[Federal Register Volume 59, Number 108 (Tuesday, June 7, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-13775]
[[Page Unknown]]
[Federal Register: June 7, 1994]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-34143; File No. SR-NASD-94-26]
Self-Regulatory Organizations; Notice of Filing and Order
Granting Accelerated Approval of Proposed Rule Change by the National
Association of Securities Dealers, Inc. Relating to the Subscriber
Charge for Expanded Last Sale Information
June 1, 1994.
Pursuant to section 19(b)(1) of the Securities Exchange Act of 1934
(``Act''),\1\ notice is hereby given that on May 2, 1994, 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. On May 25, 1994, the
NASD filed Amendment No. 1 to the proposed rule change.\2\ 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. 78s(b)(1) (1988).
\2\See letter from Michael Kulczak, Associate General Counsel,
NASD, to Elizabeth L. Prout, Staff Attorney, Commission, dated May
25, 1994. Amendment No. 1 corrects a clerical error in the text of
the proposed rule change.
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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 following is the full
text of a proposed rule change to authorize implementation of an
increase in the fee charged by The Nasdaq Stock Market, Inc.
(``Nasdaq'') to access the last sale information which it collects,
processes, and distributes through vendors and to incorporate the
amended fee into part VIII, section A.5 of Schedule D to the NASD By-
Laws. (New language is italics and deletions are in brackets.)
A. System Services
* * * * *
5. [NASDAQ] Last Sale Information
a. The charge to be paid by the subscriber for each terminal
receiving [NASDAQ] Last Sale Information through a vendor shall be
determined by the total number of securities classified by the
Corporation (i) as designated securities under parts X[XII] and
XI[XIII] and (ii) those classified as OTC Equity Securities under part
XII of Schedule D to the NASD By-Laws. The following schedule of
charges shall apply to the receipt of last sale information for such
securities.
------------------------------------------------------------------------
Charge per
No. of [Designated] Securities terminal
per month
------------------------------------------------------------------------
250 or less................................................. $2.50
251 to 500.................................................. 5.00
501 to 1,000................................................ 7.50
1001 or more................................................ 9.75
*[9.00]
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[*On March 13, 1992, the Association's Board of Governors voted to
increase the charge from $7.50 to $9.00 based on existing
authorization from the Securities and Exchange Commission to levy a
maximum charge of $10.00/terminal/month for receipt of last sale
information on more than 1,000 designated securities.]
b. The rate for each month shall be determined by the total number
of designated securities and OTC Equity Securities at the start of
business on the first day of that month.
The NASD requests the Commission to find good cause, pursuant to
Section 19(b)(2) of the Act,\3\ for approving the proposed rule change
prior to the thirtieth day after publication in the Federal Register.
The NASD and Nasdaq believe that accelerated approval is appropriate
because: (1) The instant fee increase to $9.75/terminal/month is below
the $10 maximum originally approved by the Commission in 1982 for
subscribers to access the Last Sale information on more than 1,000
reportable securities;\4\ (2) the increase of $.75/terminal/month will
entitle vendors' subscribers to access real-time last sale data on
substantially more securities, approximately 20,000 issues classified
as OTC Equity Securities (hereinafter referred to as ``OTC
equities'');\5\ (3) the amount of the increase is reasonable in light
of (i) the number of additional reportable issues, (ii) their relative
share volume in comparison to the volume being reported in Nasdaq-
listed securities, and (iii) the amount of additional data that must be
collected, processed, and distributed to support the expanded Last Sale
Service; (4) the expanded data has been available to vendors'
subscribers since April 4, 1994 at no additional charge; and (5) the
next bi-monthly billing cycle for Last Sale Service begins on June 1,
1994 and the increased fee will be applied prospectively.
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\3\15 U.S.C. 78s(b)(2) (1988).
\4\See Securities Exchange Act Release No. 19108 (October 6,
1982). The Commission notes that the approval order permitted a
maximum charge of $10.00 per month per subscriber terminal for the
receipt of lover 1,000 Nasdaq ``National Market System'' (currently
called ``Nasdaq/National Market'') securities. Currently, of the
total number of securities for which last sale reports are available
to subscribers, 3,599 are Nasdaq/National Market securities.
Conversation between Michael Kulczak, NASD, with Elizabeth Prout,
Commission, on May 31, 1994.
\5\OTC equities comprise the universe of equity securities that
are (i) not listed on Nasdaq and (ii) not qualified as ``reported
securities'' for purposes of the National Market System plans
governing the collection and dissemination of transaction data.
Pursuant to Part XII of Schedule D to the NASD By-Laws, NASD members
are required to report their transactions in OTC equities within 90
seconds of execution for regulatory purposes as well as for
dissemination through vendor channels.
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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 proposed summaries, set forth in sections
(A), (B), and (C) below, of the most significant aspects of such
statements.
A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
1. Purpose
This rule change is designed to effect an increase of $.75/
terminal/month for receipt of an expanded Last Sale Service that now
includes real-time transaction reports in OTC equities. Last Sale
Service is provided to the subscribers of authorized vendors who
redistribute last sale information pursuant to an agreement with
Nasdaq.
The actual distribution of last sale information that includes
trade reports on OTC equities commenced on April 4, 1994. Access to
this expanded stream of last sale information is now provided to all
subscribers who had been receiving last sale information on Nasdaq-
listed securities. The proposed fee increase will apply prospectively
to all such subscribers, starting June 1, 1994.\6\ In sum, a bundled
last sale service--covering all Nasdaq-listed securities and all
domestic OTC equities--will be provided to vendors' subscribers for a
single monthly charge of $9.75/terminal.
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\6\Last Sale subscribers are billed bi-monthly in advance; the
next billing cycle begins on June 1, 1994.
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The instant filing also includes technical changes in the language
of the present fee schedule to indicate (i) changes in the numbering of
other parts of Schedule D and (ii) expansion of the Last Sale Service
offering to include reportable OTC equities. These changes are
necessary to update the service description contained in the published
fee schedule.
2. Statutory Basis
The NASD and Nasdaq believe that the proposed rule change is
consistent with the requirements of Section 15A(b)(5) of the Act.\7\
Section 15A(b)(5) specifies that the rules of a national securities
association shall provide for the equitable allocation of reasonable
dues, fees, and other charges among members, issuers and other persons
using any facility or system that the Association operates or controls.
The proposed increase of $.75/terminal/month represents an 8.3%
increase over the prevailing rate. This increase is designed to offset
the developmental and operating costs associated with extending real-
time trade reporting to a large universe of OTC equities, numbering
more than 20,000 securities. This universe includes approximately 4,200
OTC equities that are quoted in the OTC Bulletin Board Service
(``OTCBB''). In terms of reported share volume for the month ending
January 31, 1994, share volume attributable to OTC equities quoted in
the OTCBB equaled 8.4% of share volume in Nasdaq-listed securities; the
comparable figure for OTC equities not quoted in the OTCBB was
approximately 11% of Nasdaq share volume. Accordingly, the NASD and
Nasdaq believe that the proposed 8.4% increase in the last sale charge
is reasonable in relation to the expanded base of reportable securities
and the relative share volume in those issues for which last sale data
will be collected, processed and disseminated. Lastly, the amended fee
remains below the $10/terminal/month maximum that the Commission
previously approved when real-time trade reporting commenced for
Nasdaq-listed securities.
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\7\15 U.S.C. 78o-3(b)(5) (1988).
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B. Self-Regulatory Organization's Statement on the Burden on
Competition
The NASD and Nasdaq believe that this proposal will not create 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. 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, NW., Washington, DC 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 at 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 No. SD-NASD-94-26 and should
be submitted by June 28, 1994.
IV. Commission's Findings and Order Granting Accelerated Approval of
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 the NASD and, in particular, the requirements
of section 15A(b)(5), which specifies that the rules of a national
securities association provided for the equitable allocation of
reasonable dues, fees, and any other charges among members and issuers
and other persons using any facility or system which the association
operates or controls. As discussed above, the present proposal sets
subscribers fees at $9.75 per terminal which is below the $10.00
terminal ceiling that the Commission, in 1982, found to be reasonable
for subscriber access to last sale reports for over 1,000 Nasdaq/
National Market securities. The Commission believes that the present
proposal is consistent with the 1982 order because subscribers now may
access last sales reports in over 20,000 securities, which nearly 4000
are Nasdaq/National Market securities.
The Commission finds good cause for approving the proposed rule
change prior to the 30th day after the date of publication of notice of
filing thereof in the Federal Register. The Commission increase is
consistent with the 1982 order. The Commission also believes that
accelerated approval of the present proposal is appropriate because,
since April 4, 1994, subscribers have been receiving last sale
information at no additional charge in the expanded universe of
securities that recently became subject to last sale reporting
requirements.
It Is Therefore Ordered, pursuant to section 19(b)(2)\8\ that the
proposed rule change is hereby approved.
\8\15 U.S.C. 78s(b)(2) (1988).
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For the Commission, by the Division of Market Regulation,
pursuant to delegated authority.\9\
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\9\17 CFR 200.30-3(a)(12)(1991).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 94-13775 Filed 6-6-94; 8:45 am]
BILLING CODE 8010-01-M
