Document ID: SEC-2007-0605-0001
Agency: sec
Document Type: Notice
Title: Self-regulatory organizations; proposed rule changes: NASDAQ Stock Market, LLC
Posted Date: 2007-04-27T04:00Z

[Federal Register: April 27, 2007 (Volume 72, Number 81)]
[Notices]               
[Page 21060-21062]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr27ap07-93]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-55652; File No. SR-NASDAQ-2007-021]

 
Self-Regulatory Organizations; The NASDAQ Stock Market, LLC; 
Notice of Filing and Immediate Effectiveness of Proposed Rule To 
Describe How a Failure To Comply With Nasdaq's Requirements Concerning 
Direct Registration Programs Is Treated

April 20, 2007.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act''),\1\ notice is hereby given that on March 6, 2007, The NASDAQ 
Stock Market, LLC (``Nasdaq'') filed with the Securities and Exchange 
Commission (``Commission'') the proposed rule change described in Items 
I, II, and III below, which items have been prepared primarily by 
Nasdaq. Nasdaq filed the proposed rule change pursuant to Section 
19(b)(3)(A)(iii) of the Act \2\ and

[[Page 21061]]

Rule 19b-4(f)(6) \3\ thereunder so that the proposal was effective upon 
filing with the Commission.\4\ The Commission is publishing this notice 
to solicit comments on the 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)(iii).
    \3\ 17 CFR 240.19b-4(f)(6).
    \4\ Nasdaq gave the Commission written notice of its intention 
to file the proposed rule change on March 2, 2007. The Commission 
reviewed the proposed rule change and gave Nasdaq permission to file 
the proposed rule change on March 6, 2007. Nasdaq has asked the 
Commission to waive the 30-day pre-operative waiting period. See 
Rule 19b-4(f)(6). 17 CFR 240.19b-4(f)(6).
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The purpose of the rule change is to describe how a failure to 
comply with Nasdaq's requirements concerning direct registration 
programs is to be treated.

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.\5\
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    \5\ 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 recently adopted a requirement that listed securities be 
eligible to participate in a direct registration program.\6\ In that 
filing, Nasdaq inadvertently failed to modify its procedural rules to 
govern how a failure to comply with the new requirement would be 
treated. This filing addresses that oversight by including the direct 
registration requirement in the list of deficiencies where Nasdaq staff 
will accept a plan to regain compliance for the company. As such, if a 
company is not eligible for a direct registration program, Nasdaq staff 
would review the company's plan to regain compliance and could allow to 
company up to 105 days from the date that Nasdaq notifies the company 
of the deficiency to regain compliance.\7\ If staff does not accept the 
company's plan or the company does not comply in the time allowed by 
the staff, Nasdaq would issue a delisting letter that could be appealed 
under Nasdaq Rule 4805(a).
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    \6\ Securities Exchange Act Release No. 54288 (August 8, 2006), 
71 FR 47276 (August 16, 2006) (SR-NASDAQ-2006-008). These rules 
became effective for new listings beginning on January 1, 2007, and 
will become effective for all companies on January 1, 2008.
    \7\ Nasdaq Rule 4803(b).
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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 \8\ and with Section 6(b)(5) of 
the Act \9\ in particular because the proposed rule 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. The proposed rule change 
clarifies how Nasdaq will treat non-compliance with its rules.
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    \8\ 15 U.S.C. 78f.
    \9\ 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

    The foregoing proposed rule change has become effective upon filing 
pursuant to Section 19(b)(3)(A)(iii) of the Act \10\ and Rule 19b-
4(f)(6) \11\ thereunder because it: (i) Does not significantly affect 
the protection of investors or the public interest; (ii) does not 
impose any significant burden on competition; and (iii) by its terms, 
does not become operative for 30 days after the date of filing or such 
shorter time as the Commission may designate if consistent with the 
protection of investors and the public interest.
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    \10\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \11\ 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 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.
    Nasdaq requested that the Commission waive the thirty-day operative 
delay contained in Rule 19b-4(f)(6)(iii) under the Act.\12\ Because 
this proposed rule rectifies an oversight to update Nasdaq procedural 
rules to govern how a failure to comply with a new substantive 
requirement would be treated, the Commission believes waiver of the 
thirty-day operative delay is consistent with the protection of 
investors and the public interest. Accordingly, the Commission 
designated the proposal to be effective and operative upon filing with 
the Commission.\13\
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    \12\ 17 CFR 240.19b-4(f)(6)(iii).
    \13\ For purposes only of waiving the thirty-day operative delay 
of this proposal, the Commission has considered the proposed rule's 
impact on efficiency, competition, and capital formation. 15 U.S.C. 
78c(f).
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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-2007-021 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-2007-021. 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

[[Page 21062]]

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 Section, 100 F Street, NE., Washington, DC 20549. Copies of 
such filings also will be available for inspection and copying at the 
principal office of Nasdaq and on Nasdaq's Web site at http://www.complinet.com/file_store/pdf/rulebooks/NASDAQ_SR-NASDAQ-2007-021.pdf.
 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-2007-021 and should be submitted on or before May 18, 2007.

    For the Commission by the Division of Market Regulation, 
pursuant to delegated authority.\14\
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    \14\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
 [FR Doc. E7-8055 Filed 4-26-07; 8:45 am]

BILLING CODE 8010-01-P