Federal Register / Vol. 73, No. 181 / Wednesday, September 17, 2008 / Notices 53911 

4 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

3Amendment No. 2 replaced the original filing in 

its entirety. 

4See Securities Exchange Act Release No. 58275 

(July 31, 2008), 73 FR 46129. 

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–BATS–2008–002 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–BATS–2008–002. 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, on official business days between 

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

of the filing also will be available for 

inspection and copying at the principal 

office of the Exchange. 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–BATS– 

2008–002 and should be submitted on 

or before October 8, 2008. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.4

Florence E. Harmon, 

Acting Secretary. 

[FR Doc. E8–21708 Filed 9–16–08; 8:45 am] 

BILLING CODE 8010–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–58509; File No. SR– 

NASDAQ–2008–025] 

Self-Regulatory Organizations; The 

NASDAQ Stock Market LLC; Order 

Approving Proposed Rule Change, as 

Modified by Amendment No. 2 Thereto, 

To Establish a System for the 

Purchase of Equity Value Indicator 

Securities 

September 10, 2008. 

I. Introduction 

On March 20, 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 Act of 1934 

(‘‘Exchange Act’’) 1 and Rule 19b–4 

thereunder,2 a proposed rule change to 

establish an Equity Value Indicator 

(‘‘EVI’’) Cross. On July 23, 2008, the 

Nasdaq filed Amendment No. 1 to the 

proposed rule change. On July 30, 2008, 

Nasdaq withdrew Amendment No. 1 

and filed Amendment No. 2 to the 

proposed rule change.3 On August 7, 

2008, the proposed rule change, as 

modified by Amendment No. 2, was 

published for comment in the Federal 

Register.4 The Commission received no 

comments on the proposed rule change. 

This order approves the proposed rule 

change, as modified by Amendment No. 

2. 

II. Background 

Nasdaq has proposed to establish a 

system that will allow its members to 

purchase ‘‘EVI Securities,’’ which 

Nasdaq anticipates will entitle holders 

thereof to specified payments based on 

the exercise of stock options previously 

granted to employees of the issuer. This 

system—designated by Nasdaq the ‘‘EVI 

Cross’’—is designed to generate a 

market-based value of employee stock 

options for purposes of FASB Statement 

of Financial Accounting Standards No. 

123(R). EVI Securities will represent a 

payment obligation of the issuer, but 

will not represent any direct ownership 

interest in the issuing company or in the 

associated employee stock options. The 

issuer will make available to the public 

the number of EVI Securities available 

in the EVI Cross, the limit price (if any), 

and the terms and features of its EVI 

Securities, such as how payments are 

calculated, maturity dates, and form of 

payment. 

Nasdaq is not proposing to list or 

provide a secondary market for EVI 

Securities. An issuer will be able to sell, 

and Nasdaq members will be able to 

buy, EVI Securities in a single auction. 

Nasdaq members would access the EVI 

Cross system through existing interfaces 

for order entry, although the EVI Cross 

system will be separate from the Nasdaq 

Market Center execution system. The 

EVI Cross system is modeled on the 

technology used for Nasdaq’s existing 

crossing mechanisms such as its 

Opening and Closing Crosses, the 

Nasdaq Crossing Network, and its Halt 

Cross. Nasdaq anticipates that an issuer, 

if it chose to use the EVI Cross, would 

do so on the first trading day following 

the grant of employee stock options. 

To initiate an auction, a Nasdaq 

member authorized to act on behalf of 

the issuer of EVI Securities would enter 

an order specifying a quantity of EVI 

Securities to sell; a limit price is 

optional. After 4 p.m. on the day of the 

auction, the sell order could not be 

modified but could be cancelled as late 

as 4:45 p.m. On the day of the auction, 

any Nasdaq member could submit a 

limit order to buy with a designated 

size. Beginning at 4 p.m. and 

periodically thereafter, Nasdaq would 

disseminate information about the 

anticipated execution price, which is 

the single highest price at which the 

maximum amount of interest could be 

paired. Based on this information, 

prospective buyers could submit new 

orders and potentially increase the 

anticipated execution price. Executions 

would occur at 5 p.m., unless the 

system extends the auction process 

because the anticipated execution price 

changes by a designated amount in the 

minute before the designated time of 

execution. If the remaining size of the 

sell order cannot fill all the buy orders 

at the execution price, allocations 

would be made based on time priority. 

All executions would be reported to the 

National Securities Clearing Corporation 

and disseminated via a data feed. 

Nasdaq would charge an issuer tiered 

fees depending on the total value of the 

EVI offering. The fee would be 2 percent 

of the first $10,000,000 of the total value 

of an EVI offering. If the value of the EVI 

offering is above $10,000,000, Nasdaq 

would charge an additional fee of 1.5 

percent of the value of the EVI offering 

above $10,000,000. The total fees, 

however, would not exceed $1,500,000. 

Nasdaq would not assess a fee if the EVI 

Cross is not carried out. Nasdaq 

members would be required to establish 

a new port for connectivity to access the 

EVI Cross system. However, Nasdaq 


pwalker on PROD1PC71 with NOTICES
53912 Federal Register / Vol. 73, No. 181 / Wednesday, September 17, 2008 / Notices 

5 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). 

6 15 U.S.C. 78f(b)(5). 

7See, e.g., Securities Exchange Act Release No. 

50405 (September 16, 2004), 69 FR 57118 

(September 23, 2004) (SR–NASD–2007–071) 

(approving Nasdaq’s Opening Cross); Securities 

Exchange Act Release No. 49406 (March 11, 2004), 

69 FR 12879 (March 18, 2004) (SR–NASD–2003– 

173) (approving Nasdaq’s Closing Cross); Securities 

Exchange Act Release No. 53687 (April 20, 2006), 

71 FR 24878 (April 27, 2006) (SR–NASD–2006–015) 

(approving the Nasdaq Halt Cross); Securities 

Exchange Act Release No. 54101 (July 5, 2006), 71 

FR 39382 (July 12, 2006) (SR–NASD–2005–140) 

(approving the Nasdaq Crossing Network). 

8 15 U.S.C. 78f(b)(4). 

9 15 U.S.C. 78s(b)(2). 

10 17 CFR 200.30–3(a)(12). 

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

2 5 U.S.C. 78a. 

3 17 CFR 40.19b–4. 

4See Securities Exchange Act Release No. 58488 

(September 8, 2008). For a complete list of the 

securities affected by this filing, see SR–NYSE– 

2008–81. 

5See Securities Exchange Act Release No. 51808 

(June 9, 2005), 17 CFR Parts 200, 201, 230, 240, 242, 

249 and 270. 

6See 17 CFR 242.611. 

7See Securities Exchange Act Release No. 55160 

(January 24, 2007), 72 FR 4202 (January 30, 2007) 

(S7–10–04). 

8See 17 CFR 242.612. Rule 612 originally was to 

become effective on August 29, 2005, but the date 

was later extended to January 29, 2006. See 

Securities Exchange Act Release No. 52196 (Aug. 2, 

2005), 70 FR 45529 (Aug. 8, 2005). 

would not assess a fee for that port, and 

Nasdaq has not proposed to assess any 

transaction fees for purchases of EVI 

Securities. 

III. Discussion 

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.5 In particular, the 

Commission finds that the proposed 

rule change is consistent with Section 

6(b)(5) of the Act,6 which requires, 

among other things, that the rules of an 

exchange be designed to prevent 

fraudulent and manipulative acts and 

practices; to promote just and equitable 

principles of trade; to foster cooperation 

and coordination with persons engaged 

in regulating, clearing, settling, 

processing information with respect to, 

and facilitating transactions in 

securities; and, in general, to protect 

investors and the public interest; and 

are not designed to permit unfair 

discrimination between customers, 

issuers, brokers, or dealers. The 

proposal offers a potentially useful 

service to issuers and does not appear 

to raise any issue under the Exchange 

Act. 

The Commission believes that the 

proposed trading rules are consistent 

with the Act and notes that they are 

based on those of Nasdaq’s crossing 

platforms that have previously been 

approved by the Commission.7 The 

Commission finds that the proposed 

fees for the EVI Cross are consistent 

with Section 6(b)(4) of the Act,8 which 

requires that the rules of an exchange 

provide for the equitable allocation of 

reasonable dues, fees, and other charges 

among its members and issuers and 

other persons using its facilities. The 

Commission notes that an issuer will 

not be charged a fee unless an auction 

is carried out, and that Nasdaq has not 

proposed any transaction fees on 

members that purchase EVI Securities in 

an auction. 

This order addresses only whether 

Nasdaq’s rules and fees relating to the 

EVI Cross are consistent with the Act. 

The Commission is offering no opinion 

here as to whether prices of EVI 

Securities derived from auctions 

conducted pursuant to this proposal 

may be employed to value employee 

stock options consistent with FASB 

Statement of Financial Accounting 

Standards No. 123(R), or whether the 

offering of any particular EVI Securities 

is consistent with the federal securities 

laws. 

IV. Conclusion 

It is therefore ordered, pursuant to 

Section 19(b)(2) of the Act,9 that the 

proposed rule change (SR–NASDAQ– 

2008–025), as modified by Amendment 

No. 2, be, and hereby is, approved. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.10

Florence E. Harmon, 

Acting Secretary. 

[FR Doc. E8–21705 Filed 9–16–08; 8:45 am] 

BILLING CODE 8010–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–58522; File No. SR–NYSE– 

2008–83] 

Self-Regulatory Organizations; Notice 

of Filing and Immediate Effectiveness 

of Proposed Rule Change by New York 

Stock Exchange LLC To Resume the 

Operation of NYSE Rule 123D(3) With 

Respect to Trading in the Securities of 

Fannie Mae and Freddie Mac 

Beginning on September 11, 2008, 

Following the Suspension of That Rule 

Pursuant to SR–NYSE–2008–81 

September 11, 2008. 

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

Securities Exchange Act of 1934 (the 

‘‘Act’’) 2 and Rule 19b–4 thereunder,3

notice is hereby given that, on 

September 11, 2008, New York Stock 

Exchange LLC (‘‘NYSE’’ or the 

‘‘Exchange’’) filed with the Securities 

and Exchange Commission (the 

‘‘Commission’’) the proposed rule 

change as described in Items I and II 

below, which Items have been prepared 

by the self-regulatory organization. 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 Exchange proposes to resume the 

operation of NYSE Rule 123D(3) with 

respect to trading in the securities of 

Fannie Mae and Freddie Mac beginning 

on September 11, 2008, following the 

suspension of that rule pursuant to SR– 

NYSE–2008–81.4

II. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

In its filing with the Commission, 

NYSE included statements concerning 

the purpose of, and basis for, the 

proposed rule change. The text of these 

statements may be examined at the 

places specified in Item IV below. NYSE 

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 

Regulation NMS, adopted by the 

Securities and Exchange Commission 

(‘‘SEC’’) in April 2005,5 provides that 

each trading center intending to qualify 

for trade-through protection under 

Regulation NMS Rule 611 6 is required 

to have a Regulation NMS-compliant 

trading system fully operational by 

March 5, 2007 (the ‘‘Trading Phase 

Date’’).7

For stocks priced below $1.00 per 

share, Regulation NMS Rule 612 8

permits markets to accept bids, offers, 

orders and indications of interest in 

increments smaller than $0.01, but not 

less than $0.0001, and to quote and 

trade such stocks in sub-pennies. 

Markets may choose not to accept such 


pwalker on PROD1PC71 with NOTICES