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DOCUMENT ID: [Release No. 34-48890; File No. SR-NASD-2003-174]

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 the National Association of Securities Dealers, Inc. To Amend the Fee Schedule for the Nasdaq National Market Execution System With Respect to Executions Across Multiple MPIDs of the Same Member

DOCUMENT SUMMARY: December 8, 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 November 26, 2003, 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. 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 immediately effective upon filing with the Commission. 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 amend NASD Rule 7010(i) to modify the fee charged when Quotes/Orders submitted by the same member under different market participant identifiers (``MPIDs'') match and execute against each other in the Nasdaq National Market Execution System (``NNMS'' or, [[Page 69733]]
``SuperMontage'').\5\ Nasdaq implemented the revised fee schedule on December 1, 2003. The text of the proposed rule change appears below. New text is italicized.
\5\ ``Quotes/Orders'' is defined under NASD Rule 4701(bb). * * * * *

7000. CHARGES FOR SERVICES AND EQUIPMENT

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 No charge.
a 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 $0.001 per share executed (but that accesses the Quote/Order of a no more than $40 per trade for market participant that charges an trades in securities executed access fee to market participants at $1.00 or less per share). accessing its Quotes/Orders

through the NNMS.

Directed Order..................... $0.003 per share executed.

NonDirected or Preferenced Order No charge.
entered by a member that accesses
its own Quote/Order submitted
under the same or a different
market participant identifier of
the member.
Order Cancellation:

NonDirected and Preferenced Orders No charge.

Directed Orders.................... $0.10 per order cancelled. (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 proposes to amend NASD Rule 7010(i) to modify the fee charged when multiple Quotes/Orders submitted by the same member under different MPIDs match and execute against each other in SuperMontage. Currently, Nasdaq does not charge a fee when a member executes a trade against itself in SuperMontage and the Quotes/Orders are submitted under the same MPID (``single MPID execution''). However, when the same scenario occurs but the Quotes/Orders are submitted by a member under different MPIDs (``multiple MPID execution''), Nasdaq charges the standard SuperMontage execution fee that applies when trading interest of different members matches and executes.

Nasdaq proposes to amend NASD Rule 7010(i) so single MPID executions and multiple MPID executions are treated the samethere will be no charge. Therefore, Nasdaq proposes, beginning on December 1, 2003, that there will be no charge when a NonDirected Order or Preferenced Order submitted under one MPID of a member accesses the member's own Quote/Order submitted under a different MPID.\6\ Nasdaq states that its policy for not charging a fee when Quotes/Orders submitted by a member match and execute in SuperMontage is based on an expectation that, in its absence, members would internalize a greater percentage of orders through their own proprietary systems, rather than exposing them to the full market.
\6\ 6 NonDirected Order and Preferenced Order are defined under NASD Rule 4701(p) and (aa), respectively.

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 fees among members. Nasdaq believes the proposal harmonizes its fee structure for trades that are ``internalized'' by members through SuperMontage, irrespective of whether the trade is the result of a single MPID execution or multiple MPID execution.
\7\ 15 U.S.C. 78o3.
\8\ 15 U.S.C. 78o3(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. [[Page 69734]]
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 \9\ and Rule 19b4(f)(2) thereunder \10\ because it establishes or changes a due, fee or other charge. At any time within 60 days after filing of this proposed rule change, the Commission may summarily abrogate the 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.
\9\ 15 U.S.C. 78s(b)(3)(A)(ii).
\10\ 17 CFR 240.19b4(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. Comments should be submitted electronically at the following email address: rulecomments@sec.gov. All comment letters should refer to File No. SRNASD2003174. This file number should be included on the subject line if email is used. To help the Commission process and review your comments more efficiently, comments should be sent in hard copy or by email but not by both methods. 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 SRNASD2003174 should be submitted by January 5, 2004.

For the Commission, by the Division of Market Regulation, pursuant to delegated authority.\11\
\11\ 17 CFR 200.303(a)(12).
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 0330836 Filed 121203; 8:45 am]
BILLING CODE 801001P

SUMMARY: National Association of Securities Dealers, Inc.,

DOCUMENT BODY 2: December 8, 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 November 26, 2003, 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. 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 immediately effective upon filing with the Commission. 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 amend NASD Rule 7010(i) to modify the fee charged when Quotes/Orders submitted by the same member under different market participant identifiers (``MPIDs'') match and execute against each other in the Nasdaq National Market Execution System (``NNMS'' or, [[Page 69733]]
``SuperMontage'').\5\ Nasdaq implemented the revised fee schedule on December 1, 2003. The text of the proposed rule change appears below. New text is italicized.
\5\ ``Quotes/Orders'' is defined under NASD Rule 4701(bb). * * * * *

7000. CHARGES FOR SERVICES AND EQUIPMENT

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 No charge.
a 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 $0.001 per share executed (but that accesses the Quote/Order of a no more than $40 per trade for market participant that charges an trades in securities executed access fee to market participants at $1.00 or less per share). accessing its Quotes/Orders

through the NNMS.

Directed Order..................... $0.003 per share executed.

NonDirected or Preferenced Order No charge.
entered by a member that accesses
its own Quote/Order submitted
under the same or a different
market participant identifier of
the member.
Order Cancellation:

NonDirected and Preferenced Orders No charge.

Directed Orders.................... $0.10 per order cancelled. (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 proposes to amend NASD Rule 7010(i) to modify the fee charged when multiple Quotes/Orders submitted by the same member under different MPIDs match and execute against each other in SuperMontage. Currently, Nasdaq does not charge a fee when a member executes a trade against itself in SuperMontage and the Quotes/Orders are submitted under the same MPID (``single MPID execution''). However, when the same scenario occurs but the Quotes/Orders are submitted by a member under different MPIDs (``multiple MPID execution''), Nasdaq charges the standard SuperMontage execution fee that applies when trading interest of different members matches and executes.

Nasdaq proposes to amend NASD Rule 7010(i) so single MPID executions and multiple MPID executions are treated the samethere will be no charge. Therefore, Nasdaq proposes, beginning on December 1, 2003, that there will be no charge when a NonDirected Order or Preferenced Order submitted under one MPID of a member accesses the member's own Quote/Order submitted under a different MPID.\6\ Nasdaq states that its policy for not charging a fee when Quotes/Orders submitted by a member match and execute in SuperMontage is based on an expectation that, in its absence, members would internalize a greater percentage of orders through their own proprietary systems, rather than exposing them to the full market.
\6\ 6 NonDirected Order and Preferenced Order are defined under NASD Rule 4701(p) and (aa), respectively.

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 fees among members. Nasdaq believes the proposal harmonizes its fee structure for trades that are ``internalized'' by members through SuperMontage, irrespective of whether the trade is the result of a single MPID execution or multiple MPID execution.
\7\ 15 U.S.C. 78o3.
\8\ 15 U.S.C. 78o3(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. [[Page 69734]]
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 \9\ and Rule 19b4(f)(2) thereunder \10\ because it establishes or changes a due, fee or other charge. At any time within 60 days after filing of this proposed rule change, the Commission may summarily abrogate the 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.
\9\ 15 U.S.C. 78s(b)(3)(A)(ii).
\10\ 17 CFR 240.19b4(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. Comments should be submitted electronically at the following email address: rulecomments@sec.gov. All comment letters should refer to File No. SRNASD2003174. This file number should be included on the subject line if email is used. To help the Commission process and review your comments more efficiently, comments should be sent in hard copy or by email but not by both methods. 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 SRNASD2003174 should be submitted by January 5, 2004.

For the Commission, by the Division of Market Regulation, pursuant to delegated authority.\11\
\11\ 17 CFR 200.303(a)(12).
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 0330836 Filed 121203; 8:45 am]
BILLING CODE 801001P