[Federal Register Volume 70, Number 132 (Tuesday, July 12, 2005)]
[Notices]
[Pages 40091-40094]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E5-3682]



[[Page 40091]]

-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-51970; File No. SR-NASD-2004-131]


Self-Regulatory Organizations; National Association of Securities 
Dealers, Inc.; Notice of Filing of Proposed Rule Change and Amendments 
Nos. 1 and 2 Thereto Relating to the Listing and Trading of Leveraged 
Index Return Notes Linked to the Nikkei 225 Index

July 5, 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 August 30, 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. On March 21, 
2005, Nasdaq filed Amendment No. 1 to the proposed rule change.\3\ On 
March 31, 2005, Nasdaq filed Amendment No. 2 to the proposed rule 
change.\4\ The Commission is publishing this notice to solicit comments 
on the proposed rule change from interested persons.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ In Amendment No. 1, Nasdaq provided additional details 
regarding the proposed index linked notes and the Index.
    \4\ In Amendment No. 2, Nasdaq set forth the standards that must 
be continuously maintained for Nasdaq not to commence delisting or 
removal proceedings with respect to the Notes.
---------------------------------------------------------------------------

I. Self-Regulatory Organization's Statement of the Terms of the 
Substance of the Proposed Rule Change

    Nasdaq proposes to list and trade Leveraged Index Return Notes 
Linked to the Nikkei 225 Index (``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 Notes provide for 
a return based upon the Nikkei 225 Index (``Index'').
The Index
    The Index is a stock index calculated, published and disseminated 
by Nihon Keizai Shimbun, Inc. (``NKS''),\5\ which measures the 
composite price performance of selected Japanese stocks. The Index is 
currently based on 225 common stocks traded on the Tokyo Stock Exchange 
(``TSE'') and represents a broad cross-section of Japanese industry. 
All 225 underlying stocks are listed in the First Section of the TSE 
and are, therefore, among the most actively traded stocks on the TSE. 
Futures and options contracts on the Index are traded on the Singapore 
International Monetary Exchange, the Osaka Securities Exchange, and the 
Chicago Mercantile Exchange.
---------------------------------------------------------------------------

    \5\ Founded in 1876, NKS is a well-known provider of business 
information in Japan. It publishes several newspapers, including a 
large business daily, The Nihon Keizai Shimbun, and is also 
reportedly involved in a range of broadcasting and industrial 
activities. The Notes are not sponsored, endorsed, sold or promoted 
by NKS. NKS has no obligation to take the needs of Merrill Lynch or 
the holder of the Notes into consideration in determining, 
composing, or calculating the Nikkei. NKS is not responsible for, 
and has not participated in the determination of the timing of, 
prices for, or quantities of, the Notes to be issued or in the 
determination or calculation of the equation by which the Notes are 
to be settled in cash. NKS has no obligation or liability in 
connection with the administration or marketing of the Notes. NKS is 
not affiliated with a securities broker or dealer.
---------------------------------------------------------------------------

    The Index is a modified, price-weighted index, which means a 
component stock's weight in the Index is based on its price per share 
rather than total market capitalization of the issuer. NKS calculates 
the Index by multiplying the per share price of each component by the 
corresponding weighting factor for that component (a ``Weight 
Factor''), calculating the sum of all these products and dividing that 
sum by a divisor. The divisor, initially set on May 16, 1949 at 225, 
was 22.999 as of August 19, 2004, and is subject to periodic 
adjustments as set forth below. Each Weight Factor is computed by 
dividing [yen]50 by the par value of the relevant component, so that 
the share price of each component when multiplied by its Weight Factor 
corresponds to a share price based on a uniform par value of [yen]50. 
Each Weight Factor represents the number of shares of the related 
component that are included in one trading unit of the Index. The stock 
prices used in the calculation of the Index are those reported by a 
primary market for the components, which is currently the TSE. The 
level of the Index is calculated once per minute during TSE trading 
hours. The value of the Index is readily accessible by U.S. investors 
at the following Web sites: http://www.nni.nikkei.co.jp (the identity 
of the individual Index components can also be accessed from this site) 
and http://www.bloomberg.com. As noted below, because of the time 
difference between Tokyo and New York, the closing level of the Index 
on a trading day will generally be available in the United States by 
the opening of business on the same calendar day.
    In order to maintain continuity in the level of the Index in the 
event of certain changes due to non-market factors affecting the 
components, such as the addition or deletion of stocks, substitution of 
stocks, stock dividends, stock splits or distributions of assets to 
stockholders, the divisor used in calculating the Index is adjusted in 
a manner designed to prevent any instantaneous change or discontinuity 
in the level of the Index. The divisor remains at the new value until a 
further adjustment is necessary as the result of another change. As a 
result of each change affecting any component, the divisor is adjusted 
in such a way that the sum of all share prices immediately after the 
change multiplied by the applicable Weight Factor and divided by the 
new divisor, i.e., the level of the Index immediately after the change, 
will equal the level of the Index immediately prior to the change.
    Components may be deleted or added by NKS. However, to maintain 
continuity in the Index, the policy of NKS is generally not to alter 
the composition of the Index except when a component is deleted in 
accordance with the following criteria. Any stock becoming ineligible 
for listing in the First Section of the TSE due to any of the following 
reasons will be deleted from the Index: Bankruptcy of the issuer, 
merger of the issuer into, or acquisition of the issuer by, another 
company, delisting of the stock or transfer of the stock to the 
``Seiri-Post'' because of excess debt of the issuer or because of any 
other reason, or transfer of the stock to the Second Section of the 
TSE. Upon deletion of a stock from the Index, NKS will select, in 
accordance with certain criteria established by it, a replacement for 
the deleted component.

[[Page 40092]]

In an exceptional case, a newly listed stock in the First Section of 
the TSE that is recognized by NKS to be representative of a market may 
be added to the Index. As a result, an existing component with low 
trading volume and not representative of a market will be deleted.
    As of August 19, 2004, the average daily trading volume of an 
average Index component was approximately 2.95 million shares. As of 
the same date, the market capitalization of the components ranged from 
approximately 14.8 trillion yen to 28 billion yen. These figures 
correspond approximately to 136.5 billion U.S. dollars and 257 million 
U.S. dollars.
    The Index is composed of 225 securities and is broad-based. As of 
August 19, 2004, the highest-weighted stock in the Index had the weight 
of 3.106%; all other components had lower weights. The top five stocks 
in the Index had the cumulative weight of approximately 13.474%.
    The TSE is one of the world's largest securities exchanges in terms 
of market capitalization. Trading hours are currently from 9 a.m. to 11 
a.m. and from 12:30 p.m. to 3 p.m., Tokyo time, Monday through Friday. 
Due to time zone difference, on any normal trading day the TSE will 
close prior to the opening of business in New York City on the same 
calendar day. Therefore, the closing level of the Index on a trading 
day will generally be available in the United States by the opening of 
business on the same calendar day.\6\
---------------------------------------------------------------------------

    \6\ Nasdaq does not find it necessary to update during the U.S. 
trading day the closing value for the Nikkei 225 for foreign 
currency fluctuations because the return on this product is a U.S. 
Dollar amount based on the percentage change in value of the Nikkei 
225 from the initial pricing date to the close of the market on five 
business days before the maturity date of the Notes. Nasdaq states 
that this is a ``currency neutral'' product because its pricing is 
based on the percentage increase or decrease of the Index value, as 
opposed to a derivative product, such as an exchange traded fund 
(``ETF''), where an intraday update of the product's estimated value 
is adjusted (when the overseas trading market is closed during the 
U.S. trading day) for foreign currency fluctuations. To have the 
estimated value of an ETF, during the U.S. trading day, reflect 
changes in currency exchange rates between the U.S. Dollar and the 
applicable foreign currency is useful to the creation and redemption 
process (which involves purchasing component securities affected by 
currency fluctuations in some cases) and thus the secondary market 
trading of the derivative product. Telephone Conference on June 24, 
2005 among Alex Kogan, Associate General Counsel, Nasdaq and 
Florence Harmon, Senior Special Counsel and Mitra Mehr, Staff 
Attorney, Division of Market Regulation, Commission (``June 24 
Telephone Conference'').
---------------------------------------------------------------------------

    The TSE has adopted certain measures, including daily price floors 
and ceilings on individual stocks, intended to prevent any extreme 
short-term price fluctuations resulting from order imbalances. In 
general, any stock listed on the TSE cannot be traded at a price lower 
than the applicable price floor or higher than the applicable price 
ceiling. These price floors and ceilings are expressed in absolute 
Japanese yen, rather than percentage limits based on the closing price 
of the stock on the previous trading day. In addition, when there is a 
major order imbalance in a listed stock, the TSE posts a ``special bid 
quote'' or a ``special asked quote'' for that stock at a specified 
higher or lower price level than the stock's last sale price in order 
to solicit counter-orders and balance supply and demand for the stock. 
The TSE may suspend the trading of individual stocks in certain limited 
and extraordinary circumstances, including, for example, unusual 
trading activity in that stock. As a result, changes in the Index may 
be limited by price limitations or special quotes, or by suspension of 
trading, on individual stocks that comprise the Index, and these 
limitations may, in turn, adversely affect the value of the Notes.
    NKS is under no obligation to Merrill Lynch to continue the 
calculation and dissemination of the Index. In the event the 
calculation and dissemination of the Index is discontinued, Nasdaq will 
delist the Notes.
    If manipulative activity or other types of trading activity that 
raise regulatory concerns are suspected and involve Index component 
stocks, the NASD will rely on the Intermarket Surveillance Group 
Agreement to obtain the needed information from the TSE. This Agreement 
obligates the NASD and the TSE (among others) to compile and transmit 
market surveillance information and resolve in good faith any 
disagreements regarding requests for information or responses thereto. 
Also, if it ever became necessary (for example, if, hypothetically, the 
TSE withdrew from the Intermarket Surveillance Group Agreement), NASD 
would seek the Commission's assistance pursuant to memoranda of 
understanding or similar intergovernmental agreements or arrangements 
that may exist between the Commission and the Japanese securities 
regulators. Nasdaq represents that it will file the appropriate 
proposed rule change pursuant to Rule 19b-4 in the event that Nasdaq is 
unable to obtain surveillance sharing information via the Intermarket 
Surveillance Group.\7\
---------------------------------------------------------------------------

    \7\ Clarification provided in June 24 Telephone Conference.
---------------------------------------------------------------------------

Other Information
    Under Rule 4420(f), Nasdaq may approve for listing and trading 
innovative securities that cannot be readily categorized under 
traditional listing guidelines.\8\ Nasdaq proposes to list the Notes 
for trading under Rule 4420(f).
---------------------------------------------------------------------------

    \8\ See Securities Exchange Act Release No. 32988 (September 29, 
1993), 58 FR 52124 (October 6, 1993) (SR-NASD-93-15) (approving 
listing standards for hybrid securities).
---------------------------------------------------------------------------

    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 Rule 4420(f). Specifically, under Rule 4420(f)(1):

    (A) The issuer shall have assets in excess of $100 million and 
stockholders' equity of at least $10 million.\9\ 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;
---------------------------------------------------------------------------

    \9\ Merrill Lynch satisfies this listing criterion.
---------------------------------------------------------------------------

    (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, Merrill Lynch satisfies the listed marketplace 
requirement set forth in Rule 4420(f)(2).\10\ Lastly, pursuant to 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, in accordance with NASD Rule 2310(a), 
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 Rule 
2310(b), prior to the

[[Page 40093]]

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.
---------------------------------------------------------------------------

    \10\ Rule 4420(f)(2) requires issuers of securities designated 
pursuant to this paragraph to be listed on The Nasdaq National 
Market or the New York Stock Exchange (``NYSE'') or be an affiliate 
of a company listed on The Nasdaq National Market or the NYSE; 
provided, however, that the provisions of Rule 4450 will be applied 
to sovereign issuers of ``other'' securities on a case-by-case 
basis.
---------------------------------------------------------------------------

    The Notes will be subject to Nasdaq's continued listing criterion 
for other securities pursuant to 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 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.
    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 be issued in denominations of whole units 
(``Unit''), with each Unit representing a single Note. The original 
public offering price of the Notes will be $10 per Unit. The Notes will 
not pay interest and are not subject to redemption by Merrill Lynch or 
at the option of any beneficial owner before maturity. The Notes' term 
to maturity is 4\1/2\ years.
    At maturity, if the value of the Index has increased, a beneficial 
owner of a Note will be entitled to receive the original offering price 
($10), plus an amount calculated by multiplying the original offering 
price ($10) by an amount equal to 123% (``Participation Rate'') of the 
percentage increase in the Index. If, at maturity, the value of the 
Index has not changed or has decreased by up to 20%, then a beneficial 
owner of a Note will be entitled to receive the full original offering 
price.
    However, unlike ordinary debt securities, the Notes do not 
guarantee any return of principal at maturity. Therefore, if the value 
of the Index has declined at maturity by more than 20%, a beneficial 
owner will receive less, and possibly significantly less, than the 
original offering price: For each 1% decline in the Index below 20%, 
the redemption amount of the Note will be reduced by 1.25% of the 
original offering price.
    The change in the value of the Index will normally (subject to 
certain modifications explained in the prospectus supplement) be 
determined by comparing (a) the average of the values of the Index at 
the close of the market on five business days shortly before the 
maturity of the Notes to (b) the closing value of the Index on the date 
the Notes were priced for initial sale to the public. The value of the 
Participation Rate (which, as indicated above, is 123%) was determined 
by Merrill Lynch on the date the Notes were priced for initial sale 
based on the market conditions at that time. Both the value of the 
Index on the date the Notes were priced and the Participation Rate were 
disclosed in Merrill Lynch's final prospectus supplement, which Merrill 
Lynch delivered in connection with the sale of the Notes.
    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 of securities 
comprising the Index. The Notes are designed for investors who want to 
participate or gain exposure to the Index, 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 other 
securities the performance of which has been linked, in whole or in 
part, to the Index.\11\
---------------------------------------------------------------------------

    \11\ See Securities Exchange Act Release Nos. 49670 (May 7, 
2004), 69 FR 27959 (May 17, 2004) (SR-NASD-2004-068) (approving 
listing and trading of Accelerated Return Notes Linked to the Nikkei 
225 Index); 49715 (May 17, 2004), 69 FR 29597 (May 24, 2004) (SR-
NASD-2004-061) (approving listing and trading of 97% Protected Notes 
Linked to the Performance of the Global Equity Basket, which 
included the Index); 38940 (August 15, 1997), 62 FR 44735 (August 
22, 1997) (SR-Amex-97-20) (approving listing and trading of Market 
Index Target-Term Securities, return on which is based on changes in 
value of portfolio of 11 foreign indexes, including the Index); and 
27565 (December 22, 1989), 55 FR 376 (January 4, 1990) (approving 
listing of Index Warrants based on the Nikkei Stock Average and 
noting the existence of a Memorandum of Understanding between the 
Commission and the Japanese Ministry of Finance for surveillance 
purposes).
---------------------------------------------------------------------------

    Since the Notes will be deemed equity securities for the purpose of 
Rule 4420(f), the NASD and Nasdaq's existing equity trading rules will 
apply to the Notes. First, pursuant to Rule 2310 and IM-2310-2, 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.\12\ Members are also reminded that 
the Notes are considered nonconventional investments for purposes of 
the NASD Notice to Members 03-71 (Nov. 2003). 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.
---------------------------------------------------------------------------

    \12\ 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.
---------------------------------------------------------------------------

    Pursuant to Securities Exchange Act Rule 10A-3 \13\ and Section 3 
of the Sarbanes-Oxley Act of 2002, Public Law 107-204, 116 Stat. 745 
(2002), Nasdaq will prohibit the initial or continued listing of any 
security of an issuer that is not in compliance with the requirements 
set forth therein.
---------------------------------------------------------------------------

    \13\ 17 CFR 240.10A-3.
---------------------------------------------------------------------------

    Nasdaq represents that the NASD's surveillance procedures are 
adequate to properly monitor the trading of the Notes. Specifically, 
the NASD will rely on its current surveillance procedures governing 
equity securities and will include additional monitoring on key pricing 
dates. In connection with initial distributions of its Nasdaq-listed 
notes, Merrill Lynch is required to deliver the appropriate prospectus.
    Nasdaq will commence delisting or removal proceedings with respect 
to the Notes (unless the Commission has approved the continued trading 
of the Notes) if any of the following standards are not continuously 
maintained:

    (i) Each component security has a minimum market value of at 
least $75 million, except that for each of the lowest weighted 
component securities in the Index that in the aggregate account for 
no more than 10% of the weight of the Index, the market value can be 
at least $50 million;
    (ii) Each component security shall have trading volume in each 
of the last six months of not less than 500,000 shares, except that 
for each of the lowest weighted component securities in the Index 
that in the aggregate account for no more than 10% of the weight of 
the Index, the trading volume shall be at least 400,000 shares for 
each of the last six months;
    (iii) The total number of components in the Index may not 
increase or decrease by more than 33 \1/3\% from the number of 
components in the Index at the time of the initial listing of the 
Notes, and in no event may be fewer than ten (10) components;
    (iv) As of the first day of January and July of each year, no 
underlying component security will represent more than 25% of the 
weight of the Index, and the five highest

[[Page 40094]]

weighted component securities in the index do not in the aggregate 
account for more than 50% of the weight of the index;
    (v) 90% of the Index's numerical value and at least 80% of the 
total number of component securities meet the then current criteria 
for standardized option trading of a national securities exchange or 
a national securities association; \14\ and
---------------------------------------------------------------------------

    \14\ In a telephone conference, Nasdaq agreed with the SEC staff 
that the additional standard, proposed by Nasdaq, set forth in 
Amendment No. 2 is inapplicable with respect to the Notes. This 
standard stated that ``each component security (except foreign 
country securities) shall be issued by a 1934 Act reporting company 
and listed on a national securities exchange or Nasdaq.'' June 24, 
2005 Telephone Conference.
---------------------------------------------------------------------------

    (vi) Foreign country securities or American Depository Receipts 
that are not subject to comprehensive surveillance agreements do not 
in the aggregate represent more than 20% of the weight of the Index.

    Nasdaq will also commence delisting or removal proceedings with 
respect to the Notes (unless the Commission has approved the continued 
trading of the Notes) under any of the following circumstances:
    (i) If the aggregate market value or the principal amount of the 
Notes publicly held is less than $400,000;
    (ii) if the value of the Index is no longer calculated or widely 
disseminated on at least a 15-second basis; \15\ or
---------------------------------------------------------------------------

    \15\ As noted, because of the time difference between Tokyo and 
New York, the closing value of the Index will be disseminated.
---------------------------------------------------------------------------

    (iii) if such other event shall occur or condition exists which in 
the opinion of Nasdaq makes further dealings on Nasdaq inadvisable.
2. Statutory Basis
    Nasdaq believes that the proposed rule change, as amended, is 
consistent with the provisions of Section 15A of the Act,\16\ in 
general, and with Section 15A(b)(6) of the Act,\17\ 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 Index.
---------------------------------------------------------------------------

    \16\ 15 U.S.C. 78o-3.
    \17\ 15 U.S.C. 78o-3(b)(6).
---------------------------------------------------------------------------

B. Self-Regulatory Organization's Statement on Burden on Competition

    Nasdaq does not believe that the proposed rule change, as amended, 
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, as amended, or
    (B) Institute proceedings to determine whether the proposed rule 
change, as amended, 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 NASD-2004-131 on the subject line.

Paper Comments

     Send paper comments in triplicate to Jonathan G. Katz, 
Secretary, Securities and Exchange Commission, 100 F Street, NE., 
Washington, DC 20549-9303.
    All submissions should refer to File Number SR-NASD-2004-131. 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 Room. 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-2004-131 and should be submitted on or before 
August 2, 2005.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\18\
---------------------------------------------------------------------------

    \18\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Jill M. Peterson,
Assistant Secretary.
[FR Doc. E5-3682 Filed 7-11-05; 8:45 am]
BILLING CODE 8010-01-P