[Federal Register Volume 66, Number 156 (Monday, August 13, 2001)]
[Notices]
[Pages 42578-42579]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 01-20184]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-44651; File No. SR-NASD-2001-38]


Self-Regulatory Organizations; Order Approving Proposed Rule 
Change and Notice of Filing and Order Granting Accelerated Approval of 
Amendment Nos. 1 and 2 Thereto Filed by the National Association of 
Securities Dealers, Inc. Relating to the Listing of Additional Shares

August 3, 2001.

I. Introduction

    On May 29, 2001, the National Association of Securities Dealers, 
Inc. (``NASD'' or ``Association''), through its subsidiary, The Nasdaq 
Stock Market, Inc. (``Nasdaq''), submitted to the Securities and 
Exchange Commission (``Commission''), pursuant to Section 19(b)(1) of 
the Securities Exchange Act of 1934 (``Act'') \1\ and Rule 19b-4 
thereunder,\2\ a proposed rule change relating to the listing of 
additional shares. The Federal Register published the proposed rule 
change for comment on July 2, 2001.\3\ Nasdaq submitted

[[Page 42579]]

Amendment Nos. 1 \4\ and 2 \5\ to the proposed rule change on July 13, 
2001 and July 19, 2001, respectively. The Commission received no 
comments on the proposed rule change. This order approves the proposed 
rule change and grants accelerated approval to Amendment Nos. 1 and 2.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ Securities Exchange Act Release No. 44467 (June 22, 2001), 
66 FR 34973.
    \4\ See letter from John D. Nachman, Senior Attorney, Nasdaq, to 
Katherine A. England, Assistant Director, Division of Market 
Regulation (``Division''), Commission, dated June 29, 2001 
(``Amendment No. 1''). Amendment No. 1 corrects typographical errors 
in the text of the proposed rule change. Specifically, Amendment No. 
1 amends proposed Nasdaq Marketplace Rules 4510(b)(2) and 4520(b)(2) 
to provide a maximum quarterly fee of $22,500, instead of $22,000.
    \5\ See letter from John D. Nachman, Senior Attorney, Nasdaq, to 
Florence Harmon, Senior Special Counsel, Division, Commission, dated 
July 19, 2001 (``Amendment No. 2''). Amendment No. 2 requests the 
Commission to approve the proposed rule change on a retroactive 
basis effective June 29, 2001.
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II. Description

    Nasdaq proposes to amend Nasdaq Marketplace Rules 4320, 4510, and 
4520, regarding the listing of additional shares (``LAS Program''). 
Nasdaq proposes to amend Nasdaq Marketplace Rules 4510(b)(2) and 
4520(b)(2) to provide a carve-out from fees for the listing of 
additional shares for issuances of up to 49,999 shares per quarter. To 
offset the loss in revenues resulting from this carve-out, Nasdaq 
proposes to change the maximum quarterly fee for the listing of 
additional shares from $17,500 to $22,500 and the maximum annual fee 
from $35,000 to $45,000. Nasdaq states that these changes will 
alleviate issuers' concerns regarding small issuances while maintaining 
the revenues generated by the current LAS fee schedule. Nasdaq also 
proposes to amend Nasdaq Marketplace Rules 4510(b)(4) and 4520(b)(4) to 
give the Board of Directors, or its designee, the ability to defer or 
waive all or any part of the fees relating to the LAS Program.
    Lastly, Nasdaq proposes to clarify the LAS notification requirement 
for foreign issuers. Originally, Nasdaq Marketplace Rule 4320(e)(15) 
excluded American Depositary Receipts (ADRs) from the LAS notification 
requirements for foreign issuers because it is very difficult to track 
the creation as well as unwinding of ADRs and their creation may not 
implicate any Nasdaq regulatory requirements. When the notification 
requirements were amended in January 2000,\6\ the exclusion of ADRs was 
inadvertently omitted from Rule 4320(e)(15). As such, Nasdaq proposes 
to amend this Rule to clarify that ADRs are not subject to the LAS 
notification requirement.
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    \6\ See Securities Exchange Act Release No. 42351 (January 20, 
2000), 64 FR 4457 (January 27, 2000).
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III. Discussion

    The Commission finds that the proposed rule change is consistent 
with the requirements of the Act and the rules and regulations 
thereunder applicable to a national securities association.\7\ In 
particular, the Commission finds that the proposed rule change is 
consistent with the requirements of Sections 15A(B)(5) \8\ and 
15A(b)(6) \9\ of the Act. Section 15A(b)(5) requires the rules of the 
Association to provide for the equitable allocation of reasonable dues, 
fees, and other charges among members and issuers and other persons 
using any facility or system that the Association operates or controls. 
Section 15A(b)(6) of the Act requires the Association's rules to be 
designed to promote just and equitable principles of trade, and to 
protect investors and the public interest. The Commission believes that 
the proposed rule change changes will alleviate issuers' concerns 
regarding fees for small issuances while maintaining the revenues 
generated by the current LAS fee schedule. In addition, the Commission 
believes that it is appropriate for the NASD to have the ability to 
defer or waive LAS fees in situations where such action would be 
justified to achieve an equitable result. Finally, the Commission 
believes that the proposed rule change will benefit investors and the 
public interest by clarifying that ADRs are not subject to the LAS 
notification requirement.
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    \7\ In approving the proposal, the Commission has considered its 
impact on efficiency, competition, and capital formation. 15 U.S.C. 
78c(f).
    \8\ 15 U.S.C. 78o-3(b)(5).
    \9\ 15 U.S.C. 78o-3(b)(6).
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    The Commission finds good cause for accelerating approval of 
Amendment Nos. 1 and 2 to the proposed rule change prior to the 
thirtieth day after publication in the Federal Register. These 
amendments merely correct typographical errors and request retroactive 
effectiveness of the proposed rule change be June 29, 2001, which will 
permit issuers to benefit from the proposed rule change without undue 
delay. Accordingly, the Commission finds that good cause exists to 
accelerate approval of Amendment Nos. 1 and 2 to the proposed rule 
change.

IV. Solicitation of Comments

    Interested persons are invited to submit written data, views and 
arguments concerning Amendment Nos. 1 and 2, including whether the 
amendments are consistent with the Act. Persons making written 
submissions should file six copies thereof with the Secretary, 
Securities and Exchange Commission, 450 Fifth Street NW, Washington, DC 
20549-0609. 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 will also be available for inspection and copying at the 
principal office of the NASD. All submissions should refer to the File 
No. SR-NASD-2001-38 and should be submitted by September 4, 2001.

V. Conclusion

    It is Therefore Ordered, pursuant to Section 19(b)(2) of the 
Act,\10\ that the proposed rule change (SR-NASD-2001-38), as amended, 
is approved.
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    \10\ 15 U.S.C. 78s(b)(2).

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\11\
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    \11\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 01-20184 Filed 8-10-01; 8:45 am]
BILLING CODE 8010-01-M