04-4905. Self-Regulatory Organizations; National Association of Securities Dealers, Inc.; Order Granting Approval to a Proposed Rule Change by the National Association of Securities Dealers, Inc. To Modify Fees for Persons That Are Not NASD Members ...

February 27, 2004.

On December 29, 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 modify fees for NASD members using the Financial Information Exchange (“FIX”) protocol to connect to Nasdaq. The proposed rule change was published for comment in the Federal Register on January 23, 2004.^[3] The Commission received no comment letters 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 believes that the proposed rule change is consistent with the provisions of section 15A ^[5] and 15A(b)(5) of the Act,^[6] in that it provides 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. Under the modified fee schedule, firms with existing FIX circuits may continue to use them at current prices, however Nasdaq will no longer offer non-Nasdaq members the option of using FIX through CTCI or FIX-only circuits.^[7]

Nasdaq represents that FIX connectivity has not proved as popular among firms as has extranet connectivity. As stated above, while the proposed rule change will permit firms with FIX circuits to continue to use them at current prices, Nasdaq has represented that it believes the more economical extranet connectivity is likely to be the preferred method. The Commission therefore believes that the proposed rule change is likely to have a minimal impact on firms' connectivity to the Nasdaq, and further that the proposed rule change will not cause any disruption to firms currently using FIX connectivity.

It is therefore ordered, pursuant to section 19(b)(2) of the Act,^[8] that the proposed rule change (File No. SR-NASD-2003-196) is approved.

For the Commission, by the Division of Market Regulation, pursuant to delegated authority.^[9]

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. 49091 (January 16, 2004), 69 FR 3407 (January 23, 2004).

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

5.  15 U.S.C. 78o-3.

6.  15 U.S.C. 78o-3(b)(5).

7.  As of January 1, 2004, Nasdaq stopped offering new subscribers that are Nasdaq members the option of using FIX through CTCI or FIX-only circuits. See Securities Exchange Act Release No. 49092 (January 16, 2004), 69 FR 3408 (January 23, 2004).

8.  15 U.S.C. 78s(b)(2).

9.  17 CFR 200.30-3(a)(12).