[Federal Register Volume 77, Number 231 (Friday, November 30, 2012)]
[Pages 71464-71466]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2012-28943]



[Release No. 34-68287; File No. SR-NASDAQ-2012-131]

Self-Regulatory Organizations; The NASDAQ Stock Market LLC; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To 
Modify the Listing Requirements for Other Securities Listed Under Rule 

November 26, 2012.
    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 November 16, 2012, The NASDAQ

[[Page 71465]]

Stock Market LLC (``Nasdaq'' or ``Exchange'') filed with the Securities 
and Exchange Commission (``Commission'') the proposed rule change as 
described in Items I and II below, which Items have been prepared by 
the Exchange. 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.

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

    The Exchange proposes to modify the listing requirements for Other 
Securities listed under Rule 5730. The text of the proposed rule change 
is below. Proposed new language is in italics; proposed deletions are 
in brackets.\3\

    \3\ Changes are marked to the rule text that appears in the 
electronic manual of Nasdaq found at http://nasdaqomx.cchwallstreet.com.

5730. Listing Requirements for Securities Not Otherwise Specified 
[Above] (Other Securities)

(a) Initial Listing Requirements

    (1) Nasdaq will consider listing on the Global Market any security 
not otherwise covered by the criteria in the Rule 5400 or 5700 Series, 
provided the instrument is otherwise suited to trade through the 
facilities of Nasdaq. Such securities will be evaluated for listing 
against the following criteria:
    (A) No change.
    (B) For equity securities, there [There] must be:
    (i) 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.]; and
    (ii) a minimum public distribution of 1,000,000 trading units. 
However, if the instrument is redeemable at the option of the holders 
thereof on at least a weekly basis, these requirements shall not apply.
    (C) [For equity securities listed pursuant to this paragraph, there 
must be a minimum public distribution of 1,000,000 trading units.
    (D)] The aggregate market value/principal amount of the security 
shall be at least $4 million.
    (2)-(3) No change.
    (b) 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, the Exchange 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. The Exchange has prepared summaries, set forth in 
Sections A, B, and C below, of the most significant aspects of such 

A. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    Nasdaq Rule 5730 provides rules for listing ``Other Securities,'' 
which are not described elsewhere in Nasdaq's listing requirements.\4\ 
Generally, this rule allows the listing of innovative securities of 
substantially-sized companies, which are not readily categorized under 
the traditional listing standards. It is not intended to accommodate 
the listing of securities that raise significant new regulatory issues, 
which would require a separate rule filing submitted pursuant to 
Section 19(b) of the Act and Rule 19b-4 thereunder.\5\

    \4\ Securities Exchange Act Release No. 32988 (September 29, 
1993), 58 FR 52124 (October 6, 1993) (SR-NASD-93-15). This order 
approved the predecessor to current Nasdaq Rule 5730 while Nasdaq 
was a facility of the NASD, now FINRA.
    \5\ 15 U.S.C. 78s(b) and 17 CFR 240.19b-4.

    The issuer of a security listed under Rule 5730 must have assets in 
excess of $100 million, stockholders' equity of at least $10 million, 
and income of at least $1 million; assets in excess of $200 million and 
stockholders' equity of at least $10 million; or assets in excess of 
$100 million and stockholders' equity of at least $20 million.\6\ In 
addition, the security generally must have a minimum of 400 holders, an 
aggregate market value/principal amount of at least $4 million, and, in 
the case of equity securities, there must be a minimum public 
distribution of 1 million trading units.\7\ Prior to the trading of a 
security under this rule, Nasdaq evaluates the nature and complexity of 
the issue and, if appropriate, distributes a circular to the membership 
providing guidance regarding member firm compliance responsibilities 
and requirements when handling transactions in such securities.\8\

    \6\ Rule 5730(a)(1)(A).
    \7\ Rule 5730(a)(1)(B), (C) and (D). A security traded in one 
thousand dollar denominations must only have 100 holders.
    \8\ Rule 5730(a)(3).

    This rule was based on a rule of the New York Stock Exchange 
(``NYSE'')\9\ and is also similar to a rule of NYSE MKT.\10\ Nasdaq now 
proposes changes to Rule 5730 to more closely align that rule with 
those other markets' rules.

    \9\ See Section 703.19 of the NYSE Listed Company Manual.
    \10\ See Section 107 of the NYSE MKT Company Guide.

    Specifically, the proposed rule change would modify the holder 
requirement so that it applies only to equity securities, and thereby 
eliminate the holder requirement for listing debt securities. In this 
way, the revised rule will more closely track the NYSE's requirement, 
which does not impose a holder requirement on such listings.\11\ In 
addition, Nasdaq proposes to adopt an exception adopted by NYSE MKT to 
the holder and public distribution requirements for securities that are 
redeemable at the option of their holders on at least a weekly 
basis.\12\ Finally, Nasdaq also proposes to change the title of the 
rule, to clarify its applicability to only securities that do not 
otherwise have specific listing standards, wherever they may be in the 

    \11\ The proposed rule change would also remove the 100 holder 
requirement for securities that trade in $1,000 denominations 
because such securities are debt securities, which would no longer 
be subject to the holder requirement.
    \12\ Securities Exchange Act Release No. 55733 (May 10, 2007), 
72 FR 27602 (May 16, 2007) (SR-Amex-2007-34).

b. Statutory Basis
    Nasdaq believes that the proposed rule change is consistent with 
the provisions of Section 6 of the Act,\13\ in general, and with 
Section 6(b)(5) of the Act,\14\ 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 with 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. Specifically, 
Nasdaq notes that the proposed changes will conform Rule 5730 with the 
rules of other national securities exchanges, while continuing to limit 
the availability of the rule to more financially substantial companies, 
which can satisfy the assets, equity, income, and other requirements of 
Rule 5730(a). In addition, Nasdaq is unaware

[[Page 71466]]

of any problems related to the trading of instruments that have 
qualified under the other markets' lower holder and distribution 

    \13\ 15 U.S.C. 78f.
    \14\ 15 U.S.C. 78f(b)(5).

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. Instead, the 
proposed rule change will allow Nasdaq to list securities that can 
already be listed on other exchanges, thereby increasing competition 
with other national securities exchanges.

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

    Because the foregoing proposed rule change does not (i) 
significantly affect the protection of investors or the public 
interest; (ii) impose any significant burden on competition; and (iii) 
become operative for 30 days from the date on which it was filed, or 
such shorter time as the Commission may designate if consistent with 
the protection of investors and the public interest, it has become 
effective pursuant to Section 19(b)(3)(A) of the Act \15\ and Rule 19b-
4(f)(6) thereunder.\16\

    \15\ 15 U.S.C. 78s(b)(3)(A).
    \16\ 17 CFR 240.19b-4(f)(6).

    The Exchange has requested the Commission to waive the 30-day 
operative delay period to allow the proposed rule change to become 
operative upon filing.\17\ The Commission believes it is consistent 
with the public interest to waive the 30-day operative delay. The 
proposed rule change is substantially similar in all material respects 
to Section 703.19 of the NYSE Listed Company Manual and Section 107A(b) 
of the NYSE MKT Listed Company Guide, and each policy issue raised by 
the proposed rule change (i) has been considered by the Commission in 
approving the other exchanges' rules and (ii) is resolved in a manner 
generally consistent with the approved rules. As such, the Commission 
believes that the proposal presents no novel regulatory issues. Waiver 
of the operative delay will allow the Exchange to list certain 
securities that can already be listed and traded on other exchanges 
without undue delay. Therefore, the Commission grants such waiver and 
designates the proposal operative upon filing.\18\

    \17\ As required under Rule 19b-4(f)(6)(iii), the Exchange 
provided the Commission with written notice of its intent to file 
the proposed rule change along with a brief description and the text 
of the proposed rule change, at least five business days prior to 
the date of filing of the proposed rule change, or such shorter time 
as designated by the Commission.
    \18\ For purposes only of waiving the 30-day operative delay, 
the Commission has considered the proposed rule's impact on 
efficiency, competition, and capital formation. See 15 U.S.C. 

    At any time within 60 days of the filing of such 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.

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 rule-comments@sec.gov. Please include 
File No. SR-NASDAQ-2012-131 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 No. SR-NASDAQ-2012-131. 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 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 Room, 100 F Street NE., Washington, 
DC 20549, on official business days between the hours of 10:00 a.m. and 
3:00 p.m. Copies of such filing also will be available for inspection 
and copying at the principal office of Nasdaq. 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 No. SR-NASDAQ-2012-131 and should be submitted on 
or before December 21, 2012.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\19\

    \19\ 17 CFR 200.30-3(a)(12).

Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2012-28943 Filed 11-29-12; 8:45 am]