33590 Federal Register / Vol. 66, No. 121 / Friday, June 22, 2001 / Notices

6 15 U.S.C. 78s(b)(3)(A).

7 17 CFR 240.19b–4(f)(6).

8 17 CFR 200.30–3(a)(12).

1 15 U.S.C. 78s(b)(1).

2 17 CFR 240.19b–4.

3 17 CFR 240.19b–4(f)(6).

4See Securities Exchange Act Release No. 37693

(September 17, 1996), 61 FR 50362 (September 25,

1996) (order approving File No. SR–CBOE–96–43).

5See Securities Exchange Act Release No. 37696

(September 17, 1996), 61 FR 50358 (September 25,

1996) (order approving File No. SR–CBOE–96–44)

(‘‘Sub-Index Order’’). The six Sub-Indexes include:

the GSTI Hardware Index, the GSTI Internet Index,

the GSTI Semiconductor Index, the GSTI Software

Index, the GSTI Services Index, and the GSTI

Multimedia Networking Index.

(C) Self-Regulatory Organization’s

Statement on Comments on the

Proposed Rule Change Received From

Members, Participants or Others

No written comments were solicited

or received with respect to the proposed

rule change.

III. Date of Effectiveness of the

Proposed Rule Change and Timing for

Commission Action

The CBOE has filed the proposed rule

change as a ‘‘non-controversial’’ rule

change pursuant to Section 19(b)(3)(A)

of the Act 6 and subparagraph (f)(6) of

Rule 19b–4 thereunder.7 Because the

foregoing proposed rule change: (1)

Does not significantly affect the

protection of investors or the public

interest; (2) does not impose any

significant burden on competition; and

(3) by its terms, does not become

operative for 30 days after the date of

the filing, it has become effective

pursuant to Section 19(b)(3)(A) of the

Act and Rule 19b–4(f)(6). The CBOE

also provided the Commission with

written notice of its intent to file the

proposed rule change, along with a brief

description and text of the proposed

rule change, at least five business days

prior to the date of the filling of the

proposed rule change. At any time

within 60 days of the filing of such

proposed rule change, the Commission

may summarily abrogate such rule

change if it appears to the Commission

that such action is necessary or

appropriate in the public interest, for

the protection of investors, or otherwise

in furtherance of the purposes of the

Act.

IV. Solicitation of Comments

Interested persons are invited to

submit written data, views and

arguments concerning the foregoing,

including whether it is consistent with

the Act. Persons making written

submissions should file six copies

thereof with the Secretary, Securities

and Exchange Commission, 450 Fifth

Street, NW, Washington, DC 20549–

0609. Copies of the submission, all

subsequent amendments, all written

statements with respect to the proposed

rule change that are filed with the

Commission, and all written

communications relating to the

proposed rule change between the

Commission and any person, other than

those that may be withheld from the

public in accordance with the

provisions of 5 U.S.C. 552, will be

available for inspection and copying at

the Commission’s Public Reference

Section, 450 Fifth Street, N.W.,

Washington, D.C. Copies of such filing

will also be available for inspection and

copying at the principal office of the

CBOE. All submissions should refer to

File No. SR–CBOE–2001–30 and should

be submitted by July 13, 2001.

For the Commission, by the Division of

Market Regulation, pursuant to delegated

authority.8

Marget H. McFarland,

Deputy Secretary.

[FR Doc. 01–15679 Filed 6–21–01; 8:45 am]

BILLING CODE 8010–01–M

SECURITIES AND EXCHANGE

COMMISSION

[Release No. 34–44435; File No. SR–CBOE–

2001–34]

Self-Regulatory Organizations; Notice

of Filing and Immediate Effectiveness

of Proposed Rule Change by the

Chicago Board Options Exchange,

Inc., Relating to the Goldman, Sachs

Technology Composite Index (‘‘GSTI’’)

and the GSTI Sub-Indexes

June 15, 2001.

Pursuant to Section 19(b)(1) of the

Securities Exchange Act of 1934

(‘‘Act’’),1 and Rule 19b–4 thereunder,2

notice is hereby given that on June 14,

2001, the Chicago Board Options

Exchange, Inc. (‘‘CBOE’’ or ‘‘Exchange’’)

filed with the Securities and Exchange

Commission (‘‘SEC’’ or ‘‘Commission’’)

the proposed rule change as described

in Items I, II, and III below, which Items

have been prepared by the CBOE. The

proposed rule change has been filed by

the CBOE as a ‘‘non-controversial’’ rule

change under Rule 19b–4(f)(6) of the

Act.3 The Commission is publishing this

notice to solicit comments on the

proposed rule change from interested

persons.

I. Self-Regulatory Organization’s

Statement of the Terms of Substance of

the Proposed Rule Change

The CBOE currently lists and trades

European-style, cash-settled options on

the Goldman Sachs Technology

Composite Index (‘‘GSTI Composite

Index’’ or ‘‘Index’’) 4 and on six GSTI

Sub-indexes (‘‘Sub-Indexes’’).5 Pursuant

to determinations by Goldman, Sachs &

Co. (‘‘Goldman Sachs’’), the CBOE

proposes to: (1) Revise the guidelines

governing the selection of stocks in the

GSTI Composite Index to allow

Goldman Sachs to exclude from the

GSTI Composite Index companies that

Goldman Sachs believes are classified

inappropriately as technology

companies despite their Standard

Industrial Classification (‘‘SIC’’)/Russell

code; (2) revise the weighting criteria for

the six Sub-Indexes so that all

components will be subject to a

maximum weight cap of 8.5% of the

total capitalization of any Sub-Index;

and (3) change the dates of the semiannual rebalancing for the GSTI

Composite Index and the six SubIndexes from the third Friday in January

and July of each year to the third Friday

in December and June of each year. The

CBOE seeks continued approval to list

and trade options on the GSTI

Composite Index and on the SubIndexes after the proposed revisions

become effective after the close of

trading on June 15, 2001. In addition,

the CBOE proposes to amend CBOE rule

24.14, ‘‘Disclaimers,’’ to include a

specific reference to Goldman Sachs as

entitled to the benefit of the disclaimer

of liability with respect to the GSTI

Composite Index and the six SubIndexes.

The text of the proposed rule change

is available at the Office of the

Secretary, CBOE, and at the

Commission.

II. Self-Regulatory Organization’s

Statement of the Purpose of, and

Statutory Basis for, the Proposed Rule

Change

In its filing with the Commission, the

CBOE included statements concerning

the purpose of and basis for the

proposed rule change and discussed any

comments it received on the proposed

rule change. The text of these statements

may be examined at the places specified

in Item IV below. The CBOE has

prepared summaries, set forth in

sections (A), (B), and (C) below, of the

most significant aspects of such

statements.

(A) Self-Regulatory Organization’s

Statement of the Purpose of, and

Statutory Basis for, the Proposed Rule

Change

1. Purpose

The CBOE currently lists and trades

European-style, cash-settled options on

Federal Register / Vol. 66, No. 121 / Friday, June 22, 2001 / Notices 33591

6 In 1999, a CBOE proposal in which Goldman

Sachs added a supplemental sector/industry

classification method used for identifying the

universe of technology stocks eligible for inclusion

in the Index became effective on filing. See

Securities Exchange Act Release No. 41882 (Sept.

17, 1999), 64 FR 51818 (Sept. 24, 1999) (notice of

filing and immediate effectiveness of File No. SR–

CBOE–99–54) (‘‘1999 Notice’’). In that proposal;

Goldman Sachs refined the definition of

‘‘technology-related’’ to include Internet-related

companies.

7 Goldman Sachs views the decision by the

Committee regarding changes to the Index to be

material non-public information. In this respect, a

Chinese wall has been erected around the personnel

at Goldman Sachs who have access to information

concerning changes and adjustments to the Index.

Further, upon the completion of any addition or

deletion of a security from the Index, Goldman will

review trading in the subject securities for any

irregularities. Goldman Sachs’ revised Chinese wall

procedures, which have been submitted to CBOE,

are closely modeled on existing procedures for

other Goldman Sachs indexes underlying

standardized options. The CBOE notes that in the

Sub-Index Order the Commission found that

Goldman Sachs’ Chinese wall procedures

‘‘adequately serve to minimize the susceptibility to

manipulation of the Sub-Indexes and the securities

in the Sub-Indexes.’’ See Sub-Index Order, supra

note 5. Further, in the 1999 Notice, the Exchange

represented that ‘‘Goldman Sachs will not have any

informational advantage concerning modifications

to the composition of the GSTI composite Index and

the Sub-Indexes due to Goldman Sachs’ role in

maintaining such indexes, including the

classification of stocks.’’ See 1999 Notice, supra

note 6. Upon reviewing Goldman Sachs’ revised

Chinese wall procedures, the CBOE again

represents that Goldman Sachs will not have any

informational advantage concerning modifications

to the composition of the GSTI Composite Index

and the Sub-Indexes due to Goldman Sachs’ role in

maintaining the indexes, including the

classification of the stocks.

8See 1999 Notice, supra note 6.

9A proposal that similarly reduced the maximum

weighting criteria applicable to the Sub-Indexes

became effective on filing with the Commission.

See 1999 Notice, supra note 6.

10On June 18, 2001, the ‘‘old’’ series will be fixed

and no new series of the ‘‘old’’ index will be

introduced. As of June 13, 2001, there was open

interest in the September and December 2001 series

for the GSTI Composite Index and/or five of the

Sub-Indexes. There are no LEAPS trading on any of

the ‘‘old’’ indexes.

11See Securities Exchange Act Release Nos.

30944 (July 21, 1992), 57 FR 33376 (July 28, 1992)

(order approving File No. SR–CBOE–92–09)

(continued listing and trading of SPX options after

a change to a.m. settlement); 37089 (April 9, 1996),

61 FR 16660 (April 16, 1998) (order approving File

No. SR–CBOE–96–12) (change in the method of

determining the settlement value for NDX options);

and 40642 (November 5, 1998), 63 FR 63759

(November 16, 1998) (order approving File No. SR–

CBOE–98–43) (continued listing and trading of

Continued

the GSTI Composite Index and on the

six GSTI Sub-Indexes. The GSTI

Composite Index is a broad-based,

modified capitalization-weighted index

of the universe of technology-related

company stocks meeting certain

objective criteria. The narrow-based

Sub-Indexes are also calculated using a

modified capitalization-weighting

methodology. Components for each of

the six GSTI Sub-Indexes are chosen

from the GSTI Composite Index.

Goldman Sachs has informed the

CBOE that as of June 15, 2001 (after the

close of trading), Goldman Sachs will

change certain guidelines governing the

selection of stocks included in the GSTI

Composite Index to refine the definition

of ‘‘technology-related’’ companies.

Under the proposal, the Goldman Sachs

Technology Index Committee

(‘‘Committee’’) will have the discretion

to exclude companies that, based on its

knowledge of the technology sector, the

Committee believes are inappropriately

classified as technology companies

despite their SIC/Russell code.6

Currently, the components of the

GSTI Composite Index are drawn from

a universe of companies that fall within

a set of predetermined Russell or SIC

code classifications. Notwithstanding

the Russell and SIC classifications,

Goldman Sachs may believe that some

companies are not in actuality

technology companies and thus are not

proper components for inclusion in the

GSTI Composite Index. In these limited

instances, Goldman Sachs seeks the

flexibility to remove these components

from the Index. The Committee, which

will make the decision to exclude a

component, will meet before every

scheduled rebalancing date to determine

whether a GSTI Composite Index

constituent meets the industry

membership criterion. In making the

determination, the Committee will

examine a component company’s

primary source of revenue or,

alternatively, its emerging business

activity and strategy. If the Committee

determines that a company’s primary

source of revenue is from sources that

are not technology-related, the

Committee may determine that the

company should not be classified as a

technology company and, therefore, the

Committee will remove the component

from the GSTI Composite Index.

Similarly, the Committee may

determine to remove a company from

the GTSI Composite Index if it

determines that the company’s emerging

business strategy is not technologyrelated.7

Goldman Sachs believes that these

changes will prevent the inclusion in

the GSTI Composite Index of stocks that

are not commonly considered to be part

of the universe of technology-related

companies, even though they may have

the proper SIC or Russell code.

Goldman Sachs expects that the GSTI

Composite Index, as a result of the

proposed change, will more accurately

represent the technology sector and will

be better suited to track future changes

in the industry.8

Goldman Sachs also intends to revise

the weighting criteria for the SubIndexes, effective June 15, 2001 (after

the close of trading). Currently,

component weights are capped in each

of the Sub-Indexes so that no

component accounts for more than

12.5% of the total capitalization of any

Sub-Index. Goldman Sachs proposes to

revise the weighting criteria for the SubIndexes so that all components will be

subject to a maximum weight cap of

8.5%. By reducing the maximum weight

cap, Goldman Sachs notes that the

revised weighting methodology will

require that each of the Sub-Indexes be

comprised of at least 12 components.9

Goldman Sachs expects this revised

methodology to promote portfolio

weight diversification, thereby further

limiting the domination of the SubIndexes by a few large stocks.

Goldman Sachs also proposes to

change the dates of the semi-annual

rebalancing for the GSTI Composite

Index and the six Sub-Indexes from the

third Friday in January and July of each

year to the third Friday in December

and June of each year.

With the exception of the foregoing

changes, the Exchange proposes no

other changes to the GSTI Composite

Index and the six Sub-Indexes.

The CBOE will notify market

participants of Goldman Sach’s decision

to alter the guidelines for inclusion in

the GSTI Composite Index and the

revised calculation methodology in the

Sub-Indexes through a notice to

members and member firms in advance

of the changeover.

On the Monday following the

expiration Friday when Goldman Sachs

implements these changes, the CBOE

will bring up new series of options

overlying the GSTI Composite Index

and the six Sub-Indexes under the

current ticker symbols. The outstanding

series will be traded under new ticker

symbols and will continue to settle

based on the present guidelines and

calculation method. No new series will

be added to the ‘‘old’’ index classes and

when the existing series expire, the

‘‘old’’ indexes will cease to trade.10 The

Exchange believes this action will be

adequate to prevent any problems

because, as noted above, the Exchange

will continue to list outstanding series

under a different symbol that will settle

under the old methodology; thus, there

will be no change to outstanding

contracts. The Exchange previously has

employed the same system for

introducing new series after a change in

the calculation of the index value or

settlement value of an index.11

33592 Federal Register / Vol. 66, No. 121 / Friday, June 22, 2001 / Notices

NDX options after a change in the weighting

methodology of the Nasdaq-100 Index).

12 In its notice to members regarding the revised

guidelines for inclusion in the GSTI Composite

Index and the revised calculation methodology for

the Sub-Indexes, the CBOE will advise members

and member organizations that positions in the

‘‘old’’ and ‘‘new’’ GSTI Composite Index and in the

corresponding ‘‘old’’ and ‘‘new’’ Sub-Indexes will

be aggregated for the purpose of calculating position

and exercise limits. Telephone conversation

between Stephen M. Youhn, Attorney, CBOE, and

Yvonne Fraticelli, Special Counsel, Office of Market

Supervision, Division of Market Regulation,

Commission, on June 13, 2001 (‘‘June 13

Conversation’’).

13 15 U.S.C. 78s(b)(3)(A).

14 17 CFR 240.19b–4(f)(6).

15 17 CFR 240.19b–4(f)(6)(iii).

16See Securities Exchange Act Release No. 38852

(July 18, 1997), 62 FR 40128 (July 25, 1997) (order

approving File No. SR–CBOE–97–30).

17For the purposes only of accelerating the

operative date of this proposal, the Commission has

considered the proposal’s impact on efficiency,

competition, and capital formation. 15 U.S.C. 78c(f).

Combinations of options based on the

‘‘old’’ GSTI Composite Index and the

‘‘new’’ GSTI Composite Index will be

aggregated and cannot exceed 100,000

contracts. In addition, options based on

an ‘‘old’’ Sub-Index will be aggregated

with options based on the

corresponding ‘‘new’’ Sub-Index and

cannot exceed 31,500 contracts.12

Finally, the Exchange proposes to

amend CBOE Rule 24.14 to include

specific reference to Goldman Sachs as

entitled to the benefit of the disclaimer

of liability with respect to the GSTI

Composite Index and the Sub-Indexes.

2. Statutory Basis

The CBOE believes that the proposed

changes to the GSTI Composite Index

will help to ensure that the Index

continues to provide an accurate

representation of the technology sector.

Further, by reducing the maximum

allowable weighting of any single

component of the Sub-Indexes from

12.5% to 8.5% of the total capitalization

of the Sub-Index, the CBOE believes that

Goldman Sachs is providing for better

portfolio weight diversification. For

these reasons, the Exchange believes

that the proposed rule change is

consistent with and furthers the

objectives of section 6(b)(5) of the Act,

in that it is designed to perfect the

mechanism of a free and open market

and to protect investors and the public

interest.

(B) Self-Regulatory Organization’s

Statement on Burden on Competition

The CBOE does not believe that the

proposed rule change will impose any

burden on competition not necessary or

appropriate in furtherance of the

purposes of the Act.

(C) Self-Regulatory Organization’s

Statement on Comments on the

Proposed Rule Change Received from

Members, Participants or Others

No written comments were solicited

or received with respect to the proposed

rule change.

III. Date of Effectiveness of the

Proposed Rule Change and Timing for

Commission Action

The CBOE has filed the proposed rule

change as a ‘‘non-controversial’’ rule

change pursuant to Section 19(b)(3)(A)

of the Act 13 and subparagraph (f)(6) of

Rule 19b–4 thereunder.14 Because the

foregoing proposed rule change: (1)

Does not significantly affect the

protection of investors or the public

interest; (2) does not impose any

significant burden on competition; and

(3) the CBOE provided the Commission

with written notice of its intent to file

the proposed rule change at least five

business days prior to the filing date,

the proposed rule change has become

effective pursuant to Section 19(b)(3)(A)

of the Act and Rule 19b–4(f)(6)

thereunder.

A proposed rule change filed under

Rule 19b–4(f)(6) normally does not

become operative prior to 30 days after

the date of filing. However, Rule 19b–

4(f)(6)(iii) 15 permits the Commission to

designate a shorter time if such action

is consistent with the protection of

investors and the public interest. The

CBOE has requested that the

Commission designate such shorter time

period so that the Exchange may

continue to list and trade options based

on the GSTI Composite and Sub-Indexes

without interruption following the

implementation of the new guidelines

and weighting methodology after the

close of trading on June 15, 2001.

The CBOE believes that the proposed

changes do not present any unique or

novel questions. In addition, the

Exchange believes that the proposed

revisions will strengthen the GSTI

Composite and Sub-Indexes by

providing for the inclusion of

components that better represent the

current state of the technology sector

and will be better suited to track future

changes in the industry. The Exchange

also believes that the revisions to the

weighting criteria will promote portfolio

weight diversification, thereby further

limiting domination of the Sub-Indexes

by a few large stocks. The CBOE also

notes that the Commission previously

approved the continued listing of

options on the GSTI Composite Index

after a similar change in its weighting

methodology.16

The Commission, consistent with the

protection of investors and the public

interest, has determined to make the

proposed rule change operative after the

close of trading on June 15, 2001, for the

following reasons.17 As noted above, the

proposal will permit Goldman Sachs to

remove or exclude a component

company from the GSTI Composite

Index regardless of the company’s SIC/

Russell classification if Goldman Sachs

determines that the company’s primary

sources of revenue are not technologyrelated or if the company’s emerging

business strategy is not technologyrelated. The Commission believes that

this limited flexibility with regard to the

selection of Index components may help

Goldman Sachs to ensure that the GSTI

Composite Index accurately reflects the

market for technology-related

companies.

The Commission believes that the

change in the component weighting

guidelines for the Sub-Indexes will

ensure greater weight diversification

among the component stocks of the SubIndexes and will eliminate

concentrations in weighting that might

cause the Sub-Indexes to be dominated

by a few highly-capitalized stocks.

The Commission believes that the

proposal to change the dates of the

semi-annual rebalancing for the GSTI

Composite Index and the six SubIndexes from the third Friday in January

and July of each year to the third Friday

in December and June of each year, and

the proposal to amend CBOE Rule 24.14

to include a specific reference to

Goldman Sachs as entitled to the benefit

of the disclaimer of liability with

respect to the GSTI Composite Index

and the Sub-Indexes, do not raise new

regulatory issues.

The Commission believes that the

proposed changes to the GSTI

Composite Index and the Sub-Indexes

are reasonable and that investors should

be permitted to trade options on he

revised GSTI Composite Index and the

Sub-Indexes on an uninterrupted basis

as the old GSTI Composite Indexes and

the Sub-Indexes are phased out. The

Commission notes that the CBOE will

advise members and member

organizations of the changes in the

guidelines for inclusion in the GSTI

Composite Index and in the revised

calculation methodology for the SubIndexes through a notice to members

and member firms in advance of the

changeover. The notice to members also

will note that positions in the ‘‘old’’ and

‘‘new’’ GSTI Composite Index and the

corresponding ‘‘old’’ and ‘‘new’’ SubIndexes will be aggregated for purposes

Federal Register / Vol. 66, No. 121 / Friday, June 22, 2001 / Notices 33593

18See June 13 Conversation, supra note 12.

19 17 CFR 200.30–3(a)(12).

1 15 U.S.C. 78s(b)(1).

2 17 CFR 240.19b–4.

3See letter from Mary M. Dunbar, Vice President,

Nasdaq, to Katherine England, Assistant Director,

Division of Market Regulation, Commission, dated

June 12, 2001 (‘‘Amendment No. 1’’). In

Amendment No. 1, Nasdaq changed the term

‘‘debenture’’ to ‘‘note’’ throughout the proposed

rule text and filing, and clarified the circumstances

under which Hellman and Friedman would be

entitled to an exemption from the restriction

contained in the Restated Certificate of

Incorporation that prohibits any beneficial owner of

more than five percent of common stocks or notes

from voting those excess shares or notes.

of calculating position exercise limits.18

The different symbols for the old and

revised indexes also should help to

avoid confusion.

For all of the reasons set forth above,

the Commission finds that it is

consistent with the protection of

investors and the public interest for the

proposal to become operative on June

15, 2001. At any time within 60 days of

the filing of such proposed rule change,

the Commission may summarily

abrogate such rule change if it appears

to the Commission that such action is

necessary or appropriate in the public

interest, for the protection of investors,

or otherwise in furtherance of the

purposes of the Act.

IV. Solicitation of Comments

Interested persons are invited to

submit written data, views and

arguments concerning the foregoing,

including whether it is consistent with

the Act. Persons making written

submissions should file six copies

thereof with the Secretary, Securities

and Exchange Commission, 450 Fifth

Street, NW, Washington, DC 20549.,

Copies of the submission, all subsequent

amendments, all written statements

with respect to the proposed rule

change that are filed with the

Commission, and all written

communications relating to the

proposed rule change between the

Commission and any person, other than

those that may be withheld from the

public in accordance with the

provisions of 5 U.S.C. 552, will be

available for inspection and copying at

the Commission’s Public Reference

Section, 450 Fifth Street, NW,

Washington, DC. Copies of such filing

will also be available for inspection and

copying at the principal office of the

CBOE. All submissions should refer to

File No. SR–CBOE–2001–34 and should

be submitted by July 13, 2001.

For the Commission, by the Division of

Market Regulation, pursuant to delegated

authority.19

Margaret H. McFarland,

Deputy Secretary.

[FR Doc. 01–15680 Filed 6–21–01; 8:45 am]

BILLING CODE 8010–01–M

SECURITIES AND EXCHANGE

COMMISSION

[Release No. 34–44423; File No. SR–NASD–

2001–34]

Self-Regulatory Organizations; Notice

of Filing of Proposed Rule Change by

the National Association of Securities

Dealers, Inc. Relating to Amendments

to the Restated Certificate of

Incorporation of The Nasdaq Stock

Market, Inc.

June 13, 2001.

Pursuant to section 19(b)(1) of the

Securities Exchange Act of 1934

(‘‘Act’’) 1 and Rule 19b–4 thereunder,2

notice is hereby given that on May 8,

2001, the National Association of

Securities Dealers, Inc. (‘‘NASD’’ or

‘‘Association’’), through its subsidiary,

The Nasdaq Stock Market, Inc.

(‘‘Nasdaq’’), filed with the Securities

and Exchange Commission (‘‘SEC’’ or

‘‘Commission’’) the proposed rule

change as described in Items I, II, and

III below, which Items have been

prepared by Nasdaq. On June 4, 2001

the NASD filed Amendment No. 1 to the

Proposal.3 The Commission is

publishing this notice to solicit

comments on the proposed rule change

from interested persons.

I. Self-Regulatory Organization’s

Statement of the Terms of Substance of

the Proposed Rule Change

Nasdaq is proposing to amend its

Restated Certification of Incorporation

(‘‘Certificate’’). Additions are italicized;

deletions are bracketed.

* * * * *

Restated Certificate of Incorporation of the

NASDAQ Stock Market, Inc.

* * * * *

Article Fourth

A. No change.

B. No change.

C. 1. (a) Except as may otherwise be

provided in this Restated Certificate of

Incorporation (including any Preferred Stock

Designation) or by applicable law, each

holder of Common Stock, as such, shall be

entitled to one vote for each shore of

Common Stock held of record by such holder

on all matters on which stockholders

generally are entitled to vote, and no holder

of any series of Preferred Stock, as such, shall

be entitled to any voting powers in respect

thereof.

(b) Except as may otherwise be provided in

this Restated Certificate of Incorporation or

by applicable law, the holders of the 4.0%

Convertible Subordinate Notes due 2006 (the

‘‘Notes’’) which may be issued from time to

time by Nasdaq shall be entitled to vote on

all matters submitted to a vote of the

stockholders of Nasdaq, voting together with

the holders of the Common Stock (and of any

other shares of capital stock of Nasdaq

entitled to vote at a meeting of stockholders)

as one class. Each principal amount of Notes

shall be entitled to a number of votes equal

to the number of votes represented by the

Common Stock of Nasdaq that could then be

acquired upon conversion of such principal

amount of Notes into Common Stock, subject

to adjustments as provided in the Notes.

Holders of the Notes shall be deemed to be

stockholders of Nasdaq, and the Notes shall

be deemed to be shares of stock, solely for the

purpose of any provision of the General

Corporation Law of the State of Delaware or

this Restated Certificate of Incorporation that

requires the vote of stockholders as a

prerequisite to any corporate action.

2. Notwithstanding any other provision of

this Restated Certificate of Incorporation, but

subject to subparagraph 6 of this paragraph

C. of this Article Fourth, in no event shall (i)

any record owner of any outstanding

Common Stock which is beneficially owned,

directly or indirectly, as of any record date

for the determination of stockholders and/or

holders of Notes entitled to vote on any

matter, or (ii) any holder of any Notes which

are beneficially owned, directly or indirectly,

as of any record date for the determination

of stockholders and/or holders of Notes

entitled to vote on any matter, by a person

(other than an Exempt Person) who

beneficially owns shares of Common Stock

and/or Notes (‘‘Excess Shares and/or Notes’’)

in excess of five percent (5%) of the thenoutstanding shares of Common Stock, be

entitled or permitted to vote any Excess

Shares and/or Notes. For all purposes hereof,

any calculation of the number of shares of

Common Stock outstanding at any particular

time, including for purposes of determining

the particular percentage of such outstanding

shares of Common Stock of which any person

is the beneficial owner, shall be made in

accordance with the last sentence of Rule

13d–3(d)(1)(i) of the General Rules and

Regulations under the Securities Exchange

Act of 1934, as amended (the ‘‘Exchange

Act’’), as in effect on the date of filing this

Restated Certificate of Incorporation.

3. The following definitions shall apply to

this paragraph C. of this Article Fourth:

(a) ‘‘Affiliate’’ shall have the meaning

ascribed to that term in Rule 12b–2 of the

General Rules and Regulations under the

Exchange Act, as in effect on the date of

filing this Restated Certificate of

Incorporation.

(b) A person shall be deemed the

‘‘beneficial owner’’ of, shall be deemed to

have ‘‘beneficial ownership’’ of and shall be

deemed to ‘‘beneficially own’’ any securities: