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Notice

Self-Regulatory Organizations; Notice of Filing and Immediate Effectiveness of Proposed Rule Change and Amendment No. 1 Thereto by the National Association of Securities Dealers, Inc. Regarding Listing Fee Waivers Under the NASD Rule 4500 Series With Regard to Certain Dual Listing and Transfer Situations

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Start Preamble February 19, 2004.

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 January 12, 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. Nasdaq Start Printed Page 9000amended the proposed rule change on February 13, 2004.[3] Nasdaq filed the proposed rule change pursuant to section 19(b)(3)(A)(i) of the Act,[4] and Rule 19b-4(f)(1) thereunder,[5] as one constituting a stated policy, practice, or interpretation with respect to the meaning, administration, or enforcement of an existing rule, which renders the proposed rule change effective upon filing with the Commission. The Commission is publishing this notice to solicit comments on the proposed rule change, as amended, from interested persons.

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

Nasdaq proposes to provide interpretive guidance with respect to NASD Rules 4510(a)(5), 4510(b)(4), 4510(c)(2), 4510(d)(3), 4520(a)(3), 4520(b)(4), and 4520(c)(3) regarding the waiver of listing fees in situations involving the dual listing or transfer of New York Stock Exchange (“NYSE”) listed securities occurring from January 12, 2004, to December 31, 2004.

Below is the text of the proposed rule change. Proposed new language is in italics; proposed deletions are in brackets.

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4500 ISSUER LISTING FEES

IM-4500-1 No change.

IM-4500-2 No change.

IM-4500-3 Waiver of Fees in Situations Involving the Dual Listing or Transfer of New York Stock Exchange (“NYSE”) Listed Securities

Rules 4510(a)(5), 4510(b)(4), 4510(c)(2), 4510(d)(3), 4520(a)(3), 4520(b)(4), and 4520(c)(3) provide Nasdaq with the discretion to waive all or part of its listing fees prescribed in this Rule 4500 series. Nasdaq shall not charge entry fees, annual fees, or listing of additional shares fees under Rules 4510(a)-(d) and Rules 4520(a)-(c) for a one year period from the date of listing on Nasdaq for any NYSE listed security that dually lists on Nasdaq between January 12, 2004, and December 31, 2004. Nasdaq shall not charge entry fees under Rules 4510(a) and 4520(a) for any NYSE listed security that transfers its listing from the NYSE to Nasdaq between January 12, 2004, and December 31, 2004.

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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. 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

NASD Rules 4510(a)(5), 4510(b)(4), 4510(c)(2), 4510(d)(3), 4520(a)(3), 4520(b)(4), and 4520(c)(3) provide Nasdaq with the discretion to waive all or part of its listing fees prescribed in this Rule 4500 series. NYSE Rule 500 has recently been repealed, and this has removed a significant barrier to NYSE companies that may have wanted to list on other markets.[6] Given the recent repeal of NYSE Rule 500, and pursuant to the authority under Nasdaq rules, Nasdaq has determined to permit dual listing of any NYSE listed security on Nasdaq without charging Nasdaq entry fees, annual fees, or listing of additional shares fees for a period of one year from the effective date of the dual listing on Nasdaq (provided that, if a dually listed issuer determines following the expiration of this period to transfer listing to Nasdaq, the entry fee or a portion thereof will be assessed upon such transfer). Nasdaq also has determined to permit transfer of any NYSE listed security from the NYSE to Nasdaq without charging Nasdaq entry fees. Waivers would be available for dual listing or transfers occurring from January 12, 2004, the date of this filing, through the end of 2004.

Nasdaq has determined to take this action because it believes that is equitable and reasonable to provide a window, following the repeal of NYSE Rule 500, for NYSE issuers to dual list on Nasdaq or transfer to Nasdaq without subjecting them to fees in addition to those fees that they have paid to the NYSE. In addition, consistent with section 11A(a)(1)(C)(ii) under the Act,[7] Nasdaq believes this action will promote fair competition between exchange markets and markets other than exchange markets, which benefits the investing public. Specifically, Nasdaq believes this interpretation should facilitate dual listing and transfer of NYSE listed securities under an equitable and reasonable fee schedule for a limited period of time. Consequently, NYSE listed companies can more easily determine the benefits of a listing on Nasdaq—a proposition that was not practically available until NYSE Rule 500 was recently repealed. Nasdaq believes these benefits will include increased liquidity, faster executions, and narrower spreads due to Nasdaq's competitive market maker system. In addition, these companies can demonstrate to investors that they meet Nasdaq's governance requirements. Nasdaq confirms that this interpretation will not impact its resource commitment to regulatory oversight of the listing process, or its other regulatory programs.

2. Statutory Basis

Nasdaq believes that the proposed rule change is consistent with the provisions of section 15A(b)(5) [8] and 15A(b)(6) [9] of the Act. Section 15A(b)(5) requires the equitable allocation of reasonable fees and charges among members and other users of facilities operated or controlled by a national securities association. Nasdaq believes that this proposal is an equitable allocation of reasonable fees because NYSE listed companies are now able to list on other markets without having to contend with the significant restrictions previously imposed by the NYSE, and the proposed rule provides for listing fee waivers to address the financial burdens that would otherwise be placed upon these companies that have already paid fees to the NYSE and would otherwise be required to pay duplicative fees. Nasdaq believes that the proposed rule change is consistent with the provisions of section 15A(b)(6) of the Start Printed Page 9001Act because it is designed to prevent fraudulent acts and practices, to promote just and equitable principles of trade, and to protect investors and the public interest because it will facilitate dual listing and transfer of NYSE listed securities for a limited period of time, so that NYSE listed companies can more easily determine the benefits of listing on Nasdaq. Nasdaq also believes the proposal will promote fair competition between markets, which benefits the investing public.

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

Nasdaq neither solicited nor received written comments with respect to the proposed rule change.

III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action

The foregoing proposal has become effective pursuant to section 19(b)(3)(A)(i) of the Act,[10] and Rule 19b-4(f)(1) [11] thereunder, in that it constitutes a stated policy and interpretation with respect to the meaning of an existing rule.

At any time within 60 days of the filing of the proposed rule change,[12] the Commission may summarily abrogate 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. Persons making written submissions should file six copies thereof with the Secretary, Securities and Exchange Commission, 450 Fifth Street, NW., Washington, DC 20549-0609. Comments may also be submitted electronically at the following e-mail address: rule-comments@sec.gov. All comment letters should refer to File No. SR-NASD-2004-004. This file number should be included on the subject line if e-mail is used. To help the Commission process and review comments more efficiently, comments should be sent in hardcopy or by e-mail but not by both methods. 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 will also be available for inspection and copying at the principal office of the NASD. All submissions should refer to file number SR-NASD-2004-004 and should be submitted by March 18, 2004.

Start Signature

For the Commission, by the Division of Market Regulation, pursuant to delegated authority.[13]

Margaret H. McFarland,

Deputy Secretary.

End Signature End Preamble

Footnotes

3.  See February 12, 2004, letter from Sara Nelson Bloom, Associate General Counsel, Nasdaq, to Katherine A. England, Assistant Director, Division of Market Regulation, Commission (“Amendment No. 1”). In Amendment No. 1, Nasdaq (1) changed date references from January 9, 2004, to January 12, 2004, to reflect the date on which the proposed rule change was filed with the Commission; (2) amended the “Purpose” section of the filing to reflect that Nasdaq will assess the entry fee or a portion thereof if a dually listed issuer determines, following the expiration of the initial one-year period, to transfer listing to Nasdaq; and (3) confirmed that the proposed interpretation will not impact Nasdaq's resource commitment to regulatory oversight of the listing process or Nasdaq's other regulatory programs. For purposes of calculating the 60-day abrogation period, the Commission considers the period to have commenced on February 13, 2004, the date Nasdaq filed Amendment No. 1.

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4.  15 U.S.C. 78s(b)(3)(A)(i).

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6.  See Securities Exchange Act Release No. 48720 (October 30, 2003), 68 FR 62645 (November 5, 2003)(SR-NYSE-2003-23) (approval order).

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7.  15 U.S.C. 78k-1(a)(1)(C)(ii).

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10.  15 U.S.C. 78s(b)(3)(A)(i).

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12.  See note 3 supra.

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[FR Doc. 04-4268 Filed 2-25-04; 8:45 am]

BILLING CODE 8010-01-P