Federal Register: February 6, 2003 (Volume 68, Number 25)
DOCID: FR Doc 03-2946
SECURITIES AND EXCHANGE COMMISSION
Securities and Exchange Commission
DOCUMENT ID: [Release No. 34-47300; File No. SR-NASD-2003-10]
NOTICE: NOTICES
ACTION: Self-regulatory organizations; proposed rule changes:
SUBJECT CATEGORY:
Self-Regulatory Organizations; Notice of Filing and Immediate Effectiveness of Proposed Rule Change by National Association of Securities Dealers, Inc. To Eliminate SuperMontage Fees for Cancellation and Cancel/Replace of Quotes/Orders
DOCUMENT SUMMARY:
January 31, 2003.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act''),\1\ and Rule 19b4 thereunder,\2\ notice is hereby given that
on January 30, 2003, the National Association of Securities Dealers, Inc. (``NASD''),
[[Page 6235]]
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. Nasdaq has designated this proposal
as one establishing or changing a due, fee or other charge imposed by
the selfregulatory organization under Section 19(b)(3)(A)(ii) of the
Act \3\ and Rule 19b4(f)(2) thereunder,\4\ which renders the rule
effective upon Commission receipt of this filing. The Commission is
publishing this notice to solicit comments on the proposed rule change from interested persons.
\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b4.
\3\ 15 U.S.C. 78s(b)(3)(A)(ii).
\4\ 17 CFR 240.19b4(f)(2).
I. SelfRegulatory Organization's Statement of the Terms of the Substance of the Proposed Rule Change
Nasdaq proposes to eliminate certain of the fees for the cancellation and cancel/replace of Quotes/Orders in Nasdaq's SuperMontage system. Nasdaq will implement the rule change on February 3, 2003.
The text of the proposed rule change is below. Proposed new
language is in italics; proposed deletions are in brackets. * * * * *
Rule 7010. System Services
(a)(h) No change.
(i) Nasdaq National Market Execution System (SuperMontage)
The following charges shall apply to the use of the Nasdaq National
Market Execution System (commonly known as SuperMontage) by members: Order Entry
NonDirected Orders (excluding No charge.
Preferenced Orders).
Preferenced Orders:
Preferenced Orders that access a No charge.
Quote/Order of the member that
entered the Preferenced Order).
Other Preferenced Orders........... $0.02 per order entry.
Directed Orders........................ $0.10 per order entry. Order Execution
NonDirected 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 NNMS:
Charge to member entering order.... $0.003 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 $0.002 per share executed (but
liquidity. no more than $80 per trade for
trades in securities executed
at $1.00 or less per share).
NonDirected or Preferenced Order that $0.001 per share executed (but
accesses the Quote/Order of a market no more than $40 per trade for
participant that charges an access fee trades in securities executed
to market participants accessing its at $1.00 or less per share). Quotes/Orders through the NNMS.
Directed Order......................... $0.003 per share executed. NonDirected or Preferenced Order No charge.
entered by a member that accesses a
Quote/Order of such member.
Order Cancellation
NonDirected and Preferenced Orders [$0.01 per order cancelled] [(excluding Preferenced Orders)]. No charge.
[Preferenced Orders]................... [$0.01 per order cancelled].
Directed Orders........................ $0.10 per order cancelled. [Entry and Maintenance of Quotes/Orders
by Nasdaq Quoting Market Participants]
[Initial entry of Quote/Order]......... [No charge].
[Change of Quote/Order due to order [No charge].
execution through SuperMontage].
[Cancel/replace of Quote/Order to [No charge].
increase size].
[Cancel/replace of Quote/Order to [$0.01].
change price].
[Cancel/replace of Quote/Order to [$0.01].
decrease size manually].
[Cancellation of Quote/Order].......... [$0.01].
[Cancellation of Quote/Order due to [$0.0075].
order purge or timeout].
(j)(s) No change.
* * * * *
II. SelfRegulatory 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. SelfRegulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change
1. Purpose
Nasdaq is proposing to eliminate: (i) The fee for the cancellation and cancel/replace of Quotes/Orders in SuperMontage and (ii) the fee for canceling nondirected and preferenced orders entered into SuperMontage.
Nasdaq first introduced a ``quotation update'' fee in February 2002
in connection with its SuperSOES system, to encourage efficient quoting
and to help ensure that system capacity could keep pace with the growth
of quotation update volume.\5\ With the introduction of SuperMontage,
Nasdaq refined the quotation update fee by applying it only for updates
that remove liquidity without an execution occurring or that change the price of a Quote/Order.\6\
[[Page 6236]]
Thus, the fee has not been assessed for changes to SuperMontage Quotes/
Orders that add liquidity or that occur when an order execution occurs.
\5\ See Securities Exchange Act Release No. 45342 (January 28, 2002), 67 FR 5019 (February 1, 2002) (SRNASD200196).
\6\ See Securities Exchange Act Release No. 45906 (May 10, 2002), 67 FR 34965 (May 16, 2002) (SRNASD200244).
Nasdaq has recently made several enhancements to the capacity of
its network systems. Specifically, hardware upgrades and improvements
in system architecture have resulted in a doubling of quote update
processing capability since the time when the fee was first introduced.
In addition, the decision of several electronic communications networks
not to participate in SuperMontage will result in a decrease in
Nasdaq's quote update traffic. As a result of these factors, Nasdaq has
determined that the elimination of the quote update fee is unlikely to
result in a volume of quotation updates that will strain the capacity
of Nasdaq's systems. Accordingly, Nasdaq is eliminating the fee in
order to lower the overall cost of market participants' use of
SuperMontage. Nasdaq is also eliminating the fees for cancellation of
nondirected and preferenced orders entered into SuperMontage, to allow a further reduction of market participants' costs.\7\
\7\ The elimination of order cancellation fees is correlative to
the elimination of the fee for cancellation of Quotes/Orders, since
Nasdaq's billing systems are not currently programmed to distinguish
between cancellation messages that relate to orders entered as non
directed or preferenced orders and those that are entered as Quotes/ Orders.
2. Statutory Basis
Nasdaq believes that the proposed rule change is consistent with
the provisions of Section 15A of the Act,\8\ including Section
15A(b)(5) of the Act,\9\ which requires that the rules of the NASD
provide 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.
\8\ 15 U.S.C. 78o3.
\9\ 15 U.S.C. 78o3(b)(5).
B. SelfRegulatory 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. SelfRegulatory 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 establishes or changes a due, fee, or
other charge and, therefore, has become effective immediately pursuant
to Section 19(b)(3)(A)(ii) of the Act \10\ and Rule 19b4(f)(2)
thereunder.\11\ 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.
\10\ 15 U.S.C. 78s(b)(3)(A)(ii).
\11\ 17 CFR 19b4(f)(2).
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. Persons making written submissions should file six copies thereof with the Secretary, Securities and Exchange Commission, 450 Fifth Street, NW., Washington, DC 205490609. 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 submissions should refer to file number SRNASD200310 and should be submitted by February 27, 2003.
For the Commission, by the Division of Market Regulation, pursuant to delegated authority.\12\
\12\ 17 CFR 200.303(a)(12).
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 032946 Filed 2503; 8:45 am]
BILLING CODE 801001P
SUMMARY:
National Association of Securities Dealers, Inc.,
DOCUMENT BODY 2:
January 31, 2003.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act''),\1\ and Rule 19b4 thereunder,\2\ notice is hereby given that
on January 30, 2003, the National Association of Securities Dealers, Inc. (``NASD''),
[[Page 6235]]
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. Nasdaq has designated this proposal
as one establishing or changing a due, fee or other charge imposed by
the selfregulatory organization under Section 19(b)(3)(A)(ii) of the
Act \3\ and Rule 19b4(f)(2) thereunder,\4\ which renders the rule
effective upon Commission receipt of this filing. The Commission is
publishing this notice to solicit comments on the proposed rule change from interested persons.
\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b4.
\3\ 15 U.S.C. 78s(b)(3)(A)(ii).
\4\ 17 CFR 240.19b4(f)(2).
I. SelfRegulatory Organization's Statement of the Terms of the Substance of the Proposed Rule Change
Nasdaq proposes to eliminate certain of the fees for the cancellation and cancel/replace of Quotes/Orders in Nasdaq's SuperMontage system. Nasdaq will implement the rule change on February 3, 2003.
The text of the proposed rule change is below. Proposed new
language is in italics; proposed deletions are in brackets. * * * * *
Rule 7010. System Services
(a)(h) No change.
(i) Nasdaq National Market Execution System (SuperMontage)
The following charges shall apply to the use of the Nasdaq National
Market Execution System (commonly known as SuperMontage) by members: Order Entry
NonDirected Orders (excluding No charge.
Preferenced Orders).
Preferenced Orders:
Preferenced Orders that access a No charge.
Quote/Order of the member that
entered the Preferenced Order).
Other Preferenced Orders........... $0.02 per order entry.
Directed Orders........................ $0.10 per order entry. Order Execution
NonDirected 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 NNMS:
Charge to member entering order.... $0.003 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 $0.002 per share executed (but
liquidity. no more than $80 per trade for
trades in securities executed
at $1.00 or less per share).
NonDirected or Preferenced Order that $0.001 per share executed (but
accesses the Quote/Order of a market no more than $40 per trade for
participant that charges an access fee trades in securities executed
to market participants accessing its at $1.00 or less per share). Quotes/Orders through the NNMS.
Directed Order......................... $0.003 per share executed. NonDirected or Preferenced Order No charge.
entered by a member that accesses a
Quote/Order of such member.
Order Cancellation
NonDirected and Preferenced Orders [$0.01 per order cancelled] [(excluding Preferenced Orders)]. No charge.
[Preferenced Orders]................... [$0.01 per order cancelled].
Directed Orders........................ $0.10 per order cancelled. [Entry and Maintenance of Quotes/Orders
by Nasdaq Quoting Market Participants]
[Initial entry of Quote/Order]......... [No charge].
[Change of Quote/Order due to order [No charge].
execution through SuperMontage].
[Cancel/replace of Quote/Order to [No charge].
increase size].
[Cancel/replace of Quote/Order to [$0.01].
change price].
[Cancel/replace of Quote/Order to [$0.01].
decrease size manually].
[Cancellation of Quote/Order].......... [$0.01].
[Cancellation of Quote/Order due to [$0.0075].
order purge or timeout].
(j)(s) No change.
* * * * *
II. SelfRegulatory 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. SelfRegulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change
1. Purpose
Nasdaq is proposing to eliminate: (i) The fee for the cancellation and cancel/replace of Quotes/Orders in SuperMontage and (ii) the fee for canceling nondirected and preferenced orders entered into SuperMontage.
Nasdaq first introduced a ``quotation update'' fee in February 2002
in connection with its SuperSOES system, to encourage efficient quoting
and to help ensure that system capacity could keep pace with the growth
of quotation update volume.\5\ With the introduction of SuperMontage,
Nasdaq refined the quotation update fee by applying it only for updates
that remove liquidity without an execution occurring or that change the price of a Quote/Order.\6\
[[Page 6236]]
Thus, the fee has not been assessed for changes to SuperMontage Quotes/
Orders that add liquidity or that occur when an order execution occurs.
\5\ See Securities Exchange Act Release No. 45342 (January 28, 2002), 67 FR 5019 (February 1, 2002) (SRNASD200196).
\6\ See Securities Exchange Act Release No. 45906 (May 10, 2002), 67 FR 34965 (May 16, 2002) (SRNASD200244).
Nasdaq has recently made several enhancements to the capacity of
its network systems. Specifically, hardware upgrades and improvements
in system architecture have resulted in a doubling of quote update
processing capability since the time when the fee was first introduced.
In addition, the decision of several electronic communications networks
not to participate in SuperMontage will result in a decrease in
Nasdaq's quote update traffic. As a result of these factors, Nasdaq has
determined that the elimination of the quote update fee is unlikely to
result in a volume of quotation updates that will strain the capacity
of Nasdaq's systems. Accordingly, Nasdaq is eliminating the fee in
order to lower the overall cost of market participants' use of
SuperMontage. Nasdaq is also eliminating the fees for cancellation of
nondirected and preferenced orders entered into SuperMontage, to allow a further reduction of market participants' costs.\7\
\7\ The elimination of order cancellation fees is correlative to
the elimination of the fee for cancellation of Quotes/Orders, since
Nasdaq's billing systems are not currently programmed to distinguish
between cancellation messages that relate to orders entered as non
directed or preferenced orders and those that are entered as Quotes/ Orders.
2. Statutory Basis
Nasdaq believes that the proposed rule change is consistent with
the provisions of Section 15A of the Act,\8\ including Section
15A(b)(5) of the Act,\9\ which requires that the rules of the NASD
provide 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.
\8\ 15 U.S.C. 78o3.
\9\ 15 U.S.C. 78o3(b)(5).
B. SelfRegulatory 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. SelfRegulatory 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 establishes or changes a due, fee, or
other charge and, therefore, has become effective immediately pursuant
to Section 19(b)(3)(A)(ii) of the Act \10\ and Rule 19b4(f)(2)
thereunder.\11\ 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.
\10\ 15 U.S.C. 78s(b)(3)(A)(ii).
\11\ 17 CFR 19b4(f)(2).
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. Persons making written submissions should file six copies thereof with the Secretary, Securities and Exchange Commission, 450 Fifth Street, NW., Washington, DC 205490609. 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 submissions should refer to file number SRNASD200310 and should be submitted by February 27, 2003.
For the Commission, by the Division of Market Regulation, pursuant to delegated authority.\12\
\12\ 17 CFR 200.303(a)(12).
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 032946 Filed 2503; 8:45 am]
BILLING CODE 801001P