Federal Register / Vol. 73, No. 172 / Thursday, September 4, 2008 / Notices 51669 

3See CBOE Rule 1.1(fff). 

4See Securities Exchange Act Release No. 58327 

(August 7, 2008), 73 FR 47988 (August 15, 2008). 

5 15 U.S.C. 78f(b). 

6 15 U.S.C. 78f(b)(4). 

7 15 U.S.C. 78s(b)(3)(A). 

8 17 CFR 19b–4(f)(2). 

9 17 CFR 200.30–3(a)(12). 

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

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 the 

Statutory Basis for, the Proposed Rule 

Change 

1. Purpose 

On August 7, 2008, the Securities and 

Exchange Commission approved a 

proposed rule change by the CBOE to 

establish a Voluntary Professional 3

designation.4 This designation permits 

non-broker-dealer customers to 

voluntarily have their orders categorized 

as broker-dealer orders for order 

handling, order execution, and cancel 

fee calculation purposes. In the 

aforementioned filing, the Exchange 

represented that it intends to establish, 

via a separate rule filing, a transaction 

fee applicable to Voluntary 

Professionals. 

In accordance with that 

representation, the Exchange now 

proposes to amend its fees schedule to 

establish the transaction fees that would 

be applicable to Voluntary Professional 

orders. Specifically, the Exchange 

proposes to charge Voluntary 

Professional orders a $0.20 per contract 

transaction fee in all equity options and 

options on indexes, exchange-traded 

funds and holding company depository 

receipts (except those listed below). The 

Exchange proposes a $0.30 per contract 

transaction fee in XEO options, a $0.40 

per contract transaction fee in DXL 

options and all volatility index options, 

and a $0.85 per contract transaction fee 

in credit default and credit default 

basket options. 

As reflected in Exhibit 5, the 

Exchange proposes to amend footnote 

14 (index option surcharge fee) to clarify 

that the Surcharge fee would apply to 

Voluntary Professionals. 

2. Statutory Basis 

The Exchange believes the proposed 

rule change is consistent with Section 

6(b) of the Act,5 in general, and furthers 

the objectives of Section 6(b)(4) 6 of the 

Act in particular, in that it is designed 

to provide for the equitable allocation of 

reasonable dues, fees, and other charges 

among CBOE members. The proposed 

fee change would enable the Exchange 

to implement the Voluntary Professional 

designation. 

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 that is not 

necessary or appropriate in furtherance 

of purposes of the Act. 

C. Self-Regulatory Organization’s 

Statement on Comments on the 

Proposed Rule Change Received From 

Members, Participants, or Others 

The Exchange neither solicited nor 

received comments on the proposal. 

III. Date of Effectiveness of the 

Proposed Rule Change and Timing for 

Commission Action 

Because the foregoing proposed rule 

change establishes or changes a due, fee, 

or other charged imposed by the 

Exchange, it has become effective 

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

Act 7 and Rule 19b–4(f)(2) 8 thereunder. 

At any time within 60 days of the filing 

of the proposed rule change the 

Commission may summarily abrogate 

such proposed 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 the proposed rule 

change is 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 SR–CBOE–2008–86 on the 

subject line. 

Paper Comments 

• Send paper comments in triplicate 

to Secretary, Securities and Exchange 

Commission, 100 F Street, NE., 

Washington, DC 20549–1090. 

All submissions should refer to File 

Number SR–CBOE–2008–86. This file 

number should be included on the 

subject line if e-mail is used. To help the 

Commission process and review your 

comments more efficiently, please use 

only one method. The Commission will 

post all comments on the Commission’s 

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

rules/sro.shtml). Copies of the 

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 in 

the Commission’s Public Reference 

Room, 100 F Street, NE., Washington, 

DC 20549, on official business days 

between the hours of 10 a.m. and 3 p.m. 

Copies of such filing also will be 

available for inspection and copying at 

the principal office of CBOE. All 

comments received will be posted 

without change; the Commission does 

not edit personal identifying 

information from submissions. You 

should submit only information that 

you wish to make available publicly. All 

submissions should refer to File 

Number SR–CBOE–2008–86 and should 

be submitted on or before September 25, 

2008. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.9

Florence E. Harmon, 

Acting Secretary. 

[FR Doc. E8–20524 Filed 9–3–08; 8:45 am] 

BILLING CODE 8010–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–58432; File No. SR–

NASDAQ–2008–062] 

Self-Regulatory Organizations; The 

NASDAQ Stock Market LLC; Order 

Approving Proposed Rule Change To 

Clarify the Application of Nasdaq 

Rules When a Listed Company 

Combines With a Non-Nasdaq Entity 

August 27, 2008. 

I. Introduction 

On July 10, 2008, The NASDAQ Stock 

Market LLC (‘‘Nasdaq’’ or ‘‘Exchange’’) 

filed with the Securities and Exchange 

Commission (‘‘Commission’’), pursuant 

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

Exchange Act of 1934 (‘‘Act’’) 1 and Rule 


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51670 Federal Register / Vol. 73, No. 172 / Thursday, September 4, 2008 / Notices 

2 17 CFR 240.19b–4. 

3See Securities Exchange Act Release No. 42848 

(July 17, 2008), 73 FR 42848. 

4Specifically, the rule provides that, in 

determining whether a Reverse Merger has 

occurred, Nasdaq will consider all relevant factors 

including, but not limited to, changes in the 

management, board of directors, voting power, 

ownership, and financial structure of the issuer, as 

well as the nature of the businesses and relative size 

of the Nasdaq issuer and non-Nasdaq entity. 

Securities Exchange Act Release No. 44067 (March 

13, 2001), 66 FR 15515 (March 19, 2001) (SR–

NASD–01–01). 

5Securities Exchange Act Release No. 32264 (May 

4, 1993), 58 FR 27760 (May 11, 1993) (SR–NAS–93–

07). 

6See, e.g., Decision 2002/2003–9 of the Nasdaq 

Listing and Hearing Review Council (December 

2002), available at: http://www.nasdaq.com/about/ 

NLHRCDecisions20022003.pdf. 

7See Nasdaq IM–4350–1, footnote 4. 

8 15 U.S.C. 78f(b)(5). 

9 In approving this proposed rule change, the 

Commission has considered the proposed rule’s 

impact on efficiency, competition, and capital 

formation. See 15 U.S.C. 78c(f). 

10 15 U.S.C. 78s(b)(2). 

11 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

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

4 17 CFR 240.19b–4(f)(2). 

19b–4 thereunder,2 a proposed rule 

change to clarify the application of 

certain Nasdaq listing rules when a 

Nasdaq-listed company combines with a 

non-Nasdaq entity. The proposed rule 

change was published for comment in 

the Federal Register on July 23, 2008.3

The Commission received no comments 

on the proposal. This order approves the 

proposed rule change. 

II. Description of the Proposal 

Nasdaq Rule 4340(a) requires that an 

issuer must apply for initial listing in 

connection with a transaction whereby 

the issuer combines with a non-Nasdaq 

entity, resulting in a change of control 

of the issuer and potentially allowing 

the non-Nasdaq entity to obtain a 

Nasdaq listing. The current Rule refers 

to such a transaction as a ‘‘Reverse 

Merger’’ and provides a non-exclusive 

list of factors that Nasdaq will consider 

to determine if a transaction should be 

considered a Reverse Merger for 

purposes of the Rule.4

Nasdaq notes that Rule 4340(a) was 

originally adopted in 1993 to address 

concerns associated with non-Nasdaq 

entities seeking a ‘‘backdoor listing’’ on 

Nasdaq through a business combination 

involving a Nasdaq issuer.5 In these 

combinations, a non-Nasdaq entity 

would purchase a Nasdaq issuer in a 

transaction that would result in the nonNasdaq entity obtaining a Nasdaq listing 

without qualifying for initial listing or 

being subject to the background checks 

and scrutiny normally applied to issuers 

seeking initial listing. 

While this Rule was originally 

adopted to deal with companies seeking 

a ‘‘backdoor listing’’ by acquiring a 

listed shell company, its language is not 

limited in that regard. Accordingly, 

Nasdaq states that it has applied the rule 

to any transaction where there is a 

change of control potentially allowing a 

non-Nasdaq entity to obtain a Nasdaq 

listing. For example, Nasdaq has 

applied the rule to mergers involving 

operating companies in substantially 

similar businesses and, in appropriate 

cases, to mergers of ‘‘equals,’’ where the 

companies are approximately the same 

size.6 This allows Nasdaq staff to review 

the post-transaction entity, including 

any new officers, directors and control 

persons, before the transaction is 

consummated, thereby allowing staff to 

confirm that the post-transaction entity 

will meet all initial listing criteria and 

that there are no public interest 

concerns. 

However, given the use of the term 

‘‘Reverse Merger’’ within Rule 4340(a), 

and the existence of a footnote in IM–

4350–1 referring to ‘‘backdoor 

listings,’’ 7 Nasdaq states that companies 

have expressed confusion as to the 

scope of the Rule. Nasdaq therefore 

proposes to remove these references 

from Rule 4340(a) and IM–4350–1 and 

instead refer simply to business 

combinations with non-Nasdaq entities 

resulting in a change of control. 

III. Discussion and Commission 

Findings 

After careful review, the Commission 

finds that the proposed rule change is 

consistent with the requirements of the 

Act and the rules and regulations 

thereunder applicable to a national 

securities exchange and, in particular, 

with Section 6(b)(5) of the Act,8 which 

requires, among other things, that the 

rules of a national securities exchange 

be designed to prevent fraudulent and 

manipulative acts and practices, to 

promote just and equitable principles of 

trade, to remove impediments to, and 

perfect the mechanism of, a free and 

open market and a national market 

system and, in general, to protect 

investors and the public interest.9

The Commission believes that the 

proposed rule change will provide 

clarity to, and eliminate any ambiguity 

over, the scope of application of Nasdaq 

Rule 4340. In particular, the revised rule 

language will make clear that an issuer 

must satisfy the initial listing 

requirements whenever it enters into 

any transaction with a non-Nasdaq 

entity, resulting in a change of control 

of the listed company and potentially 

allowing the non-Nasdaq entity to 

obtain a Nasdaq listing. The 

Commission notes that the Rule will 

continue to apply to ‘‘backdoor listings’’

or ‘‘reverse mergers,’’ but that the 

proposed rule change will clarify that 

the Rule also applies to a broader 

category of business combinations that 

result in a change of control of the 

issuer. The Commission believes that, in 

the case of any transaction resulting in 

such a change of control, which 

includes a backdoor listing, it is 

important for Nasdaq to ensure that the 

company meets all initial listing criteria 

and is subject to the scrutiny normally 

applied to issuers seeking initial listing. 

Accordingly, the Commission finds that 

the proposed rule change is consistent 

with the Act. 

IV. Conclusion 

It is therefore ordered, pursuant to 

Section 19(b)(2) of the Act,10 that the 

proposed rule change (SR–NASDAQ–

2008–062) be, and hereby is, approved. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.11

Florence E. Harmon, 

Acting Secretary. 

[FR Doc. E8–20468 Filed 9–3–08; 8:45 am] 

BILLING CODE 8010–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–58435; File No. SR–

NASDAQ–2008–070] 

Self-Regulatory Organizations; The 

NASDAQ Stock Market LLC; Notice of 

Filing and Immediate Effectiveness of 

Proposed Rule Change Regarding 

Fees and Credits for Members Using 

the Nasdaq Crossing Network 

August 27, 2008. 

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 August 

15, 2008, The NASDAQ Stock Market 

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

and Exchange Commission 

(‘‘Commission’’) the proposed rule 

change as described in Items I, II and III 

below, which Items have been prepared 

by Nasdaq. Pursuant to Section 

19(b)(3)(A)(ii) of the Act 3 and Rule 19b–

4(f)(2) thereunder,4 Nasdaq has 

designated this proposal as establishing 

or changing a due, fee, or other charge, 

which renders the proposed rule change 

effective upon filing. This rule proposal, 

which is effective upon filing with the 


sroberts on PROD1PC77 with NOTICES