Self-Regulatory Organizations; National Association of Securities Dealers, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change and Amendments No. 1, 2, 3 and 4 Thereto To Create the Nasdaq Global Select Market and Rename the Nasdaq National Market, 38922-38935 [06-6038]
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38922
Federal Register / Vol. 71, No. 131 / Monday, July 10, 2006 / Notices
should submit only information that
you wish to make available publicly. All
submissions should refer to File
Number SR–ISE–2006–35 and should be
submitted on or before July 31, 2006.
For the Commission, by the Division of
Market Regulation, pursuant to delegated
authority.11
Nancy M. Morris,
Secretary.
[FR Doc. E6–10719 Filed 7–7–06; 8:45 am]
BILLING CODE 8010–01–P
SECURITIES AND EXCHANGE
COMMISSION
(Release No. 34–54071; File No. SR–NASD–
2006–068)
Self-Regulatory Organizations;
National Association of Securities
Dealers, Inc.; Notice of Filing and
Immediate Effectiveness of Proposed
Rule Change and Amendments No. 1,
2, 3 and 4 Thereto To Create the
Nasdaq Global Select Market and
Rename the Nasdaq National Market
June 29, 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 May 30,
2006, the National Association of
Securities Dealers, Inc. (‘‘NASD’’),
through its subsidiary, The Nasdaq
Stock Market, Inc. (‘‘Nasdaq’’), filed
with the Securities and Exchange
Commission (‘‘Commission’’) the
proposed rule change as described in
Items I and II below, which Items have
been prepared by Nasdaq. Nasdaq 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 June 9, 2006, Nasdaq
filed Amendment No. 1 to the proposed
rule change.5 Nasdaq filed Amendment
No. 2 on June 15, 2006, Amendment No.
3 on June 27, 2006, and Amendment No.
4 on June 29, 2006.6 The Commission is
publishing this notice to solicit
comments on the proposed rule change,
as amended, from interested persons.
11 17
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
3 15 U.S.C. 78s(b)(3)(A).
4 17 CFR 240.19b–4(f)(6).
5 Amendment No. 1 replaced the original filing in
its entirety.
6 In Amendments No. 2, 3 and 4, Nasdaq made
certain technical corrections and clarifications to its
rule text.
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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. Nasdaq would
implement the proposed rule change on
July 1, 2006. Nasdaq previously filed
substantially identical changes to the
rules of the NASDAQ Stock Market LLC
(‘‘Nasdaq LLC’’).7 This rule filing
incorporates these changes into the
rules of the NASD because Nasdaq LLC
will not commence operations as a
national securities exchange prior to the
planned July 1, 2006, launch date for
the Nasdaq Global Select Market.8
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].
*
*
*
*
*
IM–2310–2. Fair Dealing With
Customers
(a)–(d) No change.
(e) Fair Dealing With Customers with
Regard to Derivative Products or New
Financial Products.
(1)–(2) No change.
(3) Hybrid Securities and Selected
Equity-Linked Debt Securities
(‘‘SEEDS’’) Designated as Nasdaq
[National] Global Market Securities
Pursuant to the Rule 4400 Series.
No change.
*
*
*
*
*
2710. Corporate Financing Rule—
Underwriting Terms and Arrangements
(a) No change.
(b) (1)–(6) No change.
(7) Offerings Exempt from Filing.
Notwithstanding the provisions of
subparagraph (1) above, documents and
information related to the following
public offerings need not be filed with
NASD for review, unless subject to the
provisions of Rule 2720. However, it
shall be deemed a violation of this Rule
or Rule 2810, for a member to
participate in any way in such public
offerings if the underwriting or other
arrangements in connection with the
offering are not in compliance with this
Rule or Rule 2810, as applicable:
7 See Securities Exchange Act Release No. 53799
(May 12, 2006), 71 FR 29195 (May 19, 2006) (SR–
NASDAQ–2006–007).
8 See Securities Exchange Act Release No. 53128
(January 13, 2006), 71 FR 3550 (January 23, 2006).
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(A)–(E) No change.
(F) Exchange offers of securities
where:
(i) The securities to be issued or the
securities of the company being
acquired are listed on The Nasdaq
[National] Global Market, the New York
Stock Exchange, or the American Stock
Exchange; or
(ii) No change.
(G) No change.
(8)–(11) No change.
(c)–(j) No change.
*
*
*
*
*
2790. Restrictions on the Purchase and
Sale of Initial Equity Public Offerings
(a)–(b) No change.
(c) General Exemptions.
The general prohibitions in paragraph
(a) of this rule shall not apply to sales
to and purchases by the following
accounts or persons, whether directly or
through accounts in which such persons
have a beneficial interest:
(1)–(4) No change.
(5) A publicly traded entity (other
than a broker/dealer or an affiliate of a
broker/dealer where such broker/dealer
is authorized to engage in the public
offering of new issues either as a selling
group member or underwriter) that:
(A) No change.
(B) Is traded on the Nasdaq [National]
Global Market; or
(C) Is a foreign issuer whose securities
meet the quantitative designation
criteria for listing on a national
securities exchange or trading on the
Nasdaq [National] Global Market;
(6)–(10) No change.
(d)–(h) No change.
(i) Definitions.
(1)–(9) No change.
(10) ‘‘Restricted person’’ means:
(A)–(D) No change.
(E) Persons Owning a Broker/Dealer.
(i)–(iii) No change.
(iv) Any person that directly or
indirectly owns 10% or more of a public
reporting company listed, or required to
be listed, in Schedule A of a Form BD
(other than a reporting company that is
listed on a national securities exchange
or is traded on the Nasdaq [National]
Global Market, or other than with
respect to a limited business broker/
dealer);
(v) Any person that directly or
indirectly owns 25% or more of a public
reporting company listed, or required to
be listed, in Schedule B of a Form BD
(other than a reporting company that is
listed on a national securities exchange
or is traded on the Nasdaq [National]
Global Market, or other than with
respect to a limited business broker/
dealer);
(vi) No change.
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*
(j) No change.
*
*
*
*
3350. Short Sale Rule
(a)(1) With respect to trades executed
on or reported to the ADF, 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 national
best (inside) bid when the current
national best (inside) bid is below the
preceding national best (inside) bid in
the security.
(2) With respect to trades executed on
or reported to 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.
(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,* 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.
(ii) An ‘‘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.
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(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.*
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 market making functions, will
not be considered an ‘‘exempt hedge
transaction.’’
(3)–(4) No change.
(j)–(1) No change.
IM–3350. Short Sale Rule
(a)(1) In developing a Short Sale Rule
for Nasdaq [National] Global Market
securities, NASD adopted an exemption
to the Rule for certain market making
activity. This exemption was deemed an
essential component of the Rule because
bona fide market making activity is
necessary and appropriate to maintain
continuous, liquid markets in Nasdaq
[National] Global Market securities.
Rule 3350(c)(1) states that short selling
prohibitions shall not apply to sales by
qualified Nasdaq market makers or
* The phrase contemporaneously established
includes transactions occurring simultaneously as
well as transactions occurring within the same brief
period of time.
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38923
registered ADF 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 ‘‘qualified’’ Nasdaq market maker
or a registered ADF market maker and
one must engage in ‘‘bona fide’’ market
making activity to take advantage of this
exemption. With this interpretation,
NASD wishes to clarify for members
some of the factors that will be taken
into consideration when reviewing
market making 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)(1) With respect to trades executed
on or reported to the ADF, 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 national best (inside)
bid when the current national best
(inside) bid is below the preceding
national best (inside) bid in the security.
NASD has determined that in order to
effect a ‘‘legal’’ short sale when the
current best bid is lower than 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.
(2) 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 preceding best (inside) bid in
the security. Nasdaq has detennined
that in order to effect a ‘‘legal’’ short sale
when the current best bid is lower than
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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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’’ is a distinct tier of The Nasdaq
Stock Market comprised of securities
that meet the requirements of and are
authorized as a Nasdaq National Market
security.] ‘‘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’’
means any authorized security in the
Nasdaq [National] Global Market which
(1) satisfies all applicable requirements
of the Rule 4300 Series and
substantially meets the criteria set forth
in the Rule 4400 Series and is subject
therefore to a transaction reporting plan
approved by the Commission; (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, and has been designated
therefore as a national market system
security pursuant to [SEC Rule 11Aa2–
1] Rule 600 of SEC Regulation NMS.
(27) No change.
(28) ‘‘Nasdaq Capital Market security’’
means any authorized security in The
Nasdaq Capital Market which (1)
satisfies all applicable requirements of
the Rule 4300 Series other than 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) ‘‘The Nasdaq Stock Market’’ or
‘‘Nasdaq’’ is an electronic securities
market comprised of competing market
makers whose trading is supported by a
communications network linking them
to quotation dissemination, trade
reporting, and order execution systems.
This market also provides specialized
automation services for screen-based
negotiations of transactions, on-line
comparison of transactions, and a range
of informational services tailored to the
needs of the securities industry,
investors and issuers. [The Nasdaq
Stock Market consists of two distinct
market tiers: the ‘‘Nasdaq National
Market’’ or ‘‘NNM,’’ and ‘‘The Nasdaq
Capital Market’’.] The Nasdaq Stock
Market is operated by The Nasdaq Stock
Market, Inc., a wholly-owned subsidiary
of the Association.
(30) [Reserved.]
(a) ‘‘Nasdaq Global Select Market’’ or
‘‘NGSM’’ is a segment of the Nasdaq
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Global Market comprised of NGM
securities that met the requirements for
initial inclusion contained in Rules
4425, 4426 and 4427.
(b) ‘‘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) No change.
*
*
*
*
*
4310. Qualification Requirements for
Domestic and Canadian Securities
To qualify for inclusion in Nasdaq, a
security of a domestic or Canadian
issuer shall satisfy all applicable
requirements contained in paragraphs
(a) or (b), and (c) hereof.
(a)–(b) No change.
(c) In addition to the requirements
contained in paragraph (a) or (b) above,
and unless otherwise indicated, a
security shall satisfy the following
criteria for inclusion in Nasdaq:
(1)–(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. Qualitative Listing Requirements
for Nasdaq [National Market and Nasdaq
Capital Market] Issuers Except for
Limited Partnerships
No change.
4350–1 Qualitative Listing
Requirements for Nasdaq (National
Market and Nasdaq Capital Market]
Issuers Except for Limited Partnerships
*
No change.
*
*
*
*
4400. Nasdaq [National] Global
Market—Issuer Designation
Requirements
No change.
IM–4400. 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
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shall require issuers to enter into a dual
listing agreement with Nasdaq.
While Nasdaq shall certify such
dually listed securities for listing on the
[NNM] NGM, Nasdaq shall not exercise
its authority under the NASD Rule 4400
Series separately to designate or register
such dually listed securities as Nasdaq
national market system securities within
the meaning of Section 11A of the
Securities Exchange Act of 1934 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 Tape
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 the
Nasdaq Stock Market. 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 remain 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 NASD rules as a result of a
single security being both 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 NASD rules.
Treating dually listed securities as CQS
securities under NASD 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 the
Nasdaq InterMarket.
For example, Nasdaq shall continue to
honor the trade halt authority of the
primary market under the CQ and CT
Plans. NASD Rule 4120(a)(2) and (3)
governing CQS securities shall apply to
dually listed securities, whereas NASD
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
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than NASD Rule 3350 governing short
sales of Nasdaq listed securities. Market
makers in dually listed securities shall
retain all obligations imposed by the
NASD Rule 5200, 6300, and 6400 Series
regarding quoting, trading, and
transaction reporting of CQS securities
rather than assuming the obligations
appurtenant to quoting, trading, and
transaction reporting of Nasdaq listed
securities. The fees applicable to CQS
securities set forth in NASD Rule 7010
shall continue to apply to dually listed
issues.
*
*
*
*
*
4420. Quantitative Designation Criteria
In order to be designated for 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),
(l) or (m) below. Initial Public Offerings
substantially meeting such criteria are
eligible for immediate inclusion in the
Nasdaq [National] Global Market upon
prior application and with the written
consent of the managing underwriter
that immediate inclusion is desired. All
other qualifying issues, excepting
special situations, are included on the
next inclusion date established by
Nasdaq.
(a)–(e) No change.
(f) Other Securities.
(1) No change.
(2) Issuers of securities designated
pursuant to this paragraph [(e)] (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 designating
as Nasdaq [National] Global Market
securities 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 on the Nasdaq
[National] Global Market or the NYSE;
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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 a 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 a national securities exchange and be
subject to last sale reporting; and
(C) No change.
(4)–(5) No change.
(h) Units.
(1) Initial and Continued Inclusion
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
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 website, or if it does not
maintain a website, in its annual report
provided to unit holders. An issuer shall
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38925
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 Nasdaq 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
effected as soon as practicable if the
security meets the requirements for
initial listing contained in Rule 4426.
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
effected 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, an 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 securities of any issuer
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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 Select 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 considered noncompliant, 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,
subiect to the continuation of that grace
period.
IM–4425 Launch of the Nasdaq Global
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), anv company that
initially listed as an IPO since May 1,
2005 must have the applicable average
market capitalization from the date of
listing. Nasdaq also notes that certain
Nasdaq-listed issuers that qualify to
initially list on the New Yark Stock
Exchange (NYSE) will not be eligible to
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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,
subiect 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 subiect to delisting in the event
it fails to satisfy any of the continued
listing requirements far 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:
(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 month; 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
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
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registered under the Investment
Company Act of 1940.
(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 registered under
the Investment Company Act of 1940
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
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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 of
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 issuer’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 activitives. 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)(I) 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
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17:10 Jul 07, 2006
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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
Designation Criteria
In addition to meeting the
quantitative criteria for Nasdaq
[National] Global Market inclusion, 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
designated:
(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 market] Global
Market inclusion, the issue must also
be:
(1)–(4) No Change
(5) Registered under Section 12(b) of
the Act and listed on a national
securities exchange, or admitted to
unlisted trading privileges on an
exchange, provided that:
(A) No change.
(B) Such exchange shall permit
Nasdaq market makers telephone access
to exchange trading facilities with
respect to transactions in [NNM] NGM
securities to the same extent that
exchange market makers are permitted
access to Nasdaq market makers; and
(C) No change.
(b) Foreign securities and American
Depositary Receipts where either the
issuer is required to file reports
pursuant to Section 15(d) of the Act or
the security is exempt from registration
under Section 12(g) of the Act by reason
of the applicability of SEC Rule 12g3–
2(b) are not eligible for designation in
the Nasdaq [National] Global Market.
4450. Quantitative Maintenance Criteria
After designation 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 be designated as a
national market system security. A
security maintaining its designation
under paragraph (b) need not also be in
compliance with the quantitative
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38927
maintenance criteria in the Rule 4300
series.
(a)–(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 inclusion 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 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 of
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 for inclusion of any class of
its securities (not otherwise identified in
this Rule 4500 series) in The Nasdaq
[National] Global Market, shall pay to
The Nasdaq Stock Market, Inc. a fee
calculated on total shares outstanding,
according to the following schedule.
This fee will be assessed on the date of
entry in 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 ..............
30+ to 50 million shares .............
Over 50 million shares ................
$100,000
125,000
150,000
(2) Total shares outstanding means
the aggregate of all classes of equity
securities to be included in 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
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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 inclusion of
a class of securities in The Nasdaq
[National] Global Market shall pay to
the Nasdaq Stock Market, Inc. an entry
fee of $5,000 (of which $1,000
represents a non-refundable, application
fee).
(4) An issuer that submits an
application for inclusion of any class of
rights in The Nasdaq [National] Global
Market, shall pay, at the time of its
application, a non-refundable
application fee of $I,000 to The Nasdaq
Stock Market, Inc.
(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 a national securities exchange
but not listed on Nasdaq, if the issuer
of such securities transfers their listing
exclusively to the Nasdaq [National]
Global Market; or (ii) are listed on the
New York Stock Exchange and Nasdaq,
if the issuer of such securities ceases to
maintain their listing on the New York
Stock Exchange and the securities
instead are designated as national
market securities under the Rule 4400
Series.
(8) No change.
(9) An issuer that transfers its listing
from The Nasdaq Capital Market to The
Nasdaq [National] Global Market shall
pay the entry fee described in this Rule
4510(a) less the entry fee that was
previously paid by the issuer to Nasdaq
in connection with listing on The
Nasdaq Capital Market. Such issuer is
not required to pay the application fee
described in Rule 4510(a) in connection
with the application to transfer listing.
(10) An issuer that submits an
application for listing on The Nasdaq
Capital Market, but prior to listing
revises its application to seek listing on
The Nasdaq [National] Global Market, is
not required to pay the application fee
described in Rule 4510(a) in connection
with the revised application.
(b) Additional Shares.
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 in The Nasdaq
[National] Global Market shall pay to
The Nasdaq Stock Market, Inc. an
annual fee calculated on total shares
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outstanding according to the following
schedule:
may aggregate shares outstanding of all
Closed-End Funds in the same fund
Up to 10 million shares ..............
$24,500 family listed in The Nasdaq [National]
10+ to 25 million shares .............
30,500 Global Market or The Nasdaq Small Cap
25+ to 50 million shares .............
34,500 Market, as shown in the issuer’s most
50+ to 75 million shares .............
44,500 recent periodic reports required to be
75+ to 100 million shares ...........
61,750 filed with the appropriate regulatory
Over 100 million shares ..............
75,000 authority or in more recent information
held by Nasdaq. The maximum annual
(2) No change.
fee applicable to a fund family shall not
(3) If a class of securities is removed
exceed $75,000. For purposes of this
from the Nasdaq [National] Global
rule, a ‘‘fund family’’ is defined as two
Market that portion of the annual fees
or more Closed-End Funds that have a
for such class of securities attributable
common investment adviser or have
to the months following the date of
investment advisers who are ‘‘affiliated
removal shall not be refunded, [expect]
persons’’ as defined in Section 2(a)(3) of
except such portion shall be applied to
the Investment Company Act of 1940, as
The Nasdaq Capital Market fees for that
amended.
calendar year.
(5) No change.
(4) Total shares outstanding means
(6) If a class of securities is removed
the aggregate of all classes of equity
from the Nasdaq [National] Global
securities included in the Nasdaq
Market, that portion of the annual fees
[National] Global Market as shown in
for such class of securities attributable
the issuer’s most recent periodic report
to the months following the date of
required to be filed with the issuer’s
removal shall not be refunded, except
appropriate regulatory authority or in
such portion shall be applied to The
more recent information held by
Nasdaq Capital Market fees for that
Nasdaq. In the case of foreign issuers,
calendar year.
total shares outstanding shall include
(e)–(f) No change.
only those shares issued and
outstanding in the United States.
4520. The Nasdaq Capital Market
(5) No change.
(a) Entry Fee
(d) Annual Fee—American Depositary
(1)–(6) No change.
Receipts (ADRs) and Closed-End Funds.
(7) The fees described in this Rule
(1) The issuer of each class of
4520(a) shall not be applicable with
securities that is an ADR listed in The
respect to any securities that (i) are
Nasdaq [National] Global Market shall
listed on a national securities exchange
pay to The Nasdaq Stock Market, Inc. an
but not listed on Nasdaq, if the issuer
annual fee calculated on ADRs
of such securities transfers their listing
outstanding according to the following
exclusively to the Nasdaq [National]
schedule not to exceed $30,000 per
Capital Market; or (ii) are listed on the
issuer:
New York Stock Exchange and Nasdaq,
Up to 10 million ADRs ...............
$21,225 if the issuer of such securities ceases to
10+ to 25 million ADRs ..............
26,500
maintain their listing on the New York
25+ to 50 million ADRs ..............
29,820
Over 50 million ADRs .................
30,000 Stock Exchange and the securities
instead are designated under the plan
(2) ADRs outstanding means the
applicable to Nasdaq Capital Market
aggregate of all classes of ADRs
securities.
included in The Nasdaq [National]
(8) No change.
Global Market as shown in the issuer’s
(9) An issuer that submits an
most recent periodic report required to
application for listing on The Nasdaq
be filed with the issuer’s appropriate
[National] Global Market, but prior to
regulatory authority or in more recent
listing revises its application to seek
information held by Nasdaq.
listing on The Nasdaq Capital Market, is
(3) A Closed-End Fund listed in The
not required to pay the application fee
Nasdaq [National] Global Market shall
described in Rule 4520(a) in connection
pay to The Nasdaq Stock Market, Inc. an with the revised application.
annual fee calculated based on total
(b) No change.
shares outstanding according to the
(c) Annual Fee.
following schedule:
(1)–(4) No change.
(5) If a class of securities is removed
Up to 5 million shares ................
$15,000
5+ to 10 million shares ...............
17,500 from The Nasdaq Capital Market, that
10+ to 25 million shares .............
20,000 portion of the annual fees for such class
25+ to 50 million shares .............
22,500 of securities attributable to the months
50+ to 100 million shares ...........
30,000 following the date of removal shall not
100+ to 250 million shares .........
50,000 be refunded, except such portion shall
Over 250 million shares ..............
75,000
be applied to Nasdaq [National] Global
(4) For the purpose of determining the Market fees for that calendar year.
(6) No change.
total shares outstanding, fund sponsors
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(7) Notwithstanding paragraph (6), for
the purpose of detennining the total
shares outstanding, fund sponsors may
aggregate shares outstanding of all
Closed-End Funds in the same fund
family listed in 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 infonnation
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 for inclusion of any Other
Security or SEEDS in the Nasdaq
[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 for inclusion of any Other
Security or SEEDS in 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:
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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 15 million shares .............
Over 15 million shares ................
$5,000
10,000
15,000
17,500
20,000
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
inclusion during the current calendar
year of any of the issuer’s Other
Securities and SEEDS in 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 included in 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
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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
The Nasdaq Stock Market, Inc. an
Annual Fee calculated based on total
shares outstanding according to the
following schedule:
38929
(2) Total shares outstanding means
the aggregate number of shares in all
series of Portfolio Depository Receipts
or Index Fund Shares to be included in
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
Up to 5 million shares ................
$15,000 Capital Market or The Nasdaq [National]
5+ to 10 million shares ...............
17,500
Global Market may request from Nasdaq
10+ to 25 million shares .............
20,000
25+ to 50 million shares .............
22,500 a written interpretation of the Rules
Over 50 million shares ................
30,000 contained in the 4000 through 4500
Series. In connection with such a
(2) No change.
request, the issuer must submit to The
(3) For the sole purpose of
Nasdaq Stock Market, Inc. a nondetermining the Annual Fee, total
refundable fee of $2,000. A response to
shares outstanding means the aggregate
such a request generally will be
of all classes of Other Securities and
provided within four weeks from the
SEEDS of the issuer included in the
date Nasdaq receives all information
Nasdaq [National] Global Market, as
necessary to respond to the request.
shown in the issuer’s most recent
(b)–(e) No change.
periodic report required to be filed with *
*
*
*
*
the issuer’s appropriate regulatory
4612. Primary Nasdaq Market Maker
authority or in more recent information
Standards
held by Nasdaq.
(a) A member registered as a Nasdaq
4540. Portfolio Depository Receipts and
market maker pursuant to Rule 4611
Index Fund Shares
may be deemed to be a Primary Nasdaq
(a) Entry Fee.
Market Maker in Nasdaq [National]
(1) When an issuer submits an
Global Market securities if the market
application for listing a series of
maker complies with threshold
Portfolio Depository Receipts or Index
standards (as established and published
Fund Shares in The Nasdaq [National]
by the Association from time to time) in
Global Market, it shall pay to The
the following qualification criteria:
Nasdaq Stock Market, Inc. a listing fee
(1)–(3) No change.
of $5,000 (which shall include a $1,000
(b) A market maker for a Nasdaq
non-refundable processing fee).
[National] Global Market security must
satisfy the threshold standards in at
(2)–(3) No change.
least two of the criteria in paragraph (a)
(b) Annual Fee.
in order to be designated a Primary
(1) The issuer of a series of Portfolio
Nasdaq Market Maker in that security;
Depository Receipts or Index Fund
provided however, that if a market
Shares listed on The Nasdaq [National]
maker satisfies only one of the criteria,
Global Market shall pay to The Nasdaq
it may qualify as a Primary Nasdaq
Stock Market, Inc. an annual fee
Market Maker if it also accounts for a
calculated on total shares outstanding
threshold level of proportionate volume
according to the following schedule:
Up to 1 million shares ................
$6,500 in the security (as established and
1+ to 2 million shares .................
7,000 published by the Association from time
2+ to 3 million shares .................
7,500 to time).**
(c)–(f) No change.
3+ to 4 million shares .................
8,000
(g) In registration situations:
4+ to 5 million shares .................
8,500
(1) To register and immediately
5+ to 6 million shares .................
9,000
6+ to 7 million shares .................
9,500 become a Primary Nasdaq Market Maker
7+ to 8 million shares .................
10,000 in a Nasdaq [National] Global Market
8+ to 9 million shares .................
10,500 security, a member must be a Primary
9+ to 10 million shares ...............
11,000 Nasdaq Market Maker in 80% of the
10+ to 11 million shares .............
11,500
securities in which it has registered. If
11+ to 12 million shares .............
12,000
12+ to 13 million shares .............
12,500 the market maker is not a Primary
13+ to 14 million shares .............
13,000 Nasdaq Market Maker in 80% of its
14+ to 15 million shares .............
13,500 stocks, it may qualify as a Primary
15+ to 16 million shares .............
Over 16 million shares ................
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14,000
14,500
**No
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sroberts on PROD1PC70 with NOTICES
Nasdaq Market Maker in that stock if the
market maker registers in the stock as a
regular Nasdaq market maker and
satisfies the qualification criteria for the
next review period.
(2) Notwithstanding paragraph (g)(1)
above, after an offering in a stock has
been publicly announced or a
registration statement has been filed, no
market maker may register in the stock
as a Primary Nasdaq Market Maker
unless it meets the requirements set
forth below:
(A) For secondary offerings:
(i) The secondary offering has become
effective and the market maker has
satisfied the qualification criteria in the
time period between registering in the
security and the offering becoming
effective; provided, however, that if the
member is a manager or co-manager of
the underwriting syndicate for the
secondary offering and it is a PMM in
80% or more of the Nasdaq [National]
Global Market securities in which it is
registered, the member is eligible to
become a PMM in the issue prior to the
effective date of the secondary offering
regardless of whether the member was
a registered market maker in the stock
before the announcement of the
secondary offering; or
(ii) No change.
(B)–(C) No change.
(3) No change.
(h) No change.
4613. Character of Quotations
(a) Quotation Requirements and
Obligations.
(1) Two-Sided Quote Obligation. For
each security in which a member is
registered as a market maker, the
member shall be willing to buy and sell
such security for its own account on a
continuous basis and shall enter and
maintain a two-sided quotation
(‘‘Principal Quote’’), which is attributed
to the market maker by a special maker
participant identifier (‘‘MPID’’) and is
displayed in the Nasdaq Quotation
Montage at all times, subject to the
procedures for excused withdrawal set
forth in Rule 4619.
(A) No change.
(B) Minimum Price Variation—The
minimum quotation increment for
Nasdaq [National] Global Market and
Capital Market securities shall be $0.01
for quotations priced at or above $1.00
per share and $0.0001 for quotations
priced below $1.00 per share; provided,
however, that if the Securities and
Exchange Commission (‘‘SEC’’) permits,
with respect to any security, the display,
rank or acceptance of quotations priced
at or above $1.00 per share in an
increment smaller than $0.01, then the
minimum quotation increment for such
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17:10 Jul 07, 2006
Jkt 208001
a security shall be the minimum
permitted by the SEC or $0.0001,
whichever is greater. Quotations failing
to meet this standard shall be rejected.
(2)–(3) No change.
(b)–(e) No change.
*
*
*
*
*
4630. Reporting Transactions in Nasdaq
[National] Global Market Securities
This Rule 4630 Series applies to the
reporting by members of transactions in
Nasdaq [National] Global Market
securities (‘‘designated securities’’) to
the Nasdaq Market Center.
*
*
*
*
*
4652. Transaction Reporting
(a)–(c) No change.
(d) Procedures for Reporting Price and
Volume *
No change.
(e)–(g) 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 ExchangeListed Nasdaq/National Market System
Securities Traded on Exchanges on an
Unlisted Trading Privilege Basis
(‘‘Nasdaq UTP Plan’’).
(gg)–(vv) No change.
*
*
*
*
*
(6)–(13) No change.
(b) No change.
*
*
*
*
*
5410. Applicability
(a) For a period of time, NASD will
operate two facilities for collecting trade
reports for executions in Nasdaq
[National] Global Market, Nasdaq
Capital Market, and Nasdaq Convertible
Debt securities (‘‘designated
securities’’): The Nasdaq Stock Market
and the Alternative Display Facility
(‘‘ADF’’). Nasdaq will operate the
Nasdaq Market Center (including its
trade reporting service), and NASD,
through the ADF, will operate Trade
Reporting and Comparison Service
(‘‘TRACS’’). This Rule 5400 Series
establishes the rules for determining
which member must report a trade and
whether a trade must be reported to the
Nasdaq Market Center, pursuant to the
Rule 4630, 4640, 4650 and 6100 Series
or TRACS, pursuant to the Rule 4630A
and 6100A Series.
(b) No change.
*
*
*
*
*
6110. Definitions
(a) The term ‘‘Reportable Security’’
shall mean all Nasdaq [National] Global
Market and Nasdaq Capital Market
securities, all Consolidated Quotation
Service (CQS) securities traded in the
over-the-counter market, all OTC Equity
Securities as defined in Rule 6600, and
all Direct Participation Programs as
defined in Rule 6910.
(b)–(q) No change.
6120. Trade Reporting Participation
Requirements
(a) Mandatory Participation for
Clearing Agency Members
4200A. Definitions
(1)–(5) No change.
(a) Unless the context requires
(6) Upon compliance with the
otherwise, the terms used in the Rule
conditions specified in subparagraphs
4000A and Rule 6000A Series shall have (A)–(E) below, access to and
the meanings below. Terms not
participation in the trade reporting
specifically defined below shall have
service of the Nasdaq Market Center
the meaning in NASD’s By-Laws and
may be granted to a national securities
Rules and SEC [Rule 11Aa3–1]
exchange that trades Nasdaq [National]
Regulation NMS.
Global Market or Capital Market
(1) No change.
securities on an unlisted trading
(2) ‘‘ADF-eligible security’’ means a
privileges basis (‘‘UTP Exchange’’). The
Nasdaq [National] Global Market,
terms and conditions of such access and
Nasdaq Capital Market security and
participation, including available
Nasdaq Convertible Debt securities.
functionality and applicable rules and
(3)–(4) No change.
(5) ‘‘Nasdaq [National] Global Market’’ fees, shall be set forth in and governed
or [‘‘NNM’’] NGM is a distinct tier of the by a UTP Exchange ACT Participant
Application Agreement. Such access
Nasdaq Stock Market comprised of
may be made available on terms that
securities that meet the requirements of
differ from the terms applicable to
and are authorized as a Nasdaq
members but that do not unreasonably
[National] Global Market Security.
discriminate among national securities
exchanges.
* For examples of reporting procedures, refer to
(A)–(E) No change.
the Rule 4630 Series, Reporting Transactions in
Nasdaq [National] Global Market Securities.
(7) No change
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Federal Register / Vol. 71, No. 131 / Monday, July 10, 2006 / Notices
*
(b) No change.
*
*
*
*
IM–6130. Trade Reporting of Short Sales
The NASD’s short sale rule (Short
Sale Rule or Rule 3350) generally
prohibits members from effecting short
sales in [NNM] NGM securities at or
below the inside bid when the current
inside bid is below the previous inside
bid. Rule 6130(d)(6) requires that
members indicate on ACT reports
whether a transaction is a short sale or
a short sale exempt transaction (‘‘ACT
short sale reporting requirements’’).
Rule 6130 explicitly requires members
to file ACT reports not just for [NNM]
NGM securities transactions, but for
other securities transactions, including
transactions in exchange-listed, Capital
Market, convertible debt, OTC Bulletin
Board, and OTC equity securities. Thus,
all short sale transactions in these
securities reported to ACT must carry a
‘‘short sale’’ indicator (or a ‘‘short sale
exempt’’ indicator if it is a short sale
transaction in an [NNM] NGM or
exchange-listed security that qualifies
for an exemption from Rule 3350 or SEC
Rule 10a–1).
*
*
*
*
*
sroberts on PROD1PC70 with NOTICES
6150. Risk Management Functions
(a) No change.
(b) If a clearing broker voluntarily
uses the Nasdaq Market Center risk
management service, the Nasdaq Market
Center system will provide the
following risk management capabilities
to clearing brokers that have executed
an ACT Participant Risk Management
Agreement:
(1) No change.
(2) Gross Dollar Thresholds (‘‘Super
Caps’’) and Sizeable Limits.
Clearing brokers will be able to
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 a
correspondent’s gross dollar thresholds
are exceeded, notice will be furnished to
the clearing broker, and any trade in
excess of an applicable ‘‘sizeable 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 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 Market Center 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 will have 15 minutes
from trade report input to the Nasdaq
Transaction Related Charges:
Reporting of transactions in Nasdaq [National] Global Market and
Capital Market securities executed through the Nasdaq Market
Center System (‘‘Nasdaq Market Center Covered Transactions’’).
Average daily volume of transaction reports for the Nasdaq Market
Center Covered Transactions during the month to which a participant
is a party:
0 to 9,999 ..........................................................................................
10,000 or more ..................................................................................
Other reports for transactions in Nasdaq [National] Global Market and
Capital Market securities not subject to comparison through the
Nasdaq Market Center.
Reporting of transactions in ITS Securities (as defined in Rule 5210(c))
not subject to comparison through the Nasdaq Market Center (‘‘ITS
Covered Transactions’’).
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38931
Market Center 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
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 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.
6110A. Definitions
(a)–(k) No change.
(l) The term ‘‘TRACS Eligible
Security’’ shall mean Nasdaq [National]
Global Market, Nasdaq Capital Market
security and Nasdaq Convertible Debt
securities.
(m)–(n) No change.
*
*
*
*
*
7010. System Services
(a)–(f) No change.
(g) Nasdaq Market Center Trade
Reporting
The following charges shall be paid
by the participant for use of the trade
reporting service of the Nasdaq Market
Center:
Fee per side for transaction reports of the Nasdaq Market Center Covered Transactions to which such participant is a party:
$0.029
$0.00
$0.00
Sfmt 4703
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Federal Register / Vol. 71, No. 131 / Monday, July 10, 2006 / Notices
Average daily volume of media transaction reports for ITS Covered
Transactions during the month (i) that are submitted to the trade reporting service of the Nasdaq Market Center automatically and in
which a participant is identified as the reporting party, or (ii) that are
submitted or introduced by such participant to the Nasdaq Market
Center:
0 to 5,000 ..........................................................................................
More than 5,000 ................................................................................
Reporting of all other transactions not subject to comparison through
the Nasdaq Market Center.
Comparison ..............................................................................................
Late Report—T+N ....................................................................................
Query ........................................................................................................
CTCI fee ...................................................................................................
WebLink ACT or Nasdaq Workstation Post Trade ..................................
Risk Management Charges ......................................................................
Corrective Transaction Charge ................................................................
ACT Workstation ......................................................................................
sroberts on PROD1PC70 with NOTICES
(h)–(t) No change.
(u) 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.
(v)–(w) No change.
*
*
*
*
*
II. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
In its filing with the Commission,
Nasdaq included statements concerning
the purpose of, and basis for, the
proposed rule change, as amended, and
discussed any comments it received on
the proposed rule change. The text of
these statements may be examined at
the places specified in Item IV below.
VerDate Aug<31>2005
17:10 Jul 07, 2006
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Fee per side for reports of ITS Covered Transactions to which such
participant is a party:
$0.029
$0.029 for a number of reports equal to 5,000 times the number of
trading days in the month $0.00 for all remaining reports.
$0.029/side.
$0.0144/side per 100 shares (minimum 400 shares; maximum 7,500
shares).
$0.288/side.
$0.50/query.
$575.00/month.
$300.00/month (full functionality) or $150.00/month (up to an average
of twenty transactions per day each month) (For the purposes of this
service only, a transaction is defined as an original trade entry, either
on trade date or as-of transactions per month).
$40.035/side and $17.25/month per correspondent firm (maximum
$10,000/month per correspondent firm).
$0.25/Cancel, Error, Inhibit, Kill, or ‘No’ portion of No/Was transaction,
paid by reporting side; $0.25/Break, Decline transaction, paid by
each party.
$525/logon/month.
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.9
Nasdaq also proposes to create a new
segment within the Nasdaq Global
Market. This new segment would be
known as the Nasdaq Global Select
Market, and new, higher initial listing
requirements would apply to companies
listing onthe Nasdaq Global Select
Market.10 All listing and trading rules
applicable to securities on the Nasdaq
Global Market would also apply to the
Nasdaq Global Select Market.
9 The Nasdaq Global Market, including the
Nasdaq Global Select segment described below,
would 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, would be
‘‘covered securities,’’ as that term is defined in
Section 18(b) of the Securities Act of 1933, 15
U.S.C. 77r(b).
10 As described below, given that the Nasdaq
Global Select Market is a segment of the Nasdaq
Global Market, Nasdaq would 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.11 Nasdaq believes that the
creation of this segment would more
clearly align Nasdaq’s financial and
liquidity listing standards with its
corporate governance standards 12 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 would benefit.
1. Liquidity Tests
In order to qualify for the Nasdaq
Global Select Market, a company would
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.
11 Nasdaq could deny listing to a company that
meets these requirements based on public interest
concerns, as described in existing NASD Rule 4300
and NASD IM–4300.
12 Companies on the Nasdaq Global Select Market
would 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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Average monthly trading
volume ........................
and
Shareholders ..................
OR
Shareholders ..................
> = 1,100,000
> = 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 would not consider
shares held by an officer, director, or
10% shareholder ofthe company.
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 ........
different liquidity standards for closedend funds. Finally, if the primary class
> = $27,500,000 of a company is included in the Nasdaq
Global Select Market, any secondary
>0
class of that same company, such as a
> = $550,000,000 secondary class of common or a
> = $110,000,000 preferred stock, that qualifies for listing
on the Nasdaq Global Market shall also
> = $90,000,000 be included in the Nasdaq Global Select
Market.
> = $850,000,000
Nasdaq would determine compliance
with the financial tests based on a
Publicly Held Shares .....
> = 1,250,000
company’s publicly filed financial
information. Thus, for example, as
Finally, those publicly held shares
specified in proposed NASD Rule
must have a market value of at least
$110 million; provided, however, that if 4427(b), pre-tax earnings would be the
the market value of publicly held shares company’s pre-tax income from
is at least $100 million and the company continuing operations as filed with the
Commission in the issuer’s most recent
has shareholders equity of at least $110
periodic report and/or registration
million the company would also
statement.
qualify.
sroberts on PROD1PC70 with NOTICES
Market Value of Publicly Held Shares ........
OR
Market Value of Publicly Held Shares ........
and
Shareholders’ Equity .....
3. Price Test
Any company newly listed on Nasdaq
(both initial public offerings and
> = $100,000,000 seasoned companies) would be required
to have a minimum $5 bid price to list
> = $110,000,000 on the Nasdaq Global Select Market.
Companies switching from the Nasdaq
2. Financial Tests
Global Market would have previously
A company would also be required to satisfied the bid price requirement in
meet one of three financial tests in order connection with their initial listing and
to qualify for listing on the Nasdaq
therefore would not be required to meet
Global Select Market. Specifically,
this requirement again when
companies would be required to
transferring to the new segment.
demonstrate: (1) Aggregate pre-tax
4. Other Provisions
earnings of at least $11 million over the
A company listing in connection with
prior three years, with all three years
having positive pre-tax earnings and the a court-approved reorganization under
the federal bankruptcy laws or
two most recent years having at least
comparable foreign laws would be
$2.2 million pre-tax earnings each; (2)
required to have 450 shareholders for
aggregate cash flows of at least $27.5
listing, as would a company affiliated
million over the prior three years with
with another company listed on the
all three years having positive cash
Nasdaq Global Select Market. In these
flows, an average market capitalization
of at least $550 million over the prior 12 cases, Nasdaq believes that while the
shareholder requirement is difficult to
months, and total revenue of at least
$110 million in the previous fiscal year; meet immediately upon listing because
the stock is not initially widely
or (3) total revenue of at least $90
distributed, shares are widely
million in the previous fiscal year and
distributed following the initial listing.
an average market capitalization of at
For similar reasons, the market value of
least $850 million over the prior 12
months. However, the operating history publicly held shares requirement would
be $70 million in the case of a company
requirements in NASD Rules 4426(c)(1)
listing in connection with its initial
and (c)(2) may be shortened to a lesser
public offering, a company that is
period if an issuer does not have three
affiliated with, or a spin-off from,
years of publicly reported financial
another company listed on the Nasdaq
data.13
Global Select Market, and a closed-end
Three year aggregate
pretax earnings; and ..
> = $11,000,000 management investment company.
Due to their unique nature, closedPre-tex earings in the
end management investment companies
two most recent years
each; and ....................
> = $2,200,000 would not be required to meet the
Third most recent year
financial requirements described
pre-tax earnings ..........
> 0 above.14 Further, Nasdaq has proposed
> = $110,000,000
13 A period of less than three months shall not be
considered a fiscal year. See NASD Rule 4427(f).
VerDate Aug<31>2005
17:10 Jul 07, 2006
Jkt 208001
14 While Nasdaq plans to list closed-end funds on
the Nasdaq Global Select Market, there are not
PO 00000
Frm 00092
Fmt 4703
38933
Sfmt 4703
5. Continued Listing
Following initial listing on the
Nasdaq Global Select Market, securities
would be subject to the continued
listing standards that are currently
applicable to the Nasdaq Global Market.
Thus, companies must satisfy one of the
alternatives for continued listing
contained in NASD Rule 4450.15
Implementation
Prior to the planned July 1, 2006,
launch of the new segment, Nasdaq
would review all companies’
qualifications and assign qualified
Nasdaq Global Market companies to the
new Nasdaq Global Select segment.16 In
addition, qualified Nasdaq Capital
Market companies would be given the
opportunity to be included in the new
segment.17 Thereafter, beginning in
2007, staff of the Nasdaq Listing
Qualifications Department would
review all Nasdaq Global Market
companies’ qualifications each October
and qualified Nasdaq Global Market
companies would be automatically
placed in the new segment the following
January.18 While this review would
separate listing standards for structured products,
index-linked notes, trust issued receipts, SEEDs,
units, commodity-backed products, or Exchange
Traded Funds.
15 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 NASD
Rule 4450, as well as the requirements for initial
inclusion on the Nasdaq Global Select Market. As
a result, the initial listing standards would, in all
cases, exceed the criteria set forth in Rule 3a51–
1(a)(2) of the Act, 17 CFR 240.3a51–1(a)(2).
16 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 would
be the same. See NASD Rule 4510. Fees for
securities listed on the Nasdaq Capital Market
would continue to differ. See NASD Rule 4520. Any
company not qualifying for the Nasdaq Global
Select Market would remain on the Nasdaq Global
Market.
17 See NASD Rule 4425(d).
18 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 for the Nasdaq
Global Select Market when it is reviewed in October
would be placed in that segment even if it falls
below one or more of the initial listing requirements
E:\FR\FM\10JYN1.SGM
Continued
10JYN1
38934
Federal Register / Vol. 71, No. 131 / Monday, July 10, 2006 / Notices
sroberts on PROD1PC70 with NOTICES
occur automatically in October, a
company may also apply to upgrade at
any point. Companies transferring from
the Nasdaq Global Market to the Nasdaq
Global Select Market as part of this
process would not be assessed entry or
application fees. New Nasdaq Global
Market listings would also be placed in
the Nasdaq Global Select segment if
they qualify, although they would 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 a
qualitative listing standard, such as the
cure period allowed to companies that
have a vacancy on their audit
committee, would 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 19
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 20 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
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.
19 Qualitative listing requirements include those
requirements contained in NASD Rule 4350.
20 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.
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17:10 Jul 07, 2006
Jkt 208001
segment, to be included in the Nasdaq
Global Select Market, subject to an 18
month grace period until January 1,
2008, to achieve compliance.21 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.22
2. Statutory Basis
Nasdaq believes that the proposed
rule change, as amended, is consistent
with the provisions of Section 15A of
the Act,23 in general, and with Section
15A(b)(6) of the Act,24 in particular.
Section 15A(b)(6) of the Act requires
that Nasdaq’s rule be designed to
promote just and equitable principles of
trade, to remove impediments to and
perfect the mechanism of a free and
open market, and to protect investors
and the public interest. Nasdaq believes
that changing the name of the Nasdaq
National Market to the Nasdaq Global
Market would 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 what it describes as
higher initial listing standards would
protect investors and the public interest,
and would foster competition among
exchange markets.
B. Self-Regulatory Organization’s
Statement on Burden on Competition
Nasdaq does not believe that the
proposed rule change, as amended,
would result in any burden on
competition that is not necessary or
appropriate in furtherance of the
purposes of the Act.
C. Self-Regulatory Organization’s
Statement on Comments on the
Proposed Rule Change Received From
Members, Participants, or Others
Written comments were neither
solicited nor received.
21 Certain companies would qualify for the NYSE
but not the Nasdaq Global Select Market.
22 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 NASD Rule 4800 Series with respect to
that company.
23 15 U.S.C. 78o–3.
24 15 U.S.C. 78o–3(b)(6).
PO 00000
Frm 00093
Fmt 4703
Sfmt 4703
III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
Because the foregoing proposed rule
change, as amended, does not: (i)
Significantly affect the protection of
investors or the public interest; (ii)
impose any significant burden on
competition; and (iii) become operative
for 30 days from the date 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, it has become effective
pursuant to Section 19(b)(3)(A) of the
Act 25 and Rule 19b–4(f)(6)
thereunder.26 At any time within 60
days of the filing of the proposed rule
change, the Commission may summarily
abrogate such rule change if it appears
to the Commission that such action is
necessary or appropriate in the public
interest, for the protection of investors,
or otherwise in furtherance of the
purposes of the Act.27
Nasdaq has requested that the
Commission waive the 5-day pre-filing
notice requirement and the 30-day
operative delay and allow the proposed
rule change, as amended, to become
effective upon filing. The Commission
has waived the 5-day pre-filing
requirement for this proposal. In
addition, the Commission believes that
it is consistent with the protection of
investors and the public interest to
waive the 30-day operative delay.28 The
Commission notes that the proposed
rule change, as amended, is
substantially similar to a proposed rule
change filed by the NASDAQ Stock
Market LLC.29
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:
25 15
U.S.C. 78s(b)(3)(A).
CFR 240.19b–4(f)(6).
27 For purposes of calculating the 60-day period
within which the Commission may summarily
abrogate the proposed rule change under Section
19(b)(3)(C) of the Act, the Commission considers
the period to commence on June 27, 2006, the date
Nasdaq filed Amendment No. 4 to the proposed
rule change. See 15 U.S.C. 78s(b)(3)(C).
28 For purposes only of waiving the 30-day
operative delay of this proposal, the Commission
has considered the proposed rule’s impact on
efficiency, competition, and capital formation. 15
U.S.C. 78c(f).
29 See Securities Exchange Act Release No. 53799
(May 12, 2006), 71 FR 29195 (May 19, 2006) (SR–
NASDAQ–2006–007).
26 17
E:\FR\FM\10JYN1.SGM
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Federal Register / Vol. 71, No. 131 / Monday, July 10, 2006 / Notices
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–NASD–2006–068 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.
All submissions should refer to File
Number SR–NASD–2006–068. This file
number should be included on the
subject line if e-mail is used. To help the
Commission process and review your
comments more efficiently, please use
only one method. The Commission will
post all comments on the Commission’s
Internet Web site (https://www.sec.gov/
rules/sro.shtml). Copies of the
submission, all subsequent
amendments, all written statements
with respect to the proposed rule
change that are filed with the
Commission, and all written
communications relating to the
proposed rule change between the
Commission and any person, other than
those that may be withheld from the
public in accordance with the
provisions of 5 U.S.C. 552, will be
available for inspection and copying in
the Commission’s Public Reference
Room. Copies of such filing also will be
available for inspection and copying at
the principal office of the NASD.
All comments received will be posted
without change; the Commission does
not edit personal identifying
information from submissions. You
should submit only information that
you wish to make available publicly.
All submissions should refer to File
Number SR–NASD–2006–068 and
should be submitted on or before July
31, 2006.
For the Commission, by the Division of
Market Regulation, pursuant to delegated
authority.30
sroberts on PROD1PC70 with NOTICES
J. Lynn Taylor,
Assistant Secretary.
[FR Doc. 06–6038 Filed 7–7–06; 8:45 am]
BILLING CODE 8010–01–M
30 17
CFR 200.30–3(a)(12).
VerDate Aug<31>2005
17:10 Jul 07, 2006
Jkt 208001
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–54084; File No. SR–NASD–
2005–087]
Self-Regulatory Organizations;
National Association of Securities
Dealers, Inc.; Order Approving
Proposed Rule Change and Notice of
Filing and Order Granting Accelerated
Approval to Amendment No. 1 Relating
to Amendments to the NASD’s Rules
Following the Nasdaq Exchange’s
Operation as a National Securities
Exchange for Nasdaq UTP Plan
Securities
June 30, 2006
I. Introduction
On July 11, 2005, the National
Association of Securities Dealers, Inc.
(‘‘NASD’’) filed with the Securities and
Exchange Commission (‘‘SEC’’ or
‘‘Commission’’) pursuant to Section
19(b)(1) of the Securities Exchange Act
of 1934 (‘‘Exchange Act’’),1 and Rule
19b–4 thereunder,2 a proposed rule
change to amend various NASD rules to
reflect the Nasdaq Stock Market, Inc.’s
(‘‘Nasdaq’’) separation from the NASD
following the commencement of
operations of the Nasdaq Stock Market
LLC (‘‘Nasdaq Exchange’’) as a national
securities exchange.
Prior to 2000, Nasdaq was whollyowned by the NASD. The NASD
currently retains voting control of
Nasdaq through an outstanding share of
Nasdaq Series D preferred stock.3 The
NASD and Nasdaq began restructuring
their relationship in 2000 with the goal
of completely separating Nasdaq from
the NASD. As part of this restructuring,
Nasdaq filed with the Commission an
application to register one of its
U.S.C. 78s(b)(1).
CFR 240.19B–4.
3 The share of Series D preferred stock gives the
NASD the right to cast one more than one-half of
all votes entitled to be cast at an election by all
holders of capital stock of Nasdaq. When Nasdaq
ceases to operate pursuant to the NASD’s Plan of
Allocation and Delegation of Functions by NASD to
Subsidiaries (the ‘‘Delegation Plan’’), the Series D
preferred share will expire automatically. See
Securities Exchange Act Release No. 53022
(December 23, 2005), 70 FR 77433 (December 30,
2005). To reflect this change, the NASD will file a
proposed rule change to revise the Delegation Plan
to remove references to Nasdaq as a subsidiary of
the NASD. Because this change to the Delegation
Plan would terminate the NASD’s control under the
Series D preferred share, the NASD cannot file this
proposed rule change until it can represent to the
Commission that its control of Nasdaq is no longer
necessary because the NASD can fulfill through
other means its obligations with respect to
securities reported to the Consolidated Transaction
Association Plan (‘‘CTA Plan Securities’’) See Order
Modifying Nasdaq Exchange Conditions, infra note
6.
PO 00000
1 15
2 17
Frm 00094
Fmt 4703
Sfmt 4703
38935
subsidiaries, the Nasdaq Exchange, as a
national securities exchange.4
The Commission approved the
Nasdaq’s Exchange’s registration as a
national securities exchange on January
13, 2006.5 In the Nasdaq Exchange
Order, the Commission conditioned the
Nasdaq Exchange’s operation as a
national securities exchange on the
satisfaction of certain enumerated
requirements. The Nasdaq Exchange
Order and the conditions therein
reflected the Nasdaq Exchange’s
intentions to begin operations as a
national securities exchange for CTA
Plan Securities as well as securities
listed on Nasdaq and reported to the
Joint Self-Regulatory Organization Plan
Governing the Collection, Consolidation
and Dissemination of Quotation and
Transaction Information for NasdaqListed Securities Traded on Exchanges
on an Unlisted Trading Privileges Basis
(‘‘Nasdaq UTP Plan Securities’’).
The Commission modified the
conditions set forth in the Nasdaq
Exchange Order on June 30, 2006, to
allow the Nasdaq Exchange to operate as
a national securities exchange solely
with respect to Nasdaq UTP Plan
Securities.6 During this period, the
NASD will continue to control Nasdaq
through the Series D preferred share and
Nasdaq will continue to perform
obligations under the Delegation Plan
with respect to CTA Plan Securities.
Accordingly, the NASD filed
Amendment No. 1 to modify the
proposed rule change to reflect the
Nasdaq Exchange’s operational plan.
II. NASD Proposal
In the proposed rule change, the
NASD proposed to: (1) Delete certain
NASD rules that pertain to the operation
of the Nasdaq Exchange and thus reflect
Nasdaq’s separation from the NASD; 7
(2) modify certain NASD rules to clarify
the NASD’s continued regulation of the
over-the-counter (‘‘OTC’’) market upon
the Nasdaq Exchange’s operation as an
exchange; 8 (3) amend the NASD’s Order
Audit Trail System (‘‘OATS’’) to reflect
the use of OATS by Nasdaq Exchange
members; 9 (4) make technical and
clarifying changes to the rules governing
the NASD’s Alternative Display Facility
4 In connection with the Nasdaq Exchange
registration, Nasdaq became a holding company
with the Nasdaq Exchange as its wholly-owned
subsidiary.
5 See Securities Exchange Act Release No. 53128,
71 FR 3350 (January 23, 2006) (‘‘Nasdaq Exchange
Order’’).
6 See Securities Exchange Act Release No. 54085
(June 30, 2006) (‘‘Order Modifying Nasdaq
Exchange Conditions’’).
7 See infra note 44 and accompanying section.
8 See infra notes 46–53 and accompanying text.
9 See infra note 55 and accompanying text.
E:\FR\FM\10JYN1.SGM
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]]>Agencies
[Federal Register Volume 71, Number 131 (Monday, July 10, 2006)]
[Notices]
[Pages 38922-38935]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 06-6038]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
(Release No. 34-54071; File No. SR-NASD-2006-068)
Self-Regulatory Organizations; National Association of Securities
Dealers, Inc.; Notice of Filing and Immediate Effectiveness of Proposed
Rule Change and Amendments No. 1, 2, 3 and 4 Thereto To Create the
Nasdaq Global Select Market and Rename the Nasdaq National Market
June 29, 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 May 30, 2006, the National Association of Securities Dealers, Inc.
(``NASD''), through its subsidiary, The Nasdaq Stock Market, Inc.
(``Nasdaq''), filed with the Securities and Exchange Commission
(``Commission'') the proposed rule change as described in Items I and
II below, which Items have been prepared by Nasdaq. Nasdaq 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 June 9, 2006, Nasdaq filed Amendment No.
1 to the proposed rule change.\5\ Nasdaq filed Amendment No. 2 on June
15, 2006, Amendment No. 3 on June 27, 2006, and Amendment No. 4 on June
29, 2006.\6\ The Commission is publishing this notice to solicit
comments on the proposed rule change, as amended, from interested
persons.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
\3\ 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.
\6\ In Amendments No. 2, 3 and 4, Nasdaq made certain technical
corrections and clarifications to its rule text.
---------------------------------------------------------------------------
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.
Nasdaq would implement the proposed rule change on July 1, 2006. Nasdaq
previously filed substantially identical changes to the rules of the
NASDAQ Stock Market LLC (``Nasdaq LLC'').\7\ This rule filing
incorporates these changes into the rules of the NASD because Nasdaq
LLC will not commence operations as a national securities exchange
prior to the planned July 1, 2006, launch date for the Nasdaq Global
Select Market.\8\
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].
---------------------------------------------------------------------------
\7\ See Securities Exchange Act Release No. 53799 (May 12,
2006), 71 FR 29195 (May 19, 2006) (SR-NASDAQ-2006-007).
\8\ See Securities Exchange Act Release No. 53128 (January 13,
2006), 71 FR 3550 (January 23, 2006).
---------------------------------------------------------------------------
* * * * *
IM-2310-2. Fair Dealing With Customers
(a)-(d) No change.
(e) Fair Dealing With Customers with Regard to Derivative Products
or New Financial Products.
(1)-(2) No change.
(3) Hybrid Securities and Selected Equity-Linked Debt Securities
(``SEEDS'') Designated as Nasdaq [National] Global Market Securities
Pursuant to the Rule 4400 Series.
No change.
* * * * *
2710. Corporate Financing Rule--Underwriting Terms and Arrangements
(a) No change.
(b) (1)-(6) No change.
(7) Offerings Exempt from Filing.
Notwithstanding the provisions of subparagraph (1) above, documents
and information related to the following public offerings need not be
filed with NASD for review, unless subject to the provisions of Rule
2720. However, it shall be deemed a violation of this Rule or Rule
2810, for a member to participate in any way in such public offerings
if the underwriting or other arrangements in connection with the
offering are not in compliance with this Rule or Rule 2810, as
applicable:
(A)-(E) No change.
(F) Exchange offers of securities where:
(i) The securities to be issued or the securities of the company
being acquired are listed on The Nasdaq [National] Global Market, the
New York Stock Exchange, or the American Stock Exchange; or
(ii) No change.
(G) No change.
(8)-(11) No change.
(c)-(j) No change.
* * * * *
2790. Restrictions on the Purchase and Sale of Initial Equity Public
Offerings
(a)-(b) No change.
(c) General Exemptions.
The general prohibitions in paragraph (a) of this rule shall not
apply to sales to and purchases by the following accounts or persons,
whether directly or through accounts in which such persons have a
beneficial interest:
(1)-(4) No change.
(5) A publicly traded entity (other than a broker/dealer or an
affiliate of a broker/dealer where such broker/dealer is authorized to
engage in the public offering of new issues either as a selling group
member or underwriter) that:
(A) No change.
(B) Is traded on the Nasdaq [National] Global Market; or
(C) Is a foreign issuer whose securities meet the quantitative
designation criteria for listing on a national securities exchange or
trading on the Nasdaq [National] Global Market;
(6)-(10) No change.
(d)-(h) No change.
(i) Definitions.
(1)-(9) No change.
(10) ``Restricted person'' means:
(A)-(D) No change.
(E) Persons Owning a Broker/Dealer.
(i)-(iii) No change.
(iv) Any person that directly or indirectly owns 10% or more of a
public reporting company listed, or required to be listed, in Schedule
A of a Form BD (other than a reporting company that is listed on a
national securities exchange or is traded on the Nasdaq [National]
Global Market, or other than with respect to a limited business broker/
dealer);
(v) Any person that directly or indirectly owns 25% or more of a
public reporting company listed, or required to be listed, in Schedule
B of a Form BD (other than a reporting company that is listed on a
national securities exchange or is traded on the Nasdaq [National]
Global Market, or other than with respect to a limited business broker/
dealer);
(vi) No change.
[[Page 38923]]
(j) No change.
* * * * *
3350. Short Sale Rule
(a)(1) With respect to trades executed on or reported to the ADF,
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 national best (inside) bid when the current national
best (inside) bid is below the preceding national best (inside) bid in
the security.
(2) With respect to trades executed on or reported to 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.
(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,* 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.
(ii) An ``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.\*\
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 market making functions, will not be considered
an ``exempt hedge transaction.''
---------------------------------------------------------------------------
\*\ 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)-(1) No change.
IM-3350. Short Sale Rule
(a)(1) In developing a Short Sale Rule for Nasdaq [National] Global
Market securities, NASD adopted an exemption to the Rule for certain
market making activity. This exemption was deemed an essential
component of the Rule because bona fide market making activity is
necessary and appropriate to maintain continuous, liquid markets in
Nasdaq [National] Global Market securities. Rule 3350(c)(1) states that
short selling prohibitions shall not apply to sales by qualified Nasdaq
market makers or registered ADF 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 ``qualified'' Nasdaq market maker or a
registered ADF market maker and one must engage in ``bona fide'' market
making activity to take advantage of this exemption. With this
interpretation, NASD wishes to clarify for members some of the factors
that will be taken into consideration when reviewing market making
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)(1) With respect to trades executed on or reported to the ADF,
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 national best (inside)
bid when the current national best (inside) bid is below the preceding
national best (inside) bid in the security. NASD has determined that in
order to effect a ``legal'' short sale when the current best bid is
lower than 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.
(2) 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 preceding best (inside) bid in the security. Nasdaq has detennined
that in order to effect a ``legal'' short sale when the current best
bid is lower than 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.
* * * * *
[[Page 38924]]
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'' is a distinct tier of
The Nasdaq Stock Market comprised of securities that meet the
requirements of and are authorized as a Nasdaq National Market
security.] ``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'' means any authorized security in the Nasdaq [National]
Global Market which (1) satisfies all applicable requirements of the
Rule 4300 Series and substantially meets the criteria set forth in the
Rule 4400 Series and is subject therefore to a transaction reporting
plan approved by the Commission; (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, and has been designated therefore as a national market system
security pursuant to [SEC Rule 11Aa2-1] Rule 600 of SEC Regulation NMS.
(27) No change.
(28) ``Nasdaq Capital Market security'' means any authorized
security in The Nasdaq Capital Market which (1) satisfies all
applicable requirements of the Rule 4300 Series other than 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) ``The Nasdaq Stock Market'' or ``Nasdaq'' is an electronic
securities market comprised of competing market makers whose trading is
supported by a communications network linking them to quotation
dissemination, trade reporting, and order execution systems. This
market also provides specialized automation services for screen-based
negotiations of transactions, on-line comparison of transactions, and a
range of informational services tailored to the needs of the securities
industry, investors and issuers. [The Nasdaq Stock Market consists of
two distinct market tiers: the ``Nasdaq National Market'' or ``NNM,''
and ``The Nasdaq Capital Market''.] The Nasdaq Stock Market is operated
by The Nasdaq Stock Market, Inc., a wholly-owned subsidiary of the
Association.
(30) [Reserved.]
(a) ``Nasdaq Global Select Market'' or ``NGSM'' 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.
(b) ``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) No change.
* * * * *
4310. Qualification Requirements for Domestic and Canadian Securities
To qualify for inclusion in Nasdaq, a security of a domestic or
Canadian issuer shall satisfy all applicable requirements contained in
paragraphs (a) or (b), and (c) hereof.
(a)-(b) No change.
(c) In addition to the requirements contained in paragraph (a) or
(b) above, and unless otherwise indicated, a security shall satisfy the
following criteria for inclusion in Nasdaq:
(1)-(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. Qualitative Listing Requirements for Nasdaq [National Market and
Nasdaq Capital Market] Issuers Except for Limited Partnerships
No change.
4350-1 Qualitative Listing Requirements for Nasdaq (National Market and
Nasdaq Capital Market] Issuers Except for Limited Partnerships
No change.
* * * * *
4400. Nasdaq [National] Global Market--Issuer Designation Requirements
No change.
IM-4400. 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.
While Nasdaq shall certify such dually listed securities for
listing on the [NNM] NGM, Nasdaq shall not exercise its authority under
the NASD Rule 4400 Series separately to designate or register such
dually listed securities as Nasdaq national market system securities
within the meaning of Section 11A of the Securities Exchange Act of
1934 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 Tape
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 the Nasdaq Stock Market. 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 remain 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 NASD rules as a result of a single security
being both 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 NASD rules. Treating
dually listed securities as CQS securities under NASD 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 the Nasdaq InterMarket.
For example, Nasdaq shall continue to honor the trade halt
authority of the primary market under the CQ and CT Plans. NASD Rule
4120(a)(2) and (3) governing CQS securities shall apply to dually
listed securities, whereas NASD 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
[[Page 38925]]
than NASD Rule 3350 governing short sales of Nasdaq listed securities.
Market makers in dually listed securities shall retain all obligations
imposed by the NASD Rule 5200, 6300, and 6400 Series regarding quoting,
trading, and transaction reporting of CQS securities rather than
assuming the obligations appurtenant to quoting, trading, and
transaction reporting of Nasdaq listed securities. The fees applicable
to CQS securities set forth in NASD Rule 7010 shall continue to apply
to dually listed issues.
* * * * *
4420. Quantitative Designation Criteria
In order to be designated for 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), (l) or (m) below. Initial Public Offerings substantially meeting
such criteria are eligible for immediate inclusion in the Nasdaq
[National] Global Market upon prior application and with the written
consent of the managing underwriter that immediate inclusion is
desired. All other qualifying issues, excepting special situations, are
included on the next inclusion date established by Nasdaq.
(a)-(e) No change.
(f) Other Securities.
(1) No change.
(2) Issuers of securities designated pursuant to this paragraph
[(e)] (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 designating as Nasdaq [National] Global
Market securities 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 on
the 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 a 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 a national securities exchange and be
subject to last sale reporting; and
(C) No change.
(4)-(5) No change.
(h) Units.
(1) Initial and Continued Inclusion 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 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 website, or if it
does not maintain a website, 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 Nasdaq 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 effected as soon as practicable if the
security meets the requirements for initial listing contained in Rule
4426. 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 effected 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, an
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 securities
of any issuer
[[Page 38926]]
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 Select 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
considered 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, subiect to the
continuation of that grace period.
IM-4425 Launch of the Nasdaq Global 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), anv company that initially listed as an IPO since May 1,
2005 must have the applicable average market capitalization from the
date of listing. Nasdaq also notes that certain Nasdaq-listed issuers
that qualify to initially list on the New Yark 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, subiect 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 subiect to delisting in the event it fails to satisfy any of the
continued listing requirements far 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:
(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 month; 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 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 registered under the Investment Company Act of 1940.
(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 registered under the
Investment Company Act of 1940 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
[[Page 38927]]
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 of
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 issuer'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 activitives. 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)(I) 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 Designation Criteria
In addition to meeting the quantitative criteria for Nasdaq
[National] Global Market inclusion, 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 designated:
(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 market] Global Market inclusion, the issue must also be:
(1)-(4) No Change
(5) Registered under Section 12(b) of the Act and listed on a
national securities exchange, or admitted to unlisted trading
privileges on an exchange, provided that:
(A) No change.
(B) Such exchange shall permit Nasdaq market makers telephone
access to exchange trading facilities with respect to transactions in
[NNM] NGM securities to the same extent that exchange market makers are
permitted access to Nasdaq market makers; and
(C) No change.
(b) Foreign securities and American Depositary Receipts where
either the issuer is required to file reports pursuant to Section 15(d)
of the Act or the security is exempt from registration under Section
12(g) of the Act by reason of the applicability of SEC Rule 12g3-2(b)
are not eligible for designation in the Nasdaq [National] Global
Market.
4450. Quantitative Maintenance Criteria
After designation 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 be designated as a national market system security. A security
maintaining its designation under paragraph (b) need not also be in
compliance with the quantitative maintenance criteria in the Rule 4300
series.
(a)-(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 inclusion 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 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 of 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 for inclusion of any
class of its securities (not otherwise identified in this Rule 4500
series) in The Nasdaq [National] Global Market, shall pay to The Nasdaq
Stock Market, Inc. a fee calculated on total shares outstanding,
according to the following schedule. This fee will be assessed on the
date of entry in 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 included in 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
[[Page 38928]]
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 inclusion of a class of securities in
The Nasdaq [National] Global Market shall pay to the Nasdaq Stock
Market, Inc. an entry fee of $5,000 (of which $1,000 represents a non-
refundable, application fee).
(4) An issuer that submits an application for inclusion of any
class of rights in The Nasdaq [National] Global Market, shall pay, at
the time of its application, a non-refundable application fee of $I,000
to The Nasdaq Stock Market, Inc.
(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 a national
securities exchange but not listed on Nasdaq, if the issuer of such
securities transfers their listing exclusively to the Nasdaq [National]
Global Market; or (ii) are listed on the New York Stock Exchange and
Nasdaq, if the issuer of such securities ceases to maintain their
listing on the New York Stock Exchange and the securities instead are
designated as national market securities under the Rule 4400 Series.
(8) No change.
(9) An issuer that transfers its listing from The Nasdaq Capital
Market to The Nasdaq [National] Global Market shall pay the entry fee
described in this Rule 4510(a) less the entry fee that was previously
paid by the issuer to Nasdaq in connection with listing on The Nasdaq
Capital Market. Such issuer is not required to pay the application fee
described in Rule 4510(a) in connection with the application to
transfer listing.
(10) An issuer that submits an application for listing on The
Nasdaq Capital Market, but prior to listing revises its application to
seek listing on The Nasdaq [National] Global Market, is not required to
pay the application fee described in Rule 4510(a) in connection with
the revised application.
(b) Additional Shares.
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 in The Nasdaq [National] Global Market shall pay to The
Nasdaq Stock Market, Inc. 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] except 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 included in 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 Depositary Receipts (ADRs) and Closed-End
Funds.
(1) The issuer of each class of securities that is an ADR listed in
The Nasdaq [National] Global Market shall pay to The Nasdaq Stock
Market, Inc. 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
included in 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 in The Nasdaq [National] Global Market
shall pay to The Nasdaq Stock Market, Inc. 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 in The Nasdaq [National] Global Market
or The Nasdaq Small Cap 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.
(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) Entry Fee
(1)-(6) No change.
(7) The fees described in this Rule 4520(a) shall not be applicable
with respect to any securities that (i) are listed on a national
securities exchange but not listed on Nasdaq, if the issuer of such
securities transfers their listing exclusively to the Nasdaq [National]
Capital Market; or (ii) are listed on the New York Stock Exchange and
Nasdaq, if the issuer of such securities ceases to maintain their
listing on the New York Stock Exchange and the securities instead are
designated under the plan applicable to Nasdaq Capital Market
securities.
(8) No change.
(9) An issuer that submits an application for listing on The Nasdaq
[National] Global Market, but prior to listing revises its application
to seek listing on The Nasdaq Capital Market, is not required to pay
the application fee described in Rule 4520(a) in connection with the
revised application.
(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.
[[Page 38929]]
(7) Notwithstanding paragraph (6), for the purpose of detennining
the total shares outstanding, fund sponsors may aggregate shares
outstanding of all Closed-End Funds in the same fund family listed in
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 infonnation
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 for inclusion of any
Other Security or SEEDS in the Nasdaq [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 for inclusion of any
Other Security or SEEDS in 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 inclusion during the current
calendar year of any of the issuer's Other Securities and SEEDS in 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 included in 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 The Nasdaq Stock Market, Inc. 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 included in 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 in The Nasdaq
[National] Global Market, it shall pay to The Nasdaq Stock Market, Inc.
a listing fee of $5,000 (which shall include a $1,000 non-refundable
processing fee).
(2)-(3) No change.
(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 The Nasdaq Stock Market, Inc. 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 included in 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 The Nasdaq
Stock Market, Inc. 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.
* * * * *
4612. Primary Nasdaq Market Maker Standards
(a) A member registered as a Nasdaq market maker pursuant to Rule
4611 may be deemed to be a Primary Nasdaq Market Maker in Nasdaq
[National] Global Market securities if the market maker complies with
threshold standards (as established and published by the Association
from time to time) in the following qualification criteria:
(1)-(3) No change.
(b) A market maker for a Nasdaq [National] Global Market security
must satisfy the threshold standards in at least two of the criteria in
paragraph (a) in order to be designated a Primary Nasdaq Market Maker
in that security; provided however, that if a market maker satisfies
only one of the criteria, it may qualify as a Primary Nasdaq Market
Maker if it also accounts for a threshold level of proportionate volume
in the security (as established and published by the Association from
time to time).\**\
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\**\No change.
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(c)-(f) No change.
(g) In registration situations:
(1) To register and immediately become a Primary Nasdaq Market
Maker in a Nasdaq [National] Global Market security, a member must be a
Primary Nasdaq Market Maker in 80% of the securities in which it has
registered. If the market maker is not a Primary Nasdaq Market Maker in
80% of its stocks, it may qualify as a Primary
[[Page 38930]]
Nasdaq Market Maker in that stock if the market maker registers in the
stock as a regular Nasdaq market maker and satisfies the qualification
criteria for the next review period.
(2) Notwithstanding paragraph (g)(1) above, after an offering in a
stock has been publicly announced or a registration statement has been
filed, no market maker may register in the stock as a Primary Nasdaq
Market Maker unless it meets the requirements set forth below:
(A) For secondary offerings:
(i) The secondary offering has become effective and the market
maker has satisfied the qualification criteria in the time period
between registering in the security and the offering becoming
effective; provided, however, that if the member is a manager or co-
manager of the underwriting syndicate for the secondary offering and it
is a PMM in 80% or more of the Nasdaq [National] Global Market
securities in which it is registered, the member is eligible to become
a PMM in the issue prior to the effective date of the secondary
offering regardless of whether the member was a registered market maker
in the stock before the announcement of the secondary offering; or
(ii) No change.
(B)-(C) No change.
(3) No change.
(h) No change.
4613. Character of Quotations
(a) Quotation Requirements and Obligations.
(1) Two-Sided Quote Obligation. For each security in which a member
is registered as a market maker, the member shall be willing to buy and
sell such security for its own account on a continuous basis and shall
enter and maintain a two-sided quotation (``Principal Quote''), which
is attributed to the market maker by a special maker participant
identifier (``MPID'') and is displayed in the Nasdaq Quotation Montage
at all times, subject to the procedures for excused withdrawal set
forth in Rule 4619.
(A) No change.
(B) Minimum Price Variation--The minimum quotation increment for
Nasdaq [National] Global Market and Capital Market securities shall be
$0.01 for quotations priced at or above $1.00 per share and $0.0001 for
quotations priced below $1.00 per share; provided, however, that if the
Securities and Exchange Commission (``SEC'') permits, with respect to
any security, the display, rank or acceptance of quotations priced at
or above $1.00 per share in an increment smaller than $0.01, then the
minimum quotation increment for such a security shall be the minimum
permitted by the SEC or $0.0001, whichever is greater. Quotations
failing to meet this standard shall be rejected.
(2)-(3) No change.
(b)-(e) No change.
* * * * *
4630. Reporting Transactions in Nasdaq [National] Global Market
Securities
This Rule 4630 Series applies to the reporting by members of
transactions in Nasdaq [National] Global Market securities
(``designated securities'') to the Nasdaq Market Center.
* * * * *
4652. Transaction Reporting
(a)-(c) No change.
(d) Procedures for Reporting Price and Volume *
---------------------------------------------------------------------------
* For examples of reporting procedures, refer to the Rule 4630
Series, Reporting Transactions in Nasdaq [National] Global Market
Securities.
---------------------------------------------------------------------------
No change.
(e)-(g) 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-
Listed Nasdaq/National Market System Securities Traded on Exchanges on
an Unlisted Trading Privilege Basis (``Nasdaq UTP Plan'').
(gg)-(vv) No change.
* * * * *
4200A. Definitions
(a) Unless the context requires otherwise, the terms used in the
Rule 4000A and Rule 6000A Series shall have the meanings below. Terms
not specifically defined below shall have the meaning in NASD's By-Laws
and Rules and SEC [Rule 11Aa3-1] Regulation NMS.
(1) No change.
(2) ``ADF-eligible security'' means a Nasdaq [National] Global
Market, Nasdaq Capital Market security and Nasdaq Convertible Debt
securities.
(3)-(4) No change.
(5) ``Nasdaq [National] Global Market'' or [``NNM''] NGM is a
distinct tier of the Nasdaq Stock Market comprised of securities that
meet the requirements of and are authorized as a Nasdaq [National]
Global Market Security.
(6)-(13) No change.
(b) No change.
* * * * *
5410. Applicability
(a) For a period of time, NASD will operate two facilities for
collecting trade reports for executions in Nasdaq [National] Global
Market, Nasdaq Capital Market, and Nasdaq Convertible Debt securities
(``designated securities''): The Nasdaq Stock Market and the
Alternative Display Facility (``ADF''). Nasdaq will operate the Nasdaq
Market Center (including its trade reporting service), and NASD,
through the ADF, will operate Trade Reporting and Comparison Service
(``TRACS''). This Rule 5400 Series establishes the rules for
determining which member must report a trade and whether a trade must
be reported to the Nasdaq Market Center, pursuant to the Rule 4630,
4640, 4650 and 6100 Series or TRACS, pursuant to the Rule 4630A and
6100A Serie
