Document ID: SEC-2006-0557-0001
Agency: sec
Document Type: Notice
Title: Self-regulatory organizations; proposed rule changes: National Association of Securities Dealers, Inc.
Posted Date: 2006-04-28T04:00Z

[Federal Register: April 28, 2006 (Volume 71, Number 82)]
[Notices]               
[Page 25273-25274]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr28ap06-122]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-53696; File No. SR-NASD-2006-047]

 
Self-Regulatory Organizations; National Association of Securities 
Dealers, Inc.; Notice of Filing and Immediate Effectiveness of Proposed 
Rule Change To Modify the NASD Rule 4500 Series To Describe an 
Application of Nasdaq's Authority To Waive Fees and To Make Certain 
Technical Changes

April 21, 2006.
    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 April 4, 2006, the National Association of Securities Dealers, Inc. 
(``NASD''), through its subsidiary, The Nasdaq Stock Market, Inc. 
(``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. Nasdaq has 
designated the proposed rule change as ``constituting a stated policy, 
practice, or interpretation with respect to the meaning, 
administration, or enforcement of an existing rule'' under Section 
19(b)(3)(A)(i) of the Act \3\ and Rule 19b-4(f)(1) thereunder,\4\ which 
renders the proposal effective upon filing with the Commission. The 
Commission is publishing this notice to solicit comments on the 
proposed rule change from interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ 15 U.S.C. 78s(b)(3)(A)(i).
    \4\ 17 CFR 240.19b-4(f)(1).
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    Nasdaq proposes to modify the NASD Rule 4500 series to describe an 
application of Nasdaq's authority to waive fees and to make certain 
technical corrections. Nasdaq will implement the proposed rule change 
immediately.
    The text of the proposed rule change is available at NASD, at the 
Commission, and at NASD's Web site (http://www.nasdaq.com/about/RuleFilingsListings/
 Filings--Listing.stm).

II. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

    In its filing with the Commission, Nasdaq 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. Nasdaq 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
    In January 2005, the Commission approved a proposed rule change by 
Nasdaq to eliminate the entry and application fees under NASD Rules 
4510(a) and 4520(a) for companies listed on a national securities 
exchange (an ``exchange'') that transfer their listing to the Nasdaq 
National Market or the Nasdaq Capital Market.\5\ This filing was based 
on Nasdaq's belief that assessing initial listing fees against issuers 
that have already paid fees to list on another market imposes a burden 
on the competition between exchange markets and markets other than 
exchange markets, a competition that is one of the central goals of the 
national market system.\6\ In approving that proposed rule change, the 
Commission stated its belief that such a program ``may ultimately 
benefit issuers and investors because competition among listing markets 
has the potential to enhance the quality of services that listing 
markets provide.\7\
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    \5\ Securities Exchange Act Release No. 51004 (January 10, 
2005), 70 FR 2917 (January 18, 2005) (SR-NASD-2004-140).
    \6\ 15 U.S.C. 78k-1.
    \7\ See footnote 5, supra.
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    Based on recent experience with companies considering switching 
from other markets, Nasdaq has determined that companies are also 
reluctant to switch markets during the beginning and middle of the 
year, because they will have already paid a non-refundable annual 
listing fee to another market. As a result, Nasdaq proposes to allow 
issuers a credit in the pro-rated amount of any annual listing fees 
paid to the other exchange, for the period of time after the transfer. 
This credit will be used to offset the annual fee otherwise payable to 
Nasdaq for that period under NASD Rule 4510(c), 4510(d), or 4520(c), 
and cannot exceed that fee.
    In light of a switching issuer's prior payment to another market, 
Nasdaq believes that providing such a credit to switching issuers is 
entirely consistent with an equitable allocation of listing fees. 
Further, Nasdaq notes that it does not expect the financial impact of 
this proposed rule change to be material to Nasdaq, as issuers will 
only receive a one year credit and, even with the proposed rule change 
in place, a change in listing venue is a major step for an issuer, and 
therefore Nasdaq does not expect that the number of switching issuers 
in a given time frame will be sufficient to have a material effect on 
Nasdaq's financial resources or commitment to its regulatory oversight 
of the listing process or its regulatory programs. Further, Nasdaq 
anticipates that it will make up any short-term costs through the long-
term receipt of applicable listing fees.
    In addition, Nasdaq proposes to codify that a credit is available 
to an issuer that previously paid a dual listing annual fee and 
determines to cease its dual listing and remain listed on Nasdaq. As in 
the case of a company transferring between the Nasdaq National Market 
and the Nasdaq Capital Market,\8\ such an issuer will be allowed a 
credit against the annual fee otherwise due in the year of the transfer 
for the portion of the dual list annual fee attributable to the period 
of time following the transfer.
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    \8\ NASD Rules 4510(c)(3), 4510(d)(6), and 4520(c)(5).
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    While NASD Rules 4e510(c)(2), 4510(d)(3), and 4520(c)(3) provide 
Nasdaq with the discretion to waive all or part of the annual listing 
fees, Nasdaq has determined to codify the existence of these credits 
given their applicability to any issuer switching from an exchange or 
terminating a dual listing.
    Nasdaq also proposes to modify the text of NASD Rules 4510(c)(5) 
and 4520(c)(8) to clarify that the annual fee for an ADR or closed-end 
fund that is dually listed on the Nasdaq National Market, and a closed-
end fund that is

[[Page 25274]]

dually listed on the Nasdaq Capital Market, is $15,000, the same as for 
any other dually listed security.
    Finally, Nasdaq proposes to make technical corrections to more 
clearly describe the termination of a dual listing, correct an error in 
the numbering of the subparagraphs of NASD Rule 4520(a), correct a 
reference in NASD Rule 4520(c)(8), and to delete IM-4500-2 and IM-4500-
3, which no longer have any applicability.
2. Statutory Basis
    Nasdaq believes that the proposed rule change is consistent with 
the provisions of Section 15A of the Act,\9\ in general, and with 
Sections 15A(b)(5) and (6) of the Act,\10\ in particular, in that it is 
designed to provide an equitable allocation of reasonable dues, fees, 
and charges among members and issuers and other persons using any 
facility or system which NASD operates or controls, and to remove 
impediments to and perfect the mechanism of a free and open market and 
a national market system. The proposed rule change will assure that an 
issuer is not required to pay duplicative fees to multiple markets, 
thereby removing an impediment to issuers transferring from another 
market to Nasdaq.
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    \9\ 15 U.S.C. 78o-3.
    \10\ 15 U.S.C. 78o-3(b)(5) and (6).
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B. Self-Regulatory Organization's Statement on Burden on Competition

    Nasdaq does not believe that the proposed rule change will result 
in any burden on competition that is not necessary or appropriate in 
furtherance of the purposes of the Act, as amended.

C. Self-Regulatory Organization's Statement on Comments on the Proposed 
Rule Change Received From Members, Participants, or Others

    Written comments were neither solicited nor received.

III. Date of Effectiveness of the Proposed Rule Change and Timing for 
Commission Action

    The proposed rule change has become effective pursuant to Section 
19(b)(3)(A)(i) of the Act \11\ and Rule 19b-4(f)(1) thereunder,\12\ in 
that the proposed rule change constitutes a stated policy, practice, or 
interpretation with respect to the meaning, administration, or 
enforcement of an existing rule of NASD. At any time within 60 days of 
the filing of the 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.
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    \11\ 15 U.S.C. 78s(b)(3)(A)(i).
    \12\ 17 CFR 240.19b-4(f)(1).
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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 rule-comments@sec.gov. Please include 

File Number SR-NASD-2006-047 on the subject line.

Paper Comments

     Send paper comments in triplicate to Nancy M. Morris, 
Secretary, Securities and Exchange Commission, 100 F Street, NE., 
Washington, DC 20549-1090.

All submissions should refer to File Number SR-NASD-2006-047. 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. Copies of such 
filing also will be available for inspection and copying at the 
principal office of NASD.
    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-NASD-2006-047 
and should be submitted on or before May 19, 2006.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\13\
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    \13\ 17 CFR 200.30-3(a)(12).
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Nancy M. Morris,
Secretary.
[FR Doc. E6-6410 Filed 4-27-06; 8:45 am]

BILLING CODE 8010-01-P