45246 Federal Register / Vol. 71, No. 152 / Tuesday, August 8, 2006 / Notices 

1See Release No. 34–53128 (January 13, 2006) [71 

FR 3550]. 

2 15 U.S.C. 78l(g). 

3 15 U.S.C. 78a et seq. 

4 15 U.S.C. 78l(b). 

5 15 U.S.C. 78l(g)(2)(B) or 78l(g)(2)(G). 

6 17 CFR 240.12g3–2(b). 

7 15 U.S.C. 78l(a). 

8Section 12(i) of the Exchange Act requires 

filings relating to certain financial institutions to be 

made with the Comptroller of the Currency, the 

Board of Governors of the Federal Reserve System, 

the Federal Deposit Insurance Corporation, or the 

Office of Thrift Supervision. 15 U.S.C. 78l(i). 

9See Section 12(d) of the Exchange Act [15 U.S.C. 

78l(d)]. 

10 Id. 

11These companies have filed registration 

statements pursuant to Section 12(g) or, in a limited 

number of cases, Section 12(b) of the Exchange Act. 

A separate Section 12(b) registration statement is 

required with respect to each national securities 

exchange on which a particular class of security is 

listed. Accordingly, a new registration statement on 

12(b) will be required by the time the Nasdaq 

Exchange becomes operational, even as to those 

Nasdaq-listed companies that have previously filed 

12(b) registration statements. 

12Those Nasdaq-listed companies which have 

registered under the Investment Company Act of 

1940 (the ‘‘1940 Act’’) have filed registration 

statements with the Commission under the 1940 

Act and have been required to make periodic filings 

under the 1940 Act identical in form to those 

required of investment companies that have 

registered their securities under Section 12(b) of the 

Exchange Act. These investment companies are 

exempt from registration under Section 12(g)(2)(B) 

of the Exchange Act. 

13See Letter from Edward S. Knight to Nancy M. 

Morris (July 31, 2006). For certain of its listed 

issuers whose securities are not currently required 

to be registered under the Exchange Act, Nasdaq 

and the Nasdaq Exchange have requested additional 

time for these securities to become registered under 

Section 12(b). That portion of the request is being 

addressed in a separate Order by the Commission. 

See Exchange Act Release No. 34–54241 (July 31, 

2006). 

14We understand these agencies will consider the 

request for relief with respect to the companies they 

oversee pursuant to Section 12(i) of the Exchange 

Act. We further understand that the Comptroller of 

the Currency does not currently oversee any 

affected company pursuant to Section 12(i) of the 

Exchange Act. 

15 15 U.S.C. 78l(c). 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–54240] 

In the Matter of the Application of the 

Nasdaq Stock Market, Inc. and the 

NASDAQ Stock Market LLC for Section 

12(b) Registration On Behalf of Certain 

Issuers 

July 31, 2006. 

I. Introduction 

On January 13, 2006, the Commission 

approved the application of the Nasdaq 

Stock Market, Inc. (‘‘Nasdaq’’) to register 

one of its subsidiaries, the NASDAQ 

Stock Market LLC (‘‘Nasdaq Exchange’’), 

as a national securities exchange.1

Currently, companies listed on Nasdaq 

have one or more classes of equity 

securities registered under Section 

12(g) 2 of the Securities Exchange Act of 

1934 (‘‘Exchange Act’’),3 registered 

under Section 12(b) of the Exchange 

Act 4 for listing on another national 

securities exchange, or exempt from 

registration pursuant to Section 

12(g)(2)(B) or 12(g)(2)(G) of the 

Exchange Act 5 or Rule 12g3–2(b) 

promulgated under the Exchange Act 6

as permitted under NASD Rules 4310 

and 4320. Under Section 12(a) of the 

Exchange Act,7 brokers and dealers are 

prohibited from effecting transactions in 

a security on a national securities 

exchange unless it has been registered 

under Section 12(b) of the Exchange 

Act. 

Accordingly, absent relief, Nasdaq’s 

transition to the Nasdaq Exchange 

would require each of the companies 

currently listing securities on either the 

Nasdaq Global Market or Nasdaq Capital 

Market to individually register their 

Nasdaq-listed securities under Section 

12(b) of the Exchange Act before the 

Nasdaq Exchange commences 

operations. This process would require 

each affected company to file a 

registration statement with the 

Commission or other appropriate 

regulatory agency.8 The Nasdaq 

Exchange would then be required to 

certify to the Commission and other 

regulators that, with respect to each 

registration statement, the company’s 

securities are approved for listing and 

registration on the Nasdaq Exchange.9

The registration would become effective 

30 days after the Commission’s receipt 

of certification from the Nasdaq 

Exchange or within such shorter period 

of time as the Commission may 

determine.10

On behalf of its listed companies, 

Nasdaq and the Nasdaq Exchange have 

asked for relief with respect to this 

registration process, asserting that it 

would place an unnecessary cost and 

administrative burden on the listed 

companies, investors, the agencies that 

regulate the listed companies, and 

Nasdaq and the Nasdaq Exchange, and 

would not be in the public interest. 

With respect to the vast majority of its 

listed securities, Nasdaq and the Nasdaq 

Exchange assert that information that 

would be elicited by registration has 

already been required to be publicly 

disclosed. Since the vast majority of 

Nasdaq-listed companies already have 

registered their securities under Section 

12 of the Exchange Act 11 or have been 

required to file detailed public 

information with the Commission,12 the 

resulting duplicative disclosure would 

not significantly benefit the marketplace 

or investors. 

To ameliorate the cost and 

administrative burden resulting from 

the filing of individual Exchange Act 

registration statements that would 

otherwise be required, Nasdaq and the 

Nasdaq Exchange have submitted a 

letter, dated July 31, 2006, on behalf of 

certain Nasdaq-listed issuers (the 

‘‘Issuers’’) to the Commission requesting 

that this letter serve as the single 

application for registration with respect 

to the listed securities of these Issuers, 

as well as the Nasdaq Exchange’s 

certification of such application (the 

‘‘Nasdaq Application’’).13 Nasdaq and 

the Nasdaq Exchange have made a 

similar request of the Board of 

Governors of the Federal Reserve 

System, the Federal Deposit Insurance 

Corporation, and the Office of Thrift 

Supervision.14 The Nasdaq Application 

is provided as an attachment to this 

Order. 

II. Statutory Standards 

Section 12(a) of the Exchange Act 

makes it unlawful for an exchange 

member, broker, or dealer to effect any 

transaction in any security (other than 

an exempted security) on a national 

securities exchange unless a registration 

is effective with respect to that security 

on the exchange in accordance with the 

provisions of Section 12 and the rules 

and regulations promulgated under 

Section 12. Exchange Act Section 12(b) 

and related rules prescribe the form and 

content of the application that may be 

used to register a security on a national 

exchange. However, Section 12(c) 15

permits the Commission to require 

alternative information in lieu of the 

informational requirements of Section 

12(b) if, in the judgment of the 

Commission, some or all of the 

information required under Section 

12(b) is ‘‘inapplicable to any specified 

class or classes of issuers’’ and the 

substitute information is of comparable 

character as the Commission may deem 

applicable to such class of issuers. 

Section 12(d) provides that the 

registration of a security under the 

Exchange Act becomes effective 30 days 

after the Commission’s receipt of 

certification from the national securities 

exchange that the security has been 

approved for listing and registration on 

the exchange, or within such shorter 

period of time as the Commission may 

determine. 

III. Discussion of NASD Rule 4130 and 

Opt-Out Process 

To provide notice of its plan to seek 

the requested relief on behalf of the 

Issuers and to assure sufficient authority 

Federal Register / Vol. 71, No. 152 / Tuesday, August 8, 2006 / Notices 45247 

16See Release No. 34–53606 (April 6, 2006) [71 

FR 18790]. 

17The text of Rule 4130 reads as follows: 

In connection with The Nasdaq Exchange 

commencing operations as a national securities 

exchange, each issuer authorizes Nasdaq and the 

Nasdaq Exchange to file an application to register 

under Section 12(b) of the Exchange Act any class 

of the issuer’s securities that is listed on Nasdaq on 

the day immediately preceding the day the Nasdaq 

Exchange commences such operations; provided, 

however, that this provision shall not be applicable 

to any security that the issuer informs Nasdaq, 

pursuant to procedures set forth by Nasdaq, should 

not be so registered. The application to register 

under Section 12(b) of the Exchange Act will be 

filed with the Commission or, for those securities 

subject to Section 12(i) of the Exchange Act, with 

the appropriate banking regulator specified in 

Section 12(i). The authorization in this paragraph 

includes allowing Nasdaq and the Nasdaq Exchange 

to request any appropriate regulatory relief from the 

provisions of Section 12. 

18See Nasdaq Application at 3 and Release No. 

34–53362 (February 24, 2006) [71 FR 10734]. 

19See Nasdaq Application at 3. Notice was 

provided through a May 15, 2006 bulletin to Issuers 

and a May 17, 2006 press release requesting Issuers 

notify Nasdaq by May 30, 2006 if they did not wish 

to participate. The result of an Issuer choosing to 

opt-out is that the Issuer’s securities will be 

ineligible to be listed and traded on the Nasdaq 

Exchange as of its operational date; such Issuer 

would instead trade on the pink sheets or OTC 

Bulletin Board unless it files an individual Section 

12(b) registration statement on Form 8–A or Form 

10, as applicable, in connection with listing on the 

Nasdaq Exchange or another national securities 

exchange, and such registration statement 

subsequently becomes effective. 

20See Exhibit B to the Nasdaq Application. 

21According to the Nasdaq Application, the 

Issuer Securities represent securities: (i) That are 

listed on Nasdaq immediately preceding the date 

that the Nasdaq Exchange begins operations; (ii) 

that are currently either registered under Section 

12(b) or 12(g) of the Exchange Act or exempt from 

Section 12(g) registration pursuant to Section 

12(g)(2)(B) or 12(g)(2)(G) of the Exchange Act or 

Exchange Act Rule 12g3–2(b); and (iii) that have not 

been requested by the issuer to be opted-out of the 

Nasdaq Application pursuant to the procedures 

established by Nasdaq as a result of NASD Rule 

4130. 

22 17 CFR 249,12d1–2(a). 

for Nasdaq and the Nasdaq Exchange to 

submit the Nasdaq Application to the 

Commission, the NASD proposed a new 

rule specifically permitting Nasdaq and 

the Nasdaq Exchange to take the 

contemplated action. The Commission 

approved this rule on April 6, 2006.16

NASD Rule 4130 explicitly authorizes 

Nasdaq and the Nasdaq Exchange, in 

connection with Nasdaq’s transition to a 

national securities exchange, to file an 

application with the Commission and 

the Board of Governors of the Federal 

Reserve System, the Federal Deposit 

Insurance Corporation, and the Office of 

Thrift Supervision to register each 

Issuer’s listed securities under Section 

12(b) of the Exchange Act and request 

any appropriate regulatory relief from 

the provisions of Section 12, unless the 

Issuer informs Nasdaq, pursuant to 

procedures set forth by Nasdaq, that it 

does not want to be included in this 

process.17

Accordingly, prior to filing the 

Nasdaq Application, Nasdaq provided 

notice of its intention to seek the 

requested relief.18 In addition to general 

notice through the proposed rule filing, 

Nasdaq notified each Issuer, 

individually, of its plans to submit the 

request and allowed any Issuer that did 

not wish its securities to be included in 

the request to opt-out of the process.19

At the expiration of the notice period, 

no Issuers had elected to opt-out of the 

requested relief.20

IV. Findings 

Pursuant to Section 12(c) of the 

Exchange Act, in the judgment of the 

Commission, based on the Nasdaq 

Application for Section 12(b) 

registration and the representations 

made therein and in light of the recent 

registration of the Nasdaq Exchange, the 

Commission will consider the Nasdaq 

Application in lieu of the information 

otherwise required under Section 12(b) 

of the Exchange Act. In reaching its 

determination, the Commission 

considered the following: 

(i) In recognition of the unique 

circumstances discussed above in Section I 

and in the Nasdaq Application, particularly 

the fact that the information to be elicited by 

registration under Section 12 of the Exchange 

Act or, in the case of investment companies 

registered under the 1940 Act, its substantial 

equivalent, already has been required to be 

made public by the Issuers, it is the judgment 

of the Commission that the Nasdaq 

Application is sufficient for purposes of 

registration of the securities listed in Exhibit 

A to the Nasdaq Application (the ‘‘Issuer 

Securities’’); 21

(ii) Nasdaq and the Nasdaq Exchange have 

represented to the Commission in the Nasdaq 

Application that, as of the date of this Order: 

a. They have conducted the opt-out process 

as described, particularly with respect to 

notice of the Nasdaq Application to all 

Issuers, generally, pursuant to NASD Rule 

4130 and a press release and, specifically, to 

each Issuer through the opt-out option, 

b. That authorization has not been 

withheld by any Issuer with respect to any 

of the Issuer Securities, and 

c. The Issuer Securities listed in Exhibit A 

to the Nasdaq Application accurately reflect 

the securities that are to be the subject of its 

request; 

(iii) The Nasdaq Exchange has certified to 

the Commission in the Nasdaq Application 

that, as of the date of this Order, all of the 

Issuer Securities have been approved by the 

Nasdaq Exchange for listing and registration 

in accordance with the requirements of 

Section 12(d) of the Exchange Act; and 

(iv) In accordance with Section 12(d) and 

Rule 12d1–2(a) 22 of the Exchange Act, 

Nasdaq and the Nasdaq Exchange have 

requested in writing the acceleration of the 

effective date of the Nasdaq Application for 

Section 12(b) registration of the Issuer 

Securities on the date of this Order. 

V. Conclusion 

The Commission, having reviewed the 

Nasdaq Application for Section 12(b) 

registration of the Issuer Securities and 

in reliance on the representations and 

certifications made by Nasdaq and the 

Nasdaq Exchange in the Nasdaq 

Application, has concluded that it is 

appropriate, in the public interest and 

consistent with the protection of 

investors, to approve the Nasdaq 

Application and grant the request by 

Nasdaq and the Nasdaq Exchange for 

registration of the Issuer Securities 

under Section 12(b). 

The Commission recognizes that the 

use of its authority under Section 12(c) 

of the Exchange Act to consider 

information other than that prescribed 

by Section 12(b) for purposes of Section 

12 registration is a variation on the 

customary registration process. As 

noted, however, the Commission 

believes the special circumstances of 

Nasdaq’s transition to a national 

securities exchange and the existing 

public disclosure requirements 

applicable to the Issuer Securities 

constitute a unique situation meriting 

the application of Section 12(c). 

With respect to the findings and 

conclusions in this Order, it is also to 

be expressly understood that the 

Commission has not made, and this 

Order does not constitute, any 

determination regarding the Issuers’ 

compliance with the listing standards of 

the Nasdaq Exchange or of any other 

exchange, securities association or 

facility on which the Issuers’ securities 

trade, or any Commission rule or 

regulation, other than the Section 12(b) 

registration requirements as they relate 

to Nasdaq’s transition to a national 

securities exchange. In addition, the 

Commission has not made, and this 

Order does not constitute, any 

determination regarding the regulation 

or oversight of Nasdaq or the Nasdaq 

Exchange with respect to the Issuer 

Securities, other than the Section 12(b) 

registration requirements as they relate 

to Nasdaq’s transition to a national 

securities exchange. 

Accordingly, it is ordered that the 

Nasdaq Application for Section 12(b) 

registration of the Issuer Securities, 

made by Nasdaq and the Nasdaq 

Exchange on behalf of the Issuers 

pursuant to NASD Rule 4130, be, and 

hereby is, granted, effective as of July 

31, 2006. 

45248 Federal Register / Vol. 71, No. 152 / Tuesday, August 8, 2006 / Notices 

1Securities Exchange Act Release No. 53128 

(January 13, 2006), 71 FR 3550 (January 23, 2006) 

(the ‘‘Exchange Approval Order’’). 

2Exchange Act Section 11A(a)(1)(C)(ii). 

3Effective July 1, 2006, Nasdaq renamed the 

Nasdaq National Market as the Nasdaq Global 

Market and created a new segment within the 

Global Market called the Global Select Market. 

References to the Nasdaq Global Market include 

those securities listed on the Nasdaq Global Market 

and the Nasdaq Global Select Market. See Securities 

Exchange Act Release No. 54071 (June 29, 2006), 71 

FR 38922 (July 10, 2006) (SR–NASD–2006–068); 

Securities Exchange Act Release No. 53799 (May 

12, 2006), 71 FR 29195 (May 19, 2006) (SR– 

NASDAQ–2006–007). 

4 15 U.S.C. 78l(g). 

5Most of these registration statements would be 

filed with the Commission. However, Section 12(i) 

of the Act requires filings relating to certain 

financial institutions to be made with the 

Comptroller of the Currency, the Board of 

Governors of the Federal Reserve System, the 

Federal Deposit Insurance Corporation, or the 

Office of Thrift Supervision (collectively, the 

‘‘Banking Regulators’’). 15 U.S.C. 78l(i). Separate 

requests have been sent to the Banking Regulators 

seeking similar relief for the companies registered 

with them. 

6 15 U.S.C. 78l(b). 

7 15 U.S.C. 78l(g)(2)(B). 

8 15 U.S.C. 78l(d), 

9 15 U.S.C. 78l(g)(2)(G). 

10 17 CFR 240.12g3–2(b). 

11Rule 4130 permits Nasdaq to act on behalf of 

its issuers to request registration of their listed 

securities under Section 12(b), or seek appropriate 

regulatory relief from Section 12(b), in connection 

with the transition to the Nasdaq Exchange. See 

Securities Exchange Act Release No. 53606 (April 

6, 2006), 71 FR 18790 (April 12, 2006) (approving 

SR–NASD–2006–28); Securities Exchange Act 

Release No. 53262 (February 24, 2006), 71 FR 10734 

(March 2, 2006) (providing notice of SR–NASD– 

2006–28). 

12Securities Exchange Act Release No. 52559 

(October 4, 2005), 70 FR 59097 (October 11, 2005). 

13Exchange Approval Order, supra note 1. 

14Securities Exchange Act Release No. 54085 

(June 30, 2006), 71 FR 38910 (July 10, 2006). 

15This includes securities listed on the Nasdaq 

Capital Market and the Nasdaq Global Market. Note 

that the NASD has modified its Plan of Allocation 

and Delegation of Functions by NASD to 

Subsidiaries and certain NASD rules to reflect 

NASD’s direct authority for the activities related to 

the OTC Bulletin Board, rather than the prior 

delegation of such authority to Nasdaq. As such, 

this application does not address the OTC Bulletin 

Board and securities quoted on the OTC Bulletin 

Board will not be listed on the Nasdaq Exchange. 

16NASD Rules 4310(a)(1) and (2) and 4320(a). 

17NASD Rule 4310(a)(4). 

18NASD Rule 4310(a)(3). 

19NASD Rule 4320(c). 

20 15 U.S.C. 78l(a). 

21Securities Exchange Act Release No. 53606, 

supra note 11. 

22Securities Exchange Act Release No. 53262, 

supra note 11. 

By the Commission (Chairman Cox and 

Commissioners Glassman, Atkins, Campos 

and Nazareth). 

Nancy M. Morris, 

Secretary. 

July 31, 2006 

Nancy M. Morris, Esq. 

Secretary, US Securities and Exchange 

Commission, 100 F Street, NE, 

Washington, DC 20549 

RE: Request for Relief from § 12 of the 

Securities Exchange Act of 1934 

Dear Ms. Morris: 

On January 13, 2006, the Securities and 

Exchange Commission (‘‘SEC’’ or 

‘‘Commission’’) approved the application of 

The NASDAQ Stock Market LLC (‘‘Nasdaq 

Exchange’’), a subsidiary of The Nasdaq 

Stock Market, Inc. (‘‘Nasdaq’’), to register 

under Section 6 of the Securities Exchange 

Act of 1934 (‘‘Act’’ or ‘‘Exchange Act’’) as a 

national securities exchange.1 Nasdaq’s 

transition of its listing and trading activities 

to the Nasdaq Exchange will furehr Congres’s 

instruction to promote ‘‘fair competition 

* * * between exchange markets.’’ 2 Absent 

the relief requested herein, however, 

Nasdaq’s transition to a national securities 

exchange would require approximaely 3,200 

Nasdaq Global Market 3 and Capital market 

issuers with securities registered pusuant to 

the Act, or exempt from registration under 

Section 12(g) of the Act,4 to file registraton 

statements 5 to register those securities under 

Section 12(b) of the Act.6

Engaging in what would essentially be a reregistration process for the vast majority of 

these 3,200 issuers would create a serious 

disruption in the trading of securities on The 

Nasdaq Stock Market. As explained below, 

the confusion and inevitable administrative 

delay that would accompany such a process 

for issuers registered with the Commission 

would achieve no material public benefit and 

would place an unnecessary burden on 

issuers, investors, Nasdaq, the Nasdaq 

Exchange, and the Commission. The 

Commission can prevent this potential 

disruption by granting the relief requested in 

this letter. Specifically, Nasdaq and the 

Nasdaq Exchange request that this letter 

serve as: (1) The registration statement under 

Section 12(b) for all classes of listed 

securities of Nasdaq Capital Market and 

Nasdaq Global Market issuers registered with 

the Commission under Sections 12(b) and 

12(g), as well as those listed securities 

exempt from registration under Section 

12(g)(2)(B) of the Act 7; and (2) the Nasdaq 

Exchange’s certification pursuant to Section 

12(d) of the Act 8 that these securities are 

approved for listing and registration 

concurrent with the start of operations of the 

Nasdaq Exchange. Nasdaq and the Nasdaq 

Exchange also request that the Commission 

issue an exemption from registration 

applicable to issuers that are now exempt 

from the registration requirements of Section 

12(g) pursuant to Section 12(g)(2)(G) of the 

Act 9 and Exchange Act Rule 12g3–2(b)10 to 

allow these companies three years from the 

date the Nasdaq Exchange begins operations 

to become registered under Section 12(b). 

NASD Rule 4130 specifically permits Nasdaq 

to act on behalf of its issuers in this regard.11

I. Background 

Nasdaq presently is a facility of the 

National Association of Securities Dealers, 

Inc. (‘‘NASD’’), a registered securities 

association, and thus is subject to Section 

15A of the Act. On March 15, 2001, Nasdaq 

filed an application under Section 6 of the 

Act for registration as a national securities 

exchange (‘‘Form 1’’) with the Commission. 

On August 15, 2005, and September 23, 2005, 

Nasdaq submitted Amendments 4 and 5, 

respectively, to its Form 1. In Amendments 

4 and 5 Nasdaq proposed, among other 

things, a new corporate structure whereby 

Nasdaq would become a holding company 

with the Nasdaq Exchange as one of its 

subsidiaries. The Commission published 

notice of Amendments 4 and 5 on October 

11, 2005.12 On January 13, 2006, the Nasdaq 

Exchange submitted Amendment 6 to the 

Form 1 and the Commission approved the 

Nasdaq Exchange’s application for 

registration as a national securities 

exchange.13 On June 30, 2006, the 

Commission modified the approval order so 

that the Nasdaq Exchange could begin 

operations in a phased manner, with 

operations related to trading in Nasdaq-listed 

securities beginning before operations related 

to trading in securities listed on other 

national securities exchanges.14 The Nasdaq 

Exchange has satisfied the conditions 

expressed in the amended approval order 

with respect to Nasdaq-listed securities and 

expects to begin operations as a national 

securities exchange for those securities on 

August 1, 2006. 

Upon operation of the Nasdaq Exchange, 

issuers listed and traded on Nasdaq will 

instead be listed and traded on the Nasdaq 

Exchange.15 Under current NASD rules, a 

security is eligible for listing on Nasdaq if it 

is registered under the Exchange Act under 

either Section 12(g) or Section 12(b).16 In 

addition, three categories of securities 

exempt from registration under Section 12(g) 

are also eligible for listing on Nasdaq. First, 

a security issued by an investment company 

registered under the Investment Company 

Act of 1940 (the ‘‘1940 Act’’) is exempt from 

registration under Section 12(g)(2)(B) of the 

Act, but is eligible for listing on Nasdaq.17

Second, a security issued by an insurance 

company and exempt from registration under 

Section 12(g) pursuant to Section 12(g)(2)(G) 

is also eligible for listing.18 Finally, the 

securities of certain foreign issuers are 

eligible for inclusion in Nasdaq even though 

they are exempt from registration pursuant to 

Rule 12g3–2(b) under the Exchange Act.19

Once the Nasdaq Exchange begins 

operations, issuers will need instead to have 

been registered under Section 12(b) so that 

brokers and dealers may effect transactions in 

these securities on the Nasdaq Exchange 

consistent with Section 12(a) of the Act.20

In contemplation of this request, Nasdaq 

has adopted Rule 4130, which specifically 

permits Nasdaq to act on behalf of its issuers 

to request registration of their listed 

securities under Section 12(b), or seek 

appropriate regulatory relief from Section 

12(b), in connection with the transition to the 

Nasdaq Exchange.21 In proposing this rule 

change, Nasdaq noted that it anticipated 

making the requests contained herein and the 

process by which it would provide notice to 

each issuer and would allow any issuer that 

does not wish to register under Section 12(b) 

the ability to opt-out of Nasdaq’s request.22

Nasdaq provided that notice by issuing a 

Federal Register / Vol. 71, No. 152 / Tuesday, August 8, 2006 / Notices 45249 

23See ‘‘Impact of NASDAQ Exchange Registration 

on Listed Companies’’ available at: http;// 

www.nasdaq.com/about/ 

Exchange_Bulletin_051506.pdf. 

24See ‘‘NASDAQ Notifies Listed Companies 

About Transition To Exchange Status’’ available at: 

http://www.nasdaq.com/newsroom/news/pr2006/ 

ne_section06_066.stm 

25Some issuers list more than one security on 

Nasdaq. 

26To assist the Commission with this request, we 

have attached lists of those securities registered 

with the Commission or exempt from registration. 

Exhibit A contains a list of those securities already 

registered with the Commission under Sections 

12(b) or 12(g) and those securities exempt from 

registration under Rule 12(g)(2)(B), that have not 

opted out from this request as provided for in Rule 

4130. Exhibit B contains a list of those securities 

that have opted out from this request. Exhibit C 

contains a list of those securities that are exempt 

from registration under Section 12(g) pursuant to 

Section 12(g)(2)(G) or Rule 12g3–2(b). 

27Section 12(g)(1) of the Act, 15 U.S.C. 78l(g)(1). 

28 15 U.S.C. 78l(c). 

29This reclassification would apply only to those 

issuers listed on Nasdaq when it becomes a national 

securities exchange and not to issuers approved for 

listing on Nasdaq afterwards. Such later-listed 

issuers would be required to file a registration 

statement with the Commission to register their 

securities under Section 12(b) and Nasdaq would be 

required separately to certify such registration 

statements. In addition, this reclassification would 

not apply to the securities of any issuer that has 

opted-out of such treatment, pursuant to NASD 

Rule 4130. See SR–NASD–2006–28. 

30Registered investment companies file annual 

and semiannual reports on Forms N–CSR and N– 

SAR, rather than on Forms 10–K and 10–Q, even 

if registered under the Exchange Act. See General 

Instruction A. to Form N–CSR, General Instruction 

A. to Form 10–K, and Exchange Act Rules 13a– 

11(b) and 13a–13(b). Registered investment 

companies are also subject to proxy regulation 

under Rule 20a–1 of the 1940 Act. See also Item 22 

of Schedule 14A. 

31Under Exchange Act Rule 12g–2, the 

Commission already has made provision for these 

companies to be deemed registered under the 

Exchange Act without the need for a filing. That 

relief is automatic upon the termination of the 

issuer’s registration under the 1940 Act. Given that 

relief, it would make no sense to impose a filing 

requirement when the investment company has 

maintained, rather than terminated, its registration 

under the 1940 Act. 

bulletin to issuers 23 on May 15, 2006, and by 

issuing a press release 24 on May 17, 2006. 

As of July 31, 2006, Nasdaq lists 2,776 

securities on the Global Market (including 

1,254 securities on the Nasdaq Global Select 

Market) and 580 securities on the Capital 

Market.25 These securities can be categorized 

as follows: 3,257 securities are registered 

with the Commission under Section 12(g); 40 

securities are also listed on a national 

securities exchange and are registered with 

the Commission under Section 12(b); 17 

investment company issuers’ securities are 

exempt from registration under Section 

12(g)(2)(B); four insurance company issuers’ 

securities are exempt from Section 12(g) 

registration under Section 12(g)(2)(G); nine 

foreign private issuers’ securities are exempt 

from Section 12(g) registration under Rule 

12g3–2(b); and 29 bank and savings 

association issuers’ securities are registered 

under Section 12(g) with other regulatory 

agencies pursuant to Section 12(i).26

II. Basis for Relief Sought and Anticipated 

Benefits 

A. Securities Already Registered Under 

Section 12(g) and 12(b) 

Absent relief, the issuers of approximately 

3,297 Nasdaq Global Market and Capital 

Market securities that are registered with the 

Commission under Sections 12(g) and 12(b) 

will be required to file a registration 

statement to register their securities under 

Section 12(b) on the Nasdaq Exchange once 

Nasdaq begins operating as a national 

securities exchange. Nasdaq believes that 

under the circumstances, this registration 

process would be confusing and would place 

an unnecessary cost and administrative 

burden on Nasdaq, the Nasdaq Exchange, the 

Commission, and issuers and would not be 

in the public interest. Specifically, each of 

those issuers would be required to file with 

the Commission and with the Nasdaq 

Exchange a new Exchange Act registration 

statement describing the securities to be 

registered along with all necessary exhibits. 

The Nasdaq Exchange would then be 

required to certify to the Commission that 

each issuer’s securities are approved for 

listing and registration. This process would 

have to be coordinated to minimize 

disruptions to trading in issuer securities, 

with the real possibility of some securities 

experiencing trading gaps during the 

transition. Such a daunting and timesensitive task—which creates no significant 

identifiable benefit to the public creates the 

unnecessary risk of administrative errors by 

the issuers, the Nasdaq Exchange, or the 

Commission that could inadvertently delay 

or otherwise adversely impact the 

registration and trading of securities on the 

new exchange. The public interest is served 

by having exchanges run smoothly and 

efficiently, and the requested relief would 

achieve that purpose. 

The additional registration process would 

not result in any significant benefit to the 

marketplace or investors because they would 

not receive any additional information 

regarding the security. Each Nasdaq Global 

Market and Capital Market issuer in this 

category has already filed an Exchange Act 

registration statement with the Commission 

to register the class of securities under 

Section 12 of the Act. Those issuers with 

securities registered under Section 12(g) were 

required to file a registration statement that 

contained ‘‘such information and documents 

as the Commission may specify comparable 

to that which is required in an application to 

register a security pursuant to [Section 

12(b)].’’ 27

There are also no relevant differences in 

the regulatory requirements for securities 

registered under Sections 12(b) and 12(g) that 

would negatively impact investors. For 

example, issuers with securities registered 

under Section 12(g) must, like issuers with 

securities registered under Section 12(b), file 

periodic and other reports with the 

Commission under Section 13 of the Act, 

comply with the proxy requirements under 

Section 14 of the Act, and adhere to the 

requirements of the Williams Act. Because 

securities registered under Section 12(b) and 

Section 12(g) are already treated in a nearly 

identical fashion, requiring Nasdaq issuers to 

re-register their securities would not result in 

any material benefit to the marketplace or 

investors. 

The Commission would be acting well 

within its authority in granting the relief 

requested. Congress has provided specific 

authorization under Section 12(c) of the 

Act,28 which allows the submission of 

different information than that required 

under Section 12(b). 

Accordingly, Nasdaq and the Nasdaq 

Exchange request that this letter serve as: (i) 

The registration statement under Section 

12(b) for all classes of listed securities of 

Nasdaq Global Market and Capital Market 

issuers registered with the Commission 

under Sections 12(b) and 12(g) and included 

in Exhibit A; and (ii) the Nasdaq Exchange’s 

certification pursuant to Section 12(d) of the 

Act that these securities are approved for 

listing and registration, concurrent with the 

start of operations of the Nasdaq Exchange. 

Nasdaq and the Nasdaq Exchange further 

request that the Commission accelerate the 

effective date of this application for Section 

12(b) registration to July 31, 2006. 

This action would be in the public’s 

interest and consistent with the protection of 

investors because it would prevent the 

imposition of a significant administrative 

burden on issuers, the Commission, and 

others without weakening any of the 

protections afforded to investors under the 

federal securities laws.29

B. Securities Exempt From Registration 

Under Section 12(g)(2)(B) 

Nasdaq currently lists 17 investment 

companies whose securities are exempted 

from Section 12(g) registration pursuant to 

Section 12(g)(2)(B) of the Act. No purpose 

would be served by requiring these issuers to 

file registration statements under Section 

12(b) because these companies already are 

and would remain subject to registration and 

reporting requirements under the 1940 Act 

rather than Section 13 of the Act.30 The 

Commission’s rules clearly contemplate that 

disclosure under the 1940 Act satisfies the 

disclosure required by the Exchange Act. In 

particular, each registered investment 

company has filed a registration statement 

with the Commission under the 1940 Act and 

has been required to make periodic filings 

under the 1940 Act identical in form to those 

required of investment companies that have 

registered their securities under Section 12(b) 

of the Act.31

As such, Nasdaq and the Nasdaq Exchange 

request that these issuers be treated in the 

same manner as issuers with securities 

registered under Sections 12(b) or 12(g) of the 

Act and that this letter serve as: (i) The 

registration statement under Section 12(b) for 

all classes of listed securities of Nasdaq 

Global Market and Capital Market issuers 

exempt from Section 12(g) registration 

pursuant to Section 12(g)(2)(B) and included 

in Exhibit A; and (ii) the Nasdaq Exchange’s 

certification pursuant to Section 12(d) of the 

Act that these securities are approved for 

listing and registration, concurrent with the 

start of operations of the Nasdaq Exchange. 

Nasdaq and the Nasdaq Exchange further 

45250 Federal Register / Vol. 71, No. 152 / Tuesday, August 8, 2006 / Notices 

32As noted in footnote 29, supra, this 

reclassification would apply only to those issuers 

listed on Nasdaq when it becomes a national 

securities exchange that have not opted-out of such 

treatment pursuant to NASD Rule 4130. 

33The primary difference in market structure that 

Nasdaq contemplates is the establishment of a 

holding company structure under which Nasdaq 

would own the Nasdaq Exchange, which would 

execute quotes and orders in accordance with a 

strict price-time priority algorithm. 

34Securities Act Release No. 6493 (October 14, 

1983) (‘‘Rule 12g3–2(b) Amendments’’). 

35 15 U.S.C. 78mm. 

36Pursuant to Section 12(g)(2)(G) of the Act, these 

issuers generally must file an annual statement with 

the Commissioner of Insurance of their domiciliary 

state and must be subject to regulation by their 

domiciliary state of proxies, consents, or 

authorizations. 

37These issuers are not eligible for listing on the 

Nasdaq Global Market, nor are they subject to the 

Global Market listing requirements. 

38Exchange Act Rule 12g3–2(b). The exemption 

is maintained by submitting the issuer’s home 

country reports to the Commission. 

39Rule 12g3–2(b) Amendments, supra note 34. 

These factors, according to one estimate, would 

cause prices to drop 20 percent. Id. 

40One exempt foreign issuer, Nissan Motor Co., 

Ltd., submitted a comment letter to the Commission 

in connection with Nasdaq’s application to become 

an exchange, requesting that the Rule 12g3–2(b) 

grandfathering be allowed to continue indefinitely, 

or, in the alternative, that a reasonable transition 

period be allowed. See footnote 208 to the Exchange 

Approval Order, supra, note 1. 

41Nasdaq notes that the proposed three-year 

period is consistent with the time-line the 

Commission has set forth to eliminate the 

requirement for foreign private issuers to reconcile 

financial statements prepared according to 

International Financial Reporting Standards to US 

GAAP. See SEC Press Release 2006–17, available at: 

http://www.sec.gov/news/press/2006-17.htm. 

request that the Commission accelerate the 

effective date of this application for Section 

12(b) registration to July 31, 2006. 

This action would be in the public’s 

interest and consistent with the protection of 

investors because it would prevent the 

imposition of a significant administrative 

burden on issuers, the Commission, and 

others without weakening any of the 

protections afforded to investors under the 

federal securities laws.32

C. Other Securities Exempt From Registration 

Under Section 12(g) 

As described above, Nasdaq lists 13 

securities—out of more than 3,300—that are 

otherwise exempt from registration under 

Section 12(g). The Nasdaq Exchange will 

operate in all relevant, material respects just 

as Nasdaq operates today.33 In fact, while as 

early as 1983 the Commission recognized 

that ‘‘trading on [Nasdaq] is substantially the 

same as trading on an exchange,’’ 34 the 

Commission has nonetheless permitted 

securities of these exempt issuers to trade on 

Nasdaq. 

Section 36 of the Act 35 grants the 

Commission broad authority to make 

exemptions to any part of the Act when 

‘‘such exemption is necessary or appropriate 

in the public interest, and is consistent with 

the protection of investors.’’ Granting a 

temporary continuation of an exemption 

from registration is ‘‘necessary or appropriate 

in the public interest’’ and is ‘‘consistent 

with the protection of investors.’’ This 

exemption for a transitional period would 

provide issuers that have traded on Nasdaq 

without incident for many years with 

sufficient time to undertake Exchange Act 

registration requirements and to make an 

orderly transition to the Nasdaq Exchange 

and therefore is in the public interest. The 

Commission has used its authority in the past 

to resolve administrative hurdles for complex 

transactions and to relieve unnecessary 

administrative burdens. Finally, given that 

these securities have traded on Nasdaq 

pursuant to an exemption for an extended 

period of time, the continuation of a similar 

exemption for a limited time should not raise 

any new concerns regarding the protection of 

investors. 

Forcing Section 12(g) exempt issuers to 

immediately register would be inequitable 

and wholly unrelated to any act or failure to 

act by these issuers. In the absence of 

exemptive relief, each of the Section 12(g) 

exempt issuers would be required to prepare 

and file a registration statement on Form 10 

or 20–F. Foreign issuers would also have to 

restate or reconcile their financial statements 

to U.S. generally accepted accounting 

principles (‘‘U.S. GAAP’’). But it is Nasdaq’s 

becoming an exchange rather than any 

affirmative act by these exempt issuers that 

would trigger the imposition of this 

registration requirement. Companies that list 

on the Nasdaq Exchange after it begins 

operations could be required to meet all the 

registration requirements applicable to an 

exchange listing without disrupting an 

existing market in those securities. But for 

those companies already listed, requiring 

immediate registration is potentially 

disruptive and unfair. The mere fact of 

Nasdaq’s conversion to an exchange should 

not adversely impact these companies or 

their investors. 

Thus, Nasdaq and the Nasdaq Exchange 

request that the Commission temporarily 

continue the exemption from registration for 

the following classes of Nasdaq-listed issuers. 

In connection with this request, the Nasdaq 

Exchange represents that it will continue to 

monitor these companies in the same manner 

Nasdaq does, to assure compliance with all 

applicable listing requirements. 

1. Insurance Companies 

The Commission need not immediately 

impose registration requirements on the four 

insurance companies listed on Nasdaq but 

exempt from Section 12(g) registration.36

These issuers have not taken any action on 

their own to trigger a registration requirement 

and the additional reporting requirements 

required by such registration. In fact, if the 

Commission determines not to temporarily 

continue these companies’ exemptions and 

they choose to delist rather than register, 

investors would be harmed by the potential 

loss of a liquid trading market. As such, 

Nasdaq requests that the Commission grant 

an exemption for the securities of these 

insurance companies (identified on Exhibit 

C) from the requirements of Sections 12(a) 

and 12(b) with respect to the trading of these 

securities on the Nasdaq Exchange for a 

three-year period from the date the Nasdaq 

Exchange begins to operate as an exchange, 

provided these companies continue to 

comply with the requirements of Section 

12(g)(2)(G) of the Act and the applicable 

requirements for continued listing on the 

Nasdaq Exchange. This transitional 

exemption will permit these issuers to 

complete the registration process without 

undue burden. 

2. Foreign Private Issuers 

There are nine foreign issuers that trade on 

The Nasdaq Capital Market pursuant to the 

‘‘grandfathering’’ exemption of Rule 12g3– 

2(b).37 This exemption originated in 1983, 

when the Commission first required foreign 

private issuers whose securities were trading 

on Nasdaq to be registered. Prior to that time, 

a foreign private issuer whose securities were 

not trading on a national securities exchange 

was exempt from registration where the 

foreign issuer did not voluntarily enter the 

United States markets by, for example, 

conducting a public offering or listing on an 

exchange. In 1983 the Commission amended 

Rule 12g3–2(b) to deny the exemption to 

non-U.S. issuers that voluntarily listed on 

Nasdaq. In order not to disrupt the trading of 

these issuers, however, the Commission 

grandfathered in all non-Canadian foreign 

issuers, allowing those companies to 

continue to trade on Nasdaq without 

registration under the Exchange Act.38 In 

doing so, the Commission heeded the 

concerns of commenters that many foreign 

issuers would withdraw from Nasdaq, rather 

than register, leaving the pink sheets as the 

only source of trading information related to 

these companies and resulting in increased 

price spreads, a decrease in information, 

price quotes not carried in newspapers, less 

liquid markets and fewer institutions in the 

market, absence of NASD surveillance, and 

delays in execution of transfers.39

The same considerations that compelled 

that treatment of foreign issuers in 1983 are 

relevant to the relief requested today. These 

issuers have not acted to jeopardize their 

ability to trade on Nasdaq or Rule 12g3–2(b) 

exempt status. If forced to immediately 

register their securities, a significant number 

of these issuers may delist rather than 

register, thereby relegating the U.S. investors 

in those foreign issuers to potentially less 

liquid and transparent markets. 

For these reasons, the Nasdaq Exchange’s 

registration as an exchange should not force 

these companies to immediately register or 

delist.40 Nasdaq and the Nasdaq Exchange 

therefore request that the Commission grant 

an exemption for those securities included in 

Exhibit C that are exempt from Section 12(g) 

registration under Rule 12g3–2(b) from the 

requirements of Sections 12(a) and 12(b) with 

respect to the trading of these securities on 

the Nasdaq Exchange for a three-year period 

from the date the Nasdaq Exchange begins to 

operate as an exchange, provided the issuers 

continue to comply with the requirements of 

Rule 12g3–2(b) and the applicable 

requirements for continued listing on the 

Nasdaq Exchange. This transitional 

exemption will permit these issuers to 

complete the registration process without 

undue burden.41

Federal Register / Vol. 71, No. 152 / Tuesday, August 8, 2006 / Notices 45251 

III. Conclusion 

The relief requested above is in the public 

interest because it will ensure the continued 

smooth operation of this market immediately 

from the time the Nasdaq Exchange begins 

operations as an exchange and avoid 

confusion and a number of potentially 

disruptive administrative hurdles. The relief 

is necessary and appropriate to avoid the 

disruption that could occur if members, 

brokers, and dealers were prohibited from 

effecting transactions in Nasdaq securities 

due to the lack of an effective registration 

once the Nasdaq Exchange begins operating 

as a registered exchange. 

The Commission has specific authority 

provided by Section 12(c) to effect the relief 

requested with respect to those securities 

already registered under Section 12(b) or 

12(g) and those securities exempt from 

Section 12(g) registration pursuant to Section 

12(g)(2)(B). Further, the Commission has 

general exemptive authority pursuant to 

Section 36 of the Act and Rule 0–12 

thereunder, in pertinent part, to exempt any 

person, security, or transaction, or any class 

or classes of persons, securities, or 

transactions, from any provision or 

provisions of this title or of any rule or 

regulation thereunder, to the extent that such 

exemption is necessary or appropriate in the 

public interest, and is consistent with the 

protection of investors. The unique facts 

surrounding Nasdaq’s transition to a national 

securities exchange provide ample 

justification for the Commission to exercise 

its authority under Section 36 under the 

circumstances described in this letter. 

If you have any questions concerning the 

foregoing you may contact the undersigned at 

(301) 978–8480, Arnold Golub at (301) 978– 

8075 or John Yetter at (301) 978–8497. 

Sincerely yours, Edward S. Knight 

Exhibit A: List of securities whose 

registration will be transferred to Section 

12(b) 

Exhibit B: List of securities of issuers that 

have elected to opt-out of requested relief 

Exhibit C: List of securities exempt from 

Section 12(g) registration under Section 

12(g)(2)(G) and Rule 12g3–2(b) 

BILLING CODE 8010–01–P 

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1See Release No. 34–53128 (January 13, 2006) [71 

FR 3550]. 2 15 U.S.C. 78l(g). 3 15 U.S.C. 78l(b). 4 15 U.S.C. 78a et seq. 5 15 U.S.C. 78l(g)(2)(G). Section 12(g)(2)(G) 

provides that any security issued by an insurance 

company is exempt from registration if all of the 

following conditions are met: 

• Such insurance company is required to and 

does file an annual statement with the 

Commissioner of Insurance (or other officer or 

agency performing a similar function) of its 

domiciliary State, and such annual statement 

conforms to that prescribed by the National 

Association of Insurance Commissioners or in the 

determination of such State commissioner, officer 

or agency substantially conforms to that so 

prescribed. 

• Such insurance company is subject to 

regulation by its domiciliary State of proxies, 

consents, or authorizations in respect of securities 

issued by such company and such regulation 

conforms to that prescribed by the National 

Association of Insurance Commissioners. 

• After July 1, 1966, the purchase and sales of 

securities issued by such insurance company by 

beneficial owners, directors, or officers of such 

company are subject to regulation (including 

reporting) by its domiciliary State substantially in 

the manner provided in Section 16. 

6See 17 CFR 240.12g3–2(b). 

7 15 U.S.C. 78l(a). 

8 15 U.S.C. 78c(a)(12). 

9Letter from Edward S. Knight to Nancy M. 

Morris (July 31, 2006). The Nasdaq Application is 

included in accompanying Release No. 34–54240 

(July 31, 2006). 

10 15 U.S.C. 78mm. 

11 17 CFR 240.0–12. Exchange Act Rule 0–12 sets 

forth procedures for filing applications for orders 

for exemptive relief pursuant to Section 36. 12See the Nasdaq Application. 

[FR Doc. 06–6708 Filed 8–7–06; 8:45 am] 

BILLING CODE 8010–01–C 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–54241] 

In the Matter of the Application of the 

Nasdaq Stock Market, Inc. and the 

NASDAQ Stock Market LLC for an 

Exemption From Section 12(a) 

Allowing Trading of Certain 

Unregistered Securities 

July 31, 2006. 

I. Introduction 

On January 13, 2006, the Commission 

approved the application of the Nasdaq 

Stock Market, Inc. (‘‘Nasdaq’’) to register 

one of its subsidiaries, the NASDAQ 

Stock Market LLC (‘‘Nasdaq Exchange’’) 

as a national securities exchange.1 Prior 

to Nasdaq’s submission of the 

application to become an exchange, 

Nasdaq was a wholly-owned subsidiary 

of the National Association of Securities 

Dealers, Inc. (‘‘NASD’’) that operated as 

an interdealer quotation system. 

Historically under NASD rules, a 

company’s securities were eligible for 

listing on Nasdaq if the security was 

registered under either Section 12(g) 2 or 

Section 12(b) 3 of the Securities 

Exchange Act of 1934 (‘‘Exchange 

Act’’).4 However, in certain 

circumstances, NASD rules also 

permitted the trading of securities that 

are exempt from registration under 

Section 12(g) of the Exchange Act. 

Among other exempt securities, 

NASD rules allow the trading of any 

security of an insurance company that is 

exempt from registration under Section 

12(g)(2)(G) of the Exchange Act 5 and the 

securities of certain foreign private 

issuers that are exempt from Section 

12(g) registration pursuant to Exchange 

Act Rule 12g3–2(b).6

Once the Nasdaq Exchange begins to 

operate as a national securities 

exchange, Section 12(a) of the Exchange 

Act 7 would prohibit any Nasdaq 

Exchange member, broker, or dealer 

from effecting any transaction in any 

security, other than an ‘‘exempted 

security’’ as defined in Section 3(a)(12) 

of the Exchange Act,8 on the Nasdaq 

Exchange, unless the security is 

registered under Section 12(b) of the 

Exchange Act. There are no exemptions 

from Section 12(b) registration afforded 

to insurance companies and foreign 

private issuers that correspond to the 

exemptions available to these issuers 

under Section 12(g)(2)(G) of the 

Exchange Act and Exchange Act Rule 

12g3–2(b). Accordingly, the securities of 

these issuers would need to be 

registered under Section 12(b) of the 

Exchange Act before transactions in 

those securities could be effected by 

Nasdaq Exchange members, brokers and 

dealers, consistent with Section 12(a) on 

the Nasdaq Exchange, absent the 

exemption provided by this order. 

II. Request by Nasdaq and the Nasdaq 

Exchange for an Exemption From 

Section 12(a) of the Exchange Act 

On July 31, 2006, the Commission 

received an application (the ‘‘Nasdaq 

Application’’) 9 from the Nasdaq and the 

Nasdaq Exchange for an exemption 

pursuant to Section 36 of the Exchange 

Act,10 in accordance with the 

procedures set forth in Exchange Act 

Rule 0–12.11 Section 36 of the Exchange 

Act gives the Commission the authority 

to exempt any person, security or 

transaction from any Exchange Act 

provision by rule, regulation or order, to 

the extent that the exemption is 

necessary or appropriate in the public 

interest and consistent with the 

protection of investors. Nasdaq and the 

Nasdaq Exchange have requested a 

three-year exemption from Section 12(a) 

of the Exchange Act, with respect to 

transactions in securities of the issuers 

listed in Exhibit C to the Nasdaq 

Application that are currently exempt 

from registration under Section 12(g) of 

the Exchange Act. According to Nasdaq 

and the Nasdaq Exchange, the securities 

of four insurance companies and nine 

foreign private issuers currently are 

trading on Nasdaq in reliance on these 

exemptions.12

An exemption from Section 12(a) 

would permit Nasdaq Exchange 

members and brokers or dealers to effect 

transactions in these securities on the 

Nasdaq Exchange without registration 

under Section 12(b) of the Exchange 

Act. Nasdaq and the Nasdaq Exchange 

believe that the three-year period will 

provide these issuers with adequate 

time to complete the Section 12(b) 

registration process and prepare 

financial statements should they choose 

to continue to have their securities 

traded on the Nasdaq Exchange after 

expiration of the three-year period. 

Under the terms of the requested 

exemption, the insurance companies 

would have to continue to satisfy the 

conditions set forth in Section 

12(g)(2)(G) of the Exchange Act and the 

foreign private issuers would have to 

remain in compliance with the 

conditions set forth in Exchange Act 

Rule 12g3–2(b) to qualify for the 

exemption. 

Prior to submitting this request, 

Nasdaq and the Nasdaq Exchange 

notified the insurance companies and 

the foreign private issuers of their plan 

to request a Section 12(a) exemption on 

the issuers’ behalf and allowed each 

issuer that did not wish to be the subject 

of the request to opt-out of the process. 

Nasdaq and the Nasdaq Exchange 

provided these issuers a period of 10 

business days to notify Nasdaq of an 

opt-out preference. The issuers that 

chose to opt-out from the request are 

listed in Exhibit B to the Nasdaq 

Application. 

III. Order Granting Nasdaq’s 

Application for an Exemption Pursuant 

to Section 36 of the Exchange Act 

We believe that exempting Nasdaq 

Exchange members, brokers and dealers 

for a limited time from the requirements 

of Section 12(a) regarding the trading of 

the securities listed in Exhibit C to the 

Nasdaq Application is necessary and 

appropriate in the public interest, and is 

consistent with the protection of 

investors in order to afford these issuers 

time to comply with the Section 12(b) 

registration requirements. As 

represented by Nasdaq and the Nasdaq 

Exchange in their request, immediate 

registration under Section 12(b) could