[Federal Register Volume 60, Number 235 (Thursday, December 7, 1995)]
[Notices]
[Pages 62912-62913]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-29778]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-36536; File No. SR-NASD-95-48]
Self-Regulatory Organizations; Order Approving Proposed Rule
Change by National Association of Securities Dealers, Inc. Relating to
Non-Member Subscriber Deposits for Nasdaq Level 2/3 Service and
Equipment
November 30, 1995.
I. Introduction
On October 11, 1995, the National Association of Securities
Dealers, Inc. (``NASD'' or ``Association'') submitted to the Securities
and Exchange Commission (``SEC'' or ``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 revise the non-
member subscriber deposit requirements contained in Part VIII,
Paragraph G.1. and 2. of Schedule D to the NASD By-Laws.\3\ The
proposed rule change reflects increased charges for the provision of
telecommunications services and equipment and broadens the language to
encompass the various fees associated with these services and
equipment.
\1\15 U.S.C. 78s(b)(1) (1988).
\2\17 CFR 240.19b-4 (1991).
\3\The Commission also received a separate, yet identical
proposed rule change relating to member subscriber deposits for
Nasdaq Level 2/3 service and equipment which became effective upon
receipt by the Commission pursuant to Section 19(b)(3)(A) of the Act
and subparagraph (e) of Rule 19b-4 thereunder because it established
or changed a due, fee or other charge imposed by the NASD on its
members. Securities Exchange Act Release No. 36396 (October 20,
1995), 60 FR 54896.
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Notice of the proposed rule change appeared in the Federal Register
on October 26, 1995.\4\ No comment letters were received on the
proposal. The Commission is approving the proposed rule change.
\4\Securities Exchange Act Release No. 36397 (October 20, 1995),
60 FR 54897.
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II. Description of Proposal
The proposed rule change reflects increased charges for the
provision of telecommunications services underlying Nasdaq Workstation
II service, and clarifies the various component functions encompassed
within the circuit installation fee so that the true nature of the
charge is made clear to new subscribers. These requirements would
pertain only to new subscribers or existing subscribers that have
defaulted on the payment of their charges.
This proposed rule change applies to subscribers who are not NASD
members. A companion filing, which applies the proposed rule change to
member subscribers, was filed separately for immediate
effectiveness.\5\
\5\See supra note 3.
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The NASD represents that the subscriber deposit requirement helps
hedge against uncollected balances owed by firms for Level 2/3 or
Nasdaq Workstation equipment. The subscriber deposit in part represents
actual expenses incurred by The Nasdaq Stock Market, Inc. as
obligations to telecommunications providers.
III. Discussion
The Commission believes that the proposed rule change is consistent
with the Act and the rules and regulations promulgated thereunder.
Specifically, the Commission believes that approval of the proposed
rule change is consistent with sections 15A(b)(5),\6\
[[Page 62913]]
15A(b)(6),\7\ and 15A(b)(9)\8\ of the Act. Pursuant to sections 15A
(b)(5) and (b)(6), the proposed rule change equitably allocates the
fees between NASD members and non-NASD members. Because both members
and non-members are subject to the same fee schedules and arrangements,
there is no unfair discrimination between member and non-member
subscribers. Pursuant to section 15A(b)(9), the proposed rule change
does not impose any unnecessary or inappropriate burden on competition,
but reflects an attempt to update a rule that contains provisions that
are no longer applicable because they do not adequately represent
current market practices or pricing. In light of the technological
advancements in the telecommunications area, increased costs are
commensurate with providing current and potential subscribers with
access to the various communications services and equipment. However,
the schedule of NASD charges for services and equipment is based on a
per unit cost; therefore, members and non-members are subject to the
same charges. Thus, the revision in subscriber deposit requirements
does not impose any unnecessary or inappropriate burdens on
competition.
\6\Section 15A(b)(5) requires the Commission to determine that a
registered national securities association's rules 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 association operates or controls.
\7\Section 15A(b)(6) requires the Commission to determine that a
registered national securities association's rules are designed to
promote just and equitable principles of trade, to remove
impediments to and perfect the mechanism of a free and open market
and a national market system; and are not designed to permit unfair
discrimination between customers, issuers, brokers, or dealers, to
impose any schedule or fix rates of commissions, allowances,
discounts, or other fees to be charged by its members, or to
regulate by virtue of any authority conferred by the Act matters not
related to the purposes of the Act or the administration of the
NASD.
\8\Section 15A(b)(9) requires the Commission to determine that a
registered national securities association's rules do not impose any
burden on competition not necessary or appropriate in furtherance of
the purposes of the Act.
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IV. Conclusion
For the above reasons, the Commission believes that the proposed
rule change is consistent with the provisions of the Act, and in
particular with sections 15A(b)(5), 15A(b)(6), and 15A(b)(9).
It is therefore ordered, pursuant to section 19(b)(2) of the
Act,\9\ that the proposed rule change (SR-NASD-95-48) be, and hereby is
approved.
\9\15 U.S.C. 78s(b)(2) (1988).
For the Commission, by the Division of Market Regulation, pursuant
to delegated authority.\10\
\10\17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 95-29778 Filed 12-06-95; 8:45 am]
BILLING CODE 8010-01-M
