Document ID: SEC-2008-1325-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: The NASDAQ Stock Market LLC
Posted Date: 2008-09-30T04:00Z

[Federal Register: September 30, 2008 (Volume 73, Number 190)]
[Notices]               
[Page 56876-56878]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr30se08-105]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-58622; File No. SR-NASDAQ-2008-072]

 
Self-Regulatory Organizations; The NASDAQ Stock Market LLC; 
Notice of Filing of Proposed Rule Change To Establish a PORTAL 
Reference Database and Related Fees

September 23, 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 September 16, 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. 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.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    Nasdaq proposes to establish a PORTAL Reference Database. Nasdaq 
will make the proposed rule change effective immediately upon approval.
    The text of the proposed rule change is below. Proposed new 
language is italicized.\3\
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    \3\ Changes are marked to the rule text that appears in the 
electronic Nasdaq Manual found at http://nasdaq.complinet.com.
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* * * * *

7050. PORTAL Reference Database

    The following charges shall apply to access to the PORTAL Reference 
Database:
    (1) For PORTAL data for 2008 and future years, the annual fee is:

1-20 Users..............................................         $20,000
21 to 100 Users.........................................         $50,000
101+ Users..............................................        $100,000

    (2) For PORTAL data for 1990 to 2007, the fee for each year of 
reference data shall be:

1-20 Users................................  $20,000 (not to exceed
                                             $200,000 for access to all
                                             PORTAL historical data
                                             files from 1990 to 2007).
21 to 100 Users...........................  $50,000 (not to exceed
                                             $500,000 for access to all
                                             PORTAL historical data
                                             files from 1990 to 2007).
101+ Users................................  $100,000 (not to exceed
                                             $1,000,000 for access to
                                             all PORTAL historical data
                                             files from 1990 to 2007).

* * * * *

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
Background
    The National Association of Securities Dealers, Inc. (``NASD'') 
created the PORTAL Market in 1990,\4\ simultaneously with the SEC's 
adoption of Rule 144A,\5\ to be a new trading system for the purpose of 
quoting, trading, and reporting trades in securities deemed eligible 
for resale by Qualified Institutional Buyers under Rule 144A. Rule 144A 
provides an exemption from registration under Section 5 of the 
Securities Act \6\ for resales of privately placed securities to 
investors that meet the eligibility requirements of being a qualified 
institutional buyer (``QIB'') under Rule 144A(a)(1),\7\ i.e., 
institutional investors that in the aggregate own or invest on a 
discretionary basis at least $100 million in securities and broker/
dealers that in the aggregate own or invest on a discretionary basis at 
least $10 million in securities. The PORTAL Market did

[[Page 56877]]

not develop as anticipated.\8\ For many years, the sole function of the 
NASD related to the PORTAL market was to review whether an issue of 
privately placed securities met the eligibility requirements of Rule 
144A, thereby qualifying the securities for DTC book-entry services.
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    \4\ Securities Exchange Act Release No. 27956 (April 27, 1990), 
55 FR 18781 (May 4, 1990) (the ``original PORTAL rule filing'').
    \5\ Securities Act Release No. 6862 (April 23, 1990), 55 FR 
17933 (April 30, 1990).
    \6\ 17 [sic] U.S.C. 77e.
    \7\ 17 CFR 230.144A(a)(1).
    \8\ For more information related to the background of The PORTAL 
Market, see Securities Exchange Act Release No. 55669 (April 25, 
2007); 72 FR 23874 (May 1, 2007).
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    The staff of Nasdaq has historically had responsibility for review 
of PORTAL applications to determine the eligibility of securities and, 
originally, PORTAL participants (including broker/dealers and 
investors). Upon the separation of Nasdaq from the NASD and the 
approval of Nasdaq as a registered national securities exchange under 
Section 6 of the Act, the review functions for PORTAL market 
eligibility were retained by Nasdaq and the PORTAL Market Rules in the 
NASD Rule 5300 Series became the Nasdaq Rule 6500 Series.\9\ The NASD 
continued, however, to regulate trading reporting for PORTAL-designated 
securities.
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    \9\ Securities Exchange Act Release No. 53128 (Jan. 13, 2006); 
71 FR 3550 (Jan. 23, 2006).
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    Since 1990, Nasdaq has designated over 26,000 equity and debt 
securities as being PORTAL-eligible. This designation process includes 
the submission and review of offering documents and memorandum related 
to the restricted nature of the security and the completion of a PORTAL 
market application form.
PORTAL Reference Database
    As part of Nasdaq's continuing efforts to enhance the transparency 
and efficiency of trading in Rule 144A issues, Nasdaq has created and 
intends to make publicly available, for a fee, a consolidated 
electronic reference database of information culled from PORTAL 
offering documents and applications submitted to Nasdaq since 1990. The 
database is fully electronic and allows users to determine, in addition 
to other information, a PORTAL issue's name and offering description, 
CUSIP, country of incorporation, security class, maturity class and 
date, currency denomination, applicable interest and credit rating, 
convertibility and call provisions, total number of shares offered, and 
date of PORTAL designation. As new issues seek PORTAL designation, they 
too will be added to the database. Access to the database will open to 
all market participants.
    As set forth in the proposed rule text, pricing for access to the 
database will be tiered based on the number of users authorized for 
access and the number of the years for which access is desired. There 
will be no pro-rating of these annual fees and all parties will pay a 
full year's fee regardless of when they elect to seek access to the 
database. The total cost of access to the full database will, however, 
be capped based on the number of users at a particular firm. Nasdaq 
believes that this pricing structure will allow users to better align 
and control their costs of access with their data usage.
    Nasdaq believes that PORTAL reference database will materially 
improve the availability of historical information about issuances of 
restricted equity and debt and provide a more reliable background upon 
which market participants can make investment decisions regarding such 
securities.
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)(4) of the Act,\11\ in particular, in that it provides for 
the equitable allocation of reasonable dues, fees and other charges 
among members and issuers and other persons using any facility or 
system which Nasdaq operates or controls. Nasdaq notes that creation of 
the PORTAL reference database required the retrieval, organization, and 
review of hundreds of thousands of pages of hard-copy documents as well 
as the conversion of retrieved information into electronic form, and 
its subsequent importation into the database itself. In addition, the 
database also required programming an information entry and retrieval 
protocol. On an ongoing basis, Nasdaq will also incur hardware and 
software costs for the maintenance and storage of PORTAL reference 
data.
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    \10\ 15 U.S.C. 78f.
    \11\ 15 U.S.C. 78f(b)(4).
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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

    Within 35 days of the date of publication of this notice in the 
Federal Register or within such longer period (i) as the Commission may 
designate up to 90 days of such date if it finds such longer period to 
be appropriate and publishes its reasons for so finding or (ii) as to 
which the self-regulatory organization consents, the Commission will:
    A. By order approve such proposed rule change, or
    B. Institute proceedings to determine whether the proposed rule 
change should be 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 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-2008-072 on the subject line.

Paper Comments

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

All submissions should refer to File Number SR-NASDAQ-2008-072. 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 such 
filing also will be available for

[[Page 56878]]

inspection and copying at the principal office of Nasdaq. 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-2008-072 and 
should be submitted on or before October 21, 2008.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\12\
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    \12\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Acting Secretary.
[FR Doc. E8-22859 Filed 9-29-08; 8:45 am]

BILLING CODE 8010-01-P