03-26647. Self-Regulatory Organizations; National Association of Securities Dealers, Inc.; Order Granting Approval of Proposed Rule Change by the National Association of Securities Dealers, Inc. To Introduce Fees for Persons That Are Not NASD ...

October 15, 2003.

On July 31, 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”), pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (“Act”)^[1] and Rule 19b-4 thereunder,^[2] a proposed rule change to propose connectivity and testing fees for persons that are not NASD members wishing to use the Financial Information Exchange (“FIX”) protocol to connect to Nasdaq. The proposed rule change was published for comment in the Federal Register on September 12, 2003.^[3] The Commission received no comments on the proposal. This order approves the proposed rule change.

The Commission finds that the proposed rule change is consistent with the requirements of the Act and the rules and regulations thereunder applicable to a national securities association.^[4] Specifically, the Commission finds that the proposed rule change is consistent with the provisions of 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.

The Commission finds that the proposed rule change is reasonably designed to accomplish these ends because the introduction of the FIX protocol as a means of accessing SuperMontage will expand the connectivity options available to Nasdaq's subscribers, and thereby enhance transparency in SuperMontage. In addition, the Commission notes that Nasdaq has represented that the proposed fees for FIX connectivity and testing are similar in structure and dollar amount to existing fees for computer-to-computer interface (“CTCI”) and application programming interface (“API”) connectivity. The Commission notes further that firms that already have dedicated CTCI circuits will be able to use FIX over their existing circuits, and therefore will not require that new circuits be installed. Firms that do not already have CTCI circuits may either obtain circuits to support both CTCI and FIX at the same prices that currently apply to CTCI, or may opt to obtain circuits to support FIX alone at a reduced price. The Commission believes that the proposed rule supports the efficient use of existing systems and ensures that the charges associated with such use are allocated equitably.

It is therefore ordered, pursuant to Section 19(b)(2) of the Act,^[6] that the proposed rule change (SR-NASD-2003-118), be, and it hereby is, approved.

For the Commission, by the Division of Market Regulation, pursuant to delegated authority.^[7]

Margaret H. McFarland,

Deputy Secretary.

Footnotes

1.  15 U.S.C. 78s(b)(1).

2.  17 CFR 240.19b-4.

3.  See Securities Exchange Act Release No. 48452 (September 5, 2003), 68 FR 53767.

4.  In approving this proposed rule change, the Commission has considered the proposed rule's impact on efficiency, competition, and capital formation. 15 U.S.C. 78c(f).

5.  15 U.S.C. 78 o-3(b)(5).

6.  15 U.S.C. 78(b)(2).

7.  17 CFR 200.30-3(a)(12).