Self-Regulatory Organizations; National Association of Securities Dealers, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change and Amendment No. 1 Thereto Relating to a Certificate of Designation for Preferred Stock of The Nasdaq Stock Market, Inc., 77433-77435 [E5-8128]
Download as PDF
<![CDATA[
77433
Federal Register / Vol. 70, No. 250 / Friday, December 30, 2005 / Notices
respondents, including the use of
automated collection techniques or
other forms of information technology.
Title and purpose of information
collection:
Pension Plan Reports: OMB 3220–
0089.
Under section 2(b) of the Railroad
Retirement Act (RRA), the Railroad
Retirement Board (RRB) pays
supplemental annuities to qualified RRB
employee annuitants. A supplemental
annuity, which is computed according
to section 3(e) of the RRA, can be paid
at age 60 if the employee has at least 30
years of creditable railroad service or at
age 65 if the employee has 25–29 years
of railroad service. In addition to 25
years of service, a ‘‘current connection’’
with the railroad industry is required.
Eligibility is further limited to
employees who had at least one month
of rail service before October 1981 and
were awarded regular annuities after
June 1966. Further, if an employee’s
65th birthday was prior to September 2,
1981, he or she must not have worked
in rail service after certain closing dates
(generally the last day of the month
following the month in which age 65 is
attained). Under section 2(h)(2) of the
RRA, the amount of the supplemental
annuity is reduced if the employees
receive monthly pension payments, or
lump-sum pension payments, from their
former railroad employer, which are
based in whole or in part on
contributions from that railroad
employer. The employees’ own
contributions to their pension accounts
do not cause a reduction. An employer
private pension is described in 20 CFR
216.40–216.42.
The RRB requires the following
information from railroad employers to
calculate supplemental annuities: (a)
The current status of railroad employer
pension plans and whether such
employer pension plans cause
reductions to the RRB supplemental
annuity; (b) the amount of the employer
private pension being paid to the
employee; (c) whether or not the
employer made contributions to the
pension; (d) whether or not the
employee was cashed out before
attaining retirement age under the
employer pension plan or received the
pension in a lump-sum payment in lieu
of monthly pension payments; and (e)
whether the employer pension plan
continues when the employer status
under the RRA changes. The
requirement that railroad employers
furnish pension information to the RRB
is contained in 20 CFR 209.2.
The RRB currently utilizes Form(s) G–
88p (Employer’s Supplemental Pension
Report), G–88r (Request for Information
About New or Revised Pension Plan),
and G–88r.1 (Request for Additional
Information about Employer Pension
Plan in Case of Change of Employer
Status or Termination of Pension Plan),
to obtain the necessary information from
railroad employers. One response is
requested of each respondent.
Completion is mandatory.
The RRB proposes the addition of
several new items to Form G–88p which
include ‘‘skip patterns’’ intended to
allow employers to bypass items when
no response is needed. The RRB also
proposes editorial and reformatting
changes for clarification purposes to
several existing items on G–88p. The
RRB proposes no changes to Forms G–
88r and G–88r.1.
ESTIMATE OF ANNUAL RESPONDENT BURDEN
[The estimated annual respondent burden is as follows]
Annual
responses
Form #(s)
Time
(min)
Burden
(hrs)
G–88p ..........................................................................................................................................
G–88r ...........................................................................................................................................
G–88r.1 ........................................................................................................................................
750
10
5
8
10
7
100
2
1
Total ......................................................................................................................................
765
........................
103
wwhite on PROD1PC61 with NOTICES
Additional Information or Comments:
To request more information or to
obtain a copy of the information
collection justification, forms, and/or
supporting material, please call the RRB
Clearance Officer at (312) 751–3363 or
send an e-mail request to
Charles.Mierzwa@RRB.GOV. Comments
regarding the information collection
should be addressed to Ronald J.
Hodapp, Railroad Retirement Board, 844
North Rush Street, Chicago, Illinois
60611–2092 or send an e-mail to
Ronald.Hodapp@RRB.GOV. Written
comments should be received within 60
days of this notice.
Charles Mierzwa,
Clearance Officer.
[FR Doc. E5–8140 Filed 12–29–05; 8:45 am]
BILLING CODE 7905–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–53022; File No. SR–NASD–
2005–145]
Self-Regulatory Organizations;
National Association of Securities
Dealers, Inc.; Notice of Filing and
Immediate Effectiveness of Proposed
Rule Change and Amendment No. 1
Thereto Relating to a Certificate of
Designation for Preferred Stock of The
Nasdaq Stock Market, Inc.
December 23, 2005.
Pursuant to section 19(b)(1) of the
Securities Exchange Act of 1934
(‘‘Act’’) 1 and Rule 19b–4 thereunder,2
notice is hereby given that on December
8, 2005, the National Association of
Securities Dealers, Inc. (‘‘NASD’’),
through its subsidiary, The Nasdaq
Stock Market, Inc. (‘‘Nasdaq’’) filed with
1 15
2 17
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18:16 Dec 29, 2005
Jkt 208001
PO 00000
U.S.C. 78s(b)(1).
CFR 240.19b–4.
Frm 00062
Fmt 4703
Sfmt 4703
the Securities and Exchange
Commission (‘‘Commission’’) the
proposed rule change as described in
Items I and II below, which Items have
been prepared by Nasdaq. Nasdaq filed
Amendment No. 1 to the proposed rule
change on December 21, 2005.3 Nasdaq
has designated this proposal as a ‘‘noncontroversial’’ proposed rule change
pursuant to section 19(b)(3)(A)(iii) of the
Act 4 and Rule 19b–4(f)(6) thereunder,5
which renders the proposal effective
upon filing with the Commission. The
Commission is publishing this notice to
solicit comments on the proposed rule
change, as amended, from interested
persons.
3 In Amendment No. 1, Nasdaq modified the basis
for summary effectiveness of the filing from Rule
19b–4(f)(3) under the Act to Rule 19b–4(f)(6), which
pertains to non-controversial rule changes.
4 15 U.S.C. 78s(b)(3)(A)(iii).
5 17 CFR 240.19b–4(f)(6).
E:\FR\FM\30DEN1.SGM
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77434
Federal Register / Vol. 70, No. 250 / Friday, December 30, 2005 / Notices
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
Nasdaq proposes to adopt a Certificate
of Designation, Preferences and Rights
(a ‘‘Certificate of Designation’’) of Series
D Preferred Stock (‘‘Series D Preferred’’).
Nasdaq will implement the proposed
rule change as soon as practicable.6
The text of the proposed rule change
is available on Nasdaq’s Internet Web
site (https://www.nasdaq.com), at
NASD’s principal office, and at the
Commission’s Public Reference Room.
II. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
In its filing with the Commission,
Nasdaq 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. Nasdaq has prepared
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
wwhite on PROD1PC61 with NOTICES
1. Purpose
Nasdaq is filing the Certificate of
Designation described below. Under
Article Fourth of Nasdaq’s Restated
Certificate of Incorporation, Nasdaq’s
Board of Directors may authorize the
issuance of preferred stock and fix its
designation, powers, preferences and
rights, as well as any qualifications,
limitations, and restrictions upon it.
Under Delaware law, the Certificate of
Designation is deemed to be an
amendment to Nasdaq’s Restated
Certificate of Incorporation, and as such,
Nasdaq is filing the Certificate of
Designation with the Commission.
In 2002, Nasdaq fixed the designation,
powers, preferences, and rights for its
Series B Preferred Stock (‘‘Series B
Preferred’’) and issued a single share of
the Series B Preferred to its parent
corporation, the NASD.7 The Series B
Preferred holder votes, together as one
6 The Commission notes that on December 14,
2005, Nasdaq filed a certificate of designation for
the Series D Preferred with the Secretary of the
State of Delaware. On December 20, 2005, Nasdaq
and NASD entered into an exchange agreement
pursuant to which NASD exchanged one share of
Nasdaq’s Series B Preferred Stock for one newly
issued Series D Preferred. See Nasdaq’s Form 8–K,
dated December 20, 2005.
7 See Securities Exchange Act Release No. 45638
(March 25, 2002), 67 FR 15268 (March 29, 2002).
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18:16 Dec 29, 2005
Jkt 208001
class with Nasdaq’s common stock, on
all matters submitted to a vote of
holders of common stock. The Series B
Preferred has variable voting rights such
that the number of votes entitled to be
cast by the holder of the Series B
Preferred equals that number of votes
that, together with votes otherwise
entitled to be cast by the holder of the
Series B Preferred Stock at a meeting,
whether by virtue of share ownership,
proxies, voting trust arrangements or
otherwise, entitle the holder to exercise
one vote more than one-half of all votes
entitled to be cast. Thus, by virtue of its
ownership of the Series B share, NASD
controls Nasdaq, and would continue to
control Nasdaq without regard to its
level of ownership of Nasdaq common
stock.
Nasdaq currently derives its
regulatory authority from NASD’s
registration as a national securities
association. Nasdaq exercises its
authority by virtue of a delegation from
the NASD under the terms of the
Commission-approved Plan of
Allocation and Delegation of Functions
by NASD to Subsidiaries (the
‘‘Delegation Plan’’), but the Series B
Preferred provides a means by which
the NASD may assure that Nasdaq
operates in accordance with the
Delegation Plan. The Series B Preferred
provides, however, that it loses its
voting rights and will be redeemed by
Nasdaq upon Nasdaq ‘‘becoming
registered with the U.S. Securities and
Exchange Commission as a national
securities exchange,’’ because Nasdaq
would no longer be required to operate
under the Delegation Plan if it was
authorized by the Commission to
operate as an exchange.
In 2000 and 2001, Nasdaq filed an
application to register as a national
securities exchange. Earlier this year,
Nasdaq filed substantial amendments to
its exchange registration application,
under which Nasdaq would become a
holding company and a newly formed
subsidiary, The NASDAQ Stock Market
LLC (‘‘NASDAQ LLC’’), would become
registered as a national securities
exchange. Nasdaq is optimistic that its
amended exchange registration
application will be approved in the near
future. However, it is likely that
NASDAQ LLC would not operate as an
exchange until some date after the
issuance of an order approving its
exchange registration application.
Accordingly, in the event of the
issuance of such an approval order, it is
likely that Nasdaq would still need to
continue to operate pursuant to the
Delegation Plan until such time as
NASDAQ LLC begins to operate as an
exchange (the ‘‘Operational Date’’).
PO 00000
Frm 00063
Fmt 4703
Sfmt 4703
During this transitional period, NASD
would need to continue to exercise
control with respect to Nasdaq. The
terms of the Series B Preferred,
however, are not well suited to possible
scenarios under which exchange
registration may be implemented, such
as in this case, exchange registration
would occur in advance of the
Operational Date, and NASDAQ LLC,
rather than Nasdaq, would be the entity
registered as an exchange.8
Accordingly, Nasdaq proposes to
adopt the Certificate of Designation and
issue one share of Series D Preferred to
the NASD in exchange for the
cancellation of the outstanding share of
Series B Preferred. The terms and
conditions of the Series D Preferred are
identical in all respects to those of the
Series B Preferred, except that the
triggering event for a loss of voting
rights and redemption of the Series D
Preferred would be ‘‘the first date on
which [Nasdaq] and all subsidiaries
thereof are no longer operating in any
respect pursuant to authority delegated
by’’ NASD under the Delegation Plan.
Thus, if exchange registration is granted
to NASDAQ LLC, the Series D Preferred
would lose its voting rights on the
Operational Date.9 NASD has also filed
a proposal that would remove Nasdaq
from the Delegation Plan,10 and Nasdaq
expects that if the proposal is approved
by the Commission, it will be
implemented on the Operational Date.
2. Statutory Basis
Nasdaq believes that the proposed
rule change is consistent with the
provisions of section 15A of the Act,11
in general, and with sections 15A(b)(2)
and (b)(6) of the Act,12 in particular,
which require, among other things, that
the NASD be so organized and have the
capacity to be able to carry out the
purposes of the Act and to comply with
and enforce compliance with the
provisions of the Act, and the NASD’s
rules are designed to prevent fraudulent
and manipulative acts and practices, to
promote just and equitable principles of
8 Earlier this year, Nasdaq stockholders approved
an amendment to the Series B Preferred that would
result in the termination of voting rights upon the
registration of Nasdaq or a subsidiary thereof as an
exchange. The amendment, however, did not
address ambiguity occasioned by a delay in time
between the approval of Nasdaq’s exchange
registration and the Operational Date.
9 In the unlikely event that there is a transitional
period during which NASDAQ LLC operates as an
exchange for certain stocks while Nasdaq continues
to operate as a facility of the NASD for other stocks,
the Series D Preferred would remain until Nasdaq
had ceased to operate in that capacity.
10 See Securities Exchange Act Release No. 52049
(July 15, 2005), 70 FR 42398 (July 22, 2005).
11 15 U.S.C. 78o–3.
12 15 U.S.C. 78o–3(b)(2) and (b)(6).
E:\FR\FM\30DEN1.SGM
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Federal Register / Vol. 70, No. 250 / Friday, December 30, 2005 / Notices
trade, and, in general, to protect
investors and the public interest. The
issuance of the Series D Preferred will
ensure that NASD continues to control
Nasdaq until NASDAQ LLC operates as
an exchange and Nasdaq is no longer
operating pursuant to the Delegation
Plan.
B. Self-Regulatory Organization’s
Statement on Burden on Competition
Nasdaq does not believe that the
proposed rule change will result in any
burden on competition that is not
necessary or appropriate in furtherance
of the purposes of the Act, as amended.
C. Self-Regulatory Organization’s
Statement on Comments on the
Proposed Rule Change Received From
Members, Participants or Others
Written comments were neither
solicited nor received.
III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
wwhite on PROD1PC61 with NOTICES
The Exchange has designated the
proposed rule change, as amended, as a
‘‘non-controversial’’ rule change
pursuant to section 19(b)(3)(A)(iii) of the
Act 13 and subparagraph (f)(6) of Rule
19b–4 thereunder.14 Nasdaq represents
that the foregoing rule change: does not
(i) significantly affect the protection of
investors or the public interest; (ii)
impose any significant burden on
competition; and (iii) by its terms, does
not become operative for 30-days after
the date of this filing, or such shorter
time as the Commission may designate
if consistent with the protection of
investors and the public interest.
Nasdaq has requested that the
Commission waive the five-day prefiling requirement and the 30-day
operative delay period for ‘‘noncontroversial’’ proposals and make the
proposed rule change, as amended,
effective and operative upon filing.
The Commission has determined to
waive the five-day pre-filing
requirement and the 30-day operative
delay period.15 The Commission notes
that accelerating the operative date will
allow Nasdaq to exchange the Series B
Preferred for the Series D share with
NASD. Therefore, the foregoing rule
change has become immediately
effective and operative upon filing
pursuant to section 19(b)(3)(A)(iii) of the
13 15
U.S.C. 78s(b)(3)(A)(iii).
CFR 240.19b–4(f)(6).
15 For purposes only of accelerating the operative
date of this proposal, the Commission has
considered the proposed rule’s impact on
efficiency, competition, and capital formation. 15
U.S.C. 78c(f).
14 17
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18:16 Dec 29, 2005
Jkt 208001
Act 16 and Rule 19b–4(f)(6)
thereunder.17
At any time within 60 days of the
filing of the proposed rule change, the
Commission may summarily abrogate
such rule change if it appears to the
Commission that such action is
necessary or appropriate in the public
interest, for the protection of investors,
or otherwise in furtherance of the
purposes of the Act.
IV. Solicitation of Comments
Interested persons are invited to
submit written data, views, and
arguments concerning the foregoing,
including whether the proposed rule
change, as amended, is consistent with
the Act. Comments may be submitted by
any of the following methods:
77435
should submit only information that
you wish to make available publicly. All
submissions should refer to File
Number SR–NASD–2005–145 and
should be submitted on or before
January 20, 2006.
For the Commission, by the Division of
Market Regulation, pursuant to delegated
authority.18
Jonathan G. Katz,
Secretary.
[FR Doc. E5–8128 Filed 12–29–05; 8:45 am]
BILLING CODE 8010–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 53021; File No. SR–Phlx–2005–
86]
Electronic Comments
• Use the Commission’s Internet
comment form
(https://www.sec.gov/rules/sro.shtml); or
• Send an e-mail to rulecomments@sec.gov. Please include File
No. SR–NASD–2005–145 on the subject
line.
Self-Regulatory Organizations;
Philadelphia Stock Exchange, Inc.;
Notice of Filing and Immediate
Effectiveness of Proposed Rule
Change Relating to the Extension of a
Pilot Program Concerning Split Price
Priority in Open Outcry
Paper Comments
• Send paper comments in triplicate
to Jonathan G. Katz, Secretary,
Securities and Exchange Commission,
Station Place, 100 F Street, NE.,
Washington, DC 20549–9303.
All submissions should refer to File
Number SR–NASD–2005–145. This file
number should be included on the
subject line if e-mail is used. To help the
Commission process and review your
comments more efficiently, please use
only one method. The Commission will
post all comments on the Commissions
Internet Web site
(https://www.sec.gov/rules/sro.shtml).
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 in
the Commission’s Public Reference
Room. Copies of the filing also will be
available for inspection and copying at
the principal office of NASD. All
comments received will be posted
without change; the Commission does
not edit personal identifying
information from submissions. You
Pursuant to section 19(b)(1) of the
Securities Exchange Act of 1934
(‘‘Act’’) 1, and Rule 19b–4 2 thereunder,
notice is hereby given that on December
21, 2005, the Philadelphia Stock
Exchange, Inc. (‘‘Phlx’’ or ‘‘Exchange’’)
filed with the Securities and Exchange
Commission (‘‘Commission’’) the
proposed rule change as described in
Items I and II, below, which Items have
been prepared by the Phlx. The
Exchange filed the proposal pursuant to
section 19(b)(3)(A) of the Act,3 and Rule
19b–4(f)(6) thereunder,4 which renders
the proposal effective upon filing with
the Commission.5 The Commission is
publishing this notice to solicit
comments on the proposed rule change
from interested persons.
16 15
17 17
PO 00000
U.S.C. 78s(b)(3)(A)(iii).
CFR 240.19b–4(f)(6).
Frm 00064
Fmt 4703
Sfmt 4703
December 23, 2005.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The Phlx proposes to extend, for an
additional six-month period, a pilot
program set forth in Exchange Rule
1014(g)(i)(C), governing purchase or sale
priority for orders of 100 option
contracts or more (‘‘pilot’’). The rule
affords priority to members that
purchase (sell) fifty or more contracts at
18 17
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
3 15 U.S.C. 78s(b)(3)(A).
4 17 CFR 240.19b–4(f)(6).
5 The Exchange requested the Commission to
waive the five-day pre-filing notice requirement and
the 30-day operative delay, as specified in Rule
19b–4(f)(6)(iii). 17 CFR 240.19b–4(f)(6)(iii).
1 15
E:\FR\FM\30DEN1.SGM
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]]>Agencies
[Federal Register Volume 70, Number 250 (Friday, December 30, 2005)]
[Notices]
[Pages 77433-77435]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E5-8128]
=======================================================================
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-53022; File No. SR-NASD-2005-145]
Self-Regulatory Organizations; National Association of Securities
Dealers, Inc.; Notice of Filing and Immediate Effectiveness of Proposed
Rule Change and Amendment No. 1 Thereto Relating to a Certificate of
Designation for Preferred Stock of The Nasdaq Stock Market, Inc.
December 23, 2005.
Pursuant to section 19(b)(1) of the Securities Exchange Act of 1934
(``Act'') \1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that
on December 8, 2005, 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'') the proposed rule change as described in Items I and
II below, which Items have been prepared by Nasdaq. Nasdaq filed
Amendment No. 1 to the proposed rule change on December 21, 2005.\3\
Nasdaq has designated this proposal as a ``non-controversial'' proposed
rule change pursuant to section 19(b)(3)(A)(iii) of the Act \4\ and
Rule 19b-4(f)(6) thereunder,\5\ which renders the proposal effective
upon filing with the Commission. The Commission is publishing this
notice to solicit comments on the proposed rule change, as amended,
from interested persons.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
\3\ In Amendment No. 1, Nasdaq modified the basis for summary
effectiveness of the filing from Rule 19b-4(f)(3) under the Act to
Rule 19b-4(f)(6), which pertains to non-controversial rule changes.
\4\ 15 U.S.C. 78s(b)(3)(A)(iii).
\5\ 17 CFR 240.19b-4(f)(6).
---------------------------------------------------------------------------
[[Page 77434]]
I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
Nasdaq proposes to adopt a Certificate of Designation, Preferences
and Rights (a ``Certificate of Designation'') of Series D Preferred
Stock (``Series D Preferred''). Nasdaq will implement the proposed rule
change as soon as practicable.\6\
---------------------------------------------------------------------------
\6\ The Commission notes that on December 14, 2005, Nasdaq filed
a certificate of designation for the Series D Preferred with the
Secretary of the State of Delaware. On December 20, 2005, Nasdaq and
NASD entered into an exchange agreement pursuant to which NASD
exchanged one share of Nasdaq's Series B Preferred Stock for one
newly issued Series D Preferred. See Nasdaq's Form 8-K, dated
December 20, 2005.
---------------------------------------------------------------------------
The text of the proposed rule change is available on Nasdaq's
Internet Web site (https://www.nasdaq.com), at NASD's principal office,
and at the Commission's Public Reference Room.
II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
In its filing with the Commission, Nasdaq 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. Nasdaq has prepared 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
Nasdaq is filing the Certificate of Designation described below.
Under Article Fourth of Nasdaq's Restated Certificate of Incorporation,
Nasdaq's Board of Directors may authorize the issuance of preferred
stock and fix its designation, powers, preferences and rights, as well
as any qualifications, limitations, and restrictions upon it. Under
Delaware law, the Certificate of Designation is deemed to be an
amendment to Nasdaq's Restated Certificate of Incorporation, and as
such, Nasdaq is filing the Certificate of Designation with the
Commission.
In 2002, Nasdaq fixed the designation, powers, preferences, and
rights for its Series B Preferred Stock (``Series B Preferred'') and
issued a single share of the Series B Preferred to its parent
corporation, the NASD.\7\ The Series B Preferred holder votes, together
as one class with Nasdaq's common stock, on all matters submitted to a
vote of holders of common stock. The Series B Preferred has variable
voting rights such that the number of votes entitled to be cast by the
holder of the Series B Preferred equals that number of votes that,
together with votes otherwise entitled to be cast by the holder of the
Series B Preferred Stock at a meeting, whether by virtue of share
ownership, proxies, voting trust arrangements or otherwise, entitle the
holder to exercise one vote more than one-half of all votes entitled to
be cast. Thus, by virtue of its ownership of the Series B share, NASD
controls Nasdaq, and would continue to control Nasdaq without regard to
its level of ownership of Nasdaq common stock.
---------------------------------------------------------------------------
\7\ See Securities Exchange Act Release No. 45638 (March 25,
2002), 67 FR 15268 (March 29, 2002).
---------------------------------------------------------------------------
Nasdaq currently derives its regulatory authority from NASD's
registration as a national securities association. Nasdaq exercises its
authority by virtue of a delegation from the NASD under the terms of
the Commission-approved Plan of Allocation and Delegation of Functions
by NASD to Subsidiaries (the ``Delegation Plan''), but the Series B
Preferred provides a means by which the NASD may assure that Nasdaq
operates in accordance with the Delegation Plan. The Series B Preferred
provides, however, that it loses its voting rights and will be redeemed
by Nasdaq upon Nasdaq ``becoming registered with the U.S. Securities
and Exchange Commission as a national securities exchange,'' because
Nasdaq would no longer be required to operate under the Delegation Plan
if it was authorized by the Commission to operate as an exchange.
In 2000 and 2001, Nasdaq filed an application to register as a
national securities exchange. Earlier this year, Nasdaq filed
substantial amendments to its exchange registration application, under
which Nasdaq would become a holding company and a newly formed
subsidiary, The NASDAQ Stock Market LLC (``NASDAQ LLC''), would become
registered as a national securities exchange. Nasdaq is optimistic that
its amended exchange registration application will be approved in the
near future. However, it is likely that NASDAQ LLC would not operate as
an exchange until some date after the issuance of an order approving
its exchange registration application. Accordingly, in the event of the
issuance of such an approval order, it is likely that Nasdaq would
still need to continue to operate pursuant to the Delegation Plan until
such time as NASDAQ LLC begins to operate as an exchange (the
``Operational Date''). During this transitional period, NASD would need
to continue to exercise control with respect to Nasdaq. The terms of
the Series B Preferred, however, are not well suited to possible
scenarios under which exchange registration may be implemented, such as
in this case, exchange registration would occur in advance of the
Operational Date, and NASDAQ LLC, rather than Nasdaq, would be the
entity registered as an exchange.\8\
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\8\ Earlier this year, Nasdaq stockholders approved an amendment
to the Series B Preferred that would result in the termination of
voting rights upon the registration of Nasdaq or a subsidiary
thereof as an exchange. The amendment, however, did not address
ambiguity occasioned by a delay in time between the approval of
Nasdaq's exchange registration and the Operational Date.
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Accordingly, Nasdaq proposes to adopt the Certificate of
Designation and issue one share of Series D Preferred to the NASD in
exchange for the cancellation of the outstanding share of Series B
Preferred. The terms and conditions of the Series D Preferred are
identical in all respects to those of the Series B Preferred, except
that the triggering event for a loss of voting rights and redemption of
the Series D Preferred would be ``the first date on which [Nasdaq] and
all subsidiaries thereof are no longer operating in any respect
pursuant to authority delegated by'' NASD under the Delegation Plan.
Thus, if exchange registration is granted to NASDAQ LLC, the Series D
Preferred would lose its voting rights on the Operational Date.\9\ NASD
has also filed a proposal that would remove Nasdaq from the Delegation
Plan,\10\ and Nasdaq expects that if the proposal is approved by the
Commission, it will be implemented on the Operational Date.
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\9\ In the unlikely event that there is a transitional period
during which NASDAQ LLC operates as an exchange for certain stocks
while Nasdaq continues to operate as a facility of the NASD for
other stocks, the Series D Preferred would remain until Nasdaq had
ceased to operate in that capacity.
\10\ See Securities Exchange Act Release No. 52049 (July 15,
2005), 70 FR 42398 (July 22, 2005).
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2. Statutory Basis
Nasdaq believes that the proposed rule change is consistent with
the provisions of section 15A of the Act,\11\ in general, and with
sections 15A(b)(2) and (b)(6) of the Act,\12\ in particular, which
require, among other things, that the NASD be so organized and have the
capacity to be able to carry out the purposes of the Act and to comply
with and enforce compliance with the provisions of the Act, and the
NASD's rules are designed to prevent fraudulent and manipulative acts
and practices, to promote just and equitable principles of
[[Page 77435]]
trade, and, in general, to protect investors and the public interest.
The issuance of the Series D Preferred will ensure that NASD continues
to control Nasdaq until NASDAQ LLC operates as an exchange and Nasdaq
is no longer operating pursuant to the Delegation Plan.
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\11\ 15 U.S.C. 78o-3.
\12\ 15 U.S.C. 78o-3(b)(2) and (b)(6).
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B. Self-Regulatory Organization's Statement on Burden on Competition
Nasdaq does not believe that the proposed rule change will result
in any burden on competition that is not necessary or appropriate in
furtherance of the purposes of the Act, as amended.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants or Others
Written comments were neither solicited nor received.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
The Exchange has designated the proposed rule change, as amended,
as a ``non-controversial'' rule change pursuant to section
19(b)(3)(A)(iii) of the Act \13\ and subparagraph (f)(6) of Rule 19b-4
thereunder.\14\ Nasdaq represents that the foregoing rule change: does
not (i) significantly affect the protection of investors or the public
interest; (ii) impose any significant burden on competition; and (iii)
by its terms, does not become operative for 30-days after the date of
this filing, or such shorter time as the Commission may designate if
consistent with the protection of investors and the public interest.
Nasdaq has requested that the Commission waive the five-day pre-filing
requirement and the 30-day operative delay period for ``non-
controversial'' proposals and make the proposed rule change, as
amended, effective and operative upon filing.
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\13\ 15 U.S.C. 78s(b)(3)(A)(iii).
\14\ 17 CFR 240.19b-4(f)(6).
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The Commission has determined to waive the five-day pre-filing
requirement and the 30-day operative delay period.\15\ The Commission
notes that accelerating the operative date will allow Nasdaq to
exchange the Series B Preferred for the Series D share with NASD.
Therefore, the foregoing rule change has become immediately effective
and operative upon filing pursuant to section 19(b)(3)(A)(iii) of the
Act \16\ and Rule 19b-4(f)(6) thereunder.\17\
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\15\ For purposes only of accelerating the operative date of
this proposal, the Commission has considered the proposed rule's
impact on efficiency, competition, and capital formation. 15 U.S.C.
78c(f).
\16\ 15 U.S.C. 78s(b)(3)(A)(iii).
\17\ 17 CFR 240.19b-4(f)(6).
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At any time within 60 days of the filing of the proposed rule
change, the Commission may summarily abrogate such rule change if it
appears to the Commission that such action is necessary or appropriate
in the public interest, for the protection of investors, or otherwise
in furtherance of the purposes of the Act.
IV. Solicitation of Comments
Interested persons are invited to submit written data, views, and
arguments concerning the foregoing, including whether the proposed rule
change, as amended, is consistent with the Act. Comments may be
submitted by any of the following methods:
Electronic Comments
Use the Commission's Internet comment form (https://
www.sec.gov/rules/sro.shtml); or
Send an e-mail to rule-comments@sec.gov. Please include
File No. SR-NASD-2005-145 on the subject line.
Paper Comments
Send paper comments in triplicate to Jonathan G. Katz,
Secretary, Securities and Exchange Commission, Station Place, 100 F
Street, NE., Washington, DC 20549-9303.
All submissions should refer to File Number SR-NASD-2005-145. This
file number should be included on the subject line if e-mail is used.
To help the Commission process and review your comments more
efficiently, please use only one method. The Commission will post all
comments on the Commissions Internet Web site (https://www.sec.gov/
rules/sro.shtml). 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 in the Commission's Public Reference Room. Copies of the
filing also will be available for inspection and copying at the
principal office of NASD. All comments received will be posted without
change; the Commission does not edit personal identifying information
from submissions. You should submit only information that you wish to
make available publicly. All submissions should refer to File Number
SR-NASD-2005-145 and should be submitted on or before January 20, 2006.
For the Commission, by the Division of Market Regulation,
pursuant to delegated authority.\18\
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\18\ 17 CFR 200.30-3(a)(12).
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Jonathan G. Katz,
Secretary.
[FR Doc. E5-8128 Filed 12-29-05; 8:45 am]
BILLING CODE 8010-01-P
