[Federal Register Volume 69, Number 40 (Monday, March 1, 2004)]
[Notices]
[Pages 9665-9668]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 04-4428]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-49301; File No. SR-NASD-2004-030]


Self-Regulatory Organizations; Notice of Filing and Order 
Granting Accelerated Approval of a Proposed Rule Change by National 
Association of Securities Dealers, Inc. Relating to the Listing and 
Trading of 97% Protected Notes Linked to the Dow Jones Industrial 
Average

February 23, 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 February 17, 2004, 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 the 
Substance of the Proposed Rule Change

    Nasdaq proposes to list and trade 97% Protected Notes Linked to the 
Performance of the Dow Jones Industrial Average (``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 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
    Nasdaq proposes to list and trade the Notes, the return on which is 
based upon the Dow Jones Industrial Average (``DJIA'') and for 
protection of 97% of the principal.\3\
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    \3\ The DJIA is a price-weighted index published by Dow Jones & 
Company, Inc. A component stock's weight in the DJIA is based on its 
price per share rather than the total market capitalization of the 
issuer of that component stock. The DJIA is designed to provide an 
indication of the composite price performance of 30 common stocks of 
corporations representing a broad cross-section of U.S. industry. 
Nasdaq states that the corporations represented in the DJIA tend to 
be market leaders in their respective industries, and their stocks 
are typically widely held by individuals and institutional 
investors. The corporations currently represented in the DJIA are 
incorporated in the U.S. and its territories, and their stocks are 
traded on the New York Stock Exchange, Inc. (``NYSE'') and the 
Nasdaq. The component stocks in the DJIA are selected (and any 
changes are made) by the editors of the Wall Street Journal 
(``WSJ''). Changes to the stocks included in the DJIA tend to be 
made infrequently. Historically, most substitutions have been the 
result of mergers, but from time to time, changes may be made to 
achieve what the editors of the WSJ deem to be a more accurate 
representation of the broad market of the U.S. industry. As of 
February 12, 2004, the market capitalization of the securities 
included in the DJIA ranged from a high of $329.3 billion to a low 
of $8.4 billion. The average monthly trading volume for the last six 
months, as of the same date, ranged from a high of 24.6 million 
shares to a low of 3.0 million shares. The value of the DJIA is the 
sum of the primary market prices of each of the 30 common stocks 
included in the DJIA, divided by a divisor that is designed to 
provide a meaningful continuity in the value of the DJIA. In order 
to prevent certain distortions related to extrinsic factors, the 
divisor may be adjusted appropriately. The current divisor of the 
DJIA is published daily in the WSJ and other publications. Other 
statistics based on the DJIA may be found in a variety of publicly 
available sources. The value of the index is publicly disseminated 
every two seconds if the index value changes. Telephone conversation 
between Alex Kogan, Associate General Counsel, Nasdaq, and Florence 
E. Harmon, Senior Special Counsel, Division of Market Regulation 
(``Division''), Commission (February 20, 2004).
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    Under NASD Rule 4420(f), Nasdaq may approve for listing and trading 
innovative securities that cannot be readily categorized under 
traditional listing guidelines.\4\ Nasdaq proposes to list the Notes 
for trading under NASD Rule 4420(f).
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    \4\ See Securities Exchange Act Release No. 32988 (September 29, 
1993), 58 FR 52124 (October 6, 1993), (``1993 Order'').
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Description of the Notes

    The Notes are a series of senior non-convertible debt securities 
that will be issued by Merrill Lynch and will not be secured by 
collateral. The Notes will rank equally with all of Merrill Lynch's 
other unsecured and unsubordinated debt. The Notes will be issued in 
denominations of whole units (``Unit''), with each Unit representing a 
single Note. The original public offering price will be $10 per Unit. 
The Notes will have a term to maturity of seven years. The Notes will 
not pay interest and are not subject to redemption either by Merrill 
Lynch or at the option of any beneficial owner before maturity.\5\
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    \5\ The actual maturity date will be determined on the day the 
Notes are priced for initial sale to the public.
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    At maturity, a beneficial owner will be entitled to receive a 
payment on the Notes based on the value of the DJIA, but not less than 
$9.70 per Unit (``Minimum Redemption Amount''). Thus, the Notes provide 
investors the opportunity to obtain returns based on the DJIA and they 
provide for the return of at least 97% of the principal amount per 
Unit.
    Any payment that a beneficial owner may be entitled to receive in 
addition to the Minimum Redemption Amount (the ``Supplemental 
Redemption Amount'') will depend entirely on: (a) The relation of the 
average of the values of the DJIA 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 DJIA on the date the Notes are 
priced for initial sale to the public (the ``Starting Value''), and (b) 
the Participation Rate, which will be a fixed value determined by 
Merrill Lynch on the date the Notes are priced for initial sale to the 
public and disclosed in the final prospectus supplement to be delivered 
in connection with sales of the Notes. The Participation Rate is 
expected to be between 1.00 and 1.15.\6\
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    \6\ The Participation Rate is a fixed percentage expected to be 
between 100% and 115%. Merrill Lynch will determine the 
Participation Rate on the day the Notes are priced, and it will be 
disclosed in the Prospectus and Nasdaq's circular to members, 
describing this product. The exact value of the Participation Rate 
will be determined at Merrill Lynch's discretion. Merrill expects 
but does not guarantee that the Participation Rate will be between 
100% and 115% of the interest rate on the Pricing Date. However, in 
no event, will the investor receive less than 97% of the principal 
amount per Unit at maturity. Telephone conversation between Alex 
Kogan, Associate General Counsel, Nasdaq, and Florence E. Harmon, 
Senior Special Counsel, Division, Commission (February 20, 2004).
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    The Supplemental Redemption Amount per Unit will equal:

[[Page 9666]]

[GRAPHIC] [TIFF OMITTED] TN01MR04.002

but will not be less than zero.
    As a result, the DJIA will need to increase by a percentage between 
2.61% and 3.00%, depending upon the actual Participation Rate (and 
assuming that it Yis, as expected, in the range of 1.00 and 1.15), in 
order for a beneficial owner to be entitled to receive a total amount 
at maturity equal to the principal amount. If the value of the DJIA 
decreases or does not increase sufficiently, a beneficial owner will be 
entitled to less than the principal amount of $10 per Unit. In no 
event, however, will a beneficial owner be entitled to less than the 
Minimum Redemption Amount.
    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 DJIA. The Notes are designed for investors 
who want to participate or gain exposure to the DJIA, while protecting 
97% of the principal, and who are willing to forego market interest 
payments on the Notes during the term of the Notes. The Commission has 
previously approved the listing of options on, and other securities the 
performance of which have been linked to or based on, the DJIA.\7\
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    \7\ See Securities Exchange Act Release Nos. 46883 (November 21, 
2002), 67 FR 71216 (November 29, 2002) (approving the listing and 
trading of notes linked to the DJIA); 39525 (January 8, 1998), 63 FR 
2438 (January 15, 1998) (approving the listing and trading of 
DIAMONDS Trust Units, portfolio depositary receipts based on the 
DJIA); and 39011 (September 3, 1997), 62 FR 47840 (September 11, 
1997) (approving the listing and trading of options on the DJIA).
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    As of February 12, 2004, the market capitalization of the 
securities included in the DJIA ranged from a high of $329.3 billion to 
a low of $8.4 billion. The average monthly trading volume for the last 
six months, as of the same date, ranged from a high of 24.6 million 
shares to a low of 3.0 million shares.

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.\8\ In the case of an 
issuer which is unable to satisfy the income criteria set forth in 
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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    \8\ 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; 
and
    (D) The aggregate market value/principal amount of the security 
will be at least $4 million.
    In addition, Nasdaq notes that Merrill Lynch satisfies the listed 
marketplace requirement set forth in NASD Rule 4420(f)(2).\9\ 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 have 
reasonable grounds for believing that the recommendation 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. In addition, pursuant to NASD Rule 2310(b),\10\ 
prior to the execution of a transaction in the Notes that has been 
recommended to a non-institutional customer, a member shall make 
reasonable efforts to obtain information concerning: (1) The customer's 
financial status; (2) the customer's tax status; (3) the customer's 
investment objectives; and (4) such other information used or 
considered to be reasonable by such member in making recommendations to 
the customer.
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    \9\ 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.
    \10\ Telephone conversation between Alex Kogan, Associate 
General Counsel, Nasdaq, and Florence E. Harmon, Senior Special 
Counsel, Division, Commission (February 20, 2004).
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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.\11\ In addition, as previously described, 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. Furthermore, the Notes will be subject to the equity 
margin rules. Lastly, the regular equity trading hours of 9:30 a.m. to 
4 p.m. will apply to transactions in the Notes.
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    \11\ 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.

[[Page 9667]]

Disclosure and Dissemination of Information

    Merrill Lynch will deliver a prospectus in connection with the 
initial purchase of the Notes. The procedure for the delivery of a 
prospectus will be the same as Merrill Lynch's current procedure 
involving primary offerings. In addition, Nasdaq will issue a circular 
to NASD members explaining the unique characteristics and risks of the 
Notes.
2. Statutory Basis
    Nasdaq believes that the proposed rule change is consistent with 
the provisions of section 15A of the Act,\12\ in general, and with 
section 15A(b)(6) of the Act,\13\ 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. Specifically, 
the proposed rule change will provide investors with another investment 
vehicle based on the DJIA.
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    \12\ 15 U.S.C. 78o-3.
    \13\ 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 proposal 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-2004-030. The 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, 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 Exchange. All 
submissions should refer to the File No. SR-NASD-2004-030 and should be 
submitted by March 22, 2004.

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

    Nasdaq requests that the Commission approve the proposal, on an 
accelerated basis to accommodate the timetable of 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 DJIA.\14\ The Commission has also previously approved 
the listing of securities with a structure substantially the same as 
that of the Notes.\15\
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    \14\ See supra note 7.
    \15\ See Securities Exchange Act Release Nos. 48486 (September 
11, 2003), 68 FR 54758 (September 18, 2003) (approving the listing 
and trading of contingent principal protection notes linked to the 
S&P 500 Index); and 48152 (July 10, 2003), 68 FR 42435 (July 17, 
2003) (approving the listing and trading of partial principal 
protected notes linked to the S&P 500 Index).
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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 \16\ in that it is designed 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.\17\ The Commission believes that the 
Notes will provide investors with the opportunity to obtain returns 
based on the DJIA and they provide for the return of at least 97% of 
the principal amount per Unit. Specifically, as described more fully 
above, if the value of the DJIA decreases or does not increase 
sufficiently, a beneficial owner will be entitled to less than the 
principal amount of $10 per Unit. However, in no event will a 
beneficial owner be entitled to less than the Minimum Redemption 
Amount.
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    \16\ 15 U.S.C. 78o-3(b)(6). Pursuant to Section 15A(b)(6) of the 
Act, the Commission must predicate approval of Nasdaq trading for 
new derivate products upon a finding that the introduction of the 
product is in the public interest. Such a finding would be difficult 
with respect to a product that served no investment, hedging or 
other economic functions, because any benefits that might be derived 
by market participants would likely be outweighed by the potential 
for manipulation, diminished public confidence in the integrity of 
the markets, and other valid regulatory concerns.
    \17\ 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 a series of senior non-convertible debt securities 
whose price will be derived from and based upon the value of the DJIA. 
In addition, as discussed more fully above, the Notes do not guarantee 
the total amount at maturity equal to the principal amount. Thus, if 
the DJIA has declined at maturity, a beneficial owner may receive may 
receive 3% less than the original public offering price of the Notes. 
Because the final rate of return on the Notes is derivatively priced 
and based upon the performance of the 30 common stocks underlying the 
DJIA and because the Notes are debt instruments that do not guarantee a 
total return of principal, and because investors' potential return is 
limited by the Participation Rate, 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.
    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.\18\ In particular, by imposing the 
hybrid listing standards, heightened suitability for 
recommendations,\19\ 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,

[[Page 9668]]

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 a total return of principal at maturity, that the 
Participation Rate on the Notes is expected to be between 100% and 115% 
per unit,\20\ that the Notes will not pay interest, and that the Notes 
will provide exposure in the DJIA. The circular will also explain 
Merrill Lynch's calculation of the Notes' Participation Rate. 
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. In addition, the 
Commission notes that Merrill Lynch will deliver a prospectus in 
connection with the initial purchase of the Notes.
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    \18\ See 1993 Order, supra note 4.
    \19\ 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.
    \20\ The actual Participation Rate date will be determined on 
the day the Notes are priced for initial sale to the public and 
disclosed in the final prospectus supplement.
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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.\21\
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    \21\ The companies comprising the DJIA 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. Nasdaq 
represents that its surveillance procedures are adequate to monitor 
properly the grading of the Notes.
    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,\22\ 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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    \22\ See, e.g., Securities Exchange Act Release Nos. 44913 
(October 9, 2001), 66 FR 52469 (October 15, 2001) (approving the 
listing and trading of notes issued by Morgan Stanley Dean Witter & 
Co. whose return is based on the performance of the Nasdaq-100 
Index); 44483 (June 27, 2001), 66 FR 35677 (July 6, 2001) (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) (approving the listing and trading of notes 
issued by Merrill Lynch whose return is based on a weighted 
portfolio of the Healthcare/Biotechnology industry securities).
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    Nasdaq also represents that index value of the DJIA is publicly 
disseminate every two seconds if the index valuation changes. The 
Commission finds that such public dissemination of the index valuation 
will provide investors with timely and useful information concerning 
the value of their Notes.
    Finally, the Commission believes that the listing and trading of 
the proposed Notes should not unduly impact the market for the 
securities underlying the DJIA or raise manipulative concerns. In 
approving the product, the Commission recognizes that the DJIA is a 
price-weighted index of 30 companies listed on Nasdaq and the NYSE. The 
Commission notes that the DJIA is determined, composed, and calculated 
by the editors of the WSJ, and not a broker-dealer. As of February 12, 
2004, the market capitalization of the securities included in the DJIA 
ranged from a high of $329.3 billion to a low of $8.4 billion. The 
average monthly trading volume for the last six months, as of the same 
date, ranged from a high of 24.6 million shares to a low of 3.0 million 
shares. Given the compositions of the stocks underlying the DJIA, the 
Commission believes that the listing and trading of the Notes that are 
linked to the DJIA, should not unduly impact the market for the 
underlying securities comprising the DJIA or raise manipulative 
concerns. As discussed more fully above, the underlying stocks 
comprising the DJIA are well-capitalized, highly liquid stocks. 
Moreover, the issuers of the underlying securities comprising the DJIA, 
are subject to reporting requirements under the Act, and all of the 
component stocks are either listed or traded on, or traded through the 
facilities of, U.S. securities markets. In addition, Nasdaq's 
surveillance procedures should serve to deter as well as detect any 
potential manipulation.
    The Commission finds good cause for approving the proposed rule 
change, as amended, 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.\23\ Accordingly, the Commission believes that there is 
good cause, consistent with Sections 15A(b)(6) and 19(b)(2) of the 
Act,\24\ to approve the proposal, on an accelerated basis.
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    \23\ See supra note 15.
    \24\ 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,\25\ that the proposed rule change (SR-NASD-2004-030) is hereby 
approved on an accelerated basis.
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    \25\ 15 U.S.C. 78s(b)(2).

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\26\
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    \26\ 17 CFR.200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 04-4428 Filed 2-27-04; 8:45 am]
BILLING CODE 8010-01-P