[Federal Register Volume 68, Number 80 (Friday, April 25, 2003)]
[Notices]
[Pages 20413-20417]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 03-10217]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-47704; File No. SR-NASD-2003-70]


Self-Regulatory Organizations; Notice of Filing and Order 
Granting Accelerated Approval of Proposed Rule Change by the National 
Association of Securities Dealers, Inc. Relating to the Listing and 
Trading of Market Recovery Notes Linked to the PHLX Semiconductor 
Sector

April 18, 2003.
    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 April 9, 2003, the National Association of Securities Dealers, Inc. 
(``NASD'' or ``Association''), through its subsidiary, The Nasdaq Stock 
Market, Inc. (``Nasdaq''), filed with the Securities and Exchange 
Commission (``Commission'' or ``SEC'') the proposed rule change as 
described in items I and II 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 and is approving the 
proposal on an accelerated basis.
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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 list and trade Market Recovery Notes \SM\ Linked 
to the PHLX Semiconductor Sector \SM\ (``Notes'') issued by Merrill 
Lynch & Co., Inc. (``Merrill Lynch'').

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 III 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
    Nasdaq proposes to list and trade notes, the return on which is 
based upon the PHLX Semiconductor Sector (``Index'').\3\
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    \3\ The Commission's approval of the listing and trading of this 
product does not address whether a licensing agreement issue exists. 
See In the Matter of the American Stock Exchange, Inc., Securities 
Exchange Act Release No. 42312 (January 4, 2000).
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Description of the Notes
    The Notes are a series of senior non-convertible debt securities of 
Merrill Lynch that will not be secured by collateral. The Notes will 
have a term of not less than one and not more than ten years. The Notes 
will be issued in denomination of whole units (``Unit''), with each 
Unit representing a single Note. The original public offering price is 
expected to be $10 per Unit. The Notes will not pay interest and are 
not subject to redemption by Merrill Lynch or at the option of any 
beneficial owner before maturity.\4\
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    \4\ The actual maturity date will be determined at the time on 
the day the Notes are priced for initial sale to the public.
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    At maturity, if the value of the Index has increased, a beneficial 
owner will be entitled to receive a payment on the Notes based on 
triple the amount of that percentage increase, not to exceed a maximum 
payment per Unit (the ``Capped Value'').\5\ Thus, the Notes provide 
investors the opportunity to obtain leveraged returns based on the 
Index. Unlike ordinary debt securities, the Notes do not guarantee any 
return of principal at maturity. Therefore, if the value of the Index 
has declined at maturity, a beneficial owner will receive less, and 
possibly significantly less, than the original public offering price of 
$10 per Unit.\6\
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    \5\ The actual Capped Value will be determined at the time of 
issuance of the Notes.
    \6\ Any amount the beneficial owner would receive at maturity 
(which is less than the original offering price) would correspond to 
any decline in the value of the Index.
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    The payment that a beneficial owner will be entitled to receive 
(the ``Redemption Amount'') depends entirely on the relation of the 
average of the values of the Index at the close of the market on five 
business days shortly before the maturity of the Notes (the ``Ending 
Value'') and the closing value of the Index on the date the Notes are 
priced for initial sale to the public (the ``Starting Value'').
    If the Ending Value is less than or equal to the Starting Value, 
the

[[Page 20414]]

Redemption Amount per Unit will equal:
[GRAPHIC] [TIFF OMITTED] TN25AP03.875

    If the Ending Value is greater than the Starting Value, the 
Redemption Amount per Unit will equal:
[GRAPHIC] [TIFF OMITTED] TN25AP03.876

provided, however, the Redemption Amount cannot exceed the Capped 
Value.
    The Notes are cash-settled in U.S. dollars and do not give the 
holder any right to receive a portfolio security, dividend payments or 
any other ownership right or interest in the portfolio or index of 
securities comprising the Index. The Notes are designed for investors 
who want to participate or gain exposure to the Index, subject to a 
cap, and who are willing to forego market interest payments on the 
Notes during such term. The Commission has previously approved the 
listing of options on the Index.\7\ The Commission has also previously 
approved the listing of securities with a structure identical to that 
of the Notes.\8\
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    \7\ See Securities Exchange Act Release Nos. 38157 (January 10, 
1997), 62 FR 2707 (January 17, 1997) (approving the listing and 
trading of European-style options on the Index); 34546 (August 4, 
1994), 59 FR 43881 (August 18, 1994) (approving the listing and 
trading of options and long-term options on the Index).
    \8\ See Securities Exchange Act Release Nos. 47464 (March 7, 
2003), 68 FR 12116 (March 13, 2003) (approving the listing and 
trading of Market Recovery Notes Linked to the S&P 500 Index); 47009 
(December 16, 2002), 67 FR 78540 (December 24, 2002) (approving the 
listing and trading of Market Recovery Notes linked to the Nasdaq-
100 Index); and 46883 (November 21, 2002), 67 FR 71216 (November 29, 
2002) (approving the listing and trading of Market Recovery Notes 
linked to the Dow Jones Industrial Average).
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    The Index is currently composed of 17 U.S. companies primarily 
involved in the design, distribution, manufacture, and sale of 
semiconductors.\9\ The Index was set to an initial value of 200 on 
December 1, 1993 and was split two-for-one on July 24, 1995. The Index 
is maintained by the Philadelphia Stock Exchange (``PHLX''). The PHLX 
may change the composition of the Index at any time, subject to 
compliance with the maintenance criteria discussed herein, to reflect 
the conditions in the semiconductor industry. If it becomes necessary 
to replace a security in the Index, the PHLX will replace the security 
with a stock which the PHLX, in its discretion, believes would be 
compatible with the intended market character of the Index.\10\ In 
making replacement determinations, the PHLX will also take into account 
a security's capitalization, liquidity, volatility, and name 
recognition of the proposed replacement. Further, securities may be 
replaced in the event of certain corporate events, such as takeovers or 
mergers that change the nature of the security. If, however, the PHLX 
determines to increase the number of Index component securities to 
greater than 21 or reduce the number of Index component securities to 
fewer than 11, the PHLX will submit a rule filing with the Commission 
pursuant to section 19(b) of the Act. In addition, in choosing 
replacement securities for the Index, the PHLX will be required to 
ensure that at least 90% of the weight of the Index continues to be 
made up of stocks that are eligible for standardized options trading.
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    \9\ As of March 24, 2003, the portfolio of securities comprising 
the Index consisted of: Advanced Micro Devices, Inc.; Altera 
Corporation; Applied Materials, Inc.; Broadcom Corporation; Intel 
Corporation; KLA-Tencor Corporation; Lattice Semiconductor 
Corporation; Linear Technology Corporation; LSI Logic Corporation; 
Maxim Integrated Products, Inc.; Micron Technology, Inc.; Motorola, 
Inc.; National Semiconductor Corporation; Novellus Systems, Inc.; 
Teradyne, Inc.; Texas Instruments, Incorporated; and Xilinx, Inc.
    \10\ The PHLX has represented that any replacement or additional 
component securities will be listed and traded on either the New 
York Stock Exchange, Inc. (``NYSE''), the American Stock Exchange 
LLC (``Amex'') or quoted on and traded through the Nasdaq National 
Market. See Securities Exchange Act Release No. 34546 (August 18, 
1994), 59 FR 43881 (August 25, 1994) (SR-PHLX-94-02).
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    The Index is a price-weighted index and reflects changes in the 
prices of the component securities relative to the Index's base date of 
December 1, 1993. Specifically, the Index value is calculated by adding 
the prices of the component stocks, dividing this summation by a 
divisor that is equal to the number of the components of the Index to 
get the average price, and multiplying the resulting number by 100. To 
maintain the continuity of the Index, the divisor will be adjusted to 
reflect non-market changes in the prices of the component securities as 
well as changes in the composition of the Index. Changes that may 
result in divisor adjustments include, but are not limited to, stock 
splits and dividends, spin-offs, certain rights issuances, and mergers 
and acquisitions.
    As of March 24, 2003, the market capitalization of the portfolio of 
securities representing the Index ranged from a high of $118.1 billion 
to a low of $893.9 million. The average daily trading volume for the 
last six months, as of March 17, 2003, ranged from a high of 53.6 
million shares to a low of 2.2 million shares.
    Nasdaq states that, the PHLX has represented that the Index value 
will be updated at least once every 15 seconds during the trading 
day.\11\ The updated Index values will be disseminated and displayed by 
means of primary market prints reported by the Consolidated Tape 
Association. Merrill Lynch also represented that it will maintain and 
disseminate the updated Index values every 15 seconds through a third-
party provider if PHLX ceases to maintain and disseminate the updated 
Index values every 15 seconds.\12\ If Merrill Lynch, however, fails to 
maintain and disseminate the updated Index values according to the 
above representation, Nasdaq represented that it will delist the 
Notes.\13\
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    \11\ Id.
    \12\ Telephone conversation between John D. Nachmann, Senior 
Attorney, Nasdaq, and Hong-Ahn Tran, Special Counsel, Division of 
Market Regulation (``Division''), Commission, on April 18, 2003.
    \13\ Id.
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    Under NASD rule 4420(f), Nasdaq may approve for listing and trading 
innovative securities, which cannot be readily categorized under 
traditional listing guidelines.\14\ Nasdaq proposes to list for trading 
notes based on the Index under NASD rule 4420(f).
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    \14\ See Securities Exchange Act Release No. 32988 (September 
29, 1993); 58 FR 52124 (October 6, 1993) (order approving File No. 
SR-NASD-93-15), (the ``1993 Order'').
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Criteria for Initial and Continued Listing
    The Notes, which will be registered under section 12 of the Act, 
will initially be subject to Nasdaq's listing criteria for other 
securities under NASD rule 4420(f). Specifically, under NASD rule 
4420(f)(1):
    (A) The issuer shall have assets in excess of $100 million and 
stockholders' equity of at least $10 million.\15\ In the case of an 
issuer which is unable to satisfy the income criteria set forth in

[[Page 20415]]

paragraph (a)(1), Nasdaq generally will require the issuer to have the 
following: (i) assets in excess of $200 million and stockholders' 
equity of at least $10 million; or (ii) assets in excess of $100 
million and stockholders' equity of at least $20 million;
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    \15\ Merrill Lynch satisfies this listing criterion.
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    (B) There must be a minimum of 400 holders of the security, 
provided, however, that if the instrument is traded in $1,000 
denominations, there must be a minimum of 100 holders;
    (C) For equity securities designated pursuant to this paragraph, 
there must be a minimum public distribution of 1,000,000 trading units;
    (D) The aggregate market value/principal amount of the security 
will be at least $4 million.
    In addition, Nasdaq states that Merrill Lynch satisfies the listed 
marketplace requirement set forth in NASD rule 4420(f)(2).\16\ Lastly, 
pursuant to NASD rule 4420(f)(3), prior to the commencement of trading 
of the Notes, Nasdaq will distribute a circular to members providing 
guidance regarding compliance responsibilities and requirements, 
including suitability recommendations, and highlighting the special 
risks and characteristics of the Notes. In particular, Nasdaq will 
advise members recommending a transaction in the Notes to: (1) 
Determine that such transaction is suitable for the customer; and (2) 
have a reasonable basis for believing that the customer can evaluate 
the special characteristics of, and is able to bear the financial risks 
of, such transaction.
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    \16\ NASD rule 4420(f)(2) requires issuers of securities 
designated pursuant to this paragraph to be listed on The Nasdaq 
National Market or the NYSE or be an affiliate of a company listed 
on The Nasdaq National Market or the NYSE; provided, however, that 
the provisions of NASD rule 4450 will be applied to sovereign 
issuers of ``other'' securities on a case-by-case basis.
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    The Notes will be subject to Nasdaq's continued listing criterion 
for other securities pursuant to NASD rule 4450(c). Under this 
criterion, the aggregate market value or principal amount of publicly-
held units must be at least $1 million. The Notes also must have at 
least two registered and active market makers as required by NASD rule 
4310(c)(1). Nasdaq will also consider prohibiting the continued listing 
of the Notes if Merrill Lynch is not able to meet its obligations on 
the Notes.
Rules Applicable to the Trading of the Notes
    Since the Notes will be deemed equity securities for the purpose of 
NASD rule 4420(f), the NASD and Nasdaq's existing equity trading rules 
will apply to the Notes. First, pursuant to NASD rule 2310, 
``Recommendations to Customers (Suitability)'' and NASD IM-2310-2, 
``Fair Dealing with Customers,'' NASD members must have reasonable 
grounds for believing that a recommendation to a customer regarding the 
purchase, sale or exchange of any security is suitable for such 
customer upon the basis of the facts, if any, disclosed by such 
customer as to his other security holdings and as to his financial 
situation and needs.\17\ In addition, as previously mentioned, Nasdaq 
will distribute a circular to members and employees thereof providing 
guidance regarding compliance responsibilities and requirements, 
including suitability recommendations, and highlighting the special 
risks and characteristics of the Notes to, among other things, have a 
reasonable basis for believing that the customer can evaluate the 
special characteristics of, and is able to bear the financial risks of, 
such transaction. Second, the Notes will be subject to the equity 
margin rules. Lastly, the regular equity trading hours of 9:30 am to 
4:00 pm will apply to transactions in the Notes.
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    \17\ NASD rule 2310(b) requires members to make reasonable 
efforts to obtain information concerning a customer's financial 
status, a customer's tax status, the customer's investment 
objectives, and such other information used or considered to be 
reasonable by such member or registered representative in making 
recommendations to the customer.
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    Nasdaq represents that NASD's surveillance procedures are adequate 
to properly monitor the trading of the Notes. Specifically, NASD will 
rely on its current surveillance procedures governing equity 
securities, and will include additional monitoring on key pricing 
dates.
2. Statutory Basis
    Nasdaq believes that the proposed rule change is consistent with 
the provisions of section 15A of the Act,\18\ in general, and with 
section 15A(b)(6) of the Act,\19\ in particular, in that the proposal 
is designed to prevent fraudulent and manipulative acts and practices, 
to promote just and equitable principles of trade, to remove 
impediments to and perfect the mechanism of a free and open market and, 
in general, to protect investors and the public interest.
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    \18\ 15 U.S.C. 78o-3.
    \19\ 15 U.S.C. 78o-3(6).
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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.

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. 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. 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 file number SR-NASD-2003-70 and 
should be submitted by May 16, 2003.

I. Commission's Findings and Order Granting Accelerated Approval of 
Proposed Rule Change

    Nasdaq has asked the Commission to approve the proposal, on an 
accelerated basis to accommodate the timetable for listing the Notes. 
The Commission notes that it has previously approved the listing of 
options on, and securities the performance of which have been linked to 
or based on, the PHLX Semiconductor Index.\20\ The Commission has also 
previously approved the listing of securities with a structure 
identical to that of the Notes.\21\
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    \20\ See note 7, supra.
    \21\ See note 8, supra.
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    After careful consideration, 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, and, in particular, with the requirements of section 
15A(b)(6) of the Act \22\ in that it is designed to promote just and

[[Page 20416]]

equitable principles of trade, to remove impediments to and perfect the 
mechanism of a free and open market, and, in general, to protect 
investors and the public interest.\23\ The Commission believes that the 
Notes will provide investors with a means to participate in any 
percentage increase in the Index that exist at the maturity of the 
Notes, subject to the Capped Value. Specifically, as described more 
fully above, if the value of the PHLX Semiconducter Sector Index has 
increased, a beneficial owner will be entitled to receive at maturity a 
payment of the Notes based on triple the amount of any percentage 
increase in the Index, not to exceed the Capped Value.
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    \22\ 15 U.S.C. 78o-3(b)(6).
    \23\ In approving the proposed rule, 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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    The Notes are leveraged debts instruments whose price will be 
derived from and based upon the value of the Index. In addition, as 
discussed more fully above, the Notes do not guarantee any return of 
principal at maturity. Thus, if the Index has declined at maturity, a 
beneficial owner may receive significantly less than the original 
public offering price of the Notes.\24\ Accordingly, the level of risk 
involved in the purchase or sale of the Notes is similar to the risk 
involved in the purchase or sale of traditional common stock. Because 
the final rate of return on the Notes is derivatively priced and based 
upon the performance of an index of securities, because the Notes are 
debt instruments that do not guarantee a return of principal, and 
because investors' potential return is limited by the Capped Value, 
there are several issues regarding trading of this type of product. For 
the reasons discussed below, the Commission believes that Nasdaq's 
proposal adequately addresses the concerns raised by this type of 
product.
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    \24\ Any amount the beneficial owner would receive at maturity 
(which is less than the original offering price) would correspond to 
any decline in the value of the Index.
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    First, the Commission notes that the protections of NASD rule 
4420(f) were designed to address the concerns attendant to the trading 
of hybrid securities like the Notes.\25\ In particular, by imposing the 
hybrid listing standards, heightened suitability for 
recommendations,\26\ and compliance requirements, noted above, the 
Commission believes that Nasdaq has adequately addressed the potential 
problems that could arise from the hybrid nature of the Notes. The 
Commission notes that Nasdaq will distribute a circular to its 
membership that provides guidance regarding member firm compliance 
responsibilities and requirements, including suitability 
recommendations, and highlights the special risks and characteristics 
associated with the Notes. Specifically, among other things, the 
circular will indicate that the Notes do not guarantee any return of 
principal at maturity, that the maximum return on the Notes is limited 
to the Capped Value,\27\ that the Notes will not pay interest, and that 
the Notes will provide exposure in the Index. Distribution of the 
circular should help to ensure that only customers with an 
understanding of the risks attendant to the trading of the Notes and 
who are able to bear the financial risks associated with transactions 
in the Notes will trade the Notes.
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    \25\ See 1993 Order, supra note 14.
    \26\ As discussed above, Nasdaq will advise members recommending 
a transaction in the Notes to: (1) Determine that the transaction is 
suitable for the customer; and (2) have a reasonable basis for 
believing that the customer can evaluate the special characteristics 
of, and is able to bear the financial risks of, the transaction.
    \27\ The actual Capped Value will be determined at the time of 
issuance of the Notes.
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    Second, the Commission notes that the final rate of return on the 
Notes depends, in part, upon the individual credit of the issuer, 
Merrill Lynch. To some extent this credit risk is minimized by the 
NASD's listing standards in NASD Rule 4420(f), which provide that only 
issuers satisfying substantial asset and equity requirements may issue 
these types of hybrid securities. In addition, the NASD's hybrid 
listing standards further require that the Notes have at least $4 
million in market value. Financial information regarding Merrill Lynch, 
in addition to information concerning the issuers of the securities 
comprising the Index, will be publicly available.\28\
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    \28\ The companies comprising the Index are reporting companies 
under the Act.
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    Third, the Notes will be registered under section 12 of the Act. As 
noted above, the NASD's and Nasdaq's existing equity trading rules will 
apply to the Notes, which will be subject to equity margin rules and 
will trade during the regular equity trading hours of 9:30 a.m. to 4 
p.m. NASD Regulation's surveillance procedures for the Notes will be 
the same as its current surveillance procedures for equity securities, 
and will include additional monitoring on key pricing dates.\29\
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    \29\ The Commission expects Nasdaq's surveillance procedures to 
address the inherent conflict of Merrill Lynch's position in the 
market at key pricing dates.
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    Fourth, the Commission has a systemic concern that a broker-dealer, 
such as Merrill Lynch, or a subsidiary providing a hedge for the issuer 
will incur position exposure. However, as the Commission has concluded 
in previous approval orders for the hybrid instruments issued by 
broker-dealers,\30\ the Commission believes that this concern is 
minimal given the size of the Notes issuance in relation to the net 
worth of Merrill Lynch.
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    \30\ See, e.g., Securities Exchange Act Release Nos. 44913 
(October 9, 2001), 66 FR 52469 (October 15, 2001) (order approving 
File No. SR-NASD-2001-73) (approving the listing and trading of 
notes issued by Morgan Stanley Dean Witter & Co. whose return is 
based on the performance of the Index); 44483 (June 27, 2001), 66 FR 
35677 (July 6, 2001) (order approving File No. SR-Amex-2001-40) 
(approving the listing and trading of notes issued by Merrill Lynch 
whose return is based on a portfolio of 20 securities selected from 
the Amex Institutional Index); and 37744 (September 27, 1996), 61 FR 
52480 (October 7, 1996) (order approving File No. SR-Amex-96-27) 
(approving the listing and trading of notes issued by Merrill Lynch 
whose return is based on a weighted portfolio of healthcare/
biotechnology industry securities).
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    Finally, the Commission believes that the listing and trading of 
the proposed Notes should not unduly impact the market for the 
securities underlying the Index or raise manipulative concerns. In 
approving the product, the Commission recognizes that the Index is a 
price-weighted index currently composed of 17 U.S. companies listed on 
Nasdaq, the NYSE and the AMEX. The Commission notes that the Index is 
determined, composed, and calculated by PHLX. The Commission notes that 
Merrill Lynch will maintain and disseminate the updated Index values 
every 15 seconds through a third-party provider if PHLX ceases to do 
so. If Merrill Lynch, however, fails to maintain and disseminate the 
updated Index values, the Commission notes that Nasdaq will delist the 
Notes. As of March 24, 2003, the market capitalization of the portfolio 
of securities representing the Index ranged in capitalization from a 
high of $118.1 billion to a low of $893.3 million. In addition, the 
average trading volume for the last six months, as of March 17, 2003, 
ranged from a high of 53.6 million shares to a low of 2.2 million 
shares. Given the large capitalization, and liquid markets, the 
Commission continues to believe, as it has concluded previously, that 
the listing and trading of securities that are linked to the Index, 
should not unduly impact the market for the underlying securities 
comprising the Index or raise manipulative concerns. Moreover, the 
issuers of the underlying securities comprising the PHLX Semiconductor 
Sector Index, are subject to reporting requirements under the Act, and 
all of the component stocks are with listed on Nasdaq, the NYSE, or the 
Amex.

[[Page 20417]]

    The Commission finds good cause for approving the proposed rule 
change, prior to the thirtieth day after the date of publication of 
notice of filing thereof in the Federal Register. The Commission 
believes that the Notes will provide investors with an additional 
investment choice and that accelerated approval of the proposal will 
allow investors to begin trading the Notes promptly. In addition, the 
Commission notes that it has previously approved the listing and 
trading of similar Notes and other hybrid securities based on the 
Index.\31\ Accordingly, the Commission believes that there is good 
cause, consistent with sections (6)(b)(5) and 19(b)(2) of the Act,\32\ 
to approve the proposal, on an accelerated basis.
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    \31\ See note 8, supra.
    \32\ 15 U.S.C. 78o-3(b)(6) and 78s(b)(2).
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V. Conclusion

    It is therefore ordered, pursuant to section 19(b)(2) of the 
Act,\33\ that the proposed rule change (SR-NASD-2003-70) is hereby 
approved on an accelerated basis.
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    \33\ 15 U.S.C. 78s(b)(2).

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\34\
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    \34\ 17 CFR 200.30-3(a)(12).
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Jill M. Peterson,
Assistant Secretary.
[FR Doc. 03-10217 Filed 4-24-03; 8:45 am]
BILLING CODE 8010-01-P