regulatory organizations; proposed rule changes: National Association of Securities Dealers, Inc.,

[Federal Register: December 11, 2002 (Volume 67, Number 238)]

[Notices]

[Page 76200-76201]

From the Federal Register Online via GPO Access [wais.access.gpo.gov]

[DOCID:fr11de02-60]

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-46946; File No. SR-NASD-2002-172]

Self-Regulatory Organizations; Notice of Filing and Immediate Effectiveness of Proposed Rule Change by the National Association of Securities Dealers, Inc. To Delay the Imposition of Distributor Fees for SuperMontage View Suite Data Feeds Under NASD Rule 7010(q)

December 4, 2002.

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 29, 2002, the National Association of Securities Dealers, Inc. (``NASD'') through its subsidiary, The Nasdaq Stock Market, Inc. (``Nasdaq'') filed with the Securities and Exchange Commission (``SEC'' or ``Commission'') the proposed rule change as described in Items I and II below, which Items have been prepared by the Exchange. The Commission is publishing this notice to solicit comments on the proposed rule change.

\1\ 15 U.S.C. 78s(b)(1).

\2\ 17 CFR 240.19b-4.

1. Self-Regulatory Organization's Statement of the Terms of Substance of the Proposed Rule Change

   Nasdaq proposes to delay charging the distributor fees for any SuperMontage View Suite data feeds under NASD Rule 7010(q) until January 1, 2003.

2. 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.

   1. Self-Regulatory Organization's Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change

      1. Purpose

      Nasdaq believes that the new SuperMontage data feeds approved by the Commission vastly expand the ability of market participants to see and

      [[Page 76201]]

      show trading interest.\3\ Those data feeds are about to be complete: SuperMontage was launched on October 14, 2002, with five stocks, and by December 2, 2002, all Nasdaq stocks will be traded on SuperMontage.

      \3\ See Securities Exchange Act Release No. 43863 (January 19, 2001), 66 FR 8020 (January 26, 2001) and Securities Exchange Act Release No. 45790 (April 19, 2002), 67 FR 21007 (April 29, 2002).

      Under Nasdaq's recently approved NASD Rule 7010(q),\4\ Nasdaq planned to begin charging both distributors and subscribers as of the day all stocks will be traded--December 2, 2002. Nasdaq represents, however, that its distributors, particularly its small distributors, have recently advised Nasdaq that they need more time to educate and sign up a sufficient number of subscribers to support the fixed fee distributors pay. Nasdaq believes that it should promote informed decision making by investors; thus, Nasdaq supports the distributors request for more time.

      \4\ See Securities Exchange Act Release No. 46843 (November 18, 2002), 67 FR 70471 (November 22, 2002).

      Nasdaq proposes to delay charging any of the distributor fees in NASD Rule 7010(q) until January 1, 2003. This proposed ``fee holiday'' would relieve all persons subject to the distributor fee from payment until January 1, 2003. Nasdaq believes that this one-month delay should provide its distributors and Nasdaq the opportunity to better inform subscribers about the data packages available through the View Suite products. During this time, Nasdaq expects subscribers to indicate their interest by signing up for the data packages and paying the subscriber charge. Nasdaq expects that by the end of the fee holiday, the necessary subscriber base will exist for distributors to be confident they can incur the fixed distributor fee. 2. Statutory Basis

      Nasdaq believes that the proposed rule change is consistent with the provisions of Section 15A of the Act,\6\ including Section 15A(b)(6) of the Act,\7\ which requires, among other things, that a registered national securities association's rules must be designed to prevent fraudulent and manipulative acts and practices, to promote just and equitable principles of trade, and, in general, to protect investors and the public interest. Nasdaq believes that the proposed rule change protects investors and the public interest in that it allows investors to become more informed regarding the new data feeds and allows distributors a brief necessary period to build a stable subscriber base.

      \6\ 15 U.S.C. 78o-3

      \7\ 15 U.S.C. 78o-3(6).

   2. Self-Regulatory Organization's Statement on Burden on Competition

      Nasdaq does not believe that the proposed rule change will impose any burden on competition.

   3. Self-Regulatory Organization's Statement on Comments on the Proposed Rule Change Received From Members, Participants or Others

      Nasdaq has neither solicited nor received comments on the proposed rule change.

3. 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) of the Act \5\ and Rule 19b-4(f)(6)\6\ thereunder because the proposal: (i) Does not significantly affect the protection of investors or the public interest; (ii) does not impose any significant burden on competition; and (iii) does not become operative prior to 30 days after the date of filing or such shorter time as the Commission may designate if consistent with the protection of investors and the public interest; provided that the Exchange has given the Commission notice of its intent to file the proposed rule change, along with a brief description and text of the proposed rule change, at least five business days prior to the date of filing of the proposed rule change, or such short time as designated by the Commission. 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.

   \5\ 15 U.S.C. 78s(b)(3)(A).

   \6\ 17 CFR 240.19b-4(f)(6).

   Nasdaq has requested that the Commission waive the five-day pre- filing notice and the 30-day operative delay. The Commission believes that waiving the five-day pre-filing notice and the 30-day operative delay is consistent with the protection of investors and the public interest. The Commission notes that the implementation of Nasdaq's fee holiday proposal would help distributors and Nasdaq to focus immediately on educating investors and potential subscribers. For these reasons, the Commission designates the proposal to be effective and operative upon filing with the Commission.\7\

   \7\ For purposes only of accelerating the operative date of this proposal, the Commission has considered the proposed rule's impact on efficiency, competition, and capital formation. 15 U.S.C. 78c(f).

4. 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 20549-0609. 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 at 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 No. SR-NASD-2002-172 and should be submitted by January 2, 2003.

   For the Commission, by the Division of Market Regulation, pursuant to delegated authority.\8\

   \8\ 17 CFR 200.30-3(a)(12).

   Margaret H. McFarland, Deputy Secretary.

   [FR Doc. 02-31198 Filed 12-10-02; 8:45 am]

   BILLING CODE 8010-01-P