Proposed Rules. SECURITIES AND EXCHANGE COMMISSION

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BILLING CODE 4310-W7-P 71 152 Tuesday, August 8, 2006 Notices Part V Securities and Exchange Commission Applications, Hearings, Determinations, etc.: Nasdaq Stock Market, Inc. and NASDAQ Stock Market LLC; Notices SECURITIES AND EXCHANGE COMMISSION [Release No. 34-54240] In the Matter of the Application of the Nasdaq Stock Market, Inc. and the NASDAQ Stock Market LLC for Section 12(b) Registration On Behalf of Certain Issuers July 31, 2006. I. Introduction On January 13, 2006, the Commission approved the application of the Nasdaq Stock Market, Inc.

(“Nasdaq”) to register one of its subsidiaries, the NASDAQ Stock Market LLC (“Nasdaq Exchange”), as a national securities exchange. 1 Currently, companies listed on Nasdaq have one or more classes of equity securities registered under Section 12(g) 2 of the Securities Exchange Act of 1934 (“Exchange Act”), 3 registered under Section 12(b) of the Exchange Act 4 for listing on another national securities exchange, or exempt from registration pursuant to Section 12(g)(2)(B) or 12(g)(2)(G) of the Exchange Act 5 or Rule 12g3-2(b) promulgated under the Exchange Act 6 as permitted under NASD Rules 4310 and 4320.

Under Section 12(a) of the Exchange Act, 7 brokers and dealers are prohibited from effecting transactions in a security on a national securities exchange unless it has been registered under Section 12(b) of the Exchange Act. 1 *See* Release No. 34-53128 (January 13, 2006) [71 FR 3550]. 2 15 U.S.C. 78 *l* (g). 3 15 U.S.C. 78a *et seq.* 4 15 U.S.C. 78 *l* (b). 5 15 U.S.C. 78 *l* (g)(2)(B) or 78 *l* (g)(2)(G). 6 17 CFR 240.12g3-2(b). 7 15 U.S.C. 78 *l* (a). Accordingly, absent relief, Nasdaq's transition to the Nasdaq Exchange would require each of the companies currently listing securities on either the Nasdaq Global Market or Nasdaq Capital Market to individually register their Nasdaq-listed securities under Section 12(b) of the Exchange Act before the Nasdaq Exchange commences operations.

This process would require each affected company to file a registration statement with the Commission or other appropriate regulatory agency. 8 The Nasdaq Exchange would then be required to certify to the Commission and other regulators that, with respect to each registration statement, the company's securities are approved for listing and registration on the Nasdaq Exchange. 9 The registration would become effective 30 days after the Commission's receipt of certification from the Nasdaq Exchange or within such shorter period of time as the Commission may determine. 10 8 Section 12(i) of the Exchange Act requires filings relating to certain financial institutions to be made with the Comptroller of the Currency, the Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Corporation, or the Office of Thrift Supervision. 15 U.S.C. 78 *l* (i). 9 *See* Section 12(d) of the Exchange Act [15 U.S.C. 78 *l* (d)]. 10 *Id.* On behalf of its listed companies, Nasdaq and the Nasdaq Exchange have asked for relief with respect to this registration process, asserting that it would place an unnecessary cost and administrative burden on the listed companies, investors, the agencies that regulate the listed companies, and Nasdaq and the Nasdaq Exchange, and would not be in the public interest.

With respect to the vast majority of its listed securities, Nasdaq and the Nasdaq Exchange assert that information that would be elicited by registration has already been required to be publicly disclosed. Since the vast majority of Nasdaq-listed companies already have registered their securities under Section 12 of the Exchange Act 11 or have been required to file detailed public information with the Commission, 12 the resulting duplicative disclosure would not significantly benefit the marketplace or investors. 11 These companies have filed registration statements pursuant to Section 12(g) or, in a limited number of cases, Section 12(b) of the Exchange Act.

A separate Section 12(b) registration statement is required with respect to each national securities exchange on which a particular class of security is listed. Accordingly, a new registration statement on 12(b) will be required by the time the Nasdaq Exchange becomes operational, even as to those Nasdaq-listed companies that have previously filed 12(b) registration statements. 12 Those Nasdaq-listed companies which have registered under the Investment Company Act of 1940 (the “1940 Act”) have filed registration statements with the Commission under the 1940 Act and have been required to make periodic filings under the 1940 Act identical in form to those required of investment companies that have registered their securities under Section 12(b) of the Exchange Act.

These investment companies are exempt from registration under Section 12(g)(2)(B) of the Exchange Act. To ameliorate the cost and administrative burden resulting from the filing of individual Exchange Act registration statements that would otherwise be required, Nasdaq and the Nasdaq Exchange have submitted a letter, dated July 31, 2006, on behalf of certain Nasdaq-listed issuers (the “Issuers”) to the Commission requesting that this letter serve as the single application for registration with respect to the listed securities of these Issuers, as well as the Nasdaq Exchange's certification of such application (the “Nasdaq Application”). 13 Nasdaq and the Nasdaq Exchange have made a similar request of the Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Corporation, and the Office of Thrift Supervision. 14 The Nasdaq Application is provided as an attachment to this Order. 13 *See* Letter from Edward S.

Knight to Nancy M. Morris (July 31, 2006). For certain of its listed issuers whose securities are not currently required to be registered under the Exchange Act, Nasdaq and the Nasdaq Exchange have requested additional time for these securities to become registered under Section 12(b). That portion of the request is being addressed in a separate Order by the Commission. See Exchange Act Release No. 34-54241 (July 31, 2006). 14 We understand these agencies will consider the request for relief with respect to the companies they oversee pursuant to Section 12(i) of the Exchange Act.

We further understand that the Comptroller of the Currency does not currently oversee any affected company pursuant to Section 12(i) of the Exchange Act. II. Statutory Standards Section 12(a) of the Exchange Act makes it unlawful for an exchange member, broker, or dealer to effect any transaction in any security (other than an exempted security) on a national securities exchange unless a registration is effective with respect to that security on the exchange in accordance with the provisions of Section 12 and the rules and regulations promulgated under Section 12.

Exchange Act Section 12(b) and related rules prescribe the form and content of the application that may be used to register a security on a national exchange. However, Section 12(c) 15 permits the Commission to require alternative information in lieu of the informational requirements of Section 12(b) if, in the judgment of the Commission, some or all of the information required under Section 12(b) is “inapplicable to any specified class or classes of issuers” and the substitute information is of comparable character as the Commission may deem applicable to such class of issuers. 15 15 U.S.C. 78 *l* (c).

Section 12(d) provides that the registration of a security under the Exchange Act becomes effective 30 days after the Commission's receipt of certification from the national securities exchange that the security has been approved for listing and registration on the exchange, or within such shorter period of time as the Commission may determine. III. Discussion of NASD Rule 4130 and Opt-Out Process To provide notice of its plan to seek the requested relief on behalf of the Issuers and to assure sufficient authority for Nasdaq and the Nasdaq Exchange to submit the Nasdaq Application to the Commission, the NASD proposed a new rule specifically permitting Nasdaq and the Nasdaq Exchange to take the contemplated action.

The Commission approved this rule on April 6, 2006. 16 NASD Rule 4130 explicitly authorizes Nasdaq and the Nasdaq Exchange, in connection with Nasdaq's transition to a national securities exchange, to file an application with the Commission and the Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Corporation, and the Office of Thrift Supervision to register each Issuer's listed securities under Section 12(b) of the Exchange Act and request any appropriate regulatory relief from the provisions of Section 12, unless the Issuer informs Nasdaq, pursuant to procedures set forth by Nasdaq, that it does not want to be included in this process. 17 16 *See* Release No. 34-53606 (April 6, 2006) [71 FR 18790]. 17 The text of Rule 4130 reads as follows:

In connection with The Nasdaq Exchange commencing operations as a national securities exchange, each issuer authorizes Nasdaq and the Nasdaq Exchange to file an application to register under Section 12(b) of the Exchange Act any class of the issuer's securities that is listed on Nasdaq on the day immediately preceding the day the Nasdaq Exchange commences such operations; provided, however, that this provision shall not be applicable to any security that the issuer informs Nasdaq, pursuant to procedures set forth by Nasdaq, should not be so registered.

The application to register under Section 12(b) of the Exchange Act will be filed with the Commission or, for those securities subject to Section 12(i) of the Exchange Act, with the appropriate banking regulator specified in Section 12(i). The authorization in this paragraph includes allowing Nasdaq and the Nasdaq Exchange to request any appropriate regulatory relief from the provisions of Section 12. Accordingly, prior to filing the Nasdaq Application, Nasdaq provided notice of its intention to seek the requested relief. 18 In addition to general notice through the proposed rule filing, Nasdaq notified each Issuer, individually, of its plans to submit the request and allowed any Issuer that did not wish its securities to be included in the request to opt-out of the process. 19 At the expiration of the notice period, no Issuers had elected to opt-out of the requested relief. 20 18 *See* Nasdaq Application at 3 and Release No. 34-53362 (February 24, 2006) [71 FR 10734]. 19 *See* Nasdaq Application at 3.

Notice was provided through a May 15, 2006 bulletin to Issuers and a May 17, 2006 press release requesting Issuers notify Nasdaq by May 30, 2006 if they did not wish to participate. The result of an Issuer choosing to opt-out is that the Issuer's securities will be ineligible to be listed and traded on the Nasdaq Exchange as of its operational date; such Issuer would instead trade on the pink sheets or OTC Bulletin Board unless it files an individual Section 12(b) registration statement on Form 8-A or Form 10, as applicable, in connection with listing on the Nasdaq Exchange or another national securities exchange, and such registration statement subsequently becomes effective. 20 *See* Exhibit B to the Nasdaq Application.

IV. Findings Pursuant to Section 12(c) of the Exchange Act, in the judgment of the Commission, based on the Nasdaq Application for Section 12(b) registration and the representations made therein and in light of the recent registration of the Nasdaq Exchange, the Commission will consider the Nasdaq Application in lieu of the information otherwise required under Section 12(b) of the Exchange Act. In reaching its determination, the Commission considered the following:

(i)In recognition of the unique circumstances discussed above in Section I and in the Nasdaq Application, particularly the fact that the information to be elicited by registration under Section 12 of the Exchange Act or, in the case of investment companies registered under the 1940 Act, its substantial equivalent, already has been required to be made public by the Issuers, it is the judgment of the Commission that the Nasdaq Application is sufficient for purposes of registration of the securities listed in Exhibit A to the Nasdaq Application (the “Issuer Securities”); 21 21 According to the Nasdaq Application, the Issuer Securities represent securities:

(i)That are listed on Nasdaq immediately preceding the date that the Nasdaq Exchange begins operations;

(ii)that are currently either registered under Section 12(b) or 12(g) of the Exchange Act or exempt from Section 12(g) registration pursuant to Section 12(g)(2)(B) or 12(g)(2)(G) of the Exchange Act or Exchange Act Rule 12g3-2(b); and

(iii)that have not been requested by the issuer to be opted-out of the Nasdaq Application pursuant to the procedures established by Nasdaq as a result of NASD Rule 4130.

(ii)Nasdaq and the Nasdaq Exchange have represented to the Commission in the Nasdaq Application that, as of the date of this Order: a. They have conducted the opt-out process as described, particularly with respect to notice of the Nasdaq Application to all Issuers, generally, pursuant to NASD Rule 4130 and a press release and, specifically, to each Issuer through the opt-out option, b. That authorization has not been withheld by any Issuer with respect to any of the Issuer Securities, and c. The Issuer Securities listed in Exhibit A to the Nasdaq Application accurately reflect the securities that are to be the subject of its request;

(iii)The Nasdaq Exchange has certified to the Commission in the Nasdaq Application that, as of the date of this Order, all of the Issuer Securities have been approved by the Nasdaq Exchange for listing and registration in accordance with the requirements of Section 12(d) of the Exchange Act; and

(iv)In accordance with Section 12(d) and Rule 12d1-2(a) 22 of the Exchange Act, Nasdaq and the Nasdaq Exchange have requested in writing the acceleration of the effective date of the Nasdaq Application for Section 12(b) registration of the Issuer Securities on the date of this Order. 22 17 CFR 249,12d1-2(a). V. Conclusion The Commission, having reviewed the Nasdaq Application for Section 12(b) registration of the Issuer Securities and in reliance on the representations and certifications made by Nasdaq and the Nasdaq Exchange in the Nasdaq Application, has concluded that it is appropriate, in the public interest and consistent with the protection of investors, to approve the Nasdaq Application and grant the request by Nasdaq and the Nasdaq Exchange for registration of the Issuer Securities under Section 12(b). The Commission recognizes that the use of its authority under Section 12(c) of the Exchange Act to consider information other than that prescribed by Section 12(b) for purposes of Section 12 registration is a variation on the customary registration process. As noted, however, the Commission believes the special circumstances of Nasdaq's transition to a national securities exchange and the existing public disclosure requirements applicable to the Issuer Securities constitute a unique situation meriting the application of Section 12(c). With respect to the findings and conclusions in this Order, it is also to be expressly understood that the Commission has not made, and this Order does not constitute, any determination regarding the Issuers' compliance with the listing standards of the Nasdaq Exchange or of any other exchange, securities association or facility on which the Issuers' securities trade, or any Commission rule or regulation, other than the Section 12(b) registration requirements as they relate to Nasdaq's transition to a national securities exchange. In addition, the Commission has not made, and this Order does not constitute, any determination regarding the regulation or oversight of Nasdaq or the Nasdaq Exchange with respect to the Issuer Securities, other than the Section 12(b) registration requirements as they relate to Nasdaq's transition to a national securities exchange. Accordingly, *it is ordered* that the Nasdaq Application for Section 12(b) registration of the Issuer Securities, made by Nasdaq and the Nasdaq Exchange on behalf of the Issuers pursuant to NASD Rule 4130, be, and hereby is, granted, effective as of July 31, 2006. By the Commission (Chairman Cox and Commissioners Glassman, Atkins, Campos and Nazareth). Nancy M. Morris, Secretary. July 31, 2006 Nancy M. Morris, Esq. Secretary, US Securities and Exchange Commission, 100 F Street, NE, Washington, DC 20549 RE: Request for Relief from § 12 of the Securities Exchange Act of 1934 Dear Ms. Morris: On January 13, 2006, the Securities and Exchange Commission (“SEC” or “Commission”) approved the application of The NASDAQ Stock Market LLC (“Nasdaq Exchange”), a subsidiary of The Nasdaq Stock Market, Inc. (“Nasdaq”), to register under Section 6 of the Securities Exchange Act of 1934 (“Act” or “Exchange Act”) as a national securities exchange. 1 Nasdaq's transition of its listing and trading activities to the Nasdaq Exchange will furehr Congres's instruction to promote “fair competition * * * between exchange markets.” 2 Absent the relief requested herein, however, Nasdaq's transition to a national securities exchange would require approximaely 3,200 Nasdaq Global Market 3 and Capital market issuers with securities registered pusuant to the Act, or exempt from registration under Section 12(g) of the Act, 4 to file registraton statements 5 to register those securities under Section 12(b) of the Act. 6 1 Securities Exchange Act Release No. 53128 (January 13, 2006), 71 FR 3550 (January 23, 2006) (the “Exchange Approval Order”). 2 Exchange Act Section 11A(a)(1)(C)(ii). 3 Effective July 1, 2006, Nasdaq renamed the Nasdaq National Market as the Nasdaq Global Market and created a new segment within the Global Market called the Global Select Market. References to the Nasdaq Global Market include those securities listed on the Nasdaq Global Market and the Nasdaq Global Select Market. *See* Securities Exchange Act Release No. 54071 (June 29, 2006), 71 FR 38922 (July 10, 2006) (SR-NASD-2006-068); Securities Exchange Act Release No. 53799 (May 12, 2006), 71 FR 29195 (May 19, 2006) (SR-NASDAQ-2006-007). 4 15 U.S.C. 78l(g). 5 Most of these registration statements would be filed with the Commission. However, Section 12(i) of the Act requires filings relating to certain financial institutions to be made with the Comptroller of the Currency, the Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Corporation, or the Office of Thrift Supervision (collectively, the “Banking Regulators”). 15 U.S.C. 78l(i). Separate requests have been sent to the Banking Regulators seeking similar relief for the companies registered with them. 6 15 U.S.C. 78 *l* (b). Engaging in what would essentially be a re-registration process for the vast majority of these 3,200 issuers would create a serious disruption in the trading of securities on The Nasdaq Stock Market. As explained below, the confusion and inevitable administrative delay that would accompany such a process for issuers registered with the Commission would achieve no material public benefit and would place an unnecessary burden on issuers, investors, Nasdaq, the Nasdaq Exchange, and the Commission. The Commission can prevent this potential disruption by granting the relief requested in this letter. Specifically, Nasdaq and the Nasdaq Exchange request that this letter serve as:

(1)The registration statement under Section 12(b) for all classes of listed securities of Nasdaq Capital Market and Nasdaq Global Market issuers registered with the Commission under Sections 12(b) and 12(g), as well as those listed securities exempt from registration under Section 12(g)(2)(B) of the Act 7 ; and

(2)the Nasdaq Exchange's certification pursuant to Section 12(d) of the Act 8 that these securities are approved for listing and registration concurrent with the start of operations of the Nasdaq Exchange. Nasdaq and the Nasdaq Exchange also request that the Commission issue an exemption from registration applicable to issuers that are now exempt from the registration requirements of Section 12(g) pursuant to Section 12(g)(2)(G) of the Act 9 and Exchange Act Rule 12g3-2(b) 10 to allow these companies three years from the date the Nasdaq Exchange begins operations to become registered under Section 12(b). NASD Rule 4130 specifically permits Nasdaq to act on behalf of its issuers in this regard. 11 7 15 U.S.C. 78l(g)(2)(B). 8 15 U.S.C. 78l(d), 9 15 U.S.C. 78l(g)(2)(G). 10 17 CFR 240.12g3-2(b). 11 Rule 4130 permits Nasdaq to act on behalf of its issuers to request registration of their listed securities under Section 12(b), or seek appropriate regulatory relief from Section 12(b), in connection with the transition to the Nasdaq Exchange. *See* Securities Exchange Act Release No. 53606 (April 6, 2006), 71 FR 18790 (April 12, 2006) (approving SR-NASD-2006-28); Securities Exchange Act Release No. 53262 (February 24, 2006), 71 FR 10734 (March 2, 2006) (providing notice of SR-NASD-2006-28). I. Background Nasdaq presently is a facility of the National Association of Securities Dealers, Inc. (“NASD”), a registered securities association, and thus is subject to Section 15A of the Act. On March 15, 2001, Nasdaq filed an application under Section 6 of the Act for registration as a national securities exchange (“Form 1”) with the Commission. On August 15, 2005, and September 23, 2005, Nasdaq submitted Amendments 4 and 5, respectively, to its Form 1. In Amendments 4 and 5 Nasdaq proposed, among other things, a new corporate structure whereby Nasdaq would become a holding company with the Nasdaq Exchange as one of its subsidiaries. The Commission published notice of Amendments 4 and 5 on October 11, 2005. 12 On January 13, 2006, the Nasdaq Exchange submitted Amendment 6 to the Form 1 and the Commission approved the Nasdaq Exchange's application for registration as a national securities exchange. 13 On June 30, 2006, the Commission modified the approval order so that the Nasdaq Exchange could begin operations in a phased manner, with operations related to trading in Nasdaq-listed securities beginning before operations related to trading in securities listed on other national securities exchanges. 14 The Nasdaq Exchange has satisfied the conditions expressed in the amended approval order with respect to Nasdaq-listed securities and expects to begin operations as a national securities exchange for those securities on August 1, 2006. 12 Securities Exchange Act Release No. 52559 (October 4, 2005), 70 FR 59097 (October 11, 2005). 13 Exchange Approval Order, supra note 1. 14 Securities Exchange Act Release No. 54085 (June 30, 2006), 71 FR 38910 (July 10, 2006). Upon operation of the Nasdaq Exchange, issuers listed and traded on Nasdaq will instead be listed and traded on the Nasdaq Exchange. 15 Under current NASD rules, a security is eligible for listing on Nasdaq if it is registered under the Exchange Act under either Section 12(g) or Section 12(b). 16 In addition, three categories of securities exempt from registration under Section 12(g) are also eligible for listing on Nasdaq. First, a security issued by an investment company registered under the Investment Company Act of 1940 (the “1940 Act”) is exempt from registration under Section 12(g)(2)(B) of the Act, but is eligible for listing on Nasdaq. 17 Second, a security issued by an insurance company and exempt from registration under Section 12(g) pursuant to Section 12(g)(2)(G) is also eligible for listing. 18 Finally, the securities of certain foreign issuers are eligible for inclusion in Nasdaq even though they are exempt from registration pursuant to Rule 12g3-2(b) under the Exchange Act. 19 Once the Nasdaq Exchange begins operations, issuers will need instead to have been registered under Section 12(b) so that brokers and dealers may effect transactions in these securities on the Nasdaq Exchange consistent with Section 12(a) of the Act. 20 15 This includes securities listed on the Nasdaq Capital Market and the Nasdaq Global Market. Note that the NASD has modified its Plan of Allocation and Delegation of Functions by NASD to Subsidiaries and certain NASD rules to reflect NASD's direct authority for the activities related to the OTC Bulletin Board, rather than the prior delegation of such authority to Nasdaq. As such, this application does not address the OTC Bulletin Board and securities quoted on the OTC Bulletin Board will not be listed on the Nasdaq Exchange. 16 NASD Rules 4310(a)(1) and

(2)and 4320(a). 17 NASD Rule 4310(a)(4). 18 NASD Rule 4310(a)(3). 19 NASD Rule 4320(c). 20 15 U.S.C. 78l(a). In contemplation of this request, Nasdaq has adopted Rule 4130, which specifically permits Nasdaq to act on behalf of its issuers to request registration of their listed securities under Section 12(b), or seek appropriate regulatory relief from Section 12(b), in connection with the transition to the Nasdaq Exchange. 21 In proposing this rule change, Nasdaq noted that it anticipated making the requests contained herein and the process by which it would provide notice to each issuer and would allow any issuer that does not wish to register under Section 12(b) the ability to opt-out of Nasdaq's request. 22 Nasdaq provided that notice by issuing a bulletin to issuers 23 on May 15, 2006, and by issuing a press release 24 on May 17, 2006. 21 Securities Exchange Act Release No. 53606, supra note 11. 22 Securities Exchange Act Release No. 53262, supra note 11. 23 *See* “Impact of NASDAQ Exchange Registration on Listed Companies” available at: *http;//www.nasdaq.com/about/Exchange_Bulletin_051506.pdf.* 24 *See* “NASDAQ Notifies Listed Companies About Transition To Exchange Status” available at: *http://www.nasdaq.com/newsroom/news/pr2006/ne_section06_066.stm* As of July 31, 2006, Nasdaq lists 2,776 securities on the Global Market (including 1,254 securities on the Nasdaq Global Select Market) and 580 securities on the Capital Market. 25 These securities can be categorized as follows: 3,257 securities are registered with the Commission under Section 12(g); 40 securities are also listed on a national securities exchange and are registered with the Commission under Section 12(b); 17 investment company issuers' securities are exempt from registration under Section 12(g)(2)(B); four insurance company issuers' securities are exempt from Section 12(g) registration under Section 12(g)(2)(G); nine foreign private issuers' securities are exempt from Section 12(g) registration under Rule 12g3-2(b); and 29 bank and savings association issuers' securities are registered under Section 12(g) with other regulatory agencies pursuant to Section 12(i). 26 25 Some issuers list more than one security on Nasdaq. 26 To assist the Commission with this request, we have attached lists of those securities registered with the Commission or exempt from registration. Exhibit A contains a list of those securities already registered with the Commission under Sections 12(b) or 12(g) and those securities exempt from registration under Rule 12(g)(2)(B), that have not opted out from this request as provided for in Rule 4130. Exhibit B contains a list of those securities that have opted out from this request. Exhibit C contains a list of those securities that are exempt from registration under Section 12(g) pursuant to Section 12(g)(2)(G) or Rule 12g3-2(b). II. Basis for Relief Sought and Anticipated Benefits A. Securities Already Registered Under Section 12(g) and 12(b) Absent relief, the issuers of approximately 3,297 Nasdaq Global Market and Capital Market securities that are registered with the Commission under Sections 12(g) and 12(b) will be required to file a registration statement to register their securities under Section 12(b) on the Nasdaq Exchange once Nasdaq begins operating as a national securities exchange. Nasdaq believes that under the circumstances, this registration process would be confusing and would place an unnecessary cost and administrative burden on Nasdaq, the Nasdaq Exchange, the Commission, and issuers and would not be in the public interest. Specifically, each of those issuers would be required to file with the Commission and with the Nasdaq Exchange a new Exchange Act registration statement describing the securities to be registered along with all necessary exhibits. The Nasdaq Exchange would then be required to certify to the Commission that each issuer's securities are approved for listing and registration. This process would have to be coordinated to minimize disruptions to trading in issuer securities, with the real possibility of some securities experiencing trading gaps during the transition. Such a daunting and time-sensitive task—which creates no significant identifiable benefit to the public creates the unnecessary risk of administrative errors by the issuers, the Nasdaq Exchange, or the Commission that could inadvertently delay or otherwise adversely impact the registration and trading of securities on the new exchange. The public interest is served by having exchanges run smoothly and efficiently, and the requested relief would achieve that purpose. The additional registration process would not result in any significant benefit to the marketplace or investors because they would not receive any additional information regarding the security. Each Nasdaq Global Market and Capital Market issuer in this category has already filed an Exchange Act registration statement with the Commission to register the class of securities under Section 12 of the Act. Those issuers with securities registered under Section 12(g) were required to file a registration statement that contained “such information and documents as the Commission may specify comparable to that which is required in an application to register a security pursuant to [Section 12(b)].” 27 27 Section 12(g)(1) of the Act, 15 U.S.C. 78l(g)(1). There are also no relevant differences in the regulatory requirements for securities registered under Sections 12(b) and 12(g) that would negatively impact investors. For example, issuers with securities registered under Section 12(g) must, like issuers with securities registered under Section 12(b), file periodic and other reports with the Commission under Section 13 of the Act, comply with the proxy requirements under Section 14 of the Act, and adhere to the requirements of the Williams Act. Because securities registered under Section 12(b) and Section 12(g) are already treated in a nearly identical fashion, requiring Nasdaq issuers to re-register their securities would not result in any material benefit to the marketplace or investors. The Commission would be acting well within its authority in granting the relief requested. Congress has provided specific authorization under Section 12(c) of the Act, 28 which allows the submission of different information than that required under Section 12(b). 28 15 U.S.C. 78l(c). Accordingly, Nasdaq and the Nasdaq Exchange request that this letter serve as:

(i)The registration statement under Section 12(b) for all classes of listed securities of Nasdaq Global Market and Capital Market issuers registered with the Commission under Sections 12(b) and 12(g) and included in Exhibit A; and

(i)The registration statement under Section 12(b) for all classes of listed securities of Nasdaq Global Market and Capital Market issuers exempt from Section 12(g) registration pursuant to Section 12(g)(2)(B) and included in Exhibit A; and

(ii)the Nasdaq Exchange's certification pursuant to Section 12(d) of the Act that these securities are approved for listing and registration, concurrent with the start of operations of the Nasdaq Exchange. Nasdaq and the Nasdaq Exchange further request that the Commission accelerate the effective date of this application for Section 12(b) registration to July 31, 2006. This action would be in the public's interest and consistent with the protection of investors because it would prevent the imposition of a significant administrative burden on issuers, the Commission, and others without weakening any of the protections afforded to investors under the federal securities laws. 32 32 As noted in footnote 29, supra, this reclassification would apply only to those issuers listed on Nasdaq when it becomes a national securities exchange that have not opted-out of such treatment pursuant to NASD Rule 4130. C. Other Securities Exempt From Registration Under Section 12(g) As described above, Nasdaq lists 13 securities—out of more than 3,300—that are otherwise exempt from registration under Section 12(g). The Nasdaq Exchange will operate in all relevant, material respects just as Nasdaq operates today. 33 In fact, while as early as 1983 the Commission recognized that “trading on [Nasdaq] is substantially the same as trading on an exchange,” 34 the Commission has nonetheless permitted securities of these exempt issuers to trade on Nasdaq. 33 The primary difference in market structure that Nasdaq contemplates is the establishment of a holding company structure under which Nasdaq would own the Nasdaq Exchange, which would execute quotes and orders in accordance with a strict price-time priority algorithm. 34 Securities Act Release No. 6493 (October 14, 1983) (``Rule 12g3-2(b) Amendments''). Section 36 of the Act 35 grants the Commission broad authority to make exemptions to any part of the Act when “such exemption is necessary or appropriate in the public interest, and is consistent with the protection of investors.” Granting a temporary continuation of an exemption from registration is “necessary or appropriate in the public interest” and is “consistent with the protection of investors.” This exemption for a transitional period would provide issuers that have traded on Nasdaq without incident for many years with sufficient time to undertake Exchange Act registration requirements and to make an orderly transition to the Nasdaq Exchange and therefore is in the public interest. The Commission has used its authority in the past to resolve administrative hurdles for complex transactions and to relieve unnecessary administrative burdens. Finally, given that these securities have traded on Nasdaq pursuant to an exemption for an extended period of time, the continuation of a similar exemption for a limited time should not raise any new concerns regarding the protection of investors. 35 15 U.S.C. 78mm. Forcing Section 12(g) exempt issuers to immediately register would be inequitable and wholly unrelated to any act or failure to act by these issuers. In the absence of exemptive relief, each of the Section 12(g) exempt issuers would be required to prepare and file a registration statement on Form 10 or 20-F. Foreign issuers would also have to restate or reconcile their financial statements to U.S. generally accepted accounting principles (“U.S. GAAP”). But it is Nasdaq's becoming an exchange rather than any affirmative act by these exempt issuers that would trigger the imposition of this registration requirement. Companies that list on the Nasdaq Exchange after it begins operations could be required to meet all the registration requirements applicable to an exchange listing without disrupting an existing market in those securities. But for those companies already listed, requiring immediate registration is potentially disruptive and unfair. The mere fact of Nasdaq's conversion to an exchange should not adversely impact these companies or their investors. Thus, Nasdaq and the Nasdaq Exchange request that the Commission temporarily continue the exemption from registration for the following classes of Nasdaq-listed issuers. In connection with this request, the Nasdaq Exchange represents that it will continue to monitor these companies in the same manner Nasdaq does, to assure compliance with all applicable listing requirements. 1. Insurance Companies The Commission need not immediately impose registration requirements on the four insurance companies listed on Nasdaq but exempt from Section 12(g) registration. 36 These issuers have not taken any action on their own to trigger a registration requirement and the additional reporting requirements required by such registration. In fact, if the Commission determines not to temporarily continue these companies' exemptions and they choose to delist rather than register, investors would be harmed by the potential loss of a liquid trading market. As such, Nasdaq requests that the Commission grant an exemption for the securities of these insurance companies (identified on Exhibit C) from the requirements of Sections 12(a) and 12(b) with respect to the trading of these securities on the Nasdaq Exchange for a three-year period from the date the Nasdaq Exchange begins to operate as an exchange, provided these companies continue to comply with the requirements of Section 12(g)(2)(G) of the Act and the applicable requirements for continued listing on the Nasdaq Exchange. This transitional exemption will permit these issuers to complete the registration process without undue burden. 36 Pursuant to Section 12(g)(2)(G) of the Act, these issuers generally must file an annual statement with the Commissioner of Insurance of their domiciliary state and must be subject to regulation by their domiciliary state of proxies, consents, or authorizations. 2. Foreign Private Issuers There are nine foreign issuers that trade on The Nasdaq Capital Market pursuant to the “grandfathering” exemption of Rule 12g3-2(b). 37 This exemption originated in 1983, when the Commission first required foreign private issuers whose securities were trading on Nasdaq to be registered. Prior to that time, a foreign private issuer whose securities were not trading on a national securities exchange was exempt from registration where the foreign issuer did not voluntarily enter the United States markets by, for example, conducting a public offering or listing on an exchange. In 1983 the Commission amended Rule 12g3-2(b) to deny the exemption to non-U.S. issuers that voluntarily listed on Nasdaq. In order not to disrupt the trading of these issuers, however, the Commission grandfathered in all non-Canadian foreign issuers, allowing those companies to continue to trade on Nasdaq without registration under the Exchange Act. 38 In doing so, the Commission heeded the concerns of commenters that many foreign issuers would withdraw from Nasdaq, rather than register, leaving the pink sheets as the only source of trading information related to these companies and resulting in increased price spreads, a decrease in information, price quotes not carried in newspapers, less liquid markets and fewer institutions in the market, absence of NASD surveillance, and delays in execution of transfers. 39 37 These issuers are not eligible for listing on the Nasdaq Global Market, nor are they subject to the Global Market listing requirements. 38 Exchange Act Rule 12g3-2(b). The exemption is maintained by submitting the issuer's home country reports to the Commission. 39 Rule 12g3-2(b) Amendments, supra note 34. These factors, according to one estimate, would cause prices to drop 20 percent. *Id.* The same considerations that compelled that treatment of foreign issuers in 1983 are relevant to the relief requested today. These issuers have not acted to jeopardize their ability to trade on Nasdaq or Rule 12g3-2(b) exempt status. If forced to immediately register their securities, a significant number of these issuers may delist rather than register, thereby relegating the U.S. investors in those foreign issuers to potentially less liquid and transparent markets. For these reasons, the Nasdaq Exchange's registration as an exchange should not force these companies to immediately register or delist. 40 Nasdaq and the Nasdaq Exchange therefore request that the Commission grant an exemption for those securities included in Exhibit C that are exempt from Section 12(g) registration under Rule 12g3-2(b) from the requirements of Sections 12(a) and 12(b) with respect to the trading of these securities on the Nasdaq Exchange for a three-year period from the date the Nasdaq Exchange begins to operate as an exchange, provided the issuers continue to comply with the requirements of Rule 12g3-2(b) and the applicable requirements for continued listing on the Nasdaq Exchange. This transitional exemption will permit these issuers to complete the registration process without undue burden. 41 40 One exempt foreign issuer, Nissan Motor Co., Ltd., submitted a comment letter to the Commission in connection with Nasdaq's application to become an exchange, requesting that the Rule 12g3-2(b) grandfathering be allowed to continue indefinitely, or, in the alternative, that a reasonable transition period be allowed. *See* footnote 208 to the Exchange Approval Order, supra, note 1. 41 Nasdaq notes that the proposed three-year period is consistent with the time-line the Commission has set forth to eliminate the requirement for foreign private issuers to reconcile financial statements prepared according to International Financial Reporting Standards to US GAAP. *See* SEC Press Release 2006-17, available at: *http://www.sec.gov/news/press/2006-17.htm.* III. Conclusion The relief requested above is in the public interest because it will ensure the continued smooth operation of this market immediately from the time the Nasdaq Exchange begins operations as an exchange and avoid confusion and a number of potentially disruptive administrative hurdles. The relief is necessary and appropriate to avoid the disruption that could occur if members, brokers, and dealers were prohibited from effecting transactions in Nasdaq securities due to the lack of an effective registration once the Nasdaq Exchange begins operating as a registered exchange. The Commission has specific authority provided by Section 12(c) to effect the relief requested with respect to those securities already registered under Section 12(b) or 12(g) and those securities exempt from Section 12(g) registration pursuant to Section 12(g)(2)(B). Further, the Commission has general exemptive authority pursuant to Section 36 of the Act and Rule 0-12 thereunder, in pertinent part, to exempt any person, security, or transaction, or any class or classes of persons, securities, or transactions, from any provision or provisions of this title or of any rule or regulation thereunder, to the extent that such exemption is necessary or appropriate in the public interest, and is consistent with the protection of investors. The unique facts surrounding Nasdaq's transition to a national securities exchange provide ample justification for the Commission to exercise its authority under Section 36 under the circumstances described in this letter. If you have any questions concerning the foregoing you may contact the undersigned at

(301)978-8480, Arnold Golub at

(301)978-8075 or John Yetter at

(301)978-8497. Sincerely yours, Edward S. Knight Exhibit A: List of securities whose registration will be transferred to Section 12(b) Exhibit B: List of securities of issuers that have elected to opt-out of requested relief Exhibit C: List of securities exempt from Section 12(g) registration under Section 12(g)(2)(G) and Rule 12g3-2(b) BILLING CODE 8010-01-P EN08AU06.000 EN08AU06.001 EN08AU06.002 EN08AU06.003 EN08AU06.004 EN08AU06.005 EN08AU06.006 EN08AU06.007 EN08AU06.008 EN08AU06.009 EN08AU06.010 EN08AU06.011 EN08AU06.012 EN08AU06.013 EN08AU06.014 EN08AU06.015 EN08AU06.016 EN08AU06.017 EN08AU06.018 EN08AU06.019 EN08AU06.020 EN08AU06.021 EN08AU06.022 EN08AU06.023 EN08AU06.024 EN08AU06.025 EN08AU06.026 EN08AU06.027 EN08AU06.028 EN08AU06.029 EN08AU06.030 EN08AU06.031 EN08AU06.032 EN08AU06.033 EN08AU06.034 EN08AU06.035 EN08AU06.036 EN08AU06.037 EN08AU06.038 EN08AU06.039 EN08AU06.040 EN08AU06.041 EN08AU06.042 EN08AU06.043 EN08AU06.044 EN08AU06.045 EN08AU06.046 EN08AU06.047 EN08AU06.048 EN08AU06.049 EN08AU06.050 EN08AU06.051 EN08AU06.052 EN08AU06.053 EN08AU06.054 EN08AU06.055 EN08AU06.056 EN08AU06.057 EN08AU06.058 EN08AU06.059 EN08AU06.060 EN08AU06.061 EN08AU06.062 EN08AU06.063 EN08AU06.064 EN08AU06.065 EN08AU06.066 EN08AU06.067 EN08AU06.068 EN08AU06.069 EN08AU06.070 EN08AU06.071 EN08AU06.072 EN08AU06.073 EN08AU06.074 EN08AU06.075 EN08AU06.076 EN08AU06.077 EN08AU06.078 EN08AU06.079 EN08AU06.080 EN08AU06.081 EN08AU06.082 EN08AU06.083 EN08AU06.084 EN08AU06.085 EN08AU06.086 EN08AU06.087 EN08AU06.088 EN08AU06.089 EN08AU06.090 EN08AU06.091 EN08AU06.092 EN08AU06.093 EN08AU06.094 EN08AU06.095 EN08AU06.096 EN08AU06.097 EN08AU06.098 EN08AU06.099 EN08AU06.100 EN08AU06.101 EN08AU06.102 EN08AU06.103 EN08AU06.104 EN08AU06.105 EN08AU06.106 [FR Doc. 06-6708 Filed 8-7-06; 8:45 am]

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U.S. Code

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15 USC 78
17 CFR 240.12
17 CFR 249

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SECURITIES AND EXCHANGE COMMISSION

U.S.C.§ 78a

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