Notices. Notice of availability, notice of comment period, notice of public information meeting and public hearing

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BILLING CODE 8010-01-P SECURITIES AND EXCHANGE COMMISSION [Release No. 34-50713; File No. SR-NASD-98-74] Self-Regulatory Organizations; Order Granting Approval to Proposed Rule Change as Amended and Notice of Filing and Order Granting Accelerated Approval to Amendment No. 5 by the National Association of Securities Dealers, Inc., Regarding NASD Rule 3110(f) Governing Predispute Arbitration Agreements With Customers November 22, 2004. I. Introduction On October 6, 1998, the National Association of Securities Dealers (“NASD”) filed with the Securities and Exchange Commission (“Commission” or “SEC”) a proposed rule change pursuant to section 19(b)(1) of the Securities Exchange Act of 1934 (“Act”) 1 and Rule 19b-4 thereunder to amend NASD Rule 3110(f) governing predispute arbitration agreements. 2 Notice of the proposal, as amended by Amendment Nos. 1 and 2, was published in the **Federal Register** on November 29, 1999. 3 The Commission received two comment letters on the proposed rule change. 4 On April 30, 2002, NASD submitted a Response to Comments and Amendment No. 3 to the proposed rule change.

On August 22, 2003, NASD filed Amendment No. 4 to the proposal, which replaced in its entirety the prior filings and amendments, except for the Response to Comments contained in Amendment No. 3. Notice of the proposal, as amended by Amendment Nos. 3 and 4, was published in the **Federal Register** on September 12, 2003. 5 The Commission received 24 comment letters on Amendment Nos. 3 and 4. 6 On January 9, 2004, NASD submitted a Response to Comments and Amendment No. 5 to the proposed rule change. 7 This order approves the proposed rule change, grants accelerated approval to Amendment No. 5, and solicits comments from interested persons on Amendment No. 5. 1 15 U.S.C. 78s(b)(1). 2 17 CFR 240.19b-4. 3 *See* Release No. 34-42160 (November 19, 1999), 64 FR 66681 (November 29, 1999). 4 *See* letters from Barry D.

Estell, dated December 15, 1999 (“Estell Letter”), and John J. Miller, dated December 27, 1999 (“Miller Letter”). 5 *See* Release No. 34-48444 (September 4, 2003), 68 FR 53762 (September 12, 2003). 6 *See* letters from Al Van Kampen, Rohde & Van Kampen, dated October 11, 2003; Barbara Black and Jill I. Gross, Pace Investor Rights Project, Pace University School of Law, dated October 2, 2003 (“Pace Letter”); Carl J. Carlson, Carlson & Fabish, P.S., dated October 5, 2003; Daniel A.

Ball, Selzer, Gurvitch, Rabin, Obecny, dated October 3, 2003; Don K. Leufven, dated October 9, 2003; Donald G. McGrath, McGrath & Polvino, PLLC, dated October 3, 2003; H. Douglas Powell, Fishkind & Associates, Inc., dated October 6, 2003; Herb Pounds, Herbert E. Pounds, Jr., P.C., dated October 6, 2003; J. Pat Sadler, Public Investors' Arbitration Bar Association, dated October 2, 2003; Jeffrey A. Feldman, Esquire, dated October 6, 2003; John Miller, Law Office of John L. Miller, P.C., dated October 5, 2003;

Jorge A. Lopez, Esquire, Jorge A. Lopez, P.A., dated October 5, 2003; Kari S. Turigliatto, Mutual Service Corporation, dated October 8, 2003; Kenneth A. Martyn, Attorney at Law, dated October 8, 2003; Laurence S. Schultz, Driggers, Schultz & Herbst, P.C., dated October 3, 2003; Lenny Steiner, dated October 4, 2003; Madelaine Eppenstein and Theodore G. Eppenstein, Eppenstein and Eppenstein, dated October 3, 2003; Ralph A. Lambiase, North American Securities Administrators Association, Inc., dated October 3, 2003;

Richard M. Layne, Layne & Lewis LLP, dated October 2, 2003; Robert S. Banks, Jr., Banks Law Office, P.C., dated October 3, 2003; Rosemary J. Shockman, Shockman Law Office, P.C., dated October 2, 2003; Scott C. Iigenfritz, Johnson, Pope, Bokor, Ruppel & Burns, P.A., dated October 16, 2003; Steve Buchwalter, Law Offices of Steve A. Buchwalter, P.C., dated October 3, 2003; and Tracy Pride Stoneman, Tracy Pride Stoneman, P.C., dated October 3, 2003. 7 *See* letter from Kosha Dalal, Assistant General Counsel, NASD, to Katherine A.

England, Assistant Director, Division of Market Regulation, SEC, dated January 9, 2004 (“Amendment No. 5”). II. Description of the Proposal A. Background 1. Purpose and General Description of Proposal The proposed rule change is intended to increase the disclosure required in predispute arbitration agreements. Many broker-dealers require that customers seeking to open accounts, particularly margin and option accounts or accounts with a checking or money market feature, agree in writing to arbitrate disputes concerning the account, typically in an SRO-sponsored forum.

These agreements, called “predispute arbitration agreements,” are generally part of the non-negotiated customer agreement drafted by the firm. To ensure that customers are advised about what they are agreeing to when they sign predispute arbitration agreements, NASD Rule 3110(f) requires that such agreements contain highlighted disclosure about differences between arbitration and litigation, including notice that by agreeing to arbitrate their disputes, customers may be waiving certain rights that would be available in court.

NASD Rule 3110(f) also requires that the agreement itself be highlighted, and that a copy of the agreement be given to the customer and acknowledged by the customer in writing. Despite these precautions, investor representatives have expressed concern that many customers who sign predispute arbitration agreements still do not understand adequately what they are agreeing to. Customers' perceptions of unfairness are heightened by the fact that, in order to open an account, they are forced to agree to SRO-sponsored arbitration.

Consequently, the Arbitration Task Force, chaired by David Ruder (formerly Chairman of the SEC and a former NASD Board member), recommended in its 1996 report, Securities Arbitration Reform: Report of the Arbitration Policy Task Force to the Board of Governors, National Association of Securities Dealers, Inc. (“Ruder Task Force Report”), that members be required to provide more disclosure about arbitration to customers who sign predispute arbitration agreements, and that the use of certain provisions that limit rights and remedies be restricted.

Thus, NASD proposes to amend NASD Rule 3110(f) regarding predispute arbitration agreements

(i)to require additional disclosure in predispute arbitration agreements about the arbitration process, including possible limits on eligibility of claims;

(ii)to require member firms to provide certain information regarding arbitration and predispute arbitration agreements to customers upon request;

(iii)to provide explicitly that the rules of the arbitration forum in which the claim is filed are incorporated into the predispute arbitration agreement; and

(iv)to require members seeking to compel arbitration of claims initiated in court to arbitrate all of the claims contained in the complaint if the customer so requests. 2. General Comments on the Proposed Rule Change In 1999, the Commission received two comment letters on the proposal, as amended by Amendment Nos. 1 and 2. 8 In 2003, the Commission received 24 comment letters on the proposal, as amended by Amendment Nos. 3 and 4. 9 Several commenters applauded the proposed rule change as an effort to help investors understand the consequences of signing predispute arbitration agreements. The majority of commenters, however, opposed Proposed Rule 3110(f)(4)(B), relating to the use of choice-of-law provisions. In response to these comments, NASD is amending the proposed rule change to withdraw Proposed Rule 3110(f)(4)(B), for the reasons explained below in Section II. 8 *See* Estell Letter and Miller Letter, *supra* note 4. 9 *See supra* note 6. F. Restrictions on Provisions That Limit Rights and Remedies Finally, one commenter criticized the proposed rule change for not permitting customers to opt out of predispute arbitration agreements in cases involving securities fraud, and for failing to eliminate the requirement that one non-public arbitrator serve on three-arbitrator panels, as required by NASD Rule 10308. 10 NASD responded that these concerns, while noted, are outside the scope of the proposed rule filing. 10 *See* letter from Madelaine Eppenstein and Theodore G. Eppenstein, Eppenstein and Eppenstein, dated October 3, 2003. B. Required Disclosure and Notice of Possible Restrictions on Eligibility Currently, disclosure language about the differences between litigation and arbitration must be included in predispute arbitration agreements. 11 NASD proposes to clarify existing disclosures and to require new disclosure that

(i)the rules of some arbitration forums may impose time limits for bringing claims in arbitration; and

(ii)in some cases, claims that are ineligible for arbitration may be brought in court. 12 11 *See* NASD Rule 3110(f)(1). 12 *See* Proposed Rule 3110(f)(1)(F). In a companion rule filing approved by the Commission today, NASD is amending its rule pertaining to time limits for bringing claims in arbitration (NASD Rule 10304), to provide explicitly that arbitrators, rather than the courts, determine the eligibility of claims, and that a party requesting dismissal of a claim on eligibility grounds in an NASD forum agrees that the party that filed the dismissed claim may withdraw all related claims without prejudice and may pursue all of the claims in court. *See* Release No. 34-50714 (November 22, 2004) (order approving amendments to Rule 10304). Under the proposal, members would be required to add the new disclosure requirements to all new customer account agreements containing predispute arbitration agreements as of the effective date of the rule. Accordingly, the proposed rule would not require members to replace existing agreements with current customers. 13 13 *See* Proposed Rule 3110(f)(7). C. Incorporation of Arbitration Forum Rules The proposal provides that the rules of the arbitration forum in which a claim is brought, and any amendments thereto, are incorporated into the parties' agreement and are enforceable, as are other provisions of the arbitration contract. 14 This provision should ensure that the rules of a forum apply to cases brought in that forum and eliminate the need to execute new agreements each time a forum changes its rules. Accordingly, if a customer files a complaint in an NASD arbitration forum, NASD's arbitration rules would apply in all respects to the agreement. 14 *See* Proposed Rule 3110(f)(1)(G). D. Acknowledgement of Predispute Arbitration Clause NASD Rule 3110(f) currently requires that

(i)predispute arbitration agreements contain a highlighted statement indicating that the agreement contains an arbitration clause and specifying at what page and paragraph the arbitration clause is located; and

(ii)a copy of the predispute arbitration agreement be provided to the customer, who must acknowledge receipt of the agreement in writing, either on the agreement itself or on a separate document. Proposed Rule 3110(f)(2)(B) would amend the current rule to require that delivery and customer acknowledgement of the agreement take place at the time of signing. E. Requirement That Members Provide Copies of Customer Agreements and Information Regarding Arbitration Forums to Customers Upon Request: Proposal and Comments Received Proposed Rule 3110(f)(3)(A) would require members, within ten days of receiving a customer request, either to provide the customer with a copy of any predispute arbitration agreement clause or agreement that the customer had signed, or inform the customer that the member does not have a copy of the agreement. 15 In addition, the proposal would require that, upon request of a customer, a member must provide the customer with the names of, and information on how to contact or obtain the rules of, all arbitration forums in which a claim may be filed under the agreement. 16 15 *See* Proposed Rule 3110(f)(3)(A). 16 *See* Proposed Rule 3110(f)(3)(B). One commenter interpreted the phrase “or inform the customer that the member does not have a copy thereof” in Proposed Rule (f)(3)(A) to refer to a situation in which there is no predispute arbitration agreement between the customer and firm. 17 NASD stated that, in fact, Proposed Rule 3110(f)(3)(A) is intended to address a situation in which a customer agreement or predispute arbitration agreement has been executed, but the firm is for some reason unwilling or unable to produce a copy to the customer. Current Rule 3110(f)(3) requires that copies of any predispute arbitration agreement be given to the customer, who must acknowledge receipt thereof. NASD has become aware, however, that members generally provide copies of such agreements at the time the agreement is signed, but sometimes refuse or are unable to do so after a dispute has arisen. Thus, Proposed Rule 3110(f)(A)(3) requires members to produce customer account or predispute arbitration agreements upon the request of the customer. NASD expects that members will retain such agreements, as required by NASD rules. However, if for some reason, whether through an act of nature, human error, or otherwise, a member is unable to comply with the customer's request, NASD proposes to require members to inform the customer of that fact, rather than simply failing to respond to the customer's request. 17 *See* Pace Letter *supra* note 6. F. Restrictions on Provisions That Limit Rights and Remedies Proposed Rule 3110(f)(4)(A) clarifies the prohibition against provisions in predispute arbitration agreements that limit rights or remedies, including provisions that would circumvent NASD's eligibility rule proposal, as amended. 18 In particular, the proposal would provide that predispute arbitration agreements may not include any condition that would:

(i)Limit or contradict the rules of any self-regulatory organization (“SRO”);

(ii)limit the ability of a party to file any claim in arbitration;

(iii)limit the ability of a party to file any claim in court permitted to be filed in court under the rules of the forums in which a claim may be filed under the agreement; or

(iv)limit the ability of arbitrators to make any award. 19 18 *See supra* note 12. 19 *See* Proposed Rule 3110(f)(4)(A). NASD initially proposed to amend Rule 3110(f)(4) to include paragraph (f)(4)(B), which would state that no choice-of-law provision would be enforceable unless there is a significant contact or relationship between the law selected and either the transaction at issue or one or more of the parties. NASD had proposed paragraph (f)(4)(B) in response to the recommendation of the Ruder Task Force Report and with the purpose of protecting investors from the use of arbitrary choice of law provisions. This would make explicit NASD's interpretation of current Rule 3110(f)(4) to require that, when predispute arbitration agreements between members and customers include a choice-of-law provision, there must be “an appropriate contact or relationship between the transaction at issue or the parties and the law selected.” 20 As explained more fully below, however, NASD has withdrawn proposed paragraph (f)(4)(B) in response to comments, but continues to caution its members against overreaching in choice of law provisions. 20 NASD *Notice to Members* 95-85 (October 16, 1995); *see also* NASD *Notice to Members 95-16.* Although one commenter generally supported proposed paragraph 3110(f)(4)(B), 21 the overwhelming majority of commenters opposed it as potentially harmful to investors. A majority of the commenters argued that, because relevant case law regarding choice-of-law provisions in predispute arbitration agreements has evolved considerably in the five years since the proposed rule change was filed, proposed paragraph (f)(4)(B) could be interpreted to endorse choice-of-law clauses that may not be enforceable under applicable state law. Two commenters suggested that members might use paragraph (f)(4)(B) to legitimize choice-of-law clauses that would override the protection of customers' home state blue sky laws. 22 Given the strong opposition of most commenters and the fact that such adverse consequences were not intended by NASD, NASD is withdrawing proposed paragraph (f)(4)(B). However, by doing so, NASD is not implying that members may include arbitrary choice-of-law provisions in predispute arbitration agreements with customers. As it has in the past, NASD will continue to interpret NASD Rule 3110(f) to require that, if a choice-of-law provision is used, there must be an adequate nexus between the law chosen and the transaction or parties at issue in accordance with NASD Notices to Members 95-85 and 95-16. 23 21 *See* Pace Letter, *supra* note 6. 22 *See* Estell Letter and Miller Letter, *supra* note 4. 23 *See supra* note 20. G. Non-Bifurcation Provision NASD proposes to require members seeking to compel arbitration of claims filed in court to agree to arbitrate all of the claims contained in the complaint if the customer requests, even if some of the claims would be ineligible for arbitration under the eligibility rule. 24 24 *See* Proposed Rule 3110(f)(5). In a companion filing, NASD proposes to provide that by requesting dismissal of a claim on eligibility grounds in the NASD forum, the requesting party is agreeing that the party that filed the dismissed claim may withdraw all related claims without prejudice and may pursue all of the claims in court. 25 NASD represents that this provision would protect parties against involuntary bifurcation of claims. 26 25 *See supra* note 12. 26 *Id.* H. Effective Date Provisions The proposed amendments to NASD Rule 3110(f) would require various changes to the customer agreements used by NASD member firms. In order to provide enough time for firms to modify customer agreements, the proposed rule change would take effect 90 days after NASD publishes a *Notice to Members* to announce Commission approval of the proposal. Moreover, NASD would issue such *Notice to Members* within 60 days of publication of the Commission's approval of the proposed rule change in the **Federal Register** . The proposed amendments to NASD Rule 3110(f) would also provide that agreements signed before the effective date of the rule, as amended, would be subject to the provisions of NASD Rule 3110(f) in effect at the time the agreement was signed, except with regard to the provisions of subparagraph (f)(3) of the proposed rule change. 27 27 *See* Proposed Rule 3110(f)(7). III. Discussion and Commission Findings Currently, NASD Rule 3110(f) requires that predispute arbitration agreements contain highlighted disclosure about differences between arbitration and litigation, including notice that by agreeing to arbitrate their disputes, customers may be waiving certain rights that would be available in court. Further, NASD Rule 3110(f) provides that its members must highlight the agreement and provide a copy of the agreement to the customer, which the customer acknowledges in writing. The Commission notes that despite the disclosure requirements under the current rule, NASD has determined that there are continuing concerns about whether customers who become parties to predispute arbitration agreements adequately understand the terms of the agreement. NASD has concluded that it is necessary to require its members to provide more disclosure about arbitration to customers who sign predispute arbitration agreements, and that the use of certain provisions that limit rights and remedies should be restricted. 28 Accordingly, NASD submitted the proposed amendments to NASD Rule 3110(f) to address these concerns. 28 In formulating its proposal, NASD referred to the work of its Arbitration Policy Task Force, chaired by David Ruder. *See supra* text 0, 1. Purpose and General Description of Proposal. The Commission believes that the proposal should provide customers with clearer and enhanced disclosure regarding the terms of predispute arbitration agreements. The Commission believes that the proposed rule change incorporates important protections into the text of the arbitration agreement itself, including the rules of the SRO in which the arbitration takes place. This will permit better guidance to the parties, arbitrators, and the courts. Moreover, the proposed requirement that a member either provide a customer with the predispute arbitration agreement or inform the customer that the member does not have a copy within ten days, as well as provide the customer with information on how to obtain the rules of the arbitration forums in which a claim may be filed under the agreement, should help to protect investors and facilitate the dispute resolution process. The Commission also notes that the proposal provides that if the member seeks to compel arbitration of claims, the member must agree to arbitrate all of the claims contained in the complaint if the customer requests. The Commission believes that the proposed rule change should benefit investors by preventing customers from being forced to bifurcate their claims. The proposed rule change, together with Rule 10304, as amended, addresses the concern that parties would be forced to litigate in two forums; limits the potential litigation strategies that could escalate the costs of and thereby impede dispute resolution; and eliminates the particular litigation strategy, never contemplated under NASD rules, of so-called “election of remedies,” which foreclosed some investors’ access to justice altogether. Finally, the Commission notes the concerns raised by commenters regarding the proposed choice-of-law provision. 29 The Commission, believes that NASD's response in withdrawing paragraph 3110(f)(4)(B) is consistent with the Act, and that that Proposed Rule 3110(f)(4)(A) achieves an appropriate balance between the interests of investors and the ability of parties to agree contractually to fair terms that would govern their disputes, 30 especially as explained in NASD Notice to Members 95-85. 31 29 *See supra* text 0, Restrictions on Provisions that Limit Rights and Remedies. 30 The Supreme Court ruled in 1995 that the choice of law provision in the customer agreement before the Court did not have the effect of barring arbitrators from barring punitive damages. *Mastrobuono* v. *Shearson Lehman Hutton, Inc.,* 514 U.S. 52 (1995). Rule 3110(f)(4) explicitly forbids broker-dealers from using any term of an agreement to limit such relief. 31 *See supra* note 20. The Commission notes that NASD will publish a *Notice to Members* within 60 days of receiving Commission approval of the proposed rule change. The effective date of the proposed rule change will be 90 days after the publication of the *Notice to Members.* After careful review, the Commission finds that the proposal is consistent with the requirements of Section 15A of the Act 32 and the rules and regulations thereunder that govern NASD. 33 In particular, the Commission finds that the proposal is consistent with Section 15A(b)(6) of the Act 34 which requires, among other things, that the rules of an association be designed to prevent fraudulent and manipulative acts and practices, to promote just and equitable principles of trade, and, in general, to protect investors and the public interest; and are not designed to permit unfair discrimination among customers, issuers, brokers, or dealers. 32 15 U.S.C. 78 *o* -3. 33 In addition, pursuant to Section 3(f) of the Act, the Commission has considered the proposed rule's impact on efficiency, competition, and capital formation. 15 U.S.C. 78c(f). 34 15 U.S.C. 78 *o* -3(b)(6). IV. Accelerated Approval of Amendment No. 5 The Commission believes that there is good cause for approving Amendment No. 5 prior to the 30th day after publication in the **Federal Register** . Amendment No. 5 responds to comments by withdrawing Proposed Rule 3110(f)(4)(B). Accelerated approval of Amendment No. 5 will enable NASD to announce promptly the final rules, in conjunction with those being approved today in a companion filing, SR-NASD-2003-101, which changes would be incorporated by Proposed Rule 3110(f) into any predispute arbitration agreement governing proceedings held in a NASD forum. Concurrent approval of Amendment No. 5 and SR-NASD-2003-101 will lessen member confusion as to the final requirements of both rule filings, allow their effective dates to be the same, and thereby permit members to make the necessary changes to comply with them in a timely fashion. 35 Based on the above, the Commission finds good cause, consistent with section 15A(b)(6) and section 19(b)(2) of the Act, for approving Amendment No. 5 prior to the 30th day after the date of publication of notice of filing thereof in the **Federal Register** . 35 The Commission further notes that both rule filings and amendments thereto have been available since their respective filing dates on *http://www.nasdadr.com.* V. Solicitation of Comments Interested persons are invited to submit written data, views, and arguments concerning whether proposed Amendment No. 5 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-98-74 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-98-74. 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 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-98-74 and should be submitted on or before December 27, 2004. VI. Conclusion *It is therefore ordered,* pursuant to section 19(b)(2) of the Act, 36 that the proposed rule change (SR-NASD-98-74), as amended, is hereby approved, and Amendment No. 5 is approved on an accelerated basis. 36 15 U.S.C. 78s(b)(2). For the Commission, by the Division of Market Regulation, pursuant to delegated authority. 37 37 17 CFR 200.30-3(a)(12). Margaret H. McFarland, Deputy Secretary. [FR Doc. E4-3450 Filed 12-2-04; 8:45 am] BILLING CODE 8010-01-P SECURITIES AND EXCHANGE COMMISSION [Release No. 34-50741; File No. SR-NASD-2004-142] Self-Regulatory Organizations; National Association of Securities Dealers, Inc.; Notice of Filing of Proposed Rule Change and Amendment No. 1 Thereto To Establish Fees for Companies With a Dual Listing on the New York Stock Exchange and Nasdaq November 29, 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 28, 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 November 12, 2004, Nasdaq amended the proposed rule change. 3 The Commission is publishing this notice to solicit comments on the proposed rule change, as amended, from interested persons. 1 15 U.S.C. 78s(b)(1). 2 17 CFR 240.19b-4. 3 *See* Amendment No. 1 replaced and superseded the original filing in its entirety. I. Self-Regulatory Organization's Statement of the Terms of the Substance of the Proposed Rule Change Nasdaq proposes to adopt a fee schedule for issuers that are dually listed on the New York Stock Exchange (the “NYSE”) and Nasdaq. Should the Commission approve the proposed rule change, Nasdaq will implement the proposed rule change immediately. The text of the proposed rule change is below. Proposed new language is in italics. 4 4 Changes are marked to the rule text that appears in the electronic NASD Manual found at *www.nasd.com.* Nasdaq notes, however, that it has recently submitted SR-NASD-2004-140 (September 20, 2004), a proposed rule change that would adopt Rules 4510(a)(6) and 4520(a)(6). Accordingly, those provisions have been marked as “Reserved” in the rule text. *See* Securities Exchange Act Release No. 50740, November 29, 2004. 4510. The Nasdaq National Market

(a)Entry Fee (1)-(5) No change.

(6)Reserved. *(7) The fees described in this Rule 4510(a) shall not be applicable to an issuer

(i)whose securities are listed on the New York Stock Exchange and designated as national market securities pursuant to the plan governing New York Stock Exchange securities at the time such securities are approved for listing on Nasdaq, and

(ii)that maintains such listing and designation after it lists such securities on Nasdaq.*

(b)Additional Shares (1)-(4) No change. *(5) The fees described in this Rule 4510(b) shall not be applicable to an issuer

(ii)that maintains such listing and designation after it lists such securities on Nasdaq.*

(c)Annual Fee—Domestic and Foreign Issues (1)-(4) No change. *(5) In lieu of the fees described in Rule 4510(c)(1), the annual fee shall be $15,000 for each issuer

(ii)that maintains such listing and designation after it lists such securities on Nasdaq. Such annual fee shall be assessed on the first anniversary of the issuer's listing on Nasdaq.* (d)-(e) No change. 4520. The Nasdaq SmallCap Market

(a)Entry Fee (1)-(5) No change.

(6)Reserved. *(7) The fees described in this Rule 4520(a) shall not be applicable to an issuer

(ii)that maintains such listing and designation after it lists such securities on Nasdaq.*

(b)Additional Shares (1)-(4) No change. *(5) The fees described in this Rule 4520(b) shall not be applicable to an issuer

(ii)that maintains such listing and designation after it lists such securities on Nasdaq.*

(c)Annual Fee (1)-(4) No change. *(5) In lieu of the fees described in Rule 4510(c)(1), the annual fee shall be $15,000 for each issuer

(ii)that maintains such listing and designation after it lists such securities on Nasdaq. Such annual fee shall be assessed on the first anniversary of the issuer's listing on Nasdaq.*

(d)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 During 2004, following the repeal of the NYSE's Rule 500, 5 Nasdaq established a dual listing program for securities listed on the NYSE. Nasdaq had long advocated the repeal of NYSE Rule 500, in favor of a competitive environment in which significant barriers to listing transfers do not exist and listed companies can move quickly and easily to the market that best suits their needs. In recognition of the fact that a change in listing venue is a major step for any issuer, however, Nasdaq's dual listing program is designed to allow issuers to undertake a focused comparison of the services and market quality offered by Nasdaq and the NYSE. The explicit goal of the program, however, is to encourage the eventual switch of companies that dual list. 5 *See* Securities Exchange Act Release No. 48720 (October 30, 2003), 68 FR 62645 (November 5, 2003) (SR-NYSE-2003-23). To facilitate the program, Nasdaq filed with the Commission on January 12, 2004, an interpretation of its rules (NASD IM-4500-3) that waived, for a one-year period, the entry fees, annual fees, and listing of additional shares fees due under Nasdaq rules for any NYSE issuer that dually listed on Nasdaq, or switched to Nasdaq, between January 12, 2004, and December 31, 2004. 6 With the instant proposed rule change, Nasdaq now proposes to establish a fee schedule for those NYSE issuers that remain dually listed after that one-year period, and for NYSE issuers that dually list after December 31, 2004. Nasdaq proposes to apply this schedule to any issuer that adds a dual listing on Nasdaq while remaining listed on the NYSE. 6 Securities Exchange Act Release No. 49286 (February 19, 2004), 69 FR 8999 (February 26, 2004) (SR-NASD-2004-04). Under the proposed fee schedule, the issuer of a dually listed security would not be subject to entry and application fees, which otherwise would range from $25,000 to $50,000 on The Nasdaq SmallCap Market and from $100,000 to $150,000 on the Nasdaq National Market. These issuers also would not be subject to the fee for listing additional shares, which is otherwise $2,500 or $0.01 per additional share, whichever is higher, up to an annual maximum of $45,000 per issuer. 7 Finally, a dually listed issuer would not pay an annual fee until the end of its first year on Nasdaq, at which time the annual fee would be $15,000. 8 Nasdaq believes that without a remission of these fees, companies that may be interested in comparing Nasdaq and the NYSE through a dual listing would nevertheless be forced to weigh the potential benefits against a requirement to duplicate the fees that they have paid and continue to pay to the NYSE. Nasdaq believes that in effect, NYSE Rule 500 would have been replaced with a burden on a Nasdaq listing imposed by Nasdaq itself. Nasdaq believes that by promoting a comparison of markets through dual listing, a waiver of these fees will enhance fair competition between exchange markets and markets other than exchange markets, consistent with section 11A(a)(1)(C)(ii) of the Act, 9 to the benefit of the investing public. 7 Issuances of up to 49,999 additional shares per quarter are not subject to the Additional Shares fee. 8 On August 25, 2004, Nasdaq proposed to modify the annual fee for issuers listed on the Nasdaq Stock Market. *See* Securities Exchange Act Release No. 50577 (October 21, 2004), 69 FR 62926 (October 28, 2004) (SR-NASD-2004-128). Under this proposal, annual fees for SmallCap Market issuers would range from $17,500 to $21,000 and annual fees for National Market issuers would range from $24,500 to $75,000. Nasdaq has proposed that these revised fees be effective January 1, 2005 for issuers currently listed on The Nasdaq Stock Market. 9 15 U.S.C. 78k-1(a)(1)(C)(ii). Nasdaq also believes that the proposed remission of the entry fee is justified from the standpoint of Nasdaq's experience with regard to the time and effort required to review applications of issuers that are already listed on an exchange. Although companies that dually list are reviewed for compliance with Nasdaq listing standards in the same manner as any other company applying for listing on Nasdaq, Nasdaq believes that the average application of a dually listing issuer is less likely to involve time-consuming regulatory issues than the average application from a company conducting an initial public offering or transferring from the over-the-counter market. This is, in part, due to the ongoing scheme of regulation to which such issuers have been subject. Moreover, because such companies are already familiar with the standards of conduct imposed upon public companies by listing markets, their applications are generally presented with a high degree of completeness and accuracy. Finally, and most significant, because such companies already satisfy the listing standards of the NYSE, there is a very high likelihood that they also comply with Nasdaq's listing standards. Thus, although Nasdaq always conducts a full and independent review of each issuer's compliance, and will continue to do so with respect to issuers that dually list, the probability that an issuer seeking to dually list will be found not in compliance and therefore denied access to a Nasdaq listing is low. As a result, the probability that Nasdaq staff will be required to devote time and effort to establish a sufficient record to support a decision to deny listing and to defend such a denial against appeal under the Rule 4800 Series is also low. By contrast, when an applicant is denied a listing, Nasdaq receives only a $5,000 application fee, but must frequently devote significant resources to defending its decision. The proposed fee schedule would require an issuer of dually listed securities to pay an annual listing fee of $15,000, instead of the annual fee otherwise due. In the case of an issuer that was eligible for a waiver under NASD IM-4500-3, this annual fee will be assessed on the anniversary of the issuer's Nasdaq listing. In the case of subsequent issuers that add a dual listing, the fee will be assessed on the anniversary of the issuer's listing on Nasdaq. Accordingly, issuers that opt to dual list will have a one-year period to assess the benefits of the dual listing before the fee is assessed. Although, as noted above, the goal of the dual-listing program is to encourage switches to Nasdaq after one year, some issuers may feel that they need more than one year to evaluate the two markets, or that they benefit from maintaining a dual listing that encourages ongoing competition between Nasdaq and the NYSE. In that case, Nasdaq believes it would be inequitable to charge dually listed issuers the full annual fee or the fee for listing additional shares, as they are also paying these fees to the NYSE. Nevertheless, Nasdaq believes that in such circumstances, the collection of a reduced annual fee is warranted to support the ongoing cost of issuer services, including regulatory oversight, and to fund future product and service investments. Nasdaq believes that imposing lower fees on dually listed issuers is equitable in light of the issuers' ongoing payment of fees to the NYSE and the ongoing role of the NYSE as the primary market for such issuers. Nasdaq's fee schedule and the fee schedules of other self-regulatory organizations assess varying levels of fees on issuers based on reasoned assessments of the issuers' varying circumstances. 10 For example, both entry fees and annual fees are assessed on a sliding scale that uses total shares outstanding and the issuer's market tier ( *i.e.* , Nasdaq National Market or SmallCap Market) as a corollary to the complexity of reviewing each issuer's compliance with listing standards and each issuer's ability to pay. Inevitably, the use of such a scale means that different issuers pay different amounts for their listing on Nasdaq. Similarly, non-U.S. issuers listing American Depositary Receipts (“ADRs”) on Nasdaq are subject to a lower annual fee than domestic issuers due, in part, to the fact that Nasdaq is typically a secondary market for these issuers' securities. Nasdaq believes that the lower fees for ADRs are directly analogous to the proposed lower fees for dually listed companies. Moreover, Nasdaq notes that certain functions required to oversee companies that are solely listed on Nasdaq are not necessary with respect to dually listed issuers. Specifically, Nasdaq's Market Watch group, which ordinarily reviews news releases for material news and makes determinations as to whether to halt trading pending news dissemination, defers to the NYSE on those matters regarding dually listed issuers. In addition, notifications for dividends and stock splits, or changes to the underlying security or symbol, are not required to be provided to Nasdaq as they would be in the case of issuers that are not dually listed. Finally, Nasdaq believes issuers that become dually listed voluntarily undertake a second set of regulations and therefore demonstrate their commitment to regulatory excellence. Although Nasdaq subjects dually listed companies to the same degree of regulatory scrutiny applicable to solely listed issuers, Nasdaq expects that companies of this type will raise fewer regulatory issues and therefore will require less staff time on an ongoing basis. 10 Nasdaq notes that the Commission has previously approved reduced fees for securities that are dually listed on the Pacific Exchange, finding that “reduced fees are appropriate and reasonable because the costs incident to maintaining exclusive issues are greater than costs incident to maintaining dually listed issues.” *See* Securities Exchange Act Release No. 40395 (September 3, 1998), 63 FR 48774 (September 11, 1998) (SR-PCX-98-32). It should also be noted that the trading of dually listed stocks remains subject to the restrictions of the Intermarket Trading System plan. Moreover, dually listed issuers are not eligible for inclusion in indices maintained by Nasdaq, and their stock is therefore not held by index products and funds based upon such indices. Nasdaq does not expect the financial impact of this proposed rule change to be material, either in terms of increased levels of annual fees from dually listed companies that eventually switch to Nasdaq or in terms of diminished entry or annual fees of companies that maintain a dual listing. Quite simply, even with the proposed rule change in place, Nasdaq understands that a change in listing venue, either through a switch or a dual listing, is a major step for an issuer, and therefore Nasdaq does not expect that the number of dually listed issuers in a given time frame will be sufficient to have a material effect on financial resources. Accordingly, the proposed rule change will not impact Nasdaq's resource commitment to its regulatory oversight of the listing process or its regulatory programs. 2. Statutory Basis Nasdaq believes that the proposed rule change is consistent with the provisions of section 15A of the Act, 11 in general, and with sections 15A(b)(5) and 15A(b)(6) of the Act, 12 in particular, in that it is designed to provide an equitable allocation of reasonable dues, fees, and other charges among members and issuers and other persons using any facility or system which the NASD operates or controls, and to remove impediments to and perfect the mechanism of a free and open market and a national market system. As discussed above, Nasdaq believes that this proposal is an equitable allocation of reasonable fees because dually listed companies would pay annual fees, but such fees would be reduced in recognition of the fact that the issuer is also paying listing fees to another market and that certain services offered by Nasdaq would be duplicative of services already received from the other market. In addition, as noted above, Nasdaq believes that the proposed rule change is consistent with the provisions of section 11A(a)(1)(C)(ii) of the Act 13 in that it is designed to promote fair competition between exchange markets and markets other than exchange markets. 11 15 U.S.C. 78o-3. 12 15 U.S.C. 78o-3(b)(5) and (6). 13 15 U.S.C. 78k-1(a)(1)(C)(ii). 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. Specifically, Nasdaq believes that the proposed rule change will enhance competition by allowing issuers that are listed on the NYSE to add a listing on Nasdaq without being required to pay fees that are duplicative of fees already paid to the NYSE. 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, 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 *rule-comments@sec.gov.* Please include File Number SR-NASD-2004-142 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-2004-142. 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-2004-142 and should be submitted on or before December 27, 2004. For the Commission, by the Division of Market Regulation, pursuant to delegated authority. 14 14 17 CFR 200.30-3(a)(12). Margaret H. McFarland, Deputy Secretary. [FR Doc. E4-3451 Filed 12-2-04; 8:45 am] BILLING CODE 8010-01-P SECURITIES AND EXCHANGE COMMISSION [Release No. 34-50740; File No. SR-NASD-2004-140] Self-Regulatory Organizations; National Association of Securities Dealers, Inc.; Notice of Filing of Proposed Rule Change and Amendment No. 1 Thereto To Eliminate Entry and Application Fees for Exchange-Listed Issuers Transferring Listings to Nasdaq November 29, 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 20, 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 November 12, 2004, Nasdaq amended the proposed rule change. 3 The Commission is publishing this notice to solicit comments on the proposed rule change, as amended, from interested persons. 1 15 U.S.C. 78s(b)(1). 2 17 CFR 240.19b-4. 3 *See* Amendment No. 1 replaced and superseded the original filing in its entirety. I. Self-Regulatory Organization's Statement of the Terms of the Substance of the Proposed Rule Change Nasdaq proposes to eliminate the entry and application fees imposed upon issuers listed on a national securities exchange that transfer their listing to Nasdaq. Nasdaq will make the proposed rule change effective retroactively for any issuer listing on Nasdaq on or after September 20, 2004 (the date Nasdaq originally filed this proposal with the Commission). Accordingly, an issuer that switches its listing to Nasdaq between September 20, 2004 and such date as Commission approval of the filing may occur would receive a refund of the entry and application fee paid. The text of the proposed rule change is below. Proposed new language is in italics. 4 4 Changes are marked to the rule text that appears in the electronic NASD Manual found at *http://www.nasd.com.* No pending rule filings would affect the portions of these rules amended herein. 4510. The Nasdaq National Market

(a)Entry Fee (1)-(5) No change. *(6) The fees described in this Rule 4510(a) shall not be applicable to any issuer that is listed on a national securities exchange and that transfers its listing to the Nasdaq National Market.* (b)-(e) No change. 4520. The Nasdaq SmallCap Market

(a)Entry Fee (1)-(5) No change. *(6) The fees described in this Rule 4520(a) shall not be applicable to any issuer that is listed on a national securities exchange and that transfers its listing to the Nasdaq SmallCap Market.* 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 eliminate the entry and application fees under NASD Rules 4510(a) and 4520(a) for any company listed on a national securities exchange (an “exchange”) that transfers its listing to the Nasdaq National Market or the Nasdaq SmallCap Market ( *i.e.* , the issuer becomes listed on Nasdaq and ceases to be listed on an exchange). Nasdaq believes that the elimination of such fees is justified on several grounds. An issuer that already paid initial listing fees to an exchange when it became a publicly traded company is reluctant to pay a second initial listing fee to another listing venue, even if it concludes that Nasdaq offers the issuer and its investors superior services and market quality. With the benefit of statistics mandated by Rule 11Ac1-5 under the Act, 5 an issuer seeking the better market may compare the execution speed and quality on its current venue with speed and quality of comparable stocks trading on Nasdaq and conclude that a change in listing would be beneficial. Nevertheless, the benefits of the switch must currently be weighed against the cost of initial inclusion, which ranges from $25,000 to $150,000, depending on the issuer's market tier and the number of shares outstanding. Since the expected benefits of the switch would be diffused among the issuers' investors and realized over time, but the initial listing fees must be paid by the issuer immediately, Nasdaq is concerned that issuers that stand to benefit may nevertheless opt to forgo a switch. As such, Nasdaq believes that assessing the initial fees against issuers that have already paid fees to list on another market imposes a burden on the competition between exchange markets and markets other than exchange markets, a competition that Nasdaq believes is one of the central goals of the national market system. 6 5 17 CFR 240.11Ac1-5. 6 *See* 15 U.S.C. 78k-1. Nasdaq's concern as to the undue burden on competition imposed by a duplicative initial listing fee is especially acute in the case of New York Stock Exchange (“NYSE”) listed companies, whose opportunities to effect a switch have, until recently, been constrained by NYSE Rule 500. 7 Nasdaq had long advocated the repeal of NYSE Rule 500, in favor of a competitive environment in which significant barriers to listing transfers do not exist and listed companies can move quickly and easily to the market that best suits their needs. In January 2004, Nasdaq announced a program to allow NYSE companies to take advantage of the repeal of NYSE Rule 500 by adding a second listing on Nasdaq and thereby undertake a focused comparison of the services and market quality offered by each listing venue. To date, seven companies have taken advantage of this program. The explicit goal of this program has always been to encourage the eventual switch of companies that dual list, once they have experienced first-hand the benefits of their Nasdaq listing. 8 For that reason, Nasdaq adopted a one-year waiver of entry, annual, and listing of additional shares fees for NYSE companies that dual list, and a waiver of entry fees (the same fees that are the subject of this proposed rule change) for any issuer that switches its listing between January 12, 2004, and December 31, 2004. 9 Without a waiver for switches, companies that have dual listed would nevertheless be forced to weigh the benefits of a Nasdaq listing against the requirement to pay a duplicative entry fee. In effect, NYSE Rule 500 would have been replaced with a burden on listing transfers imposed by Nasdaq itself. To avoid such an incongruous result, Nasdaq believes that the temporary fee waiver for switches adopted earlier this year should be made permanent. 7 *See* Securities Exchange Act Release No. 48720 (October 30, 2003), 68 FR 62645 (November 5, 2003) (SR-NYSE-2003-23). 8 It is Nasdaq's expectation that a comparison of the performance of issuers in the dual listing program may also prove instructive to other NYSE issuers and issuers listed on other markets, but that full scale entry fees may impede such issuers from switching. 9 Securities Exchange Act Release No. 49286 (February 19, 2004), 69 FR 8999 (February 26, 2004) (SR-NASD-2004-04). Nasdaq notes that in SR-NASD-2004-04, it indicated that a dually listed company that transfers to Nasdaq after December 31, 2004 would pay “the entry fee or a portion thereof.” As indicated in this filing, however, Nasdaq has now concluded that the imposition of a duplicative entry fee is inequitable to switching issuers and places an undue burden on competition. Nasdaq also believes that the proposed rule change is justified from the standpoint of Nasdaq's experience with regard to the time and effort required to review applications of issuers that are already listed on an exchange. Although companies that switch their listings are reviewed for compliance with Nasdaq listing standards in the same manner as any other company applying for listing on Nasdaq, Nasdaq believes that the average application of a switching issuer is less likely to involve time-consuming regulatory issues than the average application from a company conducting an initial public offering or a company that is applying to Nasdaq after being delisted by another market. This is, in part, due to the ongoing scheme of regulation to which such issuers have been subject. Moreover, because such companies are already familiar with the standards of conduct imposed upon public companies by listing markets, their applications are generally presented with a high degree of completeness and accuracy. Finally, and most significant, because such companies already satisfy the listing standards of another self-regulatory organization, there is a higher likelihood that they also comply with Nasdaq's listing standards. Thus, although Nasdaq always conducts a full and independent review of each issuer's compliance, and will continue to do so with respect to issuers switching from exchanges, Nasdaq believes the probability that a switching issuer will be found not in compliance and therefore denied access to a Nasdaq listing is low. As a result, Nasdaq believes the probability that Nasdaq staff will be required to devote the time and effort required to establish a sufficient record to support a decision to deny listing and to defend such a decision against appeal under the NASD Rule 4800 Series is also low. By contrast, when an applicant is denied a listing, Nasdaq receives only a $5,000 application fee (and possibly hearing fees under the NASD Rule 4800 Series), but must frequently devote resources to defending its decision. Nasdaq understands that the effect of this proposed rule change will be to impose a lower level of listing fees on switching issuers than on some other issuers. 10 In light of the fact that Nasdaq will collect the same level of annual fees and listing of additional shares fees from such issuers, however, Nasdaq believes that the difference does not constitute an inequitable allocation of fees. Notably, Nasdaq's fee schedule and the fee schedules of other self-regulatory organizations assess varying levels of fees on issuers based on reasoned assessments of the issuers' varying circumstances. For example, both entry fees and annual fees are assessed on a sliding scale that uses total shares outstanding and the issuer's market tier ( *i.e.* , Nasdaq National Market or SmallCap Market) as a corollary to the complexity of reviewing each issuer's compliance with listing standards and each issuer's ability to pay. Inevitably, the use of such a scale means that different issuers pay different amounts for their listing on Nasdaq. Similarly, issuers listed on Nasdaq are not subjected to entry fees under NASD Rules 4510(a) and 4520(a) for listing an additional security if they have already paid the maximum entry fee, and annual fees for listing of American Depositary Receipts on the Nasdaq National Market are significantly lower than annual fees for listing of common stock, in recognition of the issuer's payment of listing fees to a foreign market. In light of a switching issuer's prior payment to another market and the generally lower burdens associated with reviewing a switching issuer's eligibility, Nasdaq believes that eliminating initial fees for switching issuers is entirely consistent with an equitable allocation of listing fees. Finally, Nasdaq notes that it does not expect the financial impact of this proposed rule change to be material, either in terms of increased levels of annual fees from switching issuers or in terms of diminished entry fees. Quite simply, even with the proposed rule change in place, Nasdaq understands that a change in listing venue is a major step for an issuer, and therefore Nasdaq does not expect that the number of switching issuers in a given time frame will be sufficient to have a material effect on financial resources. Accordingly, the proposed rule change will not impact Nasdaq's resource commitment to its regulatory oversight of the listing process or its regulatory programs. 10 *See* Securities Exchange Act Release No. 50741 (November 29, 2004) (SR-NASD-2004-142), which established fees for companies with a dual listing on the New York Stock Exchange and Nasdaq. 2. Statutory Basis Nasdaq believes that the proposed rule change is consistent with the provisions of section 15A of the Act, 11 in general, and with sections 15A(b)(5) and 15A(b)(6) of the Act, 12 in particular, in that it is designed to provide an equitable allocation of reasonable dues, fees, and other charges among members and issuers and other persons using any facility or system which the NASD operates or controls, and to remove impediments to and perfect the mechanism of a free and open market and a national market system. As described above, Nasdaq believes the elimination of entry fees for exchange-listed companies switching to Nasdaq is equitable and reasonable because requiring these companies to pay such fees would impose costs that are duplicative of fees that they have already paid to another market, and is also justified from the standpoint of Nasdaq's experience with regard to the time and effort generally required to process applications of such companies. In addition, Nasdaq believes this change will enable exchange-listed companies to determine more easily the benefits of switching to Nasdaq, thereby eliminating a burden on competition among markets in accordance with the provisions of section 11A(a)(1)(C)(ii) of the Act. 13 11 15 U.S.C. 78o-3. 12 15 U.S.C. 78o-3(b)(5) and (6). 13 15 U.S.C. 78k-1(a)(1)(C)(ii). 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. Specifically, Nasdaq believes that the proposed rule change will enhance competition by allowing issuers that are listed on an exchange to move their listing to Nasdaq without being required to pay a fee that is duplicative of fees already paid to an exchange. 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

(FAA)is issuing this notice to advise the public that a Draft Environmental Impact Statement (DEIS)—Proposed Relocation of the Panama City-Bay County International Airport, has been prepared and is available for public review and comment. Written requests for the DEIS and written comments on the DEIS can be submitted to the individual listed in the section FOR FURTHER INFORMATION CONTACT . A public information meeting and public hearing will be held on January 11, 2005. The public comment period will commence on November 26, 2004 and will close on January 21, 2005. *Public Comment and Information Meeting/Public Hearing:* The start of the public comment period on the DEIS will be November 26, 2004 and will end on January 21, 2005. A Public Information Meeting and Public Hearing will be held on January 11, 2005. The public information meeting will begin at 5 p.m. (c.s.t.) and will last until 7 p.m. (c.s.t.). The public hearing will begin at 7 p.m. (c.s.t.) and will be a joint public hearing with the USACE. The location for the Public Information Meeting/Public Hearing is the Gulf Coast Community College, 5230 US 98, Panama City, Florida. Copies of the DEIS may be viewed during regular business hours at the following locations: 1. Panama City-Bay County International Airport Administration Office, 3173 Airport Road, Panama City, Florida 32405.

(850)763-6751. 2. Bay County Public Library, 25 West Government Street, Panama City, Florida 32401.

(850)872-7500. 3. U.S Army Corps of Engineers, Panama City Regulatory Office, 1002 West 23rd Street, Suite 350, Panama City, Florida 32405.

(850)763-0717. 4. Federal Aviation Administration, Orlando Airports District Office, 5950 Hazeltine National Drive, Suite 400, Orlando, Florida 32822.

(407)812-0331. The Panama City-Bay County International Airport Administration Office has a limited number of CDs of the DEIS available for public distribution. Please contact this office for a copy. FOR FURTHER INFORMATION CONTACT: Virginia Lane, Environmental Specialist, Federal Aviation Administration, Orlando Airports District Office, Suite 400, 5950 Hazeltine National Drive, Orlando, Florida 32822. Ms. Lane can be contacted at

(407)812-6331 (voice),

(407)812-6978 (facsimile). SUPPLEMENTARY INFORMATION: The FAA prepared this DEIS to disclose the potential environmental impacts resulting from the proposed relocation of the Panama City-Bay County International Airport to a new site in Bay County, Florida. The U.S. Army Corps of Engineers (USACE) is a cooperating federal agency for this DEIS, having jurisdiction by law because the proposed Federal action has the potential for significant wetland impacts. The proposed new site would accommodate airfield development that would meet both short- and long-term aviation needs without being constrained by natural or man-made features. Initial development components of the proposed relocated airport would consist of airport and terminal facilities, and include a primary air carrier runway of 8,400 feet and a general aviation crosswind runway of 5,000 feet. This system would be supported by the necessary ancillary facilities including parallel and connecting taxiways, terminal area facilities, general aviation facilities, air traffic control and emergency service facilities, and lighting and navigation facilities. These initial development components are the subject of this DEIS. The purpose and need for these improvements is reviewed in the DEIS. All reasonable alternatives will be considered, including the no-action alternative. Comments from interested parties on the DEIS are encouraged and may be presented verbally at the public information meeting and/or public hearing or may be submitted in writing to the FAA at the address listed in the section entitled FOR FURTHER INFORMATION CONTACT . The comment period will close on January 21, 2005. Issued in Washington, DC, on November 26, 2004. Dennis E. Roberts, Director, Office of Airport Planning and Programming. [FR Doc. 04-26586 Filed 12-2-04; 8:45 am]

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