[Federal Register Volume 77, Number 171 (Tuesday, September 4, 2012)]
[Notices]
[Pages 53957-53958]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2012-21677]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-67738; File No. SR-NASDAQ-2012-100]
Self-Regulatory Organizations; The NASDAQ Stock Market LLC;
Notice of Filing and Immediate Effectiveness of Proposed Rule Change to
Direct Registration Requirements under Rule 5210(c)
August 28, 2012.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act''),\1\ notice is hereby given that on August 24, 2012, The
NASDAQ Stock Market LLC (``Nasdaq'') filed with the Securities and
Exchange Commission (``Commission'') the proposed rule change described
in Items I and II below, which items have been prepared primarily by
Nasdaq. Nasdaq filed the proposed rule change pursuant to Section
19(b)(3)(A) of the Act and Rule 19b-4(f)(6) thereunder so that the
proposed rule change was effective upon filing with the Commission.\2\
The Commission is publishing this notice to solicit comments on the
proposed rule change from interested parties.
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\1\ 15 U.S.C. 78s(b)(1).
\2\ 15 U.S.C. 78s(b)(3)(A) and 17 CFR 240.19b-4(f)(6).
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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 5210(c) related to the Direct
Registration System (``DRS'') to reconcile a discrepancy between the
initial and continued listing requirements. Nasdaq will implement the
proposed change immediately. The text of the proposed rule change is
available on Nasdaq's Web site at http://www.nasdaq.cchwallstreet.com,
at http://www.sec.gov, at the principal office of Nasdaq, and at the
Commission's Public Reference Room.
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 these
statements.\3\
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\3\ The Commission has modified the text of the summaries
prepared by Nasdaq.
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(A) Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
(1) Purpose
Nasdaq proposes to modify Rule 5210(c) related to DRS to reconcile
a discrepancy between the initial and continued listing requirements.
As currently drafted, Rule 5210(c) provides that the DRS requirement
does not apply to additional classes of securities of companies which
already have securities listed on Nasdaq and companies which
immediately prior to such listing had securities listed on another
registered securities exchange in the U.S.
This language is now outdated. Specifically, when Nasdaq introduced
the DRS, it applied the rule to most new listings, but created a phase-
in period for already listed companies, including companies listing
additional classes of securities and companies switching from other
exchanges.\4\ This phase-in period has now ended \5\ and all listed
companies are required by Rule 5255 to comply with the DRS requirement,
however, the language allowing an exemption from the DRS initial
listing requirement for these companies remains in Rule 5210(c). Thus,
as currently written, a company could qualify to list on Nasdaq
pursuant to one of these exceptions in Rule 5210(c), but immediately be
out of compliance with the continued listing requirements in Rule 5255.
The purpose of the proposed rule change is to remove these exceptions
from the initial listing requirement, and thereby clarify and conform
to these rules.
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\4\ Securities Exchange Act Release No. 54288 (August 8, 2006),
71 FR 47276 (August 16, 2006) (Order Granting Approval of SR-NASDAQ-
2006-008).
\5\ The phase in period ended on March 31, 2008. See Securities
Exchange Act Release No. 57062 (December 28, 2007), 73 FR 900
(January 4, 2008) (Order Granting Approval of SR-NASDAQ-2007-101).
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Additionally, the proposed rule change corrects a second
inconsistency between the initial listings rules and continued listings
rules regarding securities which are book-entry-only.
[[Page 53958]]
The continued listing requirement in Rule 5255 excludes securities that
are book-entry-only because ownership of such securities is already
recorded only on the books and records of the company and is not held
in certificated form. As such, these securities already enjoy many of
the advantages that DRS is designed to promote. The comparable
exception in the initial listing requirement contained in Rule 5210(c),
however, only excludes ``non-equity securities that are book-entry-
only.'' While similar language previously existed limiting the
exception from the continued listing requirement to non-equity
securities, Nasdaq expanded that exception to include all securities
that are book-entry-only.\6\ As with the other correction herein, this
creates an inconsistency between the initial and continued listings
requirements. Nasdaq now proposes to expand the exception in Rule
5210(c) relating to initial listings to exclude all securities that are
book-entry-only to clarify and conform these rules. If a security
ceases to be book-entry-only, that security would then be required to
be eligible to participate in DRS.
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\6\ See Securities Exchange Act Release No. 58125 (July 9,
2008), 73 FR 42389 (July 21, 2008) (Order Granting Approval of SR-
NASDAQ-2008-31).
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(2) Statutory Basis
Nasdaq believes that the proposed rule change is consistent with
the provisions of Section 6 of the Act,\7\ in general, and with section
6(b)(5) of the Act,\8\ 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 foster cooperation and
coordination in persons engaged in regulating, clearing, settling,
processing information with respect to, and facilitating transactions
in securities, to remove impediments to and perfect the mechanism of a
free and open market and a national market system, and, in general, to
protect investors and the public interest. The proposed rule change
will remove inconsistent rule language, thereby clarifying Nasdaq's
rules, and help assure that the benefits of DRS are available for
securities that do not otherwise enjoy those benefits, which should in
turn help promote the public interest.
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\7\ 15 U.S.C 78f.
\8\ 15 U.S.C 78f(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 relating to the proposed rule change have not been
solicited Nasdaq. Nasdaq will notify the Commission of any written
comments received by Nasdaq.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
The proposed rule change is effective upon filing pursuant to
Section 19(b)(3)(A) of the Act and paragraph (f)(6) of Rule 19b-4
thereunder, in that the proposed rule change: (i) Does not
significantly affect the protection of investors or the public
interest; (ii) does not impose any significant burden on competition;
and (iii) does not become operative for 30 days after the date of the
filing, or such shorter time as the Commission may designate if
consistent with the protection of investors and the public interest. On
August 10, 2012, Nasdaq gave the Commission written notice of its
intent to file the proposed rule change, along with a brief description
and text of the proposed rule change.
Nasdaq believes that the proposed rule change does not
significantly affect the protection of investors or the public interest
because it conforms the initial listing standard contained in Rule 5210
to the existing continued listing standard contained in Rule 5255 by
eliminating exceptions to the rule that are no longer applicable and
providing that the rule is not applicable to any security which is
book-entry only, since such securities already enjoy the benefits of a
direct registration program.
At any time within 60 days of the filing of the proposed rule
change, the Commission summarily may temporarily suspend such rule
change if it appears to the Commission that such action is necessary or
appropriate in the public interest, for the protection of investors, or
otherwise in furtherance of the purposes of the Act. Nasdaq has
provided the Commission of its intent to file the proposed rule change,
along with a brief description and text of the proposed rule change, at
least five business days prior to the date of filing of the proposed
rule change.
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 email to [email protected]. Please include
File Number SR-NASDAQ-2012-100 on the subject line.
Paper Comments
Send paper comments in triplicate to Elizabeth M. Murphy,
Secretary, Securities and Exchange Commission, 100 F Street NE.,
Washington, DC 20549-1090.
All submissions should refer to File Number SR-NASDAQ-2012-100. This
file number should be included on the subject line if email 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 Web site viewing and
printing in the Commission's Public Reference Section, 100 F Street
NE., Washington, DC 20549-1090, on official business days between the
hours of 10 a.m. and 3 p.m. Copies of such filings will also be
available for inspection and copying at the principal office of Nasdaq
and on Nasdaq's Web site at http://www.nasdaq.cchwallstreet.com. 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-NASDAQ-2012-100 and should
be submitted on or before September 25, 2012.
For the Commission by the Division of Trading and Markets,
pursuant to delegated authority.\9\
\9\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2012-21677 Filed 8-31-12; 8:45 am]
BILLING CODE 8011-01-P