Document ID: SEC-2012-1913-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: NASDAQ Stock Market LLC
Posted Date: 2012-11-21T05:00Z

[Federal Register Volume 77, Number 225 (Wednesday, November 21, 2012)]
[Notices]
[Pages 69911-69912]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2012-28299]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-68238; File No. SR-NASDAQ-2012-128]

Self-Regulatory Organizations; The NASDAQ Stock Market LLC; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To 
Expand the Exemption to the Direct Registration Program Requirement to 
All Foreign Issuers Rather Than Only Foreign Private Issuers

November 15, 2012.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act''),\1\ notice is hereby given that on November 7, 2012, The 
NASDAQ Stock Market LLC (``Nasdaq'' or ``the Exchange'') filed with the 
Securities and Exchange Commission (``Commission'') the proposed rule 
change described in Items I and II below, which items have been 
prepared primarily by the Exchange. Nasdaq filed the proposed rule 
change pursuant to Section 19(b)(3)(A) of the Act and Rule 19b-4(f)(6) 
thereunder so that the proposed rule change was effective upon filing 
with the Commission.\2\ The Commission is publishing this notice to 
solicit comments on the proposed rule change from interested parties.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 15 U.S.C. 78s(b)(3)(A) and 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

    The Exchange proposes to expand the exemption to the Direct 
Registration Program requirement under Nasdaq Rules 5210(c) and 5255(c) 
so that it applies to all foreign issuers rather than foreign private 
issuers only. If the Commission waives the pre-operative delay provided 
for in Rule 19b-4(f)(6),\3\ Nasdaq proposes to implement the proposed 
rule change immediately. The text of the proposed rule change is 
available at http://nasdaq.cchwallstreet.com, at Nasdaq's principal 
office, and at the Commission's Public Reference Room.
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    \3\ 17 CFR 240.19b-4(f)(6).
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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 these 
statements.\4\
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    \4\ The Commission has modified the text of the summaries 
prepared by Nasdaq.
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(A) Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

(1) Purpose
    Nasdaq Rules 5210(c) and 5255 provide that all securities listed on 
Nasdaq (except securities which are book-entry only) must be eligible 
for a Direct Registration Program \5\ (``DRS'') operated by a clearing 
agency registered under Section 17A of the Act.\6\ When this 
requirement was initially adopted, Nasdaq recognized that the laws or 
regulations of certain foreign countries might make it impossible for 
companies incorporated in those countries to comply. Consequently, the 
current rule permits a foreign private issuer to follow its home 
country practice in lieu of this requirement when prohibited from 
complying by a law or regulation in its home country.\7\
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    \5\ The Direct Registration Program is more often referred to in 
the securities industry as the Direct Registration System or 
``DRS.''
    \6\ 15 U.S.C. 78q-1.
    \7\ See Securities Exchange Act Release No. 54288 (August 8, 
2006), 71 FR 47276 (August 16, 2006) (order approving SR-NASDAQ-
2006-008). See also Exchange Act Release No. 58125 (July 9, 2008), 
73 FR 42389 (July 21, 2008) (order approving SR-NASDAQ-2008-031).
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    Nasdaq now proposes to amend this exemption to extend its 
application to all ``foreign issuers'' as that term is used in 
Securities Exchange Act Rule 3b-4 \8\ rather than only to foreign 
private issuers. Nasdaq believes this amendment is necessary because 
the same legal or regulatory impediments to DRS eligibility exist for a 
foreign issuer which is incorporated in a foreign jurisdiction but 
which does not qualify for foreign private issuer status as is the case 
for a foreign private issuer incorporated in the same jurisdiction 
which is currently eligible to utilize the existing exemption. Absent 
this extension of the scope of the exemption, the DRS eligibility 
requirement would render it impossible for a foreign issuer to list if 
it was not a foreign private issuer but was incorporated in a foreign 
jurisdiction whose law or regulation made compliance with the DRS 
requirement impossible. Nasdaq believes that the proposed rule change 
is appropriate in light of the specific and discrete problem faced by 
foreign issuers that are not foreign private issuers but who are 
prohibited by home country law or regulation from becoming DRS 
eligible. As under the current exemption, the foreign issuer will have 
to submit to Nasdaq a written statement from an independent counsel in 
the company's home country certifying that a law or regulation in the 
home country prohibits compliance with the DRS requirement in order to 
utilize the exemption.
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    \8\ Exchange Act Rule 3b-4 defines the term ``foreign issuer'' 
as any issuer which is a foreign government, a national of any 
foreign country or a corporation or other organization incorporated 
or organized under the laws of any foreign country. 17 CFR 240.3b-4.
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    Nasdaq Rule 5615 provides limited exemptions with respect to 
certain corporate governance and reporting requirements for foreign 
private issuers. The proposed rule change does not expand the scope of 
such relief to

[[Page 69912]]

foreign issuers that do not qualify for foreign private issuer status. 
To minimize confusion about the availability of such exemptions to 
foreign issuers that do not qualify for foreign private issuer status, 
the proposed rule change will relocate the procedural requirements to 
utilize the exemption from Rule 5615 and IM-5615 to Rules 5210(c) and 
5255 and conform the language used in Rules 5210(c) and 5255 to 
describe the exemption.
(2) Statutory Basis
    Nasdaq believes that the proposed rule change is consistent with 
the provisions of Section 6 of the Act,\9\ in general, and with section 
6(b)(5) of the Act,\10\ 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 in 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.
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    \9\ 15 U.S.C. 78f.
    \10\ 15 U.S.C. 78f(b)(5).
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    The proposed rule change is consistent with the investor protection 
objectives of the Act in that it will provide a very limited exemption 
to Nasdaq's DRS eligibility requirements for foreign issuers that 
provide a letter from home country counsel certifying that compliance 
with that requirement is prohibited by home country law or regulation. 
Further, the proposed rule change should facilitate cooperation and 
coordination among clearing agencies, transfer agents, and broker-
dealers by explaining the basis upon which certain foreign issuers are 
not required to participate in DRS. This, in turn, should facilitate 
better efficiency in the clearance and settlement of securities 
transactions involving the securities of these foreign issuers and 
should facilitate better efficiency in the transfer of such securities.

 (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 purposed 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 relating to the proposed rule change were neither 
solicited nor received. Nasdaq will notify the Commission of any 
written comments received by the Exchange.

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

    The proposed rule change is effective upon filing pursuant to 
Section 19(b)(3)(A) of the Act \11\ and paragraph (f)(6) of Rule 19b-4 
thereunder,\12\ in that the proposed rule change: (i) Does not 
significantly affect the protection of investors or the public 
interest; (ii) does not impose any significant burden on competition; 
and (iii) does not become operative for 30 days after the date of the 
filing, or such shorter time as the Commission may designate if 
consistent with the protection of investors and the public interest; 
provided the self-regulatory organization has given the Commission 
written notice of its intent to file the proposed rule change, along 
with a brief description and text of the proposed rule change, at least 
five business days prior to the date of filing of the proposed rule 
change, or such shorter time as designated by the Commission. Nasdaq 
has provided the Commission of its intent to file the proposed rule 
change, along with a brief description and text of the proposed rule 
change, at least five business days prior to the date of filing of the 
proposed rule change.
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    \11\ 15 U.S.C. 78s(b)(3)(A).
    \12\ 17 CFR 240.19b-4(f)(6).
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    At any time within 60 days of the filing of the proposed rule 
change, the Commission summarily may temporarily suspend 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. If the Commission 
takes such action, the Commission shall institute proceedings to 
determine whether the proposed rule should be approved or disapproved.

IV. Solicitation of Comments

    Interested persons are invited to submit written data, views, and 
arguments concerning the foregoing, including whether the proposed rule 
change, as amended, 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 email to rule-comments@sec.gov. Please include 
File Number SR-NASDAQ-2012-128 on the subject line.

Paper Comments

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

All submission should refer to File Number SR-NASDAQ-2012-128. This 
file number should be included on the subject line if email 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 Web site viewing and 
printing in the Commission's Public Reference Section, 100 F Street 
NE., Washington, DC 20549-1090, on official business days between the 
hours of 10:00 a.m. and 3:00 p.m. Copies of such filings will also be 
available for inspection and copying at the principal office of Nasdaq 
and on Nasdaq's Web site at http://www.nasdaq.cchwallstreet.com. 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-2012-128 and should 
be submitted on or before December 12, 2012.

    For the Commission by the Division of Trading and Markets, 
pursuant to delegated authority.\13\
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    \13\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2012-28299 Filed 11-20-12; 8:45 am]
BILLING CODE 8011-01-P