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

[Federal Register: April 27, 1999 (Volume 64, Number 80)]

[Notices]

[Page 22664-22665]

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

[DOCID:fr27ap99-103]

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-41314; File No. SR-NASD-99-17]

April 20, 1999

Self-Regulatory Organizations; Notice of Filing and Immediate Effectiveness of Proposed Rule Change by the National Association of Securities Dealers, Inc. Relating to SelectNet Fees

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 March 24, 1999, the National Association of Securities Dealers, Inc. (``NASD'' or ``Association''), through its wholly-owned subsidiary the Nasdaq Stock Market, Inc. (``Nasdaq''), filedwith the Securities and Exchange Commission (``Commission'' or ``SEC'') the proposed rule change as described in Items I, II, and III below, which Items have been prepared by Nasdaq.

\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

   The NASD is submitting this proposed rule change to extend, through March 31, 2000, the fees currently charged under NASD Rule 7010(l) for the execution of transactions in Select Net as discussed below. If no further action is taken, SelectNet fees will revert to their original per-side level on April 1, 2000.\3\

   \3\ Nasdaq notes that it recently filedwith the Commission a rule proposal to, in part, return SelectNet to a pure order delivery and negotiation facility. See SR-NASD-99-11. Notwithstanding the one year extension of reduced fees contemplated here, Nasdaq reserves the right to adjust its SelectNet pricing by proposed rule change pending the approval of SR-NASD-99-11.

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. Nasdaq has prepared summaries, set forth below in Sections A, B, and C 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

      Nasdaq is proposing to again extend its current reduced SelectNet fees. The reasons for Nasdaq's prevailing SelectNet fee structure were fully explained in its original fee structure proposal filedwith the Commission in February of 1998.\4\ Since then, SelectNet usage has continued at significantly elevated levels. As such, Nasdaq believes that an extension of these reduced fees, through March 31, 2000, is warranted. Under the proposed extension, SelectNet fees would continue to be assessed in the following manner: (1) $1.00 will be charged for each SelectNet order entered and directed to one particular market participant that is subsequently executed in whole or in part, (2) no fee will be charged to a member who receives and executes a directed SelectNet order, (3) the existing $2.50 fee will remain in effect for both sides of executed SelectNet orders that result from broadcast messages; and (4) a $0.25 fee will remain in effect for any member who cancels a SelectNet order. Nasdaq will continue to monitor and review SelectNet activity to determine if further extensions of its reduced SelectNet fee structure are appropriate. If no further action is taken, SelectNet fees will revert to their original $2.50 per-side level on April 1, 2000.

      \4\ See Securities Exchange Act Release No. 39641 (February 10, 1998), 63 FR 8241 (February 18, 1998). Nasdaq's current reduced fee structure was originally approved for a 90 day trial period, commencing the day that the proposal was published in the Federal Register. The reduced fees were extended in May, September and November of 1998 and would expire on March 31, 1999, if not extended by this filing. See Securities Exchange Act Release No. 40783 (December 11, 1998), 63 FR 70177 (December 18, 1998).

      For the reason set forth above, Nasdaq believes that the proposed rule change is consistent with Section 15A(b)(5) of the Act,\5\ 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.

      \5\ 15 U.S.C. 78o-3(b)(5).

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

      The NASD believes that the proposed rule change will not result in any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act.

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

      Comments were neither solicited nor received.

      [[Page 22665]]

3. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action

   This filing applies to the assessment of SelectNet fees to NASD members, and thus the proposed rule change is effective immediately upon filing pursuant to Section 19(b)(3)(A)(ii) of the Act \6\ and subparagraph (f)(2) of Rule 19b-4 \7\ under the Act because the proposal is establishing or changing a due, fee or other charge.

   \6\ 15 U.S.C. 78s(b)(3)(A)(ii).

   \7\ 17 CFR 240.19b-4(f)(2).

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, N.W., Washington, D.C. 20549- 0609. Copies of the submission, all subsequent amendments, all written statements with respect to the proposed rule change that are filedwith 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 No. SR-NASD-99-17 and should be submitted by May 18, 1999.

   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. 99-10517Filed4-26-99; 8:45 am]

   BILLING CODE 8010-01-M