Notice to Members 98-66

NASD Clarifies Acceptable Customer Access to SelectNet and SOES

Correction - On page 497, the third sentence in the last paragraph under subhead Background - SelectNet And SOES should read:The SOES rules currently contain a specific provision, NASD Rule 4720(c)(4), that requires SOES order entry firms to maintain the physical security of Nasdaq equipment located on the premises of the firm to prevent unauthorized entry of information into SOES.

In response to several inquiries from National Association of Securities Dealers, Inc. (NASD®) members regarding their ability to provide electronic access to The Nasdaq Stock Market’s® (Nasdaq®) SelectNetSM to non-member broker/dealers or customers, Nasdaq clarifies that, in the circumstances described below, members that are Nasdaq Workstation II® subscribers may choose to provide an electronic transmission of a non-member’s order through their own system into SelectNet.

In addition, members have also raised questions regarding the ability of a Small Order Execution SystemSM (SOESSM) order entry firm to provide public customers electronic access to Nasdaq’s SOES system. This Notice clarifies that, in the circumstances described below, members that are SOES order entry firms may choose to provide an electronic interface for public customer orders through their own SOES order entry system.