Document ID: SEC-2007-0502-0001
Agency: sec
Document Type: Notice
Title: Self-regulatory organizations; proposed rule changes: NASDAQ Stock Market LLC
Posted Date: 2007-04-04T04:00Z

[Federal Register: April 4, 2007 (Volume 72, Number 64)]
[Notices]               
[Page 16391-16392]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr04ap07-96]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-55563; File No. SR-NASDAQ-2007-031]

 
Self-Regulatory Organizations; The NASDAQ Stock Market LLC; 
Notice of Filing of Proposed Rule Change Relating to Trading Three-
Character Symbols

 March 30, 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 March 29, 2007, 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 substantially 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 the 
Substance of the Proposed Rule Change

    Nasdaq proposes to allow any company with a three-character symbol 
that transfers its securities to Nasdaq from another domestic market to 
continue using the existing three-character symbol that identifies the 
company's securities.

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
    Historically, securities listed on Nasdaq have traded using four or 
five character symbols.\3\ In 2005, however, Nasdaq announced its 
intent to allow companies listed on Nasdaq to also use one-, two-, or 
three-character symbols beginning on January 31, 2007.\4\ This 
announcement was designed to provide market participants and vendors 
the time needed to make required changes to their own systems that may 
be affected by the change. Nasdaq announced a series of dates 
throughout December 2006 and January and February 2007 where market 
participants could test trading Nasdaq stocks using one-, two-, or 
three-character symbols on weekends, in after hour sessions, and during 
full day sessions.\5\ Beginning February 20, 2007, Nasdaq had the 
ability to accept and distribute Nasdaq-listed securities with one-, 
two-, or three-character symbols. Nasdaq reminded market participants 
about this change again on March 1, 2007, stressing that ``[a]ll 
customers should have completed their coding and testing efforts to 
ensure their readiness to support 1-, 2- and 3-character NASDAQ-listed 
issues.'' \6\ On March 22, 2007, Delta Financial Corporation 
transferred the listing of its common stock to Nasdaq from the American 
Stock Exchange (``Amex'') and maintained its three-character symbol, 
DFC.\7\ Nasdaq represents that there have been no trading problems 
reported to Nasdaq as a result of trading that security on Nasdaq with 
a three-character symbol.
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    \3\ This includes securities listed on Nasdaq's predecessor 
market, operated as a facility of the NASD.
    \4\ See Head Trader Alert 2005-133 (November 14, 2005), 
available at: http://www.nasdaqtrader.com/Trader/News/2005/headtraderalerts/hta2005-133.stm
 and Vendor Alert 2005-070 (November 

14, 2005), available at: http://www.nasdaqtrader.com/Trader/News/2005/vendoralerts/nva2005-070.stm.
 See also Head Trader Alert 2006-

144 (September 29, 2006), available at: http://www.nasdaqtrader.com/Trader/News/2006/headtraderalerts/hta2006-144.stm
, Head Trader Alert 

2006-193 (November 16, 2006), available at: http://www.nasdaqtrader.com/Trader/News/2006/headtraderalerts/hta2006-193.stm
 and Vendor Alert 2006-065 (October 4, 2006), available at: 

http://www.nasdaqtrader.com/Trader/News/2006/vendoralerts/nva2006-065.stm
.

    \5\ See Head Trader Alert 2006-201 (December 6, 2006), available 
at: http://www.nasdaqtrader.com/Trader/News/2006/headtraderalerts/hta2006-201.stm
, Head Trader Alert 2007-008 (January 25, 2007), 

available at: http://www.nasdaqtrader.com/Trader/News/2007/headtraderalerts/hta2007-008.stm
, Head Trader Alert 2007-011 

(January 30, 2007), available at: http://www.nasdaqtrader.com/Trader/News/2007/headtraderalerts/hta2007-011.stm
, Head Trader Alert 

2007-020 (February 7, 2007), available at: http://www.nasdaqtrader.com/Trader/News/2007/headtraderalerts/hta2007-020.stm
, and Head Trader Alert 2007-034 (February 16, 2007), 

available at: http://www.nasdaqtrader.com/Trader/News/2007/headtraderalerts/hta2007-034.stm
.

    \6\ Head Trader Alert 2007-050 (March 1, 2007), available at: 
http://www.nasdaqtrader.com/Trader/News/2007/headtraderalerts/hta2007-050.stm
.

    \7\ See Securities Exchange Act Release No. 55519 (March 26, 
2007) (SR-NASDAQ-2007-025).
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    Nasdaq now proposes to allow any company with a three-character 
symbol that transfers its securities to Nasdaq from another domestic 
market to continue using the existing three-character symbol that 
identifies the company's securities.\8\ Nasdaq believes that this will 
promote competition among exchanges and reduce investor confusion. 
Specifically, Nasdaq believes that issuers should have the freedom of 
choice and competition. Nasdaq believes that as issuers face the 
important choice of where to list their equities, the symbol an issuer 
currently uses should not factor prominently in the listing decision 
process. Similarly, Nasdaq believes that the symbol that a market 
assigns to an issuer should not serve as an anchor if the issuer wishes 
to transfer to a competing market. Nasdaq believes that, as such, 
permitting the portability of these symbols will enhance competition 
among exchanges and encourage issuers to evaluate exchanges on the 
basis of objective criteria, including the most efficient trading 
platform for investors and the lowest costs for shareholders.
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    \8\ Nasdaq states that it remains committed to working with the 
Commission and other markets to establish an equitable and 
transparent symbol assignment plan.
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    Nasdaq believes that permitting companies to continue to use their 
historical symbol will also reduce investor confusion associated with 
any such transfer because investors will continue to be able to obtain 
quotations and execute trades using the same familiar symbol and will 
allow the issuer to maintain a symbol that has

[[Page 16392]]

become a part of its identity to investors.\9\
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    \9\ Nasdaq states that a market transfer will be transparent to 
investors because, under the Commission's rules, a company must 
announce the transfer of its listing on a Form 8-K. See Form 8-K, 
item 3.01(d). In addition, the issuer must publish notice of its 
intent to delist its securities from the current market, in a press 
release and on its Web site. See 17 CFR 240.12d2-2(c)(2)(iii).
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    Nasdaq believes that this proposal is also consistent with the 
historical practice of companies that have switched among national 
securities exchanges. Since August 2001, approximately 200 issues have 
transferred their listing between the Amex, the New York Stock Exchange 
(``NYSE''), and NYSE Arca, while maintaining their original ticker 
symbol upon transfer.\10\ Now that Nasdaq is also a national securities 
exchange,\11\ allowing companies to maintain their symbol when 
transferring to Nasdaq would be consistent with the current practices 
of other exchanges.
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    \10\ See, e.g., Allis-Chambers Energy (announced on March 7, 
2007 its intent to switch from Amex to NYSE keeping the symbol ALY), 
Yamana Gold Inc. (announced on December 21, 2006 its intent to 
switch from Amex to NYSE keeping the symbol AUY), VAALCO Energy 
(announced on October 2, 2006 its intent to switch from Amex to NYSE 
keeping the symbol EGY), the transfer of 15 iShares ETFs from the 
Amex to NYSE Arca keeping their symbols announced on September 27, 
2006, and the transfer of The Latin America Equity Fund, Inc., 
Credit Suisse Asset Management Income Fund, Inc., The Chile Fund, 
among others, from NYSE to AMEX on May 11, 2006 keeping their 
respective symbols CIK, LAQ and CH. A complete list of these 
transfers is available from Nasdaq upon request.
    \11\ Nasdaq became operational as an exchange for Nasdaq-listed 
securities on August 1, 2006. See Nasdaq Issuer Alert 2006-001, 
available at: http://www.complinet.com/file_store/pdf/rulebooks/nasdaq_ia2006-001.pdf.
 See also Securities Exchange Act Release No. 

53128 (January 13, 2006), 71 FR 3550 (January 23, 2006).
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    Finally, Nasdaq believes that the changes to its systems to 
accommodate one-, two-, and three-character symbols will enhance the 
strength of the U.S. capital markets. As a result of these 
technological changes, all Nasdaq systems, including the Securities 
Information Processor (SIP), are able to support all NYSE- and Amex-
listed securities using their original symbols over its core 
transaction and data platforms. Nasdaq notes that this provides an 
added level of redundancy and resiliency for the U.S. capital markets, 
and is key to Nasdaq's ability to provide a full back-up for other 
equity markets in the event of a national or local emergency thereby 
enhancing the strength of the U.S. capital markets.
2. Statutory Basis
    Nasdaq believes that the proposed rule change is consistent with 
the provisions of Section 6 of the Act,\12\ in general and with Section 
6(b)(5) of the Act,\13\ in particular, in that it is designed to 
prevent fraudulent and manipulative acts and practices, to promote just 
and equitable principles of trade, to remove impediments to a free and 
open market and a national market system, and, in general, to protect 
investors and the public interest. Nasdaq believes that the proposal 
will reduce investor confusion and encourage competition among 
exchanges.
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    \12\ 15 U.S.C. 78f.
    \13\ 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

    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-2007-031 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-2007-031. 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. 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-2007-031 and should be submitted on or before 
April 25, 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. E7-6335 Filed 4-3-07; 8:45 am]

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