VIA ELECTRONIC MAIL and
FIRST CLASS MAIL

April 1, 2002

Jonathan G. Katz
Secretary
U.S. Securities and Exchange Commission
450 5th Street, N.W.
Washington, D.C. 20549-0609

Re: File No. SR-NASD-2002-28

Dear Mr. Katz:

NexTrade, Inc. (NexTrade) hereby respectfully submits its comments to the above-referenced proposed rule changes of the National Association of Securities Dealers, Inc. (NASD). NexTrade is a Securities and Exchange Commission (Commission) registered broker-dealer and operates an electronic communications network (ECN) pursuant to a Commission staff No-Action Letter. As an ECN and NASD member firm, NexTrade appreciates the opportunity to comment on important changes proposed for the operation and regulation of the over-the-counter (OTC) market.

The above-referenced proposed rule change by the NASD would amend NASD Rules to designate transaction and quotation related fees applicable to activities in the NASD's Alternative Display Facility (ADF), including the adoption of fees for the proposed Trade Comparison and Reporting Service (TRACS).

As previously noted in NexTrade's comment letter on the NASD's ADF proposal,1 the creation of the ADF and a new trade reporting system for OTC trades, TRACS will unfairly burden NASD member firms that wish to trade Nasdaq securities both on the Nasdaq Exchange and off such exchange. While Nasdaq Exchange members will be able to take advantage of the existing Nasdaq Workstation and the ACT system, which were financed by NASD member firms, those firms that wish to trade Nasdaq securities in the OTC market will have to bear the costs of additional programming for both the ADF and TRACS.

Further, as noted in NexTrade's previous comment letter, the NASD indicates that it will not disseminate to ADF market participants any consolidated quotation or trade data in a security from securities exchanges and market centers. Therefore, under proposed Rule 4613(e)(2) the NASD would require OTC market makers to have in close proximity to the ADF terminal a quotation service that disseminates quotations in that security on behalf of other markets. There is no equivalent requirement for Nasdaq Exchange members to obtain ADF quotation data. The expense of obtaining this additional hardware and software is unknown and may impose excessive costs on NASD members, especially smaller market participants.

Finally, the NASD proposes a new trade reporting rule (Rule 6620), which would obligate any NASD member to initiate or maintain a contractual relationship with Nasdaq for the purposes of reporting Pink Sheet securities through ACT. Rather than force NASD members to support both TRACS and ACT NexTrade recommends that the proposed TRACS service be expanded to include the capability of reporting Pink Sheet transactions.

In sum, the costs that are proposed for NASD members that use the ADF and TRACS must be reviewed in light of the additional financial burden that is imposed on firms that choose to display orders in the OTC market. Such additional costs could create a competitive burden on users of the ADF and TRACS that is inappropriate. NexTrade respectfully requests that the Commission review the NASD's proposed ADF and TRACS in light of the competitive burden that may be imposed upon those firms that choose to use the ADF.

If you have any questions regarding this matter, you may contact me at (727) 446-6660 x129.

Yours truly,

Mark P. Barracca
Corporate Counsel*

Cc: Katherine A. England, Esq., Division of Market Regulation, SEC
Stephanie M. Dumont, Associate General Counsel, Office of General Counsel, NASD Regulation, Inc.

Footnotes
1 Letter to Jonathan G. Katz, Secretary, Securities and Exchange Commission, File No. SR-NASD-2001-90 from Mark P. Barracca, Corporate Counsel, NexTrade, Inc., dated January 18, 2002.
* Licensed in Virginia and the District of Columbia. Not licensed in Florida.