[Federal Register Volume 77, Number 62 (Friday, March 30, 2012)]
[Notices]
[Pages 19428-19454]
[FR Doc No: 2012-7516]

Vol. 77

Friday,

No. 62

March 30, 2012

Part II

Securities and Exchange Commission

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Self-Regulatory Organizations; The NASDAQ Stock Market LLC; Order
Granting Approval of Proposed Rule Change, as Modified by Amendment No.
1 Thereto, Relating to the Adoption of Listing Standards for Certain
Securities; Notice

Federal Register / Vol. 77, No. 62 / Friday, March 30, 2012 /
Notices

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-66648; File No. SR-NASDAQ-2012-013]

Self-Regulatory Organizations; The NASDAQ Stock Market LLC; Order
Granting Approval of Proposed Rule Change, as Modified by Amendment No.
1 Thereto, Relating to the Adoption of Listing Standards for Certain
Securities

March 23, 2012.

I. Introduction

    On January 20, 2012, The NASDAQ Stock Market LLC (``NASDAQ'' or
``Exchange'') filed with the Securities and Exchange Commission
(``Commission''), pursuant to Section 19(b)(1) of the Securities
Exchange Act of 1934 (``Act'') \1\ and Rule 19b-4 thereunder,\2\ a
proposed rule change to adopt rules applicable to the qualification,
listing, trading, and delisting of certain securities on NASDAQ. The
proposed rule change was published for comment in the Federal Register
on February 9, 2012.\3\ The Commission received no comments on the
proposal. On March 21, 2012, the Exchange filed Amendment No. 1 to the
proposed rule change.\4\ This order grants approval of the proposed
rule change, as modified by Amendment No. 1 thereto.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ See Securities Exchange Act Release No. 66320 (February 3,
2012), 77 FR 6833 (``Notice'').
    \4\ In Amendment No. 1, consistent with its proposal to conform
the continued listing requirements applicable to Equity Index-Linked
Securities and Commodity-Linked Securities to those of another
national securities exchange and to incorporate such requirements
under proposed Rules 5710(k)(i)(B) and (k)(ii)(B), NASDAQ proposes
to delete existing references to continued listing standards
applicable to Linked Securities (as defined herein) in Rule 5730(b).
In addition, in Amendment No. 1, NASDAQ proposes to incorporate
additional rule requirements relating to information dissemination
applicable to Index-Linked Exchangeable Notes in order to conform
its proposal with the listing requirements for Index-Linked
Exchangeable Notes of another national securities exchange. This
technical amendment does not require notice and comment as it did
not materially affect the substance of the rule filing or raise any
unique or novel regulatory issues.
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II. Description of the Proposed Rule Change

    The Exchange proposes to adopt rules applicable to the
qualification, listing, trading, and delisting on NASDAQ (``Listing
Rules'') of certain securities. Specifically, NASDAQ proposes to amend
Rule 5710 (``Securities Linked to the Performance of Indexes and
Commodities (Including Currencies)'') to: (i) Incorporate generic
continued listing standards for Equity Index-Linked Securities and
Commodity-Linked Securities (collectively, ``Existing Linked
Securities'') under Rule 5710; \5\ (ii) adopt initial and continued
generic listing standards for Fixed Income Index-Linked Securities,
Futures-Linked Securities, and Multifactor Index-Linked Securities
(collectively, ``Additional Linked Securities,'' and together with the
Existing Linked Securities, ``Linked Securities''); \6\ (iii) revise
the introductory paragraph to incorporate references to, and provide
descriptions of, the Additional Linked Securities; \7\ (iv) revise the
paragraph of Rule 5710 relating to trading halts to clarify that it
applies to all Linked Securities; \8\ (v) adopt Commentary .01 relating
to obligations of Market Makers in Linked Securities; \9\ and (vi)
correct cross references and conform defined terms. In addition, NASDAQ
proposes new Rule 5711 (``Trading of Certain Derivative Securities'')
to adopt initial and continued listing criteria for the following
securities: Index-Linked Exchangeable Notes; Equity Gold Shares; Trust
Certificates; Commodity-Based Trust Shares; Currency Trust Shares;
Commodity Index Trust Shares; Commodity Futures Trust Shares;
Partnership Units; Trust Units; Managed Trust Securities; and Currency
Warrants (together with the Linked Securities, collectively, the
``Subject Securities'').\10\ The proposed Listing Rules are based on,
and are substantially similar to, the listing standards of NYSE Arca,
Inc. (``NYSE Arca'') for the listing and trading of the Subject
Securities.
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    \5\ NASDAQ Rules 5710(g) and (h) currently include initial
listing standards applicable to the Existing Linked Securities.
NASDAQ proposes to move the existing rule text in Rules 5710(g) and
(h) to proposed Rule 5710(k)(i)(A) and (k)(ii)(A), respectively. In
addition, NASDAQ Rule 5730(b) currently includes continued listing
standards applicable to Existing Linked Securities. NASDAQ proposes
to conform the continued listing requirements applicable to the
Existing Linked Securities to those of another national securities
exchange, to incorporate such requirements under proposed Rules
5710(k)(i)(B) and (k)(ii)(B), and to delete references in Rule
5730(b) to Existing Linked Securities. See supra note 4.
    \6\ See proposed Rules 5710(k)(iii)-(v).
    \7\ See introductory paragraphs to Rule 5710, as proposed to be
amended.
    \8\ See proposed Rule 5710(h) (formerly Rule 5710(j)).
    \9\ See proposed Commentary .01 to Rule 5710.
    \10\ The Exchange has proposed to adopt generic listing
standards for Linked Securities and Index-Linked Exchangeable Notes,
both generic and non-generic listing standards for Currency Trust
Shares, and non-generic listing standards for all other Subject
Securities.
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A. Proposed Amendments to Rule 5710 (``Securities Linked to the
Performance of Indexes and Commodities (Including Currencies)'')

    NASDAQ has proposed to amend the introductory paragraphs of Rule
5710 to state that NASDAQ will consider for listing and trading Fixed
Income Index-Linked Securities, Futures-Linked Securities, and
Multifactor Index-Linked Securities that in each case meet the
applicable criteria of Rule 5710. In addition, the Exchange has
proposed to amend the introductory paragraph to provide definitions for
``Equity Reference Asset'' and ``Commodity Reference Asset,'' which
refer to the basis for payment at maturity for Equity Index-Linked
Securities and Commodity-Linked Securities, respectively. NASDAQ has
further proposed to amend the introductory paragraph to describe the
basis for payment at maturity for each of the Additional Linked
Securities as follows:
     The payment at maturity with respect to Fixed Income
Index-Linked Securities is based on the performance of one or more
indexes or portfolios of notes, bonds, debentures or evidence of
indebtedness that include, but are not limited to, U.S. Department of
Treasury securities (``Treasury Securities''), government-sponsored
entity securities (``GSE Securities''), municipal securities, trust
preferred securities, supranational debt and debt of a foreign country
or a subdivision thereof or a basket or index of any of the foregoing
(``Fixed Income Reference Asset'').
     The payment at maturity with respect to Futures-Linked
Securities is based on the performance of an index of (a) futures on
Treasury Securities, GSE Securities, supranational debt and debt of a
foreign country or a subdivision thereof, or options or other
derivatives on any of the foregoing; or (b) interest rate futures or
options or derivatives on the foregoing in this subparagraph (b); or
(c) CBOE Volatility Index (VIX) Futures (``Futures Reference Asset'').
     The payment at maturity with respect to Multifactor Index-
Linked Securities is based on the performance of any combination of two
or more Equity Reference Assets, Commodity Reference Assets, Fixed
Income Reference Assets or Futures Reference Assets (``Multifactor
Reference Asset,'' and together with Equity Reference Assets, Commodity
Reference Assets, Fixed Income Reference Assets and Futures Reference
Assets, ``Reference Assets''). A Multifactor Reference Asset may
include as a component a notional investment in cash or a cash
equivalent based on a widely accepted overnight

loan interest rate, LIBOR, Prime Rate, or an implied interest rate
based on observed market spot and foreign currency forward rates.
    Based on NASDAQ's proposed amendments to the introductory
paragraphs of Rule 5710, the definition of ``Linked Securities'' in
Rule 5710 would now encompass the Additional Linked Securities.
Therefore, under NASDAQ's proposal, all provisions of Rule 5710 that
apply to Linked Securities would now apply to the Additional Linked
Securities as well.
    As stated in the introductory paragraphs to Rule 5710, NASDAQ may
consider for listing and trading pursuant to Rule 19b-4(e) under the
Act Linked Securities (including the Additional Linked Securities) that
meet the standards set forth in Rule 5710, and NASDAQ may submit a rule
filing pursuant to Section 19(b)(2) of the Act to permit the listing
and trading of Linked Securities (including the Additional Linked
Securities) that do not otherwise meet the standards set forth in Rule
5710.
    NASDAQ is not proposing any amendments to Rules 5710(a)-(f), and
such provisions would apply to all Linked Securities (including the
Additional Linked Securities).\11\ NASDAQ has proposed to delete
current Rules 5710(g) and (h) (which contain the initial listing
standards for Equity Index-Linked Securities and Commodity-Linked
Securities) and move the text of these two paragraphs to proposed Rules
5710(k)(i)(A) and (k)(ii)(A).\12\ NASDAQ has proposed to re-number the
remaining existing paragraphs of Rule 5710 to reflect the deletion of
paragraphs (g) and (h). NASDAQ has proposed to update cross references
throughout the existing rule text of 5710 to reflect this
reorganization and renumbering, and to reflect the addition of
paragraph (k) to Rule 5710 (described below).
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    \11\ Rules 5710(a)-(f) set forth the following requirements:
    (a) Both the issue and the issuer of such security meet the
criteria for other securities set forth in Rule 5730(a), except that
if the security is traded in $1,000 denominations or is redeemable
at the option of holders thereof on at least a weekly basis, then no
minimum number of holders and no minimum public distribution of
trading units shall be required.
    (b) The issue has a term of not less than one (1) year and not
greater than thirty (30) years.
    (c) The issue must be the non-convertible debt of the Company.
    (d) The payment at maturity may or may not provide for a
multiple of the direct or inverse performance of an underlying
index, indexes or Reference Asset; however, in no event will a loss
(negative payment) at maturity be accelerated by a multiple that
exceeds twice the performance of an underlying index, indexes or
Reference Asset.
    (e) The Company will be expected to have a minimum tangible net
worth in excess of $250,000,000 and to exceed by at least 20% the
earnings requirements set forth in Rule 5405(b)(1)(A). In the
alternative, the Company will be expected: (i) To have a minimum
tangible net worth of $150,000,000 and to exceed by at least 20% the
earnings requirement set forth in Rule 5405(b)(1)(A), and (ii) not
to have issued securities where the original issue price of all the
Company's other index-linked note offerings (combined with index-
linked note offerings of the Company's affiliates) listed on a
national securities exchange exceeds 25% of the Company's net worth.
    (f) The Company is in compliance with Rule 10A-3 under the Act.
    \12\ See supra note 5.
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    NASDAQ is not proposing any substantive amendments to Rules
5710(i), (k), or (l), and under the proposal, such paragraphs would be
renumbered as paragraphs (g), (i), and (j), respectively. Such
paragraphs would apply to all Linked Securities (including the
Additional Linked Securities), unless otherwise noted therein.\13\
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    \13\ Proposed Rules 5710(g), (i) and (j) provide as follows:
    (g) Maintenance and Dissemination--(i) If the index is
maintained by a broker-dealer, the broker-dealer shall erect a
``firewall'' around the personnel who have access to information
concerning changes and adjustments to the index and the index shall
be calculated by a third party who is not a broker-dealer. (ii)
Unless the Commission order applicable under paragraph (k) hereof
provides otherwise, the current value of the index or the Reference
Asset (as applicable) will be widely disseminated at least every 15
seconds during NASDAQ's regular market session, except as provided
in the next clause (iii). (iii) The values of the following indexes
need not be calculated and widely disseminated at least every 15
seconds if, after the close of trading, the indicative value of the
Equity Index-Linked Security based on one or more of such indexes is
calculated and disseminated to provide an updated value: CBOE S&P
500 BuyWrite Index(sm), CBOE DJIA Buy Write Index(sm), CBOE Nasdaq-
100 BuyWrite Index(sm). (iv) If the value of a Linked Security is
based on more than one index, then the dissemination requirement of
this paragraph (g) applies to the composite value of such indexes.
(v) In the case of a Commodity-Linked Security that is periodically
redeemable, the indicative value of the subject Commodity-Linked
Security must be calculated and widely disseminated by one or more
major market data vendors on at least a 15-second basis during
NASDAQ's regular market session.
    * * *
    (i) Surveillance Procedures. FINRA will implement on behalf of
Nasdaq written surveillance procedures for Linked Securities. Nasdaq
will enter into adequate comprehensive surveillance sharing
agreements for non-U.S. securities, as applicable.
    (j) Linked Securities will be treated as equity instruments.
Furthermore, for the purpose of fee determination, Linked Securities
shall be deemed and treated as Other Securities.
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    NASDAQ has proposed to amend the current rule text relating to
trading halts in Linked Securities \14\ to remove references to
``Commodity-Linked Securities'' and ``Equity Index-Linked Securities''
in order to make the paragraph applicable to all Linked Securities
(including the Additional Linked Securities).\15\
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    \14\ See proposed Rule 5710(h) (formerly Rule 5710(j).
    \15\ Proposed Rule 5701(h) provides as follows:
    (h) Trading Halts. In the case of Linked Securities, if the
indicative value (if required to be disseminated) or the Reference
Asset value is not being disseminated as required, or if the value
of the index is not being disseminated as required, Nasdaq may halt
trading during the day on which such interruption occurs. Nasdaq
will halt trading no later than the beginning of trading following
the trading day when the interruption commenced if such interruption
persists at this time.
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    As discussed above, NASDAQ has proposed to move the initial listing
standards for Equity Index-Linked Securities and Commodity-Linked
Securities (previously in Rules 5710(g) and (h)) to new paragraph (k).
New paragraph (k) of Rule 5710 would also set forth the continued
listing standards for Equity Index-Linked Securities and Commodity-
Linked Securities and both initial and continued listing standards for
the Additional Linked Securities (as further described below).\16\
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    \16\ See supra notes 4 and 5.
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    Finally, NASDAQ has proposed to add Commentary .01 to Rule 5710,
which would establish certain regulatory requirements for registered
Market Makers in Linked Securities. Specifically, registered Market
Makers in Linked Securities would be required to file with NASDAQ, in a
manner prescribed by NASDAQ, and keep current a list identifying all
accounts for trading in the Reference Asset components, the
commodities, currencies or futures underlying the Reference Asset
components, or any derivative instruments based on the Reference Asset
or based on any Reference Asset component or any physical commodity,
currency or futures underlying a Reference Asset component, which the
registered Market Maker may have or over which it may exercise
investment discretion. No registered Market Maker in Linked Securities
would be permitted to trade in the Reference Asset components, the
commodities, currencies, or futures underlying the Reference Asset
components, or any derivative instruments based on the Reference Asset
or based on any Reference Asset component or any physical commodity or
futures currency underlying a Reference Asset component, in an account
in which a registered Market Maker, directly or indirectly, controls
trading activities, or has a direct interest in the profits or losses
thereof, which has not been reported to NASDAQ as required by the
proposed Rule.\17\
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    \17\ See proposed Commentary .01(a) to Rule 5710.
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    In addition to the existing obligations under NASDAQ rules
regarding the

production of books and records,\18\ proposed Commentary .01(b) would
further require registered Market Makers in Linked Securities to make
available to NASDAQ such books, records, or other information
pertaining to transactions by such entity or any limited partner,
officer, or approved person thereof, registered or nonregistered
employee affiliated with such entity for its or their own accounts in
the Reference Asset components, the commodities, currencies or futures
underlying the Reference Asset components, or any derivative
instruments based on the Reference Asset or based on any Reference
Asset component or any physical commodity, currency or futures
underlying a Reference Asset component, as may be requested by NASDAQ.
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    \18\ See, e.g., NASDAQ Rule 4625.
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    Proposed Commentary .01 to Rule 5710 is based on, and is
substantively identical to, Commentary .01 to NYSE Arca Equities Rule
5.2(j)(6) (``Equity Index-Linked Securities, Commodity-Linked
Securities, Currency-Linked Securities, Fixed Income Index-Linked
Securities, Futures-Linked Securities and Multifactor Index-Linked
Securities'').
1. Equity Index-Linked Securities
    Proposed Rule 5710(k)(i)(A) would set forth the initial listing
criteria for Equity Index-Linked Securities, which are currently found
in Rule 5710(g).\19\ NASDAQ has not proposed any substantive changes to
its initial listing criteria for Equity Index-Linked Securities.\20\
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    \19\ As discussed above, Rule 5710(g) would be deleted and
replaced in its entirety by proposed Rule 5710(k)(i)(A).
    \20\ Proposed Rule 5710(k)(i)(A) (formerly Rule 5710(g))
provides as follows:
    (A) In the case of an Equity Index-Linked Security, each
underlying index is required to have at least ten (10) component
securities. In addition, the index or indexes to which the security
is linked shall either:
    (1) Have been reviewed and approved for the trading of options
or other derivatives by the Commission under Section 19(b)(2) of the
Act and rules thereunder and the conditions set forth in the
Commission's approval order, including comprehensive surveillance
sharing agreements for non-U.S. stocks, continue to be satisfied, or
    (2) The index or indexes meet the following criteria:
    (a) Each component security has a minimum market value of at
least $75 million, except that for each of the lowest weighted
component securities in the index that in the aggregate account for
no more than 10% of the weight of the index, the market value can be
at least $50 million;
    (b) Each component security shall have trading volume in each of
the last six months of not less than 1,000,000 shares, except that
for each of the lowest weighted component securities in the index
that in the aggregate account for no more than 10% of the weight of
the index, the trading volume shall be at least 500,000 shares in
each of the last six months;
    (c) Indexes based upon the equal-dollar or modified equal-dollar
weighting method will be rebalanced at least semiannually;
    (d) In the case of a capitalization-weighted or modified
capitalization-weighted index, the lesser of the five highest
weighted component securities in the index or the highest weighted
component securities in the index that in the aggregate represent at
least 30% of the total number of component securities in the index,
each have an average monthly trading volume of at least 2,000,000
shares over the previous six months;
    (e) No underlying component security will represent more than
25% of the weight of the index, and the five highest weighted
component securities in the index do not in the aggregate account
for more than 50% of the weight of the index (60% for an index
consisting of fewer than 25 component securities);
    (f) 90% of the index's numerical value and at least 80% of the
total number of component securities will meet the then current
criteria for standardized option trading on a national securities
exchange or a national securities association, provided, however,
that an index will not be subject to this requirement if (a) no
underlying component security represents more than 10% of the dollar
weight of the index and (b) the index has a minimum of 20
components; and
    (g) All component securities shall be either (A) securities
(other than securities of a foreign issuer and American Depository
Receipts (``ADRs'')) that are (i) issued by a 1934 Act reporting
company or by an investment company registered under the Investment
Company Act of 1940 that, in each case, has securities listed on a
national securities exchange and (ii) an ``NMS stock'' (as defined
in Rule 600 of Regulation NMS under the Act), or (B) securities of a
foreign issuer or ADRs, provided that securities of a foreign issuer
(including when they underlie ADRs) whose primary trading market
outside the United States is not a member of the Intermarket
Surveillance Group (``ISG'') or a party to a comprehensive
surveillance sharing agreement with Nasdaq will not in the aggregate
represent more than 20% of the dollar weight of the index.
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    Proposed Rule 5710(k)(i)(B) would contain continued listing
standards for Equity Index-Linked Securities. Under the proposal,
NASDAQ would commence delisting or removal proceedings (unless the
Commission has approved the continued trading of the subject Equity
Index-Linked Security), if any of the initial listing standards are not
continuously maintained, except that: (i) the criteria that no single
component represent more than 25% of the dollar weight of the index and
the five highest dollar weighted components in the index cannot
represent more than 50% (or 60% for indexes with less than 25
components) of the dollar weight of the index, need only be satisfied
at the time the index is rebalanced; and (ii) component stocks that in
the aggregate account for at least 90% of the weight of the index each
shall have a minimum global monthly trading volume of 500,000 shares,
or minimum global notional volume traded per month of $12,500,000,
averaged over the last six months.\21\
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    \21\ See proposed Rule 5710(k)(i)(B)(1).
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    In connection with an Equity Index-Linked Security that is listed
pursuant to proposed Rule 5710(k)(i)(A)(1), NASDAQ would commence
delisting or removal proceedings (unless the Commission has approved
the continued trading of the subject Equity Index-Linked Security) if
an underlying index or indexes fails to satisfy the maintenance
standards or conditions for such index or indexes as set forth by the
Commission in its order under Section 19(b)(2) of the Act approving the
index or indexes for the trading of options or other derivatives.\22\
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    \22\ See proposed Rule 5710(k)(i)(B)(2).
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    Additionally, NASDAQ would commence delisting or removal
proceedings (unless the Commission has approved the continued trading
of the subject Equity Index-Linked Security), under any of the
following circumstances:
     If the aggregate market value or the principal amount of
the Equity Index-Linked Securities publicly held is less than $400,000;
     If the value of the index or composite value of the
indexes is no longer calculated or widely disseminated on at least a
15-second basis with respect to indexes containing only securities
listed on a national securities exchange, or on at least a 60-second
basis with respect to indexes containing foreign country securities,
provided, however, that, if the official index value does not change
during some or all of the period when trading is occurring on NASDAQ
(for example, for indexes of foreign country securities, because of
time zone differences or holidays in the countries where such indexes'
component stocks trade) then the last calculated official index value
must remain available throughout NASDAQ trading hours; or
     If such other event shall occur or condition exists which
in the opinion of NASDAQ makes further dealings on NASDAQ
inadvisable.\23\
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    \23\ See proposed Rule 5710(k)(i)(B)(3).
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    Finally, the proposed rule provides that indexes underlying Equity
Index-Linked Securities would be rebalanced at least annually.\24\
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    \24\ See proposed Rule 5710(k)(i)(B)(4).
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    The proposed continued listing criteria for Equity Index-Linked
Securities are based on, and substantively identical to, NYSE Arca
Equities Rule 5.2(j)(6)(B)(I)(2) (``Equity Index-Linked Securities
Listing Standards--Continued Listing Criteria'').\25\
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    \25\ Consistent with its proposal to conform the continued
listing requirements applicable to Equity Index-Linked Securities to
those of NYSE Arca and to incorporate such requirements under
proposed Rule 5710(k)(i)(B), NASDAQ has proposed to delete existing
references to continued listing standards applicable to Equity
Index-Linked Securities in Rule 5730(b). See supra notes 4 and 5.

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2. Commodity-Linked Securities
    Proposed Rule 5710(k)(ii)(A) would set forth the initial listing
criteria for Commodity-Linked Securities, which are currently found in
Rule 5710(h).\26\ NASDAQ has not proposed any substantive changes to
its initial listing criteria for Commodity-Linked Securities.\27\
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    \26\ As discussed above, Rule 5710(h) would be deleted and
replaced in its entirety by proposed Rule 5710(k)(ii)(A).
    \27\ Proposed Rule 5710(k)(ii)(A) (formerly Rule 5710(h))
provides as follows:
    (A) In the case of a Commodity-Linked Security, the Reference
Asset shall meet the criteria in either subparagraph (1) or
subparagraph (2) below:
    (1) The Reference Asset to which the security is linked shall
have been reviewed and approved for the trading of Commodity-Related
Securities or options or other derivatives by the Commission under
Section 19(b)(2) of the Act and rules thereunder and the conditions
set forth in the Commission's approval order, including with respect
to comprehensive surveillance sharing agreements, continue to be
satisfied.
    (2) The pricing information for each component of a Reference
Asset other than a Currency must be derived from a market which is
an ISG member or affiliate or with which Nasdaq has a comprehensive
surveillance sharing agreement. Notwithstanding the previous
sentence, pricing information for gold and silver may be derived
from the London Bullion Market Association. The pricing information
for each component of a Reference Asset that is a Currency must be
either: (1) The generally accepted spot price for the currency
exchange rate in question; or (2) derived from a market of which (a)
is an ISG member or affiliate or with which Nasdaq has a
comprehensive surveillance sharing agreement and (b) is the pricing
source for a currency component of a Reference Asset that has
previously been approved by the Commission. A Reference Asset may
include components representing not more than 10% of the dollar
weight of such Reference Asset for which the pricing information is
derived from markets that do not meet the requirements of this
subparagraph (2), provided, however, that no single component
subject to this exception exceeds 7% of the dollar weight of the
Reference Asset. The term ``Currency,'' as used in this
subparagraph, shall mean one or more currencies, or currency
options, futures, or other currency derivatives, Commodity-Related
Securities if their underlying Commodities are currencies or
currency derivatives, or a basket or index of any of the foregoing.
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    Proposed Rule 5710(k)(ii)(B) would establish new continued listing
standards for Commodity-Linked Securities. NASDAQ would commence
delisting or removal proceedings if any of the initial listing criteria
are not continuously maintained.\28\ Additionally, NASDAQ would
commence delisting or removal proceedings under any of the following
circumstances:
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    \28\ See proposed Rule 5710(k)(ii)(B)(1).
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     If the aggregate market value or the principal amount of
the Commodity-Linked Securities publicly held is less than $400,000;
     If the value of the Commodity Reference Asset is no longer
calculated or available and a new Commodity Reference Asset is
substituted, unless the new Commodity Reference Asset meets the
requirements of the proposed rule; or
     If such other event shall occur or condition exists which
in the opinion of NASDAQ makes further dealings on NASDAQ
inadvisable.\29\
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    \29\ See proposed Rule 5710(k)(ii)(B)(2).
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    The proposed continued listing standards for Commodity-Linked
Securities are based on, and substantively identical to, NYSE Arca
Equities Rule 5.2(j)(6)(B)(II)(2) (``Commodity-Linked Securities
Listing Standards'').\30\
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    \30\ Consistent with its proposal to conform the continued
listing requirements applicable to Commodity-Linked Securities to
those of NYSE Arca and to incorporate such requirements under
proposed Rule 5710(k)(ii)(B), NASDAQ has proposed to delete existing
references to continued listing standards applicable to Commodity-
Linked Securities in Rule 5730(b). See supra notes 4 and 5.
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3. Fixed Income Index-Linked Securities
    Proposed Rule 5710(k)(iii) would establish initial and continued
listing standards for Fixed Income Index-Linked Securities.
    Proposed Rule 5710(k)(iii)(A) provides that either: (i) The Fixed
Income Reference Asset to which the security is linked shall have been
reviewed and approved for the trading of options, Index Fund Shares, or
other derivatives by the Commission under Section 19(b)(2) of the Act
and rules thereunder and the conditions set forth in the Commission's
approval order continue to be satisfied; or (ii) the issue must meet
the following initial listing criteria:
     Components of the Fixed Income Reference Asset that in the
aggregate account for at least 75% of the weight of the Fixed Income
Reference Asset must each have a minimum original principal amount
outstanding of $100 million or more;
     A component of the Fixed Income Reference Asset may be a
convertible security; however, once the convertible security component
converts to the underlying equity security, the component is removed
from the Fixed Income Reference Asset;
     No component of the Fixed Income Reference Asset
(excluding Treasury Securities and GSE Securities) will represent more
than 30% of the dollar weight of the Fixed Income Reference Asset, and
the five highest dollar weighted components in the Fixed Income
Reference Asset will not in the aggregate account for more than 65% of
the dollar weight of the Fixed Income Reference Asset;
     An underlying Fixed Income Reference Asset (excluding one
consisting entirely of exempted securities) must include a minimum of
13 non-affiliated issuers; and
     Component securities that in the aggregate account for at
least 90% of the dollar weight of the Fixed Income Reference Asset must
be from one of the following: (a) Issuers that are required to file
reports pursuant to Sections 13 and 15(d) of the Act; or (b) issuers
that have a worldwide market value of outstanding common equity held by
non-affiliates of $700 million or more; or (c) issuers that have
outstanding securities that are notes, bonds, debentures, or evidence
of indebtedness having a total remaining principal amount of at least
$1 billion; or (d) exempted securities as defined in Section 3(a)(12)
of the Act; or (e) issuers that are a government of a foreign country
or a political subdivision of a foreign country.
    In addition, the value of the Fixed Income Reference Asset must be
widely disseminated to the public by one or more major market vendors
at least once per business day.\31\
---------------------------------------------------------------------------

    \31\ See proposed Rule 5710(k)(iii)(B).
---------------------------------------------------------------------------

    Proposed Rule 5710(k)(iii)(C) provides that NASDAQ would commence
delisting or removal proceedings if any of the initial listing criteria
are not continuously maintained, and that NASDAQ would also commence
delisting or removal proceedings if:
     The aggregate market value or the principal amount of the
Fixed Income Index-Linked Securities publicly held is less than
$400,000;
     The value of the Fixed Income Reference Asset is no longer
calculated or available and a new Fixed Income Reference Asset is
substituted, unless the new Fixed Income Reference Asset meets the
requirements of proposed Rule 5710(k); or
     Such other event shall occur or condition exists which in
the opinion of NASDAQ makes further dealings inadvisable.
    The proposed initial and continued listing standards for Fixed-
Income Linked Securities are based on, and substantively identical to,
NYSE Arca Equities Rule 5.2(j)(6)(B)(IV) (``Fixed Income Index-Linked
Securities Listing Standards'').
4. Futures-Linked Securities
    Proposed Rule 5710(k)(iv) would establish initial and continued
listing standards for Futures-Linked Securities. Proposed Rule
5710(k)(iv)(A) states that

the issue must meet one of the following initial listing standards:
     The Futures Reference Asset to which the security is
linked shall have been reviewed and approved for the trading of
Futures-Linked Securities or options or other derivatives by the
Commission under Section 19(b)(2) of the Act and rules thereunder and
the conditions set forth in the Commission's approval order, including
with respect to comprehensive surveillance sharing agreements, continue
to be satisfied; or
     The pricing information for components of a Futures
Reference Asset must be derived from a market which is a member, or an
affiliate of a member, of the Intermarket Surveillance Group (``ISG''),
or with which NASDAQ has a comprehensive surveillance sharing
agreement. A Futures Reference Asset may include components
representing not more than 10% of the dollar weight of such Futures
Reference Asset for which the pricing information is derived from
markets that do not meet the foregoing requirement; provided, however,
that no single component subject to this exception exceeds 7% of the
dollar weight of the Futures Reference Asset.
    In addition, the issue must meet both of the following initial
listing criteria:
     The value of the Futures Reference Asset must be
calculated and widely disseminated by one or more major market data
vendors on at least a 15-second basis during the Regular Market Session
(as defined in NASDAQ Rule 4120); and
     In the case of Futures-Linked Securities that are
periodically redeemable, the Intraday Indicative Value \32\ of the
subject Futures-Linked Securities must be calculated and widely
disseminated by NASDAQ or one or more major market data vendors on at
least a 15-second basis during the Regular Market Session.\33\
---------------------------------------------------------------------------

    \32\ The ``Intraday Indicative Value'' is an estimate of the
value of a share of each series of a particular security.
    \33\ See proposed Rule 5710(k)(iv)(B).
---------------------------------------------------------------------------

    Proposed Rule 5710(k)(iv)(C) states that NASDAQ would commence
delisting or removal proceedings if any of the initial listing criteria
are not continuously maintained, and that NASDAQ would also commence
delisting or removal proceedings under any of the following
circumstances:
     If the aggregate market value or the principal amount of
the Futures-Linked Securities publicly held is less than $400,000;
     If the value of the Futures Reference Asset is no longer
calculated or available and a new Futures Reference Asset is
substituted, unless the new Futures Reference Asset meets the
requirements of proposed Rule 5710(k); or
     If such other event shall occur or condition exists which
in the opinion of NASDAQ makes further dealings on NASDAQ inadvisable.
    The proposed initial and continued listing standards for Futures-
Linked Securities are based on, and substantively identical to, NYSE
Arca Equities Rule 5.2(j)(6)(B)(V) (``Futures-Linked Securities Listing
Standards'').
5. Multifactor Index-Linked Securities
    Proposed Rule 5710(k)(v) would establish initial and continued
listing standards for Multifactor Index-Linked Securities. Proposed
Rule 5710(k)(v)(A) states that the issue must meet one of the following
initial listing standards:
     Each component of the Multifactor Reference Asset to which
the security is linked shall have been reviewed and approved for the
trading of either options, Index Fund Shares, or other derivatives
under Section 19(b)(2) of the Act and rules thereunder and the
conditions set forth in the Commission's approval order continue to be
satisfied; or
     Each Reference Asset included in the Multifactor Reference
Asset must meet the applicable initial and continued listing criteria
set forth in the relevant subsection of proposed Rule 5710(k).
    In addition, proposed Rule 5710(k)(v)(B) provides that the issue
must meet both of the following additional initial listing criteria:
     The value of the Multifactor Reference Asset must be
calculated and widely disseminated to the public on at least a 15-
second basis during the time the Multifactor Index-Linked Security
trades on NASDAQ; and
     In the case of Multifactor Index-Linked Securities that
are periodically redeemable, the Intraday Indicative Value of the
Multifactor Index-Linked Securities must be calculated and widely
disseminated by one or more major market data vendors on at least a 15-
second basis during the time the Multifactor Index-Linked Securities
trade on NASDAQ.
    Proposed Rule 5710(k)(v)(C) states that NASDAQ would commence
delisting or removal proceedings if:
     Any of the initial listing criteria described above are
not continuously maintained;
     The aggregate market value or the principal amount of the
Multifactor Index-Linked Securities publicly held is less than
$400,000;
     The value of the Multifactor Reference Asset is no longer
calculated or available and a new Multifactor Reference Asset is
substituted, unless the new Multifactor Reference Asset meets the
requirements of proposed Rule 5710(k); or
     Such other event shall occur or condition exists which in
the opinion of NASDAQ makes further dealings on NASDAQ inadvisable.
    The proposed initial and continued listing standards for
Multifactor Index-Linked Securities are based on, and substantively
identical to, NYSE Arca Equities Rule 5.2(j)(6)(B)(VI) (``Multifactor
Index-Linked Securities Listing Standards'').

B. Proposed Rule 5711--Trading of Certain Derivative Securities

    NASDAQ has proposed to adopt new Rule 5711 (``Trading of Certain
Derivative Securities''), which would set forth listing standards for
the following securities: Index-Linked Exchangeable Notes; Equity Gold
Shares; Trust Certificates; Commodity-Based Trust Shares; Currency
Trust Shares; Commodity Index Trust Shares; Commodity Futures Trust
Shares; Partnership Units; Trust Units; Managed Trust Securities; and
Currency Warrants.
1. Index-Linked Exchangeable Notes
    Proposed Rule 5711(a) would adopt generic listing standards for
Index-Linked Exchangeable Notes. Index-Linked Exchangeable Notes are
exchangeable debt securities that are exchangeable at the option of the
holder (subject to the requirement that the holder in most
circumstances exchange a specified minimum amount of notes), on call by
the issuer, or at maturity for a cash amount (``Cash Value Amount'')
based on the reported market prices of the underlying stocks of an
underlying index.\34\
---------------------------------------------------------------------------

    \34\ See proposed Rule 5711(a).
---------------------------------------------------------------------------

    Index-Linked Exchangeable Notes would be considered for listing and
trading by NASDAQ pursuant to Rule 19b-4(e) under the Act,\35\
provided:
---------------------------------------------------------------------------

    \35\ 17 CFR 240.19b-4(e).
---------------------------------------------------------------------------

     Both the issue and the issuer of such security meet the
requirements of NASDAQ Rule 5730 (``Listing Requirements for Securities
Not Specified Above (Other Securities)''), except that the minimum
public distribution shall be 150,000 notes with a minimum of 400 public
note-holders, except, if traded in thousand dollar denominations or
redeemable at the option of the holders thereof on at least a weekly
basis, then no minimum

public distribution and no minimum number of holders.\36\
---------------------------------------------------------------------------

    \36\ See proposed Rule 5711(a)(i).
---------------------------------------------------------------------------

     The issue has a minimum term of one year.\37\
---------------------------------------------------------------------------

    \37\ See proposed Rule 5711(a)(ii).
---------------------------------------------------------------------------

     The issuer will be expected to have a minimum tangible net
worth in excess of $250,000,000, and to otherwise substantially exceed
the earnings requirements set forth in NASDAQ Rule 5405(b).\38\ In the
alternative, the issuer will be expected: (i) to have a minimum
tangible net worth of $150,000,000 and to otherwise substantially
exceed the earnings requirements set forth in Rule 5405(b); and (ii)
not to have issued Index-Linked Exchangeable Notes where the original
issue price of all the issuer's other Index-Linked Exchangeable Note
offerings (combined with other Index-Linked Exchangeable Note offerings
of the issuer's affiliates) listed on a national securities exchange
exceeds 25% of the issuer's net worth.\39\
---------------------------------------------------------------------------

    \38\ Rule 5405(b) sets forth initial listing standards for
primary equity securities.
    \39\ See proposed Rule 5711(a)(iii).
---------------------------------------------------------------------------

     The index to which an Index-Linked Exchangeable Note is
linked shall either be (i) indices that have been created by a third
party and been reviewed and have been approved for the trading of
options or other derivatives securities (each, a ``Third-Party Index'')
either by the Commission under Section 19(b)(2) of the Act and rules
thereunder or by NASDAQ under rules adopted pursuant to Rule 19b-4(e);
or (ii) indices which the issuer has created and for which NASDAQ will
have obtained approval from either the Commission pursuant to Section
19(b)(2) and rules thereunder or from NASDAQ under rules adopted
pursuant to Rule 19b-4(e) (each, an ``Issuer Index''). The Issuer
Indices and their underlying securities must meet one of the following:
(A) The procedures and criteria set forth in Nasdaq Options Market
(``NOM'') Rules, Chapter XIV, Section 6(b) and (c); or (B) the criteria
set forth in NASDAQ Rules 5715(b)(3) and (4), the index concentration
limits set forth in NOM Rules, Chapter XIV, Section 6, and NOM Rules,
Chapter XIV, Section 6(b)(12) insofar as it relates to NOM Rules,
Chapter XIV, Section 6(b)(6).\40\
---------------------------------------------------------------------------

    \40\ See proposed Rule 5711(a)(iv).
---------------------------------------------------------------------------

    Index-Linked Exchangeable Notes would be treated as equity
instruments.\41\ The Intraday Indicative Value of each series of Index-
Linked Exchangeable Notes would be required to be calculated and widely
disseminated by NASDAQ or one or more major market data vendors on at
least a 15-second basis during the Regular Market Session.\42\ In
addition, the value of the underlying index must also be publicly
disseminated to investors, on a real time basis, every 15 seconds.\43\
---------------------------------------------------------------------------

    \41\ See proposed Rule 5711(a)(v).
    \42\ See proposed Rule 5711(a)(vi). The term ``Intraday
Indicative Value'' means an estimate of the value of a note or a
share of the series of Index-Linked Exchangeable Notes. Id.
    \43\ See proposed Rule 5711(a)(vii). The term ``Intraday
Indicative Value'' means an estimate of the value of a note or a
share of the series of Index-Linked Exchangeable Notes. Id.
---------------------------------------------------------------------------

    Beginning twelve months after the initial issuance of a series of
Index-Linked Exchangeable Notes, NASDAQ would consider the suspension
of trading in or removal from listing of that series of Index-Linked
Exchangeable Notes under any of the following circumstances:
     If the series has fewer than 50,000 notes issued and
outstanding;
     If the market value of all Index-Linked Exchangeable Notes
of that series issued and outstanding is less than $1,000,000; or
     If such other event shall occur or such other condition
exists which in the opinion of NASDAQ makes further dealings of NASDAQ
inadvisable.\44\
---------------------------------------------------------------------------

    \44\ See proposed Rule 5711(a)(viii).
---------------------------------------------------------------------------

    The proposed listing requirements relating to Index-Linked
Exchangeable Notes are based on, and substantively identical to, NYSE
Arca Equities Rule 5.2(j)(4) (``Index-Linked Exchangeable Notes'').
2. Equity Gold Shares
    Proposed Rule 5711(b) would establish listing standards for Equity
Gold Shares that represent units of fractional undivided beneficial
interest in, and ownership of, the Equity Gold Trust. While Equity Gold
Shares are not technically ``Index Fund Shares,'' and thus are not
covered by NASDAQ Rule 5705, all other NASDAQ rules that reference
``Index Fund Shares'' shall also apply to Equity Gold Shares.\45\
---------------------------------------------------------------------------

    \45\ See proposed Rule 5711(b)(i).
---------------------------------------------------------------------------

    Except to the extent that specific provisions in proposed Rule
5711(b) govern, or unless the context otherwise requires, the
provisions of all other NASDAQ Rules and policies would be applicable
to the trading of Equity Gold Shares on NASDAQ.\46\ In addition, the
requirements set forth in proposed Rule 5711(d) relating to Commodity-
Based Trust Shares would also apply to Equity Gold Shares.\47\
---------------------------------------------------------------------------

    \46\ See proposed Rule 5711(b)(ii).
    \47\ See proposed Rule 5711(b)(iii).
---------------------------------------------------------------------------

    The proposed listing requirements relating to Equity Gold Shares
are based on, and substantively identical to, NYSE Arca Equities Rule
5.2(j)(5) (``Equity Gold Shares'').
3. Trust Certificates
    Under proposed Rule 5711(c), NASDAQ may consider for trading,
whether by listing or pursuant to unlisted trading privileges, Trust
Certificates. Trust Certificates represent an interest in a special
purpose trust created pursuant to a trust agreement. The trust will
only issue Trust Certificates. Trust Certificates may or may not
provide for the repayment of the original principal investment amount.
Trust Certificates pay an amount at maturity which is based upon the
performance of specified assets as set forth below:
     An underlying index or indexes of equity securities
(``Trust Certificate Equity Reference Asset'');
     Instruments that are direct obligations of the issuing
company, either exercisable throughout their life (i.e., American
style) or exercisable only on their expiration date (i.e., European
style), entitling the holder to a cash settlement in U.S. dollars to
the extent that the foreign or domestic index has declined below (for a
put warrant) or increased above (for a call warrant) the pre-stated
cash settlement value of the index (``Index Warrants''); or
     A combination of two or more Trust Certificate Equity
Reference Assets or Index Warrants.\48\
---------------------------------------------------------------------------

    \48\ See proposed Rule 5711(c)(i).
---------------------------------------------------------------------------

    NASDAQ would file separate proposals under Section 19(b) of the Act
before trading, either by listing or pursuant to unlisted trading
privileges, Trust Certificates.\49\
---------------------------------------------------------------------------

    \49\ See proposed Rule 5711(c)(ii).
---------------------------------------------------------------------------

    Pursuant to proposed Commentary .01 to Rule 5711(c), NASDAQ would
commence delisting or removal proceedings with respect to an issue of
Trust Certificates (unless the Commission has approved the continued
trading of such issue), under any of the following circumstances:
     If the aggregate market value or the principal amount of
the securities publicly held is less than $400,000;
     If the value of the index or composite value of the
indexes is no longer calculated or widely disseminated on at least a
15-second basis with respect to indexes containing only securities
listed on a national securities exchange, or on at least a 60-second
basis with respect to indexes containing foreign country securities;
provided, however, that, if the official index value does not change
during some or all of the period when trading is occurring on the
NASDAQ Stock

Market (for example, for indexes of foreign country securities, because
of time zone differences or holidays in the countries where such
indexes' component stocks trade) then the last calculated official
index value must remain available throughout NASDAQ trading hours; or
     If such other event shall occur or condition exists which
in the opinion of NASDAQ makes further dealings on NASDAQ inadvisable.
    Proposed Commentary .02 to Rule 5711(c) provides that the stated
term of the trust shall be as stated in the trust prospectus; however,
a trust may be terminated under such earlier circumstances as may be
specified in the trust prospectus.
    Proposed Commentary .03 to Rule 5711(c) provides that the trustee
of a trust must be a trust company or banking institution having
substantial capital and surplus and the experience and facilities for
handling corporate trust business. In cases where, for any reason, an
individual has been appointed as trustee, a qualified trust company or
banking institution must be appointed co-trustee. In addition, no
change is to be made in the trustee of a listed issue without prior
notice to and approval of NASDAQ.
    Proposed Commentary .04 to Rule 5711(c) provides that voting rights
would be as set forth in the applicable trust prospectus.
    Proposed Commentary .05 to Rule 5711(c) provides that NASDAQ would
implement written surveillance procedures for Trust Certificates.
    Proposed Commentary .06 to Rule 5711(c) provides that the Trust
Certificates would be subject to NASDAQ's equity trading rules.
    Proposed Commentary .07 to Rule 5711(c) provides that prior to the
commencement of trading of a particular Trust Certificates listing
pursuant to proposed Rule 5711(c), NASDAQ will evaluate the nature and
complexity of the issue and, if appropriate, distribute a circular to
Members providing guidance regarding compliance responsibilities
(including suitability recommendations and account approval) when
handling transactions in Trust Certificates.
    Proposed Commentary .08 to Rule 5711(c) provides that Trust
Certificates may be exchangeable at the option of the holder into
securities that participate in the return of the applicable underlying
asset. In the event that the Trust Certificates are exchangeable at the
option of the holder and contain an Index Warrant, then a Member must
ensure that the Member's account is approved for options trading in
accordance with the rules of the NOM in order to exercise such rights.
    Proposed Commentary .09 to Rule 5711(c) provides that Trust
Certificates may pass-through periodic payments of interest and
principle of the underlying securities.
    Proposed Commentary .10 to Rule 5711(c) provides that the trust
payments may be guaranteed pursuant to a financial guaranty insurance
policy which may include swap agreements.
    Proposed Commentary .11 to Rule 5711(c) provides that the Trust
Certificates may be subject to early termination or call features.
    The proposed standards relating to Trust Certificates are based on,
and substantively identical to, NYSE Arca Equities Rule 5.2(j)(7)
(``Trust Certificates'').
4. Commodity-Based Trust Shares
    Pursuant to proposed Rule 5711(d), NASDAQ may consider for trading,
whether by listing or pursuant to unlisted trading privileges, of
Commodity-Based Trust Shares that meet the criteria of the rule.\50\
The term ``Commodity-Based Trust Shares'' is defined as a security (i)
that is issued by a trust that holds a specified commodity deposited
with the trust; (ii) that is issued by such trust in a specified
aggregate minimum number in return for a deposit of a quantity of the
underlying commodity; and (iii) that, when aggregated in the same
specified minimum number, may be redeemed at a holder's request by such
trust which will deliver to the redeeming holder the quantity of the
underlying commodity.\51\ NASDAQ may trade, either by listing or
pursuant to unlisted trading privileges, Commodity-Based Trust Shares
based on an underlying commodity, and each issue of a Commodity-Based
Trust Share would be designated as a separate series and would be
identified by a unique symbol.\52\
---------------------------------------------------------------------------

    \50\ Proposed Rule 5711(d) would be applicable only to
Commodity-Based Trust Shares. Except to the extent inconsistent with
this Rule, or unless the context otherwise requires, the provisions
of the trust issued receipts rules, Bylaws, and all other rules and
procedures of the Board of Directors shall be applicable to the
trading on NASDAQ of such securities. Commodity-Based Trust Shares
are included within the definition of ``security'' or ``securities''
as such terms are used in the Bylaws and Rules of NASDAQ. See
proposed Rule 5711(d)(ii).
    \51\ See proposed Rule 5711(d)(iii)(A). The term ``commodity''
is defined in Section 1(a)(4) of the Commodity Exchange Act
(``CEA''). See proposed Rule 5711(d)(iii)(B).
    \52\ See proposed Rule 5711(d)(iv).
---------------------------------------------------------------------------

    Under the proposal, NASDAQ would establish a minimum number of
Commodity-Based Trust Shares required to be outstanding at the time of
commencement of trading on NASDAQ.\53\ Following the initial 12-month
period following commencement of trading on NASDAQ of Commodity-Based
Trust Shares, NASDAQ would consider the suspension of trading in or
removal from listing of such series under any of the following
circumstances:
---------------------------------------------------------------------------

    \53\ See proposed Rule 5711(d)(v)(A).
---------------------------------------------------------------------------

     If the trust has more than 60 days remaining until
termination and there are fewer than 50 record and/or beneficial
holders of Commodity-Based Trust Shares for 30 or more consecutive
trading days;
     If the trust has fewer than 50,000 receipts issued and
outstanding;
     If the market value of all receipts issued and outstanding
is less than $1,000,000;
     If the value of the underlying commodity is no longer
calculated or available on at least a 15-second delayed basis from a
source unaffiliated with the sponsor, trust, custodian or NASDAQ or
NASDAQ stops providing a hyperlink on its Web site to any such
unaffiliated commodity value;
     If the Intraday Indicative Value is no longer made
available on at least a 15-second delayed basis; or
     If such other event shall occur or condition exists which
in the opinion of NASDAQ makes further dealings on NASDAQ
inadvisable.\54\
---------------------------------------------------------------------------

    \54\ See proposed Rule 5711(d)(v)(B).
---------------------------------------------------------------------------

    Upon termination of a trust, NASDAQ requires that Commodity-Based
Trust Shares issued in connection with such entity trust be removed
from NASDAQ listing. A trust may terminate in accordance with the
provisions of the trust prospectus, which may provide for termination
if the value of the trust falls below a specified amount.\55\
---------------------------------------------------------------------------

    \55\ Id.
---------------------------------------------------------------------------

    Proposed Rule 5711(d)(v)(C) provides that the stated term of the
trust shall be as stated in the trust prospectus; however, a trust may
be terminated under such earlier circumstances as may be specified in
the trust prospectus.
    Proposed Rule 5711(d)(v)(D) provides that the trustee of a trust
must be a trust company or banking institution having substantial
capital and surplus and the experience and facilities for handling
corporate trust business. In cases where, for any reason, an individual
has been appointed as trustee, a qualified trust company or banking
institution must be appointed co-trustee. In addition, no change is to
be made in the trustee of a listed issue without prior notice to and
approval of NASDAQ.

    Proposed Rule 5711(d)(v)(E) provides that voting rights shall be as
set forth in the applicable trust prospectus.
    Proposed Rules 5711(d)(vi) and (vii) set forth the limitation of
NASDAQ liability and requirements for Market Makers in Commodity-Based
Trust Shares (see ``General Provisions--Limitation of Nasdaq
Liability'' and ``General Provisions--Market Maker Accounts'' below for
a description of these requirements).
    Proposed Commentary .01 to Rule 5711(d) provides that a Commodity-
Based Trust Share is a Trust Issued Receipt that holds a specified
commodity deposited with the trust.
    Proposed Commentary .02 to Rule 5711(d) requires that Members
provide all purchasers of newly issued Commodity-Based Trust Shares a
prospectus for the series of Commodity-Based Trust Shares.
    Proposed Commentary .03 to Rule 5711(d) provides that transactions
in Commodity-Based Trust Shares would occur during the trading hours
specified in NASDAQ Rule 4120.
    Proposed Commentary .04 to Rule 5711(d) provides that NASDAQ would
file separate proposals under Section 19(b) of the Act before the
listing and/or trading of Commodity-Based Trust Shares.
    The proposed requirements relating to Commodity-Based Trust Shares
are based on, and substantively identical to, NYSE Arca Equities Rule
8.201 (``Commodity-Based Trust Shares'').
5. Currency Trust Shares
    Proposed Rule 5711(e) would permit the listing and trading, or
trading pursuant to unlisted trading privileges, on NASDAQ of Currency
Trust Shares that meet the criteria of the rule.\56\ The term
``Currency Trust Shares'' as used in the proposed rule means, unless
the context otherwise requires, a security that: (i) Is issued by a
trust that holds a specified non-U.S. currency or currencies deposited
with the trust; (ii) when aggregated in some specified minimum number
may be surrendered to the trust by an Authorized Participant (as
defined in the trust's prospectus) to receive the specified non-U.S.
currency or currencies; and (iii) pays beneficial owners interest and
other distributions on the deposited non-U.S. currency or currencies,
if any, declared and paid by the trust.\57\ NASDAQ may trade, either by
listing or pursuant to unlisted trading privileges, Currency Trust
Shares that hold a specified non-U.S. currency or currencies, and each
issue of Currency Trust Shares would be designated as a separate series
and shall be identified by a unique symbol.\58\
---------------------------------------------------------------------------

    \56\ Proposed Rule 5711(e) would be applicable only to Currency
Trust Shares. Except to the extent inconsistent with the proposed
Rule, or unless the context otherwise requires, the provisions of
the trust issued receipts rules, Bylaws, and all other rules and
procedures of the Board of Directors shall be applicable to the
trading on NASDAQ of such securities. Currency Trust Shares are
included within the definition of ``security'' or ``securities'' as
such terms are used in the Bylaws and Rules of NASDAQ. See proposed
Rule 5711(e)(ii).
    \57\ See proposed Rule 5711(e)(iii).
    \58\ See proposed Rule 5711(e)(iv).
---------------------------------------------------------------------------

    Under the proposal, NASDAQ would establish a minimum number of
Currency Trust Shares required to be outstanding at the time of
commencement of trading on NASDAQ.\59\ Following the initial 12-month
period following commencement of trading on NASDAQ of Currency Trust
Shares, NASDAQ would consider the suspension of trading in or removal
from listing of such series under any of the following circumstances:
---------------------------------------------------------------------------

    \59\ See proposed Rule 5711(e)(v)(A).
---------------------------------------------------------------------------

     If the trust has more than 60 days remaining until
termination and there are fewer than 50 record and/or beneficial
holders of Currency Trust Shares for 30 or more consecutive trading
days;
     If the trust has fewer than 50,000 Currency Trust Shares
issued and outstanding;
     If the market value of all Currency Trust Shares issued
and outstanding is less than $1,000,000;
     If the value of the applicable non-U.S. currency is no
longer calculated or available on at least a 15-second delayed basis
from a source unaffiliated with the sponsor, trust, custodian or NASDAQ
or NASDAQ stops providing a hyperlink on its Web site to any such
unaffiliated applicable non-U.S. currency value;
     If the Intraday Indicative Value is no longer made
available on at least a 15-second delayed basis; or
     If such other event shall occur or condition exists which
in the opinion of NASDAQ makes further dealings on NASDAQ
inadvisable.\60\
---------------------------------------------------------------------------

    \60\ See proposed Rule 5711(e)(v)(B).
---------------------------------------------------------------------------

    Upon termination of a trust, NASDAQ would require that Currency
Trust Shares issued in connection with such entity trust be removed
from NASDAQ listing. A trust may terminate in accordance with the
provisions of the trust prospectus, which may provide for termination
if the value of the trust falls below a specified amount.\61\
---------------------------------------------------------------------------

    \61\ Id.
---------------------------------------------------------------------------

    Proposed Rule 5711(e)(v)(C) provides that the stated term of the
trust shall be as stated in the trust prospectus; however, a trust may
be terminated under such earlier circumstances as may be specified in
the trust prospectus.
    Proposed Rule 5711(e)(v)(D) provides that the trustee of a trust
must be a trust company or banking institution having substantial
capital and surplus and the experience and facilities for handling
corporate trust business. In cases where, for any reason, an individual
has been appointed as trustee, a qualified trust company or banking
institution must be appointed co-trustee. In addition, no change is to
be made in the trustee of a listed issue without prior notice to and
approval of NASDAQ.
    Proposed Rule 5711(e)(v)(E) provides that voting rights shall be as
set forth in the applicable trust prospectus.
    Proposed Rules 5711(e)(vi) and (vii) set forth the limitation of
NASDAQ liability and requirements for Market Makers in Currency Trust
Shares (see ``General Provisions--Limitation of Nasdaq Liability'' and
``General Provisions--Market Maker Accounts'' below for a description
of these requirements).
    NASDAQ may submit a rule filing pursuant to Section 19(b)(2) of the
Act to permit the listing and trading of Currency Trust Shares that do
not otherwise meet the standards set forth in Commentary .04 to
proposed Rule 5711(e).\62\
---------------------------------------------------------------------------

    \62\ See proposed Rule 5711(e)(viii).
---------------------------------------------------------------------------

    Proposed Commentary .01 to Rule 5711(e) states that a Currency
Trust Share is a Trust Issued Receipt that holds a specified non-U.S.
currency or currencies deposited with the Trust.
    Proposed Commentary .02 to Rule 5711(e) requires that Members
provide all purchasers of newly issued Currency Trust Shares a
prospectus for the series of Currency Trust Shares.
    Proposed Commentary .03 to Rule 5711(e) provides that transactions
in Currency Trust Shares would occur during the trading hours specified
in NASDAQ Rule 4120.
    Proposed Commentary .04 to Rule 5711(e) provides that NASDAQ may
approve an issue of Currency Trust Shares for listing and/or trading
(including pursuant to unlisted trading privileges) pursuant to Rule
19b-4(e) under the Act if such issue satisfies the criteria set forth
in the proposed Rule 5711(e), together with the following criteria:
     A minimum of 100,000 shares of a series of Currency Trust
Shares is required to be outstanding at commencement of trading (this
is not required for issues trading pursuant to unlisted trading
privileges);
     The value of the applicable non-U.S. currency, currencies
or currency index must be disseminated by one or

more major market data vendors on at least a 15-second delayed basis;
     The Intraday Indicative Value must be calculated and
widely disseminated by NASDAQ or one or more major market data vendors
on at least a 15-second basis during the Regular Market Session; and
     NASDAQ will implement written surveillance procedures
applicable to Currency Trust Shares.
    Proposed Commentary .05 to Rule 5711(e) states that if the value of
a Currency Trust Share is based, in whole or in part, on an index that
is maintained by a broker-dealer, the broker-dealer must erect a
``firewall'' around the personnel responsible for the maintenance of
such index or who have access to information concerning changes and
adjustments to the index, and the index shall be calculated by a third
party who is not a broker-dealer. Additionally, any advisory committee,
supervisory board or similar entity that advises an index licensor or
administrator or that makes decisions regarding the index or portfolio
composition, methodology and related matters must implement and
maintain, or be subject to, procedures designed to prevent the use and
dissemination of material, non-public information regarding the
applicable index or portfolio.
    Proposed Commentary .06 to Rule 5711(e) provides that Currency
Trust Shares would be subject to NASDAQ's equity trading rules.
    Proposed Commentary .07 to Rule 5711(e) states that if the Intraday
Indicative Value or the value of the non-U.S. currency or currencies or
the currency index applicable to a series of Currency Trust Shares is
not being disseminated as required, NASDAQ may halt trading during the
day on which such interruption first occurs. If such interruption
persists past the trading day in which it occurred, NASDAQ would halt
trading no later than the beginning of the trading day following the
interruption. If NASDAQ becomes aware that the net asset value
applicable to a series of Currency Trust Shares is not being
disseminated to all market participants at the same time, it would halt
trading in such series until such time as the net asset value is
available to all market participants.
    The proposed listing standards relating to Currency Trust Shares
are based on, and substantively identical to, NYSE Arca Equities Rule
8.202 (``Currency Trust Shares'').
6. Commodity Index Trust Shares
    Pursuant to proposed Rule 5711(f), NASDAQ would consider for
trading, whether by listing or pursuant to unlisted trading privileges,
Commodity Index Trust Shares that meet the criteria of the rule.\63\
The term ``Commodity Index Trust Shares'' as used in the proposed rule
(unless the context otherwise requires) means a security that: (i) is
issued by a trust that (A) is a commodity pool as defined in the CEA
and regulations thereunder, and that is managed by a commodity pool
operator registered with the Commodity Futures Trading Commission
(``CFTC''); and (B) holds long positions in futures contracts on a
specified commodity index, or interests in a commodity pool which, in
turn, holds such long positions; and (ii) when aggregated in some
specified minimum number may be surrendered to the trust by the
beneficial owner to receive positions in futures contracts on a
specified index and cash or short term securities.\64\ NASDAQ may
trade, either by listing or pursuant to unlisted trading privileges,
Commodity Index Trust Shares based on one or more securities, and
Commodity Index Trust Shares based on particular securities would be
designated as a separate series and would be identified by a unique
symbol.\65\
---------------------------------------------------------------------------

    \63\ Proposed Rule 5711(f) would be applicable only to Commodity
Index Trust Shares. Except to the extent inconsistent with the
proposed rule, or unless the context otherwise requires, the
provisions of the Trust Issued Receipts rules, Bylaws, and all other
rules and procedures of the Board of Directors shall be applicable
to the trading on NASDAQ of such securities. Commodity Index Trust
Shares are included within the definition of ``security'' or
``securities'' as such terms are used in the Bylaws and Rules of
NASDAQ. See proposed Rule 5711(f)(ii).
    \64\ See proposed Rule 5711(f)(iii). The term ``futures
contract'' is commonly known as a ``contract of sale of a commodity
for future delivery'' as set forth in Section 2(a) of the CEA. Id.
    \65\ See proposed Rule 5711(f)(iv).
---------------------------------------------------------------------------

    NASDAQ would establish a minimum number of Commodity Index Trust
Shares required to be outstanding at the time of commencement of
trading on NASDAQ.\66\ NASDAQ would consider the suspension of trading
in or removal from listing of a series of Commodity Index Trust Shares
under any of the following circumstances:
---------------------------------------------------------------------------

    \66\ See proposed Rule 5711(f)(v)(A).
---------------------------------------------------------------------------

     Following the initial twelve-month period beginning upon
the commencement of trading of the Commodity Index Trust Shares, there
are fewer than 50 record and/or beneficial holders of Commodity Index
Trust Shares for 30 or more consecutive trading days;
     If the value of the applicable underlying index is no
longer calculated or available on at least a 15-second delayed basis
from a source unaffiliated with the sponsor, the trust or the trustee
of the trust;
     If the net asset value for the trust is no longer
disseminated to all market participants at the same time;
     If the Intraday Indicative Value is no longer made
available on at least a 15-second delayed basis; or
     If such other event shall occur or condition exists which
in the opinion of NASDAQ makes further dealings on NASDAQ
inadvisable.\67\
---------------------------------------------------------------------------

    \67\ See proposed Rule 5711(f)(v)(B).
---------------------------------------------------------------------------

    Upon termination of a trust, NASDAQ would require that Commodity
Index Trust Shares issued in connection with such entity trust be
removed from NASDAQ listing. A trust may terminate in accordance with
the provisions of the trust prospectus, which may provide for
termination if the value of the trust falls below a specified
amount.\68\
---------------------------------------------------------------------------

    \68\ Id.
---------------------------------------------------------------------------

    Proposed Rule 5711(f)(v)(C) provides that the stated term of the
trust shall be as stated in the trust prospectus; however, a trust may
be terminated under such earlier circumstances as may be specified in
the trust prospectus.
    Proposed Rule 5711(f)(v)(D) provides that the trustee of a trust
must be a trust company or banking institution having substantial
capital and surplus and the experience and facilities for handling
corporate trust business. In cases where, for any reason, an individual
has been appointed as trustee, a qualified trust company or banking
institution must be appointed co-trustee. In addition, no change is to
be made in the trustee of a listed issue without prior notice to and
approval of NASDAQ.
    Proposed Rule 5711(f)(v)(E) provides that voting rights shall be as
set forth in the applicable trust prospectus.
    Proposed Rules 5711(f)(vi) and (vii) set forth the limitation of
NASDAQ liability and requirements for Market Makers in Commodity Index
Trust Shares (see ``General Provisions--Limitation of NASDAQ
Liability'' and ``General Provisions--Market Maker Accounts'' below for
a description of these requirements).
    Proposed Commentary .01 to Rule 5711(f) states that a Commodity
Index Trust Share is a Trust Issued Receipt that holds long positions
in futures contracts on a specified commodity index, or interests in a
commodity pool which, in turn, holds such long positions, deposited
with the Trust.
    Proposed Commentary .02 to Rule 5711(f) requires that Members
provide all purchasers of newly issued Commodity Index Trust Shares a
prospectus for the series of Commodity Index Trust Shares.

    Proposed Commentary .03 to Rule 5711(f) states that transactions in
Commodity Index Trust Shares would occur during the trading hours
specified in NASDAQ Rule 4120.
    Proposed Commentary .04 to Rule 5711(f) states that NASDAQ would
file separate proposals under Section 19(b) of the Act before trading,
either by listing or pursuant to unlisted trading privileges, Commodity
Index Trust Shares.
    The proposed requirements relating to Commodity Index Trust Shares
are based on, and substantively identical to NYSE Arca Equities Rule
8.203 (``Commodity Index Trust Shares'').
7. Commodity Futures Trust Shares
    Pursuant to proposed Rule 5711(g), NASDAQ would consider for
trading, whether by listing or pursuant to unlisted trading privileges,
Commodity Futures Trust Shares that meet the criteria of the proposed
rule.\69\ The term ``Commodity Futures Trust Shares'' as used in the
proposed rules means, unless the context otherwise requires, a security
that: (ii) is issued by a trust that (A) is a commodity pool as defined
in the CEA and regulations thereunder, and that is managed by a
commodity pool operator registered with the CFTC, and (B) holds
positions in futures contracts that track the performance of a
specified commodity, or interests in a commodity pool which, in turn,
holds such positions; and (ii) is issued and redeemed daily in
specified aggregate amounts at net asset value.\70\ NASDAQ may trade,
either by listing or pursuant to unlisted trading privileges, Commodity
Futures Trust Shares based on an underlying commodity futures contract,
and each issue of Commodity Futures Trust Shares shall be designated as
a separate series and shall be identified by a unique symbol.\71\
---------------------------------------------------------------------------

    \69\ Proposed Rule 5711(g) would apply only to Commodity Futures
Trust Shares. Except to the extent inconsistent with the proposed
Rule, or unless the context otherwise requires, the provisions of
the trust issued receipts rules, Bylaws, and all other rules and
procedures of the Board of Directors shall be applicable to the
trading on NASDAQ of such securities. Commodity Futures Trust Shares
are included within the definition of ``security'' or ``securities''
as such terms are used in the Bylaws and Rules of NASDAQ. See
proposed Rule 5711(g)(ii).
    \70\ See proposed Rule 5711(g)(iii). The term ``futures
contract'' is a ``contract of sale of a commodity for future
delivery'' set forth in Section 2(a) of the CEA. The term
``commodity'' is defined in Section 1(a)(4) of the CEA. Id.
    \71\ See proposed Rule 5711(g)(iv).
---------------------------------------------------------------------------

    NASDAQ would establish a minimum number of Commodity Futures Trust
Shares required to be outstanding at the time of commencement of
trading on NASDAQ.\72\ NASDAQ would consider the suspension of trading
in or removal from listing of a series of Commodity Futures Trust
Shares under any of the following circumstances:
---------------------------------------------------------------------------

    \72\ See proposed Rule 5711(g)(v)(A).
---------------------------------------------------------------------------

     If, following the initial twelve-month period beginning
upon the commencement of trading of the Commodity Futures Trust Shares:
(i) the trust has fewer than 50,000 Commodity Futures Trust Shares
issued and outstanding; (ii) the market value of all Commodity Futures
Trust Shares issued and outstanding is less than $1,000,000; or (iii)
there are fewer than 50 record and/or beneficial holders of Commodity
Futures Trust Shares for 30 consecutive trading days;
     If the value of the underlying futures contracts is no
longer calculated or available on at least a 15-second delayed basis
during NASDAQ's Regular Market Session from a source unaffiliated with
the sponsor, the trust or the trustee of the trust;
     If the net asset value for the trust is no longer
disseminated to all market participants at the same time;
     If the Intraday Indicative Value is no longer disseminated
on at least a 15-second delayed basis during NASDAQ's Regular Market
Session; or
     If such other event shall occur or condition exists which
in the opinion of NASDAQ makes further dealings on NASDAQ
inadvisable.\73\
---------------------------------------------------------------------------

    \73\ See proposed Rule 5711(g)(v)(B).
---------------------------------------------------------------------------

    Upon termination of a trust, NASDAQ requires that Commodity Futures
Trust Shares issued in connection with such trust be removed from
NASDAQ listing. A trust would terminate in accordance with the
provisions of the trust prospectus.\74\
---------------------------------------------------------------------------

    \74\ Id.
---------------------------------------------------------------------------

    Proposed Rule 5711(g)(v)(C) provides that the stated term of the
trust shall be as stated in the prospectus; however, a trust may be
terminated under such earlier circumstances as may be specified in the
trust prospectus.
    Proposed Rule 5711(g)(v)(D) provides that the trustee of a trust
must be a trust company or banking institution having substantial
capital and surplus and the experience and facilities for handling
corporate trust business. In cases where, for any reason, an individual
has been appointed as trustee, a qualified trust company or banking
institution must be appointed co-trustee. In addition, no change is to
be made in the trustee of a listed issue without prior notice to and
approval of NASDAQ.
    Proposed Rule 5711(g)(v)(E) provides that voting rights shall be as
set forth in the applicable trust prospectus.
    Proposed Rules 5711(g)(vi) and (vii) set forth the limitation of
NASDAQ liability and requirements for Market Makers in Commodity
Futures Trust Shares (see ``General Provisions--Limitation of NASDAQ
Liability'' and ``General Provisions--Market Maker Accounts'' below for
a description of these requirements).
    Proposed Rule 5711(g)(viii) states that NASDAQ would file separate
proposals under Section 19(b) of the Act before listing and trading
separate and distinct Commodity Futures Trust Shares designated on
different underlying futures contracts.
    Proposed Commentary .01 to Rule 5711(g) would require Members
trading in Commodity Futures Trust Shares to provide all purchasers of
newly issued Commodity Futures Trust Shares a prospectus for the series
of Commodity Futures Trust Shares.
    Proposed Commentary .02 to Rule 5711(g) states that transactions in
Commodity Futures Trust Shares would occur during the trading hours
specified in NASDAQ Rule 4120.
    Proposed Commentary .03 to Rule 5711(g) states that if the Intraday
Indicative Value or the value of the underlying futures contract is not
being disseminated as required, NASDAQ may halt trading during the day
in which the interruption to the dissemination of the Intraday
Indicative Value or the value of the underlying futures contract
occurs. If the interruption to the dissemination of the Intraday
Indicative Value or the value of the underlying futures contract
persists past the trading day in which it occurred, NASDAQ would halt
trading no later than the beginning of the trading day following the
interruption.
    In addition, if NASDAQ becomes aware that the net asset value with
respect to a series of Commodity Futures Trust Shares is not
disseminated to all market participants at the same time, it would halt
trading in such series until such time as the net asset value is
available to all market participants.
    Proposed Commentary .04 to Rule 5711(g) states that NASDAQ's rules
governing the trading of equity securities apply to Commodity Futures
Trust Shares.
    Proposed Commentary .05 to Rule 5711(g) states that NASDAQ would
implement written surveillance procedures for Commodity Futures Trust
Shares.
    The proposed requirements relating to Commodity Futures Trust
Shares are based on, and substantively identical to, NYSE Arca Equities
Rule 8.204 (``Commodity Futures Trust Shares'').

8. Partnership Units
    Pursuant to proposed Rule 5711(h), NASDAQ would consider for
trading, whether by listing or pursuant to unlisted trading privileges,
Partnership Units that meet the criteria of the proposed rule. The term
``Partnership Units'' for purposes of the proposed rule means a
security (i) that is issued by a partnership that invests in any
combination of futures contracts, options on futures contracts, forward
contracts, commodities and/or securities; and (ii) that is issued and
redeemed daily in specified aggregate amounts at net asset value.\75\
NASDAQ may list and trade Partnership Units based on an underlying
asset, commodity or security, and each issue of a Partnership Unit
would be designated as a separate series and would be identified by a
unique symbol.\76\
---------------------------------------------------------------------------

    \75\ See proposed Rule 5711(h)(ii). The term ``commodity'' is
defined in Section 1(a)(4) of the CEA. Id.
    \76\ See proposed Rule 5711(h)(iii).
---------------------------------------------------------------------------

    NASDAQ would establish a minimum number of Partnership Units
required to be outstanding at the time of commencement of trading on
NASDAQ.\77\ NASDAQ would consider removing from listing Partnership
Units under any of the following circumstances:
---------------------------------------------------------------------------

    \77\ See proposed Rule 5711(h)(iv)(A).
---------------------------------------------------------------------------

     If, following the initial twelve month period from the
date of commencement of trading of the Partnership Units: (i) The
partnership has more than 60 days remaining until termination and there
are fewer than 50 record and/or beneficial holders of the Partnership
Units for 30 or more consecutive trading days; (ii) the partnership has
fewer than 50,000 Partnership Units issued and outstanding; or (iii)
the market value of all Partnership Units issued and outstanding is
less than $1,000,000;
     If the value of the underlying benchmark investment,
commodity or asset is no longer calculated or available on at least a
15-second delayed basis or NASDAQ stops providing a hyperlink on its
Web site to any such investment, commodity or asset value;
     If the Intraday Indicative Value is no longer made
available on at least a 15-second delayed basis; or
     If such other event shall occur or condition exists which
in the opinion of NASDAQ makes further dealings on NASDAQ
inadvisable.\78\
---------------------------------------------------------------------------

    \78\ See proposed Rule 5711(h)(iv)(B).
---------------------------------------------------------------------------

    Upon termination of a partnership, NASDAQ requires that Partnership
Units issued in connection with such partnership be removed from NASDAQ
listing. A partnership would terminate in accordance with the
provisions of the partnership prospectus.\79\
---------------------------------------------------------------------------

    \79\ Id.
---------------------------------------------------------------------------

    Proposed Rule 5711(h)(iv)(C) provides that the stated term of the
partnership shall be as stated in the prospectus; however, such entity
may be terminated under such earlier circumstances as may be specified
in the Partnership prospectus.
    Proposed Rule 5711(h)(iv)(D) provides that the general partner of a
partnership must be an entity having substantial capital and surplus
and the experience and facilities for handling partnership business. In
cases where, for any reason, an individual has been appointed as
general partner, a qualified entity must also be appointed as general
partner. In addition, no change is to be made in the general partner of
a listed issue without prior notice to and approval of NASDAQ.
    Proposed Rule 5711(h)(iv)(E) provides that voting rights shall be
as set forth in the applicable partnership prospectus.
    Proposed Rules 5711(h)(v) and (vi) set forth the limitation of
NASDAQ liability and requirements for Market Makers in Partnership
Units (see ``General Provisions--Limitation of NASDAQ Liability'' and
``General Provisions--Market Maker Accounts'' below for a description
of these requirements).
    Proposed Rule 5711(h)(vii) states that NASDAQ would file separate
proposals under Section 19(b) of the Act before listing and trading
separate and distinct Partnership Units designated on different
underlying investments, commodities and/or assets.
    Proposed Commentary .01 to Rule 5711(h) requires that Members
provide to all purchasers of newly issued Partnership Units a
prospectus for the series of Partnership Units.
    The proposed requirements relating to Partnership Units are based
on, and substantively identical to, NYSE Arca Equities Rule 8.300
(``Partnership Units'').
9. Trust Units
    NASDAQ proposes to add new Rule 5711(i) in order to permit trading,
either by listing or pursuant to unlisted trading privileges, of Trust
Units.\80\ As defined in the proposed rule, a ``Trust Unit'' is a
security that is issued by a trust or other similar entity that is
constituted as a commodity pool that holds investments comprising or
otherwise based on any combination of futures contracts, options on
futures contracts, forward contracts, swap contracts, commodities and/
or securities.\81\ Under the proposal, NASDAQ may list and trade Trust
Units based on an underlying asset, commodity, security or portfolio,
and each issue of a Trust Unit shall be designated as a separate series
and shall be identified by a unique symbol.\82\
---------------------------------------------------------------------------

    \80\ The provisions of proposed Rule 5711(i) are applicable only
to Trust Units. Except to the extent inconsistent with the proposed
rule or unless the context otherwise requires, the rules and
procedures of the Board of Directors shall be applicable to the
trading on NASDAQ of such securities. Trust Units are included
within the definition of ``security,'' ``securities'' and
``derivative securities products'' as such terms are used in the
Rules of NASDAQ. See proposed Rule 5711(i)(i).
    \81\ See proposed Rule 5711(i)(ii). The term ``commodity'' is
defined in Section 1(a)(4) of the CEA. Id.
    \82\ See proposed Rule 5711(i)(iii).
---------------------------------------------------------------------------

    NASDAQ would establish a minimum number of Trust Units required to
be outstanding at the time of commencement of trading on NASDAQ.\83\
NASDAQ would obtain a representation from the issuer of each series of
Trust Units that the net asset value per share for the series would be
calculated daily and be made available to all market participants at
the same time.\84\
---------------------------------------------------------------------------

    \83\ See proposed Rule 5711(i)(iv)(A)(1).
    \84\ See proposed Rule 5711(i)(iv)(A)(2).
---------------------------------------------------------------------------

    NASDAQ would remove Trust Units from listing under any of the
following circumstances:
     If following the initial twelve month period following the
commencement of trading of Trust Units: (i) The trust has more than 60
days remaining until termination and there are fewer than 50 record
and/or beneficial holders of Trust Units for 30 or more consecutive
trading days; (ii) the trust has fewer than 50,000 Trust Units issued
and outstanding; or (iii) the market value of all Trust Units issued
and outstanding is less than $1,000,000; or
     If such other event shall occur or condition exists which
in the opinion of the NASDAQ makes further dealings on NASDAQ
inadvisable.\85\
---------------------------------------------------------------------------

    \85\ See proposed Rule 5711(i)(iv)(B)(1).
---------------------------------------------------------------------------

    Proposed Rule 5711(i)(iv)(B)(2) provides that NASDAQ would halt
trading in a series of Trust Units if the circuit breaker parameters in
NASDAQ Rule 4120(a)(11) have been reached. In exercising its discretion
to halt or suspend trading in a series of Trust Units, NASDAQ may
consider any relevant factors. In particular, if the portfolio and net
asset value per share are not being disseminated as required, NASDAQ
may halt trading during the day in which the interruption to the
dissemination of the portfolio holdings or net asset value per share
occurs. If the

interruption to the dissemination of the portfolio holdings or net
asset value per share persists past the trading day in which it
occurred, NASDAQ would halt trading no later than the beginning of the
trading day following the interruption.
    Upon termination of a trust, NASDAQ would require that Trust Units
issued in connection with such trust be removed from NASDAQ listing. A
trust would terminate in accordance with the provisions of the
prospectus.\86\
---------------------------------------------------------------------------

    \86\ See proposed Rule 5711(i)(iv)(B)(2).
---------------------------------------------------------------------------

    Proposed Rule 5711(i)(iv)(C) provides that the stated term of the
trust shall be as stated in the prospectus; however, such entity may be
terminated under such earlier circumstances as may be specified in the
prospectus.
    Proposed Rule 5711(i)(iv)(D) provides that the trustee of a trust
must be a trust company or banking institution having substantial
capital and surplus and the experience and facilities for handling
corporate trust business. In cases where, for any reason, an individual
has been appointed as trustee, a qualified trust company or banking
institution must be appointed co-trustee. In addition, no change is to
be made in the trustee of a listed issue without prior notice to and
approval of NASDAQ.
    Proposed Rule 5711(i)(iv)(E) provides that voting rights shall be
as set forth in the prospectus.
    Proposed Rules 5711(i)(v) and (vi) set forth the limitation of
NASDAQ liability and requirements for Market Makers in Trust Units (see
``General Provisions--Limitation of NASDAQ Liability'' and ``General
Provisions--Market Maker Accounts'' below for a description of these
requirements).
    Proposed Commentary .01 to Rule 5711(i) requires that Members
provide to all purchasers of newly issued Trust Units a prospectus for
the series of Trust Units.
    Proposed Commentary .02 to Rule 5711(i) states that transactions in
Trust Units would occur during the trading hours specified in NASDAQ
Rule 4120.
    Proposed Commentary .03 to Rule 5711(i) states that NASDAQ would
file separate proposals under Section 19(b) of the Act before listing
and trading separate and distinct Trust Units designated on different
underlying investments, commodities, assets and/or portfolios.
    The proposed requirements relating to Trust Units are based on, and
substantively identical to, NYSE Arca Equities Rule 8.500 (``Trust
Units'').
10. Managed Trust Securities
    Pursuant to proposed Rule 5711(j), NASDAQ would consider for
trading, whether by listing or pursuant to unlisted trading privileges,
Managed Trust Securities that meet the criteria of the proposed
rule.\87\ As used in the proposed rule and unless the context otherwise
requires, the term ``Managed Trust Securities'' means a security that
is registered under the Securities Act of 1933, as amended, and which:
(i) Is issued by a trust that (A) is a commodity pool as defined in the
CEA and regulations thereunder, and that is managed by a commodity pool
operator registered with the CFTC, and (B) holds long and/or short
positions in exchange-traded futures contracts and/or certain currency
forward contracts selected by the trust's advisor consistent with the
trust's investment objectives, which would only include, exchange-
traded futures contracts involving commodities, currencies, stock
indices, fixed income indices, interest rates and sovereign, private
and mortgage or asset backed debt instruments, and/or forward contracts
on specified currencies, each as disclosed in the trust's prospectus as
such may be amended from time to time; and (ii) is issued and redeemed
continuously in specified aggregate amounts at the next applicable net
asset value.\88\ NASDAQ may trade, either by listing or pursuant to
unlisted trading privileges, Managed Trust Securities based on the
underlying portfolio of exchange-traded futures and/or certain currency
forward contracts described in the related prospectus, and each issue
of Managed Trust Securities shall be designated as a separate trust or
series and shall be identified by a unique symbol.\89\
---------------------------------------------------------------------------

    \87\ Proposed Rule 5711(j) would apply only to Managed Trust
Securities. Managed Trust Securities are included within the
definition of ``security'' or ``securities'' as such terms are used
in the Bylaws and Rules of NASDAQ. See proposed Rule 5711(j)(ii).
    \88\ See proposed Rule 5711(j)(iii)(A). Proposed Rule
5711(j)(iii) includes the following additional definitions
concerning Managed Trust Securities:
     The term ``Disclosed Portfolio'' means the identities
and quantities of the securities and other assets held by the trust
that will form the basis for the trust's calculation of net asset
value at the end of the business day. See proposed Rule
5711(j)(iii)(B).
     The term ``Intraday Indicative Value'' is the estimated
indicative value of a Managed Trust Security based on current
information regarding the value of the securities and other assets
in the Disclosed Portfolio. See proposed Rule 5711(j)(iii)(C).
     The term ``Reporting Authority'' in respect of a
particular series of Managed Trust Securities means NASDAQ, an
institution, or a reporting or information service designated by
NASDAQ or by the trust or the exchange that lists a particular
series of Managed Trust Securities (if NASDAQ is trading such series
pursuant to unlisted trading privileges) as the official source for
calculating and reporting information relating to such series,
including, but not limited to, the Intraday Indicative Value, the
Disclosed Portfolio, the amount of any cash distribution to holders
of Managed Trust Securities, net asset value, or other information
relating to the issuance, redemption or trading of Managed Trust
Securities. A series of Managed Trust Securities may have more than
one Reporting Authority, each having different functions. See
proposed Rule 5711(j)(iii)(D).
    \89\ See proposed Rule 5711(j)(iv).
---------------------------------------------------------------------------

    Managed Trust Securities would be listed and traded on NASDAQ
subject to application of the following initial listing criteria:
     NASDAQ will establish a minimum number of Managed Trust
Securities required to be outstanding at the time of commencement of
trading on NASDAQ; and
     NASDAQ will obtain a representation from the issuer of
each series of Managed Trust Securities that the net asset value per
share for the series will be calculated daily and that the net asset
value and the Disclosed Portfolio will be made available to all market
participants at the same time.\90\
---------------------------------------------------------------------------

    \90\ See proposed Rule 5711(j)(v)(A). The term ``Disclosed
Portfolio'' means the identities and quantities of the securities
and other assets held by the trust that will form the basis for the
trust's calculation of net asset value at the end of the business
day. See proposed Rule 5711(j)(iii)(B).
---------------------------------------------------------------------------

    Under proposed Rule 5711(j)(v)(B), each series of Managed Trust
Securities would be listed and traded on NASDAQ subject to application
of the following continued listing criteria:
     The Intraday Indicative Value for Managed Trust Securities
will be widely disseminated by one or more major market data vendors at
least every 15 seconds during the time when the Managed Trust
Securities trade on NASDAQ.
     The Disclosed Portfolio will be disseminated at least once
daily and will be made available to all market participants at the same
time.
     The Reporting Authority that provides the Disclosed
Portfolio must implement and maintain, or be subject to, procedures
designed to prevent the use and dissemination of material non-public
information regarding the actual components of the portfolio.\91\
---------------------------------------------------------------------------

    \91\ The term ``Reporting Authority'' in respect of a particular
series of Managed Trust Securities means NASDAQ, an institution, or
a reporting or information service designated by NASDAQ or by the
trust or the exchange that lists a particular series of Managed
Trust Securities (if NASDAQ is trading such series pursuant to
unlisted trading privileges) as the official source for calculating
and reporting information relating to such series, including, but
not limited to, the Intraday Indicative Value, the Disclosed
Portfolio, the amount of any cash distribution to holders of Managed
Trust Securities, net asset value, or other information relating to
the issuance, redemption or trading of Managed Trust Securities. A
series of Managed Trust Securities may have more than one Reporting
Authority, each having different functions. See proposed Rule
5711(j)(iii)(D).

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    Under proposed Rule 5711(j)(v)(B)(3), NASDAQ would consider the
suspension of trading in or removal from listing of a series of Managed
Trust Securities under any of the following circumstances:
     If, following the initial twelve-month period beginning
upon the commencement of trading of the Managed Trust Securities: (i)
The Trust has fewer than 50,000 Managed Trust Securities issued and
outstanding; (ii) the market value of all Managed Trust Securities
issued and outstanding is less than $1,000,000; or (iii) there are
fewer than 50 record and/or beneficial holders of Managed Trust
Securities for 30 consecutive trading days;
     If the Intraday Indicative Value for the trust is no
longer calculated or available or the Disclosed Portfolio is not made
available to all market participants at the same time;
     If the Trust issuing the Managed Trust Securities has
failed to file any filings required by the Commission or if NASDAQ is
aware that the trust is not in compliance with the conditions of any
exemptive order or no-action relief granted by the Commission to the
Trust with respect to the series of Managed Trust Securities; or
     If such other event shall occur or condition exists which
in the opinion of NASDAQ makes further dealings on NASDAQ inadvisable.
    Proposed Rule 5711(j)(v)(B)(4) provides that, if the Intraday
Indicative Value of a series of Managed Trust Securities is not being
disseminated as required, NASDAQ may halt trading during the day in
which the interruption to the dissemination of the Intraday Indicative
Value occurs. If the interruption to the dissemination of the Intraday
Indicative Value persists past the trading day in which it occurred,
NASDAQ would halt trading no later than the beginning of the trading
day following the interruption. If a series of Managed Trust Securities
is trading on NASDAQ pursuant to unlisted trading privileges, NASDAQ
would halt trading in that series as specified in NASDAQ Rule 4120(a)
or (b), as applicable. In addition, if NASDAQ becomes aware that the
net asset value or the Disclosed Portfolio with respect to a series of
Managed Trust Securities is not disseminated to all market participants
at the same time, it would halt trading in such series until such time
as the net asset value or the Disclosed Portfolio is available to all
market participants.
    Proposed Rule 5711(j)(v)(B)(5) provides that upon termination of a
trust, NASDAQ requires that Managed Trust Securities issued in
connection with such trust be removed from NASDAQ listing. A trust
would terminate in accordance with the provisions of the trust
prospectus.
    Proposed Rule 5711(j)(v)(C) provides that the term of the trust
shall be as stated in the prospectus; however, a trust may be
terminated under such earlier circumstances as may be specified in the
trust prospectus.
    Proposed Rule 5711(j)(v)(D) provides that the trustee of a trust
must be a trust company or banking institution having substantial
capital and surplus and the experience and facilities for handling
corporate trust business. In cases where, for any reason, an individual
has been appointed as trustee, a qualified trust company or banking
institution must be appointed co-trustee. In addition, no change is to
be made in the trustee of a listed issue without prior notice to and
approval of NASDAQ.
    Proposed Rule 5711(j)(v)(E) provides that voting rights shall be as
set forth in the applicable trust prospectus.
    Proposed Rules 5711(j)(vi) and (vii) set forth the limitation of
NASDAQ liability and requirements for Market Makers in Managed Trust
Securities (see ``General Provisions--Limitation of NASDAQ Liability''
and ``General Provisions--Market Maker Accounts'' below for a
description of these requirements).
    Proposed Rule 5711(j)(viii) provides that NASDAQ would file
separate proposals under Section 19(b) of the Act before listing and
trading separate and distinct Managed Trust Securities.
    Proposed Commentary .01 to Rule 5711(j) requires that Members
provide all purchasers of newly issued Managed Trust Securities a
prospectus for the series of Managed Trust Securities.
    Proposed Commentary .02 to Rule 5711(j) states that transactions in
Managed Trust Securities would occur during the trading hours specified
in NASDAQ Rule 4120.
    Proposed Commentary .03 to Rule 5711(j) states that NASDAQ's rules
governing the trading of equity securities apply to Managed Trust
Securities.
    Proposed Commentary .04 to Rule 5711(j) states that NASDAQ would
implement written surveillance procedures for Managed Trust Securities.
    Proposed Commentary .05 to Rule 5711(j) states that if the trust's
advisor is affiliated with a broker-dealer, the broker-dealer shall
erect a ``fire wall'' around the personnel who have access to
information concerning changes and adjustments to the Disclosed
Portfolio. Personnel who make decisions on the trust's portfolio
composition must be subject to procedures designed to prevent the use
and dissemination of material nonpublic information regarding the
applicable trust portfolio.
    The proposed requirements relating to Managed Trust Securities are
based on, and substantively identical to, NYSE Arca Equities Rule 8.700
(``Managed Trust Securities'').
11. Currency Warrants
    Proposed Rule 5711(k) would govern the listing of Currency
Warrants, and the proposed rule provides that the listing of Currency
Warrant issues is considered on a case-by-case basis. Pursuant to
proposed Rule 5711(k)(i), Currency Warrant issues would be evaluated
for listing against the following criteria:
     The warrant issuer will be expected to have a minimum
tangible net worth in excess of $250,000,000 and otherwise to exceed
substantially the earnings requirements set forth in Rule 5405(b).\92\
In the alternative, the warrant issuer will be expected: (i) To have a
minimum tangible net worth of $150,000,000 and otherwise to exceed
substantially the earnings requirements set forth in Rule 5405(b); and
(ii) not to have issued warrants where the original issue price of all
the issuer's currency warrant offerings (combined with currency warrant
offerings of the issuer's affiliates) listed on a national securities
exchange or traded through the facilities of NASDAQ exceeds 25% of the
warrant issuer's net worth.\93\
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    \92\ Rule 5405(b) sets forth initial listing standards for
primary equity securities.
    \93\ See proposed Rule 5711(k)(i)(A).
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     The term must be one to five years from date of
issuance.\94\
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    \94\ See proposed Rule 5711(k)(i)(B).
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     There must be a minimum public distribution of 1,000,000
warrants together with a minimum of 400 public holders, and an
aggregate market value of $4,000,000. In the alternative, there must be
a minimum public distribution of 2,000,000 warrants together with a
minimum number of public warrant holders determined on a case by case
basis, an aggregate market value of $12,000,000 and an initial warrant
price of $6.\95\
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    \95\ See proposed Rule 5711(k)(i)(C).
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     The warrants must be cash settled in U.S. dollars.\96\
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    \96\ See proposed Rule 5711(k)(i)(D).
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     All currency warrants must include in their terms
provisions specifying the time by which all exercise notices must

be submitted, and that all unexercised warrants that are in the money
will be automatically exercised on their expiration date or on or
promptly following the date on which such warrants are delisted by
NASDAQ (if such warrant issue has not been listed on another organized
securities market in the United States).\97\
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    \97\ See proposed Rule 5711(k)(i)(E).
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    NASDAQ would file separate proposals under Section 19(b) of the Act
before listing and trading separate and distinct Currency Warrants.\98\
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    \98\ See proposed Rule 5711(k)(ii).
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    Proposed Rule 5711(k)(iii) describes regulatory requirements
applicable to Currency Warrants. Specifically:
     No Member shall accept an order from a customer to
purchase or sell a Currency Warrant unless the customer's account has
been approved for options trading pursuant to NOM Rules, Chapter XI,
Section 7.\99\
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    \99\ See proposed Rule 5711(k)(iii)(A).
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     The provisions of NOM Rules, Chapter XI, Section 9 shall
apply to recommendations in Currency Warrants and the term ``option''
as used therein shall be deemed to include Currency Warrants.\100\
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    \100\ See proposed Rule 5711(k)(iii)(B).
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     Any account in which a Member exercises discretion to
trade in Currency Warrants shall be subject to the provisions of NOM
Rules, Chapter XI, Section 10 with respect to such trading, and the
terms ``option'' and ``options contract'' as used in therein shall be
deemed to include Currency Warrants.\101\
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    \101\ See proposed Rule 5711(k)(iii)(C).
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     NOM Rules, Chapter XI, Section 8 shall apply to all
customer accounts of a Member in which transactions in Currency
Warrants are effected, and the term ``option'' as used therein shall be
deemed to include Currency Warrants.\102\
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    \102\ See proposed Rule 5711(k)(iii)(D).
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     NOM Rules, Chapter XI, Section 24 shall apply to all
public customer complaints received by a Member regarding Currency
Warrants, and the term ``option'' as used therein shall be deemed to
include Currency Warrants.\103\
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    \103\ See proposed Rule 5711(k)(iii)(E).
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     Members participating in Currency Warrants shall be bound
to comply with the ``Communications and Disclosures'' rule of the
Financial Industry Regulatory Authority (``FINRA''), as applicable, as
though such rule were part of NASDAQ's proposed rules relating to
Currency Warrants.\104\
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    \104\ See proposed Rule 5711(k)(iii)(F).
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    Under proposed Rule 5711(k)(iv), trading on NASDAQ in any Currency
Warrant would be halted whenever NASDAQ deems such action appropriate
in the interests of a fair and orderly market or to protect investors.
Trading in Currency Warrants that have been the subject of a halt or
suspension by NASDAQ may resume if NASDAQ determines that the
conditions which led to the halt or suspension are no longer present,
or that the interests of a fair and orderly market are best served by a
resumption of trading.
    Proposed Rule 5711(k)(v) would govern reporting of Currency Warrant
positions. Proposed Rule 5711(k)(v)(A) would require each Member to
file with NASDAQ a report with respect to each account in which the
Member has an interest, each account of a partner, officer, director,
or employee of such Member, and each customer account that has
established an aggregate position (whether long or short) of 100,000
warrants covering the same underlying currency, combining for purposes
of the proposed rule: (i) long positions in put warrants and short
positions in call warrants; and (i) short positions in put warrants
with long positions in call warrants. The report shall be in such form
as may be prescribed by NASDAQ and shall be filed no later than the
close of business on the next day following the day on which the
transaction or transactions requiring the filing of such report
occurred.
    Proposed Rule 5711(k)(v)(B) provides that whenever a report shall
be required to be filed with respect to an account pursuant to the
proposed rule, the Member filing the same must file with NASDAQ such
additional periodic reports with respect to such account as NASDAQ may
from time to time require.
    Proposed Rule 5711(k)(v)(C) provides that all reports required by
the proposed rule shall be filed with NASDAQ in such manner and form as
prescribed by NASDAQ.
    The proposed requirements relating to Currency Warrants are based
on, and substantively identical to, the requirements for Currency
Warrants set forth in NYSE Arca Equities Rules 8.3 (``Listing of
Currency and Index Warrants''), 8.4 (``Account Approval''), 8.5
(``Suitability''), 8.6 (``Discretionary Accounts''), 8.7 (``Supervision
of Accounts''), 8.8 (``Customer Complaints''), 8.9 (``Prior Approval of
Certain Communications to Customers''), 8.12 (``Trading Halts or
Suspensions''), and 8.13 (``Reporting of Warrant Positions'').

C. General Provisions

    To the extent not specifically addressed in the respective proposed
rules, and unless otherwise noted below, the following general
provisions apply to all of the proposed rules and Subject Securities.
1. Information Circular
    Prior to the commencement of trading, NASDAQ will inform its
Members in an Information Circular of the special characteristics and
risks associated with trading the Subject Securities. Specifically, the
Information Circular will discuss the following: (i) The procedures for
purchases and redemptions of the Subject Securities (and/or that the
Subject Securities are not individually redeemable); (ii) NASDAQ Rule
2310, which imposes suitability obligations on NASDAQ Members with
respect to recommending transactions in the Subject Securities to
customers; (iii) how information regarding the Intraday Indicative
Value is disseminated; (iv) the requirement that Members deliver a
prospectus to investors purchasing newly issued Subject Securities
prior to or concurrently with the confirmation of a transaction; and
(v) trading information.
    In addition, the Information Circular will advise Members, prior to
the commencement of trading, of the prospectus delivery requirements
applicable to the Subject Securities. Members purchasing Subject
Securities for resale to investors will deliver a prospectus to such
investors. The Information Circular will also discuss any exemptive,
no-action, and interpretive relief granted by the Commission from any
rules under the Act.
    In addition, the Information Circular will reference that the
Subject Securities are subject to various fees and expenses described
in the registration statement. If applicable, the Information Circular
will also reference that the CFTC has regulatory jurisdiction over the
trading of futures contracts.
    The Information Circular will also disclose the trading hours of
the Subject Securities and, if applicable, the Net Asset Value
(``NAV'') calculation time for the Subject Securities. The Information
Circular will disclose that information about the Subject Securities
and the corresponding indexes, if applicable, will be publicly
available on the Web site for the Subject Securities. The Information
Circular will also reference, if applicable, the fact that there is no
regulated source of last sale information regarding physical
commodities, and that the Commission

has no jurisdiction over the trading of physical commodities or futures
contracts on which the value of the Subject Securities may be based.
    The Information Circular will also reference the risks involved in
trading the Subject Securities during the Opening Process and the Post-
Market Session when an updated Intraday Indicative Value will not be
calculated or publicly disseminated and, if applicable, the risks
involved in trading the Subject Securities during the Regular Market
Session when the Intraday Indicative Value may be static or based in
part on the fluctuation of currency exchange rates when the underlying
markets have closed prior to the close of NASDAQ's Regular Market
Session.
2. Limitation of NASDAQ Liability
    Neither NASDAQ, any agent of NASDAQ, nor the Reporting Authority
(if applicable), shall have any liability for damages, claims, losses
or expenses caused by any errors, omissions, or delays in calculating
or disseminating any applicable underlying index or asset value; the
current value of the applicable positions or interests required to be
deposited to a Trust, if applicable, in connection with issuance of the
securities; net asset value; or any other information relating to the
purchase, redemption, or trading of the Subject Securities, resulting
from any negligent act or omission by NASDAQ, any agent of NASDAQ, or
the Reporting Authority (if applicable), or any act, condition or cause
beyond the reasonable control of NASDAQ, any agent of NASDAQ, or the
Reporting Authority (if applicable), including, but not limited to, an
act of God; fire; flood; extraordinary weather conditions; war;
insurrection; riot; strike; accident; action of government;
communications or power failure; equipment or software malfunction; or
any error, omission or delay in the reports of transactions in the
applicable positions or interests.
3. Market Maker Accounts
    A registered Market Maker in the securities described below must
file with NASDAQ, in a manner prescribed by NASDAQ, and keep current a
list identifying all accounts for trading in:
     In the case of Commodity-Based Trust Shares, the
applicable underlying commodity, related commodity futures or options
on commodity futures, or any other related commodity derivatives, which
the registered Market Maker may have or over which it may exercise
investment discretion (``Underlying Commodities'');
     In the case of Currency Trust Shares, the applicable
underlying non-U.S. currency, options, futures or options on futures on
such currency, or any other derivatives based on such currency, which
the registered Market Maker may have or over which it may exercise
investment discretion (``Underlying Currencies'');
     In the case of Commodity Index Trust Shares, the
applicable physical commodities included in, or options, futures or
options on futures on, an index underlying an issue of Commodity Index
Trust Shares or any other derivatives based on such index or based on
any commodity included in such index, which the registered Market Maker
may have or over which it may exercise investment discretion
(``Underlying Commodity Index Assets'');
     In the case of Commodity Futures Trust Shares, the
applicable underlying commodity, related futures or options on futures,
or any other related derivatives, which the registered Market Maker may
have or over which it may exercise investment discretion (``Underlying
Commodity Futures'');
     In the case of Partnership Units, the applicable
underlying asset or commodity, related futures or options on futures,
or any other related derivatives, which the registered Market Maker may
have or over which it may exercise investment discretion (``Underlying
Partnership Unit Assets'');
     In the case of Trust Units, the applicable underlying
commodity, related commodity futures or options on commodity futures,
or any other related commodity derivatives, which the registered Market
Maker may have or over which it may exercise investment discretion
(``Underlying Trust Unit Assets''); and
     In the case of Managed Trust Securities, the underlying
commodity or applicable currency, related futures or options on
futures, or any other related derivatives, which a registered Market
Maker may have or over which it may exercise investment discretion
(``Underlying Managed Trust Assets'').
    No registered Market Maker in the above mentioned securities shall
trade in the respective Underlying Commodities, Underlying Currencies,
Underlying Commodity Index Assets, Underlying Commodity Futures,
Underlying Partnership Unit Assets, Underlying Trust Unit Assets, and/
or the Underlying Managed Trust Assets (collectively, ``Underlying
Assets'') in an account in which a Market Maker, directly or
indirectly, controls trading activities, or has a direct interest in
the profits or losses thereof, which has not been reported to NASDAQ.
    In addition to the existing obligations under NASDAQ rules
regarding the production of books and records (see, e.g., Rule 4625), a
registered Market Maker in the above mentioned securities is required
to make available to NASDAQ such books, records or other information
pertaining to transactions by such entity or registered or non-
registered employee affiliated with such entity for its or their own
accounts for trading the applicable Underlying Assets as may be
requested by NASDAQ.
4. Trading Rules
    NASDAQ deems the Subject Securities to be equity securities, thus
rendering trading in the Subject Securities subject to NASDAQ's
existing rules governing the trading of equity securities. The Subject
Securities will trade on NASDAQ from 8 a.m. to 8 p.m. E.T. NASDAQ has
appropriate rules to facilitate transactions in the Subject Securities
during all trading sessions. The minimum price increment for quoting
and entry of orders in equity securities traded on NASDAQ is $0.01,
with the exception of securities that are priced less than $1.00 for
which the minimum price increment for order entry is $0.0001.
5. Surveillance
    NASDAQ believes that its surveillance procedures are adequate to
address any concerns about the trading of the Subject Securities on
NASDAQ. Trading of the Subject Securities on NASDAQ will be subject to
FINRA's surveillance procedures for derivative products.\105\ NASDAQ
may obtain information via the ISG from other exchanges who are members
or affiliates of the ISG.\106\