of the Act,\17\ in particular, in 
that the proposed rule change, as amended, 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

[[Page 8027]]

the proposed rule change, as amended, would establish a uniform fee 
schedule for the Nasdaq Facilities that takes account of the higher 
volumes associated with the combining of the Nasdaq Facilities for 
purposes of determining pricing discounts. Nasdaq does not currently 
anticipate that the new pricing structure would have a material impact 
on its financial results.
---------------------------------------------------------------------------

    \16\ 15 U.S.C. 78o-3.
    \17\ 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, as amended, 
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

    Nasdaq states that 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, as amended, is subject to Section 
19(b)(3)(A)(ii) of the Act \18\ and subparagraph (f)(2) of Rule 19b-4 
\19\ thereunder because it establishes or changes a due, fee, or other 
charge 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 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.\20\
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    \18\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \19\ 17 CFR 240.19b-4(f)(2).
    \20\ The effective date of the original proposed rule change is 
January 30, 2006, and the effective date of Amendment No. 1 is 
February 1, 2006. For purposes of calculating the 60-day period 
within which the Commission may summarily abrogate the proposed rule 
change, as amended, the Commission considers the period to commence 
on February 1, 2006, the date on which the Exchange 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-2006-013 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-2006-013. 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 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 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-2006-013 and should be submitted on or before March 
8, 2006.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\21\
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    \21\ 17 CFR 200.30-3(a)(12).
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J. Lynn Taylor,
Assistant Secretary.
 [FR Doc. E6-2106 Filed 2-14-06; 8:45 am]

BILLING CODE 8010-01-P