Federal Register / Vol. 70, No. 195 / Tuesday, October 11, 2005 / Notices 59097 

2 17 CFR 240.12d2–2(d). 

3 15 U.S.C. 781(b). 

4 15 U.S.C. 781(g). 

5 17 CFR 200.30–3(a)(1). 

1See Letter to Robert L.D. Colby, Deputy Director, 

Division of Market Regulation (‘‘Division’’), SEC, 

from Edward S. Knight, Executive Vice President 

and General Counsel, Nasdaq, dated August 15, 

2005 (‘‘Amendment No. 4’’). 

2 15 U.S.C. 78(f). 

3See Letter to Robert L.D. Colby, Deputy Director, 

Division, SEC, from Edward S. Knight, Executive 

Vice President and General Counsel, Nasdaq, dated 

September 23, 2005 (‘‘Amendment No. 5’’). In 

Amendment No. 5, Nasdaq corrected typographical 

errors that were submitted in Amendment No. 4. 

4Complete copies of Nasdaq’s Amendment Nos. 

4 and 5 to its Form 1 are available in the 

Commission’s Public Reference Room, File No. 10–

131. Portions of Nasdaq’s Form 1 as amended by 

Amendment Nos. 4 and 5, including Nasdaq’s rules, 

are available on the Commission’s Internet Web site 

(http://www.sec.gov). 

5See Exchange Act Release No. 44396 (June 7, 

2001), 66 FR 31952 (‘‘Original Notice’’). The 

Commission extended the comment period for 

Nasdaq’s Original Notice for 30 days. See Exchange 

Act Release No. 44625 (July 31, 2001), 66 FR 41056 

(August 6, 2001). 

6See Letters from Edward S. Knight, Executive 

Vice President and General Counsel, Nasdaq, to 

Annette Nazareth, Director, Division, SEC, dated 

November 13, 2001 (‘‘Amendment No. 1’’); Jonathan 

G. Katz, Secretary, SEC, dated December 5, 2001 

(‘‘Amendment No. 2’’); and Annette Nazareth, 

Director, Division, SEC, dated January 8, 2002 

(‘‘Amendment No. 3’’). 

7The comment letters are available in the 

Commission’s Public Reference Room and some of 

these comment letters are available on the 

Commission’s Internet Web site (http:// 

www.sec.gov). 

8Pursuant to Rule 3a1–1, an organization, 

association, or group of persons shall be exempt 

from the definition of ‘‘exchange’’ if it is operated 

by a national securities association. Unless another 

exemption from the definition of ‘‘exchange’’

applies, such organization, association, or group of 

persons that otherwise meets the definition of an 

‘‘exchange’’ must register as such with the 

Commission. 17 CFR 240.3a1–1. 

9For a complete description of NASD’s current 

ownership in Nasdaq see Exhibit K to the Form 1. 

thereunder,2 to withdraw its common 

stock, $.01 par value (‘‘Security’’), from 

listing and registration on the American 

Stock Exchange LLC (‘‘Amex’’). 

On September 8, 2005, the Board of 

Directors (‘‘Board’’) of the Issuer 

approved resolutions to withdraw the 

Security from listing and registration on 

Amex. The Issuer stated the following 

reasons, among others, factored into the 

Board’s decision to withdraw the 

Security from Amex. First, the ongoing 

costs and expenses, both direct and 

indirect, associated with the preparation 

and filing of the Issuer’s periodic reports 

with the Commission. The Issuer 

expects to save each year approximately 

the equivalent of the current quarterly 

dividend in out-of-pocket accounting, 

legal, and other costs. Second, the 

substantial increase in costs and 

expenses that the Issuer expects to incur 

in 2006, and thereafter as a public 

company in light of the Sarbanes-Oxley 

Act of 2002, particularly in complying 

with Section 404 of such act. Third, 

going private will enable management to 

focus more time on running the 

business rather than on Commission 

compliance. Fourth, liquidity of the 

Security on Amex has been limited, and 

volatility has been greater than the 

Issuer believes is warranted. 

The Issuer stated that it has met the 

requirements of Amex’s rules governing 

an issuer’s voluntary withdrawal of a 

security from listing and registration by 

complying with all the applicable laws 

in effect in Delaware, the State in which 

it is incorporated, and by providing 

Amex with the required documents for 

withdrawal from Amex. 

The Issuer’s application relates solely 

to the withdrawal of the Security from 

listing on Amex and from registration 

under Section 12(b) of the Act,3 and 

shall not affect its obligation to be 

registered under Section 12(g) of the 

Act.4

Any interested person may, on or 

before October 28, 2005, comment on 

the facts bearing upon whether the 

application has been made in 

accordance with the rules of Amex, and 

what terms, if any, should be imposed 

by the Commission for the protection of 

investors. All comment letters may be 

submitted by either of the following 

methods: 

Electronic Comments 

• Use the Commission’s Internet 

comment form (http://www.sec.gov/ 

rules/delist.shtml); or 

• Send an e-mail to rulecomments@sec.gov. Please include the 

File Number 1–31514 or; 

Paper Comments 

• Send paper comments in triplicate 

to Jonathan G. Katz, Secretary, 

Securities and Exchange Commission, 

100 F Street, NE., Washington, DC 

20549–9303. 

All submissions should refer to File 

Number 1–31514. This file number 

should be included on the subject line 

if e-mail is used. To help us process and 

review your comments more efficiently, 

please use only one method. The 

Commission will post all comments on 

the Commission’s Internet Web site 

(http://www.sec.gov/rules/delist.shtml). 

Comments are also available for public 

inspection and copying in the 

Commission’s Public Reference Room. 

All comments received will be posted 

without change; we do not edit personal 

identifying information from 

submissions. You should submit only 

information that you wish to make 

available publicly. 

The Commission, based on the 

information submitted to it, will issue 

an order granting the application after 

the date mentioned above, unless the 

Commission determines to order a 

hearing on the matter. 

For the Commission, by the Division of 

Market Regulation, pursuant to delegated 

authority.5

Jonathan G. Katz, 

Secretary. 

[FR Doc. E5–5560 Filed 10–7–05; 8:45 am] 

BILLING CODE 8010–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–52559; File No. 10–131] 

The Nasdaq Stock Market Inc., Notice 

of Filing of Amendment Nos. 4 and 5 

to Its Application for Registration as a 

National Securities Exchange Under 

Section 6 of the Securities Exchange 

Act of 1934 

October 4, 2005. 

On August 15, 2005, The Nasdaq 

Stock Market Inc. (‘‘Nasdaq’’) submitted 

to the Securities and Exchange 

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

Amendment No. 4 1 to its application for 

registration as a national securities 

exchange (‘‘Form 1’’) under Section 6 2

of the Securities Exchange Act of 1934 

(‘‘Exchange Act’’). Nasdaq’s 

Amendment No. 4 supersedes and 

replaces Nasdaq’s original filing and 

intervening amendments. On September 

23, 2005, Nasdaq filed Amendment No. 

5 to its Form 1.3 The Commission is 

publishing this notice to solicit 

comments on Nasdaq’s Form 1 as 

amended by Amendment Nos. 4 and 5. 4

I. Background 

Nasdaq originally submitted its Form 

1 on March 15, 2001, which the 

Commission published for comment in 

the Federal Register on June 13, 2001.5

Nasdaq subsequently amended its Form 

1 three times.6 In response to Nasdaq’s 

Form 1 and its amendments, the 

Commission has received 82 comment 

letters.7

Nasdaq currently is exempt from the 

definition of an ‘‘exchange’’ under Rule 

3a1–1 because it is operated by the 

National Association of Securities 

Dealers, Inc. (‘‘NASD’’).8 In order for 

NASD to relinquish regulatory control 

of Nasdaq, Nasdaq must register as a 

national securities exchange.9

Accordingly, Nasdaq has filed a 

completely new Form 1, including all of 

59098 Federal Register / Vol. 70, No. 195 / Tuesday, October 11, 2005 / Notices 

10 In December 2004, Nasdaq filed with the 

Commission a proposed rule change to amend the 

rules that govern how executions occur in the 

Nasdaq Market Center to eliminate the rules that 

permit executions to occur outside of price/time 

priority. See Exchange Act Release No. 50845 

(December 13, 2004), 69 FR 76022 (December 20, 

2004) (‘‘December Proposal’’). Specifically, Nasdaq 

proposed to eliminate the execution algorithm that 

requires orders to be internalized in the Nasdaq 

Market Center, the Directed Order process, and the 

use of preferenced orders. The Commission 

published this proposal and Nasdaq has asked the 

Commission to consider approval of this proposal 

in connection with its application to register as a 

national securities exchange. Subsequent to the 

December Proposal, Nasdaq filed another proposed 

rule change to eliminate immediately the Directed 

Order Process, which the Commission approved on 

July 28, 2005. See Exchange Act Release No. 52148, 

70 FR 44711 (August 3, 2005). These changes to the 

rules that govern the execution of orders in the 

Nasdaq Market Center are reflected in Amendment 

No. 4. In addition, the Over-the-Counter Bulletin 

Board is no longer part of Nasdaq’s exchange 

application and will remain with NASD. See NASD 

Proposal, infra note 13. 

11Nasdaq acquired Brut in September 2004 and 

the rules governing the execution of transactions on 

Brut were approved by the Commission in March 

2005. See Exchange Act Release No. 51326 (March 

7, 2005), 70 FR 12521 (March 14, 2005). Nasdaq has 

included the rules governing transactions executed 

in the Brut system as part of Amendment No. 4 to 

its Form 1. The Commission notes that Nasdaq has 

entered into an agreement to purchase Instinet, 

which will result in Nasdaq’s ownership of Inet. 

This transaction has not closed and thus, Nasdaq 

has not submitted the rules governing the operation 

of Inet with this latest amendment. 

12See December Proposal, supra note 10. 

13See Exchange Act Release No. 52049 (July 15, 

2005), 70 FR 42398 (July 22, 2005) (‘‘NASD 

Proposal’’). 

14See proposed Nasdaq Rule 6950 Series. 

15See proposed Nasdaq Rule 6954(c). NASD has 

proposed a corresponding change to its OATS rules. 

See NASD Proposal, supra note 13. 

16See NASD Proposal, supra note 13. 

17See proposed Article III, Section 5(e) of the 

Nasdaq Exchange By-Laws. 

18See proposed Article IV, Section 7 of the 

Nasdaq Exchange By-Laws. 

19 15 U.S.C. 78f(b)(1). 

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

21 15 U.S.C. 78j(a). 

22 15 U.S.C. 78k. 

23 15 U.S.C. 78k-1. 

24 17 CFR 242.602(a)(1)(ii), Rule 242.601. 

25 15 U.S.C. 78o-3. 

the required exhibits, to register as a 

national securities exchange. 

II. Nasdaq’s Amended Exchange 

Registration 

Nasdaq filed Amendment No. 4 to, 

among other things, address concerns 

raised by its original application.10

Specifically, Amendment No. 4 would 

limit the ambit of Nasdaq’s proposed 

exchange to those transactions that 

occur in the Nasdaq Market Center, 

formerly known as SuperMontage, and 

Brut.11 Nasdaq also has proposed that 

all transactions on the Nasdaq Market 

Center be executed in price/time 

priority.12 Trades that are executed in 

the internal systems of NASD members 

would be reported under NASD rules to 

NASD’s Alternative Display Facility 

(‘‘ADF’’) or a proposed new NASD 

facility. This new facility would be 

jointly owned by Nasdaq and NASD but 

would be a facility of NASD and thus 

would be subject to NASD’s exclusive 

regulatory control.13

Nasdaq proposes to require its 

members to comply with NASD’s Order 

Audit Trail (‘‘OATS’’) requirements. To 

do so, Nasdaq has carried over certain 

OATS rules into its own rulebook and 

has incorporated by reference other 

NASD OATS requirements.14 In 

addition, Nasdaq members would be 

required to append an identifier to all 

orders entered into Nasdaq for purposes 

of tracking the order in OATS.15

Because Nasdaq will require its 

members to report order information to 

OATS, Nasdaq will have access to 

certain OATS data for regulatory 

purposes. The Commission requests 

comment on the extent to which Nasdaq 

should be able to use OATS data for 

non-regulatory purposes. The 

Commission further requests comment 

on whether Nasdaq should have access 

to OATS data regarding: (1) all orders its 

members receive, including those orders 

that are routed to markets other than 

Nasdaq; and (2) reports of executions by 

its members that are reported to the new 

NASD trade reporting facility.16

To oversee the performance of its 

regulatory obligations, Nasdaq has 

proposed to create a fully-independent 

committee of the exchange’s Board of 

Directors, the Regulatory Oversight 

Committee (‘‘ROC’’).17 This committee 

will consist of three Public Directors 

that satisfy the definition ‘‘independent 

director’’ set forth in proposed Nasdaq 

Rule 4200. The ROC would, among 

other things, be responsible for 

monitoring the adequacy and 

effectiveness of Nasdaq’s regulatory 

program. In addition, the ROC would 

oversee the Chief Regulatory Officer 

(‘‘CRO’’) by periodically meeting with 

the CRO in executive session to 

consider regulatory issues. The ROC 

also would be informed about the 

compensation of the CRO, and his 

promotion or termination (including 

reasons). Finally, the regulatory budget 

would be presented to the ROC so that 

its members may monitor the adequacy 

of resources available for Nasdaq’s 

regulatory program. 

Nasdaq proposes that its CRO have 

general supervision of the regulation of 

the exchange, including overseeing the 

proposed exchange’s surveillance, 

examination, and enforcement 

functions, and administering a 

regulatory services agreement.18 The 

CRO would be an executive vice 

president or senior vice president that 

reports to the Chief Executive Officer, 

and could also serve as Nasdaq’s 

General Counsel. 

The Commission requests comment 

on whether Nasdaq’s proposed 

regulatory structure, including the ROC 

and CRO, is consistent with Section 

6(b)(1) of the Exchange Act,19 which 

requires an exchange to be so organized 

and have the capacity to carry out the 

purposes of the Exchange Act and 

comply, and enforce compliance by its 

members and persons associated with 

its members, with the Exchange Act, the 

rules thereunder, and the exchange’s 

rules. Specifically, does Nasdaq’s 

proposed structure insulate its 

regulatory function from its market and 

other commercial operations so that it 

may carry out its regulatory obligations 

under the Exchange Act? 

The Form 1 provides detailed 

information about Nasdaq and how it 

proposes to satisfy the requirements of 

the Exchange Act. The Commission 

shall grant such registration if it finds 

that the requirements of the Exchange 

Act and the rules and regulations 

thereunder with respect to Nasdaq are 

satisfied.20 In addition to the issues 

discussed above, there are a number of 

implications to Nasdaq’s separation 

from NASD and its application to 

register and operate as an exchange. For 

example, while Section 10(a) of the 

Exchange Act 21 does not apply to the 

trading of Nasdaq stocks, if the 

Commission approves Nasdaq’s 

registration as an exchange, Section 

10(a) will apply to such trading, absent 

an exemption. In addition, if Nasdaq 

becomes an exchange, its members 

would be subject to Section 11 of the 

Exchange Act.22 Moreover, Nasdaq must 

demonstrate that it can satisfy its 

obligations under Section 11A of the 

Exchange Act.23

Nasdaq’s application to register as a 

national securities exchange also has 

implications for NASD, which, as a 

national securities association, will 

continue to be required to collect bids, 

offers, quotation sizes and transaction 

reports from those entities that wish to 

trade listed securities, including Nasdaq 

securities, otherwise than on a national 

securities exchange.24 Under Section 

15A of the Exchange Act, NASD must 

have a quotation reporting facility for 

non-Nasdaq exchange-listed 

securities.25

Federal Register / Vol. 70, No. 195 / Tuesday, October 11, 2005 / Notices 59099 

1 15 U.S.C. 78l(d). 

2 17 CFR 240.12d2–2(d). 

3 15 U.S.C. 78l(b). 

4 15 U.S.C. 78l(g). 5 17 CFR 200.30–3(a)(1). 

III. Solicitation of Comments 

Interested persons are invited to 

submit written data, views, and 

arguments concerning the foregoing, 

including whether Nasdaq’s 

Amendment Nos. 4 and 5 to its Form 1 

are consistent with the Act. Comments 

may be submitted by any of the 

following methods: 

Electronic Comments 

• Use the Commission’s Internet 

comment form (http://www.sec.gov/ 

rules/sro.shtml); or 

• Send an e-mail to rulecomments@sec.gov. Please include File 

Number 10–131 on the subject line. 

Paper Comments 

• Send paper comments in triplicate 

to Jonathan G. Katz, Secretary, 

Securities and Exchange Commission, 

Station Place, 100 F Street, NE., 

Washington, DC 20549–9303. 

All submissions should refer to File 

Number 10–131. This file number 

should be included on the subject line 

if e-mail is used. To help the 

Commission process and review your 

comments more efficiently, please use 

only one method. The Commission will 

post all comments on the Commission’s 

Internet Web site (http://www.sec.gov/ 

rules/other.shtml). Copies of the 

submission, all subsequent 

amendments, all written statements 

with respect to Nasdaq’s Form 1 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 in 

the Commission’s Public Reference 

Room. All comments received will be 

posted without change; the Commission 

does not edit personal identifying 

information from submissions. You 

should submit only information that 

you wish to make available publicly. 

The Commission requests that 

commenters focus on issues raised in 

Nasdaq’s Form 1, File No. 10–131, when 

submitting comments on this notice. All 

submissions should refer to File 

Number 10–131 and should be 

submitted on or before November 10, 

2005. 

By the Commission. 

Jonathan G. Katz, 

Secretary. 

[FR Doc. 05–20314 Filed 10–7–05; 8:45 am] 

BILLING CODE 8010–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[File No. 1–10382] 

Issuer Delisting; Notice of Application 

of Valley Forge Scientific Corp. To 

Withdraw Its Common Stock, No Par 

Value, From Listing and Registration 

on the Boston Stock Exchange, Inc. 

October 4, 2005. 

On September 16, 2005, Valley Forge 

Scientific, Corp., a Pennsylvania 

corporation (‘‘Issuer’’), filed an 

application with the Securities and 

Exchange Commission (‘‘Commission’’), 

pursuant to Section 12(d) of the 

Securities Exchange Act of 1934 

(‘‘Act’’) 1 and Rule 12d2–2(d) 

thereunder,2 to withdraw its common 

stock, no par value (‘‘Security’’), from 

listing and registration on the Boston 

Stock Exchange, Inc. (‘‘BSE’’). 

The Board of Directors (‘‘the Board’’) 

of the Issuer approved resolutions on 

September 12, 2005 to withdraw the 

Security from listing on BSE. The Issuer 

stated that the Board decided to 

withdraw the Security from BSE for the 

following reasons: (i) The Security has 

been, and expects to continue to be, 

traded on The Nasdaq SmallCap Market 

(‘‘Nasdaq’’); and (ii) additionally, the 

Security has not been actively traded on 

BSE during the last ten years. Therefore, 

the Board determined to delist the 

Security from BSE for administrative 

efficiency. 

The Issuer stated in its application 

that it has complied with applicable 

rules of BSE by complying with all 

applicable laws in the Commonwealth 

of Pennsylvania, the State in which the 

Issuer is incorporated, and by providing 

BSE with the required documents 

governing the withdrawal of securities 

from listing and registration on BSE. 

The Issuer’s application relates solely to 

the withdrawal of the Security from 

listing on BSE and from registration 

under Section 12(b) of the Act,3 and 

shall not affect its obligation to be 

registered under Section 12(g) of the 

Act.4

Any interested person may, on or 

before October 28, 2005 comment on the 

facts bearing upon whether the 

application has been made in 

accordance with the rules of BSE, and 

what terms, if any, should be imposed 

by the Commission for the protection of 

investors. All comment letters may be 

submitted by either of the following 

methods: 

Electronic Comments 

• Send an e-mail to rulecomments@sec.gov. Please include the 

File Number 1–10382 or; 

Paper Comments 

• Send paper comments in triplicate 

to Jonathan G. Katz, Secretary, 

Securities and Exchange Commission, 

100 F Street, NE., Washington, DC 

20549–9303. 

All submissions should refer to File 

Number 1–10382. This file number 

should be included on the subject line 

if e-mail is used. To help us process and 

review your comments more efficiently, 

please use only one method. The 

Commission will post all comments on 

the Commission’s Internet Web site 

(http://www.sec.gov/rules/delist.shtml). 

Comments are also available for public 

inspection and copying in the 

Commission’s Public Reference Room. 

All comments received will be posted 

without change; we do not edit personal 

identifying information from 

submissions. You should submit only 

information that you wish to make 

available publicly. 

The Commission, based on the 

information submitted to it, will issue 

an order granting the application after 

the date mentioned above, unless the 

Commission determines to order a 

hearing on the matter. 

For the Commission, by the Division of 

Market Regulation, pursuant to delegated 

authority.5

Jonathan G. Katz, 

Secretary. 

[FR Doc. E5–5559 Filed 10–7–05; 8:45 am] 

BILLING CODE 8010–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

Sunshine Act Meeting 

FEDERAL REGISTER CITATION OF PREVIOUS

ANNOUNCEMENT: [To be published]. 

STATUS: Closed meeting. 

PLACE: 100 F Street, NE., Washington, 

DC. 

ANNOUNCEMENT OF ADDITIONAL MEETING: 

Additional meeting. 

An additional Closed Meeting has 

been scheduled for Wednesday, October 

12, 2005 at 9 a.m. 

Commissioners and certain staff 

members who have an interest in the 

matter will attend the closed meeting. 

The General Counsel of the 

Commission, or his designee, has 

certified that, in his opinion, one or 

more of the exemptions set forth in 5