[Federal Register Volume 70, Number 76 (Thursday, April 21, 2005)]
[Notices]
[Pages 20787-20789]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E5-1876]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-51559; File No. SR-NASD-2005-024]


Self-Regulatory Organizations; National Association of Securities 
Dealers, Inc.; Notice of Filing of Proposed Rule Change and Amendment 
No. 1 Thereto To Make Clear That the Underlying Index Value for 
Portfolio Depository Receipts and Index Fund Shares Must Be 
Disseminated Widely by an Appropriate Service

April 15, 2005.
    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 9, 2005, 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. On April 4, 
2005, Nasdaq filed Amendment No. 1 to the proposed rule change.\3\ 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    \3\ Amendment No. 1 replaced and superseded the original filing 
in its entirety. Amendment No. 1 revises the proposal to indicate 
that, among other things, the current index value must be 
disseminated by one or more major market data vendors during the 
time Portfolio Depository Receipts and Index Fund Shares trade on 
Nasdaq.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    Nasdaq proposes to make clear in the generic listing standards for 
Portfolio Depository Receipts and Index Fund Shares that the underlying 
index value must be disseminated widely by an appropriate service. The 
text of the proposed rule change, as amended, is set forth below. 
Proposed new language

[[Page 20788]]

is in italics; proposed deletions are in brackets.
* * * * *

4420. Quantitative Designation Criteria

    (a) through (h) No change.
(i) Portfolio Depository Receipts
    (1) and (2) No change.
    (3) Nasdaq may approve a series of Portfolio Depositary Receipts 
for listing and trading pursuant to Rule 19b-4(e) under the Securities 
Exchange Act of 1934, provided each of the following criteria is 
satisfied:
    (A) No change.
    (B) Index Methodology and Calculation.
    (i) and (ii) No change.
    (iii) The current index value will be widely disseminated by one or 
more major market data vendors at least every 15 seconds during the 
time when the Portfolio Depositary Receipts trade on Nasdaq [over the 
Nasdaq Trade Dissemination System].
    (C) through (E) No change.
    (4) through (7) No change.
(j) Index Fund Shares
    (1) and (2) No change.
    (3) Nasdaq may approve a series of Index Fund Shares for listing 
and trading pursuant to Rule 19b-4(e) under the Securities Exchange Act 
of 1934, provided each of the following criteria is satisfied:
    (A) No change.
    (B) Index Methodology and Calculation
    (i) and (ii) No change.
    (iii) The current index value will be widely disseminated by one or 
more major market data vendors at least every 15 seconds during the 
time when the Index Fund Shares trade on Nasdaq [over the Nasdaq Trade 
Dissemination System].
    (C) through (E) No change.
    (4) through (7) No change.
    (k) and (l) 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 had 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 believes that the proposed rule change to the generic 
listing standards for Portfolio Depository Receipts and Index Fund 
Shares makes clear that the value of the underlying index must be 
disseminated widely by Nasdaq itself, by the Consolidated Tape 
Association (which generally disseminates trade data for exchange-
listed securities), or by another reputable organization, such as 
Reuters or Bloomberg. However, a key requirement is that the index 
value be updated at least every 15 seconds. Of course, if the official 
index value does not change during some or all of the period when 
trading is occurring (for example, this is typically the case with pre-
market-open and after-hours trading, and also with foreign indexes 
because of time zone differences or holidays in the countries where 
such indexes' components trade), then the last official calculated 
index value must remain available throughout the Nasdaq trading hours.
    Nasdaq believes that the specific identity of the index 
dissemination service is not relevant, so long as such service is 
reputable, accepted in the investment community, and achieves 
appropriately wide dissemination of the particular index. As such, 
Nasdaq seeks to remove the reference to a specific Nasdaq service as 
the preferred means of index dissemination and replace it with the 
requirement of wide dissemination.
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 it is designed 
to remove the impediments to a free and open market and a national 
market system, and, in general, to protect investors and the public 
interest. Nasdaq believes that clarifying the rules helps all market 
participants.
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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, 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 NASD 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, as amended, 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-2005-024 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-2005-024. 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

[[Page 20789]]

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 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 publicly available. All 
submissions should refer to File Number SR-NASD-2005-024 and should be 
submitted on or before May 12, 2005.

    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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Jill M. Peterson,
Assistant Secretary.
[FR Doc. E5-1876 Filed 4-20-05; 8:45 am]
BILLING CODE 8010-01-P