Self-Regulatory Organizations; The NASDAQ Stock Market LLC; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change and Amendment No. 1 Thereto to Create the Nasdaq Global Select Market and Rename the Nasdaq National Market, 29195-29205 [06-4689]
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Federal Register / Vol. 71, No. 97 / Friday, May 19, 2006 / Notices
For the Commission, by the Division of
Market Regulation, pursuant to delegated
authority.8
Jill M. Peterson,
Assistant Secretary.
[FR Doc. E6–7637 Filed 5–18–06; 8:45 am]
initial listing standards.6 Nasdaq will
implement the proposed rule on July 1,
2006.
The text of the proposed rule change
is available on Nasdaq’s Web site
(https://www.nasdaq.com), at Nasdaq’s
principal office, and at the
Commission’s Public Reference Room.
The text of the proposed rule change is
included below. Proposed new language
is italicized; deletions are [bracketed].
*
*
*
*
*
BILLING CODE 8010–01–P
3350. Short Sale Rule
relating to the operation and
administration of the MSRB.
It is therefore ordered, pursuant to
Section 19(b)(2) of the Act,7 that the
proposed rule change (SR–MSRB–2006–
02) be, and hereby is, approved.
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–53799; File No. SR–
NASDAQ–2006–007]
Self-Regulatory Organizations; The
NASDAQ Stock Market LLC; Notice of
Filing and Immediate Effectiveness of
a Proposed Rule Change and
Amendment No. 1 Thereto to Create
the Nasdaq Global Select Market and
Rename the Nasdaq National Market
May 12, 2006.
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 April 17,
2006, The NASDAQ Stock Market LLC
(‘‘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. Nasdaq has filed
this 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. On May 8, 2006, Nasdaq
filed Amendment No. 1 to the proposed
rule change.5 The Commission is
publishing this notice to solicit
comments on the proposed rule change
from interested persons.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
Nasdaq proposes to rename the
Nasdaq National Market as the Nasdaq
Global Market and to create the Nasdaq
Global Select Market, a new tier within
the Nasdaq Global Market with higher
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7 15
U.S.C. 78s(b)(2).
CFR 200.30–3(a)(12).
1 15 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 Amendment No. 1 replaced the original filing in
its entirety.
8 17
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(a) With respect to trades executed on
Nasdaq, no member shall effect a short
sale for the account of a customer or for
its own account in a Nasdaq [National]
Global Market security at or below the
current best (inside) bid displayed in
the Nasdaq Market Center when the
current best (inside) bid is below the
preceding best (inside) bid in the
security. For purposes of this rule, the
term ‘‘customer’’ includes a nonmember broker-dealer.
(b)–(g) No change.
(h)(1) A member shall be permitted,
consistent with its quotation
obligations, to execute a short sale for
the account of an options market maker
that would otherwise be in
contravention of this Rule, if:
(A) The options market maker is
registered with a qualified options
exchange as a qualified options market
maker in a stock options class on a
Nasdaq [National] Global Market
security or an options class on a
qualified stock index; and
(B) No change.
(2) For purposes of this paragraph:
(A)(i) An ‘‘exempt hedge transaction,’’
in the context of qualified options
market makers in stock options classes,
shall mean a short sale in a Nasdaq
[National] Global Market security that
was effected to hedge, and in fact serves
to hedge, an existing offsetting options
position or an offsetting options
position that was created in a
transaction(s) contemporaneous with
the short sale,1 provided that when
establishing the short position the
options market maker is eligible to
receive(s) good faith margin pursuant to
Section 220.12 of Regulation T under
the Act for that transaction.
6 In various places in the purpose section, Nasdaq
clarified that the higher listing standards apply to
initial listing standards. Telephone conversation
between Arnold Golub, Associate Vice President,
Nasdaq, and Mia Zur, Special Counsel, Division of
Market Regulation (‘‘Division’’), Commission, on
May 10, 2006.
1 The phrase contemporaneously established
includes transactions occurring simultaneously as
well as transactions occurring within the same brief
period of time.
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29195
(ii) A ‘‘exempt hedge transaction,’’ in
the context of qualified options market
makers in stock index options classes,
shall mean a short sale in a Nasdaq
[National] Global Market security that
was effected to hedge, and in fact serves
to hedge, an existing offsetting stock
index options position or an offsetting
stock index options position that was
created in a transaction(s)
contemporaneous with the short sale,
provided that:
a.–c. No change.
(iii) No change.
(B) A ‘‘qualified options market
maker’’ shall mean an options market
maker who has received an appointment
as a ‘‘qualified options market maker’’
for certain classes of stock options on
Nasdaq [National] Global Market
securities and/or index options on
qualified stock indexes pursuant to the
rules of a qualified options exchange.
(C) No change.
(D) A ‘‘qualified stock index’’ shall
mean any stock index that includes one
or more Nasdaq [National] Global
Market securities, provided that more
than 10% of the weight of the index is
accounted for by Nasdaq [National]
Global Market securities and provided
further that the qualification of an index
as a qualified stock index shall be
reviewed as of the end of each calendar
quarter, and the index shall cease to
qualify if the value of the index
represented by one or more Nasdaq
[National] Global Market securities is
less than 8% at the end of any
subsequent calendar quarter.
(E)–(F) No change.
(i)(1) No change.
(2) For purposes of this paragraph, an
‘‘exempt hedge transaction’’ shall mean
a short sale in a Nasdaq [National]
Global Market security that was effected
to hedge, and in fact serves to hedge, an
existing offsetting warrant position or an
offsetting warrant position that was
created in a transaction(s)
contemporaneous with the short sale.2
Notwithstanding any other provision of
this paragraph, any transaction
unrelated to normal warrant market
making activity, such as index arbitrage
or risk arbitrage that in either case is
independent of a warrant market
maker’s making functions, with not be
considered an ‘‘exempt hedge
transaction.’’
(3)–(4) No change.
(j)–(k) No change.
2 The phrase contemporaneously established
includes transactions occurring simultaneously as
well as transactions occurring within the same brief
period of time.
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requirements of and are listed as Nasdaq
National Market securities.] ‘‘Nasdaq
Global Market’’ or ‘‘NGM’’ is a distinct
tier of Nasdaq comprised of two
segments: the Nasdaq Global Market
and the Nasdaq Global Select Market.
The Nasdaq Global Market is the
successor to the Nasdaq National
Market.
(26) ‘‘Nasdaq [National] Global Market
security’’ or ‘‘[NNM] NGM security’’
measn any security listed on Nasdaq
which (1) satisfies all applicable
requirements of the Rule 4300 Series
and substantially meets the criteria set
forth in the Rule 4400 Series; (2) is a
right to purchase such security; (3) is a
warrant to subscribe to such security; or
(4) is an index warrant which
substantially meets the criteria set forth
in Rule 4420.
(27) No change.
(28) ‘‘Nasdaq Capital Market security’’
means any security listed on The
Nasdaq Capital Market which (1)
satisfies all applicable requirements of
the Rule 4300 Series but that is not a
Nasdaq [National] Global Market
security; (2) is a right to purchase such
security; or (3) is a warrant to subscribe
to such security.
(29) [Reserved.] ‘‘Nasdaq Global
Select Market’’ or ‘‘NGSM’’ security is a
segment of the Nasdaq Global Market
comprised of NGM securities that met
the requirements for initial inclusion
contained in Rules 4425, 4426 and
4427.
(3) [Reserved.] ‘‘Nasdaq Global Select
Market security’’ or ‘‘NGSM security’’
means any security listed on Nasdaq
and included in the Nasdaq Global
Select segment of the Nasdaq Global
Market.
(31)–(39) No change.
(b)–(c) No change.
these requirements, but that are not
listed on the Nasdaq [National] Global
Market, are listed on the Nasdaq Capital
Market.
(a)–(b) No change.
(c) In addition to the requirements
contained in paragraph (a) and (b)
above, and unless otherwise indicated,
a security shall satisfy the following
criteria for listing on Nasdaq:
(1)–(8) No change.
(9)(A)–(b) No change.
(C) In the case of index warrants, the
criteria established in the Rule 4400
Series for Nasdaq [National] Global
Market securities shall apply.
(10)–(30) No change.
(d) No change.
4350–1. Qualitative Listing
Requirements for Nasdaq [National
Market and Nasdaq Capital Market]
Issuers Except for Limited Partnerships
(a)–(h) No change.
4200. Definitions
4305. Transition of Securities Included
on the Market Operated by The Nasdaq
Stock Market, Inc.
(a)–(c) No change.
(d) Any issuer listed on the Nasdaq
[National] Global Market or the Nasdaq
Capital Market pursuant to paragraphs
(a) or (b) above that had received any
notice or was subject to any Rule of The
Nasdaq Stock Market, Inc. as a facility
of the NASD shall be treated as though
such notice or such Rule was a notice
from or a rule of Nasdaq in computing
applicable times frames.
(a) For purposes of the Rule 4000
Series, unless the context requires
otherwise:
(1)–(24) No change.
(25) [‘‘Nasdaq National Market’’ or
‘‘NNM’’ distinct tier of Nasdaq
comprised of securities that meet the
4310. Listing Requirements for
Domestic and Canadian Securities
To qualify for listing in Nasdaq, a
security of a domestic or Canadian
issuer shall satisfy all applicable
requirements contained in paragraphs
(a), (b), and (c) hereof. Issuers that meet
IM–3350. Short Sale Rule
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(a)(1) In developing a Short Sale Rule
for Nasdaq [National] Global Market
securities, Nasdaq has adopted an
exemption to the Rule for certain market
making activity. This exemption is an
essential component of the Rule because
bona fide market making activity is
necessary and appropriate to maintain
continous, liquid markets in Nasdaq
[National] Global Market securities.
Rule 3350(c)(1) states that short selling
prohibitions shall not apply to sales by
registered Nasdaq market makers in
connection with bona fide market
making activity and specifies that
transactions unrelated to normal market
making activity, such as index arbitrage
and risk arbitrage that are independent
from a member’s market making
functions, will not be considered as
bona fide market making. Thus two
standards are to be applied: One must
be a registered Nasdaq market maker
and one must engage in ‘‘bona fide’’
market making activity to take
advantage of this exemption. With this
interpretation, Nasdaq wishes to clarify
for members some of the factors that
will be taken into consideration when
reviewing market activity that may not
be deemed to be bona fide market
making activity and therefore would not
be exempted from the Rule’s
application.
(2)—(3) No change.
(b) With respect to trades executed on
or reported to Nasdaq, Rule 3350
requires that no member shall effect a
short sale for the account of a customer
or for its own account in a Nasdaq
[National] Global Market security at or
below the current best (inside) bid
displayed in the Nasdaq Market Center
when the current best (inside) bid is
below the proceeding best (inside) bid
in the security. For purposes of this
rule, the term ‘‘customer’’ includes a
non-member broker-dealer. Nasdaq has
determined that in order to effect a
‘‘legal’’ short sale when the current best
bid is lower that the preceding best bid
the short sale must be executed at a
price of at least $0.01 above the current
inside bid when the current inside
spread is $0.01 or greater. The last sale
report for such a trade would, therefore,
be above the inside bid by at least $0.01.
(c)–(d) No change.
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4320. Listing Requirements for NonCanadian Foreign Securities and
American Depositary Receipts
To qualify for listing on Nasdaq, a
security of non-Canadian foreign issuer,
an American Depositary Receipt (ADR)
or similar security issued in respect of
a security of a foreign issuer shall satisfy
the requirements of paragraphs (a), (b),
and (e) of this Rule. Issuers that meet
these requirements, but that are not
listed on the Nasdaq [National] Global
Market, are listed on the Nasdaq Capital
Market.
(a) A security of a foreign issuer, an
ADR or similar security issued in
respect of a security of a foreign issuer,
other than a newly issued security, shall
be considered for listing provided that
it is:
(1)–(2) No change.
(b)–(f) No change.
4350. Qualitative Listing Requirements
for Nasdaq [National Market and
Nasdaq Capital Market] Issuers Except
for Limited Partnerships
(a)–(n) No change.
IM–4390. Impact of Non-Designation of
Dually Listed Securities
To foster competition among markets
and further the development of the
national market system following the
repeal of NYSE Rule 500, Nasdaq shall
permit issuers whose securities are
listed on the New York Stock Exchange
to apply also to list those securities on
the Nasdaq [National] Global Market
[(‘‘NNM’’)] (‘‘NGM’’). Nasdaq shall make
an independent determination of
whether such issuers satisfy all
applicable listing requirements and
shall require issuers to enter into a dual
listing agreement with Nasdaq.
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Federal Register / Vol. 71, No. 97 / Friday, May 19, 2006 / Notices
While Nasdaq shall certify such
dually listed securities for listing on the
[NGM] NGM, Nasdaq shall not exercise
its authority under Rule 4390 separately
to designate or register such dually
listed securities as Nasdaq national
market system securities within the
meaning of Section 11A of the Act or
the rules thereunder. As a result, these
securities, which are already designated
as national market system securities
under the Consolidated Quotation
Service (‘‘CQS’’) and Consolidated Tap
Association national market system
plans (‘‘CQ and CTA Plans’’), shall
remain subject to those plans and shall
not become subject to the Nasdaq UTP
Plan, the national market system plan
governing securities designated by
Nasdaq. For purposes of the national
market system, such securities shall
continue to trade under their current
one, two, or three-character ticker
symbol. Nasdaq shall continue to send
all quotations and transaction reports in
such securities to the processor for the
CTA Plan. In addition, dually listed
issues that are currently eligible for
trading via the Intermarket Trading
System (‘‘ITS’’) shall remains so and
continue to trade on the Nasdaq
Intermarket trading platform as they do
today.
Through this interpretation, Nasdaq
also resolves any potential conflicts that
arise under Nasdaq rules as result of a
single security being both a security
object to the CQ and CTA Plans (a ‘‘CQS
Security’’), which is subject to one set
of rules, and a listed [NNM] NGM
security, which is subject to a different
set of rules. Specifically, dually listed
securities shall be Nasdaq securities for
purposes of rules related to listing and
delisting, and shall remain as CQS
securities under all other Nasdaq rules.
Treating dually listed securities as CQS
securities under Nasdaq rules is
consistent with their continuing status
as CQS securities under the CTA, CQ,
and ITS national market system, as
described above. This interpretation
also preserves the status quo and avoids
creating potential confusion for
investors and market participants that
currently trade these securities on
Nasdaq.
For example, Nasdaq shall continue to
honor the trade halt authority of the
primary market under the CQ and CT
Plans. Nasdaq Rule 4120(a)(2) and (3)
governing CQS securities shall apply to
dually listed securities, whereas Nasdaq
Rule 4120(a)(1), (4), (5), (6), and (7) shall
not. SEC Rule 10a–1 governing short
sales of CQS securities shall continue to
apply to dually listed securities, rather
than Nasdaq Rule 3350 governing short
sales of Nasdaq-listed securities. Market
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makers in dually listed securities shall
retain all obligations imposed by the
Nasdaq Rule 5200 Series regarding CQS
securities rather than assuming the
obligations appurtenant to Nasdaq-listed
securities. The fees applicable to CQS
securities set forth in Nasdaq Rule 7010
shall continue to apply to dually listed
issues.
4400. NASDAQ [National] Global
Market
4410. Applications for Listing
(a) Application for listing on the
Nasdaq [National] Global Market shall
be on a form supplied by Nasdaq and
signed by a corporate officer of the
issuer. Compliance with the listing
criteria will be determined on the basis
of information filed with the
appropriate regulatory authority and the
records of Nasdaq as of the application
date. Nasdaq may require the issuer to
submit such other information as is
relevant to a listing determination,
including information required by
paragraph (c) below.
(b) Upon approval of a listing
application, Nasdaq shall certify to the
Commission, pursuant to Section 12(d)
of the Act and the rules thereunder, that
it has approved the security for listing
and registration. Listing can commence
only upon effectiveness of the security’s
registration pursuant to Section 12(d).
(c) The security of an issuer that
applies for listing on the Nasdaq Global
Market and meets the requirements
contained in Rules 4425 through 4427,
shall be listed on the Nasdaq Global
Select Market.
(d) Issuers that are listed on Nasdaq
pursuant to the Rule 4300 Series but
that are not listed on the Nasdaq
[National] Global Market, are listed on
the Nasdaq Capital Market.
4420. Quantitative Listing Criteria
In order to be listed on the Nasdaq
[National] Global Market, an issuer shall
be required to substantially meet the
criteria set forth in paragraphs (a), (b),
(c), (d), (e), (f), (g), (h), (i), (j), (k) or (l)
below.
(a)–(e) No change.
(f) Other Securities
(1) No change.
(2) Issuers of securities listed
pursuant to this paragraph (f) must be
listed on the Nasdaq [National] Global
Market or the New York Stock Exchange
(NYSE) or be an affiliate of a company
listed on the Nasdaq [National] Global
Market or the NYSE; provided, however,
that the provisions of Rule 4450 will be
applied to sovereign issuers of ‘‘other’’
securities on a case-by-case basis.
(3) No change.
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29197
(g) Nasdaq will consider listing on the
Nasdaq [National] Global Market
Selected Equity-linked Debt Securities
(SEEDS) that generally meet the criteria
of this paragraph (g). SEEDS are limitedterm, non-convertible debt securities of
an issuer where the value of the debt is
based, at least in part, on the value of
another issuer’s common stock or nonconvertible preferred stock (or
sponsored American Depositary
Receipts (ADRs) overlying such equity
securities).
(1) Issuer Listing Standards
(A) The issuer of a SEEDS must be an
entity that:
(i) Is listed on the Nasdaq [National]
Global Market or the New York Stock
Exchange (NYSE) or is an affiliate of a
company listed ont he Nasdaq
[National] Global Market or the NYSE;
provided, however, that the provisions
of Rule 4450 will be applied to
sovereign issuers of SEEDS on a case-bycase basis; and
(ii) No change.
(B) In addition, the market value of a
SEEDS offering, when combined with
the market value of all other SEEDS
offerings previously completed by the
issuer and traded on the Nasdaq
[National] Global Market or another
national securities exchange, may not be
greater than 25 percent of the issuer’s
net worth at the time of issuance.
(2) No change.
(3) Minimum Standards Applicable to
the Linked Security
An equity security on which the value
of the SEEDS is based must:
(A) No change.
(B) Be issued by a company that has
a continuous reporting obligation under
the Act, and the security must be listed
on the Nasdaq [National] Global Market
or another national securities exchange
and be subject to last sale reporting; and
(C) No change.
(4)–(5) No change.
(h) Units
(1) Initial and Continued Listing
Requirements.
(a) No change.
(b) All debt components of a unit, if
any, shall meet the following
requirements:
(i) No change.
(ii) The issuer of the debt security
must have equity securities listed on the
Nasdaq [National] Global Market; and
(iii) No change.
(c) No change.
(2) No change.
(3) Disclosure Requirements for Units.
Each Nasdaq [National] Global Market
issuer of units shall include in its
prospectus or other offering document
used in connection with any offering of
securities that is required to be filed
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(d) At any time an issuer may apply
to transfer a security listed on the
Nasdaq Capital Market to the Nasdaq
Global Select Market. Such an
application will be approved and
affected as soon as practicable if the
security meets the requirements for
initial listing contained in Rule 4426.
An issuer transferring from the Nasdaq
Capital Market to the Nasdaq Global
Select Market will be required to pay the
applicable fees contained in Rule 4510.
(e) After initial inclusion on the
Nasdaq Global Select Market, as issuer
will remain on the Nasdaq Global Select
Market provided it continues to meet the
applicable requirements of the Rule
4300 and 4400 Series, including the
qualitative requirements of Rule 4350
and IM–4300.
(f) Notwithstanding any provision to
the contrary, the security of any issuer
that is non-compliant with a qualitative
listing requirement that does not
provide for a grace period, or where
Nasdaq staff has raised a public interest
concern, will not be permitted to
transfer to the Global Steel Market until
the underlying deficiency is resolved. In
addition, any security that is below a
quantitative continued listing
requirement for the Nasdaq Global
Market, even if the issuer has not been
below the requirement for a sufficient
period of time to be continued noncompliant, and any issuer in a grace or
compliance period with respect to a
4425. Nasdaq Global Select Market
quantitative listing requirement, will not
(a) An issuer that applies for listing on be allowed to transfer from the Nasdaq
the Nasdsaq Global Market and meets
Global or Capital Markets to the Nasdaq
the requirements for initial listing
Global Select Market until the
contained in Rule 4426 shall be listed
underlying deficiency is resolved. Nor
on the Nasdaq Global Select Market.
will any issuer before a Nasdaq Listing
(b) Each October, beginning in
Qualifications Panel be allowed to
October 2007, Nasdaq will review the
transfer to the Global Select Market
qualifications of all securities listed on
until the underlying deficiency is
the Nasdaq Global Market that are not
resolved. An issuer that is in a grace or
included in the Nasdaq Global Select
compliance period with respect to a
Market. Any security that meets the
qualitative listing standard, such as the
requirements for initial listing on the
cure period for filling an audit
Nasdaq Global Select Market contained
committee vacancy, will be allowed to
in Rule 4426 at the time of this review
transfer to the Global Select Market,
will be transferred to the Global Select
subject to the continuation of that grace
Market the following January, provided
period.
it meets the continued listing criteria at
IM–4425 Launch for the Nasdaq Select
that time. An issuer will not owe any
Market
application or entry fees in connection
with such a transfer.
In connection with the initial launch
of the Nasdaq Global Select Market in
(c) At any time, an issuer may apply
July 2006, Nasdaq will review all
to transfer a security listed on the
issuers’ qualifications and assign
Nasdaq Global Market to the Nasdaq
qualified Global Market companies to
Global Select Market. Such an
the new Global Select segment. In
application will be approved and
addition, qualified Capital Market
affected as soon as practicable if the
companies will be given the opportunity
security meets the requirements for
to be included in the new segment. In
initial listing contained in Rule 4226.
connection with this initial transfer to
An issuer will not owe any application
the Global Select Market, Nasdaq will
or entry fees in connection with such a
begin to make its assessment using the
transfer.
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with the Commission under the federal
securities laws and the rules and
regulations promulgated thereunder a
statement regarding any intention to
delist the units immediately after the
minimum inclusion period. The issuer
of a unit shall further provide
information regarding the terms and
conditions of the components of the
unit (including information with respect
to any original issue discount or other
significant tax attributes of any
component) and the ratio of the
components comprising the unit. An
issuer shall also disclose when a
component of the unit is separately
listed on Nasdaq. These disclosures
shall be made on the issuer’s Web site,
or if it does not maintain a Web site, in
its annual report provided to unit
holders. An issuer shall also
immediately publicize through, at a
minimum, a public announcement
through the news media, any change in
the terms of the unit, such as changes
to the terms and conditions of any of the
components (including changes with
respect to any original issue discount or
other significant tax attributes of any
component), or to the ratio of the
components within the unit. Such
public notification shall be made as
soon as practicable in relation to the
effective date of the change.
(i)–(m) No change.
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most recent financial data filed as of
April 28, 2006, and market data as of
April 28, 2006. Nasdaq will treat as an
IPO any company that initially listed as
an IPO since May 1, 2005 for purposes
of the liquidity tests, because these
companies would have insufficient
market data to establish a 12-month
trading history and may have had
insufficient time to satisfy the market
value of public float requirement
applicable to other companies.
Similarly, for purposes of the market
capitalization requirements of Rules
4426(c)(2) and (c)(3), any company that
initially listed as an IPO since May 1,
2005 must have the appplicable average
market capitalization from the date of
listing. Nasdaq also notes that certain
Nasdaq-listed issuers that qualify to
initially list on the New York Stock
Exchange (NYSE) will not be eligible to
list on the Global Select Market. Nasdaq
will allow (but not require) any Nasdaqlisted issuer that meets the NYSE initial
listing standards as of July 2006 but that
does not qualify for the Global Select
segment when it is adopted to be
included in the Global Select Market,
subject to a grace period until January
1, 2008 to achieve compliance with all
listing criteria for the Global Select
Market. Any issuer that avails itself of
this grace period that has not achieved
compliance with all listing criteria for
the Global Select Market by January 1,
2008 will be moved to the Nasdaq
Global Market. In addition, any issuer
that avails itself of this grace period will
remain subject to delisting in the event
it fails to satisfy any of the continued
listing requirements for the Nasdaq
Global Market.
4426. Nasdaq Global Select Market
Listing Requirements
(a) For inclusion in the Nasdaq Global
Select Market, an issuer must meet the
requirements of paragraphs (b), (c), and
(d) of this rule, and all applicable
requirements of the Rule 4300 and 4400
Series, including the qualitative
requirements of Rule 4350 and IM–4300.
Rule 4427 provides guidance about
computations made under this Rule
4426.
(b) Liquidity Requirements
(1) The security must demonstrate
either:
(A) (i) a minimum of 550 beneficial
shareholders, and
(ii) an average monthly trading
volume over the prior 12 months of at
least 1,100,000 shares per months; or
(B) a minimum of 2,200 beneficial
shareholders; or
(C) a minimum of 450 beneficial
shareholders, in the case of: (i) an issuer
listing in connection with its emergence
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from a bankruptcy or reorganization
proceeding; or (ii) an issuer that is
affiliated with another company listed
on the Global Select Market.
(2) The security must have at least
1,250,000 publicly held shares; and
(3) The publicly held shares must
have either:
(A) a market value of at least $110
million; or
(B) a market value of at least $100
million, if the issuer has stockholders’
equity of at least $110 million; or
(C) a market value of at least $70
million in the case of: (i) an issuer
listing in connection with its initial
public offering; (ii) an issuer that is
affiliated with, or a spin-off from,
another company listed on the Global
Select Market; and (iii) a closed end
management investment company.
(c) Financial Requirements. An issuer,
other than a closed end management
investment company, must meet the
requirements of one of subparagraphs
(1), (2) or (3) of this paragraph.
(1) The issuer must have:
(A) aggregate income from continuing
operations before income taxes of at
least $11 million over the prior three
fiscal years;
(B) positive income from continuing
operations before income taxes in each
of the prior three fiscal years; and
(C) at least $2.2 million income from
continuing operations before income
taxes in each of the two most recent
fiscal years; or
(2) The issuer must have:
(A) aggregate cash flows of at least
$27.5 million over the prior three fiscal
years;
(B) positive cash flows in each of the
prior three fiscal years; and
(C) both:
(i) average market capitalization of at
least $550 million over the prior 12
months; and
(ii) total revenue of at least $110
million in the previous fiscal year; or
(3) The issuer must have both:
(A) average market capitalization of
at least $850 million over the prior 12
months; and
(B) total revenue of at least $90
million in the previous fiscal year.
(d) Price. For inclusion in the Nasdaq
Global Select Market, an issuer not
listed on the Nasdaq Global Market
shall have a minimum bid price of $5
per share.
(e) Closed End Management
Investment Companies.
(1) A closed end management
investment company shall not be
required to meet paragraph (c) of this
Rule 4426.
(2) In lieu of the requirement in
paragraph (b)(3) of this Rule 4426, a
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closed end management investment
company that is listed concurrently with
other closed end management
investment companies that have a
common investment adviser (or whose
investment advisers are ‘‘affiliated
persons’’ as defined in the Investment
Company Act of 1940) (a ‘‘Fund
Family’’) shall be eligible if: (A) the total
market value of publicly held shares in
such Fund Family is at least $220
million; (B) the average market value of
publicly held shares for all funds in the
Fund Family is $50 million; and (C)
each fund in the Fund Family has a
market value of publicly held shares of
at least $35 million.
(f) Other Classes of Securities. If the
common stock of an issuer is included
in the Nasdaq Global Select Market, any
other security of that same issuer, such
as other classes of common or preferred
stock, that qualify for listing on the
Nasdaq Global Market shall also be
included in the Global Select Market.
Rule 4427. Computations and
Definitions
(a) In computing the number of
publicly held shares for purposes for
Rule 4426(b), Nasdaq will not consider
shares held by an officer, director or
10% shareholder of the issuer.
(b) In calculating income from
continuing operations before income
taxes for purposes of Rule 4426(c)(1),
Nasdaq will rely on an issuer’s financial
information as filed with the
Commission in the issuers’s most recent
periodic report and/or registration
statement.
(c) In calculating cash flows for
purposes of Rule 4426(c)(2), Nasdaq will
rely on the net cash provided by
operating activities, as reported in the
issuer’s financial information as filed
with the Commission in the issuer’s
most recent periodic report and/or
registration statement, excluding
changes in working capital or in
operating assets and liabilities.
(d) If an issuer does not have three
years of publicly reported financial
data, it may qualify under Rule
4426(c)(1) if it has:
(1) reported aggregate income from
continuing operations before income
taxes of at least $11 million; and
(2) positive income from continuing
operations before income taxes in each
of the reported fiscal years.
(e) If an issuer does not have three
years of publicly reported financial
data, it may qualify under Rule
4426(c)(2) if it has:
(1) reported aggregate cash flows of at
least $27.5 million; and
(2) positive cash flows in each of the
reported fiscal years.
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(f) A period of less than three months
shall not be considered a fiscal year,
even if reported as a stub period in the
issuer’s publicly reported financial
statements.
(g) For purposes of Rule 4426, an
issuer is affiliated with another
company if that other company, directly
or indirectly though one or more
intermediaries, controls, is controlled
by, or is under common control of the
issuer. Control, for these purposes,
means having the ability to exercise
significant influence. Ability to exercise
significant influence will be presumed
to exist where the parent or affiliated
company directly or indirectly owns
20% or more of the other company’s
voting securities, and also can be
indicated by representation on the
board of directors, participation in
policy making processes, material
intercompany transactions, interchange
of managerial personnel, or
technological dependency.
(h) In the case of an issuer listing in
connection with its initial public
offering, compliance with the market
capitalization requirements of Rules
4426(c)(2) and (c)(3) will be based on
the company’s market capitalization at
the time of listing.
4430. Limited Partnership Rollup
Listing Criteria
In addition to meeting the
quantitative criteria for Nasdaq
[National] Global Market listing, an
issuer that is formed as a result of a
limited partnership rollup transaction,
as defined in Rule 4200, must meet the
criteria set forth below in order to be
listed:
(a)–(b) No change.
4440. Registration Standards
(a) In addition to meeting the
quantitative criteria and the limited
partnership rollup criteria, if applicable,
for Nasdaq [National] Global Market
listing, the issue must also be:
(1) Registered under Section 12(b) of
the Act; or
(2) Subject to an exemption issued by
the Commission that permits the listing
of the security notwithstanding its
failure to be registered pursuant to
Section 12(b).
4450. Quantitative Maintenance
Criteria
After listing as a Nasdaq [National]
Global Market security, a security must
substantially meet the criteria set forth
in paragraphs (a) or (b), and (c), (d), (e),
(f), (g), (h) or (i) below to continue to
remain listed on the Nasdaq [National]
Global Market. A security maintaining
its listing under paragraph (b) need not
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also be in compliance with the
quantitative maintenance criteria in the
Rule 4300 series.
(a)–(c) No change.
(d) Rights and Warrants
Common stock of issuer must
continue to be listed on the Nasdaq
[National] Global Market.
(e)–(h) No change.
(i) Transfers between The Nasdaq
[National] Global and Capital Markets
For Bid Price Deficient Issuers
(1) If a [National] Global Market issuer
has not been deemed in compliance
prior to the expiration of the compliance
period for bid price provided in Rule
4450(e)(2), it may transfer to The
Nasdaq Capital Market, provided that it
meets all applicable requirements for
initial listing on the Capital Market set
forth in Rule 4310(c) or Rule 4320(e), as
applicable, other than the minimum bid
price requirement. A Nasdaq [National]
Global Market issuer transferring to The
Nasdaq Capital Market must pay the
entry fee set forth in Rule 4520(a). The
issuer may also request a hearing to
remain on The Nasdaq [National] Global
Market pursuant to the Rule 4800
Series.
(2) Following a transfer to The Nasdaq
Capital Market pursuant to paragraph
(1), a Nasdaq [National] Global Market
issuer will be afforded the remainder
any compliance period set forth in Rule
4310(c)(8)(D) or Rule 4320(e)(2)(E)(ii) as
if the issuer had been listed on The
Nasdaq Capital Market. The compliance
periods afforded by this rule and any
time spent in the hearing process will be
deducted in determining the length of
the remaining applicable compliance
periods on The Nasdaq Capital Market.
4510. The Nasdaq [National] Global
Market
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(a) Entry Fee
(1) An issuer that submits an
application to list any class of its
securities (not otherwise identified in
this Rule 4500 series) on the Nasdaq
[National] Global Market, shall pay to
Nasdaq a fee calculated on total sharers
outstanding, according to the following
schedule. This fee will be assessed on
the date of listing on the Nasdaq
[National] Global Market, except for
$5,000 which represents a nonrefundable, application fee, and which
must be submitted with the issuer’s
application.
the issuer’s most recent periodic report
or in more recent information held by
Nasdaq or, in the case of new issues, as
shown in the offering circular, required
to be filed with the issuer’s appropriate
regulatory authority. In the case of
foreign issuers, total shares outstanding
shall include only those shares issued
and outstanding in the United States.
(3) A closed-end management
investment company registered under
the Investment Company Act of 1940, as
amended (a ‘‘Closed-End Fund’’), that
submits an application for listing on the
Nasdaq [National] Global Market shall
pay to Nasdaq an entry fee of $5,000 (of
which $1,000 represents a nonrefundable, application fee).
(4) An issuer that submits an
application to list any class of rights on
the Nasdaq [National] Global Market,
shall pay, at the time of its application,
a non-refundable application fee of
$1,000 to Nasdaq.
(5)–(6) No Change.
(7) The fees described in this Rule
4510(a) shall not be applicable with
respect to any securities that (i) are
listed on another national securities
exchange but not listed on Nasdaq, or
(ii) are listed on the New York Stock
Exchange and Nasdaq, if the issuer of
such securities transfers their listing
exclusively to the Nasdaq [National]
Global Market.
(8) No change.
(b) Additional Shares
(1) The issuer of each class of security
that is a domestic issue which is listed
on the Nasdaq [National] Global Market
shall pay to Nasdaq the fee set forth in
subparagraph (2) below in connection
with the issuance of additional shares of
each class of listed security.
(2)–(5) No change.
(c) Annual Fee—Domestic and
Foreign Issues
(1) The issuer of each class of
securities (not otherwise identified in
this Rule 4500 Series) that is a domestic
or foreign issue listed on the Nasdaq
[National] Global Market shall pay to
Nasdaq an annual fee calculated on total
shares outstanding according to the
following schedule:
Nasdaq Capital Market fees for that
calendar year.
(4) Total shares outstanding means
the aggregate of all classes of equity
securities listed on the Nasdaq
[National] Global Market as shown in
the issuer’s most recent periodic report
required to be filed with the issuer’s
appropriate regulatory authority or in
more recent information held by
Nasdaq. In the case of foreign issuers,
total shares outstanding shall include
only those shares issued and
outstanding in the United States.
(5) No change.
(d) Annual Fee—American Depository
Receipts (ADRs) and Closed-End Funds
(1) The issuer of each class of
securities that is an ADR listed on The
Nasdaq [National] Global Market shall
pay to Nasdaq an annual fee calculated
on ADRs outstanding according to the
following schedule not to exceed
$30,000 per issuer:
Up to 10 million ADRs ...............
10+ to 25 million ADRs ..............
25+ to 50 million ADRs ..............
Over 50 million ADRs .................
$21,225
26,500
29,820
30,000
(2) ADRs outstanding means the
aggregate of all classes of ADRs listed on
the Nasdaq [National] Global Market as
shown in the issuer’s most recent
periodic report required to be filed with
the issuer’s appropriate regulatory
authority or in more recent information
held by Nasdaq.
(3) A Closed-End Fund listed on the
Nasdaq [National] Global Market shall
pay to Nasdaq an annual fee calculated
based on total shares outstanding
according to the following schedule:
Up to 5 million shares ................
5+ to 10 million shares ...............
10+ to 25 million shares .............
25+ to 50 million shares .............
50+ to 100 million shares ...........
100+ to 250 million shares .........
Over 250 million shares ..............
$15,000
17,500
20,000
22,500
30,000
50,000
75,000
(4) For the purpose of determining the
total shares outstanding, fund sponsors
may aggregate shares outstanding of all
Closed-End Funds in the same fund
family listed on the Nasdaq [National]
Global Market or the Nasdaq Capital
Market, as shown in the issuer’s most
Up to 10 million shares ..............
$24,500 recent periodic reports required to be
10+ to 25 million shares .............
30,500 filed with the appropriate regulatory
25+ to 50 million shares .............
34,500 authority or in more recent information
50+ to 75 million shares .............
44,500 held by Nasdaq. The maximum annual
75+ to 100 million shares ...........
61,750 fee applicable to a fund family shall not
Over 100 million shares ..............
75,000 exceed $75,000. For purposes of this
(2) No change.
rule, a ‘‘fund family’’ is defined as two
Up to 30 million shares .............. $100,000
(3) If a class of securities is removed
or more Closed-End Funds that have a
30+ to 50 million shares .............
125,000 from the Nasdaq [National] Global
common investment adviser or have
Over 50 million shares ................
150,000 Market that portion of the annual fees
investment advisers who are ‘‘affiliated
for such class of securities attributable
(2) Total shares outstanding means
persons’’ as defined in Section 2(a)(3) of
to the months following the date of
the aggregate of all classes of equity
the Investment Company Act of 1940, as
removal shall not be refunded, expect
securities to be listed on the Nasdaq
amended.
(5) No change.
such portion shall be applied to the
[National] Global Market as shown in
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(6) If a class of securities is removed
from the Nasdaq [National] Global
Market, that portion of the annual fees
for such class of securities attributable
to the months following the date of
removal shall not be refunded, except
such portion shall be applied to the
Nasdaq Capital Market fees for that
calendar year.
(e)–(f) No change.
5+ to 6 million shares .................
6+ to 7 million shares .................
7+ to 8 million shares .................
8+ to 9 million shares .................
9+ to 10 million shares ...............
10+ to 15 million shares .............
Over 15 million shares ................
4520. The Nasdaq Capital Market
(a)–(b) No change.
(c) Annual Fee
(1)–(4) No change.
(5) If a class of securities is removed
from the Nasdaq Capital Market, that
portion of the annual fees for such class
of securities attributable to the months
following the date of removal shall not
be refunded, except such portion shall
be applied to Nasdaq [National] Global
Market fees for that calendar year.
(6) No change.
(7) Notwithstanding paragraph (6), for
the purpose of determining the total
shares outstanding, fund sponsors may
aggregate shares outstanding of all
Closed-End Funds in the same fund
family listed on the Nasdaq [National]
Global Market and the Nasdaq Capital
Market, as shown in the issuer’s most
recent periodic reports required to be
filed with the appropriate regulatory
authority or in more recent information
held by Nasdaq. The maximum annual
fee applicable to a fund family shall not
exceed $75,000. For purposes of this
rule, a ‘‘fund family’’ is defined as two
or more Closed-End Funds that have a
common investment adviser or have
investment advisers who are ‘‘affiliated
persons’’ as defined in Section 2(a)(3) of
the Investment Company Act of 1940, as
amended.
(8) No change.
(d)–(e) No change.
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4530. Other Securities
(a) Application Fee and Entry Fee.
(1) When an issuer submits an
application to list any Other Security or
SEEDS on the Nadaq [National] Global
Market qualified for listing under Rule
4420(f) or 4420(g), it shall pay a nonrefundable Application Fee of $1,000.
(2) When an issuer submits an
application to list any Other Security or
SEEDS on the Nasdaq [National] Global
Market qualified for listing under Rule
4420(f) or 4420(g), it shall pay an Entry
Fee calculated based on total shares
outstanding according to the following
schedule:
Up to 1 million shares ................
1+ to 2 million shares .................
2+ to 3 million shares .................
3+ to 4 million shares .................
4+ to 5 million shares .................
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$5,000
10,000
15,000
17,500
20,000
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22,500
25,000
27,500
30,000
32,500
37,500
45,000
The applicable Entry Fee shall be
reduced by any Entry Fees paid
previously in connection with the initial
listing during the current calendar year
of any of the issuer’s Other Securities
and SEEDS on the Nasdaq [National]
Global Market.
(3) For the sole purpose of
determining the Entry Fee, total shares
outstanding means the aggregate of all
classes of Other Securities and SEEDS of
the issuer to be listed on the Nasdaq
[National] Global Market in the current
calendar year as shown in the issuer’s
most recent periodic report or in more
recent information held by Nasdaq or, in
the case of new issues, as shown in the
offering circular, required to be filed
with the issuer’s appropriate regulatory
authority.
(4)–(5) No change.
(b) Annual Fee
(1) The issuer of Other Securities or
SEEDS qualified under Rule 4420(f) or
4420(g) for listing on the Nasdaq
[National] Global Market shall pay to
Nasdaq an Annual Fee calculated based
on total shares outstanding according to
the following schedule:
Up to 5 million shares ................
5+ to 10 million shares ...............
10+ to 25 million shares .............
25+ to 50 million shares .............
Over 50 million shares ................
22,500
30,000
4540. Portfolio Depository Receipts and
Index Fund Shares
(a) Entry Fee
(1) When an issuer submits an
application for listing a series of
Portfolio Depository Receipts or Index
Fund Shares on the Nasdaq [National]
Global Market, it shall pay to Nasdaq a
listing fee of $5,000 (which shall
include a $1,000 non-refundable
processing fee).
(2) The Nasdaq Board of Directors or
its designee may, in its discretion, defer
or waive all or any part of the entry fee
prescribed herein.
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(3) If the application is withdrawn or
is not approved, the entry fee (less the
non-refundable processing fee) shall be
refunded.
(b) Annual Fee
(1) The issuer of a series of Portfolio
Depository Receipts or Index Fund
Shares listed on The Nasdaq [National]
Global Market shall pay to Nasdaq an
annual fee calculated on total shares
outstanding according to the following
schedule:
Up to 1 million shares ................
1+ to 2 million shares .................
2+ to 3 million shares .................
3+ to 4 million shares .................
4+ to 5 million shares .................
5+ to 6 million shares .................
6+ to 7 million shares .................
7+ to 8 million shares .................
8+ to 9 million shares .................
9+ to 10 million shares ...............
10+ to 11 million shares .............
11+ to 12 million shares .............
12+ to 13 million shares .............
13+ to 14 million shares .............
14+ to 15 million shares .............
15+ to 16 million shares .............
Over 16 million shares ................
$6,500
7,000
7,500
8,000
8,500
9,000
9,500
10,000
10,500
11,000
11,500
12,000
12,500
13,000
13,500
14,000
14,500
(2) Total shares outstanding means
the aggregate number of shares in all
series of Portfolio Depository Receipts
or Index Fund Shares to be listed on
The Nasdaq [National] Global Market as
shown in the issuer’s most recent
periodic report required to be filed with
the issuer’s appropriate regulatory
$15,000 authority or in more recent information
17,500 held by Nasdaq.
20,000
(3) No change.
(2) No change.
(3) For the sole purpose of
determining the Annual Fee, total
shares outstanding means the aggregate
of all classes of Other Securities and
SEEDS of the issuer listed on the
Nasdaq [National] Global Market, as
shown in the issuer’s most recent
periodic report required to be filed with
the issuer’s appropriate regulatory
authority or in more recent information
held by Nasdaq.
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4550. Written Interpretations of Nasdaq
Listing Rules
(a) An issuer listed on the Nasdaq
Capital Market or the Nasdaq [National]
Global Market may request from Nasdaq
a written interpretation of the Rules
contained in the 4000 through 4500
Series. In connection with such a
request, the issuer must submit to
Nasdaq a non-refundable fee of $2,000.
A response to such a request generally
will be provided within four weeks from
the date Nasdaq receives all information
necessary to respond to the request.
(b)–(e) No change.
4701. Definitions.
(a)–(ee) No change.
(ff) The term ‘‘UTP Exchange’’ shall
mean any registered national securities
exchange that elects to participate in the
Nasdaq Market Center and that has
unlisted trading privileges in Nasdaq
[National] Global Market securities
pursuant to the Joint Self-Regulatory
Organization Plan Governing the
Collection, Consolidation and
Dissemination Of Quotation and
Transaction Information For Exchange-
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Listed Nasdaq/National Market System
Securities Traded On Exchanges On An
Unlisted Trading Privilege Basis
(‘‘Nasdaq UTP Plan’’).
(gg)–(vv) No change.
6120. System Functions.
(a) No change.
(b) The Nasdaq system will provide
the following risk management
capabilities to clearing brokers that have
executed an agreement authorizing the
use of the Nasdaq Risk Management
service:
(1) No change.
(2) Gross Dollar Thresholds (‘‘Super
Caps’’) and Sizeable Limits Clearing
brokers may establish, on an inter-day
or intra-day basis, gross dollar
thresholds (also known as ‘‘Super
Caps’’) for purchases and sales for their
correspondent executing brokers. When
any of the correspondent’s gross dollar
thresholds are exceeded, notice will be
furnished to the clearing broker and to
Trade Reporting Facilities. In such
event, Nasdaq Risk Management will
automatically instruct Trade Reporting
Facilities that any trade in excess of an
applicable ‘‘sizable limit’’ that is
negotiated by the correspondent will be
subject to review by the clearing broker
until such time as the correspondent’s
trading activity no longer exceeds a
gross dollar threshold. Specifically, the
clearing broker will have 15 minutes
from execution to review any single
trade negotiated by the correspondent
that equals or exceeds the applicable
sizeable limit in order to decide to act
as principal for the trade or to decline
to act as principal. If the clearing broker
does not affirmatively accept or decline
the ‘‘sizeable trade,’’ at the end of 15
minutes the system will instruct Trade
Reporting Facilities to act in accordance
with pre-established processing criteria,
as described below.
(A) ACT Workstation Users
(i) Clearing brokers that use the ACT
Workstation may establish gross dollar
thresholds and sizeable limits for each
of their correspondent executing
brokers. They may establish different
gross dollar thresholds and sizeable
limits for each type of security (i.e.,
Nasdaq [National] Global Market,
Nasdaq Capital Market, Consolidated
Quotations Service, or OTC Bulletin
Board), as well as an aggregate gross
dollar threshold and sizeable limit for
all types of securities.
(ii)–(iii) No change.
(B) Other Nasdaq Risk Management
Users
(i) Clearing brokers that do not use the
ACT Workstation may establish
aggregate gross dollar thresholds for
each of their correspondent executing
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brokers, but may not establish gross
dollar thresholds for each type of
security (i.e., Nasdaq [National] Global
Market, Nasdaq Capital Market,
Consolidated Quotations Service, or
OTC Bulletin Board).
(ii)–(iii) No change.
(3)–(5) No change.
(6) Single Trade Limit
Clearing brokers may request that the
Nasdaq Risk Management service
instruct Trade Reporting Facilities to
provide 15 minutes from trade report
input to review any single trade
executed by their correspondent
executing brokers that equals or exceeds
a pre-established limit in order to
decide to act as principal for the trade
or to decline to act as principal. If,
however, the clearing firm does not
affirmatively accept or decline the trade
at the end of 15 minutes the system will
instruct Trade Reporting Facilities to act
in accordance with pre-established
processing criteria, as described below.
(A) ACT Workstation Users, Clearing
brokers that use the ACT Workstation
may establish single trade limits for
each of their correspondent executing
brokers, and may establish different
limits for each type of security (i.e.,
Nasdaq [National] Global Market,
Nasdaq Capital Market, Consolidated
Quotations Service, or OTC Bulletin
Board). Such clearing brokers may also
establish the default processing criteria
that will apply to trades that exceed the
single trade limit after 15 minutes if the
clearing broker does not affirmatively
accept or decline the trade; the clearing
broker may specify that the system will
instruct Trade Reporting Facilities that
such trades should be either
automatically declined or automatically
subjected to normal processing in which
the clearing broker will act as principal
to clear the trades.
(B) No change.
7024. Nasdaq Revenue Sharing
Program
After Nasdaq earns total operating
revenue sufficient to offset actual
expenses and working capital needs, a
percentage of all Market Participant
Operating Revenue (‘‘MPOR’’) shall be
eligible for sharing with Nasdaq Quoting
Market Participants (as defined in Rule
4701). MPOR is defined as operating
revenue that is generated by Nasdaq
quoting Market Participants. MPOR
consists of transaction fees, technology
fees, and market data revenue that is
attributable to Nasdaq quoting Market
Participant activity in Nasdaq [National]
Global Market, and Capital Market
securities. MPOR shall not include any
investment income or regulatory
monies. The sharing of MPOR shall be
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Fmt 4703
Sfmt 4703
based on each Nasdaq Quoting Market
Participant’s pro rata contribution to
MPOR. In no event shall the amount of
revenue shared with Nasdaq Quoting
Market Participants exceed MPOR. To
the extent market data revenue is
subject to year-end adjustment, MPOR
revenue may be adjusted accordingly.
*
*
*
*
*
H. 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 proposes to rename the
Nasdaq National Market as the Nasdaq
Global Market to more accurately reflect
the international reach and leadership
of many of the companies listed on that
market and the market itself.7
Nasdaq also proposes to create a new
segment within the Nasdaq Global
Market. This new segment will be
known as the Nasdaq Global Select
Market, and new, higher initial listing
requirements will apply to companies
listing on the Nasdaq Global Select
Market.8 All listing and trading rules
applicable to securities on the Nasdaq
Global Market will also apply to the
Nasdaq Global Select Market.
Listing Standards. As described
below, issuers would be required to
meet minimum liquidity measures and
a financial test, as well as achieve a
minimum bid price requirement.9
7 The Nasdaq Global Market, including the
Nasdaq Global Select segment described below, will
be the successor to the Nasdaq National Market. As
such, Nasdaq believes that all securities listed on
the Nasdaq Global Market, including those on the
Nasdaq Global Select Market, will be ‘‘covered
securities,’’ as that term is defined in Section 18(b)
of the Securities Act of 1933, 15 U.S.C. 77r(b).
8 As described below, given that the Nasdaq
Global Select Market is a segment of the Nasdaq
Global Market, Nasdaq will apply the same
continued listing requirements as are applicable to
other companies on the Nasdaq Global Market,
which are the existing listing requirements for the
Nasdaq National Market.
9 Nasdaq could deny listing to a company that
meets these requirements based on public interest
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Nasdaq believes that the creation of this
segment will more clearly align
Nasdaq’s financial and liquidity listing
standards with its corporate governance
standards 10 and its regulatory
enforcement program, as well as its
trading system. While Nasdaq believes
its existing standards protect investors,
Nasdaq also believes that, to the extent
these higher initial listing standards
help attract and maintain listings on
Nasdaq and identify companies that
meet these high listing standards,
investors will benefit.
1. Liquidity Tests
In order to quality for the Nasdaq
Global Select Market, a company will be
required to demonstrate either: (1) a
minimum of 550 shareholders and an
average monthly trading volume over
the prior 12 months of at least 1,100,000
shares per month; or (2) a minimum of
2,200 shareholders.
Average monthly trading
volume ........................
AND
Shareholders ..................
OR
Shareholders ..................
>=1,100,00
>=550
>=2,200
In addition, a company must have at
least 1,250,000 publicly held shares. In
computing the number of publicly held
shares, Nasdaq will not consider shares
held by an officer, director, or 10%
shareholder of the company.
Publicly Held Shares .....
>=1,250,000
Finally, those publicly held shares
must have a market value of at least
$110 million; provided, however, that if
the market value of publicly held shares
is at least $100 million and the company
has shareholders equity of at least $110
million, the company will also qualify.
Market Value of Publicly Held Shares ........
OR
Market Value of Publicly Held Shares ........
AND
Shareholders Equity ......
>=$110,000,000
>=$100,000,000
>=$110,000,000
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2. Financial Tests
A company will also be required to
meet one of there financial tests in order
to qualify for listing on the Nasdaq
Global Select Market. Specifically,
concerns, as described in existing Nasdaq Rule 4300
and Nasdaq IM–4300.
10 Companies on the Nasdaq Global Select Market
will be required to meet the same rigorous corporate
governance standards applicable to companies on
the Nasdaq Capital and Nasdaq Global Markets.
These standards require a majority independent
board, an independent audit committee, and for
independent directors to participate in
compensation and nomination decisions.
Shareholders are also required to approve
significant transactions and the use of equity
compensation.
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companies will be required to
demonstrate: (1) Aggregate pre-tax
earnings of at least $11 million over the
prior three years, with all three years
having positive pre-tax earnings and the
two most recent years having at least
$2.2 million pre-tax earnings each; (2)
aggregate cash flows of at least $27.5
million over the prior three years with
all three years having positive cash
flows, an average market capitalization
of at least $550 million over the prior 12
months, and total revenue of at least
$110 million in the previous fiscal year;
or (3) total revenue of at least $90
million in the previous fiscal year and
an average market capitalization of at
least $850 million over the prior 12
months. However, Nasdaq notes that the
operating history requirements in
Nasdaq Rule 4426(c)(1) and (c)(2), may
be shortened to a lesser period if an
issuer does not have three years of
publicly reported financial data.11
Three year aggregate
pre-tax earnings ..........
AND
Pre-tax earnings in the
two most recent years
each .............................
AND
Third most recent year
pre-tax earnings ..........
OR
Three year aggregate
cash flows ...................
AND
Three most recent
years’ cash flow
each .........................
AND
Average 12 month market capitalization ........
AND
Total revenue .................
OR
Total revenue .................
AND
Average 12 month market capitalization ........
>=$11,000,000
>=$2,200,000
>0
>=$27,500,000
>0
>=$550,000,000
>=$110,000,000
>=$90,000,000
>=$850,000,000
Nasdaq will determine compliance
with the financial tests based on a
company’s publicly filed financial
information. Thus, for example, as
specified in proposed Nasdaq Rule
4427(b), pre-tax earnings will be the
company’s pre-tax income from
continuing operations as filed with the
Commission in the issuer’s most recent
periodic report and/or registration
statement.
11 The Commission notes that a period of less
than three months shall not be considered a fiscal
year. See Nasdaq Rule 4427(f). Telephone
conversation between Arnold Golub, Associate Vice
President, Nasdaq, Florence Harmon, Senior
Special Counsel, and Mia Zur, Special Counsel,
Division, on May 12, 2006.
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29203
3. Price Test
Any company newly listed on Nasdaq
(both initial public offerings and
seasoned companies) would be required
to have a minimum $5 bid price to list
on the Nasdaq Global Select Market.
Companies switching from the Nasdaq
Global Market would have previously
satisfied the bid price requirement in
connection with their initial listing and
therefore will not be required to meet
this requirement again when
transferring to the new segment.
4. Other Provisions
a company listing in connection with
its emergence from a bankruptcy
proceeding will be required to have 450
shareholders for listing, as will a
company affiliated with another
company listed on the Nasdaq Global
Select Market. In these cases, Nasdaq
believes that while the shareholder
requirement is difficult to meet
immediately upon listing because the
stock is not initially widely distributed,
shares are widely distributed following
the initial listing. For similar reasons,
the market value of publicly held shares
requirement will be $70 million in the
case of a company listing in connection
with its initial public offering, a
company that is affiliated with, or a
spinoff from, another company listed on
the Nasdaq Global Select Market, and a
closed-end management investment
company.
Due to their unique nature, closedend management investment companies
will not be required to meet the
financial requirements described
above.12 Further, Nasdaq has proposed
different liquidity standards for closedend funds. Finally, if the primary class
of a company is included in the Nasdaq
Global Select Market, any secondary
class of that same company, such as a
secondary classes of common or a
preferred stock, that qualifies for listing
on the Nasdaq Global Market shall also
be included in the Nasdaq Global Select
Market.
5. Continued Listing
Following initial listing on the
Nasdaq Global Select Market, securities
will be subject to the continued listing
standards that are currently applicable
to the Nasdaq Global Market. Thus,
companies must satisfy one of the
12 While Nasdaq plans to list closed-end funds on
the Nasdaq Global Select Market, there are not
separate listing standards for structured products,
index-linked notes, trust issued receipts, SEEDs,
units, commodity-backed products, or Exchange
Traded Funds.
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wwhite on PROD1PC61 with NOTICES
alternatives for continued listing
contained in Nasdaq Rule 4450.13
Implementation. Prior to the planned
July 1, 2006 launch of the new segment,
Nasdaq will review all companies’
qualifications and assign qualified
Nasdaq Global Market companies to the
new Nasdaq Global Select segment.14 In
addition, qualified Nasdaq Capital
Market companies will be given the
opportunity to be included in the new
segment.15 Thereafter, beginning in
2007, staff of the Nasdaq Listing
Qualifications Department will review
all Nasdaq Global Market companies’
qualifications each October, and
qualified Nasdaq Global Market
companies will be automatically placed
in the new segment the following
January.16 While this review will occur
automatically in October, a company
may also apply to upgrade at any point.
Companies transferring from Nasdaq
Global market to the Nasdaq Global
Select Market as part of this process will
not be assessed entry or application
fees. New Nasdaq Global Market listings
will also be placed in the Nasdaq Global
Select segment if they qualify, although
they will be subject to the applicable
entry and application fee schedule.
As part of both the initial transfer of
companies to the Nasdaq Global Select
Market and Nasdaq’s ongoing review of
companies’ eligibility to be included in
the Nasdaq Global Select Market, a
company that is in a grace or
compliance period with respect to
13 Note that for inclusion on the Nasdaq Global
Select Market, an initial public offering must be
able to satisfy one of the alternatives for continued
listing on the Nasdaq Global Market as contained
in Nasdaq Rule 4450, as well as the requirements
for initial inclusion on the Nasdaq Global Select
Market. as a result, the initial listing standards will,
in all cases, exceed the criteria set forth in Rule
3a51–1(a)(2) of the Act, 17 CFR 240.3a51–1(a)(2).
14 As a result of this review, no company then on
the Nasdaq Global Market would be adversely
affected. Note that the fees for the Nasdaq Global
Market and the Nasdaq Global Select Market will
be the same. See Nasdaq Rule 4510. Fees for
securities listed on the Nasdaq Capital Market will
continue to differ. See Nasdaq Rule 4520. Any
company not qualifying for the Nasdaq Global
Select Market would remain on the Nasdaq Global
Market.
15 See Nasdaq Rule 4425(d).
16 Nasdaq believes that the delay from October to
January is necessary to assure adequate time to
complete the required review and notify issuers and
market participants about the change. Nonetheless,
to assure that no company is disadvantaged by this
delay, a company that qualifies the Nasdaq Global
Select Market when it is reviewed in October will
be placed in that segment even if it falls below one
or more of the initial listing requirements in January
when the actual transfer takes place. However, a
company that no longer meets the continued listing
requirements for the Nasdaq Global Market in
January would not be transferred to the Nasdaq
Global Select Market, nor would a company that is
delinquent in filing its periodic reports at the time
of the transfer or where staff has raised public
interest concerns.
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17:37 May 18, 2006
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qualitative listing standard, such as the
cure period allowed to companies that
have a vacancy on their audit
committee, will be allowed to transfer to
the Nasdaq Global Select Market,
subject to the continuation of that grace
period. If a company is non-compliant
with a qualitative listing requirement 17
that does not provide for a grace period
or if staff has raised a public interest
concern, the company would not be
permitted to transfer to the Nasdaq
Global Select Market until the
underlying deficiency is resolved. A
company that is below a quantitative
listing requirement even if the company
has not been below the requirement for
a sufficient period of time to be
considered deficient,18 and a company
in a grace or compliance period with
respect to a quantitative listing
requirement would not be allowed to
transfer to the Nasdaq Global Select
Market until the underlying deficiency
is resolved, nor would any company
before a Nasdaq Listing Qualifications
Panel.
In connection with the initial transfer
of companies to the Nasdaq Global
Select Market, Nasdaq proposes to allow
(but not require) any Nasdaq-listed
company that meets the New York Stock
Exchange LLC (‘‘NYSE’’) initial listing
standards as of July 1, 2006, but that
does not then qualify for the new
segment to be included in the Nasdaq
Global Select Market, subject to an 18
month grace period, until January 1,
2008, to achieve compliance.19 During
that grace period, these companies
would have to achieve compliance with
all applicable criteria for initial listing
on the Nasdaq Global Select Market.
Any company that has not achieved
compliance with all listing criteria for
the Nasdaq Global Select Market by
January 2008 would be moved to the
Nasdaq Global Market at that time.20
2. Statutory Basis
Nasdaq believes that the proposed
rule change, as amended, is consistent
with the provisions of Section 6 of the
Act,21 in general, and with Section
17 Qualitative listing requirements include those
requirements contained in Nasdaq Rule 4350.
18 For example, a security with a closing bid price
below $1 is not considered deficient until the
security has closed below $1 for 30 consecutive
business days. Nonetheless, no security with a
closing bid price below $1 would be permitted to
list on the Nasdaq Global Select Market, even if it
has closed above $1 in the prior 30 business days.
19 Certain companies will qualify for the NYSE
but not the Nasdaq Global Select Market.
20 Of course if any such company fails to meet the
continued listing standards for the Nasdaq Global
Market at any point, staff would begin proceedings
under the Nasdaq rule 4800 Series with respect to
that company.
21 15 U.S.C. 78o–3.
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6(b)(6) of the Act,22 in particular, in that
it is designed to promote just and
equitable principles of trade, to foster
cooperation and coordination with
persons engaged in regulating, clearing,
settling, processing information with
respect to, and facilitating transactions
in securities, to remove impediments to
and perfect the mechanism of a free and
open market and a national market
system, and, in general, to protect
investors and the public interest; and is
not designed to permit unfair
discrimination between customers,
issuers, brokers, or dealers.
Nasdaq believes that changing the
name of the Nasdaq National Market to
the Nasdaq Global Market will more
accurately reflect the international reach
and leadership of many of the
companies listed on that market and the
market itself. Further, Nasdaq believes
that the creation of a market segment
within the Nasdaq Global Market with
higher initial listing standards will
protect investors and the public interest
and will foster competition among
exchange markets.
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 foregoing proposed rule change,
as amended, is subject to Section
19(b)(3)(A)(iii) of the Act 23 and Rule
19b–4(f)(6) thereunder, 24 because the
rule change does not: (i) Significantly
affect the protection of investors or the
public interest; (ii) impose any
significant burden on competition; or
(iii) become operative for 30 days from
the day on which it was filed, or such
shorter time as the Commission may
designate if consistent with the
protection of investors and the public
interest.25
22 15
U.S.C. 78o–3(b)(6).
U.S.C. 78s(b)(3)(A)(iii).
24 17 CFR 240.19b–4(f)(6).
25 As required by Rule 19b–4(f)(6)(iii) of the Act,
Nasdaq provided the Commission with written
notice of its intent to file the proposed rule change,
along with a brief description of the text of the
proposed rule change, at least five business days
23 15
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Federal Register / Vol. 71, No. 97 / Friday, May 19, 2006 / Notices
At any time within 60 days of the
filing of such 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.26
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:
the principal office of NASDAQ. 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–NASDAQ–2006–007 and
should be submitted on or before June
9, 2006.
For the Commission, by the Division of
Market Regulation, pursuant to delegated
authority.27
Jill M. Peterson,
Assistant Secretary.
[FR Doc. 06–4689 Filed 5–18–06; 8:45 am]
BILLING CODE 8010–01–M
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–NASDAQ–2006–007 on the
subject line.
Paper Comments
• Send paper comments in triplicate
to Nancy M. Morris, Secretary,
Securities and Exchange Commission,
Station Place, 100 F Street, NE.,
Washington, DC 20549–1090.
wwhite on PROD1PC61 with NOTICES
All submissions should refer to File
Number SR–NASDAQ–2006–007. 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
prior to the date of the filing of the proposed rule
change.
26 See Section 19(b)(3)(C) of the Act, 15 U.S.C.
78s(b)(3)(C). For the purposes of calculating the 60day period within which the Commission may
summarily abrogate the proposed rule change under
Section 19(b)(3)(C) of the Act, the Commission
considers that period to commence on May 8, 2006,
the date Nasdaq filed Amendment No. 1 to the
proposed rule change. See 15 U.S.C. 78s(b)(3)(C).
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17:37 May 18, 2006
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SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–53800; File No. SR–NYSE–
2006–26]
Self-Regulatory Organizations; New
York Stock Exchange LLC; Notice of
Filing and Immediate Effectiveness of
Proposed Rule Change Relating to the
Establishment of a NYSE TradeWorks
Usage Fee
May 15, 2006.
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 April 20,
2006, the New York Stock Exchange
LLC (‘‘NYSE’’ or ‘‘Exchange’’) 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 the NYSE. The
Exchange has designated this proposal
as one establishing or changing a due,
fee or other charge imposed by the
Exchange under Section 19(b)(3)(A),3
and Rule 19b–4(f)(2) thereunder,4 which
renders the proposal effective upon
filing with the Commission. The
Commission is publishing this notice to
solicit comments on the proposed rule
change from interested persons.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The Exchange proposes to establish a
fee to be paid by Member
Organizations 5 that wish to continue to
use the Exchange’s proprietary order
27 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)(2).
5 See NYSE Rule 2(b).
1 15
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29205
management system, NYSE
TradeWorksSM (‘‘TradeWorks’’),6 for the
period from the date of this filing (April
20, 2006) until December 31, 2006.
The text of the proposed rule change
is available on the NYSE’s Web site at
https://www.nyse.com, the NYSE’s Office
of the Secretary, 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,
NYSE included statements concerning
the purpose of, and basis for, the
proposed rule change 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. NYSE 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
According to the NYSE, it has
provided TradeWorks to Member
Organizations free of charge. The
Exchange expects to be able to introduce
a new order management system in
place of TradeWorks at the beginning of
2007. In the interim, the Exchange had
planned to discontinue TradeWorks as
of the end of March 2006, and estimated
that this would save it approximately $2
million over the course of the nine
months before the scheduled
implementation of the new system.
However, a number of Member
Organizations expressed a desire to
continue to use TradeWorks for the
remainder of 2006. To accommodate
this request, the Exchange will continue
to provide TradeWorks to those Member
Organizations who have agreed to bear
a portion of the cost of maintaining the
system for that period. The Exchange
proposes that each Member
Organization wishing to continue to use
TradeWorks pay a portion of the costs
6 According to the Exchange, the NYSE
TradeWorks is a messaging system, which enables
Member Organizations’ broker booths on the floor
to communicate with their trading desks and floor
brokers. TradeWorks is not used to send orders to
the floor. Instead, TradeWorks is primarily used by
the brokers’ booth clerks to receive requests for
‘‘market looks’’ (quick evaluations of trading
interest in a particular security) from the trading
desk and route them to the floor brokers to respond
to those requests. Telephone conversation between
John Carey, Assistant General Counsel, NYSE, and
Johnna B. Dumler, Attorney, Division of Market
Regulation, Commission, on May 12, 2006.
E:\FR\FM\19MYN1.SGM
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]]>Agencies
[Federal Register Volume 71, Number 97 (Friday, May 19, 2006)]
[Notices]
[Pages 29195-29205]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 06-4689]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-53799; File No. SR-NASDAQ-2006-007]
Self-Regulatory Organizations; The NASDAQ Stock Market LLC;
Notice of Filing and Immediate Effectiveness of a Proposed Rule Change
and Amendment No. 1 Thereto to Create the Nasdaq Global Select Market
and Rename the Nasdaq National Market
May 12, 2006.
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 April 17, 2006, The NASDAQ Stock Market LLC (``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. Nasdaq has filed this 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. On May 8, 2006, Nasdaq filed Amendment No. 1 to the
proposed rule change.\5\ The Commission is publishing this notice to
solicit comments on the proposed rule change from interested persons.
---------------------------------------------------------------------------
\1\ 15 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\ Amendment No. 1 replaced the original filing in its
entirety.
---------------------------------------------------------------------------
I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
Nasdaq proposes to rename the Nasdaq National Market as the Nasdaq
Global Market and to create the Nasdaq Global Select Market, a new tier
within the Nasdaq Global Market with higher initial listing
standards.\6\ Nasdaq will implement the proposed rule on July 1, 2006.
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\6\ In various places in the purpose section, Nasdaq clarified
that the higher listing standards apply to initial listing
standards. Telephone conversation between Arnold Golub, Associate
Vice President, Nasdaq, and Mia Zur, Special Counsel, Division of
Market Regulation (``Division''), Commission, on May 10, 2006.
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The text of the proposed rule change is available on Nasdaq's Web
site (https://www.nasdaq.com), at Nasdaq's principal office, and at the
Commission's Public Reference Room. The text of the proposed rule
change is included below. Proposed new language is italicized;
deletions are [bracketed].
* * * * *
3350. Short Sale Rule
(a) With respect to trades executed on Nasdaq, no member shall
effect a short sale for the account of a customer or for its own
account in a Nasdaq [National] Global Market security at or below the
current best (inside) bid displayed in the Nasdaq Market Center when
the current best (inside) bid is below the preceding best (inside) bid
in the security. For purposes of this rule, the term ``customer''
includes a non-member broker-dealer.
(b)-(g) No change.
(h)(1) A member shall be permitted, consistent with its quotation
obligations, to execute a short sale for the account of an options
market maker that would otherwise be in contravention of this Rule, if:
(A) The options market maker is registered with a qualified options
exchange as a qualified options market maker in a stock options class
on a Nasdaq [National] Global Market security or an options class on a
qualified stock index; and
(B) No change.
(2) For purposes of this paragraph:
(A)(i) An ``exempt hedge transaction,'' in the context of qualified
options market makers in stock options classes, shall mean a short sale
in a Nasdaq [National] Global Market security that was effected to
hedge, and in fact serves to hedge, an existing offsetting options
position or an offsetting options position that was created in a
transaction(s) contemporaneous with the short sale,\1\ provided that
when establishing the short position the options market maker is
eligible to receive(s) good faith margin pursuant to Section 220.12 of
Regulation T under the Act for that transaction.
---------------------------------------------------------------------------
\1\ The phrase contemporaneously established includes
transactions occurring simultaneously as well as transactions
occurring within the same brief period of time.
---------------------------------------------------------------------------
(ii) A ``exempt hedge transaction,'' in the context of qualified
options market makers in stock index options classes, shall mean a
short sale in a Nasdaq [National] Global Market security that was
effected to hedge, and in fact serves to hedge, an existing offsetting
stock index options position or an offsetting stock index options
position that was created in a transaction(s) contemporaneous with the
short sale, provided that:
a.-c. No change.
(iii) No change.
(B) A ``qualified options market maker'' shall mean an options
market maker who has received an appointment as a ``qualified options
market maker'' for certain classes of stock options on Nasdaq
[National] Global Market securities and/or index options on qualified
stock indexes pursuant to the rules of a qualified options exchange.
(C) No change.
(D) A ``qualified stock index'' shall mean any stock index that
includes one or more Nasdaq [National] Global Market securities,
provided that more than 10% of the weight of the index is accounted for
by Nasdaq [National] Global Market securities and provided further that
the qualification of an index as a qualified stock index shall be
reviewed as of the end of each calendar quarter, and the index shall
cease to qualify if the value of the index represented by one or more
Nasdaq [National] Global Market securities is less than 8% at the end
of any subsequent calendar quarter.
(E)-(F) No change.
(i)(1) No change.
(2) For purposes of this paragraph, an ``exempt hedge transaction''
shall mean a short sale in a Nasdaq [National] Global Market security
that was effected to hedge, and in fact serves to hedge, an existing
offsetting warrant position or an offsetting warrant position that was
created in a transaction(s) contemporaneous with the short sale.\2\
Notwithstanding any other provision of this paragraph, any transaction
unrelated to normal warrant market making activity, such as index
arbitrage or risk arbitrage that in either case is independent of a
warrant market maker's making functions, with not be considered an
``exempt hedge transaction.''
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\2\ The phrase contemporaneously established includes
transactions occurring simultaneously as well as transactions
occurring within the same brief period of time.
---------------------------------------------------------------------------
(3)-(4) No change.
(j)-(k) No change.
[[Page 29196]]
IM-3350. Short Sale Rule
(a)(1) In developing a Short Sale Rule for Nasdaq [National] Global
Market securities, Nasdaq has adopted an exemption to the Rule for
certain market making activity. This exemption is an essential
component of the Rule because bona fide market making activity is
necessary and appropriate to maintain continous, liquid markets in
Nasdaq [National] Global Market securities. Rule 3350(c)(1) states that
short selling prohibitions shall not apply to sales by registered
Nasdaq market makers in connection with bona fide market making
activity and specifies that transactions unrelated to normal market
making activity, such as index arbitrage and risk arbitrage that are
independent from a member's market making functions, will not be
considered as bona fide market making. Thus two standards are to be
applied: One must be a registered Nasdaq market maker and one must
engage in ``bona fide'' market making activity to take advantage of
this exemption. With this interpretation, Nasdaq wishes to clarify for
members some of the factors that will be taken into consideration when
reviewing market activity that may not be deemed to be bona fide market
making activity and therefore would not be exempted from the Rule's
application.
(2)--(3) No change.
(b) With respect to trades executed on or reported to Nasdaq, Rule
3350 requires that no member shall effect a short sale for the account
of a customer or for its own account in a Nasdaq [National] Global
Market security at or below the current best (inside) bid displayed in
the Nasdaq Market Center when the current best (inside) bid is below
the proceeding best (inside) bid in the security. For purposes of this
rule, the term ``customer'' includes a non-member broker-dealer. Nasdaq
has determined that in order to effect a ``legal'' short sale when the
current best bid is lower that the preceding best bid the short sale
must be executed at a price of at least $0.01 above the current inside
bid when the current inside spread is $0.01 or greater. The last sale
report for such a trade would, therefore, be above the inside bid by at
least $0.01.
(c)-(d) No change.
4200. Definitions
(a) For purposes of the Rule 4000 Series, unless the context
requires otherwise:
(1)-(24) No change.
(25) [``Nasdaq National Market'' or ``NNM'' distinct tier of Nasdaq
comprised of securities that meet the requirements of and are listed as
Nasdaq National Market securities.] ``Nasdaq Global Market'' or ``NGM''
is a distinct tier of Nasdaq comprised of two segments: the Nasdaq
Global Market and the Nasdaq Global Select Market. The Nasdaq Global
Market is the successor to the Nasdaq National Market.
(26) ``Nasdaq [National] Global Market security'' or ``[NNM] NGM
security'' measn any security listed on Nasdaq which (1) satisfies all
applicable requirements of the Rule 4300 Series and substantially meets
the criteria set forth in the Rule 4400 Series; (2) is a right to
purchase such security; (3) is a warrant to subscribe to such security;
or (4) is an index warrant which substantially meets the criteria set
forth in Rule 4420.
(27) No change.
(28) ``Nasdaq Capital Market security'' means any security listed
on The Nasdaq Capital Market which (1) satisfies all applicable
requirements of the Rule 4300 Series but that is not a Nasdaq
[National] Global Market security; (2) is a right to purchase such
security; or (3) is a warrant to subscribe to such security.
(29) [Reserved.] ``Nasdaq Global Select Market'' or ``NGSM''
security is a segment of the Nasdaq Global Market comprised of NGM
securities that met the requirements for initial inclusion contained in
Rules 4425, 4426 and 4427.
(3) [Reserved.] ``Nasdaq Global Select Market security'' or ``NGSM
security'' means any security listed on Nasdaq and included in the
Nasdaq Global Select segment of the Nasdaq Global Market.
(31)-(39) No change.
(b)-(c) No change.
4305. Transition of Securities Included on the Market Operated by The
Nasdaq Stock Market, Inc.
(a)-(c) No change.
(d) Any issuer listed on the Nasdaq [National] Global Market or the
Nasdaq Capital Market pursuant to paragraphs (a) or (b) above that had
received any notice or was subject to any Rule of The Nasdaq Stock
Market, Inc. as a facility of the NASD shall be treated as though such
notice or such Rule was a notice from or a rule of Nasdaq in computing
applicable times frames.
4310. Listing Requirements for Domestic and Canadian Securities
To qualify for listing in Nasdaq, a security of a domestic or
Canadian issuer shall satisfy all applicable requirements contained in
paragraphs (a), (b), and (c) hereof. Issuers that meet these
requirements, but that are not listed on the Nasdaq [National] Global
Market, are listed on the Nasdaq Capital Market.
(a)-(b) No change.
(c) In addition to the requirements contained in paragraph (a) and
(b) above, and unless otherwise indicated, a security shall satisfy the
following criteria for listing on Nasdaq:
(1)-(8) No change.
(9)(A)-(b) No change.
(C) In the case of index warrants, the criteria established in the
Rule 4400 Series for Nasdaq [National] Global Market securities shall
apply.
(10)-(30) No change.
(d) No change.
4320. Listing Requirements for Non-Canadian Foreign Securities and
American Depositary Receipts
To qualify for listing on Nasdaq, a security of non-Canadian
foreign issuer, an American Depositary Receipt (ADR) or similar
security issued in respect of a security of a foreign issuer shall
satisfy the requirements of paragraphs (a), (b), and (e) of this Rule.
Issuers that meet these requirements, but that are not listed on the
Nasdaq [National] Global Market, are listed on the Nasdaq Capital
Market.
(a) A security of a foreign issuer, an ADR or similar security
issued in respect of a security of a foreign issuer, other than a newly
issued security, shall be considered for listing provided that it is:
(1)-(2) No change.
(b)-(f) No change.
4350. Qualitative Listing Requirements for Nasdaq [National Market and
Nasdaq Capital Market] Issuers Except for Limited Partnerships
(a)-(n) No change.
4350-1. Qualitative Listing Requirements for Nasdaq [National Market
and Nasdaq Capital Market] Issuers Except for Limited Partnerships
(a)-(h) No change.
IM-4390. Impact of Non-Designation of Dually Listed Securities
To foster competition among markets and further the development of
the national market system following the repeal of NYSE Rule 500,
Nasdaq shall permit issuers whose securities are listed on the New York
Stock Exchange to apply also to list those securities on the Nasdaq
[National] Global Market [(``NNM'')] (``NGM''). Nasdaq shall make an
independent determination of whether such issuers satisfy all
applicable listing requirements and shall require issuers to enter into
a dual listing agreement with Nasdaq.
[[Page 29197]]
While Nasdaq shall certify such dually listed securities for
listing on the [NGM] NGM, Nasdaq shall not exercise its authority under
Rule 4390 separately to designate or register such dually listed
securities as Nasdaq national market system securities within the
meaning of Section 11A of the Act or the rules thereunder. As a result,
these securities, which are already designated as national market
system securities under the Consolidated Quotation Service (``CQS'')
and Consolidated Tap Association national market system plans (``CQ and
CTA Plans''), shall remain subject to those plans and shall not become
subject to the Nasdaq UTP Plan, the national market system plan
governing securities designated by Nasdaq. For purposes of the national
market system, such securities shall continue to trade under their
current one, two, or three-character ticker symbol. Nasdaq shall
continue to send all quotations and transaction reports in such
securities to the processor for the CTA Plan. In addition, dually
listed issues that are currently eligible for trading via the
Intermarket Trading System (``ITS'') shall remains so and continue to
trade on the Nasdaq Intermarket trading platform as they do today.
Through this interpretation, Nasdaq also resolves any potential
conflicts that arise under Nasdaq rules as result of a single security
being both a security object to the CQ and CTA Plans (a ``CQS
Security''), which is subject to one set of rules, and a listed [NNM]
NGM security, which is subject to a different set of rules.
Specifically, dually listed securities shall be Nasdaq securities for
purposes of rules related to listing and delisting, and shall remain as
CQS securities under all other Nasdaq rules. Treating dually listed
securities as CQS securities under Nasdaq rules is consistent with
their continuing status as CQS securities under the CTA, CQ, and ITS
national market system, as described above. This interpretation also
preserves the status quo and avoids creating potential confusion for
investors and market participants that currently trade these securities
on Nasdaq.
For example, Nasdaq shall continue to honor the trade halt
authority of the primary market under the CQ and CT Plans. Nasdaq Rule
4120(a)(2) and (3) governing CQS securities shall apply to dually
listed securities, whereas Nasdaq Rule 4120(a)(1), (4), (5), (6), and
(7) shall not. SEC Rule 10a-1 governing short sales of CQS securities
shall continue to apply to dually listed securities, rather than Nasdaq
Rule 3350 governing short sales of Nasdaq-listed securities. Market
makers in dually listed securities shall retain all obligations imposed
by the Nasdaq Rule 5200 Series regarding CQS securities rather than
assuming the obligations appurtenant to Nasdaq-listed securities. The
fees applicable to CQS securities set forth in Nasdaq Rule 7010 shall
continue to apply to dually listed issues.
4400. NASDAQ [National] Global Market
4410. Applications for Listing
(a) Application for listing on the Nasdaq [National] Global Market
shall be on a form supplied by Nasdaq and signed by a corporate officer
of the issuer. Compliance with the listing criteria will be determined
on the basis of information filed with the appropriate regulatory
authority and the records of Nasdaq as of the application date. Nasdaq
may require the issuer to submit such other information as is relevant
to a listing determination, including information required by paragraph
(c) below.
(b) Upon approval of a listing application, Nasdaq shall certify to
the Commission, pursuant to Section 12(d) of the Act and the rules
thereunder, that it has approved the security for listing and
registration. Listing can commence only upon effectiveness of the
security's registration pursuant to Section 12(d).
(c) The security of an issuer that applies for listing on the
Nasdaq Global Market and meets the requirements contained in Rules 4425
through 4427, shall be listed on the Nasdaq Global Select Market.
(d) Issuers that are listed on Nasdaq pursuant to the Rule 4300
Series but that are not listed on the Nasdaq [National] Global Market,
are listed on the Nasdaq Capital Market.
4420. Quantitative Listing Criteria
In order to be listed on the Nasdaq [National] Global Market, an
issuer shall be required to substantially meet the criteria set forth
in paragraphs (a), (b), (c), (d), (e), (f), (g), (h), (i), (j), (k) or
(l) below.
(a)-(e) No change.
(f) Other Securities
(1) No change.
(2) Issuers of securities listed pursuant to this paragraph (f)
must be listed on the Nasdaq [National] Global Market or the New York
Stock Exchange (NYSE) or be an affiliate of a company listed on the
Nasdaq [National] Global Market or the NYSE; provided, however, that
the provisions of Rule 4450 will be applied to sovereign issuers of
``other'' securities on a case-by-case basis.
(3) No change.
(g) Nasdaq will consider listing on the Nasdaq [National] Global
Market Selected Equity-linked Debt Securities (SEEDS) that generally
meet the criteria of this paragraph (g). SEEDS are limited-term, non-
convertible debt securities of an issuer where the value of the debt is
based, at least in part, on the value of another issuer's common stock
or non-convertible preferred stock (or sponsored American Depositary
Receipts (ADRs) overlying such equity securities).
(1) Issuer Listing Standards
(A) The issuer of a SEEDS must be an entity that:
(i) Is listed on the Nasdaq [National] Global Market or the New
York Stock Exchange (NYSE) or is an affiliate of a company listed ont
he Nasdaq [National] Global Market or the NYSE; provided, however, that
the provisions of Rule 4450 will be applied to sovereign issuers of
SEEDS on a case-by-case basis; and
(ii) No change.
(B) In addition, the market value of a SEEDS offering, when
combined with the market value of all other SEEDS offerings previously
completed by the issuer and traded on the Nasdaq [National] Global
Market or another national securities exchange, may not be greater than
25 percent of the issuer's net worth at the time of issuance.
(2) No change.
(3) Minimum Standards Applicable to the Linked Security
An equity security on which the value of the SEEDS is based must:
(A) No change.
(B) Be issued by a company that has a continuous reporting
obligation under the Act, and the security must be listed on the Nasdaq
[National] Global Market or another national securities exchange and be
subject to last sale reporting; and
(C) No change.
(4)-(5) No change.
(h) Units
(1) Initial and Continued Listing Requirements.
(a) No change.
(b) All debt components of a unit, if any, shall meet the following
requirements:
(i) No change.
(ii) The issuer of the debt security must have equity securities
listed on the Nasdaq [National] Global Market; and
(iii) No change.
(c) No change.
(2) No change.
(3) Disclosure Requirements for Units.
Each Nasdaq [National] Global Market issuer of units shall include
in its prospectus or other offering document used in connection with
any offering of securities that is required to be filed
[[Page 29198]]
with the Commission under the federal securities laws and the rules and
regulations promulgated thereunder a statement regarding any intention
to delist the units immediately after the minimum inclusion period. The
issuer of a unit shall further provide information regarding the terms
and conditions of the components of the unit (including information
with respect to any original issue discount or other significant tax
attributes of any component) and the ratio of the components comprising
the unit. An issuer shall also disclose when a component of the unit is
separately listed on Nasdaq. These disclosures shall be made on the
issuer's Web site, or if it does not maintain a Web site, in its annual
report provided to unit holders. An issuer shall also immediately
publicize through, at a minimum, a public announcement through the news
media, any change in the terms of the unit, such as changes to the
terms and conditions of any of the components (including changes with
respect to any original issue discount or other significant tax
attributes of any component), or to the ratio of the components within
the unit. Such public notification shall be made as soon as practicable
in relation to the effective date of the change.
(i)-(m) No change.
4425. Nasdaq Global Select Market
(a) An issuer that applies for listing on the Nasdsaq Global Market
and meets the requirements for initial listing contained in Rule 4426
shall be listed on the Nasdaq Global Select Market.
(b) Each October, beginning in October 2007, Nasdaq will review the
qualifications of all securities listed on the Nasdaq Global Market
that are not included in the Nasdaq Global Select Market. Any security
that meets the requirements for initial listing on the Nasdaq Global
Select Market contained in Rule 4426 at the time of this review will be
transferred to the Global Select Market the following January, provided
it meets the continued listing criteria at that time. An issuer will
not owe any application or entry fees in connection with such a
transfer.
(c) At any time, an issuer may apply to transfer a security listed
on the Nasdaq Global Market to the Nasdaq Global Select Market. Such an
application will be approved and affected as soon as practicable if the
security meets the requirements for initial listing contained in Rule
4226. An issuer will not owe any application or entry fees in
connection with such a transfer.
(d) At any time an issuer may apply to transfer a security listed
on the Nasdaq Capital Market to the Nasdaq Global Select Market. Such
an application will be approved and affected as soon as practicable if
the security meets the requirements for initial listing contained in
Rule 4426. An issuer transferring from the Nasdaq Capital Market to the
Nasdaq Global Select Market will be required to pay the applicable fees
contained in Rule 4510.
(e) After initial inclusion on the Nasdaq Global Select Market, as
issuer will remain on the Nasdaq Global Select Market provided it
continues to meet the applicable requirements of the Rule 4300 and 4400
Series, including the qualitative requirements of Rule 4350 and IM-
4300.
(f) Notwithstanding any provision to the contrary, the security of
any issuer that is non-compliant with a qualitative listing requirement
that does not provide for a grace period, or where Nasdaq staff has
raised a public interest concern, will not be permitted to transfer to
the Global Steel Market until the underlying deficiency is resolved. In
addition, any security that is below a quantitative continued listing
requirement for the Nasdaq Global Market, even if the issuer has not
been below the requirement for a sufficient period of time to be
continued non-compliant, and any issuer in a grace or compliance period
with respect to a quantitative listing requirement, will not be allowed
to transfer from the Nasdaq Global or Capital Markets to the Nasdaq
Global Select Market until the underlying deficiency is resolved. Nor
will any issuer before a Nasdaq Listing Qualifications Panel be allowed
to transfer to the Global Select Market until the underlying deficiency
is resolved. An issuer that is in a grace or compliance period with
respect to a qualitative listing standard, such as the cure period for
filling an audit committee vacancy, will be allowed to transfer to the
Global Select Market, subject to the continuation of that grace period.
IM-4425 Launch for the Nasdaq Select Market
In connection with the initial launch of the Nasdaq Global Select
Market in July 2006, Nasdaq will review all issuers' qualifications and
assign qualified Global Market companies to the new Global Select
segment. In addition, qualified Capital Market companies will be given
the opportunity to be included in the new segment. In connection with
this initial transfer to the Global Select Market, Nasdaq will begin to
make its assessment using the most recent financial data filed as of
April 28, 2006, and market data as of April 28, 2006. Nasdaq will treat
as an IPO any company that initially listed as an IPO since May 1, 2005
for purposes of the liquidity tests, because these companies would have
insufficient market data to establish a 12-month trading history and
may have had insufficient time to satisfy the market value of public
float requirement applicable to other companies. Similarly, for
purposes of the market capitalization requirements of Rules 4426(c)(2)
and (c)(3), any company that initially listed as an IPO since May 1,
2005 must have the appplicable average market capitalization from the
date of listing. Nasdaq also notes that certain Nasdaq-listed issuers
that qualify to initially list on the New York Stock Exchange (NYSE)
will not be eligible to list on the Global Select Market. Nasdaq will
allow (but not require) any Nasdaq-listed issuer that meets the NYSE
initial listing standards as of July 2006 but that does not qualify for
the Global Select segment when it is adopted to be included in the
Global Select Market, subject to a grace period until January 1, 2008
to achieve compliance with all listing criteria for the Global Select
Market. Any issuer that avails itself of this grace period that has not
achieved compliance with all listing criteria for the Global Select
Market by January 1, 2008 will be moved to the Nasdaq Global Market. In
addition, any issuer that avails itself of this grace period will
remain subject to delisting in the event it fails to satisfy any of the
continued listing requirements for the Nasdaq Global Market.
4426. Nasdaq Global Select Market Listing Requirements
(a) For inclusion in the Nasdaq Global Select Market, an issuer
must meet the requirements of paragraphs (b), (c), and (d) of this
rule, and all applicable requirements of the Rule 4300 and 4400 Series,
including the qualitative requirements of Rule 4350 and IM-4300. Rule
4427 provides guidance about computations made under this Rule 4426.
(b) Liquidity Requirements
(1) The security must demonstrate either:
(A) (i) a minimum of 550 beneficial shareholders, and
(ii) an average monthly trading volume over the prior 12 months of
at least 1,100,000 shares per months; or
(B) a minimum of 2,200 beneficial shareholders; or
(C) a minimum of 450 beneficial shareholders, in the case of: (i)
an issuer listing in connection with its emergence
[[Page 29199]]
from a bankruptcy or reorganization proceeding; or (ii) an issuer that
is affiliated with another company listed on the Global Select Market.
(2) The security must have at least 1,250,000 publicly held shares;
and
(3) The publicly held shares must have either:
(A) a market value of at least $110 million; or
(B) a market value of at least $100 million, if the issuer has
stockholders' equity of at least $110 million; or
(C) a market value of at least $70 million in the case of: (i) an
issuer listing in connection with its initial public offering; (ii) an
issuer that is affiliated with, or a spin-off from, another company
listed on the Global Select Market; and (iii) a closed end management
investment company.
(c) Financial Requirements. An issuer, other than a closed end
management investment company, must meet the requirements of one of
subparagraphs (1), (2) or (3) of this paragraph.
(1) The issuer must have:
(A) aggregate income from continuing operations before income taxes
of at least $11 million over the prior three fiscal years;
(B) positive income from continuing operations before income taxes
in each of the prior three fiscal years; and
(C) at least $2.2 million income from continuing operations before
income taxes in each of the two most recent fiscal years; or
(2) The issuer must have:
(A) aggregate cash flows of at least $27.5 million over the prior
three fiscal years;
(B) positive cash flows in each of the prior three fiscal years;
and
(C) both:
(i) average market capitalization of at least $550 million over the
prior 12 months; and
(ii) total revenue of at least $110 million in the previous fiscal
year; or
(3) The issuer must have both:
(A) average market capitalization of at least $850 million over the
prior 12 months; and
(B) total revenue of at least $90 million in the previous fiscal
year.
(d) Price. For inclusion in the Nasdaq Global Select Market, an
issuer not listed on the Nasdaq Global Market shall have a minimum bid
price of $5 per share.
(e) Closed End Management Investment Companies.
(1) A closed end management investment company shall not be
required to meet paragraph (c) of this Rule 4426.
(2) In lieu of the requirement in paragraph (b)(3) of this Rule
4426, a closed end management investment company that is listed
concurrently with other closed end management investment companies that
have a common investment adviser (or whose investment advisers are
``affiliated persons'' as defined in the Investment Company Act of
1940) (a ``Fund Family'') shall be eligible if: (A) the total market
value of publicly held shares in such Fund Family is at least $220
million; (B) the average market value of publicly held shares for all
funds in the Fund Family is $50 million; and (C) each fund in the Fund
Family has a market value of publicly held shares of at least $35
million.
(f) Other Classes of Securities. If the common stock of an issuer
is included in the Nasdaq Global Select Market, any other security of
that same issuer, such as other classes of common or preferred stock,
that qualify for listing on the Nasdaq Global Market shall also be
included in the Global Select Market.
Rule 4427. Computations and Definitions
(a) In computing the number of publicly held shares for purposes
for Rule 4426(b), Nasdaq will not consider shares held by an officer,
director or 10% shareholder of the issuer.
(b) In calculating income from continuing operations before income
taxes for purposes of Rule 4426(c)(1), Nasdaq will rely on an issuer's
financial information as filed with the Commission in the issuers's
most recent periodic report and/or registration statement.
(c) In calculating cash flows for purposes of Rule 4426(c)(2),
Nasdaq will rely on the net cash provided by operating activities, as
reported in the issuer's financial information as filed with the
Commission in the issuer's most recent periodic report and/or
registration statement, excluding changes in working capital or in
operating assets and liabilities.
(d) If an issuer does not have three years of publicly reported
financial data, it may qualify under Rule 4426(c)(1) if it has:
(1) reported aggregate income from continuing operations before
income taxes of at least $11 million; and
(2) positive income from continuing operations before income taxes
in each of the reported fiscal years.
(e) If an issuer does not have three years of publicly reported
financial data, it may qualify under Rule 4426(c)(2) if it has:
(1) reported aggregate cash flows of at least $27.5 million; and
(2) positive cash flows in each of the reported fiscal years.
(f) A period of less than three months shall not be considered a
fiscal year, even if reported as a stub period in the issuer's publicly
reported financial statements.
(g) For purposes of Rule 4426, an issuer is affiliated with another
company if that other company, directly or indirectly though one or
more intermediaries, controls, is controlled by, or is under common
control of the issuer. Control, for these purposes, means having the
ability to exercise significant influence. Ability to exercise
significant influence will be presumed to exist where the parent or
affiliated company directly or indirectly owns 20% or more of the other
company's voting securities, and also can be indicated by
representation on the board of directors, participation in policy
making processes, material intercompany transactions, interchange of
managerial personnel, or technological dependency.
(h) In the case of an issuer listing in connection with its initial
public offering, compliance with the market capitalization requirements
of Rules 4426(c)(2) and (c)(3) will be based on the company's market
capitalization at the time of listing.
4430. Limited Partnership Rollup Listing Criteria
In addition to meeting the quantitative criteria for Nasdaq
[National] Global Market listing, an issuer that is formed as a result
of a limited partnership rollup transaction, as defined in Rule 4200,
must meet the criteria set forth below in order to be listed:
(a)-(b) No change.
4440. Registration Standards
(a) In addition to meeting the quantitative criteria and the
limited partnership rollup criteria, if applicable, for Nasdaq
[National] Global Market listing, the issue must also be:
(1) Registered under Section 12(b) of the Act; or
(2) Subject to an exemption issued by the Commission that permits
the listing of the security notwithstanding its failure to be
registered pursuant to Section 12(b).
4450. Quantitative Maintenance Criteria
After listing as a Nasdaq [National] Global Market security, a
security must substantially meet the criteria set forth in paragraphs
(a) or (b), and (c), (d), (e), (f), (g), (h) or (i) below to continue
to remain listed on the Nasdaq [National] Global Market. A security
maintaining its listing under paragraph (b) need not
[[Page 29200]]
also be in compliance with the quantitative maintenance criteria in the
Rule 4300 series.
(a)-(c) No change.
(d) Rights and Warrants
Common stock of issuer must continue to be listed on the Nasdaq
[National] Global Market.
(e)-(h) No change.
(i) Transfers between The Nasdaq [National] Global and Capital
Markets For Bid Price Deficient Issuers
(1) If a [National] Global Market issuer has not been deemed in
compliance prior to the expiration of the compliance period for bid
price provided in Rule 4450(e)(2), it may transfer to The Nasdaq
Capital Market, provided that it meets all applicable requirements for
initial listing on the Capital Market set forth in Rule 4310(c) or Rule
4320(e), as applicable, other than the minimum bid price requirement. A
Nasdaq [National] Global Market issuer transferring to The Nasdaq
Capital Market must pay the entry fee set forth in Rule 4520(a). The
issuer may also request a hearing to remain on The Nasdaq [National]
Global Market pursuant to the Rule 4800 Series.
(2) Following a transfer to The Nasdaq Capital Market pursuant to
paragraph (1), a Nasdaq [National] Global Market issuer will be
afforded the remainder any compliance period set forth in Rule
4310(c)(8)(D) or Rule 4320(e)(2)(E)(ii) as if the issuer had been
listed on The Nasdaq Capital Market. The compliance periods afforded by
this rule and any time spent in the hearing process will be deducted in
determining the length of the remaining applicable compliance periods
on The Nasdaq Capital Market.
4510. The Nasdaq [National] Global Market
(a) Entry Fee
(1) An issuer that submits an application to list any class of its
securities (not otherwise identified in this Rule 4500 series) on the
Nasdaq [National] Global Market, shall pay to Nasdaq a fee calculated
on total sharers outstanding, according to the following schedule. This
fee will be assessed on the date of listing on the Nasdaq [National]
Global Market, except for $5,000 which represents a non-refundable,
application fee, and which must be submitted with the issuer's
application.
Up to 30 million shares...................................... $100,000
30+ to 50 million shares..................................... 125,000
Over 50 million shares....................................... 150,000
(2) Total shares outstanding means the aggregate of all classes of
equity securities to be listed on the Nasdaq [National] Global Market
as shown in the issuer's most recent periodic report or in more recent
information held by Nasdaq or, in the case of new issues, as shown in
the offering circular, required to be filed with the issuer's
appropriate regulatory authority. In the case of foreign issuers, total
shares outstanding shall include only those shares issued and
outstanding in the United States.
(3) A closed-end management investment company registered under the
Investment Company Act of 1940, as amended (a ``Closed-End Fund''),
that submits an application for listing on the Nasdaq [National] Global
Market shall pay to Nasdaq an entry fee of $5,000 (of which $1,000
represents a non-refundable, application fee).
(4) An issuer that submits an application to list any class of
rights on the Nasdaq [National] Global Market, shall pay, at the time
of its application, a non-refundable application fee of $1,000 to
Nasdaq.
(5)-(6) No Change.
(7) The fees described in this Rule 4510(a) shall not be applicable
with respect to any securities that (i) are listed on another national
securities exchange but not listed on Nasdaq, or (ii) are listed on the
New York Stock Exchange and Nasdaq, if the issuer of such securities
transfers their listing exclusively to the Nasdaq [National] Global
Market.
(8) No change.
(b) Additional Shares
(1) The issuer of each class of security that is a domestic issue
which is listed on the Nasdaq [National] Global Market shall pay to
Nasdaq the fee set forth in subparagraph (2) below in connection with
the issuance of additional shares of each class of listed security.
(2)-(5) No change.
(c) Annual Fee--Domestic and Foreign Issues
(1) The issuer of each class of securities (not otherwise
identified in this Rule 4500 Series) that is a domestic or foreign
issue listed on the Nasdaq [National] Global Market shall pay to Nasdaq
an annual fee calculated on total shares outstanding according to the
following schedule:
Up to 10 million shares...................................... $24,500
10+ to 25 million shares..................................... 30,500
25+ to 50 million shares..................................... 34,500
50+ to 75 million shares..................................... 44,500
75+ to 100 million shares.................................... 61,750
Over 100 million shares...................................... 75,000
(2) No change.
(3) If a class of securities is removed from the Nasdaq [National]
Global Market that portion of the annual fees for such class of
securities attributable to the months following the date of removal
shall not be refunded, expect such portion shall be applied to the
Nasdaq Capital Market fees for that calendar year.
(4) Total shares outstanding means the aggregate of all classes of
equity securities listed on the Nasdaq [National] Global Market as
shown in the issuer's most recent periodic report required to be filed
with the issuer's appropriate regulatory authority or in more recent
information held by Nasdaq. In the case of foreign issuers, total
shares outstanding shall include only those shares issued and
outstanding in the United States.
(5) No change.
(d) Annual Fee--American Depository Receipts (ADRs) and Closed-End
Funds
(1) The issuer of each class of securities that is an ADR listed on
The Nasdaq [National] Global Market shall pay to Nasdaq an annual fee
calculated on ADRs outstanding according to the following schedule not
to exceed $30,000 per issuer:
Up to 10 million ADRs........................................ $21,225
10+ to 25 million ADRs....................................... 26,500
25+ to 50 million ADRs....................................... 29,820
Over 50 million ADRs......................................... 30,000
(2) ADRs outstanding means the aggregate of all classes of ADRs
listed on the Nasdaq [National] Global Market as shown in the issuer's
most recent periodic report required to be filed with the issuer's
appropriate regulatory authority or in more recent information held by
Nasdaq.
(3) A Closed-End Fund listed on the Nasdaq [National] Global Market
shall pay to Nasdaq an annual fee calculated based on total shares
outstanding according to the following schedule:
Up to 5 million shares....................................... $15,000
5+ to 10 million shares...................................... 17,500
10+ to 25 million shares..................................... 20,000
25+ to 50 million shares..................................... 22,500
50+ to 100 million shares.................................... 30,000
100+ to 250 million shares................................... 50,000
Over 250 million shares...................................... 75,000
(4) For the purpose of determining the total shares outstanding,
fund sponsors may aggregate shares outstanding of all Closed-End Funds
in the same fund family listed on the Nasdaq [National] Global Market
or the Nasdaq Capital Market, as shown in the issuer's most recent
periodic reports required to be filed with the appropriate regulatory
authority or in more recent information held by Nasdaq. The maximum
annual fee applicable to a fund family shall not exceed $75,000. For
purposes of this rule, a ``fund family'' is defined as two or more
Closed-End Funds that have a common investment adviser or have
investment advisers who are ``affiliated persons'' as defined in
Section 2(a)(3) of the Investment Company Act of 1940, as amended.
(5) No change.
[[Page 29201]]
(6) If a class of securities is removed from the Nasdaq [National]
Global Market, that portion of the annual fees for such class of
securities attributable to the months following the date of removal
shall not be refunded, except such portion shall be applied to the
Nasdaq Capital Market fees for that calendar year.
(e)-(f) No change.
4520. The Nasdaq Capital Market
(a)-(b) No change.
(c) Annual Fee
(1)-(4) No change.
(5) If a class of securities is removed from the Nasdaq Capital
Market, that portion of the annual fees for such class of securities
attributable to the months following the date of removal shall not be
refunded, except such portion shall be applied to Nasdaq [National]
Global Market fees for that calendar year.
(6) No change.
(7) Notwithstanding paragraph (6), for the purpose of determining
the total shares outstanding, fund sponsors may aggregate shares
outstanding of all Closed-End Funds in the same fund family listed on
the Nasdaq [National] Global Market and the Nasdaq Capital Market, as
shown in the issuer's most recent periodic reports required to be filed
with the appropriate regulatory authority or in more recent information
held by Nasdaq. The maximum annual fee applicable to a fund family
shall not exceed $75,000. For purposes of this rule, a ``fund family''
is defined as two or more Closed-End Funds that have a common
investment adviser or have investment advisers who are ``affiliated
persons'' as defined in Section 2(a)(3) of the Investment Company Act
of 1940, as amended.
(8) No change.
(d)-(e) No change.
4530. Other Securities
(a) Application Fee and Entry Fee.
(1) When an issuer submits an application to list any Other
Security or SEEDS on the Nadaq [National] Global Market qualified for
listing under Rule 4420(f) or 4420(g), it shall pay a non-refundable
Application Fee of $1,000.
(2) When an issuer submits an application to list any Other
Security or SEEDS on the Nasdaq [National] Global Market qualified for
listing under Rule 4420(f) or 4420(g), it shall pay an Entry Fee
calculated based on total shares outstanding according to the following
schedule:
Up to 1 million shares....................................... $5,000
1+ to 2 million shares....................................... 10,000
2+ to 3 million shares....................................... 15,000
3+ to 4 million shares....................................... 17,500
4+ to 5 million shares....................................... 20,000
5+ to 6 million shares....................................... 22,500
6+ to 7 million shares....................................... 25,000
7+ to 8 million shares....................................... 27,500
8+ to 9 million shares....................................... 30,000
9+ to 10 million shares...................................... 32,500
10+ to 15 million shares..................................... 37,500
Over 15 million shares....................................... 45,000
The applicable Entry Fee shall be reduced by any Entry Fees paid
previously in connection with the initial listing during the current
calendar year of any of the issuer's Other Securities and SEEDS on the
Nasdaq [National] Global Market.
(3) For the sole purpose of determining the Entry Fee, total shares
outstanding means the aggregate of all classes of Other Securities and
SEEDS of the issuer to be listed on the Nasdaq [National] Global Market
in the current calendar year as shown in the issuer's most recent
periodic report or in more recent information held by Nasdaq or, in the
case of new issues, as shown in the offering circular, required to be
filed with the issuer's appropriate regulatory authority.
(4)-(5) No change.
(b) Annual Fee
(1) The issuer of Other Securities or SEEDS qualified under Rule
4420(f) or 4420(g) for listing on the Nasdaq [National] Global Market
shall pay to Nasdaq an Annual Fee calculated based on total shares
outstanding according to the following schedule:
Up to 5 million shares....................................... $15,000
5+ to 10 million shares...................................... 17,500
10+ to 25 million shares..................................... 20,000
25+ to 50 million shares..................................... 22,500
Over 50 million shares....................................... 30,000
(2) No change.
(3) For the sole purpose of determining the Annual Fee, total
shares outstanding means the aggregate of all classes of Other
Securities and SEEDS of the issuer listed on the Nasdaq [National]
Global Market, as shown in the issuer's most recent periodic report
required to be filed with the issuer's appropriate regulatory authority
or in more recent information held by Nasdaq.
4540. Portfolio Depository Receipts and Index Fund Shares
(a) Entry Fee
(1) When an issuer submits an application for listing a series of
Portfolio Depository Receipts or Index Fund Shares on the Nasdaq
[National] Global Market, it shall pay to Nasdaq a listing fee of
$5,000 (which shall include a $1,000 non-refundable processing fee).
(2) The Nasdaq Board of Directors or its designee may, in its
discretion, defer or waive all or any part of the entry fee prescribed
herein.
(3) If the application is withdrawn or is not approved, the entry
fee (less the non-refundable processing fee) shall be refunded.
(b) Annual Fee
(1) The issuer of a series of Portfolio Depository Receipts or
Index Fund Shares listed on The Nasdaq [National] Global Market shall
pay to Nasdaq an annual fee calculated on total shares outstanding
according to the following schedule:
Up to 1 million shares....................................... $6,500
1+ to 2 million shares....................................... 7,000
2+ to 3 million shares....................................... 7,500
3+ to 4 million shares....................................... 8,000
4+ to 5 million shares....................................... 8,500
5+ to 6 million shares....................................... 9,000
6+ to 7 million shares....................................... 9,500
7+ to 8 million shares....................................... 10,000
8+ to 9 million shares....................................... 10,500
9+ to 10 million shares...................................... 11,000
10+ to 11 million shares..................................... 11,500
11+ to 12 million shares..................................... 12,000
12+ to 13 million shares..................................... 12,500
13+ to 14 million shares..................................... 13,000
14+ to 15 million shares..................................... 13,500
15+ to 16 million shares..................................... 14,000
Over 16 million shares....................................... 14,500
(2) Total shares outstanding means the aggregate number of shares
in all series of Portfolio Depository Receipts or Index Fund Shares to
be listed on The Nasdaq [National] Global Market as shown in the
issuer's most recent periodic report required to be filed with the
issuer's appropriate regulatory authority or in more recent information
held by Nasdaq.
(3) No change.
4550. Written Interpretations of Nasdaq Listing Rules
(a) An issuer listed on the Nasdaq Capital Market or the Nasdaq
[National] Global Market may request from Nasdaq a written
interpretation of the Rules contained in the 4000 through 4500 Series.
In connection with such a request, the issuer must submit to Nasdaq a
non-refundable fee of $2,000. A response to such a request generally
will be provided within four weeks from the date Nasdaq receives all
information necessary to respond to the request.
(b)-(e) No change.
4701. Definitions.
(a)-(ee) No change.
(ff) The term ``UTP Exchange'' shall mean any registered national
securities exchange that elects to participate in the Nasdaq Market
Center and that has unlisted trading privileges in Nasdaq [National]
Global Market securities pursuant to the Joint Self-Regulatory
Organization Plan Governing the Collection, Consolidation and
Dissemination Of Quotation and Transaction Information For Exchange-
[[Page 29202]]
Listed Nasdaq/National Market System Securities Traded On Exchanges On
An Unlisted Trading Privilege Basis (``Nasdaq UTP Plan'').
(gg)-(vv) No change.
6120. System Functions.
(a) No change.
(b) The Nasdaq system will provide the following risk management
capabilities to clearing brokers that have executed an agreement
authorizing the use of the Nasdaq Risk Management service:
(1) No change.
(2) Gross Dollar Thresholds (``Super Caps'') and Sizeable Limits
Clearing brokers may establish, on an inter-day or intra-day basis,
gross dollar thresholds (also known as ``Super Caps'') for purchases
and sales for their correspondent executing brokers. When any of the
correspondent's gross dollar thresholds are exceeded, notice will be
furnished to the clearing broker and to Trade Reporting Facilities. In
such event, Nasdaq Risk Management will automatically instruct Trade
Reporting Facilities that any trade in excess of an applicable
``sizable limit'' that is negotiated by the correspondent will be
subject to review by the clearing broker until such time as the
correspondent's trading activity no longer exceeds a gross dollar
threshold. Specifically, the clearing broker will have 15 minutes from
execution to review any single trade negotiated by the correspondent
that equals or exceeds the applicable sizeable limit in order to decide
to act as principal for the trade or to decline to act as principal. If
the clearing broker does not affirmatively accept or decline the
``sizeable trade,'' at the end of 15 minutes the system will instruct
Trade Reporting Facilities to act in accordance with pre-established
processing criteria, as described below.
(A) ACT Workstation Users
(i) Clearing brokers that use the ACT Workstation may establish
gross dollar thresholds and sizeable limits for each of their
correspondent executing brokers. They may establish different gross
dollar thresholds and sizeable limits for each type of security (i.e.,
Nasdaq [National] Global Market, Nasdaq Capital Market, Consolidated
Quotations Service, or OTC Bulletin Board), as well as an aggregate
gross dollar threshold and sizeable limit for all types of securities.
(ii)-(iii) No change.
(B) Other Nasdaq Risk Management Users
(i) Clearing brokers that do not use the ACT Workstation may
establish aggregate gross dollar thresholds for each of their
correspondent executing brokers, but may not establish gross dollar
thresholds for each type of security (i.e., Nasdaq [National] Global
Market, Nasdaq Capital Market, Consolidated Quotations Service, or OTC
Bulletin Board).
(ii)-(iii) No change.
(3)-(5) No change.
(6) Single Trade Limit
Clearing brokers may request that the Nasdaq Risk Management
service instruct Trade Reporting Facilities to provide 15 minutes from
trade report input to review any single trade executed by their
correspondent executing brokers that equals or exceeds a pre-
established limit in order to decide to act as principal for the trade
or to decline to act as principal. If, however, the clearing firm does
not affirmatively accept or decline the trade at the end of 15 minutes
the system will instruct Trade Reporting Facilities to act in
accordance with pre-established processing criteria, as described
below.
(A) ACT Workstation Users, Clearing brokers that use the ACT
Workstation may establish single trade limits for each of their
correspondent executing brokers, and may establish different limits for
each type of security (i.e., Nasdaq [National] Global Market, Nasdaq
Capital Market, Consolidated Quotations Service, or OTC Bulletin
Board). Such clearing brokers may also establish the default processing
criteria that will apply to trades that exceed the single trade limit
after 15 minutes if the clearing broker does not affirmatively accept
or decline the trade; the clearing broker may specify that the system
will instruct Trade Reporting Facilities that such trades should be
either automatically declined or automatically subjected to normal
processing in which the clearing broker will act as principal to clear
the trades.
(B) No change.
7024. Nasdaq Revenue Sharing Program
After Nasdaq earns total operating revenue sufficient to offset
actual expenses and working capital needs, a percentage of all Market
Participant Operating Revenue (``MPOR'') shall be eligible for sharing
with Nasdaq Quoting Market Participants (as defined in Rule 4701). MPOR
is defined as operating revenue that is generated by Nasdaq quoting
Market Participants. MPOR consists of transaction fees, technology
fees, and market data revenue that is attributable to Nasdaq quoting
Market Participant activity in Nasdaq [National] Global Market, and
Capital Market securities. MPOR shall not include any investment income
or regulatory monies. The sharing of MPOR shall be based on each Nasdaq
Quoting Market Participant's pro rata contribution to MPOR. In no event
shall the amount of revenue shared with Nasdaq Quoting Market
Participants exceed MPOR. To the extent market data revenue is subject
to year-end adjustment, MPOR revenue may be adjusted accordingly.
* * * * *
H. 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 proposes to rename the Nasdaq National Market as the Nasdaq
Global Market to more accurately reflect the international reach and
leadership of many of the companies listed on that market and the
market itself.\7\
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\7\ The Nasdaq Global Market, including the Nasdaq Global Select
segment described below, will be the successor to the Nasdaq
National Market. As such, Nasdaq believes that all securities listed
on the Nasdaq Global Market, including those on the Nasdaq Global
Select Market, will be ``covered securities,'' as that term is
defined in Section 18(b) of the Securities Act of 1933, 15 U.S.C.
77r(b).
---------------------------------------------------------------------------
Nasdaq also proposes to create a new segment within the Nasdaq
Global Market. This new segment will be known as the Nasdaq Global
Select Market, and new, higher initial listing requirements will apply
to companies listing on the Nasdaq Global Select Market.\8\ All listing
and trading rules applicable to securities on the Nasdaq Global Market
will also apply to the Nasdaq Global Select Market.
---------------------------------------------------------------------------
\8\ As described below, given that the Nasdaq Global Select
Market is a segment of the Nasdaq Global Market, Nasdaq will apply
the same continued listing requirements as are applicable to other
companies on the Nasdaq Global Market, which are the existing
listing requirements for the Nasdaq National Market.
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Listing Standards. As described below, issuers would be required to
meet minimum liquidity measures and a financial test, as well as
achieve a minimum bid price requirement.\9\
[[Page 29203]]
Nasdaq believes that the creation of this segment will more clearly
align Nasdaq's financial and liquidity listing standards with its
corporate governance standards \10\ and its regulatory enforcement
program, as well as its trading system. While Nasdaq believes its
existing standards protect investors, Nasdaq also believes that, to the
extent these higher initial listing standards help attract and maintain
listings on Nasdaq and identify companies that meet these high listing
standards, investors will benefit.
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\9\ Nasdaq could deny listing to a company that meets these
requirements based on public interest concerns, as described in
existing Nasdaq Rule 4300 and Nasdaq IM-4300.
\10\ Companies on the Nasdaq Global Select Market will be
required to meet the same rigorous corporate governance standards
applicable to companies on the Nasdaq Capital and Nasdaq Global
Markets. These standards require a majority independent board, an
independent audit committee, and for independent directors to
participate in compensation and nomination decisions. Shareholders
are also required to approve significant transactions and the use of
equity compensation.
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1. Liquidity Tests
In order to quality for the Nasdaq Global Select Market, a company
will be required to demonstrate either: (1) a minimum of 550
shareholders and an average monthly trading volume over the prior 12
months of at least 1,100,000 shares per month; or (2) a minimum of
2,200 shareholders.
Average monthly trading volume....................... >=1,100,00
AND
Shareholders......................................... >=550
OR
Shareholders......................................... >=2,200
In addition, a company must have at least 1,250,000 publicly held
shares. In computing the number of publicly held shares, Nasdaq will
not consider shares held by an officer, director, or 10% shareholder of
the company.
Publicly Held Shares................................. >=1,250,000
Finally, those publicly held shares must have a market value of at
least $110 million; provided, however, that if the market value of
publicly held shares is at least $100 million and the company has
shareholders equity of at least $110 million, the company will also
qualify.
Market Value of Publicly Held Shares................. >=$110,000,000
OR
Market Value of Publicly Held Shares................. >=$100,000,000
AND
Shareholders Equity.................................. >=$110,000,000
2. Financial Tests
A company will also be required to meet one of there financial
tests in order to qualify for listing on the Nasdaq Global Select
Market. Specifically, companies will be required to demonstrate: (1)
Aggregate pre-tax earnings of at least $11 million over the prior three
years, with all three years having positive pre-tax earnings and the
two most recent years having at least $2.2 million pre-tax earnings
each; (2) aggregate cash flows of at least $27.5 million over the prior
three years with all three years having positive cash flows, an average
market capitalization of at least $550 million over the prior 12
months, and total revenue of at least $110 million in the previous
fiscal year; or (3) total revenue of at least $90 million in the
previous fiscal year and an average market capitalization of at least
$850 million over the prior 12 months. However, Nasdaq notes that the
operating history requirements in Nasdaq Rule 4426(c)(1) and (c)(2),
may be shortened to a lesser period if an issuer does not have three
years of publicly reported financial data.\11\
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\11\ The Commission notes that a period of less than three
months shall not be considered a fiscal year. See Nasdaq Rule
4427(f). Telephone conversation between Arnold Golub, Associate Vice
President, Nasdaq, Florence Harmon, Senior Special Counsel, and Mia
Zur, Special Counsel, Division, on May 12, 2006.
Three year aggregate pre-tax earnings................ >=$11,000,000
AND
Pre-tax earnings in the two most recent years each... >=$2,200,000
AND
Third most recent year pre-tax earnings.............. >0
