[Federal Register Volume 70, Number 106 (Friday, June 3, 2005)]
[Notices]
[Pages 32684-32685]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E5-2829]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-51748; File No. SR-NASD-2005-024]


Self-Regulatory Organizations; National Association of Securities 
Dealers, Inc.; Order Approving Proposed Rule Change and Amendment No. 1 
Relating to Dissemination of the Underlying Index Value for Portfolio 
Depository Receipts and Index Fund Shares

May 26, 2005.
    On February 9, 2005, the National Association of Securities 
Dealers, Inc. (``NASD''), through its subsidiary, The Nasdaq Stock 
Market, Inc. (``Nasdaq''), submitted to the Securities and Exchange 
Commission (``Commission''), pursuant to Section 19(b)(1) of the 
Securities Exchange Act of 1934 (``Act'') \1\ and Rule 19b-4 
thereunder,\2\ a proposed rule change to revise the listing standards 
for Portfolio Depository Receipts (``PDRs'') and Index Fund Shares to 
provide that the current value of the underlying index must be widely 
disseminated by one or more major market data vendors at least every 15 
seconds during the time the PDR or Index Fund Share trades on Nasdaq. 
On April 4, 2005, Nasdaq submitted Amendment No. 1 to the proposed rule 
change.\3\ The proposed rule change, as modified by Amendment No. 1, 
was published for comment in the Federal Register on April 21, 2005.\4\ 
The Commission received no comments regarding the proposed rule change. 
This order approves the proposed rule change, as amended.
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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    \3\ Amendment No. 1 replaced and superseded the original filing 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 revised 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 PDR or Index Fund Share trades on Nasdaq.
    \4\ See Securities Exchange Act Release No. 51559 (April 15, 
2005), 70 FR 20787.
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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.\5\ In particular, the Commission finds that the proposed 
rule change is consistent with Section 15A(b)(6) of the Act,\6\ which 
requires, among other things, that the rules of a national securities 
association be designed to prevent fraudulent and manipulative acts and 
practices, to promote just and equitable principles of trade, and, in 
general, to protect investors and the public interest.
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    \5\ In approving this proposed rule change, the Commission has 
considered the proposed rule's impact on efficiency, competition, 
and capital formation. See 15 U.S.C. 78c(f).
    \6\ 15 U.S.C. 78o-3(b)(6).
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    Currently, the NASD's rules for listing and trading PDRs and Index 
Fund Shares pursuant to Rule 19b-4(e) under the Act require that the 
current value of the underlying index be disseminated every 15 seconds 
over the Nasdaq Trade Dissemination System.\7\ Nasdaq proposes to amend 
these listing standards to require that the current value of the 
underlying index be widely disseminated by one or more major market 
data vendors at least every 15 seconds during the time the PDR or Index 
Fund Share trades on Nasdaq.
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    \7\ See NASD Rule 4420(i) and (j).
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    By revising the index dissemination requirement, the proposal would 
expand the PDRs and Index Fund Shares eligible for listing under NASD 
Rules 4420(i) and (j) to include not only PDRs and Index Fund Shares 
whose underlying index value is disseminated over the Nasdaq Trade 
Dissemination System, but also PDRs and Index Fund Shares whose current 
underlying index value is widely disseminated at least every 15 seconds 
by one or more major market data vendors during the time the PDR or 
Index Fund Share trades on Nasdaq. The Commission believes that this 
index dissemination requirement, which is similar to the index 
dissemination requirement used in the listing standards for narrow-
based index options,\8\ will help to ensure the transparency of current 
index values for

[[Page 32685]]

indexes underlying PDRs and Index Fund Shares.
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    \8\ See e.g., Chicago Board Options Exchange Rule 24.2(b); 
International Securities Exchange Rule 2002(b); Pacific Exchange 
Rule 5.13; and Philadelphia Stock Exchange Rule 1009A(b) (listing 
standards for narrow-based index options requiring that, among other 
things, the current underlying index value be reported at least once 
every 15 seconds during the time the index option trades on the 
exchange).
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    It is therefore ordered, pursuant to Section 19(b)(2) of the 
Act,\9\ that the proposed rule change (SR-NASD-2005-024), as amended, 
is approved.
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    \9\ 15 U.S.C. 78s(b)(2).

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\10\
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    \10\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. E5-2829 Filed 6-2-05; 8:45 am]
BILLING CODE 8010-01-P