Self-Regulatory Organizations; The NASDAQ Stock Market LLC; Order Granting Approval of a Proposed Rule Change Relating to Three-Characters Ticker Symbols, 38639-38641 [E7-13578]

Download as PDF Federal Register / Vol. 72, No. 134 / Friday, July 13, 2007 / Notices Paper Comments • Send paper comments in triplicate to Nancy M. Morris, Secretary, Securities and Exchange Commission, 100 F Street, NE., Washington, DC 20549–1090. All submissions should refer to File Number SR–ISE–2007–53. This file number should be included on the subject line if e-mail is used. To help the Commission process and review your comments more efficiently, please use only one method. The Commission will post all comments on the Commissions Internet Web site (http://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, 100 F Street, NE., Washington, DC 20549, on official business days between the hours of 10 a.m. and 3 p.m. Copies of such filing also will be available for inspection and copying at the principal office of the Exchange. All comments received will be posted without change; the Commission does not edit personal identifying information from submissions. You should submit only information that you wish to make available publicly. All submissions should refer to File Number SR–ISE–2007–53 and should be submitted on or before August 3, 2007. For the Commission, by the Division of Market Regulation, pursuant to delegated authority.14 Florence E. Harmon, Deputy Secretary. [FR Doc. E7–13601 Filed 7–12–07; 8:45 am] pwalker on PROD1PC71 with NOTICES BILLING CODE 8010–01–P 14 17 CFR 200.30–3(a)(12). VerDate Aug<31>2005 19:05 Jul 12, 2007 Jkt 211001 SECURITIES AND EXCHANGE COMMISSION [Release No. 34–56028; File No. SR– NASDAQ–2007–031] Self-Regulatory Organizations; The NASDAQ Stock Market LLC; Order Granting Approval of a Proposed Rule Change Relating to Three-Characters Ticker Symbols July 9, 2007. I. Introduction On March 29, 2007, The NASDAQ Stock Market LLC (‘‘Nasdaq’’) filed with the Securities and Exchange Commission (‘‘Commission’’), pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (‘‘Act’’) 1 and Rule 19b–4 thereunder,2 a proposed rule change to allow an issuer with a threecharacter ticker symbol that transfers its listing to Nasdaq from another listing market to continue using its threecharacter ticker symbol on Nasdaq. The proposed rule change was published for comment in the Federal Register on April 4, 2007.3 The Commission received 24 comment letters on the proposal.4 On U.S.C. 78s(b)(1). CFR 240.19b–4. 3 See Securities Exchange Act Release No. 55563 (March 30, 2007), 72 FR 16391. 4 See letters from Edward J. Resch, Executive Vice President, Chief Financial Officer and Treasurer, State Street Corporation, dated May 21, 2007 (‘‘State Street Letter’’); Larry A. Mizel, Chairman and Chief Executive Officer, M.D.C. Holdings, Inc. (‘‘MDC Letter’’), dated May 17, 2007; Jack R. Hartung, Chief Finance and Development Officer, Chipotle Mexican Grill, dated May 15, 2007 (‘‘Chipotle Letter’’); Carol R. Kaufman, Sr. Vice President Legal Affairs, The Cooper Companies, Inc., dated May 14, 2007 (‘‘Cooper Companies Letter’’); Farooq Kathwari, Chairman, President and CEO, Ethan Allen Interiors, Inc., dated May 9, 2007 (‘‘Ethan Allen Letter’’); James J. Angel, Associate Professor of Finance, McDonough School of Business, Georgetown University, dated May 9, 2007 (‘‘Angel Letter’’); Jack Sennott, Senior Vice President and Chief Financial Officer, Darwin Professional Underwriters, Inc., dated May 8, 2007 (‘‘Darwin Letter’’); Bart J. Ward, Chief Executive Officer, Ward & Company, dated May 8, 2007 (‘‘Ward Letter’’); Craig D. Mallick, Corporate Secretary, United States Steel Corporation, dated May 4, 2007 (‘‘United States Steel Letter’’); Michael Tenenbaum, Trustee, Strategic Technologies Employees Pension Fund Trust, dated May 2, 2007 (‘‘Strategic Technologies Letter’’); Carrie E. Dwyer, General Counsel and Executive Vice President Corporate Oversight, The Charles Schwab Corporation (‘‘Schwab’’), dated April 27, 2007 (‘‘Schwab Letter’’); Mary Yeager, Assistant Secretary, New York Stock Exchange LLC (‘‘NYSE’’), dated April 25, 2007 (‘‘NYSE Letter’’); Patrick J. Healy, Issuer Advisory Group, dated April 24, 2007 (‘‘Issuer Advisory Group Letter’’); Neal L. Wolkoff, Chairman and Chief Executive Officer, American Stock Exchange LLC (‘‘Amex’’), dated April 16, 2007 (‘‘Amex Letter’’); Eric W. Nodiff, Sr. V.P. and General Counsel, Cantel Medical Corp., dated April 9, 2007 (‘‘Cantel Medical Letter’’); Dave Patch, dated April 6, 2007 (‘‘Patch Letter’’); Steve S. Fishman, Chairman and Chief Executive Officer, PO 00000 1 15 2 17 Frm 00090 Fmt 4703 Sfmt 4703 38639 May 1, 2007, Nasdaq filed a response to the comment letters.5 This order approves the proposed rule change. II. Description of the Proposal Historically, it has been the practice of NYSE, Amex, and the regional exchanges to list securities using threecharacter ticker symbols, and of Nasdaq to list securities using four- and fivecharacter symbols.6 Nasdaq recently submitted a proposed rule change to begin listing Delta Financial Corp., a security that transferred its listing from Amex, while retaining its threecharacter symbol (‘‘DFC’’).7 Nasdaq now proposes to allow any issuer with a three-character ticker symbol that transfers its listing to Nasdaq from another domestic listing market to continue using its threecharacter ticker symbol on Nasdaq. III. Summary of Comments Four commenters expressed support for Nasdaq’s proposal; 8 the remaining 20 commenters, including 16 issuers listed on NYSE, objected to Nasdaq listing transferred securities with their three-character ticker symbols.9 The commenters objecting to the proposal generally argued that the proposal would violate the longBig Lots, Inc., dated April 4, 2007 (‘‘Big Lots Letter’’); David M. Brain, President and CEO, Entertainment Properties Trust, dated April 3, 2007 (‘‘Entertainment Properties Trust Letter’’); Cathy Burzik, President and Chief Executive Officer, Kinetic Concepts, Inc., dated March 30, 2007 (‘‘Kinetic Concepts Letter’’); Edward W. Moore, Vice President, General Counsel & Secretary, RPM International Inc., dated March 29, 2007 (‘‘RPM Letter’’); Leo Liebowitz, Chairman and Chief Executive Officer, Getty Realty Corp., dated March 29, 2007 (‘‘Getty Realty Letter’’); Timothy J. O’Donovan, Chairman of the Board and Chief Executive Officer, Wolverine World Wide, Inc., dated March 28, 2007 (‘‘Wolverine World Wide Letter’’); Jason Korstange, SVP, Director of Corporate Communications, TCF Financial Corporation, dated March 28, 2007 (‘‘TCF Financial Letter’’); and Edward F. Tancer, Vice President & General Counsel, FPL Group, Inc., dated March 28, 2007 (‘‘FPL Group Letter’’). 5 See letter from Joan C. Conley, Senior Vice President and Corporate Secretary, Nasdaq, to Nancy M. Morris, Secretary, Commission, dated May 1, 2007 (‘‘Nasdaq Response Letter’’). 6 It has also been the practice of NYSE, Amex, and the regional exchanges to list securities using two-character ticker symbols. In addition, NYSE lists securities with one-character ticker symbols. 7 See Securities Exchange Act Release No. 55519 (March 26, 2007), 72 FR 15737 (April 2, 2007) (SR– NASDAQ–2007–025). 8 See Angel Letter, Schwab Letter, Issuer Advisory Group Letter, and Patch Letter. 9 See State Street Letter, MDC Letter, Chipotle Letter, Cooper Companies Letter, Ethan Allen Letter, Darwin Letter, Ward Letter, United States Steel Letter, Strategic Technologies Letter, NYSE Letter, Amex Letter, Cantel Medical Letter, Big Lots Letter, Entertainment Properties Trust Letter, Kinetic Concepts Letter, RPM Letter, Getty Realty Letter, Wolverine World Wide Letter, TCF Financial Letter, and FPL Group Letter. E:\FR\FM\13JYN1.SGM 13JYN1 38640 Federal Register / Vol. 72, No. 134 / Friday, July 13, 2007 / Notices standing practice of allowing only NYSE-listed securities to use threecharacter ticker symbols,10 cause confusion in the marketplace,11 and circumvent the ongoing efforts of selfregulatory organizations (‘‘SROs’’) to develop a national market system plan for the selection and reservation of securities ticker symbols.12 In addition, two commenters argued that the proposal could cause a shortage of one-, two-, or three-character ticker symbols.13 In support of the proposal, some commenters asserted that the proposal would enhance competition among markets and reduce the potential for investor confusion.14 In its letter, Nasdaq responded to the commenters, stating that it believed that many of the commenters opposing the proposal misunderstood its proposal and the current use of symbols by the securities markets, and reiterated its belief that the proposal would reduce investor confusion and promote competition among exchanges.15 IV. Discussion After a careful review of the proposed rule change, the comment letters, and the Nasdaq Response Letter, the Commission finds that the proposed rule change is consistent with the requirements of the Act and the regulations thereunder applicable to a national securities exchange.16 In particular, the Commission finds that the proposal is consistent with Section 6(b)(5) of the Act,17 which requires that the rules of a national securities exchange be designed, among other things, to promote just and equitable principles of trade, to remove impediments to and perfect the mechanism of a free and open market and a national market system, and, in general, to protect investors and the public interest, and Section 6(b)(8) of the Act,18 which requires that the rules of an exchange not impose any burden pwalker on PROD1PC71 with NOTICES 10 Id. 11 See Ward Letter, NYSE Letter, Amex Letter, Big Lots Letter, and Wolverine World Wide Letter. 12 See Ward Letter, NYSE Letter, Amex Letter, and RPM Letter. 13See NYSE Letter and Amex Letter. The Amex Letter, among other comment letters, expressed views on Nasdaq listing one- and two-character ticker symbols; however, this proposed rule change relates only to the transfer of three-character ticker symbol listings. 14 See Angel Letter, Schwab Letter, and Issuer Advisory Group Letter. 15 See Nasdaq Response Letter. 16 In approving the proposed rule change, the Commission notes that it has considered the proposed rule’s impact on efficiency, competition, and capital formation. 15 U.S.C. 78c(f). 17 15 U.S.C. 78f(b)(5). 18 15 U.S.C. 78f(b)(8). VerDate Aug<31>2005 19:05 Jul 12, 2007 Jkt 211001 on competition that is not necessary or appropriate in furtherance of the Act. A. Competition Among the Listing Markets The Commission notes that national securities exchanges often allow issuers to retain the ticker symbols that identify their securities when such issuers transfer their listings to another exchange, other than Nasdaq.19 This proposal would allow Nasdaq to participate in this existing practice, along with all other national securities exchanges, for issuers with threecharacter ticker symbols.20 Nasdaq and the commenters supporting the proposal asserted that the proposed rule change would allow publicly-listed issuers to choose their marketplace based on objective factors such as trading quality, costs, and branding, and not based on symbol portability.21 Currently, an issuer deciding whether to transfer its listing to Nasdaq must consider, among other factors, the fact that it would need to change its ticker symbol. For example, the Schwab Letter stated that, when it considered transferring its listing to Nasdaq, the prospect of changing its symbol was a negative factor in its analysis regarding whether to transfer its listing. Schwab noted that the change in its ticker symbol, resulting from the transferring of its listing to Nasdaq, necessitated operational and systems changes at Schwab and industry-wide at other financial services firms and required the expenditure of other resources to inform its investors of that change. The Commission notes that when an issuer is seeking to transfer its listing to an exchange other than Nasdaq, such issuer’s analysis is not typically encumbered by considerations of changing its symbol and the attending administrative and other costs associated with that process. The proposed rule change would eliminate the considerations associated with changing its ticker symbol from the decision by an issuer identified by a three-character symbol to transfer its 19 See, e.g., Darwin Professional Underwriters (on April 18, 2007, moved from NYSE Arca to NYSE and retaining its symbol DR) and Yamana Gold Inc. (on January 12, 2007, moved from Amex to NYSE and retaining its symbol AUY). 20 Some of the commenters expressed views on Nasdaq listing one- and two-character ticker symbols; however, these considerations are beyond the scope of this proposed rule change, which covers only the transfer of three-character ticker symbols. 21 See Issuer Advisory Group Letter and Nasdaq Response Letter. PO 00000 Frm 00091 Fmt 4703 Sfmt 4703 listing to Nasdaq.22 Thus, the Commission believes that the proposed rule change, by allowing issuers to retain their three-character ticker symbols upon transferring their listings to Nasdaq, would remove a burden on competition not necessary or appropriate in furtherance of the purposes of the Act and would thereby enhance competition between Nasdaq and the other exchanges in the business of providing a listing venue. B. Investor Confusion The Commission also believes that allowing an issuer to retain the threecharacter ticker symbol that identifies its security upon transferring its listing to Nasdaq does not increase, and may reduce, the potential for confusion in the marketplace by an issuer changing its ticker symbol. Commenters supporting the proposal asserted that changing an issuer’s ticker symbol often results in investor confusion and costly investment mistakes.23 In its letter, Schwab stated that its ticker symbol change required it to expend time and resources to combat the confusion that the change would have caused among its individual stockholders who had come to identify it with its threecharacter symbol. The Commission notes that issuers transferring their listings to exchanges other than Nasdaq typically avoid such confusion by retaining their ticker symbols.24 The commenters objecting to the proposal, however, asserted that the proposed rule change, for various reasons, would cause confusion in the marketplace. The majority of such commenters argued that three-character ticker symbols are a hallmark of NYSElisted securities 25 and that, consequently, expanding the use of three-character ticker symbols to Nasdaq-listed securities would result in investor confusion.26 The Commission notes, however, that all of the 22 Of course, an issuer could request a new ticker symbol if it so desired. 23 See Angel Letter, Issuer Advisory Group Letter, and Schwab Letter. 24 The Nasdaq Response Letter stated that, of the 200 issuers transfers of existing three-character symbols since August 2001, all but one of those issuers have retained their symbols upon their transfer to a new exchange. 25 Based on this premise, these commenters also argued that three-character ticker symbols signal NYSE’s high qualitative listing standards and that allowing Nasdaq to list securities with threecharacter ticker symbols would blur the distinction between NYSE-listed and other exchange-listed securities and diminish the branding of NYSE-listed securities. 26 See Strategic Technologies Letter, NYSE Letter, Cantel Medical Letter, Big Lots Letter, Kinetic Concepts Letter, RPM Letter, Getty Realty Letter, Wolverine World Wide Letter, TCF Financial Letter, and FPL Group Letter. E:\FR\FM\13JYN1.SGM 13JYN1 Federal Register / Vol. 72, No. 134 / Friday, July 13, 2007 / Notices exchanges, except Nasdaq,27 may list securities using three-character ticker symbols.28 Unlike one-character symbols, three-character symbols are not associated by investors with any one market. The Commission also notes that the transfer of securities listings with three-character ticker symbols typically occur among other exchanges without any discernable confusion or disruption to the marketplace.29 Another commenter asserted that three-character symbols are exclusive indicators of securities trading on NYSE’s and Amex’s specialist-based markets, and that it would cause confusion if such symbols were used on Nasdaq’s dealer market.30 However, as the Commission noted above, exchanges other than NYSE and Amex may list securities with three-character symbols.31 pwalker on PROD1PC71 with NOTICES C. National Market System Plan Process Some of the commenters have expressed concern that the proposed rule change would disrupt or circumvent ongoing efforts by the SROs to develop a national market system plan.32 The Commission recently received two proposed national market system plans for the selection and reservation of ticker symbols submitted by two separate groups of SROs.33 The Commission is currently considering these plans and intends to publish the proposed plans for public comment.34 27 With the exception of the transfer of the DFC listing, Nasdaq currently only lists securities of companies using four- or five-character symbols. See supra note 7 and accompanying text. 28 For example, as noted in the Angel Letter, the NAIC Growth Fund lists on the Chicago Stock Exchange, Inc. with the ticker symbol ‘‘GRF’’. 29 Nasdaq has also represented that its recent listing of DFC occurred without any trading problems. The Amex Letter tacitly agreed with this view, but argued that the lack of trading problems associated with DFC is not the best proxy for other companies that may transfer their listings to Nasdaq because it believed that DFC is a microcap company. The Nasdaq Response Letter, however, disputed this argument and the Amex Letter’s labeling of DFC as a ‘‘microcap company,’’ citing the fact that DFC has a market capitalization of over $230 million, a figure that it contends is nearly triple the $67 million market capitalization of the median Amex issuer. 30 See Amex Letter. 31 For example, NYSE Arca lists three-character symbols. See also supra note 27. 32 See Ward Letter, NYSE Letter, Amex Letter, and RPM Letter. 33 See Proposed NMS Plan for the Selection and Reservation of Securities Symbols by the Chicago Stock Exchange, Inc., Nasdaq, National Association of Securities Dealers, Inc., National Stock Exchange, Inc. and Philadelphia Stock Exchange, Inc. (available at http://www.sec.gov/rules/sro/4– 533revised.pdf) and Proposed NMS Plan for the Selection and Reservation of Securities Symbols by Amex, NYSE and NYSE Arca (available at http:// www.sec.gov/rules/sro/4–534.pdf). 34 See Press Release, Commission, SEC Announces Process for Proposals on Securities VerDate Aug<31>2005 19:31 Jul 12, 2007 Jkt 211001 The Commission believes that its approval of the proposed rule change is independent of its consideration of these plans. The Commission under Rule 608(b)(2) may declare effective any national market system plan or plans for the selection and reservation of ticker symbols that is consistent with the requirements of the Act. Participants in any such plan would be required to comply with its requirements, which could necessitate changes to SRO rules.35 D. Symbol Shortage Two commenters argued that the proposal could create a shortage of available three-character ticker symbols.36 Nasdaq’s proposal, however, would only permit it to list securities with three-character ticker symbols when such issuer transfers its listing from another exchange; the proposal would not permit Nasdaq to list new securities with three-character ticker symbols. The Commission, therefore, does not believe Nasdaq’s proposal would have a negative impact on the availability of three-character ticker symbols. V. Conclusion It is therefore ordered, pursuant to Section 19(b)(2) of the Act,37 that the proposed rule change (SR–NASDAQ– 2007–031) be, and hereby is, approved. By the Commission. Florence E. Harmon, Deputy Secretary. [FR Doc. E7–13578 Filed 7–12–07; 8:45 am] BILLING CODE 8010–01–P 38641 SECURITIES AND EXCHANGE COMMISSION [Release No. 34–56029; File No. SR–NASD– 2007–038] Self-Regulatory Organizations; National Association of Securities Dealers, Inc; Notice of Filing and Immediate Effectiveness of Proposed Rule Change to Amend the Customer and the Industry Codes of Arbitration Procedure To Clarify NASD’s Jurisdiction Concerning Members of Other Self-Regulatory Organizations July 9, 2007. 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 June 13, 2007 the National Association of Securities Dealers, Inc. (‘‘NASD’’), through its wholly owned subsidiary, NASD Dispute Resolution, Inc. (‘‘NASD Dispute Resolution’’) filed with the Securities and Exchange Commission (‘‘Commission’’), the proposed rule change as described in Items I, II, and III below, which Items have been substantially prepared by NASD Dispute Resolution. NASD has designated the proposed rule change as constituting a stated policy, practice, or interpretation with respect to the meaning, administration, or enforcement of an existing rule of the self-regulatory organization under Section 19(b)(3)(A)(i) of the Act 3 and Rule 19b– 4(f)(1) thereunder,4 which renders the proposal effective upon receipt of this filing by the Commission. The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons. I. Self-Regulatory Organization’s Statement of the Terms of Substance of the Proposed Rule Change ‘Ticker’ Symbols (April 5, 2007) (available at http://www.sec.gov/news/press/2007/2007–63.htm). 35 See 15 U.S.C. 78k–1(a)(3) and 17 CFR 242.608(b) and (c). The NYSE Letter referenced a ‘‘Symbol Reservation Plan,’’ which it stated has operated to allocate and reserve symbols for over 30 years. The Commission notes, however, that no such plan has been approved by the Commission. 36 See NYSE Letter and Amex Letter. 37 15 U.S.C. 78s(b)(2). PO 00000 Frm 00092 Fmt 4703 Sfmt 4703 NASD Dispute Resolution is proposing to amend NASD Rules 12100 and 13100 of the NASD Codes of Arbitration Procedure for Customer Disputes (‘‘Customer Code’’) and for Industry Disputes (‘‘Industry Code’’) (together, the ‘‘Codes’’) to clarify that, for purposes of the Codes, the term ‘‘member’’ includes any broker or dealer admitted to membership in a selfregulatory organization that, with NASD consent, has required its members to arbitrate pursuant to the Codes and/or to be treated as members of NASD for purposes of the Codes. Below is the text 1 15 U.S.C. 78s(b)(1). CFR 240.19b–4. 3 15 U.S.C. 78s(b)(3)(A)(i). 4 17 CFR 240.19b–4(f)(1). 2 17 E:\FR\FM\13JYN1.SGM 13JYN1

Agencies

[Federal Register Volume 72, Number 134 (Friday, July 13, 2007)]
[Notices]
[Pages 38639-38641]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E7-13578]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-56028; File No. SR-NASDAQ-2007-031]


Self-Regulatory Organizations; The NASDAQ Stock Market LLC; Order 
Granting Approval of a Proposed Rule Change Relating to Three-
Characters Ticker Symbols

July 9, 2007.

I. Introduction

    On March 29, 2007, The NASDAQ Stock Market LLC (``Nasdaq'') filed 
with the Securities and Exchange Commission (``Commission''), pursuant 
to Section 19(b)(1) of the Securities Exchange Act of 1934 (``Act'') 
\1\ and Rule 19b-4 thereunder,\2\ a proposed rule change to allow an 
issuer with a three-character ticker symbol that transfers its listing 
to Nasdaq from another listing market to continue using its three-
character ticker symbol on Nasdaq. The proposed rule change was 
published for comment in the Federal Register on April 4, 2007.\3\
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ See Securities Exchange Act Release No. 55563 (March 30, 
2007), 72 FR 16391.
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    The Commission received 24 comment letters on the proposal.\4\ On 
May 1, 2007, Nasdaq filed a response to the comment letters.\5\ This 
order approves the proposed rule change.
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    \4\ See letters from Edward J. Resch, Executive Vice President, 
Chief Financial Officer and Treasurer, State Street Corporation, 
dated May 21, 2007 (``State Street Letter''); Larry A. Mizel, 
Chairman and Chief Executive Officer, M.D.C. Holdings, Inc. (``MDC 
Letter''), dated May 17, 2007; Jack R. Hartung, Chief Finance and 
Development Officer, Chipotle Mexican Grill, dated May 15, 2007 
(``Chipotle Letter''); Carol R. Kaufman, Sr. Vice President Legal 
Affairs, The Cooper Companies, Inc., dated May 14, 2007 (``Cooper 
Companies Letter''); Farooq Kathwari, Chairman, President and CEO, 
Ethan Allen Interiors, Inc., dated May 9, 2007 (``Ethan Allen 
Letter''); James J. Angel, Associate Professor of Finance, McDonough 
School of Business, Georgetown University, dated May 9, 2007 
(``Angel Letter''); Jack Sennott, Senior Vice President and Chief 
Financial Officer, Darwin Professional Underwriters, Inc., dated May 
8, 2007 (``Darwin Letter''); Bart J. Ward, Chief Executive Officer, 
Ward & Company, dated May 8, 2007 (``Ward Letter''); Craig D. 
Mallick, Corporate Secretary, United States Steel Corporation, dated 
May 4, 2007 (``United States Steel Letter''); Michael Tenenbaum, 
Trustee, Strategic Technologies Employees Pension Fund Trust, dated 
May 2, 2007 (``Strategic Technologies Letter''); Carrie E. Dwyer, 
General Counsel and Executive Vice President Corporate Oversight, 
The Charles Schwab Corporation (``Schwab''), dated April 27, 2007 
(``Schwab Letter''); Mary Yeager, Assistant Secretary, New York 
Stock Exchange LLC (``NYSE''), dated April 25, 2007 (``NYSE 
Letter''); Patrick J. Healy, Issuer Advisory Group, dated April 24, 
2007 (``Issuer Advisory Group Letter''); Neal L. Wolkoff, Chairman 
and Chief Executive Officer, American Stock Exchange LLC (``Amex''), 
dated April 16, 2007 (``Amex Letter''); Eric W. Nodiff, Sr. V.P. and 
General Counsel, Cantel Medical Corp., dated April 9, 2007 (``Cantel 
Medical Letter''); Dave Patch, dated April 6, 2007 (``Patch 
Letter''); Steve S. Fishman, Chairman and Chief Executive Officer, 
Big Lots, Inc., dated April 4, 2007 (``Big Lots Letter''); David M. 
Brain, President and CEO, Entertainment Properties Trust, dated 
April 3, 2007 (``Entertainment Properties Trust Letter''); Cathy 
Burzik, President and Chief Executive Officer, Kinetic Concepts, 
Inc., dated March 30, 2007 (``Kinetic Concepts Letter''); Edward W. 
Moore, Vice President, General Counsel & Secretary, RPM 
International Inc., dated March 29, 2007 (``RPM Letter''); Leo 
Liebowitz, Chairman and Chief Executive Officer, Getty Realty Corp., 
dated March 29, 2007 (``Getty Realty Letter''); Timothy J. 
O'Donovan, Chairman of the Board and Chief Executive Officer, 
Wolverine World Wide, Inc., dated March 28, 2007 (``Wolverine World 
Wide Letter''); Jason Korstange, SVP, Director of Corporate 
Communications, TCF Financial Corporation, dated March 28, 2007 
(``TCF Financial Letter''); and Edward F. Tancer, Vice President & 
General Counsel, FPL Group, Inc., dated March 28, 2007 (``FPL Group 
Letter'').
    \5\ See letter from Joan C. Conley, Senior Vice President and 
Corporate Secretary, Nasdaq, to Nancy M. Morris, Secretary, 
Commission, dated May 1, 2007 (``Nasdaq Response Letter'').
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II. Description of the Proposal

    Historically, it has been the practice of NYSE, Amex, and the 
regional exchanges to list securities using three-character ticker 
symbols, and of Nasdaq to list securities using four- and five-
character symbols.\6\ Nasdaq recently submitted a proposed rule change 
to begin listing Delta Financial Corp., a security that transferred its 
listing from Amex, while retaining its three-character symbol 
(``DFC'').\7\
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    \6\ It has also been the practice of NYSE, Amex, and the 
regional exchanges to list securities using two-character ticker 
symbols. In addition, NYSE lists securities with one-character 
ticker symbols.
    \7\ See Securities Exchange Act Release No. 55519 (March 26, 
2007), 72 FR 15737 (April 2, 2007) (SR-NASDAQ-2007-025).
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    Nasdaq now proposes to allow any issuer with a three-character 
ticker symbol that transfers its listing to Nasdaq from another 
domestic listing market to continue using its three-character ticker 
symbol on Nasdaq.

III. Summary of Comments

    Four commenters expressed support for Nasdaq's proposal; \8\ the 
remaining 20 commenters, including 16 issuers listed on NYSE, objected 
to Nasdaq listing transferred securities with their three-character 
ticker symbols.\9\
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    \8\ See Angel Letter, Schwab Letter, Issuer Advisory Group 
Letter, and Patch Letter.
    \9\ See State Street Letter, MDC Letter, Chipotle Letter, Cooper 
Companies Letter, Ethan Allen Letter, Darwin Letter, Ward Letter, 
United States Steel Letter, Strategic Technologies Letter, NYSE 
Letter, Amex Letter, Cantel Medical Letter, Big Lots Letter, 
Entertainment Properties Trust Letter, Kinetic Concepts Letter, RPM 
Letter, Getty Realty Letter, Wolverine World Wide Letter, TCF 
Financial Letter, and FPL Group Letter.
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    The commenters objecting to the proposal generally argued that the 
proposal would violate the long-

[[Page 38640]]

standing practice of allowing only NYSE-listed securities to use three-
character ticker symbols,\10\ cause confusion in the marketplace,\11\ 
and circumvent the ongoing efforts of self-regulatory organizations 
(``SROs'') to develop a national market system plan for the selection 
and reservation of securities ticker symbols.\12\ In addition, two 
commenters argued that the proposal could cause a shortage of one-, 
two-, or three-character ticker symbols.\13\
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    \10\ Id.
    \11\ See Ward Letter, NYSE Letter, Amex Letter, Big Lots Letter, 
and Wolverine World Wide Letter.
    \12\ See Ward Letter, NYSE Letter, Amex Letter, and RPM Letter.
    \13\See NYSE Letter and Amex Letter. The Amex Letter, among 
other comment letters, expressed views on Nasdaq listing one- and 
two-character ticker symbols; however, this proposed rule change 
relates only to the transfer of three-character ticker symbol 
listings.
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    In support of the proposal, some commenters asserted that the 
proposal would enhance competition among markets and reduce the 
potential for investor confusion.\14\ In its letter, Nasdaq responded 
to the commenters, stating that it believed that many of the commenters 
opposing the proposal misunderstood its proposal and the current use of 
symbols by the securities markets, and reiterated its belief that the 
proposal would reduce investor confusion and promote competition among 
exchanges.\15\
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    \14\ See Angel Letter, Schwab Letter, and Issuer Advisory Group 
Letter.
    \15\ See Nasdaq Response Letter.
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IV. Discussion

    After a careful review of the proposed rule change, the comment 
letters, and the Nasdaq Response Letter, the Commission finds that the 
proposed rule change is consistent with the requirements of the Act and 
the regulations thereunder applicable to a national securities 
exchange.\16\ In particular, the Commission finds that the proposal is 
consistent with Section 6(b)(5) of the Act,\17\ which requires that the 
rules of a national securities exchange be designed, among other 
things, to promote just and equitable principles of trade, to remove 
impediments to and perfect the mechanism of a free and open market and 
a national market system, and, in general, to protect investors and the 
public interest, and Section 6(b)(8) of the Act,\18\ which requires 
that the rules of an exchange not impose any burden on competition that 
is not necessary or appropriate in furtherance of the Act.
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    \16\ In approving the proposed rule change, the Commission notes 
that it has considered the proposed rule's impact on efficiency, 
competition, and capital formation. 15 U.S.C. 78c(f).
    \17\ 15 U.S.C. 78f(b)(5).
    \18\ 15 U.S.C. 78f(b)(8).
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A. Competition Among the Listing Markets

    The Commission notes that national securities exchanges often allow 
issuers to retain the ticker symbols that identify their securities 
when such issuers transfer their listings to another exchange, other 
than Nasdaq.\19\ This proposal would allow Nasdaq to participate in 
this existing practice, along with all other national securities 
exchanges, for issuers with three-character ticker symbols.\20\
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    \19\ See, e.g., Darwin Professional Underwriters (on April 18, 
2007, moved from NYSE Arca to NYSE and retaining its symbol DR) and 
Yamana Gold Inc. (on January 12, 2007, moved from Amex to NYSE and 
retaining its symbol AUY).
    \20\ Some of the commenters expressed views on Nasdaq listing 
one- and two-character ticker symbols; however, these considerations 
are beyond the scope of this proposed rule change, which covers only 
the transfer of three-character ticker symbols.
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    Nasdaq and the commenters supporting the proposal asserted that the 
proposed rule change would allow publicly-listed issuers to choose 
their marketplace based on objective factors such as trading quality, 
costs, and branding, and not based on symbol portability.\21\ 
Currently, an issuer deciding whether to transfer its listing to Nasdaq 
must consider, among other factors, the fact that it would need to 
change its ticker symbol. For example, the Schwab Letter stated that, 
when it considered transferring its listing to Nasdaq, the prospect of 
changing its symbol was a negative factor in its analysis regarding 
whether to transfer its listing. Schwab noted that the change in its 
ticker symbol, resulting from the transferring of its listing to 
Nasdaq, necessitated operational and systems changes at Schwab and 
industry-wide at other financial services firms and required the 
expenditure of other resources to inform its investors of that change.
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    \21\ See Issuer Advisory Group Letter and Nasdaq Response 
Letter.
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    The Commission notes that when an issuer is seeking to transfer its 
listing to an exchange other than Nasdaq, such issuer's analysis is not 
typically encumbered by considerations of changing its symbol and the 
attending administrative and other costs associated with that process. 
The proposed rule change would eliminate the considerations associated 
with changing its ticker symbol from the decision by an issuer 
identified by a three-character symbol to transfer its listing to 
Nasdaq.\22\ Thus, the Commission believes that the proposed rule 
change, by allowing issuers to retain their three-character ticker 
symbols upon transferring their listings to Nasdaq, would remove a 
burden on competition not necessary or appropriate in furtherance of 
the purposes of the Act and would thereby enhance competition between 
Nasdaq and the other exchanges in the business of providing a listing 
venue.
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    \22\ Of course, an issuer could request a new ticker symbol if 
it so desired.
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B. Investor Confusion

    The Commission also believes that allowing an issuer to retain the 
three-character ticker symbol that identifies its security upon 
transferring its listing to Nasdaq does not increase, and may reduce, 
the potential for confusion in the marketplace by an issuer changing 
its ticker symbol. Commenters supporting the proposal asserted that 
changing an issuer's ticker symbol often results in investor confusion 
and costly investment mistakes.\23\ In its letter, Schwab stated that 
its ticker symbol change required it to expend time and resources to 
combat the confusion that the change would have caused among its 
individual stockholders who had come to identify it with its three-
character symbol. The Commission notes that issuers transferring their 
listings to exchanges other than Nasdaq typically avoid such confusion 
by retaining their ticker symbols.\24\
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    \23\ See Angel Letter, Issuer Advisory Group Letter, and Schwab 
Letter.
    \24\ The Nasdaq Response Letter stated that, of the 200 issuers 
transfers of existing three-character symbols since August 2001, all 
but one of those issuers have retained their symbols upon their 
transfer to a new exchange.
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    The commenters objecting to the proposal, however, asserted that 
the proposed rule change, for various reasons, would cause confusion in 
the marketplace. The majority of such commenters argued that three-
character ticker symbols are a hallmark of NYSE-listed securities \25\ 
and that, consequently, expanding the use of three-character ticker 
symbols to Nasdaq-listed securities would result in investor 
confusion.\26\ The Commission notes, however, that all of the

[[Page 38641]]

exchanges, except Nasdaq,\27\ may list securities using three-character 
ticker symbols.\28\ Unlike one-character symbols, three-character 
symbols are not associated by investors with any one market. The 
Commission also notes that the transfer of securities listings with 
three-character ticker symbols typically occur among other exchanges 
without any discernable confusion or disruption to the marketplace.\29\
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    \25\ Based on this premise, these commenters also argued that 
three-character ticker symbols signal NYSE's high qualitative 
listing standards and that allowing Nasdaq to list securities with 
three-character ticker symbols would blur the distinction between 
NYSE-listed and other exchange-listed securities and diminish the 
branding of NYSE-listed securities.
    \26\ See Strategic Technologies Letter, NYSE Letter, Cantel 
Medical Letter, Big Lots Letter, Kinetic Concepts Letter, RPM 
Letter, Getty Realty Letter, Wolverine World Wide Letter, TCF 
Financial Letter, and FPL Group Letter.
    \27\ With the exception of the transfer of the DFC listing, 
Nasdaq currently only lists securities of companies using four- or 
five-character symbols. See supra note 7 and accompanying text.
    \28\ For example, as noted in the Angel Letter, the NAIC Growth 
Fund lists on the Chicago Stock Exchange, Inc. with the ticker 
symbol ``GRF''.
    \29\ Nasdaq has also represented that its recent listing of DFC 
occurred without any trading problems. The Amex Letter tacitly 
agreed with this view, but argued that the lack of trading problems 
associated with DFC is not the best proxy for other companies that 
may transfer their listings to Nasdaq because it believed that DFC 
is a microcap company. The Nasdaq Response Letter, however, disputed 
this argument and the Amex Letter's labeling of DFC as a ``microcap 
company,'' citing the fact that DFC has a market capitalization of 
over $230 million, a figure that it contends is nearly triple the 
$67 million market capitalization of the median Amex issuer.
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    Another commenter asserted that three-character symbols are 
exclusive indicators of securities trading on NYSE's and Amex's 
specialist-based markets, and that it would cause confusion if such 
symbols were used on Nasdaq's dealer market.\30\ However, as the 
Commission noted above, exchanges other than NYSE and Amex may list 
securities with three-character symbols.\31\
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    \30\ See Amex Letter.
    \31\ For example, NYSE Arca lists three-character symbols. See 
also supra note 27.
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C. National Market System Plan Process

    Some of the commenters have expressed concern that the proposed 
rule change would disrupt or circumvent ongoing efforts by the SROs to 
develop a national market system plan.\32\ The Commission recently 
received two proposed national market system plans for the selection 
and reservation of ticker symbols submitted by two separate groups of 
SROs.\33\ The Commission is currently considering these plans and 
intends to publish the proposed plans for public comment.\34\ The 
Commission believes that its approval of the proposed rule change is 
independent of its consideration of these plans. The Commission under 
Rule 608(b)(2) may declare effective any national market system plan or 
plans for the selection and reservation of ticker symbols that is 
consistent with the requirements of the Act. Participants in any such 
plan would be required to comply with its requirements, which could 
necessitate changes to SRO rules.\35\
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    \32\ See Ward Letter, NYSE Letter, Amex Letter, and RPM Letter.
    \33\ See Proposed NMS Plan for the Selection and Reservation of 
Securities Symbols by the Chicago Stock Exchange, Inc., Nasdaq, 
National Association of Securities Dealers, Inc., National Stock 
Exchange, Inc. and Philadelphia Stock Exchange, Inc. (available at 
http://www.sec.gov/rules/sro/4-533revised.pdf) and Proposed NMS Plan 
for the Selection and Reservation of Securities Symbols by Amex, 
NYSE and NYSE Arca (available at http://www.sec.gov/rules/sro/4-
534.pdf).
    \34\ See Press Release, Commission, SEC Announces Process for 
Proposals on Securities `Ticker' Symbols (April 5, 2007) (available 
at http://www.sec.gov/news/press/2007/2007-63.htm).
    \35\ See 15 U.S.C. 78k-1(a)(3) and 17 CFR 242.608(b) and (c). 
The NYSE Letter referenced a ``Symbol Reservation Plan,'' which it 
stated has operated to allocate and reserve symbols for over 30 
years. The Commission notes, however, that no such plan has been 
approved by the Commission.
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D. Symbol Shortage

    Two commenters argued that the proposal could create a shortage of 
available three-character ticker symbols.\36\ Nasdaq's proposal, 
however, would only permit it to list securities with three-character 
ticker symbols when such issuer transfers its listing from another 
exchange; the proposal would not permit Nasdaq to list new securities 
with three-character ticker symbols. The Commission, therefore, does 
not believe Nasdaq's proposal would have a negative impact on the 
availability of three-character ticker symbols.
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    \36\ See NYSE Letter and Amex Letter.
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V. Conclusion

    It is therefore ordered, pursuant to Section 19(b)(2) of the 
Act,\37\ that the proposed rule change (SR-NASDAQ-2007-031) be, and 
hereby is, approved.
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    \37\ 15 U.S.C. 78s(b)(2).

    By the Commission.
Florence E. Harmon,
Deputy Secretary.
 [FR Doc. E7-13578 Filed 7-12-07; 8:45 am]
BILLING CODE 8010-01-P