Document ID: SEC-2007-0869-0001
Agency: sec
Document Type: Notice
Title: Self-regulatory organizations; proposed rule changes: NASDAQ Stock Market LLC
Posted Date: 2007-06-27T04:00Z

[Federal Register: June 27, 2007 (Volume 72, Number 123)]
[Notices]               
[Page 35278-35279]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr27jn07-104]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-55924; File No. SR-NASDAQ-2007-050]

 
Self-Regulatory Organizations; The NASDAQ Stock Market LLC; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change 
and Amendment No. 1 To Modify the Minimum Shareholder Requirement for 
Initial Listing on the Nasdaq Global Select Market

 June 19, 2007.
    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 10, 2007, The NASDAQ Stock Market LLC (``Nasdaq'') filed with 
the Securities and Exchange Commission (``Commission'') the proposed 
rule change as described in Items I and II below, which Items have been 
substantially prepared by Nasdaq. On June 19, 2007, Nasdaq filed 
Amendment No. 1 to the proposed rule change.\3\ Nasdaq has filed this 
proposal pursuant to Section 19(b)(3)(A) of the Act \4\ and Rule 19b-
4(f)(6) thereunder,\5\ which renders it effective upon filing with the 
Commission. The Commission is publishing this notice, as amended, 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\ Partial Amendment No. 1 replaced a footnote in the original 
filing. See infra note 8.
    \4\ 15 U.S.C. 78s(b)(3)(A).
    \5\ 17 CFR 240.19b-4(f)(6).
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I. Self-Regulatory Organization's Statement of the Terms of the 
Substance of the Proposed Rule Change

    Nasdaq proposes to modify the minimum shareholder requirement for 
initial listing on the Nasdaq Global Select Market.
    The text of the proposed rule change is below. Proposed new 
language is in italics; proposed deletions are in brackets.\6\
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    \6\ Changes are marked to the rule text that appears in the 
electronic manual of Nasdaq found at http://www.complinet.com/nasdaq
.

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* * * * *

4426.  Nasdaq Global Select Market Listing Requirements

    (a) No change.
    (b) Liquidity Requirements
    (1) The security must demonstrate either:
    (A)-(B) No change.
    (C) A minimum of 450 beneficial round lot shareholders[, in the 
case of:
    (i) An issuer listing in connection with a court-approved 
reorganization under the federal bankruptcy laws or comparable foreign 
laws; or
    (ii) An issuer that is affiliated with another company listed on 
the Global Select Market].
    (2)-(3) No change.
    (c)-(f) No change.
* * * * *

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
    Rule 4426(b) sets forth the liquidity requirements for the Nasdaq 
Global Select Market. Among the requirements set out in that rule is 
the requirement that for initial listing on the Global Select Market, a 
security must have either (i) 2,200 beneficial shareholders or (ii) 550 
beneficial shareholders and a minimum trading volume of at least 1.1 
million shares per month over the prior year. In addition, companies 
listing in connection with a court-approved reorganization and 
companies affiliated with other Global Select Market companies can list 
on the Global Select Market if their security has a minimum of 450 
beneficial shareholders.
    These requirements for the Global Select Market were adopted to be 
similar to, but higher than, the requirements for initial listing on 
the New York Stock Exchange (``NYSE''). In August 2006, the NYSE 
revised its listing standards to reduce the required number of round 
lot holders for initial listing from 2,000 to 400.\7\ The NYSE stated 
that it made this change based on changes in the composition of the 
investor population in the time since it adopted the 2,000 holder 
requirement, such that fewer shareholders are necessary to provide 
liquidity in a security.
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    \7\ See Securities Exchange Act Release No. 54350 (August 22, 
2006), 71 FR 51259 (August 29, 2006) (SR-NYSE-2006-64).
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    Given the change to the NYSE requirements, Nasdaq now proposes to 
modify the liquidity requirement for the Global Select Market to permit 
a security to list if the security has a minimum of 450 beneficial 
round lot shareholders and satisfies the other requirements for initial 
listing.\8\ Nasdaq notes that this requirement remains higher than the 
revised NYSE requirement and the requirement for listing on the Nasdaq 
Global Market. Given Nasdaq's experience with the 400 round lot holder 
requirement for initial and continued listing on the Nasdaq

[[Page 35279]]

Global Market, Nasdaq does not believe that this change would result in 
any adverse impact on liquidity or on investors. Further, Nasdaq notes 
that the revised requirements exceed the requirements set forth in Rule 
3a51-1(a)(2) under the Act.\9\
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    \8\ In addition to the proposed criteria described above, Nasdaq 
would maintain the existing alternative criteria to permit listing a 
security that has either: (i) 2,200 beneficial shareholders; or (ii) 
550 beneficial shareholders and a minimum trading volume of at least 
1.1 million shares per month over the prior year. Nasdaq proposes to 
eliminate the alternative requirement for companies emerging from 
bankruptcy or affiliated with another listed company. Thus, as 
proposed, all companies, including companies emerging from 
bankruptcy and companies affiliated with another listed company, 
would be required to meet one of the three alternative standards.
    \9\ 17 CFR 240.3a51-1(a)(2) (excluding from the term ``penny 
stock'' certain securities).
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2. Statutory Basis
    Nasdaq believes that the proposed rule change is consistent with 
the provisions of Section 6 of the Act,\10\ in general, and with 
Section 6(b)(5) of the Act,\11\ in particular, in that the proposal is 
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, 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. Nasdaq 
believes the proposed change would continue to maintain appropriate 
minimum liquidity requirements for companies seeking to list on the 
Nasdaq Global Select Market, while also recognizing changes in the 
market that allow such liquidity with fewer shareholders.
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    \10\ 15 U.S.C. 78f.
    \11\ 15 U.S.C. 78f(b)(5).
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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

    Because the foregoing proposed rule change does not: (i) 
Significantly affect the protection of investors or the public 
interest; (ii) impose any significant burden on competition; and (iii) 
by its terms, become operative for 30 days from the date on which it 
was filed, or such shorter time as the Commission may designate if 
consistent with the protection of investors and the public interest, it 
has become effective pursuant to Section 19(b)(3)(A) of the Act \12\ 
and Rule 19b-4(f)(6) thereunder.\13\
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    \12\ 15 U.S.C. 78s(b)(3)(A).
    \13\ 17 CFR 240.19b-4(f)(6).
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    A proposed rule change filed under Rule 19b-4(f)(6) normally may 
not become operative prior to 30 days after the date of filing. 
However, Rule 19b-4(f)(6)(iii) \14\ permits the Commission to designate 
a shorter time if such action is consistent with the protection of 
investors and the public interest. Nasdaq has requested that the 
Commission waive the 30-day operative delay. The Commission believes 
that waiver of the 30-day operative delay is consistent with the 
protection of investors and the public interest. Specifically, the 
Commission believes that the proposal would allow Nasdaq to have 
similar holder requirements as other exchanges and the Nasdaq Global 
Market.\15\ Accordingly, the Commission designates the proposal to be 
effective and operative upon filing with the Commission.\16\
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    \14\ 17 CFR 240.19b-4(f)(6)(iii).
    \15\ See note 7 supra and accompanying text.
    \16\ For purposes only of waiving the operative delay for this 
proposal, the Commission has considered the proposed rule's impact 
on efficiency, competition, and capital formation. See 15 U.S.C. 
78c(f).
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    At any time within 60 days of the filing of the amended 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.\17\
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    \17\ 15 U.S.C. 78s(b)(3)(C). For purposes of calculating the 60-
day period within which the Commission may summarily abrogate the 
proposal, the Commission considers the period to commence on June 
19, 2007, the date on which Nasdaq submitted Amendment No. 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-NASDAQ-2007-050 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-NASDAQ-2007-050. 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 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-NASDAQ-2007-050 and should 
be submitted on or before July 18, 2007.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\18\
Florence E. Harmon,
Deputy Secretary.
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    \18\ 17 CFR 200.30-3(a)(12).
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 [FR Doc. E7-12392 Filed 6-26-07; 8:45 am]

BILLING CODE 8010-01-P