Self-Regulatory Organizations; National Association of Securities Dealers, Inc.; Notice of Filing of Proposed Rule Change and Amendment Nos. 1 and 2 Thereto To Establish Fee and Notice Requirements for Substitution Listing Events and To Provide Additional Transparency for Changes Requiring a Record-keeping Fee, 55643-55646 [05-18897]
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Federal Register / Vol. 70, No. 183 / Thursday, September 22, 2005 / Notices
public interest, the proposed rule
change has become effective pursuant to
Section 19(b)(3)(A) of the Act 10 and
Rule 19b–4(f)(6) thereunder.11 As
required under Rule 19b–4(f)(6)(iii),12
the Exchange provided the Commission
with written notice of the Exchange’s
intent to file the proposed rule change
at least five business days prior to the
filing date of the proposed rule change.
A proposed rule change filed under
Rule 19b–4(f)(6) 13 normally may not
become operative prior to 30 days after
the date of its filing. However, Rule
19b–4(f)(6)(iii) 14 permits the
Commission to designate a shorter time
if such action is consistent with the
protection of investors and the public
interest. The Exchange has requested
that the Commission waive the 30-day
operative delay, as specified in Rule
19b–4(f)(6)(iii), and designate the
proposed rule change operative upon
filing.
The Commission believes that
waiving the 30-day operative delay is
consistent with the protection of
investors and the public interest,15
because accelerating the operative date
immediately eliminates the
inconsistency in the Exchange Rules
with respect to Primary Market Makers
Obligations to Public Customer Orders
that otherwise exists as a result of the
approval of trade and ship.16 For this
reason, the Commission designates that
the proposal is operative upon filing.
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 is consistent with the Act.
Comments may be submitted by any of
the following methods:
10 15
U.S.C. 78s(b)(3)(A).
CFR 240.19b–4(f)(6).
12 17 CFR 240.19b–4(f)(6)(iii).
13 17 CFR 240.19b–4(f)(6).
14 17 CFR 240.19b–4(f)(6)(iii).
15 For the purpose only of waiving the 30-day
operative delay, the Commission has considered the
proposed rule’s impact on efficiency, competition,
and capital formation. 15 U.S.C. 78c(f).
16 See supra note 7.
11 17
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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
Number SR–ISE–2005–44 on the subject
line.
Paper Comments
• Send paper comments in triplicate
to Jonathan G. Katz, Secretary,
Securities and Exchange Commission,
100 F Street, NE., Washington, DC
20549–9303.
All submissions should refer to File
Number SR–ISE–2005–44 . 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 Commission’s
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 the Exchange. 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–ISE–2005–44 and should be
submitted on or before October 13,
2005.
For the Commission, by the Division of
Market Regulation, pursuant to delegated
authority.17
Jonathan G. Katz,
Secretary.
[FR Doc. 05–18895 Filed 9–21–05; 8:45 am]
BILLING CODE 8010–01–P
17 17
PO 00000
CFR 200.30–3(a)(12).
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55643
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–52430; File No. SR–NASD–
2004–162]
Self-Regulatory Organizations;
National Association of Securities
Dealers, Inc.; Notice of Filing of
Proposed Rule Change and
Amendment Nos. 1 and 2 Thereto To
Establish Fee and Notice
Requirements for Substitution Listing
Events and To Provide Additional
Transparency for Changes Requiring a
Record-keeping Fee
September 14, 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 October
26, 2004, 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, II, and III below, which Items
have been prepared by Nasdaq. On May
11, 2005, Nasdaq filed Amendment No.
1 to the proposed rule change.3 On
August 18, 2005, Nasdaq filed
Amendment No. 2 to the proposed rule
change.4 The Commission is publishing
this notice to solicit comments on the
proposal, as amended, from interested
persons.
I. Self-Regulatory Organization’s
Statement of the Terms of the Substance
of the Proposed Rule Change
Nasdaq proposes to amend NASD
Rules 4200(a), 4310, 4320, 4510, and
4520 to establish fee and notice
requirements for substitution listing
1 15
U.S.C. 78s(b)(1).
CFR 240.19b–4.
3 Amendment No. 1 superseded and replaced the
filing in its entirety. In Amendment No. 1, Nasdaq
clarified that securities that are listed on a national
securities exchange and not designated by Nasdaq
as Nasdaq national market system securities are
exempt from the proposed Substitution Listing
Event notice and fee requirements. Amendment No.
1 also corrected typographical errors and clarified
certain other non-material terms related to the
scope of the proposed Substitution Listing Event fee
and notice requirements.
4 Amendment No. 2 superseded and replaced the
amended filing in its entirety. In Amendment No.
2, Nasdaq clarified that securities that are listed on
a national securities exchange and not designated
by Nasdaq as Nasdaq national market system
securities are exempt from only the proposed
Substitution Listing Event fee requirement and,
therefore, would be subject to the proposed notice
requirement. Amendment No. 2 also made certain
conforming changes and representations regarding
the collection and dissemination of substitution
listing event information and the proposed rules
impact on Nasdaq’s regulatory functions.
2 17
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Federal Register / Vol. 70, No. 183 / Thursday, September 22, 2005 / Notices
events for all Nasdaq issuers, except the
proposed fee will not apply to issuers
whose securities are listed on a national
securities exchange and subsequently
listed on Nasdaq but not designated by
Nasdaq as Nasdaq national market
system securities. Nasdaq also proposes
amendments to provide more
transparency regarding certain changes
subject to the record-keeping fee.
Nasdaq would implement the proposed
rule change, as amended, as soon as
practicable following Commission
approval.
The text of the proposed rule change
is below. Proposed new language is in
italics; proposed deletions are in
[brackets].5
*
*
*
*
*
4200. Definitions
(a) For purposes of the Rule 4000
Series, unless the context requires
otherwise:
(1)–(36) No change.
(37) ‘‘Substitution Listing Event’’
means a reverse stock split, reincorporation or a change in the issuer’s
place of organization, the formation of
a holding company that replaces a
listed company, reclassification or
exchange of an issuer’s listed shares for
another security, the listing of a new
class of securities in substitution for a
previously-listed class of securities, or
any technical change whereby the
shareholders of the original company
receive a share-for-share interest in the
new company without any change in
their equity position or rights.
(38) ‘‘Transaction costs’’ means costs
incurred in connection with a limited
partnership rollup transaction,
including printing and mailing the
proxy, prospectus or other documents;
legal fees not related to the solicitation
of votes or tenders; financial advisory
fees; investment banking fees; appraisal
fees; accounting fees; independent
committee expenses; travel expenses;
and all other fees related to the
preparatory work of the transaction, but
not including costs that would have
otherwise been incurred by the subject
limited partnerships in the ordinary
course of business or solicitation
expenses.
[(38)](39) ‘‘Underwriting Activity
Report’’ is a report provided by the
Market Regulation Department in
connection with a distribution of
securities subject to SEC Rule 101
pursuant to Rule 2710(b)(11) and
5 Nasdaq represents that changes are marked to
the rule text that appears in the electronic NASD
Manual found at https://www.nasd.com. Nasdaq also
represents that there are no pending rule filings that
would affect this proposed rule change.
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14:53 Sep 21, 2005
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includes forms that are submitted by
members to comply with their
notification obligations under Rules
4614, 4619, and 4623.
(b) No Change.
*
*
*
*
*
4310. Qualification Requirements for
Domestic and Canadian Securities
To qualify for inclusion in Nasdaq, a
security of a domestic or Canadian
issuer shall satisfy all applicable
requirements contained in paragraphs
(a) or (b), and (c) hereof.
(a)–(b) No change.
(c) In addition to the requirements
contained in paragraph (a) or (b) above,
and unless otherwise indicated, a
security shall satisfy the following
criteria for inclusion in Nasdaq:
(1)–(19) No change.
(20) The issuer shall notify Nasdaq
promptly in writing of any change in the
general character or nature of its
businesses and any change in the
address of its principal executive
offices. The issuer also shall file on a
form designated by Nasdaq notification
of any corporate name change, or other
change requiring payment of a recordkeeping fee, no later than 10 days after
the change.
(21)–(29) No change.
(30) The issuer shall notify Nasdaq of
a Substitution Listing Event (other than
a re-incorporation or a change to an
issuer’s place of organization) no later
than 15 calendar days prior to the
implementation of such event by filing
the appropriate form as designated by
Nasdaq. For a re-incorporation or
change to an issuer’s place of
organization, an issuer shall notify
Nasdaq as soon as practicable after
such event has been implemented by
filing the appropriate form as
designated by Nasdaq. Issuers shall also
pay the appropriate fee associated with
Substitution Listing Events. The
Substitution Listing Event fee shall not
apply to securities that are listed on a
national securities exchange and not
designated by Nasdaq as Nasdaq
national market system securities.
(d) No change.
*
*
*
*
*
4320. Qualification Requirements for
Non-Canadian Foreign Securities and
American Depository Receipts
To qualify for inclusion in Nasdaq, a
security of a non-Canadian foreign
issuer, an American Depository Receipt
(ADR) or similar security issued in
respect of a security of a foreign issuer
shall satisfy the requirements of
paragraphs (a), (b) or (c), and (d) and (e)
of this Rule.
PO 00000
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Fmt 4703
Sfmt 4703
(a)–(d) No change.
(e) In addition to the requirements
contained in paragraphs (a), (b) or (c),
and (d), the security shall satisfy the
criteria set out in this subsection for
inclusion in Nasdaq. In the case of
ADRs, the underlying security will be
considered when determining the ADR’s
qualification for initial or continued
inclusion on Nasdaq.
(1)–(17) No change.
(18) The issuer shall notify Nasdaq
promptly in writing of any change in the
general character or nature of its
businesses and any change in the
address of its principal executive
offices. The issuer also shall file on a
form designated by Nasdaq notification
of any corporate name change, or other
change requiring payment of a recordkeeping fee, no later than 10 days after
the change.
(19)–(25) No change.
(26) The issuer shall notify Nasdaq of
a Substitution Listing Event (other than
a re-incorporation or a change to an
issuer’s place of organization) no later
than 15 calendar days prior to the
implementation of such event by filing
the appropriate form as designated by
Nasdaq. For a re-incorporation or
change to an issuer’s place of
organization, an issuer shall notify
Nasdaq as soon as practicable after
such event has been implemented by
filing the appropriate form as
designated by Nasdaq. Issuers shall also
pay the appropriate fee associated with
Substitution Listing Events. The
Substitution Listing Event fee shall not
apply to securities that are listed on a
national securities exchange and not
designated by Nasdaq as Nasdaq
national market system securities.
(f) No change.
*
*
*
*
*
4510. The Nasdaq National Market
(a)–(d) No change.
(e) Record-Keeping Fee.
An issuer that makes a change such as
a change to its name, the par value or
title of its security, or its symbol shall
pay a fee of $2,500 to The Nasdaq Stock
Market, Inc. and submit the appropriate
form as designated by Nasdaq.
(f) Substitution Listing Fee
An issuer that implements a
Substitution Listing Event shall pay a
fee of $7,500 to The Nasdaq Stock
Market, Inc. and submit the appropriate
form as designated by Nasdaq.
Notwithstanding the foregoing, this
substitution listing fee shall not apply to
securities that are listed on a national
securities exchange and not designated
by Nasdaq as Nasdaq national market
system securities.
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Federal Register / Vol. 70, No. 183 / Thursday, September 22, 2005 / Notices
4520. The Nasdaq SmallCap Market
(a)–(c) No change.
(d) Record-Keeping Fee.
An issuer that makes a change such as
a change to its name, the par value or
title of its security, or its symbol shall
pay a fee of $2,500 to The Nasdaq Stock
Market, Inc. and submit the appropriate
form as designated by Nasdaq.
(e) Substitution Listing Fee.
An issuer that implements a
Substitution Listing Event shall pay a
fee of $7,500 to The Nasdaq Stock
Market, Inc. and submit the appropriate
form as designated by Nasdaq.
Notwithstanding the foregoing, this
substitution listing fee shall not apply to
securities that are listed on a national
securities exchange and not designated
by Nasdaq as Nasdaq national market
system securities.
*
*
*
*
*
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, as amended, and
discussed any comments it received on
the proposal. 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
The purpose of this rule filing is to
amend NASD Rules 4200(a), 4310, 4320,
4510, and 4520 to establish a fee for
substitution listing events and a
corresponding notice requirement.
Substitution listing events include the
implementation of a reverse stock split,
an issuer’s re-incorporation or a change
in the issuer’s place of organization
(including a change in the issuer’s state
of incorporation), the reclassification or
exchange of an issuer’s listed shares for
another security, formation of a holding
company that replaces a listed
company, the listing of a new class of
securities in substitution for a
previously listed class of securities, or
any technical change where the
shareholders of the original company
receive a share-for-share interest in the
new company without a change in their
equity position or rights.
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14:53 Sep 21, 2005
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When Nasdaq learns about a
substitution listing event for a Nasdaqlisted company, Nasdaq must
implement technical changes to its
trading, market data, and internal
monitoring systems. Nasdaq
disseminates certain substitution listing
event information about Nasdaq-listed
companies to other markets and market
participants through a subscription
service.6 Nasdaq-listed issuers that are
designated by Nasdaq pursuant to
NASD Rule 4400 Series as Nasdaq
national market system securities
(‘‘Nasdaq designated securities’’) are
contacted directly by Nasdaq to verify
the details of the substitution listing
events. Under the NASD Rule 4400
Series, the securities of certain Nasdaqlisted issuers that are also listed on a
national securities exchange are not
designated by Nasdaq as Nasdaq
national market system securities
(‘‘Nasdaq non-designated securities’’).7
Nasdaq does not contact the issuers of
Nasdaq non-designated securities
directly to verify the details of
substitution listing events. Instead, for
Nasdaq non-designated securities,
Nasdaq receives electronic reports from
the national securities exchange that
designated the securities as national
market system securities 8 under that
market’s national market system plan.
Nasdaq uses these reports to make the
necessary changes to its systems.
Nasdaq has dedicated specific
resources to manage the process for
collecting, verifying, and implementing
the changes related to substitution
6 Nasdaq provides advance notification of certain
substitution listing events, such as reverse stock
splits, to member firms, market data vendors,
service bureaus, and other subscribers of its daily
list service. Notification of the substitution listing
event information on Nasdaq’s daily list service is
subsequently provided to users of Nasdaq’s systems
through a fifth letter identifier, such as a ‘‘D,’’ that
is temporarily added to an issuer’s trading symbol.
Re-incorporations or changes to the place of
organization are recorded in Nasdaq’s internal
database, but are not disseminated to market
participants.
7 NASD IM–4400 provides that Nasdaq shall not
exercise its authority under the NASD Rule 4400
Series separately to designate the securities that are
listed on a national securities exchange and
subsequently permitted to list on the Nasdaq
National Market as Nasdaq national market system
securities within the meaning of Section 11A of the
Act, 15 U.S.C. 78k–1, or the rules thereunder.
8 For example, Nasdaq uses electronic reports
from the New York Stock Exchange (‘‘NYSE’’) to
verify the details of the substitution listing events
for NYSE-listed securities that are subsequently also
listed on Nasdaq but are still designated by the
NYSE as national market system securities pursuant
to the NYSE’s national market system plan. The
consolidated reports from the NYSE contain
information regarding reverse stock splits, the
substitution of a previously listed class of securities
for another class, the creation of a holding
company, and the reincorporation or change to the
place of organization of an issuer.
PO 00000
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Sfmt 4703
55645
listing events of Nasdaq-listed securities
so that such changes are accurately and
promptly reflected in its trading, market
data, and internal monitoring systems.
To support these activities, Nasdaq
proposes to establish a fee of $7,500 per
event for issuers of Nasdaq designated
securities. Since the costs associated
with managing the substitution listing
events for Nasdaq non-designated
securities is reduced through Nasdaq’s
use of consolidated reports from other
markets, the proposed rule would waive
the substitution listing event fee for
these particular issuers.9 Waiving these
fees also would eliminate the possibility
that these issuers would be charged
twice for the same substitution listing
event since, as discussed below, other
markets charge their listed companies a
fee for substitution listing events.
Under the proposed rule change,
issuers of both Nasdaq designated and
Nasdaq non-designated securities would
be required to notify Nasdaq about a
substitution listing event no later than
15 days prior to the implementation of
the event, in order to provide Nasdaq
with sufficient time to implement the
technical changes into its systems. For
a re-incorporation or a change to an
issuer’s place of organization, however,
Nasdaq proposes to require issuers to
notify Nasdaq as soon as practicable
after the event has been implemented
since these substitution listing events
may be contingent on shareholder
approval and would not require
immediate changes to Nasdaq’s systems.
Other markets also assess a fee for
substitution listing events. For example,
both the NYSE and the American Stock
Exchange (‘‘Amex’’) charge a fee for
substitution listing events. The NYSE
charges a ‘‘Reduced Initial Fee’’ of
$15,000 for substitution events.10 Under
the NYSE’s rules, the $15,000 fee
applies only if the change in the
company’s status is technical in nature
and the shareholders of the original
company receive a share-for-share
interest in the new company without
any change in their equity position or
rights. If the substitution event does not
9 Although the proposed rule would waive the
substitution-listing event fee for these Nasdaq
issuers, Nasdaq represents that the lack of such fees
from these issuers would not impair Nasdaq’s
ability to fulfill its regulatory responsibilities and
enforce its rules. Furthermore, although Nasdaq
relies on consolidated reports in managing the
substitution listing events process for these Nasdaq
issuers, Nasdaq represents that its rules must be
‘‘designed to produce fair and informative
quotations, to prevent fictitious or misleading
quotations, and promote orderly procedures for
collecting, distributing, and publishing quotations’
pursuant to Section 15A(b)(11) of the Act, 15 U.S.C.
78o–3(b)(11).
10 See NYSE Listed Company Manual Section
902.02.
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Federal Register / Vol. 70, No. 183 / Thursday, September 22, 2005 / Notices
comply with these requirements, the
full initial listing fees would apply.
Amex charges $5,000 for each
substitution listing event.11 For Amex
issuers, a substitution listing fee applies
in cases where, after the original listing,
a change is made by charter amendment
or otherwise by which shares listed on
Amex are reclassified, or changed into
or exchanged for another security, either
with or without a change in par value.
Amex also charges a substitution listing
fee whenever a company implements a
reverse stock split, re-incorporates, lists
a new class of securities in substitution
of a previously-listed class of securities,
or otherwise engages in a transaction
which would require the company to
file a new Form 8–A with the
Commission in regard to the previously
listed security.
The proposed rule change also would
make minor amendments to NASD
Rules 4310(c)(20), 4320(e)(18), 4510(e),
and 4520(d) to clarify that Nasdaq-listed
companies that are subject to a
recordkeeping fee must submit the
appropriate form to Nasdaq within 10
days after the change. This proposed
change simply reflects the current
practice of issuers.
2. Statutory Basis
Nasdaq believes that the proposed
rule change, as amended, is consistent
with the provisions of Section 15A of
the Act,12 in general, and with Section
15A(b)(5) of the Act,13 in particular, in
that the proposed rules provide for the
equitable allocation of reasonable dues,
fees, and other charges among members
and issuers and other persons using any
facility or system which Nasdaq
operates or controls. The proposed rule
change is reasonable because the fee is
competitive with similar fees charged by
other markets. The proposed rule is also
equitable because it will apply to all
similarly situated Nasdaq issuers on an
equal basis. The exemption from the
proposed fee requirement for issuers of
Nasdaq non-designated securities is
equitable and reasonable because it
recognizes the reduced costs for
managing substitution listing events for
such issuers. The exemption is also
consistent with the provisions of
Section 15A of the Act 14 in that it
promotes competition among exchange
markets.
The proposed clarifications to NASD
Rules 4310(c)(20), 4320(e)(18), 4510(e),
and 4520(d) regarding the requisite form
11 See
AMEX Company Guide Sections 142 and
305.
U.S.C. 78o–3.
U.S.C. 78o–3(b)(5).
14 15 U.S.C. 78o–3.
to be submitted in connection with
payment for a recordkeeping fee is
consistent with Section 15A of the
Act,15 in general, and furthers the
objectives of Section 15A(b)(6) of the
Act,16 in particular in that it is designed
to foster cooperation and coordination
with persons engaged in regulating and
processing information with respect to,
and facilitating transactions in
securities, to remove impediments to a
free and open market and a national
market system, and, in general, to
protect investors and the public interest.
Nasdaq believes that the proposed rule
change would benefit issuers and
issuers’ counsel by providing additional
transparency with respect to the process
by which issuers request changes
covered by the recordkeeping fee.
B. Self-Regulatory Organization’s
Statement on Burden on Competition
Nasdaq does not believe that the
proposed rule change would result in
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
Written comments were neither
solicited nor received.
III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
Within 35 days of the date of
publication of this notice in the Federal
Register or within such longer period (i)
as the Commission may designate up to
90 days of such date if it finds such
longer period to be appropriate and
publishes its reasons for so finding or
(ii) as to which NASD consents, the
Commission will:
(A) by order approve such proposed
rule change, or
(B) institute proceedings to determine
whether the proposed rule change
should be disapproved.
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:
• Send an e-mail to rulecomments@sec.gov. Please include File
Number SR–NASD–2004–162 on the
subject line.
Paper Comments
• Send paper comments in triplicate
to Jonathan G. Katz, Secretary,
Securities and Exchange Commission,
100 F Street, NE., Washington, DC
20549–9303.
All submissions should refer to File
Number SR–NASD–2004–162. 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 Commission’s
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 such 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–2004–162 and
should be submitted on or before
October 13, 2005.
For the Commission, by the Division of
Market Regulation, pursuant to delegated
authority.17
Jonathan G. Katz,
Secretary.
[FR Doc. 05–18897 Filed 9–21–05; 8:45 am]
BILLING CODE 8010–01–P
Electronic Comments
• Use the Commission’s Internet
comment form (https://www.sec.gov/
rules/sro.shtml); or
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[Federal Register Volume 70, Number 183 (Thursday, September 22, 2005)]
[Notices]
[Pages 55643-55646]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 05-18897]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-52430; File No. SR-NASD-2004-162]
Self-Regulatory Organizations; National Association of Securities
Dealers, Inc.; Notice of Filing of Proposed Rule Change and Amendment
Nos. 1 and 2 Thereto To Establish Fee and Notice Requirements for
Substitution Listing Events and To Provide Additional Transparency for
Changes Requiring a Record-keeping Fee
September 14, 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 October 26, 2004, 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, II,
and III below, which Items have been prepared by Nasdaq. On May 11,
2005, Nasdaq filed Amendment No. 1 to the proposed rule change.\3\ On
August 18, 2005, Nasdaq filed Amendment No. 2 to the proposed rule
change.\4\ The Commission is publishing this notice to solicit comments
on the proposal, as amended, from interested persons.
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\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
\3\ Amendment No. 1 superseded and replaced the filing in its
entirety. In Amendment No. 1, Nasdaq clarified that securities that
are listed on a national securities exchange and not designated by
Nasdaq as Nasdaq national market system securities are exempt from
the proposed Substitution Listing Event notice and fee requirements.
Amendment No. 1 also corrected typographical errors and clarified
certain other non-material terms related to the scope of the
proposed Substitution Listing Event fee and notice requirements.
\4\ Amendment No. 2 superseded and replaced the amended filing
in its entirety. In Amendment No. 2, Nasdaq clarified that
securities that are listed on a national securities exchange and not
designated by Nasdaq as Nasdaq national market system securities are
exempt from only the proposed Substitution Listing Event fee
requirement and, therefore, would be subject to the proposed notice
requirement. Amendment No. 2 also made certain conforming changes
and representations regarding the collection and dissemination of
substitution listing event information and the proposed rules impact
on Nasdaq's regulatory functions.
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I. Self-Regulatory Organization's Statement of the Terms of the
Substance of the Proposed Rule Change
Nasdaq proposes to amend NASD Rules 4200(a), 4310, 4320, 4510, and
4520 to establish fee and notice requirements for substitution listing
[[Page 55644]]
events for all Nasdaq issuers, except the proposed fee will not apply
to issuers whose securities are listed on a national securities
exchange and subsequently listed on Nasdaq but not designated by Nasdaq
as Nasdaq national market system securities. Nasdaq also proposes
amendments to provide more transparency regarding certain changes
subject to the record-keeping fee. Nasdaq would implement the proposed
rule change, as amended, as soon as practicable following Commission
approval.
The text of the proposed rule change is below. Proposed new
language is in italics; proposed deletions are in [brackets].\5\
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\5\ Nasdaq represents that changes are marked to the rule text
that appears in the electronic NASD Manual found at https://
www.nasd.com. Nasdaq also represents that there are no pending rule
filings that would affect this proposed rule change.
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* * * * *
4200. Definitions
(a) For purposes of the Rule 4000 Series, unless the context
requires otherwise:
(1)-(36) No change.
(37) ``Substitution Listing Event'' means a reverse stock split,
re-incorporation or a change in the issuer's place of organization, the
formation of a holding company that replaces a listed company,
reclassification or exchange of an issuer's listed shares for another
security, the listing of a new class of securities in substitution for
a previously-listed class of securities, or any technical change
whereby the shareholders of the original company receive a share-for-
share interest in the new company without any change in their equity
position or rights.
(38) ``Transaction costs'' means costs incurred in connection with
a limited partnership rollup transaction, including printing and
mailing the proxy, prospectus or other documents; legal fees not
related to the solicitation of votes or tenders; financial advisory
fees; investment banking fees; appraisal fees; accounting fees;
independent committee expenses; travel expenses; and all other fees
related to the preparatory work of the transaction, but not including
costs that would have otherwise been incurred by the subject limited
partnerships in the ordinary course of business or solicitation
expenses.
[(38)](39) ``Underwriting Activity Report'' is a report provided by
the Market Regulation Department in connection with a distribution of
securities subject to SEC Rule 101 pursuant to Rule 2710(b)(11) and
includes forms that are submitted by members to comply with their
notification obligations under Rules 4614, 4619, and 4623.
(b) No Change.
* * * * *
4310. Qualification Requirements for Domestic and Canadian Securities
To qualify for inclusion in Nasdaq, a security of a domestic or
Canadian issuer shall satisfy all applicable requirements contained in
paragraphs (a) or (b), and (c) hereof.
(a)-(b) No change.
(c) In addition to the requirements contained in paragraph (a) or
(b) above, and unless otherwise indicated, a security shall satisfy the
following criteria for inclusion in Nasdaq:
(1)-(19) No change.
(20) The issuer shall notify Nasdaq promptly in writing of any
change in the general character or nature of its businesses and any
change in the address of its principal executive offices. The issuer
also shall file on a form designated by Nasdaq notification of any
corporate name change, or other change requiring payment of a record-
keeping fee, no later than 10 days after the change.
(21)-(29) No change.
(30) The issuer shall notify Nasdaq of a Substitution Listing Event
(other than a re-incorporation or a change to an issuer's place of
organization) no later than 15 calendar days prior to the
implementation of such event by filing the appropriate form as
designated by Nasdaq. For a re-incorporation or change to an issuer's
place of organization, an issuer shall notify Nasdaq as soon as
practicable after such event has been implemented by filing the
appropriate form as designated by Nasdaq. Issuers shall also pay the
appropriate fee associated with Substitution Listing Events. The
Substitution Listing Event fee shall not apply to securities that are
listed on a national securities exchange and not designated by Nasdaq
as Nasdaq national market system securities.
(d) No change.
* * * * *
4320. Qualification Requirements for Non-Canadian Foreign Securities
and American Depository Receipts
To qualify for inclusion in Nasdaq, a security of a non-Canadian
foreign issuer, an American Depository Receipt (ADR) or similar
security issued in respect of a security of a foreign issuer shall
satisfy the requirements of paragraphs (a), (b) or (c), and (d) and (e)
of this Rule.
(a)-(d) No change.
(e) In addition to the requirements contained in paragraphs (a),
(b) or (c), and (d), the security shall satisfy the criteria set out in
this subsection for inclusion in Nasdaq. In the case of ADRs, the
underlying security will be considered when determining the ADR's
qualification for initial or continued inclusion on Nasdaq.
(1)-(17) No change.
(18) The issuer shall notify Nasdaq promptly in writing of any
change in the general character or nature of its businesses and any
change in the address of its principal executive offices. The issuer
also shall file on a form designated by Nasdaq notification of any
corporate name change, or other change requiring payment of a record-
keeping fee, no later than 10 days after the change.
(19)-(25) No change.
(26) The issuer shall notify Nasdaq of a Substitution Listing Event
(other than a re-incorporation or a change to an issuer's place of
organization) no later than 15 calendar days prior to the
implementation of such event by filing the appropriate form as
designated by Nasdaq. For a re-incorporation or change to an issuer's
place of organization, an issuer shall notify Nasdaq as soon as
practicable after such event has been implemented by filing the
appropriate form as designated by Nasdaq. Issuers shall also pay the
appropriate fee associated with Substitution Listing Events. The
Substitution Listing Event fee shall not apply to securities that are
listed on a national securities exchange and not designated by Nasdaq
as Nasdaq national market system securities.
(f) No change.
* * * * *
4510. The Nasdaq National Market
(a)-(d) No change.
(e) Record-Keeping Fee.
An issuer that makes a change such as a change to its name, the par
value or title of its security, or its symbol shall pay a fee of $2,500
to The Nasdaq Stock Market, Inc. and submit the appropriate form as
designated by Nasdaq.
(f) Substitution Listing Fee
An issuer that implements a Substitution Listing Event shall pay a
fee of $7,500 to The Nasdaq Stock Market, Inc. and submit the
appropriate form as designated by Nasdaq. Notwithstanding the
foregoing, this substitution listing fee shall not apply to securities
that are listed on a national securities exchange and not designated by
Nasdaq as Nasdaq national market system securities.
[[Page 55645]]
4520. The Nasdaq SmallCap Market
(a)-(c) No change.
(d) Record-Keeping Fee.
An issuer that makes a change such as a change to its name, the par
value or title of its security, or its symbol shall pay a fee of $2,500
to The Nasdaq Stock Market, Inc. and submit the appropriate form as
designated by Nasdaq.
(e) Substitution Listing Fee.
An issuer that implements a Substitution Listing Event shall pay a
fee of $7,500 to The Nasdaq Stock Market, Inc. and submit the
appropriate form as designated by Nasdaq. Notwithstanding the
foregoing, this substitution listing fee shall not apply to securities
that are listed on a national securities exchange and not designated by
Nasdaq as Nasdaq national market system securities.
* * * * *
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, as
amended, and discussed any comments it received on the proposal. 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
The purpose of this rule filing is to amend NASD Rules 4200(a),
4310, 4320, 4510, and 4520 to establish a fee for substitution listing
events and a corresponding notice requirement. Substitution listing
events include the implementation of a reverse stock split, an issuer's
re-incorporation or a change in the issuer's place of organization
(including a change in the issuer's state of incorporation), the
reclassification or exchange of an issuer's listed shares for another
security, formation of a holding company that replaces a listed
company, the listing of a new class of securities in substitution for a
previously listed class of securities, or any technical change where
the shareholders of the original company receive a share-for-share
interest in the new company without a change in their equity position
or rights.
When Nasdaq learns about a substitution listing event for a Nasdaq-
listed company, Nasdaq must implement technical changes to its trading,
market data, and internal monitoring systems. Nasdaq disseminates
certain substitution listing event information about Nasdaq-listed
companies to other markets and market participants through a
subscription service.\6\ Nasdaq-listed issuers that are designated by
Nasdaq pursuant to NASD Rule 4400 Series as Nasdaq national market
system securities (``Nasdaq designated securities'') are contacted
directly by Nasdaq to verify the details of the substitution listing
events. Under the NASD Rule 4400 Series, the securities of certain
Nasdaq-listed issuers that are also listed on a national securities
exchange are not designated by Nasdaq as Nasdaq national market system
securities (``Nasdaq non-designated securities'').\7\ Nasdaq does not
contact the issuers of Nasdaq non-designated securities directly to
verify the details of substitution listing events. Instead, for Nasdaq
non-designated securities, Nasdaq receives electronic reports from the
national securities exchange that designated the securities as national
market system securities \8\ under that market's national market system
plan. Nasdaq uses these reports to make the necessary changes to its
systems.
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\6\ Nasdaq provides advance notification of certain substitution
listing events, such as reverse stock splits, to member firms,
market data vendors, service bureaus, and other subscribers of its
daily list service. Notification of the substitution listing event
information on Nasdaq's daily list service is subsequently provided
to users of Nasdaq's systems through a fifth letter identifier, such
as a ``D,'' that is temporarily added to an issuer's trading symbol.
Re-incorporations or changes to the place of organization are
recorded in Nasdaq's internal database, but are not disseminated to
market participants.
\7\ NASD IM-4400 provides that Nasdaq shall not exercise its
authority under the NASD Rule 4400 Series separately to designate
the securities that are listed on a national securities exchange and
subsequently permitted to list on the Nasdaq National Market as
Nasdaq national market system securities within the meaning of
Section 11A of the Act, 15 U.S.C. 78k-1, or the rules thereunder.
\8\ For example, Nasdaq uses electronic reports from the New
York Stock Exchange (``NYSE'') to verify the details of the
substitution listing events for NYSE-listed securities that are
subsequently also listed on Nasdaq but are still designated by the
NYSE as national market system securities pursuant to the NYSE's
national market system plan. The consolidated reports from the NYSE
contain information regarding reverse stock splits, the substitution
of a previously listed class of securities for another class, the
creation of a holding company, and the reincorporation or change to
the place of organization of an issuer.
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Nasdaq has dedicated specific resources to manage the process for
collecting, verifying, and implementing the changes related to
substitution listing events of Nasdaq-listed securities so that such
changes are accurately and promptly reflected in its trading, market
data, and internal monitoring systems. To support these activities,
Nasdaq proposes to establish a fee of $7,500 per event for issuers of
Nasdaq designated securities. Since the costs associated with managing
the substitution listing events for Nasdaq non-designated securities is
reduced through Nasdaq's use of consolidated reports from other
markets, the proposed rule would waive the substitution listing event
fee for these particular issuers.\9\ Waiving these fees also would
eliminate the possibility that these issuers would be charged twice for
the same substitution listing event since, as discussed below, other
markets charge their listed companies a fee for substitution listing
events.
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\9\ Although the proposed rule would waive the substitution-
listing event fee for these Nasdaq issuers, Nasdaq represents that
the lack of such fees from these issuers would not impair Nasdaq's
ability to fulfill its regulatory responsibilities and enforce its
rules. Furthermore, although Nasdaq relies on consolidated reports
in managing the substitution listing events process for these Nasdaq
issuers, Nasdaq represents that its rules must be ``designed to
produce fair and informative quotations, to prevent fictitious or
misleading quotations, and promote orderly procedures for
collecting, distributing, and publishing quotations' pursuant to
Section 15A(b)(11) of the Act, 15 U.S.C. 78o-3(b)(11).
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Under the proposed rule change, issuers of both Nasdaq designated
and Nasdaq non-designated securities would be required to notify Nasdaq
about a substitution listing event no later than 15 days prior to the
implementation of the event, in order to provide Nasdaq with sufficient
time to implement the technical changes into its systems. For a re-
incorporation or a change to an issuer's place of organization,
however, Nasdaq proposes to require issuers to notify Nasdaq as soon as
practicable after the event has been implemented since these
substitution listing events may be contingent on shareholder approval
and would not require immediate changes to Nasdaq's systems.
Other markets also assess a fee for substitution listing events.
For example, both the NYSE and the American Stock Exchange (``Amex'')
charge a fee for substitution listing events. The NYSE charges a
``Reduced Initial Fee'' of $15,000 for substitution events.\10\ Under
the NYSE's rules, the $15,000 fee applies only if the change in the
company's status is technical in nature and the shareholders of the
original company receive a share-for-share interest in the new company
without any change in their equity position or rights. If the
substitution event does not
[[Page 55646]]
comply with these requirements, the full initial listing fees would
apply. Amex charges $5,000 for each substitution listing event.\11\ For
Amex issuers, a substitution listing fee applies in cases where, after
the original listing, a change is made by charter amendment or
otherwise by which shares listed on Amex are reclassified, or changed
into or exchanged for another security, either with or without a change
in par value. Amex also charges a substitution listing fee whenever a
company implements a reverse stock split, re-incorporates, lists a new
class of securities in substitution of a previously-listed class of
securities, or otherwise engages in a transaction which would require
the company to file a new Form 8-A with the Commission in regard to the
previously listed security.
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\10\ See NYSE Listed Company Manual Section 902.02.
\11\ See AMEX Company Guide Sections 142 and 305.
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The proposed rule change also would make minor amendments to NASD
Rules 4310(c)(20), 4320(e)(18), 4510(e), and 4520(d) to clarify that
Nasdaq-listed companies that are subject to a recordkeeping fee must
submit the appropriate form to Nasdaq within 10 days after the change.
This proposed change simply reflects the current practice of issuers.
2. Statutory Basis
Nasdaq believes that the proposed rule change, as amended, is
consistent with the provisions of Section 15A of the Act,\12\ in
general, and with Section 15A(b)(5) of the Act,\13\ in particular, in
that the proposed rules provide for the equitable allocation of
reasonable dues, fees, and other charges among members and issuers and
other persons using any facility or system which Nasdaq operates or
controls. The proposed rule change is reasonable because the fee is
competitive with similar fees charged by other markets. The proposed
rule is also equitable because it will apply to all similarly situated
Nasdaq issuers on an equal basis. The exemption from the proposed fee
requirement for issuers of Nasdaq non-designated securities is
equitable and reasonable because it recognizes the reduced costs for
managing substitution listing events for such issuers. The exemption is
also consistent with the provisions of Section 15A of the Act \14\ in
that it promotes competition among exchange markets.
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\12\ 15 U.S.C. 78o-3.
\13\ 15 U.S.C. 78o-3(b)(5).
\14\ 15 U.S.C. 78o-3.
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The proposed clarifications to NASD Rules 4310(c)(20), 4320(e)(18),
4510(e), and 4520(d) regarding the requisite form to be submitted in
connection with payment for a recordkeeping fee is consistent with
Section 15A of the Act,\15\ in general, and furthers the objectives of
Section 15A(b)(6) of the Act,\16\ in particular in that it is designed
to foster cooperation and coordination with persons engaged in
regulating and processing information with respect to, and facilitating
transactions in securities, to remove impediments to a free and open
market and a national market system, and, in general, to protect
investors and the public interest. Nasdaq believes that the proposed
rule change would benefit issuers and issuers' counsel by providing
additional transparency with respect to the process by which issuers
request changes covered by the recordkeeping fee.
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\15\ Id.
\16\ 15 U.S.C. 78o-3(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 would result
in 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
Written comments were neither solicited nor received.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
Within 35 days of the date of publication of this notice in the
Federal Register or within such longer period (i) as the Commission may
designate up to 90 days of such date if it finds such longer period to
be appropriate and publishes its reasons for so finding or (ii) as to
which NASD consents, the Commission will:
(A) by order approve such proposed rule change, or
(B) institute proceedings to determine whether the proposed rule
change should be disapproved.
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 Number SR-NASD-2004-162 on the subject line.
Paper Comments
Send paper comments in triplicate to Jonathan G. Katz,
Secretary, Securities and Exchange Commission, 100 F Street, NE.,
Washington, DC 20549-9303.
All submissions should refer to File Number SR-NASD-2004-162. 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 Commission's 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 such
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-2004-162 and should be submitted on or before October 13, 2005.
For the Commission, by the Division of Market Regulation,
pursuant to delegated authority.\17\
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\17\ 17 CFR 200.30-3(a)(12).
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Jonathan G. Katz,
Secretary.
[FR Doc. 05-18897 Filed 9-21-05; 8:45 am]
BILLING CODE 8010-01-P
