[Federal Register Volume 69, Number 217 (Wednesday, November 10, 2004)]
[Notices]
[Pages 65237-65238]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E4-3123]



[[Page 65237]]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-50629; File No. SR-NASD-2004-166]


Self-Regulatory Organizations; National Association of Securities 
Dealers, Inc.; Notice of Filing of Proposed Rule Change To Modify the 
Other Securities Fee Schedule

November 3, 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 October 29, 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. 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 the Other Securities fee schedule in NASD 
Rule 4530.
    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\ The proposed rule change is marked to show changes to NASD 
Rule 4530 as currently reflected in the NASD Manual available at 
http://www.nasd.com. No other pending or approved rule filings would 
affect the text of this Rule.
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* * * * *
4530. Other Securities
(a) Application Fee and Entry Fee
    (1) When an issuer submits an application for inclusion of any 
Other Security or SEEDS in the Nasdaq National Market qualified for 
listing under Rule 4420(f) or 4420(g), it shall pay a non-refundable 
Application Fee of $1,000.
    [(1)] (2) When an issuer submits an application for inclusion of 
any Other Security or SEEDS in [The] the Nasdaq National Market 
qualified for listing under Rule 4420(f) or 4420(g), it shall pay an 
Entry Fee [fee ($1,000 of which is a non-refundable processing fee)] 
calculated based on total shares outstanding according to the following 
schedule:

Up to 1 million shares $ 5,000
1+ to 2 million shares $10,000
2+ to 3 million shares $15,000
3+ to 4 million shares $17,500
4+ to 5 million shares $20,000
5+ to 6 million shares $22,500
6+ to 7 million shares $25,000
7+ to 8 million shares $27,500
8+ to 9 million shares $30,000
9+ to 10 million shares $32,500
10+ to 15 million shares $37,500
Over 15 million shares $45,000

    The applicable Entry Fee shall be reduced by any Entry Fees paid 
previously in connection with the initial inclusion during the current 
calendar year of any of the issuer's Other Securities and SEEDS in the 
Nasdaq National Market.
    [(2)] (3) For the sole purpose of determining the Entry Fee, total 
[Total] shares outstanding means the aggregate of all classes of Other 
Securities and SEEDS of the issuer to be included in [The] the Nasdaq 
National Market in the current calendar year as shown in the issuer's 
most recent periodic report or in more recent information held by 
Nasdaq or, in the case of new issues, as shown in the offering 
circular, required to be filed with the issuer's appropriate regulatory 
authority.
    [(3)] (4) The Board of Directors of The Nasdaq Stock Market, Inc. 
or its designee may, in its discretion, defer or waive all or any part 
of the Application Fee or Entry Fee [entry fee] prescribed herein.
    [(4)] (5) If the application is withdrawn or is not approved, the 
Entry Fee [entry fee (less the non-refundable processing fee)] shall be 
refunded.
(b) Annual Fee
    (1) The issuer of Other Securities or SEEDS qualified under Rule 
4420(f) or 4420(g) for listing on [The] the Nasdaq National Market 
shall pay to The Nasdaq Stock Market, Inc. an [annual fee] Annual Fee 
calculated based on total shares outstanding according to the following 
schedule:

Up to [1] 5 million shares $ [6,500] 15,000
[1+ to 2 million shares $ 7,000
2+ to 3 million shares $ 7,500
3+ to 4 million shares $ 8,000
4+ to 5 million shares $ 8,500]
5+ to [6] 10 million shares $ [9,000] 17,500
[6+ to 7 million shares $ 9,500
7+ to 8 million shares $10,000
8+ to 9 million shares $10,500
9+ to 10 million shares $11,000]
10+ to [11] 25 million shares $[11,500] 20,000
[11+ to 12 million shares $12,000
12+ to 13 million shares $12,500
13+ to 14 million shares $13,000
14+ to 15 million shares $13,500
15+ to 16 million shares $14,000
Over 16 million shares $14,500]
25+ to 50 million shares $22,500
Over 50 million shares $30,000

    (2) The Board of Directors of The Nasdaq Stock Market, Inc. or its 
designee may, in its discretion, defer or waive all or any part of the 
[annual fee] Annual Fee prescribed herein.
    (3) For the sole purpose of determining the Annual Fee, total 
[Total] shares outstanding means the aggregate of all classes of Other 
Securities and SEEDS of the issuer included in the Nasdaq National 
Market, as shown in the issuer's most recent periodic report required 
to be filed with the issuer's appropriate regulatory authority or in 
more recent information held by Nasdaq.
* * * * *

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
    The proposed rule change modifies the Other Securities fee schedule 
contained in NASD Rule 4530. The proposal establishes a new, separate, 
non-refundable application fee (in addition to the existing entry fee) 
for ``other securities'' and SEEDS, and raises the applicable annual 
fee levels. The proposal also clarifies how the appropriate fee 
``tier'' is determined for an issuer in any given calendar year.
    The new application fee and the increase in the annual fee will 
help Nasdaq recover the often-substantial costs associated with listing 
the various securities (most of which are known in the industry as 
``structured products'') that will be subject to the revised fee 
schedule.\4\ The review and listing approval process for many such

[[Page 65238]]

securities frequently involves extensive product-focused consultations 
between the Nasdaq staff and the staff of the Commission and, in many 
cases, product-specific rule change filings by Nasdaq with the 
Commission. As the value of such securities is usually linked to the 
value of other securities or indexes, Nasdaq examines (as part of the 
initial listing process) and monitors the activity in (on an on-going 
basis) such ``linked'' securities and indexes. Nasdaq believes that the 
new application fee and the revised annual fees will better reflect the 
actual level and cost of the resources that Nasdaq devotes to listing 
these securities and overseeing market activities directly or 
indirectly (i.e., by virtue of linked securities or indexes) related to 
these securities and their issuers.
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    \4\ SEEDS are a type of structured product, and, as such, it is 
equitable that they be subject to the same fee schedule as the other 
structured products.
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    Nasdaq believes that the proposed fee levels are both reasonable in 
light of the associated costs and at the same time responsive to the 
need to remain competitive relative to other markets. In this regard, 
Nasdaq notes that the proposed fees will be similar to the existing 
applicable American Stock Exchange (``AMEX'') fees.\5\
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    \5\ See AMEX Company Guide Sec. Sec.  140 and 141.
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    Nasdaq proposes to make all changes effective upon Commission 
approval, with the exception of the annual fee change, which will 
become effective on January 1, 2005.
2. Statutory Basis
    Nasdaq believes that the proposed rule change is consistent with 
the provisions of section 15A of the Act,\6\ in general and with 
section 15A(b)(5) of the Act,\7\ in particular, in that it provides 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 NASD operates or controls.
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    \6\ 15 U.S.C. 78o-3.
    \7\ 15 U.S.C. 78o-3(b)(5).
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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

    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 Number SR-NASD-2004-166 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 Number SR-NASD-2004-166. 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 Number SR-NASD-2004-166 and 
should be submitted on or before December 1, 2004.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\8\
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    \8\ 17 CFR 200.30-3(a)(12).
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J. Lynn Taylor,
Assistant Secretary.
[FR Doc. E4-3123 Filed 11-9-04; 8:45 am]
BILLING CODE 8010-01-P