You are on page 1of 6

Federal Register / Vol. 71, No.

171 / Tuesday, September 5, 2006 / Notices 52351

SECURITIES AND EXCHANGE SECURITIES AND EXCHANGE exchange 5 and, in particular, the
COMMISSION COMMISSION requirements of Section 6 of the Act 6
and the rules and regulations
Sunshine Act Meeting [Release No. 34–54379; File No. SR–CBOE– thereunder. The Commission
2006–66] specifically finds that the proposed rule
Notice is hereby given, pursuant to change is consistent with Section 6(b)(5)
the provisions of the Government in the Self-Regulatory Organizations; of the Act 7 in that it is designed to
Sunshine Act, Pub. L. 94–409, that the Chicago Board Options Exchange, promote just and equitable principles of
Securities and Exchange Commission Incorporated; Order Approving a trade, to remove impediments and to
will hold the following meeting during Proposed Rule Change Regarding perfect the mechanism of a free and
the week of September 5, 2006: Market-Maker Appointments open market and a national market
system, and, in general, to protect
A closed meeting will be held on August 28, 2006. investors and the public interest. The
Thursday, September 7, 2006 at 2 p.m. Commission believes that the proposal
On July 11, 2006, the Chicago Board
Commissioners, Counsels to the Options Exchange, Incorporated should provide more flexibility to
Commissioners, the Secretary to the (‘‘CBOE’’ or ‘‘Exchange’’) filed with the Market-Maker organizations in
Commission, and recording secretaries Securities and Exchange Commission structuring class appointments.
will attend the closed meeting. Certain (‘‘Commission’’), pursuant to Section It is therefore ordered, pursuant to
staff members who have an interest in 19(b)(1) of the Securities Exchange Act Section 19(b)(2) of the Act,8 that the
the matters may also be present. of 1934 (‘‘Act’’) 1 and Rule 19b–4 proposed rule change (SR–CBOE–2006–
thereunder,2 a proposed rule change to 66) is approved.
The General Counsel of the
Commission, or his designee, has amend CBOE Rule 8.3 to provide that in For the Commission, by the Division of
certified that, in his opinion, one or the event a Market-Maker is a nominee Market Regulation, pursuant to delegated
of a member organization or has authority.9
more of the exemptions set forth in 5
registered the Market-Maker’s Nancy M. Morris,
U.S.C. 552b(c)(3), (5), (6), (7), (9)(B) and
membership for a member organization, Secretary.
(10) and 17 CFR 200.402(a)(3), (5), (6),
the member organization with which [FR Doc. E6–14597 Filed 9–1–06; 8:45 am]
7(i)(A), (C), (D), and (E), (9)(ii), and (10)
the Market-Maker is associated would BILLING CODE 8010–01–P
permit consideration of the scheduled
be permitted to request that the
matters at the closed meeting. Exchange deem all class appointments
Commissioner Atkins, as duty officer, be made to the member organization SECURITIES AND EXCHANGE
voted to consider the items listed for the instead of to the individual Market- COMMISSION
closed meeting in closed session. Maker.3 In such a case, if an individual [Release No. 34–54378; File No. SR–
The subject matters of the closed Market-Maker were no longer associated NASDAQ–2006–032]
meeting scheduled for Thursday, with a member organization, the class
September 7, 2006 will be: appointments would continue to be Self-Regulatory Organizations; The
held by the member organization and NASDAQ Stock Market LLC; Notice of
Formal orders of investigation; not the individual Market-Maker. In the Filing of Proposed Rule Change and
Institution and settlement of event a member organization did not Amendment No. 1 Thereto To Revise
injunctive actions; request that the class appointments be The Nasdaq Capital Market Listing
Institution and settlement of held by the member organization, a Requirements
administrative proceedings of an Market-Maker’s class appointments
would continue to be held in the name EFFECTIVE DATE: August 28, 2006.
enforcement nature;
of the individual Market-Maker and not Pursuant to Section 19(b)(1) of the
Litigation matters; and the member organization with which Securities Exchange Act of 1934
Consideration of amicus participation. the Market-Maker is associated. The (‘‘Act’’),1 and Rule 19b–4 thereunder,2
proposed rule change was published for notice is hereby given that on August
At times, changes in Commission
comment in the Federal Register on July 23, 2006, The NASDAQ Stock Market
priorities require alterations in the
27, 2006.4 The Commission received no LLC (‘‘Nasdaq’’), filed with the
scheduling of meeting items. Securities and Exchange Commission
comments on the proposal.
For further information and to (‘‘Commission’’) the proposed rule
The Commission finds that the
ascertain what, if any, matters have been change as described in Items I, II, and
proposed rule change is consistent with
added, deleted or postponed, please the requirements of the Act and the III below, which Items have been
contact: The Office of the Secretary at rules and regulations thereunder prepared by Nasdaq. On August 28,
(202) 551–5400. applicable to a national securities 2006, Nasdaq filed Amendment No. 1 to
Dated: August 30, 2006.
the proposed rule change.3 The
1 15 U.S.C. 78s(b)(1).
Nancy M. Morris, 5 In approving this proposed rule change, the
2 17 CFR 240.19b–4.
Secretary. Commission notes that it has considered the
3 If such a request is made by a member
proposed rule’s impact on efficiency, competition,
[FR Doc. 06–7442 Filed 8–31–06; 8:45 am] organization, CBOE would consider that the and capital formation. 15 U.S.C. 78c(f).
BILLING CODE 8010–01–M submission of electronic quotations and orders 6 15 U.S.C. 78f.
would be made by and on behalf of the member 7 15 U.S.C. 78f(b)(5).
organization with which the individual Market- 8 15 U.S.C. 78s(b)(2).
sroberts on PROD1PC70 with NOTICES

Maker is associated. However, CBOE proposes that


9 17 CFR 200.30–3(a)(12).
CBOE Rule 8.3 would state that the individual
1 15 U.S.C. 78s(b)(1).
Market-Maker would continue to have all of the
obligations of a Market-Maker under Exchange rules 2 17 CFR 240.19b–4.

in these circumstances. 3 In Amendment No. 1, Nasdaq makes clarifying


4 See Securities Exchange Act Release No. 54184 changes to the rule text in the Nasdaq Capital
(July 20, 2006), 71 FR 42690. Continued

VerDate Aug<31>2005 17:24 Sep 01, 2006 Jkt 208001 PO 00000 Frm 00035 Fmt 4703 Sfmt 4703 E:\FR\FM\05SEN1.SGM 05SEN1
52352 Federal Register / Vol. 71, No. 171 / Tuesday, September 5, 2006 / Notices

Commission is publishing this notice to (8) Reserved shall be a principal amount outstanding
solicit comments on the proposed rule (9) Reserved of at least $10 million.
change, as amended, from interested (10)—(39) No change. (B) In addition, for the initial listing
persons. (b)—(c) No change. of convertible debt, one of the following
* * * * * conditions must be satisfied:
I. Self-Regulatory Organization’s
(i) the issuer of the debt must have an
Statement of the Terms of the Substance 4310. Listing Requirements for
equity security that is listed on Nasdaq,
of the Proposed Rule Change Domestic and Canadian Securities
the American Stock Exchange or the
Nasdaq proposes to revise certain To qualify for listing in Nasdaq, a New York Stock Exchange;
listing requirements applicable to the security of a domestic or Canadian (ii) an issuer whose equity security is
Nasdaq Capital Market. The text of the issuer shall satisfy all applicable listed on Nasdaq, the American Stock
proposed rule change is below. requirements contained in paragraphs Exchange or the New York Stock
Proposed new language is in italics; (a), (b), and (c) hereof. Issuers that meet Exchange, directly or indirectly owns a
proposed deletions are in [brackets].4 these requirements, but that are not majority interest in, or is under common
* * * * * listed on the Nasdaq Global Market, are control with, the issuer of the debt
listed on the Nasdaq Capital Market. security, or has guaranteed the debt
4200. Definitions. (a) No change. security;
(a) For purposes of the Rule 4000 (b) No change. (iii) a nationally recognized securities
Series, unless the context requires (c) In addition to the requirements rating organization (an ‘‘NRSRO’’) has
otherwise: contained in paragraph (a) and (b) assigned a current rating to the debt
(1) No change. above, and unless otherwise indicated, security that is no lower than an S&P
(2) [Reserved a security shall satisfy the following Corporation ‘‘B’’ rating or equivalent
(3) Reserved criteria for listing on Nasdaq: rating by another NRSRO; or,
(4)] ‘‘Best efforts offering’’ means an (1) No change (iv) if no NRSRO has assigned a rating
offering of securities by members of a (2)[(A)] For initial listing, the issuer to the issue, an NRSRO has currently
selling group under an agreement which shall have either: assigned: (1) an investment grade rating
imposes no financial commitment on (A) (i) stockholders’ equity of $5 to an immediately senior issue; or (2) a
the members of such group to purchase million; and rating that is no lower than an S&P
any such securities except as they may (ii) a market value of publicly held Corporation ‘‘B’’ rating, or an equivalent
elect to do so. shares of $15 million; and rating by another NRSRO, to a pari
[(5) Reserved (iii) an operating history of at least
passu or junior issue.
(6) ‘‘Cash available for distribution’’ two years; or
(C) For continued listing of a
means cash flow of a limited (B) [(ii)] (i) stockholders’ equity of $4
convertible debt security, there shall be
partnership less amount set aside for million; and
(ii) market value of listed securities of a principal amount outstanding of at
restoration or creation of reserves.] least $5 million.
[(7)] (3) ‘‘Cash flow’’ means cash $50 million (currently traded issuers
must meet this requirement and the bid (6)(A) In the case of common stock,
funds provided from limited
price requirement under Rule 4310(c)(4) for initial and continued listing, there
partnership operations, including lease
for 90 consecutive trading days prior to shall be at least 300 round lot holders
payments on net leases from builders
applying for listing); [or] and of the security.
and sellers, without deduction for
(iii) a market value of publicly held (B) In the case of preferred stock and
depreciation, but after deducting cash
shares of $15 million; or secondary classes of common stock, for
funds used to pay all other expenses,
(C) [(iii)] (i) stockholders’ equity of $4 initial and continued listing, there shall
debt payments, capital improvements
million; and be at least 100 round lot holders of the
and replacements.
(ii) net income from continuing security, provided in each case that the
[(8)] (4) ‘‘Consolidated Quotations
operations of $750,000 in the most issuer’s common stock or common stock
Service’’ (CQS) means the consolidated
recently completed fiscal year or in two equivalent equity security [is] must be
quotation collection system for
of the last three most recently listed on [either] Nasdaq or [another
securities listed on an exchange other
completed fiscal years; and national securities exchange] be a
than Nasdaq implementing SEC Rule
(iii) a market value of publicly held covered security. In the event the
602.
shares of $5 million. issuer’s common stock or common stock
[(9)] (5) ‘‘Country of Domicile’’ means
[(B)] (3) For continued listing, the equivalent security either is not listed
the country under whose laws an issuer
issuer shall maintain either: on [either] Nasdaq or [another national
is organized or incorporated.
(6) ‘‘Covered security’’ means a (A) [(i)] stockholders’ equity of $2.5 securities exchange] is not a covered
security described in Section 18(b) of million; or security, the preferred stock and/or
the Securities Act of 1933. (B) [(ii)] market value of listed secondary class of common stock may
(7) Reserved securities of $35 million; or be listed on Nasdaq so long as the
(C) [(iii)] net income from continuing security satisfies the listing criteria for
Market convertible debt listing standards. Nasdaq operations of $500,000 in the most common stock.
also makes clarifying changes to the purpose recently completed fiscal year or in two (C) No change.
section regarding convertible debt, rights and of the last three most recently (7)(A) In the case of common stock,
warrants, and non-Canadian foreign securities and there shall be at least 1,000,000 publicly
American Depository Receipts.
completed fiscal years.
4 Changes are marked to the rule text that appears [(3) For initial listing, the issuer shall held shares for initial listing and
have an operating history of at least one 500,000 publicly held shares for
sroberts on PROD1PC70 with NOTICES

in the electronic manual of Nasdaq found at http://


www.complinet.com/nasdaq. These rules became year or a market value of listed continued listing. For initial listing such
effective on August 1, 2006, when Nasdaq securities of $50 million.] shares shall have a market value [of at
commenced operations as a national securities
exchange for Nasdaq-listed securities. The rule text
(4) No change. least $5 million] as provided in the
incorporates changes made by Amendment No. 1. (5) (A) In the case of a convertible applicable provision of Rule 4310(c)(2).
See id. debt security, for initial listing, there For continued listing such shares shall

VerDate Aug<31>2005 17:24 Sep 01, 2006 Jkt 208001 PO 00000 Frm 00036 Fmt 4703 Sfmt 4703 E:\FR\FM\05SEN1.SGM 05SEN1
Federal Register / Vol. 71, No. 171 / Tuesday, September 5, 2006 / Notices 52353

have a market value of at least $1 Issuers that meet these requirements, Corporation ‘‘B’’ rating or equivalent
million. but that are not listed on the Nasdaq rating by another NRSRO; or,
(B) In the case of preferred stock and Global Market, are listed on the Nasdaq (iv) if no NRSRO has assigned a rating
secondary classes of common stock, Capital Market. to the issue, an NRSRO has currently
there shall be at least 200,000 publicly (a)–(d) No change. assigned: (1) an investment grade rating
held shares having a market value of at (e) In addition to the requirements to an immediately senior issue; or (2) a
least $[2] 3.5 million for initial listing contained in paragraphs (a) and (b), the rating that is no lower than an S&P
and 100,000 publicly held shares having security shall satisfy the criteria set out Corporation ‘‘B’’ rating, or an equivalent
a market value of [$500,000] $1 million in this subsection for listing on Nasdaq. rating by another NRSRO, to a pari
for continued listing. In addition, the In the case of ADRs, the underlying passu or junior issue.
issuer’s common stock or common stock security will be considered when (C) For continued listing of a
equivalent security must be listed on determining the ADR’s qualification for convertible debt security, there shall be
[either] Nasdaq or [another national initial or continued listing on Nasdaq. a principal amount outstanding of at
securities exchange] be a covered (1) No change. least $5 million.
security. In the event the issuer’s (2)(A) For initial listing, the issue (4)(A) [There] In the case of common
common stock or common stock shall meet the requirements of Rule stock, for initial and continued listing,
equivalent security either is not listed 4310(c)(2)(A), (B) or (C). [have a there shall be at least 300 round lot
on [either] Nasdaq or [another national minimum bid price of $4 and the issuer holders of the security.
securities exchange] is not a covered shall have: (B) In the case of preferred stock and
security, the preferred stock and/or (i) stockholders’ equity of U.S. $5 secondary classes of common stock, for
secondary class of common stock may million; initial and continued listing, there shall
be traded on Nasdaq so long as the (ii) market value of listed securities of be at least 100 round lot holders of the
security satisfies the listing criteria for U.S. $50 million (currently traded security, provided in each case that the
common stock. issuers must meet this requirement for issuer’s common stock or common stock
(C) Shares held directly or indirectly 90 consecutive trading days prior to equivalent equity security [is] must be
by any officer or director of the issuer applying for listing); or listed on [either] Nasdaq or [another
and by any person who is the beneficial (iii) net income from continuing national securities exchange] be a
owner of more than 10 percent of the operations of U.S. $750,000 in the most covered security. In the event the
total shares outstanding are not recently completed fiscal year or in two issuer’s common stock or common stock
considered to be publicly held. of the last three most recently equivalent security either is not listed
(8) No change. completed fiscal years.] on [either] Nasdaq or [another national
(9)(A) In the case of rights and (B) For continued listing, the issuer securities exchange] is not a covered
warrants, for initial listing only, there shall meet the requirements of Rule security, the preferred stock and/or
shall be at least [100,000] 400,000 4310(c)(3)(A), (B) or (C). [maintain: secondary class of common stock may
issued and the underlying security (i) stockholders’ equity of U.S. $2.5 be listed on Nasdaq so long as the
[shall] must be listed on Nasdaq or million; security satisfies the listing criteria for
[another national securities exchange] (ii) market value of listed securities of common stock.
be a covered security. For continued U.S. $35 million; or (C) No change.
(iii) net income from continuing (5) There shall be at least 1,000,000
listing, the underlying security must
operations of U.S. $500,000 in the most publicly held shares for initial listing
remain listed on Nasdaq or be a covered
recently completed fiscal year or in two and 500,000 publicly held shares for
security.
(B) In the case of put warrants (that is, of the last three most recently continued listing. For initial listing,
instruments that grant the holder the completed fiscal years.] such shares shall have a market value
right to sell to the issuing company a (C) No change. [of at least $5 million] as provided in the
specified number of shares of the (D) No change. applicable provision of Rule 4310(c)(2).
Company’s common stock, at a specified (E) No change. For continued listing, such shares shall
price until a specified period of time), (3)(A) In the case of a convertible debt have a market value of at least $1
for initial listing only, there shall be at security, for initial listing, there shall be million. In the case of preferred stock
least [100,000] 400,000 issued and the a principal amount outstanding of at and secondary classes of common stock,
underlying security [shall] must be least $10 million. there shall be at least 200,000 publicly
listed on Nasdaq or [another national (B) In addition, for the initial listing held shares having a market value of at
securities exchange] be a covered of convertible debt, one of the following least [$2] $3.5 million for initial listing
security. For continued listing, the conditions must be satisfied: and 100,000 publicly held shares having
underlying security must remain listed (i) the issuer of the debt must have an a market value of [$500,000] $1 million
on Nasdaq or be a covered security. equity security that is listed on Nasdaq, for continued listing. In addition, the
(C) No change. the American Stock Exchange or the issuer’s common stock or common stock
(10)–(30) No change. New York Stock Exchange; equivalent security security must be
(d) No change. (ii) an issuer whose equity security is listed on either Nasdaq or [another
listed on Nasdaq, the American Stock national securities exchange] be a
4320. Listing Requirements for Non- Exchange or the New York Stock covered security. In the event the
Canadian Foreign Securities and Exchange, directly or indirectly owns a issuer’s common stock or common stock
American Depositary Receipts majority interest in, or is under common equivalent security either is not listed
To qualify for listing on Nasdaq, a control with, the issuer of the debt on [either] Nasdaq or [another national
security of a non-Canadian foreign security, or has guaranteed the debt securities exchange] is not a covered
sroberts on PROD1PC70 with NOTICES

issuer, an American Depositary Receipt security; security, the preferred stock and/or
(ADR) or similar security issued in (iii) a nationally recognized securities secondary class of common stock may
respect of a security of a foreign issuer rating organization (an ‘‘NRSRO’’) has be traded on Nasdaq so long as the
shall satisfy the requirements of assigned a current rating to the debt security satisfies the listing criteria for
paragraphs (a), (b), and (e) of this Rule. security that is no lower than an S&P common stock. Shares held directly or

VerDate Aug<31>2005 17:24 Sep 01, 2006 Jkt 208001 PO 00000 Frm 00037 Fmt 4703 Sfmt 4703 E:\FR\FM\05SEN1.SGM 05SEN1
52354 Federal Register / Vol. 71, No. 171 / Tuesday, September 5, 2006 / Notices

indirectly by any officer or director of [4310(c)(2)(B)(ii), 4320(e)(2)(B)(ii),] alternative, Nasdaq proposes to require
the issuer and by any person who is the 4310(c)(3)(B) or 4450(b)(1)(A) (i.e., the a two year operating history, instead of
beneficial owner of more than 10 alternative listing requirement relating the one year history currently required.
percent of the total shares outstanding to market value of listed securities). Further, for companies listing under the
are not considered to be publicly held. * * * * * market value of listed securities and
(6) In the case of rights, warrants and equity alternatives, Nasdaq proposes to
ADRs for initial listing only, at least II. Self-Regulatory Organization’s increase the market value of publicly
[100,000] 400,000 shall be issued. Statement of the Purpose of, and held shares requirement for initial
Issuers of ADRs must also meet the Statutory Basis for, the Proposed Rule listing from $5 million to $15 million.
round lot holders and publicly held Change Finally, Nasdaq proposes to clarify that
shares requirements set forth in the In its filing with the Commission, all companies must have 300 round lot
applicable provisions of Rules Nasdaq included statements concerning shareholders for continued listing of a
4310(c)(2), 4320(e)(4) and 4320(e)(5) the purpose of, and basis for, the primary class of common stock.
[subsections (4) and (5) above]. proposed rule change, as amended, and Secondary Classes of Common Stock
(7) In the case of rights and warrants, discussed any comments it received on and Preferred Stock
for initial and continued listing, the the proposed rule change, as amended.
underlying security shall be listed on The text of these statements may be Nasdaq states that it currently permits
Nasdaq or [another national securities examined at the places specified in Item the listing of secondary classes of
exchange] be a covered security. IV below. Nasdaq has prepared common stock and preferred stock on
(8)–(26) No change. summaries, set forth in Sections A, B, the Capital Market under lower liquidity
(f) No change. and C below, of the most significant standards, when the primary class of
* * * * * aspects of such statements. common stock is listed on Nasdaq or a
national securities exchange. Nasdaq
IM–4803. Staff Review of Deficiency A. Self-Regulatory Organization’s proposes to increase the market value of
As provided in Rule 4803(a)(1)(A), the Statement of the Purpose of, and publicly held shares requirement from
staff of the Listing Department may Statutory Basis for, the Proposed Rule $2 million to $3.5 million for initial
accept a plan to regain compliance with Change listing and from $500,000 to $1 million
respect to quantitative deficiencies from 1. Purpose for continued listing of these securities.
standards that do not themselves In addition, Nasdaq proposes to modify
provide a compliance period. Such Nasdaq proposes to increase the the listing standards so that the lower
standards include: initial and continued listing liquidity standards are available only
Rules [4310(c)(2)(B)(i) and (iii)] requirements applicable to companies when a company’s common stock or its
4310(c)(3)(A) and 4310(c)(3)(C) seeking to list, or already listed, on the equivalent is listed on Nasdaq or is a
Rule 4310(c)(6) Nasdaq Capital Market, as set forth in ‘‘covered security’’ as defined in Section
Rule 4310(c)(7) (but only as to the Rule 4310 (for domestic and Canadian 18 of the Securities Act. Finally, Nasdaq
number of publicly held shares, and not securities) and Rule 4320 (for non- proposes to clarify that companies must
as to such shares’ market value) Canadian foreign securities and have 100 round lot shareholders for
[Rules 4320(e)(2)(B)(i) and (iii)] American Depositary Receipts).5 Nasdaq continued listing under these listing
Rule 4320(e)(2)(B) believes that these changes will standards.
Rules 4320(e)(4) and (5) (but only as facilitate a finding by the Commission
to the number of publicly held shares, that the listing standards for the Capital Rights and Warrants
and not as to such shares’ market value) Market are substantially similar to the Nasdaq proposes to increase the
Rules 4450(a)(1), (3), and (4) listing standards applicable to securities requirement for initial listing of rights
Rules 4450(b)(1)(B), (b)(2), and (b)(5), listed on the New York Stock Exchange, and warrants to require that there be
and the American Stock Exchange, or the 400,000 outstanding. In addition,
Rules 4450(h)(1) and (4). Nasdaq Global Market. This finding is Nasdaq proposes to require that for
In a case where an issuer fails to required before the Commission can initial and continued listing, the
comply with the requirement of Rules designate securities listed on the Capital security underlying a right or warrant
[4310(c)(2)(B)(iii), 4320(e)(2)(B)(iii),] Market as ‘‘covered securities,’’ which must be listed on Nasdaq or be a
4310(c)(3)(C) or 4450(b)(1)(B), the are exempt from state regulation under covered security.7
Listing Department shall not accept a Section 18 of the Securities Act of 1933
plan to achieve compliance with those Convertible Debt
(‘‘Securities Act’’).6
requirements in the future, since Nasdaq states that its rules currently
compliance requires stated levels of net Primary Listing Standards permit the listing of convertible debt on
income or assets and revenues during The Exchange states that currently, a the Capital Market. Nasdaq proposes to
completed fiscal years and therefore can company can list on the Capital Market modify those rules, to require that for
only be demonstrated through audited by meeting a stockholders’ equity, the initial listing of convertible debt
financial statements. Similarly, an income or market value of listed either that: (i) The issuer of the debt
issuer may not submit a plan relying on securities requirement, along with other must have an equity security that is
partial-year performance to demonstrate applicable listing standards. Nasdaq listed on Nasdaq, the American Stock
compliance with these standards. An proposes to modify the income and Exchange or the New York Stock
issuer cited for non-compliance with market value of listed securities Exchange; (ii) an issuer whose equity
these requirements may, however, components of these listing standards to security is listed on Nasdaq, the
submit a plan that demonstrates current American Stock Exchange or the New
sroberts on PROD1PC70 with NOTICES

also require a minimum of $4 million in


or near-term compliance with Rules equity in each case. In addition, for York Stock Exchange, directly or
[4310(c)(2)(B)(i), 4320(e)(2)(B)(i),] companies listing under the equity indirectly owns a majority interest in, or
4310(c)(3)(A) or 4450(a)(3) (i.e., the is under common control with, the
alternative listing requirement relating 5 See Amendment No. 1, supra note 3.
to stockholders’ equity), or Rules 6 15 U.S.C. 77r(b). 7 See Amendment No. 1, supra note 3.

VerDate Aug<31>2005 17:24 Sep 01, 2006 Jkt 208001 PO 00000 Frm 00038 Fmt 4703 Sfmt 4703 E:\FR\FM\05SEN1.SGM 05SEN1
Federal Register / Vol. 71, No. 171 / Tuesday, September 5, 2006 / Notices 52355

issuer of the debt security, or has that this schedule provides notice to III. Date of Effectiveness of the
guaranteed the debt security; (iii) a companies applying for listing that they Proposed Rule Change and Timing for
nationally recognized securities rating would be subject to higher standards Commission Action
organization (an ‘‘NRSRO’’) has upon approval of the rule, so such Within 35 days of the date of
assigned a current rating to the debt companies would not be prejudiced, but publication of this notice in the Federal
security that is no lower than an S&P recognizes that companies that have Register or within such longer period (i)
Corporation ‘‘B’’ rating or equivalent previously applied did so in reliance on as the Commission may designate up to
rating by another NRSRO; or, (iv) if no the prior listing standards, and therefore 90 days of such date if it finds such
NRSRO has assigned a rating to the provides them a reasonable period of
longer period to be appropriate and
issue, an NRSRO has currently assigned: time to complete the listing process on
publishes its reasons for so finding, or
(1) An investment grade rating to an that basis.
The Exchange states that these (ii) as to which Nasdaq consents, the
immediately senior issue; or (2) a rating
procedures are similar to those used Commission will:
that is no lower than an S&P
when the listing standards were revised A. By order approve such proposed
Corporation ‘‘B’’ rating, or an equivalent
in 1997 and 2001.12 rule change, or
rating by another NRSRO, to a pari
B. Institute proceedings to determine
passu or junior issue.8 2. Statutory Basis whether the proposed rule change
Other Changes Nasdaq believes that the proposed should be disapproved.
Nasdaq also proposes to make rule change, as amended, is consistent IV. Solicitation of Comments
technical and conforming changes to the with the provisions of Section 6 of the
rules by adding a definition of ‘‘covered Act 13 in general and with Section Interested persons are invited to
security’’ in Rule 4200, deleting certain 6(b)(5) of the Act,14 in particular. submit written data, views, and
other definitions in Rule 4200 that have Section 6(b)(5) requires that Nasdaq’s arguments concerning the foregoing,
no current applicability under Nasdaq rules be designed to promote just and including whether the proposed rule
rules, and adjusting cross references equitable principles of trade, to remove change, as amended, is consistent with
contained in IM–4803.9 impediments to and perfect the the Act. Comments may be submitted by
mechanism of a free and open market, any of the following methods:
Implementation and to protect investors and the public Electronic Comments
Nasdaq states that it recognizes that interest. The Exchange believes that the
the proposed changes could result in a proposed rule change, as amended, • Use the Commission’s Internet
security that currently meets all the would raise the listing standards on the comment form (http://www.sec.gov/
listing requirements becoming non- Nasdaq Capital Market, which will help rules/sro.shtml); or
compliant. Therefore, Nasdaq proposes protect investors. Further, Nasdaq • Send an e-mail to rule-
that the changes to the continued listing believes that the proposed rule change comments@sec.gov. Please include File
requirements be made effective 30 will facilitate the Commission’s review Number SR–NASDAQ–2006–032 on the
days 10 after the proposed rule change is of Nasdaq’s petition to treat securities subject line.
approved by the Commission. Nasdaq listed on the Capital Market as covered Paper Comments
believes that this period would provide securities under Section 18(b) of the
currently-listed companies with Securities Act,15 which would remove • Send paper comments in triplicate
adequate time to comply. an impediment to the mechanism of a to Nancy M. Morris, Secretary,
In the case of companies applying for free and open market.16 Securities and Exchange Commission,
initial listing, Nasdaq proposes that the Station Place, 100 F Street, NE.,
new requirements be effective upon B. Self-Regulatory Organization’s Washington, DC 20549–1090.
approval for companies that apply after Statement on Burden on Competition All submissions should refer to File
the date this proposed rule change is Nasdaq does not believe that the Number SR–NASDAQ–2006–032. This
submitted to the SEC. Nasdaq states that proposed rule change, as amended, will file number should be included on the
companies that had applied for listing result in any burden on competition that subject line if e-mail is used. To help the
prior to the date this proposed rule is not necessary or appropriate in Commission process and review your
change is submitted to the SEC would furtherance of the purposes of the Act. comments more efficiently, please use
be able to continue to qualify under the only one method. The Commission will
C. Self-Regulatory Organization’s
prior standards, provided that they post all comments on the Commission’s
Statement on Comments on the
complete the listing process not later Internet Web site (http://www.sec.gov/
Proposed Rule Change Received From
than 30 days 11 after the proposed rule rules/sro.shtml). Copies of the
Members, Participants, or Others
change is approved by the Commission. submission, all subsequent
Companies that apply after the date this Written comments were neither amendments, all written statements
proposed rule change is submitted to solicited nor received. with respect to the proposed rule
the SEC would be approved for listing change that are filed with the
12 See Securities Exchange Act Release Nos.
based on the rules in effect at the time Commission, and all written
38961 (August 22, 1997), 62 FR 45895 (Aug. 29,
of the approval. The Exchange believes 1997) (approving SR–NASD–1997–16); and 44499 communications relating to the
(June 29, 2001), 66 FR 35819 (July 9, 2001) proposed rule change between the
8 See Amendment No. 1, supra note 3. (approving SR–NASD–2001–14). Commission and any person, other than
9 Nasdaq notes that the references to Rule 4320 in 13 15 U.S.C. 78f.

the final paragraph of IM–4803 have been deleted 14 15 U.S.C. 78f(b)(5).


those that may be withheld from the
based on the new structure of the rules. 15 15 U.S.C. 77r(b). public in accordance with the
Nonetheless, the substance of this interpretive provisions of 5 U.S.C. 552, will be
sroberts on PROD1PC70 with NOTICES

16 Petition to Amend Rule 146(b) to Designate


material continues to apply to non-U.S. companies Securities Listed on the Nasdaq Capital Market as available for inspection and copying in
in the same manner that it applies to domestic Covered Securities for the Purpose of Section 18 of
companies due to the cross reference to Rule
the Commission’s Public Reference
the Securities Act of 1933 (February 28, 2006)
4310(c)(3) contained in Rule 4320(e)(2)(B). (designated as Commission File No. 4–513,
Room. Copies of such filing also will be
10 See Amendment No. 1, supra note 3.
available at: http://www.sec.gov/rules/petitions/ available for inspection and copying at
11 See Amendment No. 1, supra note 3. petn4-513.pdf). the principal office of Nasdaq. All

VerDate Aug<31>2005 17:24 Sep 01, 2006 Jkt 208001 PO 00000 Frm 00039 Fmt 4703 Sfmt 4703 E:\FR\FM\05SEN1.SGM 05SEN1
52356 Federal Register / Vol. 71, No. 171 / Tuesday, September 5, 2006 / Notices

comments received will be posted approval to implement the proposed historically contained the fees for the
without change; the Commission does rule change retroactively as of August 1, trading systems of The Nasdaq Stock
not edit personal identifying 2006. The text of the proposed rule Market, to reflect the Nasdaq Exchange’s
information from submissions. You change is set forth below. Proposed new commencing operations for trading of
should submit only information that language is in italics; proposed securities listed on the Nasdaq
you wish to make available publicly. deletions are in [brackets].4 Exchange. During a transitional period,
All submissions should refer to File the Nasdaq Exchange will operate for its
Number SR–NASDAQ–2006–032 and 7010. System Services own listed stocks, while The Nasdaq
should be submitted on or before (a)–(h) No change. Stock Market, Inc. continues to operate
September 26, 2006. (i) ITS/CAES System, Brut, and Inet under authority delegated by NASD to
Order Execution and Routing provide quotation, execution, and trade
For the Commission, by the Division of
(1)–(8) No change. reporting services for non-Nasdaq listed
Market Regulation, pursuant to delegated
authority.17
(9) The fees applicable to non- securities. Nasdaq states that the Brut
members using Nasdaq’s Brut and Inet and Inet platforms owned by Nasdaq
Nancy M. Morris,
Facilities shall be the fees established will be operated as facilities of the
Secretary. for members under Rule 7010(i), as
[FR Doc. E6–14651 Filed 9–1–06; 8:45 am]
Nasdaq Exchange for purposes of
amended by SR–NASD–2005–019, SR– trading Nasdaq-listed securities, and as
BILLING CODE 8010–01–P NASD–2005–035, SR–NASD–2005–048, facilities of NASD for purposes of
SR–NASD–2005–071, SR–NASD–2005– trading non-Nasdaq securities.
125, SR–NASD–2005–137, SR–NASD– Accordingly, SR–NASD–2006–092
SECURITIES AND EXCHANGE 2005–154, SR–NASD–2006–013, SR–
COMMISSION amended NASD Rule 7010(i) to remove
NASD–2006–023, SR–NASD–2006–031, fees and credits associated with trading
[Release No. 34–54376; File No. SR–NASD– SR–NASD–2006–057, [and] SR–NASD– Nasdaq-listed stocks, which are now
2006–093] 2006–078, and SR–NASD–2006–092 and contained in Rule 7018 of the Nasdaq
as applied to non–members by SR– Exchange.6 Nasdaq states that NASD
Self-Regulatory Organizations; NASD–2005–020, SR–NASD–2005–038, Rule 7010(i) would continue to govern
National Association of Securities SR–NASD–2005–049, SR–NASD–2005– fees and credits for the ITS/CAES
Dealers, Inc.; Notice of Filing and 072, SR–NASD–2005–126, SR–NASD– System (formerly the Nasdaq Market
Order Granting Accelerated Approval 2005–138, SR–NASD–2005–155, SR– Center) operated by Nasdaq for trading
of Proposed Rule Change Regarding NASD–2006–014, SR–NASD–2006–024, non-Nasdaq securities, as well as Brut
Pricing for Non-Members Using SR–NASD–2006–032, SR–NASD–2006– and Inet to the extent that they are used
Nasdaq’s Brut and Inet Facilities 058, [and] SR–NASD–2006–079, and for trading non-Nasdaq securities. The
August 28, 2006. SR–NASD–2006–093. ITS/CAES System, Brut and Inet are
(j)–(y) No change. collectively referred to in the rule as the
Pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934 * * * * * Nasdaq Facilities.
(‘‘Act’’) 1 and Rule 19b–4 thereunder,2 SR–NASD–2006–092 also added a
II. Self-Regulatory Organization’s sentence to the rule to provide that for
notice is hereby given that on July 31, Statement of the Purpose of, and
2006, the National Association of purposes of determining a member’s
Statutory Basis for, the Proposed Rule volume in all securities under NASD
Securities Dealers, Inc. (‘‘NASD’’), Change
through its subsidiary, The Nasdaq Rule 7010(i), the term ‘‘Nasdaq
In its filing with the Commission, Facilities,’’ shall also be deemed to
Stock Market, Inc. (‘‘Nasdaq’’), filed
Nasdaq included statements concerning include the member’s volume in
with the Securities and Exchange
the purpose of and basis for the Nasdaq-listed securities traded through
Commission (‘‘Commission’’) the
proposed rule change and discussed any the facilities of the Nasdaq Exchange
proposed rule change as described in
comments it had received on the (i.e., the Nasdaq Market Center, Brut
Items I and II below, which Items have
proposed rule change. The text of these and Inet). Nasdaq states that this
been prepared by Nasdaq. The
statements may be examined at the clarification was necessary to ensure
Commission is publishing this notice to
places specified in Item III below. that fees and credits for trading non-
solicit comments on the proposed rule
Nasdaq has prepared summaries, set Nasdaq securities remain at their
change from interested persons. In
forth in Sections A, B, and C below, of current levels during the transitional
addition, the Commission is granting
the most significant aspects of such period before the Nasdaq Exchange
accelerated approval of the proposed
statements. begins to trade non-Nasdaq securities.
rule change. In SR–NASD–2006–092, Nasdaq also
A. Self-Regulatory Organization’s changed its fees for routing orders to the
I. Self-Regulatory Organization’s
Statement of the Purpose of, and New York Stock Exchange (‘‘NYSE’’)
Statement of the Terms of Substance of
Statutory Basis for, the Proposed Rule through its DOT system. NYSE recently
the Proposed Rule Change
Change announced that it would impose a
Nasdaq proposes to modify the
1. Purpose significant fee increase on broker-
pricing for non-NASD members using
dealers, such as Nasdaq’s Brut broker-
Nasdaq’s Brut and Inet Facilities to In SR–NASD–2006–092,5 Nasdaq
trade non-Nasdaq securities. The filing amended NASD Rule 7010(i), which has 6 See Securities Exchange Act Release No. 54285
will apply to these non-members the (August 8, 2006) (File No. SR–NASDAQ–2006–023)
same rule change that Nasdaq is 4 Changes are marked to the rule text that appears
(notice of filing and immediate effectiveness of
instituting for members.3 Nasdaq seeks in the electronic NASD Manual found at http:// proposed rule change regarding technical and
sroberts on PROD1PC70 with NOTICES

www.nasd.com. The Nasdaq Exchange states that it conforming changes to Nasdaq Rule 7018).
will not file conforming changes to its rules with Telephone conversation among John Yetter, Senior
17 17 CFR 200.30–3(a)(12). regard to order execution and routing by non- Associate General Counsel, Nasdaq, David Liu,
1 15 U.S.C. 78s(b)(1). members, since persons that are not members of the Special Counsel, Division of Market Regulation
2 17 CFR 240.19b–4. Nasdaq Exchange will not be permitted to use its (‘‘Division’’), Commission, and Theodore S. Venuti,
3 See Securities Exchange Act Release No. 54375 order execution and routing systems. Attorney, Division, Commission, on August 14,
(August 28, 2006) (File No. SR–NASD–2006–092). 5 See supra note 3. 2006.

VerDate Aug<31>2005 17:24 Sep 01, 2006 Jkt 208001 PO 00000 Frm 00040 Fmt 4703 Sfmt 4703 E:\FR\FM\05SEN1.SGM 05SEN1