[Federal Register Volume 69, Number 38 (Thursday, February 26, 2004)]
[Notices]
[Pages 8999-9001]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 04-4268]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-49286; File No. SR-NASD-2004-004]


Self-Regulatory Organizations; Notice of Filing and Immediate 
Effectiveness of Proposed Rule Change and Amendment No. 1 Thereto by 
the National Association of Securities Dealers, Inc. Regarding Listing 
Fee Waivers Under the NASD Rule 4500 Series With Regard to Certain Dual 
Listing and Transfer Situations

February 19, 2004.
    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 12, 2004, the National Association of Securities Dealers, 
Inc. (``NASD''), through its subsidiary, The Nasdaq Stock Market, Inc. 
(``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 prepared by Nasdaq. Nasdaq

[[Page 9000]]

amended the proposed rule change on February 13, 2004.\3\ Nasdaq filed 
the proposed rule change pursuant to section 19(b)(3)(A)(i) of the 
Act,\4\ and Rule 19b-4(f)(1) thereunder,\5\ as one constituting a 
stated policy, practice, or interpretation with respect to the meaning, 
administration, or enforcement of an existing rule, which renders the 
proposed rule change effective upon filing with the Commission. The 
Commission is publishing this notice to solicit comments on the 
proposed rule change, as amended, from interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ See February 12, 2004, letter from Sara Nelson Bloom, 
Associate General Counsel, Nasdaq, to Katherine A. England, 
Assistant Director, Division of Market Regulation, Commission 
(``Amendment No. 1''). In Amendment No. 1, Nasdaq (1) changed date 
references from January 9, 2004, to January 12, 2004, to reflect the 
date on which the proposed rule change was filed with the 
Commission; (2) amended the ``Purpose'' section of the filing to 
reflect that Nasdaq will assess the entry fee or a portion thereof 
if a dually listed issuer determines, following the expiration of 
the initial one-year period, to transfer listing to Nasdaq; and (3) 
confirmed that the proposed interpretation will not impact Nasdaq's 
resource commitment to regulatory oversight of the listing process 
or Nasdaq's other regulatory programs. For purposes of calculating 
the 60-day abrogation period, the Commission considers the period to 
have commenced on February 13, 2004, the date Nasdaq filed Amendment 
No. 1.
    \4\ 15 U.S.C. 78s(b)(3)(A)(i).
    \5\ 17 CFR 240.19b-4(f)(1).
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    Nasdaq proposes to provide interpretive guidance with respect to 
NASD Rules 4510(a)(5), 4510(b)(4), 4510(c)(2), 4510(d)(3), 4520(a)(3), 
4520(b)(4), and 4520(c)(3) regarding the waiver of listing fees in 
situations involving the dual listing or transfer of New York Stock 
Exchange (``NYSE'') listed securities occurring from January 12, 2004, 
to December 31, 2004.
    Below is the text of the proposed rule change. Proposed new 
language is in italics; proposed deletions are in brackets.
* * * * *
4500 ISSUER LISTING FEES
    IM-4500-1 No change.
    IM-4500-2 No change.
    IM-4500-3 Waiver of Fees in Situations Involving the Dual Listing 
or Transfer of New York Stock Exchange (``NYSE'') Listed Securities
    Rules 4510(a)(5), 4510(b)(4), 4510(c)(2), 4510(d)(3), 4520(a)(3), 
4520(b)(4), and 4520(c)(3) provide Nasdaq with the discretion to waive 
all or part of its listing fees prescribed in this Rule 4500 series. 
Nasdaq shall not charge entry fees, annual fees, or listing of 
additional shares fees under Rules 4510(a)-(d) and Rules 4520(a)-(c) 
for a one year period from the date of listing on Nasdaq for any NYSE 
listed security that dually lists on Nasdaq between January 12, 2004, 
and December 31, 2004. Nasdaq shall not charge entry fees under Rules 
4510(a) and 4520(a) for any NYSE listed security that transfers its 
listing from the NYSE to Nasdaq between January 12, 2004, and December 
31, 2004.
* * * * *

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. 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
    NASD Rules 4510(a)(5), 4510(b)(4), 4510(c)(2), 4510(d)(3), 
4520(a)(3), 4520(b)(4), and 4520(c)(3) provide Nasdaq with the 
discretion to waive all or part of its listing fees prescribed in this 
Rule 4500 series. NYSE Rule 500 has recently been repealed, and this 
has removed a significant barrier to NYSE companies that may have 
wanted to list on other markets.\6\ Given the recent repeal of NYSE 
Rule 500, and pursuant to the authority under Nasdaq rules, Nasdaq has 
determined to permit dual listing of any NYSE listed security on Nasdaq 
without charging Nasdaq entry fees, annual fees, or listing of 
additional shares fees for a period of one year from the effective date 
of the dual listing on Nasdaq (provided that, if a dually listed issuer 
determines following the expiration of this period to transfer listing 
to Nasdaq, the entry fee or a portion thereof will be assessed upon 
such transfer). Nasdaq also has determined to permit transfer of any 
NYSE listed security from the NYSE to Nasdaq without charging Nasdaq 
entry fees. Waivers would be available for dual listing or transfers 
occurring from January 12, 2004, the date of this filing, through the 
end of 2004.
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    \6\ See Securities Exchange Act Release No. 48720 (October 30, 
2003), 68 FR 62645 (November 5, 2003)(SR-NYSE-2003-23) (approval 
order).
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    Nasdaq has determined to take this action because it believes that 
is equitable and reasonable to provide a window, following the repeal 
of NYSE Rule 500, for NYSE issuers to dual list on Nasdaq or transfer 
to Nasdaq without subjecting them to fees in addition to those fees 
that they have paid to the NYSE. In addition, consistent with section 
11A(a)(1)(C)(ii) under the Act,\7\ Nasdaq believes this action will 
promote fair competition between exchange markets and markets other 
than exchange markets, which benefits the investing public. 
Specifically, Nasdaq believes this interpretation should facilitate 
dual listing and transfer of NYSE listed securities under an equitable 
and reasonable fee schedule for a limited period of time. Consequently, 
NYSE listed companies can more easily determine the benefits of a 
listing on Nasdaq--a proposition that was not practically available 
until NYSE Rule 500 was recently repealed. Nasdaq believes these 
benefits will include increased liquidity, faster executions, and 
narrower spreads due to Nasdaq's competitive market maker system. In 
addition, these companies can demonstrate to investors that they meet 
Nasdaq's governance requirements. Nasdaq confirms that this 
interpretation will not impact its resource commitment to regulatory 
oversight of the listing process, or its other regulatory programs.
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    \7\ 15 U.S.C. 78k-1(a)(1)(C)(ii).
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2. Statutory Basis [FEDREG][VOL]*[/VOL][NO]*[/NO][DATE]*[/
DATE][NOTICES][NOTICE][PREAMB][AGENCY]*[/AGENCY][SUBJECT]*[/SUBJECT]
    Nasdaq believes that the proposed rule change is consistent with 
the provisions of section 15A(b)(5) \8\ and 15A(b)(6) \9\ of the Act. 
Section 15A(b)(5) requires the equitable allocation of reasonable fees 
and charges among members and other users of facilities operated or 
controlled by a national securities association. Nasdaq believes that 
this proposal is an equitable allocation of reasonable fees because 
NYSE listed companies are now able to list on other markets without 
having to contend with the significant restrictions previously imposed 
by the NYSE, and the proposed rule provides for listing fee waivers to 
address the financial burdens that would otherwise be placed upon these 
companies that have already paid fees to the NYSE and would otherwise 
be required to pay duplicative fees. Nasdaq believes that the proposed 
rule change is consistent with the provisions of section 15A(b)(6) of 
the

[[Page 9001]]

Act because it is designed to prevent fraudulent acts and practices, to 
promote just and equitable principles of trade, and to protect 
investors and the public interest because it will facilitate dual 
listing and transfer of NYSE listed securities for a limited period of 
time, so that NYSE listed companies can more easily determine the 
benefits of listing on Nasdaq. Nasdaq also believes the proposal will 
promote fair competition between markets, which benefits the investing 
public.
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    \8\ 15 U.S.C. 78o-3(b)(5).
    \9\ 15 U.S.C. 78o-3(b)(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, as amended.

C. Self-Regulatory Organization's Statement on Comments on the Proposed 
Rule Change Received From Members, Participants, or Others

    Nasdaq neither solicited nor received written comments with respect 
to the proposed rule change.

III. Date of Effectiveness of the Proposed Rule Change and Timing for 
Commission Action

    The foregoing proposal has become effective pursuant to section 
19(b)(3)(A)(i) of the Act,\10\ and Rule 19b-4(f)(1) \11\ thereunder, in 
that it constitutes a stated policy and interpretation with respect to 
the meaning of an existing rule.
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    \10\ 15 U.S.C. 78s(b)(3)(A)(i).
    \11\ 17 CFR 240.19b-4(f)(1).
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    At any time within 60 days of the filing of the proposed rule 
change,\12\ 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.
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    \12\ See note 3 supra.
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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. Persons making written submissions 
should file six copies thereof with the Secretary, Securities and 
Exchange Commission, 450 Fifth Street, NW., Washington, DC 20549-0609. 
Comments may also be submitted electronically at the following e-mail 
address: [email protected]. All comment letters should refer to 
File No. SR-NASD-2004-004. This file number should be included on the 
subject line if e-mail is used. To help the Commission process and 
review comments more efficiently, comments should be sent in hardcopy 
or by e-mail but not by both methods. 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-2004-004 and should be 
submitted by March 18, 2004.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\13\
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    \13\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 04-4268 Filed 2-25-04; 8:45 am]
BILLING CODE 8010-01-P