Self-Regulatory Organizations; The NASDAQ Stock Market LLC; Order Instituting Proceedings To Determine Whether To Disapprove Proposed Rule Change To Adopt Additional Criteria for Listing Commodity Stockpiling Companies That Have Indicated Their Business Plan Is To Buy and Hold Commodities, 6506-6508 [2011-2447]

Download as PDF 6506 Federal Register / Vol. 76, No. 24 / Friday, February 4, 2011 / Notices commencement of trading on the Exchange. (6) For initial and/or continued listing, the Funds will be in compliance with Rule 10A–3 under the Act.16 This approval order is based on the Exchange’s representations. For the foregoing reasons, the Commission finds that the proposed rule change is consistent with Section 6(b)(5) of the Act 17 and the rules and regulations thereunder applicable to a national securities exchange. The Commission subsequently extended the time period in which to either approve the proposed rule change, or to institute proceedings to determine whether to disapprove the proposed rule change, to February 1, 2011.4 The Commission received one comment letter on the proposal.5 This order institutes proceedings under Section 19(b)(2)(B) of the Act to determine whether to disapprove the proposed rule change. IV. Conclusion It is therefore ordered, pursuant to Section 19(b)(2) of the Act,18 that the proposed rule change (SR–NYSEArca– 2010–118), be, and it hereby is, approved. II. Description of the Proposal For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.19 Elizabeth M. Murphy, Secretary. [FR Doc. 2011–2457 Filed 2–3–11; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–63804; File No. SR– NASDAQ–2010–134] Self-Regulatory Organizations; The NASDAQ Stock Market LLC; Order Instituting Proceedings To Determine Whether To Disapprove Proposed Rule Change To Adopt Additional Criteria for Listing Commodity Stockpiling Companies That Have Indicated Their Business Plan Is To Buy and Hold Commodities January 31, 2011. srobinson on DSKHWCL6B1PROD with NOTICES I. Introduction On October 15, 2010, 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 Exchange Act of 1934 (‘‘Act’’) 1 and Rule 19b–4 thereunder,2 a proposed rule change to adopt additional criteria for listing companies that have indicated that their business plan is to buy and hold commodities. The proposed rule change was published for comment in the Federal Register on November 3, 2010.3 16 17 CFR 240.10A–3. U.S.C. 78f(b)(5). 18 15 U.S.C. 78s(b)(2). 19 17 CFR 200.30–3(a)(12). 1 15 U.S.C. 78s(b)(1). 2 17 CFR 240.19b–4. 3 See Securities Exchange Act Release No. 63207 (October 28, 2010), 75 FR 67788. 17 15 VerDate Mar<15>2010 16:05 Feb 03, 2011 Jkt 223001 The Exchange proposes to adopt additional listing standards for companies that have indicated that their business plan is to purchase and stockpile raw materials or other commodities (‘‘commodity stockpiling companies’’). Under the proposal, such companies are required to meet all other applicable Nasdaq initial listing requirements, as well as the following additional listing standards. First, within 18 months of the effectiveness of its initial public offering registration statement, or such shorter period as the company specifies in the registration statement, the company would be required to invest at least 85% of the net proceeds of the initial public offering in the raw material or commodity identified in the registration statement, or return the unused amount pro rata to its shareholders.6 Second, the company would be required to publish, or facilitate access to, at no cost and in an easily accessible manner, regular pricing information regarding the raw material or other commodity from a reliable, independent source, at least as frequently as current industry practice but no less than twice per week.7 Third, the company would be required to publish its net market value on a daily basis, or where pricing information for the raw material or other commodity is not available on a daily basis, no less frequently than twice per week.8 If the spot price of the raw material or commodity fluctuates by more than 5%, the company shall 4 See Securities Exchange Act Release No. 63508 (December 9, 2010), 75 FR 78300 (December 15, 2010). 5 See Letter from Edward H. Smith, Jr. to Florence E. Harmon, Deputy Secretary, Commission, dated January 18, 2011. 6 See proposed Nasdaq IM–5101–3(a). 7 See proposed Nasdaq IM–5101–3(b). 8 See proposed Nasdaq IM–5101–3(d). Net market value would be determined by multiplying the volume of the raw material or commodity held in inventory by the last spot price published or otherwise relied upon by the company, plus cash and other assets, less any liabilities. PO 00000 Frm 00112 Fmt 4703 Sfmt 4703 publish the net market value within one business day of the fluctuation. Fourth, the company would be required to publish the quantity of the raw material or other commodity held in inventory, the average price paid, and the company’s net market value within two business days of any change in inventory held.9 Where the company contracts to purchase or sell a material quantity of the raw material or commodity, such information would be required to be disclosed in a Form 8–K filing within four business days. Fifth, the company would be required to employ the services of one or more independent third party storage facilities to safeguard the physical holdings of the raw material or commodity.10 Finally, the company would be required to create a committee comprised solely of independent directors who shall consider, at least quarterly, whether the company’s purchasing activities have had a measurable impact on the market price of the raw material or other commodity and shall report such determinations and make subsequent recommendations to the company’s board of directors.11 Nasdaq also is proposing to adopt additional audit committee requirements applicable to commodity stockpiling companies. In addition to the existing audit committee requirements in Nasdaq rules, audit committees for commodity stockpiling companies would be required to establish procedures for the identification and management of potential conflicts of interest, and would be required to review and approve any transactions where such potential conflicts have been identified.12 9 See proposed Nasdaq IM–5101–3(c). proposed Nasdaq IM–5101–3(e). Under the proposed rule language, the facility ‘‘should provide services consistent with those provided by custodians and these must include: Storage and safeguarding; insurance; transfer of the raw material or other commodity in and out of the facility; visual inspections, spot checks and assays; confirmation of deliveries to supplier packing lists; and reporting of transfers and of inventory to the [commodity stockpiling company] and its auditors.’’ The company must oversee the third party storage facility with its committee of independent directors. 11 See proposed Nasdaq IM–5101–3(f). The independent directors may rely upon and shall have the authority to engage and pay an industry expert in conducting this review. If the company’s board of directors disagrees with or does not accept the recommendations of the committee, the company will be required to file a Form 8–K with the Commission outlining the relevant events, committee’s determinations and recommendations, and rationale for the board of directors’ determination. 12 See proposed Nasdaq Rule 5605(c)(3) and IM– 5605. Under the proposal, the procedures should include any material amendment to the 10 See E:\FR\FM\04FEN1.SGM 04FEN1 Federal Register / Vol. 76, No. 24 / Friday, February 4, 2011 / Notices III. Comment Letter The Commission received one comment letter on the proposal.13 The commenter, a shareholder in SMG Indium Resources Ltd. (‘‘SMG’’), supported the proposal and stated, among other things, that approval of the proposal would ‘‘support making the market for commodities, such as Indium, more efficient and transparent by providing investors * * * with an easier and more cost-effective alternative for investing in such commodities.’’ This commenter further noted that, unlike commodity-based trust shares, which are designed along the lines of an exchange-traded fund (‘‘ETF’’) structure and offer exposure to very liquid and actively-traded commodities, commodity stockpiling companies ‘‘provide investment exposure to select strategic and commercial commodities which do not have substantial liquid and active trading markets nor extensive and well developed derivative and/or spot markets and pricing mechanisms.’’ The commenter explained his view that the proposed listing standards would assure appropriate investor protection in connection with the listing of commodity stockpiling companies, and cited particular aspects of the proposal, including the frequency and source of pricing information, the requirement to calculate and disseminate net market value, and the use of third-party storage facilities. srobinson on DSKHWCL6B1PROD with NOTICES IV. Proceedings To Determine Whether To Disapprove SR–NASDAQ–2010–134 and Grounds for Disapproval Under Consideration The Commission is instituting proceedings pursuant to Section 19(b)(2)(B) of the Act to determine whether the proposed rule change should be disapproved. Institution of such proceedings appears appropriate at this time in view of the legal and policy issues raised by the proposal, discussed below. Institution of disapproval proceedings does not indicate that the Commission has reached any conclusions with respect to any of the issues involved. Rather, as described in greater detail below, the Commission seeks and encourages interested persons to comment on the proposed rule change. Pursuant to Section 19(b)(2)(B), the Commission is providing notice of the grounds for disapproval under consideration. In particular, Section management agreement, including any change with respect to the compensation of the manager. 13 See, note 4, supra. VerDate Mar<15>2010 16:05 Feb 03, 2011 Jkt 223001 6(b)(5) of the Act 14 requires that the rules of an exchange be designed, among other things, to prevent fraudulent and manipulative acts and practices, 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. Nasdaq’s proposal would authorize a national securities exchange, for the first time, to list an operating company that simply plans to buy and hold a commodity or other raw material. A liquid market may not exist for the commodity or other raw material to be held by the commodity stockpiling company. Despite the commenter’s view that the proposal would provide appropriate investor protections for the listing of commodity stockpiling companies such as SMG, the Commission believes that the proposal raises issues, among other things, as to (1) whether the dissemination of up-todate pricing information twice per week about the sole asset of an operating company would be sufficient to support the fair and efficient exchange trading of its equity securities; (2) in the absence of a liquid and transparent market for the commodity or other raw material held by the company, whether the pricing information from the ‘‘independent source’’ would in fact have sufficient reliability and integrity, or whether there are risks that information could be manipulated; (3) whether there would be risks such pricing information may be available to some market participants sooner than others, thereby giving the former an unfair trading advantage; and (4) whether Nasdaq’s proposal adequately addresses any special risks to investors that might be presented by the exchange trading of an operating company in the business solely of stockpiling an illiquid commodity. The Commission believes these concerns raise questions as to whether Nasdaq’s proposal is consistent with the requirements of Section 6(b)(5) of the Act, including whether the nature of the required pricing information, and the frequency and manner of its dissemination, would prevent manipulation, promote just and equitable principles of trade, perfect the mechanism of a free and open market and the national market system, or protect investors and the public interest. 14 15 PO 00000 U.S.C. 78f(b)(5). Frm 00113 Fmt 4703 Sfmt 4703 6507 V. Procedure: Request for Written Comments The Commission requests that interested persons provide written submissions of their views, data and arguments with respect to the concerns identified above, as well as any others they may have with the proposal. In particular, the Commission invites the written views of interested persons concerning whether the proposed rule change is inconsistent with Section 6(b)(5) or any other provision of the Act, or the rules and regulation thereunder. Although there do not appear to be any issues relevant to approval or disapproval which would be facilitated by an oral presentation of views, data, and arguments, the Commission will consider, pursuant to Rule 19b–4, any request for an opportunity to make an oral presentation.15 Interested persons are invited to submit written data, views and arguments regarding whether the proposed rule change should be disapproved by March 21, 2011. Any person who wishes to file a rebuttal to any other person’s submission must file that rebuttal by April 5, 2011. Comments may be submitted by any of the following methods: Electronic Comments • Use the Commission’s Internet comment form (http://www.sec.gov/ rules/sro.shtml); or • Send an e-mail to rulecomments@sec.gov. Please include File Number SR–NASDAQ–2010–134 on the subject line. Paper Comments • Send paper comments in triplicate to Elizabeth M. Murphy, Secretary, Securities and Exchange Commission, 100 F Street, NE., Washington, DC 20549–1090. All submissions should refer to File Number SR–NASDAQ–2010–134. 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 (http://www.sec.gov/ rules/sro.shtml). Copies of the 15 Section 19(b)(2) of the Act, as amended by the Securities Act Amendments of 1975, Public Law 94–29 (June 4, 1975), grants the Commission flexibility to determine what type of proceeding— either oral or notice and opportunity for written comments—is appropriate for consideration of a particular proposal by a self-regulatory organization. See Securities Act Amendments of 1975, Senate Comm. on Banking, Housing & Urban Affairs, S. Rep. No. 75, 94th Cong., 1st Sess. 30 (1975). E:\FR\FM\04FEN1.SGM 04FEN1 6508 Federal Register / Vol. 76, No. 24 / Friday, February 4, 2011 / Notices 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 Web site viewing and printing 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– NASDAQ–2010–134 and should be submitted on or before March 21, 2011. Rebuttal comments should be submitted by April 5, 2011. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.16 Elizabeth M. Murphy, Secretary. [FR Doc. 2011–2447 Filed 2–3–11; 8:45 am] BILLING CODE 8011–01–P SMALL BUSINESS ADMINISTRATION Data Collection Available for Public Comments and Recommendations Notice and request for comments. ACTION: In accordance with the Paperwork Reduction Act of 1995, this notice announces the Small Business Administration’s intentions to request approval on a new and/or currently approved information collection. DATES: Submit comments on or before April 5, 2011. Addresses: Send all comments regarding whether this information collection is necessary for the proper performance of the function of the agency, whether the burden estimates are accurate, and if there are ways to minimize the estimated burden and enhance the quality of the collection, to Jules Lichtenstein, Economist, Office of Advocacy, Small Business srobinson on DSKHWCL6B1PROD with NOTICES SUMMARY: 16 17 CFR 200.30–3(a)(57). VerDate Mar<15>2010 16:05 Feb 03, 2011 Jkt 223001 Administration, 409 3rd Street, 7th Floor, Washington, DC 20416. For Further Information Contact: Jules Lichtenstein, Economist, Office of Advocacy, 202–205–6537, jules.lichtenstein@sba.gov Curtis B. Rich, Management Analyst, 202–205– 7030 curtis.rich@sba.gov. Supplementary Information: The survey is intended to improve understanding of the relative roles of immigrants and U.S.-born citizens in founding U.S. high-tech companies. The population for the survey is drawn from the Corporate Research Boards database of ‘‘gazelle’’ firms in high-technology which is licensed from Dun & Bradstreet. Title: ‘‘High-Tech Immigrant Entrepreneurship’’. Description of Respondents: Firms in selected industries in the Dun and Bradstreet database. Form Number: N/A. Annual Responses: 1,000. Annual Burden: 167. Addresses: Send all comments regarding whether this information collection is necessary for the proper performance of the function of the agency, whether the burden estimates are accurate, and if there are ways to minimize the estimated burden and enhance the quality of the collection, to Rachel Newman-Karton, Program Analyst, Office of Small Business Development Centers, Small Business Administration, 409 3rd Street, 6th Floor, Washington, DC 20416. For Further Information Contact: Rachel Newman-Karton, Program Analyst, Office of Small Business Development Centers, 202–619–1816, Rachel.newman-karton@sba.gov Curtis B. Rich, Management Analyst, 202–205– 7030 curtis.rich@sba.gov. Supplementary Information: The Drug Free Workplace Grantees are required to submit quarterly reports which will report the grantees progress on helping small businesses implement Drug Free Workplace programs including education and training. The SBA requires such information to track the grantees progress to assess the effectiveness of the Drug Free Workplace Program, and report this information to Congress. Title: ‘‘Quarterly Reports file by Grantees of the Drug Free Workplace Program’’. Description of Respondents: Eligible Intermediaries who have received a Drug Free Workplace Program grant. Form Number: N/A. Annual Responses: 28. Annual Burden: 112. Addresses: Send all comments regarding whether these information PO 00000 Frm 00114 Fmt 4703 Sfmt 4703 collections are necessary for the proper performance of the function of the agency, whether the burden estimates are accurate, and if there are ways to minimize the estimated burden and enhance the quality of the collections, to Gail Hepler, Chief 7(a) Program Branch, Office of Financial Assistance, Small Business Administration, 409 3rd Street, 8th Floor, Washington, DC 20416. For Further Information Contact: Gail Hepler, Chief 7(a) Program Branch, Office of Financial Assistance, 202– 205–7530, gail.hepler@sba.gov Curtis B. Rich, Management Analyst, 202–205– 7030 curtis.rich@sba.gov. Supplementary Information: Since 2005 SBA has been opening the Gulf Opportunity Pilot Loan Program, which provides financing to small businesses in communities located to or re-locating in the parishes/counties that were Presidential declared disaster area as a results of Hurricanes Katrina or Rita plus any parishes/counties contiguous to these parishes. This information is collected from those parishes. This information is collected from those lenders and small business owners who participate or seek to participate in the program and is used for portfolio risk management loan monitoring and lender oversight. Title: ‘‘Gulf Opportunity Pilot Loan Program (GO) Loan Pilot’’. Description of Respondents: Applicants requesting an SBA loan for Katrina or Rita. Form Number’s: 2276 A, B, C, 2281, 2282. Annual Responses: 580. Annual Burden: 362. Supplementary Information: This form is used to assist borrowers (20% or greater owners, corporate officers, or loan guarantors) in preparing their total net worth by listing all of their assets and liabilities, including current income. Title: ‘‘Personal Financial Statement’’. Description of Respondents: Applicants for an SBA Loan. Form Number: 413. Annual Responses: 91,937. Annual Burden: 137,095. Addresses: Send all comments regarding whether this information collection is necessary for the proper performance of the function of the agency, whether the burden estimates are accurate, and if there are ways to minimize the estimated burden and enhance the quality of the collection, to Holly Schick, Deputy Associate Administrator for Entrepreneurial Development, Small Business Administration, 409 3rd Street, 6th Floor, Washington, DC 20416. E:\FR\FM\04FEN1.SGM 04FEN1

Agencies

[Federal Register Volume 76, Number 24 (Friday, February 4, 2011)]
[Notices]
[Pages 6506-6508]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2011-2447]


-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-63804; File No. SR-NASDAQ-2010-134]


Self-Regulatory Organizations; The NASDAQ Stock Market LLC; Order 
Instituting Proceedings To Determine Whether To Disapprove Proposed 
Rule Change To Adopt Additional Criteria for Listing Commodity 
Stockpiling Companies That Have Indicated Their Business Plan Is To Buy 
and Hold Commodities

 January 31, 2011.

I. Introduction

    On October 15, 2010, 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 
Exchange Act of 1934 (``Act'') \1\ and Rule 19b-4 thereunder,\2\ a 
proposed rule change to adopt additional criteria for listing companies 
that have indicated that their business plan is to buy and hold 
commodities. The proposed rule change was published for comment in the 
Federal Register on November 3, 2010.\3\ The Commission subsequently 
extended the time period in which to either approve the proposed rule 
change, or to institute proceedings to determine whether to disapprove 
the proposed rule change, to February 1, 2011.\4\ The Commission 
received one comment letter on the proposal.\5\ This order institutes 
proceedings under Section 19(b)(2)(B) of the Act to determine whether 
to disapprove the proposed rule change.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ See Securities Exchange Act Release No. 63207 (October 28, 
2010), 75 FR 67788.
    \4\ See Securities Exchange Act Release No. 63508 (December 9, 
2010), 75 FR 78300 (December 15, 2010).
    \5\ See Letter from Edward H. Smith, Jr. to Florence E. Harmon, 
Deputy Secretary, Commission, dated January 18, 2011.
---------------------------------------------------------------------------

II. Description of the Proposal

    The Exchange proposes to adopt additional listing standards for 
companies that have indicated that their business plan is to purchase 
and stockpile raw materials or other commodities (``commodity 
stockpiling companies''). Under the proposal, such companies are 
required to meet all other applicable Nasdaq initial listing 
requirements, as well as the following additional listing standards. 
First, within 18 months of the effectiveness of its initial public 
offering registration statement, or such shorter period as the company 
specifies in the registration statement, the company would be required 
to invest at least 85% of the net proceeds of the initial public 
offering in the raw material or commodity identified in the 
registration statement, or return the unused amount pro rata to its 
shareholders.\6\
---------------------------------------------------------------------------

    \6\ See proposed Nasdaq IM-5101-3(a).
---------------------------------------------------------------------------

    Second, the company would be required to publish, or facilitate 
access to, at no cost and in an easily accessible manner, regular 
pricing information regarding the raw material or other commodity from 
a reliable, independent source, at least as frequently as current 
industry practice but no less than twice per week.\7\
---------------------------------------------------------------------------

    \7\ See proposed Nasdaq IM-5101-3(b).
---------------------------------------------------------------------------

    Third, the company would be required to publish its net market 
value on a daily basis, or where pricing information for the raw 
material or other commodity is not available on a daily basis, no less 
frequently than twice per week.\8\ If the spot price of the raw 
material or commodity fluctuates by more than 5%, the company shall 
publish the net market value within one business day of the 
fluctuation.
---------------------------------------------------------------------------

    \8\ See proposed Nasdaq IM-5101-3(d). Net market value would be 
determined by multiplying the volume of the raw material or 
commodity held in inventory by the last spot price published or 
otherwise relied upon by the company, plus cash and other assets, 
less any liabilities.
---------------------------------------------------------------------------

    Fourth, the company would be required to publish the quantity of 
the raw material or other commodity held in inventory, the average 
price paid, and the company's net market value within two business days 
of any change in inventory held.\9\ Where the company contracts to 
purchase or sell a material quantity of the raw material or commodity, 
such information would be required to be disclosed in a Form 8-K filing 
within four business days.
---------------------------------------------------------------------------

    \9\ See proposed Nasdaq IM-5101-3(c).
---------------------------------------------------------------------------

    Fifth, the company would be required to employ the services of one 
or more independent third party storage facilities to safeguard the 
physical holdings of the raw material or commodity.\10\ Finally, the 
company would be required to create a committee comprised solely of 
independent directors who shall consider, at least quarterly, whether 
the company's purchasing activities have had a measurable impact on the 
market price of the raw material or other commodity and shall report 
such determinations and make subsequent recommendations to the 
company's board of directors.\11\
---------------------------------------------------------------------------

    \10\ See proposed Nasdaq IM-5101-3(e). Under the proposed rule 
language, the facility ``should provide services consistent with 
those provided by custodians and these must include: Storage and 
safeguarding; insurance; transfer of the raw material or other 
commodity in and out of the facility; visual inspections, spot 
checks and assays; confirmation of deliveries to supplier packing 
lists; and reporting of transfers and of inventory to the [commodity 
stockpiling company] and its auditors.'' The company must oversee 
the third party storage facility with its committee of independent 
directors.
    \11\ See proposed Nasdaq IM-5101-3(f). The independent directors 
may rely upon and shall have the authority to engage and pay an 
industry expert in conducting this review. If the company's board of 
directors disagrees with or does not accept the recommendations of 
the committee, the company will be required to file a Form 8-K with 
the Commission outlining the relevant events, committee's 
determinations and recommendations, and rationale for the board of 
directors' determination.
---------------------------------------------------------------------------

    Nasdaq also is proposing to adopt additional audit committee 
requirements applicable to commodity stockpiling companies. In addition 
to the existing audit committee requirements in Nasdaq rules, audit 
committees for commodity stockpiling companies would be required to 
establish procedures for the identification and management of potential 
conflicts of interest, and would be required to review and approve any 
transactions where such potential conflicts have been identified.\12\
---------------------------------------------------------------------------

    \12\ See proposed Nasdaq Rule 5605(c)(3) and IM-5605. Under the 
proposal, the procedures should include any material amendment to 
the management agreement, including any change with respect to the 
compensation of the manager.

---------------------------------------------------------------------------

[[Page 6507]]

III. Comment Letter

    The Commission received one comment letter on the proposal.\13\ The 
commenter, a shareholder in SMG Indium Resources Ltd. (``SMG''), 
supported the proposal and stated, among other things, that approval of 
the proposal would ``support making the market for commodities, such as 
Indium, more efficient and transparent by providing investors * * * 
with an easier and more cost-effective alternative for investing in 
such commodities.'' This commenter further noted that, unlike 
commodity-based trust shares, which are designed along the lines of an 
exchange-traded fund (``ETF'') structure and offer exposure to very 
liquid and actively-traded commodities, commodity stockpiling companies 
``provide investment exposure to select strategic and commercial 
commodities which do not have substantial liquid and active trading 
markets nor extensive and well developed derivative and/or spot markets 
and pricing mechanisms.'' The commenter explained his view that the 
proposed listing standards would assure appropriate investor protection 
in connection with the listing of commodity stockpiling companies, and 
cited particular aspects of the proposal, including the frequency and 
source of pricing information, the requirement to calculate and 
disseminate net market value, and the use of third-party storage 
facilities.
---------------------------------------------------------------------------

    \13\ See, note 4, supra.
---------------------------------------------------------------------------

IV. Proceedings To Determine Whether To Disapprove SR-NASDAQ-2010-134 
and Grounds for Disapproval Under Consideration

    The Commission is instituting proceedings pursuant to Section 
19(b)(2)(B) of the Act to determine whether the proposed rule change 
should be disapproved. Institution of such proceedings appears 
appropriate at this time in view of the legal and policy issues raised 
by the proposal, discussed below. Institution of disapproval 
proceedings does not indicate that the Commission has reached any 
conclusions with respect to any of the issues involved. Rather, as 
described in greater detail below, the Commission seeks and encourages 
interested persons to comment on the proposed rule change.
    Pursuant to Section 19(b)(2)(B), the Commission is providing notice 
of the grounds for disapproval under consideration. In particular, 
Section 6(b)(5) of the Act \14\ requires that the rules of an exchange 
be designed, among other things, to prevent fraudulent and manipulative 
acts and practices, 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.
---------------------------------------------------------------------------

    \14\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

    Nasdaq's proposal would authorize a national securities exchange, 
for the first time, to list an operating company that simply plans to 
buy and hold a commodity or other raw material. A liquid market may not 
exist for the commodity or other raw material to be held by the 
commodity stockpiling company. Despite the commenter's view that the 
proposal would provide appropriate investor protections for the listing 
of commodity stockpiling companies such as SMG, the Commission believes 
that the proposal raises issues, among other things, as to (1) whether 
the dissemination of up-to-date pricing information twice per week 
about the sole asset of an operating company would be sufficient to 
support the fair and efficient exchange trading of its equity 
securities; (2) in the absence of a liquid and transparent market for 
the commodity or other raw material held by the company, whether the 
pricing information from the ``independent source'' would in fact have 
sufficient reliability and integrity, or whether there are risks that 
information could be manipulated; (3) whether there would be risks such 
pricing information may be available to some market participants sooner 
than others, thereby giving the former an unfair trading advantage; and 
(4) whether Nasdaq's proposal adequately addresses any special risks to 
investors that might be presented by the exchange trading of an 
operating company in the business solely of stockpiling an illiquid 
commodity. The Commission believes these concerns raise questions as to 
whether Nasdaq's proposal is consistent with the requirements of 
Section 6(b)(5) of the Act, including whether the nature of the 
required pricing information, and the frequency and manner of its 
dissemination, would prevent manipulation, promote just and equitable 
principles of trade, perfect the mechanism of a free and open market 
and the national market system, or protect investors and the public 
interest.

V. Procedure: Request for Written Comments

    The Commission requests that interested persons provide written 
submissions of their views, data and arguments with respect to the 
concerns identified above, as well as any others they may have with the 
proposal. In particular, the Commission invites the written views of 
interested persons concerning whether the proposed rule change is 
inconsistent with Section 6(b)(5) or any other provision of the Act, or 
the rules and regulation thereunder. Although there do not appear to be 
any issues relevant to approval or disapproval which would be 
facilitated by an oral presentation of views, data, and arguments, the 
Commission will consider, pursuant to Rule 19b-4, any request for an 
opportunity to make an oral presentation.\15\
---------------------------------------------------------------------------

    \15\ Section 19(b)(2) of the Act, as amended by the Securities 
Act Amendments of 1975, Public Law 94-29 (June 4, 1975), grants the 
Commission flexibility to determine what type of proceeding--either 
oral or notice and opportunity for written comments--is appropriate 
for consideration of a particular proposal by a self-regulatory 
organization. See Securities Act Amendments of 1975, Senate Comm. on 
Banking, Housing & Urban Affairs, S. Rep. No. 75, 94th Cong., 1st 
Sess. 30 (1975).
---------------------------------------------------------------------------

    Interested persons are invited to submit written data, views and 
arguments regarding whether the proposed rule change should be 
disapproved by March 21, 2011. Any person who wishes to file a rebuttal 
to any other person's submission must file that rebuttal by April 5, 
2011. Comments may be submitted by any of the following methods:

Electronic Comments

     Use the Commission's Internet comment form (http://www.sec.gov/rules/sro.shtml); or
     Send an e-mail to rule-comments@sec.gov. Please include 
File Number SR-NASDAQ-2010-134 on the subject line.

Paper Comments

     Send paper comments in triplicate to Elizabeth M. Murphy, 
Secretary, Securities and Exchange Commission, 100 F Street, NE., 
Washington, DC 20549-1090.

All submissions should refer to File Number SR-NASDAQ-2010-134. 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 (http://www.sec.gov/rules/sro.shtml). Copies of the

[[Page 6508]]

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 Web site viewing and printing 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-NASDAQ-2010-134 and should be submitted 
on or before March 21, 2011. Rebuttal comments should be submitted by 
April 5, 2011.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\16\
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    \16\ 17 CFR 200.30-3(a)(57).
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Elizabeth M. Murphy,
Secretary.
[FR Doc. 2011-2447 Filed 2-3-11; 8:45 am]
BILLING CODE 8011-01-P