[Federal Register Volume 62, Number 205 (Thursday, October 23, 1997)]
[Notices]
[Pages 55296-55297]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-28125]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-39248; File No. SR-NASD-97-74]
Self-Regulatory Organizations; Notice of Filing and Immediate
Effectiveness of Proposed Rule Change by National Association of
Securities Dealers, Inc. Relating to SelectNet Fees
October 16, 1997.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act''),\1\ notice is hereby given that on October 14, 1997, the
National Association of Securities Dealers, Inc. (``NASD'' or
``Association'') filed with 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 the NASD.
The Commission is publishing this notice to solicit comments on the
proposed rule change from interested persons.
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\1\ 15 U.S.C. Sec. 78s(b)(1).
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
Pursuant to Section 19(b)(1) of the Act, the NASD, through its
wholly-owned subsidiary, The Nasdaq Stock Market, Inc. (``Nasdaq'') is
herewith filing a proposed rule change to temporarily abate 50% of the
fee currently charged under NASD Rule 7010(l) for the execution of a
transaction in SelectNet from $2.50 per side to $1.25 per side
effective October 1, 1997 through December 31, 1997. If no further
action is taken, Nasdaq will revert to assessing SelectNet fees at the
present level of $2.50 per side on January 1, 1998.
II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
In its filing with the Commission, the NASD 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. The NASD has prepared summaries, set forth in Sections
A, B, and C below, of the most significant aspects of the statements.
A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
Nasdaq is proposing to temporarily abate 50% of the fee currently
charged under NASD Rule 7010(l) for the execution of a transaction in
SelectNet from $2.50 per side to $1.25 per side effective October 1,
1997 through December 31, 1997. The proposed rule change constitutes
only a temporary abatement in the fee Nasdaq collects.
Nasdaq believes that the recent volume increases in the market
generally and SelectNet usage in particular justify a temporary
abatement of fees to SelectNet users. Specifically, SelectNet
transaction volume is at an historic high. In August 1997, more than
75,000 daily executions took place in SelectNet. This represents an
almost fourfold increase in volume from average daily activity recorded
in 1996.
The growth in SelectNet usage can be attributed to a number of
factors, most notably the introduction of the SEC Order Execution Rules
(``Order Execution Rules'') in January of this year.\2\ Nasdaq used the
SelectNet system to create the linkage with each electronic
communication network (``ECN'') anticipated by the Order Execution
Rules. Accordingly, SelectNet has become the chosen means of accessing
orders displayed in the Nasdaq quote montage by eligible ECNs such as
Instinet. Growth in SelectNet utilization closely tracks expansion in
the number of Nasdaq stocks covered by the Order Execution Rules. The
speed and volatility of today's markets, software enhancements and a
heightened awareness of trading obligations by market participants also
has contributed to growth in SelectNet activity as well as an increase
in SelectNet revenues. Accordingly, Nasdaq believes that a temporary
abatement of these fees for SelectNet users is appropriate.
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\2\ See Securities Exchange Act Release No. 37619A (September 6,
1996), 61 FR 48290 (September 12, 1996).
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Nasdaq believes that a temporary fee abatement is preferable to a
permanent fee reduction due to both the uncertain future of SelectNet
as a service offered by Nasdaq and the significant amount of network
capacity consumed by SelectNet Message traffic. If no further action is
taken, Nasdaq will revert to assessing SelectNet fees at the present
rate of $2.50 per side on January 1, 1998.
Nasdaq believes that the proposed rule change is consistent with
Section
[[Page 55297]]
15A(b)(5) \3\ of the Act, 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. Specifically, Nasdaq
believes that the proposed temporary fee abatement is appropriate in
light of both the recent growth in SelectNet activity as well as
uncertainty regarding future usage levels.
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\3\ 15 U.S.C. Sec. 78o-3(b)(5).
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B. 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.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others
Comments were neither solicited nor received.
III. 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 upon filing
pursuant to Section 19(b)(3)(A)(ii) \4\ of the Act and subparagraph (e)
of Rule 19b-4 \5\ thereunder because the proposal establishes or
changes a due, fee or other charge.
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\4\ 15 U.S.C. Sec. 78s(b)(3)(A)(ii).
\5\ 17 CFR 240.19b-4(e).
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At any time within 60 days of the filing of a rule change pursuant
to Section 19(b)(3)(A) of the Act, 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.
IV. Solicitation of Comments
Interested persons are invited to submit written data, views, and
arguments concerning the foregoing. 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.
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 the filing will also be
available for inspection and copying at the principal office of the
NASD. All submissions should refer to File Number SR-NASD-97-74 and
should be submitted by November 13, 1997.
For the Commission, by the Division of Market Regulation,
pursuant to delegated authority.\6\
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\6\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 97-28125 Filed 10-22-97; 8:45 am]
BILLING CODE 8010-01-M
