Document ID: SEC-2010-0275-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: NASDAQ Stock Market LLC
Posted Date: 2010-02-23T05:00Z

[Federal Register Volume 75, Number 35 (Tuesday, February 23, 2010)]
[Notices]
[Pages 8156-8158]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2010-3394]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-61521; File No. SR-NASDAQ-2010-008]

Self-Regulatory Organizations; The NASDAQ Stock Market LLC; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To 
Modify the Prior Notification Requirements When Companies Release 
Material Information Outside of Nasdaq Market Hours

February 16, 2010.
    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 January 15, 2010, The NASDAQ Stock Market LLC (``Nasdaq'' or the 
``Exchange'') filed with the Securities and Exchange Commission 
(``Commission'') the proposed rule change as described in Items I and 
II below, which Items have been prepared by Nasdaq. Nasdaq has 
designated the proposed rule change as effecting a change described 
under Rule 19b-4(f)(6) under the Act,\3\ 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\ 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

    Nasdaq proposes to modify the requirement for companies to provide 
prior notification to Nasdaq when releasing material information 
outside of Nasdaq market hours.
    The text of the proposed rule change is below. Proposed new 
language is in italics; proposed deletions are in brackets.\4\
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    \4\ Changes are marked to the rule text that appears in the 
electronic manual of Nasdaq found at http://nasdaqomx.cchwallstreet.com.
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* * * * *

5250. Obligations for Companies Listed on the Nasdaq Stock Market

    (a) No change.
    (b) Obligation to Make Public Disclosure.
    (1) Except in unusual circumstances, a Nasdaq-listed Company 
shall make prompt disclosure to the public through any Regulation FD 
compliant method (or combination of methods) of disclosure of any 
material information that would reasonably be expected to affect the 
value of its securities or influence investors' decisions. The 
Company shall, prior to the release of the information, provide 
notice of such disclosure to Nasdaq's MarketWatch Department at 
least ten minutes prior to public announcement if the information 
involves any of the events set forth in IM-5250-1 and the public 
release of the material information is made during Nasdaq market 
hours. If the public release of the material information is made 
outside of Nasdaq market hours, Nasdaq Companies must notify 
MarketWatch of the material information prior to 6:50 a.m. ET. As 
described in IM-5250-1, prior notice to the MarketWatch Department 
must be made through the electronic disclosure submission system 
available at http://www.nasdaq.net, except in emergency situations.
    (2)-(3) No change.
    (c)-(f) No change.

IM-5250-1. Disclosure of Material Information

    Rule 5250(b)(1) requires that, except in unusual circumstances, 
Nasdaq Companies disclose promptly to the public through any 
Regulation FD compliant method (or combination of methods) of 
disclosure any material information that would reasonably be 
expected to affect the value of their securities or influence 
investors' decisions. Nasdaq Companies must notify Nasdaq at least 
ten minutes prior to the release to the public of material 
information that involves any of the events set forth below when the 
public release of the information is made during Nasdaq market hours 
(7 a.m. to 8 p.m. ET). If the public release of the material 
information is made outside of Nasdaq market hours, Nasdaq Companies 
must notify MarketWatch of the material information prior to 6:50 
a.m. ET. Under unusual circumstances Companies may not be required 
to make public disclosure of material events; for example, where it 
is possible to maintain confidentiality of those events and 
immediate public disclosure would prejudice the ability of the 
Company to pursue its legitimate corporate objectives. However, 
Nasdaq Companies remain obligated to disclose this information to 
Nasdaq upon request pursuant to Rule 5250(a).
    Paragraph 2. No change.

Notification to Nasdaq MarketWatch Department

    Nasdaq Companies must notify Nasdaq's MarketWatch Department 
prior to the distribution of certain material news at least ten 
minutes prior to public announcement of the news when the public 
release of the information is made during Nasdaq market hours (7 
a.m. to 8 p.m. ET). If the public release of the material 
information is made outside of Nasdaq market hours, Nasdaq Companies 
must notify MarketWatch of the

[[Page 8157]]

material information prior to 6:50 a.m. ET. Except in emergency 
situations, this notification must be made through Nasdaq's 
electronic disclosure submission system available at http://www.nasdaq.net. In emergency situations, Companies may instead 
provide notification by telephone or facsimile. Examples of an 
emergency situation include: lack of computer or Internet access; 
technical problems on either the Company or Nasdaq system or an 
incompatibility between those systems; and a material development 
such that no draft disclosure document exists, but immediate 
notification to MarketWatch is important based on the material 
event.
    If a Nasdaq Company repeatedly fails to either notify Nasdaq at 
least ten minutes prior to the distribution of material news during 
market hours or prior to 6:50 a.m. ET for material news distributed 
outside of market hours, or repeatedly fails to use the electronic 
disclosure submission system when Nasdaq finds no emergency 
situation existed, Nasdaq may issue a Public Reprimand Letter (as 
defined in Rule 5805(j)) or, in extreme cases, a Staff Delisting 
Determination (as defined in Rule 5805(h)). In determining whether 
to issue a Public Reprimand Letter, Nasdaq will consider whether the 
Company has demonstrated a pattern of failures, whether the Company 
has been contacted concerning previous violations, and whether the 
Company has taken steps to assure that future violations will not 
occur.

Trading Halts

    Paragraphs 1-3. No change.
    Companies are required to notify the MarketWatch Department of 
the release of material information included in the following list 
of events at least ten minutes prior to the release of such 
information to the public when the public release of the information 
is made during Nasdaq market hours (7 a.m. to 8 p.m. ET). If the 
public release of the material information is made outside of Nasdaq 
market hours, Nasdaq Companies must notify MarketWatch of the 
material information prior to 6:50 a.m. ET. It should also be noted 
that every development that might be reported to Nasdaq in these 
areas would not necessarily be deemed to warrant a trading halt. In 
addition to the following list of events, Nasdaq encourages 
Companies to avail themselves of the opportunity for advance 
notification to the MarketWatch Department in situations where they 
believe, based upon their knowledge of the significance of the 
information, that a temporary trading halt may be necessary or 
appropriate.
    (a)-(h) No change.

Use of Regulation FD Compliant Methods in the Disclosure of 
Material Information

    Regardless of the method of disclosure that a Company chooses to 
use, Companies are required to notify the MarketWatch Department of 
the release of material information that involves any of the events 
set forth above at least ten minutes prior to its release to the 
public when the public release of the information is made during 
Nasdaq market hours (7 a.m. to 8 p.m. ET). If the public release of 
the material information is made outside of Nasdaq market hours, 
Nasdaq Companies must notify MarketWatch of the material information 
prior to 6:50 a.m. ET. When a Company chooses to utilize a 
Regulation FD compliant method for disclosure other than a press 
release or Form 8-K, the Company will be required to provide prior 
notice to the MarketWatch Department of: 1) the press release 
announcing the logistics of the future disclosure event; and 2) a 
descriptive summary of the material information to be announced 
during the disclosure event if the press release does not contain 
such a summary.
    Paragraph 2. 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
    Pursuant to Rule 5250(b)(1) and IM-5250-1, a Nasdaq-listed company 
is required, except in unusual circumstances, to make prompt disclosure 
to the public through any Regulation FD compliant method (or 
combination of methods) of disclosure of any material information that 
would reasonably be expected to affect the value of its securities or 
influence investors' decisions. These rules also require the company to 
provide notice of such disclosure to Nasdaq's MarketWatch Department at 
least ten minutes prior to public announcement if the information 
involves any of the events set forth in IM-5250-1. Among other things, 
this prior notice allows the MarketWatch Department to assess whether 
it is appropriate to implement a trading halt to allow full 
dissemination of the news by the public and to maintain an orderly 
trading market.\5\ Rule 5250(b)(1) and IM-5250-1 do not currently 
distinguish the prior notification requirement when public release of 
the information is made during or outside of Nasdaq market hours.
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    \5\ See Rule 4120 for the Exchange's procedures with respect to 
trading halts pending dissemination of material news.
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    Nasdaq proposes to amend Rule 5250(b)(1) and IM-5250-1 to 
distinguish notifications made outside of market hours, when Nasdaq 
would not need to implement a trading halt. As revised, when the 
material information is made public outside of Nasdaq market hours, 
Nasdaq companies would be required to provide notification of the 
information to MarketWatch by 6:50 a.m. ET, which is ten minutes prior 
to the start of Nasdaq market hours. No change would be made for 
disclosures made during Nasdaq market hours (7 a.m. to 8 p.m. ET), when 
Nasdaq companies must provide notification to MarketWatch at least ten 
minutes prior to the public release of the information.
    Nasdaq believes the proposed change is appropriate as there is no 
regulatory benefit to receiving the pre-notifications outside of market 
hours. In addition, Nasdaq believes that the proposed change would 
limit a potential conflict between the existing rule and the 
requirements in certain foreign jurisdictions, which may prohibit 
providing Nasdaq with advance notice of material disclosures.\6\ The 
revised requirement would permit such disclosures outside of market 
hours without pre-notification to Nasdaq. Nonetheless, while advance 
notice is not required, Nasdaq believes it is important for listed 
companies to continue to provide notification to the Exchange of 
material information, even when the public release of the announcement 
is made outside of Nasdaq market hours, so that Nasdaq can evaluate any 
potential impact of the news on the company's listing.
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    \6\ For example, Nasdaq has been informed that pursuant to the 
Netherlands Act on the Supervision of the Securities Trade and the 
Netherlands Autoriteit Financi[euml]le Markten, when a company 
intentionally discloses material non-public information to a third 
party as part of the normal course of business, including to 
regulators or an exchange upon which the company's shares are 
listed, the Company must simultaneously disclose the information 
publicly.
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2. Statutory Basis
    Nasdaq believes the proposed rule change is consistent with the 
provisions of Section 6 of the Act,\7\ in general and with Section 
6(b)(5) of the Act,\8\ in particular. The proposed change would 
continue to facilitate Nasdaq's ability to conduct timely reviews of 
company disclosures, thereby facilitating the operation of a free and 
open market, and protecting investors and the public

[[Page 8158]]

interest, while eliminating an unnecessary procedural requirement.
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    \7\ 15 U.S.C. 78f.
    \8\ 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 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, the proposed rule change has 
become effective pursuant to Section 19(b)(3)(A) of the Act \9\ and 
Rule 19b-4(f)(6) thereunder.\10\
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    \9\ 15 U.S.C. 78s(b)(3)(A).
    \10\ 17 CFR 240.19b-4(f)(6). Pursuant to Rule 19b-4(f)(6)(iii) 
under the Act, the Exchange is required to give 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. 
The Exchange has satisfied this requirement.
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    A proposed rule change filed pursuant to Rule 19b-4(f)(6) under the 
Act \11\ normally does not become operative for 30 days after the date 
of its filing. However, Rule 19b-4(f)(6)(iii) \12\ permits the 
Commission to designate a shorter time if such action is consistent 
with the protection of investors and the public interest. The Exchange 
has requested that the Commission waive the 30-day operative delay.
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    \11\ 17 CFR 240.19b-4(f)(6).
    \12\ 17 CFR 240.19b-4(f)(6)(iii).
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    The Commission believes that waiving the 30-day operative delay is 
consistent with the protection of investors and the public interest. In 
making this determination, the Commission notes that Nasdaq's proposed 
rule change is similar to and consistent with the NYSE's rule regarding 
pre-notification to the Exchange for release of material 
information,\13\ and the Commission believes that the Nasdaq's proposed 
rule change raises no new regulatory issues. The Commission also 
believes that providing pre-notification to Nasdaq outside of market 
hours, except ten minutes prior to opening, provides no regulatory 
benefit, since such notifications would not be reviewed by Nasdaq staff 
overnight or until such time that Nasdaq staff was on duty, which is 
likely only shortly prior to the beginning of market hours. In 
addition, given that one of the primary purposes of this notice is to 
allow MarketWatch staff to assess whether it is appropriate to 
implement a trading halt, such notification would only be necessary 
shortly before the opening, as the rule contemplates, to allow Nasdaq 
staff to make this determination. For these reasons, the Commission 
designates that the proposed rule change become operative immediately 
upon filing.\14\
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    \13\ See Section 202.06 of the NYSE Listed Company Manual, which 
requires pre-notification to the NYSE for disclosures ``made shortly 
before the opening or during market hours (presently 9:30 a.m. to 5 
p.m., New York time).''
    \14\ For purposes only of waiving the 30-day operative delay, 
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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    At any time within 60 days of the filing of the proposed rule 
change, the Commission may summarily abrogate the 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.

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-2010-008 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 submissions should refer to File Number SR-NASDAQ-2010-008. 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 Web site 
viewing and printing in the Commission's Public Reference Room, on 
official business days between the hours of 10 a.m. and 3 p.m. Copies 
of the 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-2010-008 and should be submitted on or before 
March 16, 2010.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\15\
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    \15\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010-3394 Filed 2-22-10; 8:45 am]
BILLING CODE 8011-01-P