[Federal Register Volume 69, Number 159 (Wednesday, August 18, 2004)]
[Notices]
[Pages 51341-51342]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 04-18908]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-50183; File No. SR-NASD-2004-109]


Self-Regulatory Organizations; Notice of Filing of a Proposed 
Rule Change by the National Association of Securities Dealers, Inc. To 
Increase the Initial Inclusion Requirements for Certain Foreign 
Securities Seeking To List on the Nasdaq SmallCap Market

August 11, 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 July 15, 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'' or ``SEC'') the proposed rule change as described in 
Items I, II, and III 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.
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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 modify Rule 4320 to increase the initial 
inclusion requirements for non-Canadian foreign securities and American 
Depositary Receipts seeking to list on the Nasdaq SmallCap Market 
(``SmallCap Market''). Nasdaq will implement the proposed rule change 
immediately upon approval by the Commission.
    The text of the proposed rule change is below. Proposed new 
language is in italics; proposed deletions are in [brackets].\3\
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    \3\ Changes are marked to the text for Rule 4320 that appears in 
the electronic NASD Manual found at www.nasd.com, which was current 
as of the date of this filing. No other pending rule filings would 
affect the text of this rule. Telephone conversation between Arnold 
P. Golub, Associate Vice President, Nasdaq, and Florence Harmon, 
Senior Special Counsel, Division, Commission on August 11, 2004.
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* * * * *

4320. Qualification Requirements for Non-Canadian Foreign Securities 
and American Depositary Receipts

    To qualify for inclusion in Nasdaq, a security of a non-Canadian 
foreign issuer, an American Depositary Receipt (ADR) or similar 
security issued in respect of a security of a foreign issuer shall 
satisfy the requirements of paragraphs (a), (b) or (c), and (d) and (e) 
of this Rule.
    (a)-(d) No change.
    (e) In addition to the requirements contained in paragraphs (a), 
(b) or (c), and (d), the security shall satisfy the criteria set out in 
this subsection for inclusion in Nasdaq. In the case of ADRs, the 
underlying security will be considered when determining the ADR's 
qualification for initial or continued inclusion on Nasdaq.
    (1) No change.
    (2) (A) For initial inclusion, the issue shall have a minimum bid 
price of $4 and the issuer shall have:
    (i)-(iii) No change.
    (B)-(D) No change.
    (3)-(4) No change.
    (5) There shall be at least 1,000,000 publicly held shares for 
initial inclusion

[[Page 51342]]

and 500,000 publicly held shares for continued inclusion. For initial 
inclusion, such shares shall have a market value of at least $5 
million. In the case of preferred stock and secondary classes of common 
stock, there shall be at least 200,000 publicly held shares for initial 
inclusion and 100,000 publicly held shares for continued inclusion. In 
addition, the issuer's common stock or common stock equivalent security 
must be traded on either Nasdaq or a national securities exchange. In 
the event the issuer's common stock or common stock equivalent security 
is not traded on either Nasdaq or a national securities exchange, the 
preferred stock and/or secondary class of common stock may be included 
in Nasdaq so long as the security satisfies the listing criteria for 
common stock. Shares held directly or indirectly by any officer or 
director of the issuer and by any person who is the beneficial owner of 
more than 10 percent of the total shares outstanding are not considered 
to be publicly held.
    (6)-(20) No change.
    (21-25) Reserved.
    (f) No change.
* * * * *

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
    Currently, no initial inclusion requirements relating to share 
price or market value of publicly held shares are applicable to non-
Canadian foreign issuers seeking to list on the Nasdaq SmallCap Market. 
By contrast, domestic issuers must have a bid price of at least $4 and 
a market value of publicly held shares of at least $5,000,000 for 
initial listing. Nasdaq proposes to amend Rule 4320 to apply these same 
initial inclusion requirements to non-Canadian foreign issuers.
2. Statutory Basis
    Nasdaq believes that the proposed rule change is consistent with 
the provisions of Section 15A of the Act,\4\ in general, and with 
Section 15A(b)(6) of the Act,\5\ in particular, in that the proposal is 
designed to prevent fraudulent and manipulative acts and practices, and 
to protect investors and the public interest. As previously mentioned, 
Nasdaq is proposing this rule change to apply the same, heightened 
quantitative initial inclusion standards upon non-Canadian foreign 
issuers that currently apply to domestic and Canadian issuers.
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    \4\ 15 U.S.C. 78o-3.
    \5\ 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.

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 [email protected]. Please include 
File No. SR-NASD-2004-109 on the subject line.

Paper Comments

     Send paper comments in triplicate to Jonathan G. Katz, 
Secretary, Securities and Exchange Commission, 450 Fifth Street, NW., 
Washington, DC 20549-0609.
    All submissions should refer to File No. SR-NASD-2004-109. 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 Section, 450 Fifth 
Street, NW., Washington, DC 20549. Copies of such filing also will be 
available for inspection and copying at the principal office of the 
NASD. 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 No. SR-NASD-
2004-109 and should be submitted on or before September 8, 2004.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\6\
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    \6\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 04-18908 Filed 8-17-04; 8:45 am]
BILLING CODE 8010-01-P