Self-Regulatory Organizations; The NASDAQ Stock Market LLC; Order Approving Proposed Rule Change, as Modified by Amendment No. 2 Thereto, To Establish a System for the Purchase of Equity Value Indicator Securities, 53911-53912 [E8-21705]
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Federal Register / Vol. 73, No. 181 / Wednesday, September 17, 2008 / Notices
arguments concerning the foregoing,
including whether the proposed rule
change is consistent with the Act.
Comments may be submitted by any of
the following methods:
SECURITIES AND EXCHANGE
COMMISSION
Electronic Comments
Self-Regulatory Organizations; The
NASDAQ Stock Market LLC; Order
Approving Proposed Rule Change, as
Modified by Amendment No. 2 Thereto,
To Establish a System for the
Purchase of Equity Value Indicator
Securities
• 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–BATS–2008–002 on the
subject line.
[Release No. 34–58509; File No. SR–
NASDAQ–2008–025]
September 10, 2008.
I. Introduction
On March 20, 2008, The NASDAQ
Stock Market LLC, (‘‘Nasdaq’’ or
• Send paper comments in triplicate
‘‘Exchange’’), filed with the Securities
to Secretary, Securities and Exchange
and Exchange Commission
Commission, 100 F Street, NE.,
(‘‘Commission’’), pursuant to Section
Washington, DC 20549–1090.
19(b)(1) of the Securities Act of 1934
All submissions should refer to File
(‘‘Exchange Act’’) 1 and Rule 19b–4
Number SR–BATS–2008–002. This file
thereunder,2 a proposed rule change to
number should be included on the
establish an Equity Value Indicator
subject line if e-mail is used. To help the (‘‘EVI’’) Cross. On July 23, 2008, the
Commission process and review your
Nasdaq filed Amendment No. 1 to the
comments more efficiently, please use
proposed rule change. On July 30, 2008,
only one method. The Commission will Nasdaq withdrew Amendment No. 1
post all comments on the Commission’s and filed Amendment No. 2 to the
Internet Web site (https://www.sec.gov/
proposed rule change.3 On August 7,
rules/sro.shtml). Copies of the
2008, the proposed rule change, as
submission, all subsequent
modified by Amendment No. 2, was
amendments, all written statements
published for comment in the Federal
with respect to the proposed rule
Register.4 The Commission received no
change that are filed with the
comments on the proposed rule change.
Commission, and all written
This order approves the proposed rule
communications relating to the
change, as modified by Amendment No.
proposed rule change between the
2.
Commission and any person, other than
II. Background
those that may be withheld from the
Nasdaq has proposed to establish a
public in accordance with the
system that will allow its members to
provisions of 5 U.S.C. 552, will be
purchase ‘‘EVI Securities,’’ which
available for inspection and copying in
Nasdaq anticipates will entitle holders
the Commission’s Public Reference
Room, on official business days between thereof to specified payments based on
the exercise of stock options previously
the hours of 10 a.m. and 3 p.m. Copies
granted to employees of the issuer. This
of the filing also will be available for
system—designated by Nasdaq the ‘‘EVI
inspection and copying at the principal
Cross’’—is designed to generate a
office of the Exchange. All comments
received will be posted without change; market-based value of employee stock
options for purposes of FASB Statement
the Commission does not edit personal
of Financial Accounting Standards No.
identifying information from
123(R). EVI Securities will represent a
submissions. You should submit only
payment obligation of the issuer, but
information that you wish to make
will not represent any direct ownership
available publicly. All submissions
interest in the issuing company or in the
should refer to File Number SR–BATS–
associated employee stock options. The
2008–002 and should be submitted on
issuer will make available to the public
or before October 8, 2008.
the number of EVI Securities available
For the Commission, by the Division of
in the EVI Cross, the limit price (if any),
Trading and Markets, pursuant to delegated
and the terms and features of its EVI
4
authority.
Securities, such as how payments are
pwalker on PROD1PC71 with NOTICES
Paper Comments
Florence E. Harmon,
Acting Secretary.
[FR Doc. E8–21708 Filed 9–16–08; 8:45 am]
BILLING CODE 8010–01–P
4 17
CFR 200.30–3(a)(12).
VerDate Aug<31>2005
17:38 Sep 16, 2008
Jkt 214001
1 15
U.S.C. 78s(b)(1).
CFR 240.19b–4.
3 Amendment No. 2 replaced the original filing in
its entirety.
4 See Securities Exchange Act Release No. 58275
(July 31, 2008), 73 FR 46129.
2 17
PO 00000
Frm 00095
Fmt 4703
Sfmt 4703
53911
calculated, maturity dates, and form of
payment.
Nasdaq is not proposing to list or
provide a secondary market for EVI
Securities. An issuer will be able to sell,
and Nasdaq members will be able to
buy, EVI Securities in a single auction.
Nasdaq members would access the EVI
Cross system through existing interfaces
for order entry, although the EVI Cross
system will be separate from the Nasdaq
Market Center execution system. The
EVI Cross system is modeled on the
technology used for Nasdaq’s existing
crossing mechanisms such as its
Opening and Closing Crosses, the
Nasdaq Crossing Network, and its Halt
Cross. Nasdaq anticipates that an issuer,
if it chose to use the EVI Cross, would
do so on the first trading day following
the grant of employee stock options.
To initiate an auction, a Nasdaq
member authorized to act on behalf of
the issuer of EVI Securities would enter
an order specifying a quantity of EVI
Securities to sell; a limit price is
optional. After 4 p.m. on the day of the
auction, the sell order could not be
modified but could be cancelled as late
as 4:45 p.m. On the day of the auction,
any Nasdaq member could submit a
limit order to buy with a designated
size. Beginning at 4 p.m. and
periodically thereafter, Nasdaq would
disseminate information about the
anticipated execution price, which is
the single highest price at which the
maximum amount of interest could be
paired. Based on this information,
prospective buyers could submit new
orders and potentially increase the
anticipated execution price. Executions
would occur at 5 p.m., unless the
system extends the auction process
because the anticipated execution price
changes by a designated amount in the
minute before the designated time of
execution. If the remaining size of the
sell order cannot fill all the buy orders
at the execution price, allocations
would be made based on time priority.
All executions would be reported to the
National Securities Clearing Corporation
and disseminated via a data feed.
Nasdaq would charge an issuer tiered
fees depending on the total value of the
EVI offering. The fee would be 2 percent
of the first $10,000,000 of the total value
of an EVI offering. If the value of the EVI
offering is above $10,000,000, Nasdaq
would charge an additional fee of 1.5
percent of the value of the EVI offering
above $10,000,000. The total fees,
however, would not exceed $1,500,000.
Nasdaq would not assess a fee if the EVI
Cross is not carried out. Nasdaq
members would be required to establish
a new port for connectivity to access the
EVI Cross system. However, Nasdaq
E:\FR\FM\17SEN1.SGM
17SEN1
53912
Federal Register / Vol. 73, No. 181 / Wednesday, September 17, 2008 / Notices
would not assess a fee for that port, and
Nasdaq has not proposed to assess any
transaction fees for purchases of EVI
Securities.
III. Discussion
pwalker on PROD1PC71 with NOTICES
After careful review, the Commission
finds that the proposed rule change is
consistent with the requirements of the
Act and the rules and regulations
thereunder applicable to a national
securities exchange.5 In particular, the
Commission finds that the proposed
rule change is consistent with Section
6(b)(5) of the Act,6 which requires,
among other things, that the rules of an
exchange be designed to prevent
fraudulent and manipulative acts and
practices; to promote just and equitable
principles of trade; to foster cooperation
and coordination with persons engaged
in regulating, clearing, settling,
processing information with respect to,
and facilitating transactions in
securities; and, in general, to protect
investors and the public interest; and
are not designed to permit unfair
discrimination between customers,
issuers, brokers, or dealers. The
proposal offers a potentially useful
service to issuers and does not appear
to raise any issue under the Exchange
Act.
The Commission believes that the
proposed trading rules are consistent
with the Act and notes that they are
based on those of Nasdaq’s crossing
platforms that have previously been
approved by the Commission.7 The
Commission finds that the proposed
fees for the EVI Cross are consistent
with Section 6(b)(4) of the Act,8 which
requires that the rules of an exchange
provide for the equitable allocation of
reasonable dues, fees, and other charges
among its members and issuers and
other persons using its facilities. The
Commission notes that an issuer will
not be charged a fee unless an auction
is carried out, and that Nasdaq has not
proposed any transaction fees on
5 In approving this proposed rule change, the
Commission has considered the proposed rule’s
impact on efficiency, competition, and capital
formation. See 15 U.S.C. 78c(f).
6 15 U.S.C. 78f(b)(5).
7 See, e.g., Securities Exchange Act Release No.
50405 (September 16, 2004), 69 FR 57118
(September 23, 2004) (SR–NASD–2007–071)
(approving Nasdaq’s Opening Cross); Securities
Exchange Act Release No. 49406 (March 11, 2004),
69 FR 12879 (March 18, 2004) (SR–NASD–2003–
173) (approving Nasdaq’s Closing Cross); Securities
Exchange Act Release No. 53687 (April 20, 2006),
71 FR 24878 (April 27, 2006) (SR–NASD–2006–015)
(approving the Nasdaq Halt Cross); Securities
Exchange Act Release No. 54101 (July 5, 2006), 71
FR 39382 (July 12, 2006) (SR–NASD–2005–140)
(approving the Nasdaq Crossing Network).
8 15 U.S.C. 78f(b)(4).
VerDate Aug<31>2005
17:55 Sep 16, 2008
Jkt 214001
members that purchase EVI Securities in
an auction.
This order addresses only whether
Nasdaq’s rules and fees relating to the
EVI Cross are consistent with the Act.
The Commission is offering no opinion
here as to whether prices of EVI
Securities derived from auctions
conducted pursuant to this proposal
may be employed to value employee
stock options consistent with FASB
Statement of Financial Accounting
Standards No. 123(R), or whether the
offering of any particular EVI Securities
is consistent with the federal securities
laws.
IV. Conclusion
It is therefore ordered, pursuant to
Section 19(b)(2) of the Act,9 that the
proposed rule change (SR–NASDAQ–
2008–025), as modified by Amendment
No. 2, be, and hereby is, approved.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.10
Florence E. Harmon,
Acting Secretary.
[FR Doc. E8–21705 Filed 9–16–08; 8:45 am]
BILLING CODE 8010–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–58522; File No. SR–NYSE–
2008–83]
Self-Regulatory Organizations; Notice
of Filing and Immediate Effectiveness
of Proposed Rule Change by New York
Stock Exchange LLC To Resume the
Operation of NYSE Rule 123D(3) With
Respect to Trading in the Securities of
Fannie Mae and Freddie Mac
Beginning on September 11, 2008,
Following the Suspension of That Rule
Pursuant to SR–NYSE–2008–81
September 11, 2008.
Pursuant to Section 19(b)(1) 1 of the
Securities Exchange Act of 1934 (the
‘‘Act’’) 2 and Rule 19b–4 thereunder,3
notice is hereby given that, on
September 11, 2008, New York Stock
Exchange LLC (‘‘NYSE’’ or the
‘‘Exchange’’) filed with the Securities
and Exchange Commission (the
‘‘Commission’’) the proposed rule
change as described in Items I and II
below, which Items have been prepared
by the self-regulatory organization. The
Commission is publishing this notice to
9 15
U.S.C. 78s(b)(2).
CFR 200.30–3(a)(12).
1 15 U.S.C.78s(b)(1).
2 5 U.S.C. 78a.
3 17 CFR 40.19b–4.
10 17
PO 00000
Frm 00096
Fmt 4703
Sfmt 4703
solicit comments on the proposed rule
change from interested persons.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The Exchange proposes to resume the
operation of NYSE Rule 123D(3) with
respect to trading in the securities of
Fannie Mae and Freddie Mac beginning
on September 11, 2008, following the
suspension of that rule pursuant to SR–
NYSE–2008–81.4
II. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
In its filing with the Commission,
NYSE included statements concerning
the purpose of, and basis for, the
proposed rule change. The text of these
statements may be examined at the
places specified in Item IV below. NYSE
has prepared summaries, set forth in
Sections A, B, and C below, of the most
significant aspects of such statements.
A. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
1. Purpose
Regulation NMS, adopted by the
Securities and Exchange Commission
(‘‘SEC’’) in April 2005,5 provides that
each trading center intending to qualify
for trade-through protection under
Regulation NMS Rule 611 6 is required
to have a Regulation NMS-compliant
trading system fully operational by
March 5, 2007 (the ‘‘Trading Phase
Date’’).7
For stocks priced below $1.00 per
share, Regulation NMS Rule 612 8
permits markets to accept bids, offers,
orders and indications of interest in
increments smaller than $0.01, but not
less than $0.0001, and to quote and
trade such stocks in sub-pennies.
Markets may choose not to accept such
4 See Securities Exchange Act Release No. 58488
(September 8, 2008). For a complete list of the
securities affected by this filing, see SR–NYSE–
2008–81.
5 See Securities Exchange Act Release No. 51808
(June 9, 2005), 17 CFR Parts 200, 201, 230, 240, 242,
249 and 270.
6 See 17 CFR 242.611.
7 See Securities Exchange Act Release No. 55160
(January 24, 2007), 72 FR 4202 (January 30, 2007)
(S7–10–04).
8 See 17 CFR 242.612. Rule 612 originally was to
become effective on August 29, 2005, but the date
was later extended to January 29, 2006. See
Securities Exchange Act Release No. 52196 (Aug. 2,
2005), 70 FR 45529 (Aug. 8, 2005).
E:\FR\FM\17SEN1.SGM
17SEN1
]]>Agencies
[Federal Register Volume 73, Number 181 (Wednesday, September 17, 2008)]
[Notices]
[Pages 53911-53912]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E8-21705]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-58509; File No. SR-NASDAQ-2008-025]
Self-Regulatory Organizations; The NASDAQ Stock Market LLC; Order
Approving Proposed Rule Change, as Modified by Amendment No. 2 Thereto,
To Establish a System for the Purchase of Equity Value Indicator
Securities
September 10, 2008.
I. Introduction
On March 20, 2008, The NASDAQ Stock Market LLC, (``Nasdaq'' or
``Exchange''), filed with the Securities and Exchange Commission
(``Commission''), pursuant to Section 19(b)(1) of the Securities Act of
1934 (``Exchange Act'') \1\ and Rule 19b-4 thereunder,\2\ a proposed
rule change to establish an Equity Value Indicator (``EVI'') Cross. On
July 23, 2008, the Nasdaq filed Amendment No. 1 to the proposed rule
change. On July 30, 2008, Nasdaq withdrew Amendment No. 1 and filed
Amendment No. 2 to the proposed rule change.\3\ On August 7, 2008, the
proposed rule change, as modified by Amendment No. 2, was published for
comment in the Federal Register.\4\ The Commission received no comments
on the proposed rule change. This order approves the proposed rule
change, as modified by Amendment No. 2.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
\3\ Amendment No. 2 replaced the original filing in its
entirety.
\4\ See Securities Exchange Act Release No. 58275 (July 31,
2008), 73 FR 46129.
---------------------------------------------------------------------------
II. Background
Nasdaq has proposed to establish a system that will allow its
members to purchase ``EVI Securities,'' which Nasdaq anticipates will
entitle holders thereof to specified payments based on the exercise of
stock options previously granted to employees of the issuer. This
system--designated by Nasdaq the ``EVI Cross''--is designed to generate
a market-based value of employee stock options for purposes of FASB
Statement of Financial Accounting Standards No. 123(R). EVI Securities
will represent a payment obligation of the issuer, but will not
represent any direct ownership interest in the issuing company or in
the associated employee stock options. The issuer will make available
to the public the number of EVI Securities available in the EVI Cross,
the limit price (if any), and the terms and features of its EVI
Securities, such as how payments are calculated, maturity dates, and
form of payment.
Nasdaq is not proposing to list or provide a secondary market for
EVI Securities. An issuer will be able to sell, and Nasdaq members will
be able to buy, EVI Securities in a single auction. Nasdaq members
would access the EVI Cross system through existing interfaces for order
entry, although the EVI Cross system will be separate from the Nasdaq
Market Center execution system. The EVI Cross system is modeled on the
technology used for Nasdaq's existing crossing mechanisms such as its
Opening and Closing Crosses, the Nasdaq Crossing Network, and its Halt
Cross. Nasdaq anticipates that an issuer, if it chose to use the EVI
Cross, would do so on the first trading day following the grant of
employee stock options.
To initiate an auction, a Nasdaq member authorized to act on behalf
of the issuer of EVI Securities would enter an order specifying a
quantity of EVI Securities to sell; a limit price is optional. After 4
p.m. on the day of the auction, the sell order could not be modified
but could be cancelled as late as 4:45 p.m. On the day of the auction,
any Nasdaq member could submit a limit order to buy with a designated
size. Beginning at 4 p.m. and periodically thereafter, Nasdaq would
disseminate information about the anticipated execution price, which is
the single highest price at which the maximum amount of interest could
be paired. Based on this information, prospective buyers could submit
new orders and potentially increase the anticipated execution price.
Executions would occur at 5 p.m., unless the system extends the auction
process because the anticipated execution price changes by a designated
amount in the minute before the designated time of execution. If the
remaining size of the sell order cannot fill all the buy orders at the
execution price, allocations would be made based on time priority. All
executions would be reported to the National Securities Clearing
Corporation and disseminated via a data feed.
Nasdaq would charge an issuer tiered fees depending on the total
value of the EVI offering. The fee would be 2 percent of the first
$10,000,000 of the total value of an EVI offering. If the value of the
EVI offering is above $10,000,000, Nasdaq would charge an additional
fee of 1.5 percent of the value of the EVI offering above $10,000,000.
The total fees, however, would not exceed $1,500,000. Nasdaq would not
assess a fee if the EVI Cross is not carried out. Nasdaq members would
be required to establish a new port for connectivity to access the EVI
Cross system. However, Nasdaq
[[Page 53912]]
would not assess a fee for that port, and Nasdaq has not proposed to
assess any transaction fees for purchases of EVI Securities.
III. Discussion
After careful review, the Commission finds that the proposed rule
change is consistent with the requirements of the Act and the rules and
regulations thereunder applicable to a national securities exchange.\5\
In particular, the Commission finds that the proposed rule change is
consistent with Section 6(b)(5) of the Act,\6\ which requires, among
other things, that the rules of an exchange be designed to prevent
fraudulent and manipulative acts and practices; to promote just and
equitable principles of trade; to foster cooperation and coordination
with persons engaged in regulating, clearing, settling, processing
information with respect to, and facilitating transactions in
securities; and, in general, to protect investors and the public
interest; and are not designed to permit unfair discrimination between
customers, issuers, brokers, or dealers. The proposal offers a
potentially useful service to issuers and does not appear to raise any
issue under the Exchange Act.
---------------------------------------------------------------------------
\5\ In approving this proposed rule change, the Commission has
considered the proposed rule's impact on efficiency, competition,
and capital formation. See 15 U.S.C. 78c(f).
\6\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------
The Commission believes that the proposed trading rules are
consistent with the Act and notes that they are based on those of
Nasdaq's crossing platforms that have previously been approved by the
Commission.\7\ The Commission finds that the proposed fees for the EVI
Cross are consistent with Section 6(b)(4) of the Act,\8\ which requires
that the rules of an exchange provide for the equitable allocation of
reasonable dues, fees, and other charges among its members and issuers
and other persons using its facilities. The Commission notes that an
issuer will not be charged a fee unless an auction is carried out, and
that Nasdaq has not proposed any transaction fees on members that
purchase EVI Securities in an auction.
---------------------------------------------------------------------------
\7\ See, e.g., Securities Exchange Act Release No. 50405
(September 16, 2004), 69 FR 57118 (September 23, 2004) (SR-NASD-
2007-071) (approving Nasdaq's Opening Cross); Securities Exchange
Act Release No. 49406 (March 11, 2004), 69 FR 12879 (March 18, 2004)
(SR-NASD-2003-173) (approving Nasdaq's Closing Cross); Securities
Exchange Act Release No. 53687 (April 20, 2006), 71 FR 24878 (April
27, 2006) (SR-NASD-2006-015) (approving the Nasdaq Halt Cross);
Securities Exchange Act Release No. 54101 (July 5, 2006), 71 FR
39382 (July 12, 2006) (SR-NASD-2005-140) (approving the Nasdaq
Crossing Network).
\8\ 15 U.S.C. 78f(b)(4).
---------------------------------------------------------------------------
This order addresses only whether Nasdaq's rules and fees relating
to the EVI Cross are consistent with the Act. The Commission is
offering no opinion here as to whether prices of EVI Securities derived
from auctions conducted pursuant to this proposal may be employed to
value employee stock options consistent with FASB Statement of
Financial Accounting Standards No. 123(R), or whether the offering of
any particular EVI Securities is consistent with the federal securities
laws.
IV. Conclusion
It is therefore ordered, pursuant to Section 19(b)(2) of the
Act,\9\ that the proposed rule change (SR-NASDAQ-2008-025), as modified
by Amendment No. 2, be, and hereby is, approved.
---------------------------------------------------------------------------
\9\ 15 U.S.C. 78s(b)(2).
\10\ 17 CFR 200.30-3(a)(12).
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\10\
Florence E. Harmon,
Acting Secretary.
[FR Doc. E8-21705 Filed 9-16-08; 8:45 am]
BILLING CODE 8010-01-P
