Notices. Notice

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BILLING CODE 8010-01-M SECURITIES AND EXCHANGE COMMISSION [Release No. 34-50537; File No. SR-NASD-2004-143] Self-Regulatory Organizations; Notice of Filing and Immediate Effectiveness of Proposed Rule Change, and Amendment No. 1 thereto, by National Association of Securities Dealers, Inc. Relating to Attributable Summary Orders in the Nasdaq Market Center October 14, 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 September 24, 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 October 4, 2004, Nasdaq filed Amendment No. 1 to the proposed rule change. 3 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 *See* letter from Edward Knight, Executive Vice President, Nasdaq, to Katherine England, Assistant Director, Division of Market Regulation (“Division”), Commission, dated September 29, 2004 (“Amendment No. 1”).

In Amendment No. 1, Nasdaq clarified the description of the proposed rule change and provided rationale for its request to waive the 30-day operative delay for the proposed rule change. I. Self-Regulatory Organization's Statement of the Terms of the Substance of the Proposed Rule Change Nasdaq is filing a proposed rule change with the Commission to provide Order Delivery electronic communication networks (“ECNs”) in the Nasdaq Market Center the ability to enter attributable Summary Orders—an order type that rejects back to the entering party if the order would lock or cross the best bid or best offer displayed in the Nasdaq Market Center. 4 The text of the proposed rule change is below.

Proposed deletions are in brackets. 5 4 *See* Amendment No. 1, note 3 *supra.* 5 The proposed rule change is marked to show changes from the rule as it appears in the electronic NASD Manual available at *http://www.nasdr.com* as well as SR-NASD-2004-76 filed on an immediately effective basis on May 5, 2004. *See* Securities Exchange Act Release No. 50074 (July 23, 2004), 69 FR 45866 (July 30, 2004). 4700. Nasdaq Market Center—Execution Services 4701. Definitions Unless stated otherwise, the terms described below shall have the following meaning:

(a)—(nn) No Change.

(oo)The term “Summary” shall mean, for priced limit orders so designated, that if an order is marketable upon receipt by the Nasdaq Market Center, it shall be rejected and returned to the entering party. Summary Orders may only be entered by Order-Delivery ECNs. [Summary Orders may only be designated as Non-Attributable Orders.] (pp)-(uu) No Change. 4706. Order Entry Parameters

(a)Non-Directed Orders—

(1)General. The following requirements shall apply to Non-Directed Orders Entered by Nasdaq Market Center Participants: 6 6 Pursuant to a telephone conversation on October 14, 2004, between Thomas Moran, Office of General Counsel, Nasdaq, and Marc McKayle, Special Counsel, Division, Commission, the Commission corrected the proposed rule text by replacing the term “NNMS” with “National Market Center.”

(A)No Change.

(B)A Non-Directed Order must be a market or limit order, must indicate whether it is a buy, short sale, short-sale exempt, or long sale, and may be designated as “Immediate or Cancel,” “Day,” “Good-till-Cancelled,” “Auto-Ex,” “Fill or Return,” “Pegged,” “Discretionary,” “Sweep,” “Total Day,” “Total Good till Cancelled,” “Total Immediate or Cancel,” or “Summary.”

(i)through

(xii)No Change.

(xiii)An order may be designated as “Summary,” in which case the order shall be designated either as Day or GTC. A Summary Order that is marketable upon receipt by the Nasdaq Market Center shall be rejected and returned to the entering party. If not marketable upon receipt by the Nasdaq Market Center, it will be retained by the system. Summary Day and GTC orders shall be executed prior to the market open if required under Rule 4710(b)(3)(B). Summary Orders may only be entered by Order-Delivery ECNs. [Summary Orders may only be designated as Non-Attributable Orders.] (C)-(F) No Change.

(2)No Change.

(A)through

(B)No Change. (b)-(e) 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, 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 is proposing to allow Order Delivery ECNs participating in the Nasdaq Market Center to enter attributable Summary Orders. Summary Orders, in essence, provide a warning that the price of the order would lock or cross the best prices then displayed in the Nasdaq Market Center by rejecting such an order back to the entering party. If the Summary Order does not lock or cross the best price, it is retained by the system for normal processing. Today, the use of Summary Orders is restricted to Nasdaq Order Delivery ECNs and such orders may only be used to enter Non-Attributable Orders into SIZE. 7 This proposal will give Nasdaq Order Delivery ECNs the choice to enter such orders as either attributable or non-attributable. 7 SIZE is the anonymous Market Participant Identifier (“MPID”) used to display Non-Attributable Quotes/Orders in the Nasdaq Market Center. *See* NASD Rule 4707(b)(2). Under current Nasdaq Market Center processing, quotes already provide the lock/cross warning via rejection attributes of the Summary Order. Orders that are not designated as Summary, however, do not provide similar lock/cross warning capabilities and are considered immediately executable indications of trading interest that would be executed by the system if they locked or crossed the Nasdaq inside market. As such, Order Delivery ECNs generally refrain from using orders when displaying trading interest in the Nasdaq Market Center and instead aggregate multiple orders at their best price level and submit them to Nasdaq using a single aggregated quote. In turn, this aggregation increases internal processing complexity for ECNs that must convert and combine individual orders residing in their systems into a single quote and then appropriately parcel out subsequent order deliveries against that quote back to individual subscribers. The ability to receive a warning via order rejection when entering a locking or crossing order is an important component in providing Nasdaq Order Delivery ECNs control over how their orders are processed in the Nasdaq Market Center so as to manage executions taking place in their own systems as well in the Nasdaq Market Center. This control is particularly important to ECNs that act exclusively as agents and seek to avoid dual liability for multiple executions against the same single share amount displayed simultaneously, and potentially accessible, in the Nasdaq Market Center as well as the ECNs own internal book. As noted above, lock or cross warnings are available today to ECNs when they represent trading interest in Nasdaq using quotes. Nasdaq believes that the current limitation on using Summary Orders only to place Non-Attributable Orders in SIZE restricts the ability of Nasdaq Order Delivery ECNs that, in lieu of quotes, may desire to provide multiple orders at the same price level to Nasdaq and have such orders attributed to them through a displayed MPID. Expansion of the Summary Order to allow the entry of attributable orders by ECNs that desire to enter multiple orders at multiple price levels into the Nasdaq Market Center ensures that such orders behave in a manner similar to quotes by providing for the rejection of locking or crossing trading interest as well as having that trading interest associated with the identity of the entering ECN via an attributable MPID. For ECNs that currently aggregate their customers' trading interest and submit it combined in a single quote, Summary Orders can provide a simplified, and less technologically burdensome, method to pass such orders individually to the Nasdaq Market Center and thereafter track and reconcile any resulting transactions with their own internal execution and order management systems while continuing to have such orders publicly associated with the entering ECN via attribution similar to quotes. 2. Statutory Basis Nasdaq believes that the proposed rule change is consistent with the provisions of section 15A of the Act, 8 in general, and with section 15A(b)(6) of the Act, 9 in particular, in that it is designed to prevent fraudulent and manipulative acts and practices, to promote just and equitable principles of trade, remove impediments to a free and open market and a national market system, and, in general, to protect investors and the public interest. In particular, Nasdaq believes that the increased control given to all market participants through the use of Summary Orders will assist in improving execution quality for themselves and their customers. In addition, to the extent that expansion of the Summary Order to attributable orders encourages the submission of greater amounts of trading interest in the form of such orders into the Nasdaq Market Center all market participants can be expected to benefit from such increased system liquidity. 8 15 U.S.C. 78 *o* -3. 9 15 U.S.C. 78 *o* -3(b)(6). 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 were neither solicited nor received. III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action The proposed rule change has been designated by Nasdaq as a “non-controversial” rule change pursuant to section 19(b)(3)(A) of the Act 10 and subparagraph (f)(6) of Rule 19b-4 thereunder. 11 10 15 U.S.C. 78s(b)(1). 11 17 CFR 240.19b-4(f)(6). The foregoing rule change:

(1)Does not significantly affect the protection of investors or the public interest,

(2)does not impose any significant burden on competition, and

(3)by its terms does not become operative for 30 days after the date of this filing, or such shorter time as the Commission may designate, if consistent with the protection of investors and the public interest, and the NASD 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, at least five business days prior to the date of filing of the proposed rule change. Consequently, the proposed rule change has become effective pursuant to section 19(b)(3)(A) of the Act, 12 and Rule 19b-4(f)(6) thereunder. 13 12 15 U.S.C. 78s(b)(1). 13 17 CFR 240.19b-4(f)(6). Pursuant to Rule 19b-4(f)(6)(iii), 14 a proposed “non-controversial” rule change does not become operative for 30 days after the date of filing, or such shorter time as the Commission may designate if consistent with the protection of investors and the public interest. Nasdaq has requested that the Commission waive the 30-day operative delay. Nasdaq believes that adoption of this proposal will encourage the submission of greater liquidity in the form of multiple attributable orders at multiple price levels. Nasdaq believes that the benefits of this liquidity should be made available to all market participants as soon as practicable, and respectfully requests that the Commission waive the 30-day pre-operative period contained in Rule 19b-4(f)(6)(iii) of the Act. 15 Nasdaq notes that the functionality proposed here is already available to Order-Delivery ECNs using Non-Attributable Orders. The Commission believes that this proposal may encourage greater liquidity and transparency and that waiver of the 30-day operative delay is consistent with the protection of investors and the public interest. 16 Accordingly, the Commission has determined to waive the operative delay. 14 17 CFR 240.19b-4(f)(6)(iii). 15 *See* Amendment No. 1, note 3 *supra.* 16 For the purposes only of waiving the 30-day operative delay, the Commission has considered the proposed rule's impact on efficiency, competition, and capital formation. 15 U.S.C. 78c(f). At any time within 60 days of the filing of the proposed rule change, 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, 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 Please include File Numb *(http://www.sec.gov/rules/sro.shtml);* or • Send an e-mail to *rule-comments@sec.gov.* er SR-NASD-2004-143 on the subject line. Paper Comments • Send paper comments in triplicate to Jonathan G. Katz, Secretary, Securities and Exchange Commission, 450 Fifth Street, NW., Washington, DC 20549-0609. All submissions should refer to File No. SR-NASD-2004-143. 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-2004-143 and should be submitted on or before November 12, 2004. For the Commission, by the Division of Market Regulation, pursuant to delegated authority. 17 Margaret H. McFarland, Deputy Secretary. 17 17 CFR 200.30-3(a)(12). [FR Doc. E4-2734 Filed 10-20-04; 8:45 am] BILLING CODE 8010-01-P SECURITIES AND EXCHANGE COMMISSION [Release No. 34-50541; File No. SR-NASD-2004-147] Self-Regulatory Organizations; National Association of Securities Dealers, Inc.; Notice of Filing of Proposed Rule Change To Bid Price Compliance Periods and Market Value of Publicly Held Shares Requirements October 14, 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 October 1, 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. 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 Nasdaq proposes to modify the bid price compliance periods on the Nasdaq National Market and the Nasdaq SmallCap Market and to require non-Canadian foreign issuers to satisfy the minimum bid price and market value of publicly held shares requirements applicable to domestic issuers for continued listing on the Nasdaq SmallCap Market. Nasdaq will implement the proposed rule change relating to compliance periods effective January 1, 2005, upon expiration of the existing pilot rules. Nasdaq will implement the proposed rule change relating to continued listing requirements for bid price and market value of listed securities for non-U.S. issuers effective 18 months after approval by the Commission. The text of the proposed rule change is below. Proposed new language is in italics; proposed deletions are in brackets. 3 3 Pending filing SR-NASD-2004-125 would renumber and modify the text of NASD Rule 4820. Nasdaq has represented that it would make a technical correction to this filing if and when the Commission approves SR-NASD-2004-125. No other pending rule filings would affect the portions of the rules amended herein. 4310. Qualification Requirements for Domestic and Canadian Securities To qualify for inclusion in Nasdaq, a security of a domestic or Canadian issuer will satisfy all applicable requirements contained in paragraphs

(a)or (b), and

(c)hereof.

(a)No change.

(b)No change.

(c)In addition to the requirements contained in paragraph

(a)or

(b)above, and unless otherwise indicated, a security will satisfy the following criteria for inclusion in Nasdaq: (1)-(7) No change. (8)(A)-(C) No change.

(D)A failure to meet the continued inclusion requirement for minimum bid price on The Nasdaq SmallCap Market shall be determined to exist only if the deficiency continues for a period of 30 consecutive business days. Upon such failure, the issuer shall be notified promptly and shall have a period of 180 calendar days from such notification to achieve compliance. If the issuer has not been deemed in compliance prior to the expiration of the 180 day compliance period, it shall be afforded an additional 180 day compliance period, provided that on the 180th day of the first compliance period, the issuer demonstrates that it meets the criteria for initial inclusion set forth in Rule 4310(c) (except for the bid price requirement set forth in Rule 4310(c)(4)) based on the issuer's most recent public filings and market information. If the issuer has publicly announced information ( *e.g.* , in an earnings release) indicating that it no longer satisfies the applicable initial inclusion criteria, it shall not be eligible for the additional compliance period under this rule. [If on the 180th day of the second compliance period, the issuer has not been deemed in compliance during such compliance period but it satisfies the criteria for initial inclusion set forth in Rule 4310(c) (except for the bid price requirement set forth in Rule 4310(c)(4)), the issuer shall be provided with an additional compliance period up to its next shareholder meeting scheduled to occur no later than two years from the original notification of the bid price deficiency, provided the issuer commits to seek shareholder approval at that meeting for a reverse stock split to address the bid price deficiency. If the issuer fails to timely propose, or obtain approval for, or promptly execute the reverse stock split, Nasdaq shall immediately institute delisting proceedings upon such failure. Compliance can be achieved during any compliance period by meeting the applicable standard for a minimum of 10 consecutive business days.] Compliance can be achieved during any compliance period by meeting the applicable standard for a minimum of 10 consecutive business days.

(E)No change. (9)-(29) No change.

(d)No change. 4320. Qualification Requirements for Non-Canadian Foreign Securities and American Depositary Receipts To qualify for inclusion in Nasdaq, a security of a non-Canadian foreign issuer, an American Depositary Receipt

(ADR)or similar security issued in respect of a security of a foreign issuer shall satisfy the requirements of paragraphs (a),

(b)or (c), and

(d)and

(e)of this Rule. (a)-(d) No change.

(e)In addition to the requirements contained in paragraphs (a),

(b)or (c), and (d), the security shall satisfy the criteria set out in this subsection for inclusion in Nasdaq. In the case of ADRs, the underlying security will be considered when determining the ADR's qualification for initial or continued inclusion on Nasdaq.

(1)No change. (2)(A) For initial inclusion, [the issue shall have a minimum bid price of $4 and]the issuer shall have: (i)-(iii) No change. (B)-(D) No change. *(E)

(i)For initial inclusion, common stock, preferred stock and secondary classes of common stock, or their equivalents, shall have a minimum bid price of $4 per share. For continued inclusion, the minimum bid price per share shall be $1.* *(ii) A failure to meet the continued inclusion requirement for minimum bid price on The Nasdaq SmallCap Market shall be determined to exist only if the deficiency continues for a period of 30 consecutive business days. Upon such failure, the issuer shall be notified promptly and shall have a period of 180 calendar days from such notification to achieve compliance. If the issuer has not been deemed in compliance prior to the expiration of the 180 day compliance period, it shall be afforded an additional 180 day compliance period, provided, that on the 180th day of the first compliance period, the issuer demonstrates that it meets the criteria for initial inclusion set forth in Rule 4320(e) (except for the bid price requirement set forth in Rule 4320(e)(2)(E)(i)) based on the issuer's most recent public filings and market information. If the issuer has publicly announced information (e.g., in an earnings release) indicating that it no longer satisfies the applicable initial inclusion criteria, it shall not be eligible for the additional compliance period under this rule. Compliance can be achieved during any compliance period by meeting the applicable standard for a minimum of 10 consecutive business days.* *(iii) Nasdaq may, in its discretion, require an issuer to maintain a bid price of at least $1.00 per share for a period in excess of ten consecutive business days, but generally no more than 20 consecutive business days, before determining that the issuer has demonstrated an ability to maintain long-term compliance. In determining whether to monitor bid price beyond ten business days, Nasdaq will consider the following four factors:

(i)margin of compliance (the amount by which the price is above the $1.00 minimum standard);

(ii)trading volume (a lack of trading volume may indicate a lack of bona fide market interest in the security at the posted bid price);

(iii)the market maker montage (the number of market makers quoting at or above $1.00 and the size of their quotes); and,

(iv)the trend of the stock price (is it up or down).* (3)-(4) No change.

(5)There shall be at least 1,000,000 publicly held shares for initial inclusion and 500,000 publicly held shares for continued inclusion. For initial inclusion, such shares shall have a market value of at least $5 million. * For continued inclusion, such shares shall have a market value of at least $1 million. * In the case of preferred stock and secondary classes of common stock, there shall be at least 200,000 publicly held shares *having a market value of at least $2 million* for initial inclusion and 100,000 publicly held shares *having a market value of $500,000* for continued inclusion. In addition, the issuer's common stock or common stock equivalent security must be traded on either Nasdaq or a national securities exchange. In the event the issuer's common stock or common stock equivalent security is not traded on either Nasdaq or a national securities exchange, the preferred stock and/or secondary class of common stock may be included in Nasdaq so long as the security satisfies the listing criteria for common stock. Shares held directly or indirectly by any officer or director of the issuer and by any person who is the beneficial owner of more than 10 percent of the total shares outstanding are not considered to be publicly held. (6)-(25) No change.

(f)No change. 4450. Quantitative Maintenance Criteria After designation as a Nasdaq National Market security, a security must substantially meet the criteria set forth in paragraphs

(a)or (b), and (c), (d), (e), (f), (g),

(h)or

(i)below to continue to be designated as a national market system security. A security maintaining its designation under paragraph

(b)need not also be in compliance with the quantitative maintenance criteria in the Rule 4300 series. (a)-(d) No change.

(e)Compliance Periods

(1)No change.

(2)A failure to meet the continued inclusion requirement for minimum bid price shall be determined to exist only if the deficiency continues for a period of 30 consecutive business days. Upon such failure, the issuer shall be notified promptly and shall have a period of 180 calendar days from such notification to achieve compliance. [If the issuer has not been deemed in compliance prior to the expiration of the 180 day compliance period, it shall be afforded an additional 180 day compliance period, provided, that on the 180th day following the notification of the deficiency, the issuer demonstrates that it meets the criteria for initial inclusion set forth in Rule 4420 (except for the bid price requirement set forth in Rule 4420(a)(4), (b)(4) or (c)(3)) based on the issuer's most recent public filings and market information. If the issuer has publicly announced information ( *e.g.* , in an earnings release) indicating that it no longer satisfies the applicable initial inclusion criteria, it shall not be eligible for the additional compliance period under this rule. If the issuer has not been deemed in compliance 45 calendar days before the expiration of the second 180 day compliance period, the Listing Qualifications Department shall issue a letter (the “Staff Warning Letter”), notifying the issuer of its non-compliance, the pending expiration of the compliance period, and its right to request a hearing. The issuer must request a hearing within seven calendar days of the date of the Staff Warning Letter in order to preserve its right to review pursuant to Rule 4820. If the issuer requests a hearing, the hearing shall be scheduled for a date promptly following the expiration of the compliance period. If the issuer fails to request a hearing and does not regain compliance prior to the expiration of the compliance period, it shall be delisted immediately following the compliance period with no further opportunity for a hearing.] Compliance can be achieved during any compliance period by meeting the applicable standard for a minimum of 10 consecutive business days [during the applicable compliance period]. Nasdaq may, in its discretion, require an issuer to maintain a bid price of at least $1.00 per share for a period in excess of ten consecutive business days, but generally no more than 20 consecutive business days, before determining that the issuer has demonstrated an ability to maintain long-term compliance. In determining whether to monitor bid price beyond ten business days, Nasdaq shall consider the following four factors:

(i)Margin of compliance (the amount by which the price is above the $1.00 minimum standard);

(ii)trading volume (a lack of trading volume may indicate a lack of bona fide market interest in the security at the posted bid price);

(iii)the market maker montage (the number of market makers quoting at or above $1.00 and the size of their quotes); and,

(iv)the trend of the stock price (is it up or down). (3)-(4) No change. (f)-(h) No change.

(i)Transfers between The Nasdaq National and SmallCap Markets For Bid Price Deficient Issuers

(1)If a National Market issuer has not been deemed in compliance prior to the expiration of [a] *the* compliance period for bid price *provided in Rule 4450(e)(2)* , it may transfer to The Nasdaq SmallCap Market, provided that it meets all applicable requirements for continued inclusion on the SmallCap Market set forth in Rule 4310(c) [(other than the minimum bid price requirement of Rule 4310(c)(4))] or Rule 4320(e), as applicable *, other than the minimum bid price requirement* . A Nasdaq National Market issuer transferring to The Nasdaq SmallCap Market must pay the entry fee set forth in Rule 4520(a). The issuer may also request a hearing to remain on The Nasdaq National Market pursuant to the Rule 4800 Series.

(2)Following a transfer to The Nasdaq SmallCap Market pursuant to paragraph (1), a [domestic or Canadian] Nasdaq National Market issuer will be afforded the remainder of any compliance period set forth in Rule 4310(c)(8)(D) *or Rule 4320(e)(2)(E)(ii)* as if the issuer had been listed on The Nasdaq SmallCap Market. The compliance periods afforded by this rule and any time spent in the hearing process will be deducted in determining the length of the remaining applicable compliance periods on The Nasdaq SmallCap Market. 4820. Request for Hearing

(a)An issuer may, within seven calendar days of [the earlier of] the date of the Staff Determination [or the Staff Warning Letter referenced in Rule 4450(e)], request either a written or oral hearing to review the Staff Determination. Requests for hearings should be filed with The Nasdaq Office of Listing Qualifications Hearings (the “Hearings Department”). A request for a hearing shall stay the delisting action pending the issuance of a written determination by a Listing Qualifications Panel. If no hearing is requested within the seven calendar day period, the right to request review is waived, and the Staff Determination shall take immediate effect. All hearings shall be held before a Listing Qualifications Panel as described in Rule 4830. All hearings shall be scheduled, to the extent practicable, within 45 days of the date that the request for hearing is filed, at a location determined by the Hearings Department. The Hearings Department shall make an acknowledgment of the issuer's hearing request stating the date, time and location of the hearing, and the deadline for written submissions to the Listing Qualifications Panel. The issuer shall be provided at least 10 calendar days notice of the hearing unless the issuer waives such notice. (b)-(c) No change. IM-4350-1. Interpretive Material Regarding Future Priced Securities Summary No change. How the Rules Apply Shareholder Approval No change. Voting Rights No change. The Bid Price Requirement *The bid price requirement establishes a minimum bid price for issues trading on Nasdaq.* NASD Rules 4310(c)(4), [and] *4320(e)(2)(E),* 4450(a)(5) *and 4450(b)(4)* provide that *,* for an issue to be eligible for continued inclusion on The Nasdaq Stock Market, the minimum bid price per share shall be $1. *An issue is subject to delisting from Nasdaq if its bid price falls below $1.* [In addition, Rule 4450(b)(4), which applies only to issues qualifying for the Nasdaq National Market under maintenance standard 2, provides that for an issue to remain eligible for continued inclusion in the Nasdaq National Market, the minimum bid price shall be $5.] [The bid price requirement establishes a minimum bid price for issues trading on Nasdaq. An issue is subject to delisting from Nasdaq if its bid price falls below $1. In addition, certain issues are subject to delisting from the Nasdaq National Market if their bid price falls below $5.] The bid price rules must be thoroughly considered because the characteristics of Future Priced Securities often exert downward pressure on the bid price of the issuer's common stock. Specifically, dilution from the discounted conversion of the Future Priced Security may result in a significant decline in the price of the common stock. Furthermore, there appear to be instances where short selling has contributed to a substantial price decline, which, in turn, could lead to a failure to comply with the bid price requirement. * * * Listing of Additional Shares No change. Public Interest Concerns No change. Reverse Merger No change. Footnote to IM-4350-1: * * * If used to manipulate the price of the stock, short selling by the holders of the Future Priced Security is prohibited by the antifraud provisions of the securities laws and by NASD Rules and may be prohibited by the terms of the placement. 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 rules relating to the minimum bid price requirement were approved on a pilot basis by the Commission in February 2002 and modified in March and December 2003. 4 These rules, which expire on December 31, 2004, provide 180 calendar days for a National Market issuer to regain compliance. Upon the expiration of the first 180 calendar days, an issuer able to satisfy all initial listing criteria is eligible for an additional grace period, also on the National Market, of another 180 calendar days. Thereafter, a National Market issuer is also eligible to phase-down to the SmallCap Market to take advantage of the extended bid price grace period on that market if it meets all SmallCap initial listing criteria except for bid price. If a National Market issuer is not in compliance 45 days prior to the expiration of its second grace period, Nasdaq sends a warning letter to the issuer and the issuer must request a hearing at that time, if one is desired. 4 See Securities Exchange Act Release No. 45387 (February 4, 2002), 67 FR 6306 (February 11, 2002) (SR-NASD-2002-13); Securities Exchange Act Release No. 47482 (March 11, 2003), 68 FR 12729 (March 17, 2003) (SR-NASD-2003-34); and Securities Exchange Act Release No. 48991 (December 23, 2003), 68 FR 75677 (December 31, 2003) (SR-NASD-2003-44), amended by Securities Exchange Act Release No. 48991A (February 5, 2004), 69 FR 6707 (February 11, 2004) (SR-NASD-2003-44). Similarly, the current pilot provides 180 calendar days for a SmallCap Market issuer to regain compliance. Upon the expiration of the first 180-day grace period, an issuer satisfying all initial listing criteria is eligible for an additional grace period of 180 days. Thereafter, an issuer can receive a third grace period, up to the time of its next shareholders meeting (but not more than two years from the original notice of deficiency), if the issuer agrees to seek shareholder approval for a reverse stock split at that meeting and to implement the reverse stock split promptly afterward. Having reviewed its experiences under the pilot program, Nasdaq now proposes to modify the pilot rules and seek permanent approval of the revised rules. Nasdaq believes the time frames contained in the proposed rule, while shorter than those of the pilot rule, would allow sufficient time for issuers to execute a plan to regain compliance with the bid price rules. Nasdaq further believes that the proposed rule will simplify the administration of bid price deficiencies. The proposed rules would provide a SmallCap Market issuer with an initial 180-calendar-day period to regain compliance. Thereafter, the issuer could receive an additional 180-day grace period if it complied with all initial inclusion requirements except bid price. A National Market issuer would be provided 180 days to regain compliance on the National Market, after which it could transfer to the SmallCap Market if it complied with all SmallCap initial inclusion requirements except for bid price. An issuer in a compliance period under the pilot rules at the time the proposed rules are effective would get to finish that period, but must thereafter satisfy the proposed rules. Thus, for example, on January 1, 2005, when the proposed rules would be effective, a Nasdaq National Market issuer that is on day 120 of its second 180-day compliance period under the pilot program would be entitled to remain on the National Market for an additional 60 days to complete that compliance period; however, at the end of that period, the issuer would not be entitled to any additional time to regain compliance, nor would it be eligible to transfer to the Nasdaq SmallCap Market because the issuer would have been below the bid price requirement for a longer period than permitted under the proposed rules. The following chart provides further examples of what would happen to issuers in compliance periods under the pilot rules on January 1, 2005: Market as of January 1, 2005 Status as of January 1, 2005 Action at end of compliance period, if still below $1.00 National Market In 1st 180-day compliance period Transfer to SmallCap Market pursuant to proposed rules, if eligible, or subject to delisting if not eligible for transfer. National Market In 2nd 180-day compliance period Subject to delisting at end of period. 5 SmallCap Market In 1st 180-day compliance period Eligible for 2nd 180-day compliance period pursuant to proposed rules. SmallCap Market In 2nd 180-day compliance period Subject to delisting at end of period. 6 SmallCap Market In 3rd compliance period (until next shareholder meeting or two years from deficiency notification) Subject to delisting at end of period. Finally, Nasdaq proposes to amend NASD Rule 4320 to require non-Canadian foreign issuers to satisfy the minimum bid price and market value of publicly held shares requirements applicable to domestic issuers for continued listing on the Nasdaq SmallCap Market. 7 Currently no such requirements apply to SmallCap Market issuers. In order to allow these issuers sufficient time to take appropriate action to achieve compliance, if necessary, Nasdaq proposes that this requirement be effective 18 months after approval by the Commission. 5 A Nasdaq National Market issuer that would be subject to delisting at the end of its current compliance period would be permitted to request a hearing to review that delisting decision even if it did not request such a hearing 45-days prior to the end of its compliance period as required by current NASD Rule 4450(e)(2). Nasdaq believes that this is appropriate as such an issuer may have failed to request a hearing because it believed it would be entitled to transfer to the SmallCap Market to obtain additional time under the pilot rules. 6 Pursuant to the proposed NASD Rule 4820, upon the Staff Determination of the delisting, any issuer may request either a written or oral hearing to review the Staff Determination. Telephone discussion between Arnold Golub, Office of General Counsel, Nasdaq, and Geoffrey Pemble, Special Counsel, Division of Market Regulation (“Division”), Commission, and Natasha Cowen, Attorney, Division, Commission (October 7, 2004). 7 A rule change to impose these requirements for initial listing by non-U.S. issuers was approved in September 2004. *See* Securities Exchange Act Release No. 50458 (September 28, 2004), 69 FR 59286 (October 4, 2004). Under this change, all non-U.S. issuers are required to meet the same initial inclusion bid price and market value of publicly held shares requirements as domestic and Canadian issuers. Nasdaq believes that these requirements provide important protections to investors, regardless of where the issuer is located. 2. Statutory Basis Nasdaq believes that the proposed rule change is consistent with the provisions of section 15A of the Act 8 in general and with section 15A(b)(6) of the Act 9 in particular, in that it is designed to promote just and equitable principles of trade, to remove impediments to and perfect the mechanism of a free and open market, and to protect investors and the public interest. Specifically, the proposed change to the bid price compliance periods would simplify the application of Nasdaq's rules and enhance transparency as to the application of those rules. Further, Nasdaq believes that the proposal to adopt continued listing requirements for bid price and market value of publicly held shares for non-Canadian foreign issuers listed on the SmallCap Market will protect investors and the public interest. 8 15 U.S.C. 78o-3. 9 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 would result in any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act. 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; or

(B)Institute proceedings to determine whether the proposed rule change 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 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 *rule-comments@sec.gov.* Please include File Number SR-NASD-2004-147 on the subject line. Paper Comments • Send paper comments in triplicate to Jonathan G. Katz, Secretary, Securities and Exchange Commission, 450 Fifth Street, NW., Washington, DC 20549-0609. All submissions should refer to File Number SR-NASD-2004-147. 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 Section, 450 Fifth Street, NW., Washington, DC 20549. 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-2004-147 and should be submitted on or before November 12, 2004. For the Commission, by the Division of Market Regulation, pursuant to delegated authority. 10 10 17 CFR 200.30-3(a)(12). Margaret H. McFarland, Deputy Secretary. [FR Doc. E4-2784 Filed 10-20-04; 8:45 am] BILLING CODE 8010-01-P DEPARTMENT OF STATE [Public Notice 4875] Culturally Significant Objects Imported for Exhibition Determinations: “Bacchus” AGENCY: Department of State. ACTION: Notice. SUMMARY: Notice is hereby given of the following determinations: Pursuant to the authority vested in me by the Act of October 19, 1965 (79 Stat. 985; 22 U.S.C. 2459), Executive Order 12047 of March 27, 1978, the Foreign Affairs Reform and Restructuring Act of 1998 (112 Stat. 2681, *et seq.* ; 22 U.S.C. 6501 note, *et seq.* ), Delegation of Authority No. 234 of October 1, 1999 (64 FR 56014), Delegation of Authority No. 236 of October 19, 1999 (64 FR 57920), as amended, and Delegation of Authority No. 257 of April 15, 2003 (68 FR 19875), I hereby determine that the object to be included in the exhibition, “Bacchus,” imported from abroad for temporary exhibition within the United States, is of cultural significance. The object is imported pursuant to a loan agreement with the foreign lender. I also determine that the exhibition or display of the exhibit object at the Metropolitan Museum of Art, New York, New York, from on or about October 28, 2004, to on or about January 24, 2005, and at possible additional venues yet to be determined, is in the national interest. Public notice of these determinations is ordered to be published in the **Federal Register** . FOR FURTHER INFORMATION CONTACT: For further information, contact Paul W. Manning, Attorney-Adviser, Office of the Legal Adviser,

(202)619-5997, and the address is United States Department of State, SA-44, Room 700, 301 4th Street, SW., Washington, DC 20547-0001. Dated: October 13, 2004. C. Miller Crouch, Principal Deputy Assistant Secretary for Educational and Cultural Affairs, Department of State. [FR Doc. 04-23590 Filed 10-20-04; 8:45 am]

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