[Federal Register: July 10, 2006 (Volume 71, Number 131)]
[Notices]
[Page 38922-38935]
[DOCID:fr10jy06-95]

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SECURITIES AND EXCHANGE COMMISSION

(Release No. 34-54071; File No. SR-NASD-2006-068)

Self-Regulatory Organizations; National Association of Securities
Dealers, Inc.; Notice of Filing and Immediate Effectiveness of Proposed
Rule Change and Amendments No. 1, 2, 3 and 4 Thereto To Create the
Nasdaq Global Select Market and Rename the Nasdaq National Market

June 29, 2006.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that
on May 30, 2006, the National Association of Securities Dealers, Inc.
(``NASD''), through its subsidiary, The Nasdaq Stock Market, Inc.
(``Nasdaq''), filed with the Securities and Exchange Commission
(``Commission'') the proposed rule change as described in Items I and
II below, which Items have been prepared by Nasdaq. Nasdaq has filed
this proposal pursuant to Section 19(b)(3)(A) of the Act \3\ and Rule
19b-4(f)(6) thereunder,\4\ which renders the proposal effective upon
filing with the Commission. On June 9, 2006, Nasdaq filed Amendment No.
1 to the proposed rule change.\5\ Nasdaq filed Amendment No. 2 on June
15, 2006, Amendment No. 3 on June 27, 2006, and Amendment No. 4 on June
29, 2006.\6\ The Commission is publishing this notice to solicit
comments on the proposed rule change, as amended, from interested
persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ 15 U.S.C. 78s(b)(3)(A).
    \4\ 17 CFR 240.19b-4(f)(6).
    \5\ Amendment No. 1 replaced the original filing in its
entirety.
    \6\ In Amendments No. 2, 3 and 4, Nasdaq made certain technical
corrections and clarifications to its rule text.
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Self-Regulatory Organization's Statement of the Terms of Substance of
the Proposed Rule Change

    Nasdaq proposes to rename the Nasdaq National Market as the Nasdaq
Global Market and to create the Nasdaq Global Select Market, a new tier
within the Nasdaq Global Market with higher initial listing standards.
Nasdaq would implement the proposed rule change on July 1, 2006. Nasdaq
previously filed substantially identical changes to the rules of the
NASDAQ Stock Market LLC (``Nasdaq LLC'').\7\ This rule filing
incorporates these changes into the rules of the NASD because Nasdaq
LLC will not commence operations as a national securities exchange
prior to the planned July 1, 2006, launch date for the Nasdaq Global
Select Market.\8\
    The text of the proposed rule change is available on Nasdaq's Web
site (http://www.nasdaq.com), at Nasdaq's principal office, and at the

Commission's Public Reference Room. The text of the proposed rule
change is included below. Proposed new language is italicized;
deletions are [bracketed].
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    \7\ See Securities Exchange Act Release No. 53799 (May 12,
2006), 71 FR 29195 (May 19, 2006) (SR-NASDAQ-2006-007).
    \8\ See Securities Exchange Act Release No. 53128 (January 13,
2006), 71 FR 3550 (January 23, 2006).
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* * * * *
IM-2310-2. Fair Dealing With Customers
    (a)-(d) No change.
    (e) Fair Dealing With Customers with Regard to Derivative Products
or New Financial Products.
    (1)-(2) No change.
    (3) Hybrid Securities and Selected Equity-Linked Debt Securities
(``SEEDS'') Designated as Nasdaq [National] Global Market Securities
Pursuant to the Rule 4400 Series.
    No change.
* * * * *
2710. Corporate Financing Rule--Underwriting Terms and Arrangements
    (a) No change.
    (b) (1)-(6) No change.
    (7) Offerings Exempt from Filing.
    Notwithstanding the provisions of subparagraph (1) above, documents
and information related to the following public offerings need not be
filed with NASD for review, unless subject to the provisions of Rule
2720. However, it shall be deemed a violation of this Rule or Rule
2810, for a member to participate in any way in such public offerings
if the underwriting or other arrangements in connection with the
offering are not in compliance with this Rule or Rule 2810, as
applicable:
    (A)-(E) No change.
    (F) Exchange offers of securities where:
    (i) The securities to be issued or the securities of the company
being acquired are listed on The Nasdaq [National] Global Market, the
New York Stock Exchange, or the American Stock Exchange; or
    (ii) No change.
    (G) No change.
    (8)-(11) No change.
    (c)-(j) No change.
* * * * *
2790. Restrictions on the Purchase and Sale of Initial Equity Public
Offerings
    (a)-(b) No change.
    (c) General Exemptions.
    The general prohibitions in paragraph (a) of this rule shall not
apply to sales to and purchases by the following accounts or persons,
whether directly or through accounts in which such persons have a
beneficial interest:
    (1)-(4) No change.
    (5) A publicly traded entity (other than a broker/dealer or an
affiliate of a broker/dealer where such broker/dealer is authorized to
engage in the public offering of new issues either as a selling group
member or underwriter) that:
    (A) No change.
    (B) Is traded on the Nasdaq [National] Global Market; or
    (C) Is a foreign issuer whose securities meet the quantitative
designation criteria for listing on a national securities exchange or
trading on the Nasdaq [National] Global Market;
    (6)-(10) No change.
    (d)-(h) No change.
    (i) Definitions.
    (1)-(9) No change.
    (10) ``Restricted person'' means:
    (A)-(D) No change.
    (E) Persons Owning a Broker/Dealer.
    (i)-(iii) No change.
    (iv) Any person that directly or indirectly owns 10% or more of a
public reporting company listed, or required to be listed, in Schedule
A of a Form BD (other than a reporting company that is listed on a
national securities exchange or is traded on the Nasdaq [National]
Global Market, or other than with respect to a limited business broker/
dealer);
    (v) Any person that directly or indirectly owns 25% or more of a
public reporting company listed, or required to be listed, in Schedule
B of a Form BD (other than a reporting company that is listed on a
national securities exchange or is traded on the Nasdaq [National]
Global Market, or other than with respect to a limited business broker/
dealer);
    (vi) No change.

    (j) No change.
* * * * *
3350. Short Sale Rule
    (a)(1) With respect to trades executed on or reported to the ADF,
no member shall effect a short sale for the account of a customer or
for its own account in a Nasdaq [National] Global Market security at or
below the current national best (inside) bid when the current national
best (inside) bid is below the preceding national best (inside) bid in
the security.
    (2) With respect to trades executed on or reported to Nasdaq, no
member shall effect a short sale for the account of a customer or for
its own account in a Nasdaq [National] Global Market security at or
below the current best (inside) bid displayed in the Nasdaq Market
Center when the current best (inside) bid is below the preceding best
(inside) bid in the security.
    (b)-(g) No change.
    (h)(1) A member shall be permitted, consistent with its quotation
obligations, to execute a short sale for the account of an options
market maker that would otherwise be in contravention of this Rule, if:
    (A) The options market maker is registered with a qualified options
exchange as a qualified options market maker in a stock options class
on a Nasdaq [National] Global Market security or an options class on a
qualified stock index; and
    (B) No change.
    (2) For purposes of this paragraph:
    (A)(i) An ``exempt hedge transaction,'' in the context of qualified
options market makers in stock options classes, shall mean a short sale
in a Nasdaq [National] Global Market security that was effected to
hedge, and in fact serves to hedge, an existing offsetting options
position or an offsetting options position that was created in a
transaction(s) contemporaneous with the short sale,* provided that when
establishing the short position the options market maker is eligible to
receive(s) good faith margin pursuant to Section 220.12 of Regulation T
under the Act for that transaction.
    (ii) An ``exempt hedge transaction,'' in the context of qualified
options market makers in stock index options classes, shall mean a
short sale in a Nasdaq [National] Global Market security that was
effected to hedge, and in fact serves to hedge, an existing offsetting
stock index options position or an offsetting stock index options
position that was created in a transaction(s) contemporaneous with the
short sale, provided that:
    a.-c. No change.
    (iii) No change.
    (B) A ``qualified options market maker'' shall mean an options
market maker who has received an appointment as a ``qualified options
market maker'' for certain classes of stock options on Nasdaq
[National] Global Market securities and/or index options on qualified
stock indexes pursuant to the rules of a qualified options exchange.
    (C) No change.
    (D) A ``qualified stock index'' shall mean any stock index that
includes one or more Nasdaq [National] Global Market securities,
provided that more than 10% of the weight of the index is accounted for
by Nasdaq [National] Global Market securities and provided further that
the qualification of an index as a qualified stock index shall be
reviewed as of the end of each calendar quarter, and the index shall
cease to qualify if the value of the index represented by one or more
Nasdaq [National] Global Market securities is less than 8% at the end
of any subsequent calendar quarter.
    (E)-(F) No change.
    (i)(1) No change.
    (2) For purposes of this paragraph, an ``exempt hedge transaction''
shall mean a short sale in a Nasdaq [National] Global Market security
that was effected to hedge, and in fact serves to hedge, an existing
offsetting warrant position or an offsetting warrant position that was
created in a transaction(s) contemporaneous with the short sale.\*\
Notwithstanding any other provision of this paragraph, any transaction
unrelated to normal warrant market making activity, such as index
arbitrage or risk arbitrage that in either case is independent of a
warrant market maker's market making functions, will not be considered
an ``exempt hedge transaction.''
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    \*\ The phrase contemporaneously established includes
transactions occurring simultaneously as well as transactions
occurring within the same brief period of time.
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    (3)-(4) No change.
    (j)-(1) No change.
IM-3350. Short Sale Rule
    (a)(1) In developing a Short Sale Rule for Nasdaq [National] Global
Market securities, NASD adopted an exemption to the Rule for certain
market making activity. This exemption was deemed an essential
component of the Rule because bona fide market making activity is
necessary and appropriate to maintain continuous, liquid markets in
Nasdaq [National] Global Market securities. Rule 3350(c)(1) states that
short selling prohibitions shall not apply to sales by qualified Nasdaq
market makers or registered ADF market makers in connection with bona
fide market making activity and specifies that transactions unrelated
to normal market making activity, such as index arbitrage and risk
arbitrage that are independent from a member's market making functions,
will not be considered as bona fide market making. Thus two standards
are to be applied: One must be a ``qualified'' Nasdaq market maker or a
registered ADF market maker and one must engage in ``bona fide'' market
making activity to take advantage of this exemption. With this
interpretation, NASD wishes to clarify for members some of the factors
that will be taken into consideration when reviewing market making
activity that may not be deemed to be bona fide market making activity
and therefore would not be exempted from the Rule's application.
    (2)-(3) No change.
    (b)(1) With respect to trades executed on or reported to the ADF,
Rule 3350 requires that no member shall effect a short sale for the
account of a customer or for its own account in a Nasdaq [National]
Global Market security at or below the current national best (inside)
bid when the current national best (inside) bid is below the preceding
national best (inside) bid in the security. NASD has determined that in
order to effect a ``legal'' short sale when the current best bid is
lower than the preceding best bid the short sale must be executed at a
price of at least $0.01 above the current inside bid when the current
inside spread is $0.01 or greater. The last sale report for such a
trade would, therefore, be above the inside bid by at least $0.01.
    (2) With respect to trades executed on or reported to Nasdaq, Rule
3350 requires that no member shall effect a short sale for the account
of a customer or for its own account in a Nasdaq [National] Global
Market security at or below the current best (inside) bid displayed in
the Nasdaq Market Center when the current best (inside) bid is below
the preceding best (inside) bid in the security. Nasdaq has detennined
that in order to effect a ``legal'' short sale when the current best
bid is lower than the preceding best bid the short sale must be
executed at a price of at least $0.01 above the current inside bid when
the current inside spread is $0.01 or greater. The last sale report for
such a trade would, therefore, be above the inside bid by at least
$0.01.
    (c)-(d) No change.
* * * * *

4200. DEFINITIONS
    (a) For purposes of the Rule 4000 Series, unless the context
requires otherwise:
    (1)-(24) No change.
    (25) [``Nasdaq National Market'' or ``NNM'' is a distinct tier of
The Nasdaq Stock Market comprised of securities that meet the
requirements of and are authorized as a Nasdaq National Market
security.] ``Nasdaq Global Market'' or ``NGM'' is a distinct tier of
Nasdaq comprised of two segments: the Nasdaq Global Market and the
Nasdaq Global Select Market. The Nasdaq Global Market is the successor
to the Nasdaq National Market.
    (26) ``Nasdaq [National] Global Market security'' or ``[NNM] NGM
security'' means any authorized security in the Nasdaq [National]
Global Market which (1) satisfies all applicable requirements of the
Rule 4300 Series and substantially meets the criteria set forth in the
Rule 4400 Series and is subject therefore to a transaction reporting
plan approved by the Commission; (2) is a right to purchase such
security; (3) is a warrant to subscribe to such security; or (4) is an
index warrant which substantially meets the criteria set forth in Rule
4420, and has been designated therefore as a national market system
security pursuant to [SEC Rule 11Aa2-1] Rule 600 of SEC Regulation NMS.
    (27) No change.
    (28) ``Nasdaq Capital Market security'' means any authorized
security in The Nasdaq Capital Market which (1) satisfies all
applicable requirements of the Rule 4300 Series other than a Nasdaq
[National] Global Market security; (2) is a right to purchase such
security; or (3) is a warrant to subscribe to such security.
    (29) ``The Nasdaq Stock Market'' or ``Nasdaq'' is an electronic
securities market comprised of competing market makers whose trading is
supported by a communications network linking them to quotation
dissemination, trade reporting, and order execution systems. This
market also provides specialized automation services for screen-based
negotiations of transactions, on-line comparison of transactions, and a
range of informational services tailored to the needs of the securities
industry, investors and issuers. [The Nasdaq Stock Market consists of
two distinct market tiers: the ``Nasdaq National Market'' or ``NNM,''
and ``The Nasdaq Capital Market''.] The Nasdaq Stock Market is operated
by The Nasdaq Stock Market, Inc., a wholly-owned subsidiary of the
Association.
    (30) [Reserved.]
    (a) ``Nasdaq Global Select Market'' or ``NGSM'' is a segment of the
Nasdaq Global Market comprised of NGM securities that met the
requirements for initial inclusion contained in Rules 4425, 4426 and
4427.
    (b) ``Nasdaq Global Select Market security'' or ``NGSM security''
means any security listed on Nasdaq and included in the Nasdaq Global
Select segment of the Nasdaq Global Market.
    (31)-(39) No change.
    (b) No change.
* * * * *
4310. Qualification Requirements for Domestic and Canadian Securities
    To qualify for inclusion in Nasdaq, a security of a domestic or
Canadian issuer shall satisfy all applicable requirements contained in
paragraphs (a) or (b), and (c) hereof.
    (a)-(b) No change.
    (c) In addition to the requirements contained in paragraph (a) or
(b) above, and unless otherwise indicated, a security shall satisfy the
following criteria for inclusion in Nasdaq:
    (1)-(8) No change.
    (9)(A)-(B) No change.
    (C) In the case of index warrants, the criteria established in the
Rule 4400 Series for Nasdaq [National] Global Market securities shall
apply.
    (10)-(30) No change.
    (d) No change.
* * * * *
4350. Qualitative Listing Requirements for Nasdaq [National Market and
Nasdaq Capital Market] Issuers Except for Limited Partnerships
    No change.
4350-1 Qualitative Listing Requirements for Nasdaq (National Market and
Nasdaq Capital Market] Issuers Except for Limited Partnerships
    No change.
* * * * *
4400. Nasdaq [National] Global Market--Issuer Designation Requirements
    No change.
IM-4400. Impact of Non-Designation of Dually Listed Securities
    To foster competition among markets and further the development of
the national market system following the repeal of NYSE Rule 500,
Nasdaq shall permit issuers whose securities are listed on the New York
Stock Exchange to apply also to list those securities on the Nasdaq
[National] Global Market ([``NNM''] ``NGM''). Nasdaq shall make an
independent determination of whether such issuers satisfy all
applicable listing requirements and shall require issuers to enter into
a dual listing agreement with Nasdaq.
    While Nasdaq shall certify such dually listed securities for
listing on the [NNM] NGM, Nasdaq shall not exercise its authority under
the NASD Rule 4400 Series separately to designate or register such
dually listed securities as Nasdaq national market system securities
within the meaning of Section 11A of the Securities Exchange Act of
1934 or the rules thereunder. As a result, these securities, which are
already designated as national market system securities under the
Consolidated Quotation Service (``CQS'') and Consolidated Tape
Association national market system plans (``CQ and CTA Plans''), shall
remain subject to those plans and shall not become subject to the
Nasdaq UTP Plan, the national market system plan governing securities
designated by the Nasdaq Stock Market. For purposes of the national
market system, such securities shall continue to trade under their
current one, two, or three-character ticker symbol. Nasdaq shall
continue to send all quotations and transaction reports in such
securities to the processor for the CTA Plan. In addition, dually
listed issues that are currently eligible for trading via the
Intermarket Trading System (``ITS'') shall remain so and continue to
trade on the Nasdaq Intermarket trading platform as they do today.
    Through this interpretation, Nasdaq also resolves any potential
conflicts that arise under NASD rules as a result of a single security
being both a CQS security, which is subject to one set of rules, and a
listed [NNM] NGM security, which is subject to a different set of
rules. Specifically, dually listed securities shall be Nasdaq
securities for purposes of rules related to listing and delisting, and
shall remain as CQS securities under all other NASD rules. Treating
dually listed securities as CQS securities under NASD rules is
consistent with their continuing status as CQS securities under the
CTA, CQ, and ITS national market system, as described above. This
interpretation also preserves the status quo and avoids creating
potential confusion for investors and market participants that
currently trade these securities on the Nasdaq InterMarket.
    For example, Nasdaq shall continue to honor the trade halt
authority of the primary market under the CQ and CT Plans. NASD Rule
4120(a)(2) and (3) governing CQS securities shall apply to dually
listed securities, whereas NASD Rule 4120(a)(1), (4), (5), (6), and (7)
shall not. SEC Rule 10a-1 governing short sales of CQS securities shall
continue to apply to dually listed securities, rather

than NASD Rule 3350 governing short sales of Nasdaq listed securities.
Market makers in dually listed securities shall retain all obligations
imposed by the NASD Rule 5200, 6300, and 6400 Series regarding quoting,
trading, and transaction reporting of CQS securities rather than
assuming the obligations appurtenant to quoting, trading, and
transaction reporting of Nasdaq listed securities. The fees applicable
to CQS securities set forth in NASD Rule 7010 shall continue to apply
to dually listed issues.
* * * * *
4420. Quantitative Designation Criteria
    In order to be designated for the Nasdaq [National] Global Market,
an issuer shall be required to substantially meet the criteria set
forth in paragraphs (a), (b), (c), (d), (e), (f), (g), (h), (i), (j),
(k), (l) or (m) below. Initial Public Offerings substantially meeting
such criteria are eligible for immediate inclusion in the Nasdaq
[National] Global Market upon prior application and with the written
consent of the managing underwriter that immediate inclusion is
desired. All other qualifying issues, excepting special situations, are
included on the next inclusion date established by Nasdaq.
    (a)-(e) No change.
    (f) Other Securities.
    (1) No change.
    (2) Issuers of securities designated pursuant to this paragraph
[(e)] (f) must be listed on the Nasdaq [National] Global Market or the
New York Stock Exchange (NYSE) or be an affiliate of a company listed
on the Nasdaq [National] Global Market or the NYSE; provided, however,
that the provisions of Rule 4450 will be applied to sovereign issuers
of ``other'' securities on a case-by-case basis.
    (3) No change.
    (g) Nasdaq will consider designating as Nasdaq [National] Global
Market securities Selected Equity-linked Debt Securities (SEEDS) that
generally meet the criteria of this paragraph (g). SEEDS are limited-
term, non-convertible debt securities of an issuer where the value of
the debt is based, at least in part, on the value of another issuer's
common stock or non-convertible preferred stock (or sponsored American
Depositary Receipts (ADRs) overlying such equity securities).
    (1) Issuer Listing Standards.
    (A) The issuer of a SEEDS must be an entity that:
    (i) Is listed on the Nasdaq [National] Global Market or the New
York Stock Exchange (NYSE) or is an affiliate of a company listed on
the Nasdaq [National] Global Market or the NYSE; provided, however,
that the provisions of Rule 4450 will be applied to sovereign issuers
of SEEDS on a case-by-case basis; and
    (ii) No change.
    (B) In addition, the market value of a SEEDS offering, when
combined with the market value of all other SEEDS offerings previously
completed by the issuer and traded on the Nasdaq [National] Global
Market or a national securities exchange, may not be greater than 25
percent of the issuer's net worth at the time of issuance.
    (2) No change.
    (3) Minimum Standards Applicable to the Linked Security.
    An equity security on which the value of the SEEDS is based must:
    (A) No change.
    (B) Be issued by a company that has a continuous reporting
obligation under the Act, and the security must be listed on the Nasdaq
[National] Global Market or a national securities exchange and be
subject to last sale reporting; and
    (C) No change.
    (4)-(5) No change.
    (h) Units.
    (1) Initial and Continued Inclusion Requirements.
    (a) No change.
    (b) All debt components of a unit, if any, shall meet the following
requirements:
    (i) No change.
    (ii) the issuer of the debt security must have equity securities
listed on the Nasdaq [National] Global Market; and
    (iii) No change.
    (c) No change.
    (2) No change.
    (3) Disclosure Requirements for Units.
    Each Nasdaq [National] Global Market issuer of units shall include
in its prospectus or other offering document used in connection with
any offering of securities that is required to be filed with the
Commission under the federal securities laws and the rules and
regulations promulgated thereunder a statement regarding any intention
to delist the units immediately after the minimum inclusion period. The
issuer of a unit shall further provide information regarding the terms
and conditions of the components of the unit (including information
with respect to any original issue discount or other significant tax
attributes of any component) and the ratio of the components comprising
the unit. An issuer shall also disclose when a component of the unit is
separately listed on Nasdaq.
    These disclosures shall be made on the issuer's website, or if it
does not maintain a website, in its annual report provided to unit
holders. An issuer shall also immediately publicize through, at a
minimum, a public announcement through the news media, any change in
the terms of the unit, such as changes to the terms and conditions of
any of the components (including changes with respect to any original
issue discount or other significant tax attributes of any component),
or to the ratio of the components within the unit. Such public
notification shall be made as soon as practicable in relation to the
effective date of the change.
    (i)-(m) No change.

4425. Nasdaq Global Select Market

    (a) An issuer that applies for listing on the Nasdaq Global Market
and meets the requirements for initial listing contained in Rule 4426
shall be listed on the Nasdaq Global Select Market.
    (b) Each October, beginning in October 2007, Nasdaq will review the
qualifications of all securities listed on the Nasdaq Global Market
that are not included in the Nasdaq Global Select Market. Any security
that meets the requirements for initial listing on the Nasdaq Global
Select Market contained in Rule 4426 at the time of this review will be
transferred to the Global Select Market the following January, provided
it meets the continued listing criteria at that time. An issuer will
not owe any application or entry fees in connection with such a
transfer.
    (c) At any time, an issuer may apply to transfer a security listed
on the Nasdaq Global Market to the Nasdaq Global Select Market. Such an
application will be approved and effected as soon as practicable if the
security meets the requirements for initial listing contained in Rule
4426. An issuer will not owe any application or entry fees in
connection with such a transfer.
    (d) At any time, an issuer may apply to transfer a security listed
on the Nasdaq Capital Market to the Nasdaq Global Select Market. Such
an application will be approved and effected as soon as practicable if
the security meets the requirements for initial listing contained in
Rule 4426. An issuer transferring from the Nasdaq Capital Market to the
Nasdaq Global Select Market will be required to pay the applicable fees
contained in Rule 4510.
    (e) After initial inclusion on the Nasdaq Global Select Market, an
issuer will remain on the Nasdaq Global Select Market provided it
continues to meet the applicable requirements of the Rule 4300 and 4400
Series, including the qualitative requirements of Rule 4350 and IM-
4300.
    (f) Notwithstanding any provision to the contrary, the securities
of any issuer

that is non-compliant with a qualitative listing requirement that does
not provide for a grace period, or where Nasdaq staff has raised a
public interest concern, will not be permitted to transfer to the
Global Select Market until the underlying deficiency is resolved. In
addition, any security that is below a quantitative continued listing
requirement for the Nasdaq Global Market, even if the issuer has not
been below the requirement for a sufficient period of time to be
considered non-compliant, and any issuer in a grace or compliance
period with respect to a quantitative listing requirement, will not be
allowed to transfer from the Nasdaq Global or Capital Markets to the
Nasdaq Global Select Market until the underlying deficiency is
resolved. Nor will any issuer before a Nasdaq Listing Qualifications
Panel be allowed to transfer to the Global Select Market until the
underlying deficiency is resolved. An issuer that is in a grace or
compliance period with respect to a qualitative listing standard, such
as the cure period for filling an audit committee vacancy, will be
allowed to transfer to the Global Select Market, subiect to the
continuation of that grace period.

IM-4425 Launch of the Nasdaq Global Select Market

    In connection with the initial launch of the Nasdaq Global Select
Market in July 2006, Nasdaq will review all issuers' qualifications and
assign qualified Global Market companies to the new Global Select
segment. In addition, qualified Capital Market companies will be given
the opportunity to be included in the new segment. In connection with
this initial transfer to the Global Select Market, Nasdaq will begin to
make its assessment using the most recent financial data filed as of
April 28, 2006, and market data as of April 28, 2006. Nasdaq will treat
as an IPO any company that initially listed as an IPO since May 1, 2005
for purposes of the liquidity tests, because these companies would have
insufficient market data to establish a 12-month trading history and
may have had insufficient time to satisfy the market value of public
float requirement applicable to other companies. Similarly, for
purposes of the market capitalization requirements of Rules 4426(c)(2)
and (c)(3), anv company that initially listed as an IPO since May 1,
2005 must have the applicable average market capitalization from the
date of listing. Nasdaq also notes that certain Nasdaq-listed issuers
that qualify to initially list on the New Yark Stock Exchange (NYSE)
will not be eligible to list on the Global Select Market. Nasdaq will
allow (but not require) any Nasdaq-listed issuer that meets the NYSE
initial listing standards as of July 2006 but that does not qualify for
the Global Select segment when it is adopted to be included in the
Global Select Market, subiect to a grace period until January 1, 2008
to achieve compliance with all listing criteria for the Global Select
Market. Any issuer that avails itself of this grace period that has not
achieved compliance with all listing criteria for the Global Select
Market by January 1, 2008 will be moved to the Nasdaq Global Market. In
addition, any issuer that avails itself of this grace period will
remain subiect to delisting in the event it fails to satisfy any of the
continued listing requirements far the Nasdaq Global Market.

4426. Nasdaq Global Select Market Listing Requirements

    (a) For inclusion in the Nasdaq Global Select Market, an issuer
must meet the requirements of paragraphs (b), (c), and (d) of this
rule, and all applicable requirements of the Rule 4300 and 4400 Series,
including the qualitative requirements of Rule 4350 and IM-4300. Rule
4427 provides guidance about computations made under this Rule 4426.
    (b) Liquidity Requirements.
    (1) The security must demonstrate either:
    (i) A minimum of 550 beneficial shareholders, and
    (ii) An average monthly trading volume over the prior 12 months of
at least 1,100,000 shares per month; or
    (B) A minimum of 2,200 beneficial shareholders; or
    (C) A minimum of 450 beneficial shareholders, in the case of: (i)
an issuer listing in connection with its emergence from a bankruptcy or
reorganization proceeding; or (ii) an issuer that is affiliated with
another company listed on the Global Select Market.
    (2) The security must have at least 1,250,000 publicly held shares;
and
    (3) The publicly held shares must have either:
    (A) A market value of at least $110 million; or
    (B) A market value of at least $100 million, if the issuer has
stockholders' equity of at least $110 million; or
    (C) A market value of at least $70 million in the case of: (i) an
issuer listing in connection with its initial public offering; (ii) an
issuer that is affiliated with, or a spin-off from, another company
listed on the Global Select Market; and (iii) a closed end management
investment company registered under the Investment Company Act of 1940.
    (c) Financial Requirements. An issuer, other than a closed end
management investment company, must meet the requirements of one of
subparagraphs (1), (2) or (3) of this paragraph.
    (1) The issuer must have:
    (A) Aggregate income from continuing operations before income taxes
of at least $11 million over the prior three fiscal years:
    (B) Positive income from continuing operations before income taxes
in each of the prior three fiscal years: and
    (C) At least $2.2 million income from continuing operations before
income taxes in each of the two most recent fiscal years; or
    (2) The issuer must have:
    (A) Aggregate cash flows of at least $27.5 million over the prior
three fiscal years;
    (B) Positive cash flows in each of the prior three fiscal years;
and
    (C) Both:
    (i) Average market capitalization of at least $550 million over the
prior 12 months; and
    (ii) Total revenue of at least $110 million in the previous fiscal
year; or
    (3) The issuer must have both:
    (A) Average market capitalization of at least $850 million over the
prior 12 months; and
    (B) Total revenue of at least $90 million in the previous fiscal
year.
    (d) Price. For inclusion in the Nasdaq Global Select Market, an
issuer not listed on the Nasdaq Global Market shall have a minimum bid
price of $5 per share.
    (e) Closed End Management Investment Companies.
    (1) A closed end management investment company registered under the
Investment Company Act of 1940 shall not be required to meet paragraph
(c) of this Rule 4426.
    (2) In lieu of the requirement in paragraph (b)(3) of this Rule
4426, a closed end management investment company that is listed
concurrently with other closed end management investment companies that
have a common investment adviser or whose investment advisers are
``affiliated persons,'' as defined in the Investment Company Act of
1940 (a ``Fund Family'') shall be eligible if: (A) the total market
value of publicly held shares in such Fund Family is at least $220
million; (B) the average market value of publicly held shares for all
funds in the Fund Family is $50 million; and (C) each fund in the Fund
Family has a market value of publicly held shares of at least $35
million.
    (f) Other Classes of Securities. If the common stock of an issuer
is included

in the Nasdaq Global Select Market, any other security of that same
issuer, such as other classes of common or preferred stock, that
qualify for listing on the Nasdaq Global Market shall also be included
in the Global Select Market.

Rule 4427. Computations and Definitions

    (a) In computing the number of publicly held shares for purposes of
Rule 4426(b), Nasdaq will not consider shares held by an officer,
director or 10% shareholder of the issuer.
    (b) In calculating income from continuing operations before income
taxes for purposes of Rule 4426(c)(1), Nasdaq will rely on an issuer's
financial information as filed with the Commission in the issuer's most
recent periodic report and/or registration statement.
    (c) In calculating cash flows for purposes of Rule 4426(c)(2).
Nasdaq will rely on the net cash provided by operating activitives. as
reported in the issuer's financial information as filed with the
Commission in the issuer's most recent periodic report and/or
registration statement, excluding changes in working capital or in
operating assets and liabilities.
    (d) If an issuer does not have three years of publicly reported
financial data, it may qualify under Rule 4426(c)(I) if it has:
    (1) Reported aggregate income from continuing operations before
income taxes of at least $11 million and
    (2) Positive income from continuing operations before income taxes
in each of the reported fiscal years.
    (e) If an issuer does not have three years of publicly reported
financial data, it may qualify under Rule 4426(c)(2) if it has:
    (1) Reported aggregate cash flows of at least $27.5 million and
    (2) Positive cash flows in each of the reported fiscal years.
    (f) A period of less than three months shall not be considered a
fiscal year, even if reported as a stub period in the issuer's publicly
reported financial statements.
    (g) For purposes of Rule 4426, an issuer is affiliated with another
company if that other company, directly or indirectly though one or
more intermediaries, controls. is controlled by, or is under common
control of the issuer. Control, for these purposes. means having the
ability to exercise significant influence. Ability to exercise
significant influence will be presumed to exist where the parent or
affiliated company directly or indirectly owns 20% or more of the other
company's voting securities, and also can be indicated by
representation on the board of directors, participation in policy
making processes, material intercompany transactions, interchange of
managerial personnel, or technological dependency.
    (h) In the case of an issuer listing in connection with its initial
public offering, compliance with the market capitalization requirements
of Rules 4426(c)(2) and (c)(3) will be based on the company's market
capitalization at the time of listing.
4430. Limited Partnership Rollup Designation Criteria
    In addition to meeting the quantitative criteria for Nasdaq
[National] Global Market inclusion, an issuer that is formed as a
result of a limited partnership rollup transaction, as defined in Rule
4200, must meet the criteria set forth below in order to be designated:
    (a)-(b) No change.
4440. Registration Standards
    (a) In addition to meeting the quantitative criteria and the
limited partnership rollup criteria, if applicable, for Nasdaq
[National market] Global Market inclusion, the issue must also be:
    (1)-(4) No Change
    (5) Registered under Section 12(b) of the Act and listed on a
national securities exchange, or admitted to unlisted trading
privileges on an exchange, provided that:
    (A) No change.
    (B) Such exchange shall permit Nasdaq market makers telephone
access to exchange trading facilities with respect to transactions in
[NNM] NGM securities to the same extent that exchange market makers are
permitted access to Nasdaq market makers; and
    (C) No change.
    (b) Foreign securities and American Depositary Receipts where
either the issuer is required to file reports pursuant to Section 15(d)
of the Act or the security is exempt from registration under Section
12(g) of the Act by reason of the applicability of SEC Rule 12g3-2(b)
are not eligible for designation in the Nasdaq [National] Global
Market.
4450. Quantitative Maintenance Criteria
    After designation as a Nasdaq [National] Global Market security, a
security must substantially meet the criteria set forth in paragraphs
(a) or (b), and (c), (d), (e), (f), (g), (h) or (i) below to continue
to be designated as a national market system security. A security
maintaining its designation under paragraph (b) need not also be in
compliance with the quantitative maintenance criteria in the Rule 4300
series.
    (a)-(h) No change.
    (i) Transfers between The Nasdaq [National] Global and Capital
Markets For Bid Price Deficient Issuers
    (1) If a [National] Global Market issuer has not been deemed in
compliance prior to the expiration of the compliance period for bid
price provided in Rule 4450(e)(2), it may transfer to The Nasdaq
Capital Market, provided that it meets all applicable requirements for
initial inclusion on the Capital Market set forth in Rule 4310(c) or
Rule 4320(e), as applicable, other than the minimum bid price
requirement. A Nasdaq [National] Global Market issuer transferring to
The Nasdaq Capital Market must pay the entry fee set forth in Rule
4520(a). The issuer may also request a hearing to remain on The Nasdaq
National Market pursuant to the Rule 4800 Series.
    (2) Following a transfer to The Nasdaq Capital Market pursuant to
paragraph (1), a Nasdaq [National] Global Market issuer will be
afforded the remainder of any compliance period set forth in Rule
4310(c)(8)(D) or Rule 4320(e)(2)(E)(ii) as if the issuer had been
listed on The Nasdaq Capital Market. The compliance periods afforded by
this rule and any time spent in the hearing process will be deducted in
determining the length of the remaining applicable compliance periods
on The Nasdaq Capital Market.
* * * * *
4510. The Nasdaq [National] Global Market
    (a) Entry Fee
    (1) An issuer that submits an application for inclusion of any
class of its securities (not otherwise identified in this Rule 4500
series) in The Nasdaq [National] Global Market, shall pay to The Nasdaq
Stock Market, Inc. a fee calculated on total shares outstanding,
according to the following schedule. This fee will be assessed on the
date of entry in The Nasdaq [National] Global Market, except for $5,000
which represents a non-refundable, application fee, and which must be
submitted with the issuer's application.

Up to 30 million shares......................................   $100,000
30+ to 50 million shares.....................................    125,000
Over 50 million shares.......................................    150,000

    (2) Total shares outstanding means the aggregate of all classes of
equity securities to be included in The Nasdaq [National] Global Market
as shown in the issuer's most recent periodic report or in more recent
information held by Nasdaq or, in the case of new issues, as shown in
the offering circular, required to be filed with the issuer's
appropriate

regulatory authority. In the case of foreign issuers, total shares
outstanding shall include only those shares issued and outstanding in
the United States.
    (3) A closed-end management investment company registered under the
Investment Company Act of 1940, as amended (a ``Closed-End Fund''),
that submits an application for inclusion of a class of securities in
The Nasdaq [National] Global Market shall pay to the Nasdaq Stock
Market, Inc. an entry fee of $5,000 (of which $1,000 represents a non-
refundable, application fee).
    (4) An issuer that submits an application for inclusion of any
class of rights in The Nasdaq [National] Global Market, shall pay, at
the time of its application, a non-refundable application fee of $I,000
to The Nasdaq Stock Market, Inc.
    (5)-(6) No change.
    (7) The fees described in this Rule 4510(a) shall not be applicable
with respect to any securities that (i) are listed on a national
securities exchange but not listed on Nasdaq, if the issuer of such
securities transfers their listing exclusively to the Nasdaq [National]
Global Market; or (ii) are listed on the New York Stock Exchange and
Nasdaq, if the issuer of such securities ceases to maintain their
listing on the New York Stock Exchange and the securities instead are
designated as national market securities under the Rule 4400 Series.
    (8) No change.
    (9) An issuer that transfers its listing from The Nasdaq Capital
Market to The Nasdaq [National] Global Market shall pay the entry fee
described in this Rule 4510(a) less the entry fee that was previously
paid by the issuer to Nasdaq in connection with listing on The Nasdaq
Capital Market. Such issuer is not required to pay the application fee
described in Rule 4510(a) in connection with the application to
transfer listing.
    (10) An issuer that submits an application for listing on The
Nasdaq Capital Market, but prior to listing revises its application to
seek listing on The Nasdaq [National] Global Market, is not required to
pay the application fee described in Rule 4510(a) in connection with
the revised application.
    (b) Additional Shares.
    No change.
    (c) Annual Fee--Domestic and Foreign Issues.
    (1) The issuer of each class of securities (not otherwise
identified in this Rule 4500 series) that is a domestic or foreign
issue listed in The Nasdaq [National] Global Market shall pay to The
Nasdaq Stock Market, Inc. an annual fee calculated on total shares
outstanding according to the following schedule:

Up to 10 million shares......................................    $24,500
10+ to 25 million shares.....................................     30,500
25+ to 50 million shares.....................................     34,500
50+ to 75 million shares.....................................     44,500
75+ to 100 million shares....................................     61,750
Over 100 million shares......................................     75,000

    (2) No change.
    (3) If a class of securities is removed from the Nasdaq [National]
Global Market that portion of the annual fees for such class of
securities attributable to the months following the date of removal
shall not be refunded, [expect] except such portion shall be applied to
The Nasdaq Capital Market fees for that calendar year.
    (4) Total shares outstanding means the aggregate of all classes of
equity securities included in the Nasdaq [National] Global Market as
shown in the issuer's most recent periodic report required to be filed
with the issuer's appropriate regulatory authority or in more recent
information held by Nasdaq. In the case of foreign issuers, total
shares outstanding shall include only those shares issued and
outstanding in the United States.
    (5) No change.
    (d) Annual Fee--American Depositary Receipts (ADRs) and Closed-End
Funds.
    (1) The issuer of each class of securities that is an ADR listed in
The Nasdaq [National] Global Market shall pay to The Nasdaq Stock
Market, Inc. an annual fee calculated on ADRs outstanding according to
the following schedule not to exceed $30,000 per issuer:

Up to 10 million ADRs........................................    $21,225
10+ to 25 million ADRs.......................................     26,500
25+ to 50 million ADRs.......................................     29,820
Over 50 million ADRs.........................................     30,000

    (2) ADRs outstanding means the aggregate of all classes of ADRs
included in The Nasdaq [National] Global Market as shown in the
issuer's most recent periodic report required to be filed with the
issuer's appropriate regulatory authority or in more recent information
held by Nasdaq.
    (3) A Closed-End Fund listed in The Nasdaq [National] Global Market
shall pay to The Nasdaq Stock Market, Inc. an annual fee calculated
based on total shares outstanding according to the following schedule:

Up to 5 million shares.......................................    $15,000
5+ to 10 million shares......................................     17,500
10+ to 25 million shares.....................................     20,000
25+ to 50 million shares.....................................     22,500
50+ to 100 million shares....................................     30,000
100+ to 250 million shares...................................     50,000
Over 250 million shares......................................     75,000

    (4) For the purpose of determining the total shares outstanding,
fund sponsors may aggregate shares outstanding of all Closed-End Funds
in the same fund family listed in The Nasdaq [National] Global Market
or The Nasdaq Small Cap Market, as shown in the issuer's most recent
periodic reports required to be filed with the appropriate regulatory
authority or in more recent information held by Nasdaq. The maximum
annual fee applicable to a fund family shall not exceed $75,000. For
purposes of this rule, a ``fund family'' is defined as two or more
Closed-End Funds that have a common investment adviser or have
investment advisers who are ``affiliated persons'' as defined in
Section 2(a)(3) of the Investment Company Act of 1940, as amended.
    (5) No change.
    (6) If a class of securities is removed from the Nasdaq [National]
Global Market, that portion of the annual fees for such class of
securities attributable to the months following the date of removal
shall not be refunded, except such portion shall be applied to The
Nasdaq Capital Market fees for that calendar year.
    (e)-(f) No change.
4520. The Nasdaq Capital Market
    (a) Entry Fee
    (1)-(6) No change.
    (7) The fees described in this Rule 4520(a) shall not be applicable
with respect to any securities that (i) are listed on a national
securities exchange but not listed on Nasdaq, if the issuer of such
securities transfers their listing exclusively to the Nasdaq [National]
Capital Market; or (ii) are listed on the New York Stock Exchange and
Nasdaq, if the issuer of such securities ceases to maintain their
listing on the New York Stock Exchange and the securities instead are
designated under the plan applicable to Nasdaq Capital Market
securities.
    (8) No change.
    (9) An issuer that submits an application for listing on The Nasdaq
[National] Global Market, but prior to listing revises its application
to seek listing on The Nasdaq Capital Market, is not required to pay
the application fee described in Rule 4520(a) in connection with the
revised application.
    (b) No change.
    (c) Annual Fee.
    (1)-(4) No change.
    (5) If a class of securities is removed from The Nasdaq Capital
Market, that portion of the annual fees for such class of securities
attributable to the months following the date of removal shall not be
refunded, except such portion shall be applied to Nasdaq [National]
Global Market fees for that calendar year.
    (6) No change.

    (7) Notwithstanding paragraph (6), for the purpose of detennining
the total shares outstanding, fund sponsors may aggregate shares
outstanding of all Closed-End Funds in the same fund family listed in
The Nasdaq [National] Global Market or The Nasdaq Capital Market, as
shown in the issuer's most recent periodic reports required to be filed
with the appropriate regulatory authority or in more recent infonnation
held by Nasdaq. The maximum, annual fee applicable to a fund family
shall not exceed $75,000. For purposes of this rule, a ``fund family''
is defined as two or more Closed-End Funds that have a common
investment adviser or have investment advisers who are ``affiliated
persons'' as defined in Section 2(a)(3) of the Investment Company Act
of 1940, as amended.
    (8) No change.
    (d)-(e) No change.
4530. Other Securities
    (a) Application Fee and Entry Fee.
    (1) When an issuer submits an application for inclusion of any
Other Security or SEEDS in the Nasdaq [National] Global Market
qualified for listing under Rule 4420(f) or 4420(g), it shall pay a
non-refundable Application Fee of $1,000.
    (2) When an issuer submits an application for inclusion of any
Other Security or SEEDS in the Nasdaq [National] Global Market
qualified for listing under Rule 4420(f) or 4420(g), it shall pay an
Entry Fee calculated based on total shares outstanding according to the
following schedule:

Up to 1 million shares.......................................     $5,000
1+ to 2 million shares.......................................     10,000
2+ to 3 million shares.......................................     15,000
3+ to 4 million shares.......................................     17,500
4+ to 5 million shares.......................................     20,000
5+ to 6 million shares.......................................     22,500
6+ to 7 million shares.......................................     25,000
7+ to 8 million shares.......................................     27,500
8+ to 9 million shares.......................................     30,000
9+ to 10 million shares......................................     32,500
10+ to 15 million shares.....................................     37,500
Over 15 million shares.......................................     45,000

    The applicable Entry Fee shall be reduced by any Entry Fees paid
previously in connection with the initial inclusion during the current
calendar year of any of the issuer's Other Securities and SEEDS in the
Nasdaq [National] Global Market.
    (3) For the sole purpose of determining the Entry Fee, total shares
outstanding means the aggregate of all classes of Other Securities and
SEEDS of the issuer to be included in the Nasdaq [National] Global
Market in the current calendar year as shown in the issuer's most
recent periodic report or in more recent information held by Nasdaq or,
in the case of new issues, as shown in the offering circular, required
to be filed with the issuer's appropriate regulatory authority.
    (4)-(5) No change.
    (b) Annual Fee.
    (1) The issuer of Other Securities or SEEDS qualified under Rule
4420(f) or 4420(g) for listing on the Nasdaq [National] Global Market
shall pay to The Nasdaq Stock Market, Inc. an Annual Fee calculated
based on total shares outstanding according to the following schedule:

Up to 5 million shares.......................................    $15,000
5+ to 10 million shares......................................     17,500
10+ to 25 million shares.....................................     20,000
25+ to 50 million shares.....................................     22,500
Over 50 million shares.......................................     30,000

    (2) No change.
    (3) For the sole purpose of determining the Annual Fee, total
shares outstanding means the aggregate of all classes of Other
Securities and SEEDS of the issuer included in the Nasdaq [National]
Global Market, as shown in the issuer's most recent periodic report
required to be filed with the issuer's appropriate regulatory authority
or in more recent information held by Nasdaq.
4540. Portfolio Depository Receipts and Index Fund Shares
    (a) Entry Fee.
    (1) When an issuer submits an application for listing a series of
Portfolio Depository Receipts or Index Fund Shares in The Nasdaq
[National] Global Market, it shall pay to The Nasdaq Stock Market, Inc.
a listing fee of $5,000 (which shall include a $1,000 non-refundable
processing fee).
    (2)-(3) No change.
    (b) Annual Fee.
    (1) The issuer of a series of Portfolio Depository Receipts or
Index Fund Shares listed on The Nasdaq [National] Global Market shall
pay to The Nasdaq Stock Market, Inc. an annual fee calculated on total
shares outstanding according to the following schedule:

Up to 1 million shares.......................................     $6,500
1+ to 2 million shares.......................................      7,000
2+ to 3 million shares.......................................      7,500
3+ to 4 million shares.......................................      8,000
4+ to 5 million shares.......................................      8,500
5+ to 6 million shares.......................................      9,000
6+ to 7 million shares.......................................      9,500
7+ to 8 million shares.......................................     10,000
8+ to 9 million shares.......................................     10,500
9+ to 10 million shares......................................     11,000
10+ to 11 million shares.....................................     11,500
11+ to 12 million shares.....................................     12,000
12+ to 13 million shares.....................................     12,500
13+ to 14 million shares.....................................     13,000
14+ to 15 million shares.....................................     13,500
15+ to 16 million shares.....................................     14,000
Over 16 million shares.......................................     14,500

    (2) Total shares outstanding means the aggregate number of shares
in all series of Portfolio Depository Receipts or Index Fund Shares to
be included in The Nasdaq [National] Global Market as shown in the
issuer's most recent periodic report required to be filed with the
issuer's appropriate regulatory authority or in more recent information
held by Nasdaq.
    (3) No change.
4550. Written Interpretations of Nasdaq Listing Rules
    (a) An issuer listed on The Nasdaq Capital Market or The Nasdaq
[National] Global Market may request from Nasdaq a written
interpretation of the Rules contained in the 4000 through 4500 Series.
In connection with such a request, the issuer must submit to The Nasdaq
Stock Market, Inc. a non-refundable fee of $2,000. A response to such a
request generally will be provided within four weeks from the date
Nasdaq receives all information necessary to respond to the request.
    (b)-(e) No change.
* * * * *
4612. Primary Nasdaq Market Maker Standards
    (a) A member registered as a Nasdaq market maker pursuant to Rule
4611 may be deemed to be a Primary Nasdaq Market Maker in Nasdaq
[National] Global Market securities if the market maker complies with
threshold standards (as established and published by the Association
from time to time) in the following qualification criteria:
    (1)-(3) No change.
    (b) A market maker for a Nasdaq [National] Global Market security
must satisfy the threshold standards in at least two of the criteria in
paragraph (a) in order to be designated a Primary Nasdaq Market Maker
in that security; provided however, that if a market maker satisfies
only one of the criteria, it may qualify as a Primary Nasdaq Market
Maker if it also accounts for a threshold level of proportionate volume
in the security (as established and published by the Association from
time to time).\**\
---------------------------------------------------------------------------

    \**\No change.
---------------------------------------------------------------------------

    (c)-(f) No change.
    (g) In registration situations:
    (1) To register and immediately become a Primary Nasdaq Market
Maker in a Nasdaq [National] Global Market security, a member must be a
Primary Nasdaq Market Maker in 80% of the securities in which it has
registered. If the market maker is not a Primary Nasdaq Market Maker in
80% of its stocks, it may qualify as a Primary

Nasdaq Market Maker in that stock if the market maker registers in the
stock as a regular Nasdaq market maker and satisfies the qualification
criteria for the next review period.
    (2) Notwithstanding paragraph (g)(1) above, after an offering in a
stock has been publicly announced or a registration statement has been
filed, no market maker may register in the stock as a Primary Nasdaq
Market Maker unless it meets the requirements set forth below:
    (A) For secondary offerings:
    (i) The secondary offering has become effective and the market
maker has satisfied the qualification criteria in the time period
between registering in the security and the offering becoming
effective; provided, however, that if the member is a manager or co-
manager of the underwriting syndicate for the secondary offering and it
is a PMM in 80% or more of the Nasdaq [National] Global Market
securities in which it is registered, the member is eligible to become
a PMM in the issue prior to the effective date of the secondary
offering regardless of whether the member was a registered market maker
in the stock before the announcement of the secondary offering; or
    (ii) No change.
    (B)-(C) No change.
    (3) No change.
    (h) No change.
4613. Character of Quotations
    (a) Quotation Requirements and Obligations.
    (1) Two-Sided Quote Obligation. For each security in which a member
is registered as a market maker, the member shall be willing to buy and
sell such security for its own account on a continuous basis and shall
enter and maintain a two-sided quotation (``Principal Quote''), which
is attributed to the market maker by a special maker participant
identifier (``MPID'') and is displayed in the Nasdaq Quotation Montage
at all times, subject to the procedures for excused withdrawal set
forth in Rule 4619.
    (A) No change.
    (B) Minimum Price Variation--The minimum quotation increment for
Nasdaq [National] Global Market and Capital Market securities shall be
$0.01 for quotations priced at or above $1.00 per share and $0.0001 for
quotations priced below $1.00 per share; provided, however, that if the
Securities and Exchange Commission (``SEC'') permits, with respect to
any security, the display, rank or acceptance of quotations priced at
or above $1.00 per share in an increment smaller than $0.01, then the
minimum quotation increment for such a security shall be the minimum
permitted by the SEC or $0.0001, whichever is greater. Quotations
failing to meet this standard shall be rejected.
    (2)-(3) No change.
    (b)-(e) No change.
* * * * *
4630. Reporting Transactions in Nasdaq [National] Global Market
Securities
    This Rule 4630 Series applies to the reporting by members of
transactions in Nasdaq [National] Global Market securities
(``designated securities'') to the Nasdaq Market Center.
* * * * *
4652. Transaction Reporting
    (a)-(c) No change.
    (d) Procedures for Reporting Price and Volume *
---------------------------------------------------------------------------

    * For examples of reporting procedures, refer to the Rule 4630
Series, Reporting Transactions in Nasdaq [National] Global Market
Securities.
---------------------------------------------------------------------------

    No change.
    (e)-(g) No change.
* * * * *
4701. Definitions
    (a)-(ee) No change.
    (ff) The term ``UTP Exchange'' shall mean any registered national
securities exchange that elects to participate in the Nasdaq Market
Center and that has unlisted trading privileges in Nasdaq [National]
Global Market securities pursuant to the Joint Self-Regulatory
Organization Plan Governing the Collection, Consolidation and
Dissemination of Quotation and Transaction Information for Exchange-
Listed Nasdaq/National Market System Securities Traded on Exchanges on
an Unlisted Trading Privilege Basis (``Nasdaq UTP Plan'').
    (gg)-(vv) No change.
* * * * *
4200A. Definitions
    (a) Unless the context requires otherwise, the terms used in the
Rule 4000A and Rule 6000A Series shall have the meanings below. Terms
not specifically defined below shall have the meaning in NASD's By-Laws
and Rules and SEC [Rule 11Aa3-1] Regulation NMS.
    (1) No change.
    (2) ``ADF-eligible security'' means a Nasdaq [National] Global
Market, Nasdaq Capital Market security and Nasdaq Convertible Debt
securities.
    (3)-(4) No change.
    (5) ``Nasdaq [National] Global Market'' or [``NNM''] NGM is a
distinct tier of the Nasdaq Stock Market comprised of securities that
meet the requirements of and are authorized as a Nasdaq [National]
Global Market Security.
    (6)-(13) No change.
    (b) No change.
* * * * *
5410. Applicability
    (a) For a period of time, NASD will operate two facilities for
collecting trade reports for executions in Nasdaq [National] Global
Market, Nasdaq Capital Market, and Nasdaq Convertible Debt securities
(``designated securities''): The Nasdaq Stock Market and the
Alternative Display Facility (``ADF''). Nasdaq will operate the Nasdaq
Market Center (including its trade reporting service), and NASD,
through the ADF, will operate Trade Reporting and Comparison Service
(``TRACS''). This Rule 5400 Series establishes the rules for
determining which member must report a trade and whether a trade must
be reported to the Nasdaq Market Center, pursuant to the Rule 4630,
4640, 4650 and 6100 Series or TRACS, pursuant to the Rule 4630A and
6100A Series.
    (b) No change.
* * * * *
6110. Definitions
    (a) The term ``Reportable Security'' shall mean all Nasdaq
[National] Global Market and Nasdaq Capital Market securities, all
Consolidated Quotation Service (CQS) securities traded in the over-the-
counter market, all OTC Equity Securities as defined in Rule 6600, and
all Direct Participation Programs as defined in Rule 6910.
    (b)-(q) No change.
6120. Trade Reporting Participation Requirements
    (a) Mandatory Participation for Clearing Agency Members
    (1)-(5) No change.
    (6) Upon compliance with the conditions specified in subparagraphs
(A)-(E) below, access to and participation in the trade reporting
service of the Nasdaq Market Center may be granted to a national
securities exchange that trades Nasdaq [National] Global Market or
Capital Market securities on an unlisted trading privileges basis
(``UTP Exchange''). The terms and conditions of such access and
participation, including available functionality and applicable rules
and fees, shall be set forth in and governed by a UTP Exchange ACT
Participant Application Agreement. Such access may be made available on
terms that differ from the terms applicable to members but that do not
unreasonably discriminate among national securities exchanges.
    (A)-(E) No change.
    (7) No change

    (b) No change.
* * * * *
IM-6130. Trade Reporting of Short Sales
    The NASD's short sale rule (Short Sale Rule or Rule 3350) generally
prohibits members from effecting short sales in [NNM] NGM securities at
or below the inside bid when the current inside bid is below the
previous inside bid. Rule 6130(d)(6) requires that members indicate on
ACT reports whether a transaction is a short sale or a short sale
exempt transaction (``ACT short sale reporting requirements''). Rule
6130 explicitly requires members to file ACT reports not just for [NNM]
NGM securities transactions, but for other securities transactions,
including transactions in exchange-listed, Capital Market, convertible
debt, OTC Bulletin Board, and OTC equity securities. Thus, all short
sale transactions in these securities reported to ACT must carry a
``short sale'' indicator (or a ``short sale exempt'' indicator if it is
a short sale transaction in an [NNM] NGM or exchange-listed security
that qualifies for an exemption from Rule 3350 or SEC Rule 10a-1).
* * * * *
6150. Risk Management Functions
    (a) No change.
    (b) If a clearing broker voluntarily uses the Nasdaq Market Center
risk management service, the Nasdaq Market Center system will provide
the following risk management capabilities to clearing brokers that
have executed an ACT Participant Risk Management Agreement:
    (1) No change.
    (2) Gross Dollar Thresholds (``Super Caps'') and Sizeable Limits.
    Clearing brokers will be able to establish, on an inter-day or
intra-day basis, gross dollar thresholds (also known as ``Super Caps'')
for purchases and sales for their correspondent executing brokers. When
any of a correspondent's gross dollar thresholds are exceeded, notice
will be furnished to the clearing broker, and any trade in excess of an
applicable ``sizeable limit'' that is negotiated by the correspondent
will be subject to review by the clearing broker until such time as the
correspondent's trading activity no longer exceeds a gross dollar
threshold. Specifically, the clearing broker will have 15 minutes from
execution to review any single trade negotiated by the correspondent
that equals or exceeds the applicable sizeable limit in order to decide
to act as principal for the trade or to decline to act as principal. If
the clearing broker does not affirmatively accept or decline the
``sizeable trade,'' at the end of 15 minutes the system will act in
accordance with pre-established processing criteria, as described
below.
    (A) ACT Workstation Users.
    (i) Clearing brokers that use the ACT Workstation may establish
gross dollar thresholds and sizeable limits for each of their
correspondent executing brokers. They may establish different gross
dollar thresholds and sizeable limits for each type of security (i.e.,
Nasdaq [National] Global Market, Nasdaq Capital Market, Consolidated
Quotations Service, or OTC Bulletin Board), as well as an aggregate
gross dollar threshold and sizeable limit for all types of securities.
    (ii)-(iii) No change.
    (B) Other Nasdaq Market Center Risk Management Users.
    (i) Clearing brokers that do not use the ACT Workstation may
establish aggregate gross dollar thresholds for each of their
correspondent executing brokers, but may not establish gross dollar
thresholds for each type of security (i.e., Nasdaq [National] Global
Market, Nasdaq Capital Market, Consolidated Quotations Service, or OTC
Bulletin Board).
    (ii)-(iii) No change.
    (3)-(5) No change.
    (6) Single Trade Limit.
    Clearing brokers will have 15 minutes from trade report input to
the Nasdaq Market Center to review any single trade executed by their
correspondent executing brokers that equals or exceeds a pre-
established limit in order to decide to act as principal for the trade
or to decline to act as principal. If, however, the clearing firm does
not affirmatively accept or decline the trade, at the end of 15 minutes
the system will act in accordance with pre-established processing
criteria, as described below.
    (A) ACT Workstation Users. Clearing brokers that use the ACT
Workstation may establish single trade limits for each of their
correspondent executing brokers, and may establish different limits for
each type of security (i.e., Nasdaq [National] Global Market, Nasdaq
Capital Market, Consolidated Quotations Service, or OTC Bulletin
Board). Such clearing brokers may also establish the default processing
criteria that will apply to trades that exceed the single trade limit
after 15 minutes if the clearing broker does not affirmatively accept
or decline the trade; the clearing broker may specify that such trades
should be either automatically declined or automatically subjected to
normal processing in which the clearing broker will act as principal to
clear the trades.
    (B) No change.
6110A. Definitions
    (a)-(k) No change.
    (l) The term ``TRACS Eligible Security'' shall mean Nasdaq
[National] Global Market, Nasdaq Capital Market security and Nasdaq
Convertible Debt securities.
    (m)-(n) No change.
* * * * *
7010. System Services
    (a)-(f) No change.
    (g) Nasdaq Market Center Trade Reporting
    The following charges shall be paid by the participant for use of
the trade reporting service of the Nasdaq Market Center:

------------------------------------------------------------------------

------------------------------------------------------------------------
Transaction Related Charges:
    Reporting of transactions in Nasdaq
     [National] Global Market and
     Capital Market securities executed
     through the Nasdaq Market Center
     System (``Nasdaq Market Center
     Covered Transactions'').
Average daily volume of transaction      Fee per side for transaction
 reports for the Nasdaq Market Center     reports of the Nasdaq Market
 Covered Transactions during the month    Center Covered Transactions to
 to which a participant is a party:       which such participant is a
                                          party:
    0 to 9,999.........................  $0.029
    10,000 or more.....................  $0.00
Other reports for transactions in        $0.00
 Nasdaq [National] Global Market and
 Capital Market securities not subject
 to comparison through the Nasdaq
 Market Center.
Reporting of transactions in ITS
 Securities (as defined in Rule
 5210(c)) not subject to comparison
 through the Nasdaq Market Center
 (``ITS Covered Transactions'').

Average daily volume of media            Fee per side for reports of ITS
 transaction reports for ITS Covered      Covered Transactions to which
 Transactions during the month (i) that   such participant is a party:
 are submitted to the trade reporting
 service of the Nasdaq Market Center
 automatically and in which a
 participant is identified as the
 reporting party, or (ii) that are
 submitted or introduced by such
 participant to the Nasdaq Market
 Center:
    0 to 5,000.........................  $0.029
    More than 5,000....................  $0.029 for a number of reports
                                          equal to 5,000 times the
                                          number of trading days in the
                                          month $0.00 for all remaining
                                          reports.
Reporting of all other transactions not  $0.029/side.
 subject to comparison through the
 Nasdaq Market Center.
Comparison.............................  $0.0144/side per 100 shares
                                          (minimum 400 shares; maximum
                                          7,500 shares).
Late Report--T+N.......................  $0.288/side.
Query..................................  $0.50/query.
CTCI fee...............................  $575.00/month.
WebLink ACT or Nasdaq Workstation Post   $300.00/month (full
 Trade.                                   functionality) or $150.00/
                                          month (up to an average of
                                          twenty transactions per day
                                          each month) (For the purposes
                                          of this service only, a
                                          transaction is defined as an
                                          original trade entry, either
                                          on trade date or as-of
                                          transactions per month).
Risk Management Charges................  $40.035/side and $17.25/month
                                          per correspondent firm
                                          (maximum $10,000/month per
                                          correspondent firm).
Corrective Transaction Charge..........  $0.25/Cancel, Error, Inhibit,
                                          Kill, or `No' portion of No/
                                          Was transaction, paid by
                                          reporting side; $0.25/Break,
                                          Decline transaction, paid by
                                          each party.
ACT Workstation........................  $525/logon/month.
------------------------------------------------------------------------

    (h)-(t) No change.
    (u) Nasdaq Revenue Sharing Program.
    After Nasdaq earns total operating revenue sufficient to offset
actual expenses and working capital needs, a percentage of all Market
Participant Operating Revenue (``MPOR'') shall be eligible for sharing
with Nasdaq Quoting Market Participants (as defined in Rule 4701). MPOR
is defined as operating revenue that is generated by Nasdaq Quoting
Market Participants. MPOR consists of transaction fees, technology
fees, and market data revenue that is attributable to Nasdaq Quoting
Market Participant activity in Nasdaq [National] Global Market and
Capital Market securities. MPOR shall not include any investment income
or regulatory monies. The sharing of MPOR shall be based on each Nasdaq
Quoting Market Participant's pro rata contribution to MPOR. In no event
shall the amount of revenue shared with Nasdaq Quoting Market
Participants exceed MPOR. To the extent market data revenue is subject
to year-end adjustment, MPOR revenue may be adjusted accordingly.
    (v)-(w) No change.
* * * * *

II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change

    In its filing with the Commission, Nasdaq included statements
concerning the purpose of, and basis for, the proposed rule change, as
amended, and discussed any comments it received on the proposed rule
change. The text of these statements may be examined at the places
specified in Item IV below. Nasdaq has prepared summaries, set forth in
Sections A, B, and C below, of the most significant aspects of such
statements.

A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change

1. Purpose
    Nasdaq proposes to rename the Nasdaq National Market as the Nasdaq
Global Market to more accurately reflect the international reach and
leadership of many of the companies listed on that market and the
market itself.\9\
---------------------------------------------------------------------------

    \9\ The Nasdaq Global Market, including the Nasdaq Global Select
segment described below, would be the successor to the Nasdaq
National Market. As such, Nasdaq believes that all securities listed
on the Nasdaq Global Market, including those on the Nasdaq Global
Select Market, would be ``covered securities,'' as that term is
defined in Section 18(b) of the Securities Act of 1933, 15 U.S.C.
77r(b).
---------------------------------------------------------------------------

    Nasdaq also proposes to create a new segment within the Nasdaq
Global Market. This new segment would be known as the Nasdaq Global
Select Market, and new, higher initial listing requirements would apply
to companies listing onthe Nasdaq Global Select Market.\10\ All listing
and trading rules applicable to securities on the Nasdaq Global Market
would also apply to the Nasdaq Global Select Market.
---------------------------------------------------------------------------

    \10\ As described below, given that the Nasdaq Global Select
Market is a segment of the Nasdaq Global Market, Nasdaq would apply
the same continued listing requirements as are applicable to other
companies on the Nasdaq Global Market, which are the existing
listing requirements for the Nasdaq National Market.
---------------------------------------------------------------------------

Listing Standards

    As described below, issuers would be required to meet minimum
liquidity measures and a financial test, as well as achieve a minimum
bid price requirement.\11\ Nasdaq believes that the creation of this
segment would more clearly align Nasdaq's financial and liquidity
listing standards with its corporate governance standards \12\ and its
regulatory enforcement program, as well as its trading system. While
Nasdaq believes its existing standards protect investors, Nasdaq also
believes that, to the extent these higher initial listing standards
help attract and maintain listings on Nasdaq and identify companies
that meet these high listing standards, investors would benefit.
---------------------------------------------------------------------------

    \11\ Nasdaq could deny listing to a company that meets these
requirements based on public interest concerns, as described in
existing NASD Rule 4300 and NASD IM-4300.
    \12\ Companies on the Nasdaq Global Select Market would be
required to meet the same rigorous corporate governance standards
applicable to companies on the Nasdaq Capital and Nasdaq Global
Markets. These standards require a majority independent board, an
independent audit committee, and for independent directors to
participate in compensation and nomination decisions. Shareholders
are also required to approve significant transactions and the use of
equity compensation.
---------------------------------------------------------------------------

1. Liquidity Tests
    In order to qualify for the Nasdaq Global Select Market, a company
would be required to demonstrate either: (1) A minimum of 550
shareholders and an average monthly trading volume over the prior 12
months of at least 1,100,000 shares per month; or (2) A minimum of
2,200 shareholders.

Average monthly trading volume.......................      > = 1,100,000
  and
Shareholders.........................................            > = 550
  OR
Shareholders.........................................          > = 2,200

    In addition, a company must have at least 1,250,000 publicly held
shares. In computing the number of publicly held shares, Nasdaq would
not consider shares held by an officer, director, or 10% shareholder
ofthe company.

Publicly Held Shares.................................      > = 1,250,000

    Finally, those publicly held shares must have a market value of at
least $110 million; provided, however, that if the market value of
publicly held shares is at least $100 million and the company has
shareholders equity of at least $110 million the company would also
qualify.

Market Value of Publicly Held Shares.................   > = $110,000,000
  OR
Market Value of Publicly Held Shares.................   > = $100,000,000
  and
Shareholders' Equity.................................   > = $110,000,000

2. Financial Tests
    A company would also be required to meet one of three financial
tests in order to qualify for listing on the Nasdaq Global Select
Market. Specifically, companies would be required to demonstrate: (1)
Aggregate pre-tax earnings of at least $11 million over the prior three
years, with all three years having positive pre-tax earnings and the
two most recent years having at least $2.2 million pre-tax earnings
each; (2) aggregate cash flows of at least $27.5 million over the prior
three years with all three years having positive cash flows, an average
market capitalization of at least $550 million over the prior 12
months, and total revenue of at least $110 million in the previous
fiscal year; or (3) total revenue of at least $90 million in the
previous fiscal year and an average market capitalization of at least
$850 million over the prior 12 months. However, the operating history
requirements in NASD Rules 4426(c)(1) and (c)(2) may be shortened to a
lesser period if an issuer does not have three years of publicly
reported financial data.\13\
---------------------------------------------------------------------------

    \13\ A period of less than three months shall not be considered
a fiscal year. See NASD Rule 4427(f).

Three year aggregate pretax earnings; and............    > = $11,000,000
Pre-tex earings in the two most recent years each;        > = $2,200,000
 and.................................................
Third most recent year pre-tax earnings..............                > 0
  OR
Three year aggregate cash flows; and.................    > = $27,500,000
Three most recent years' cash flow each; and.........                > 0
Average 12 month market capitalization; and..........   > = $550,000,000
    Total revenue....................................   > = $110,000,000
  OR
Total revenue; and...................................    > = $90,000,000
Average 12 month market capitalization...............   > = $850,000,000

    Nasdaq would determine compliance with the financial tests based on
a company's publicly filed financial information. Thus, for example, as
specified in proposed NASD Rule 4427(b), pre-tax earnings would be the
company's pre-tax income from continuing operations as filed with the
Commission in the issuer's most recent periodic report and/or
registration statement.
3. Price Test
    Any company newly listed on Nasdaq (both initial public offerings
and seasoned companies) would be required to have a minimum $5 bid
price to list on the Nasdaq Global Select Market. Companies switching
from the Nasdaq Global Market would have previously satisfied the bid
price requirement in connection with their initial listing and
therefore would not be required to meet this requirement again when
transferring to the new segment.
4. Other Provisions
    A company listing in connection with a court-approved
reorganization under the federal bankruptcy laws or comparable foreign
laws would be required to have 450 shareholders for listing, as would a
company affiliated with another company listed on the Nasdaq Global
Select Market. In these cases, Nasdaq believes that while the
shareholder requirement is difficult to meet immediately upon listing
because the stock is not initially widely distributed, shares are
widely distributed following the initial listing. For similar reasons,
the market value of publicly held shares requirement would be $70
million in the case of a company listing in connection with its initial
public offering, a company that is affiliated with, or a spin-off from,
another company listed on the Nasdaq Global Select Market, and a
closed-end management investment company.
    Due to their unique nature, closed-end management investment
companies would not be required to meet the financial requirements
described above.\14\ Further, Nasdaq has proposed different liquidity
standards for closed-end funds. Finally, if the primary class of a
company is included in the Nasdaq Global Select Market, any secondary
class of that same company, such as a secondary class of common or a
preferred stock, that qualifies for listing on the Nasdaq Global Market
shall also be included in the Nasdaq Global Select Market.
---------------------------------------------------------------------------

    \14\ While Nasdaq plans to list closed-end funds on the Nasdaq
Global Select Market, there are not separate listing standards for
structured products, index-linked notes, trust issued receipts,
SEEDs, units, commodity-backed products, or Exchange Traded Funds.
---------------------------------------------------------------------------

5. Continued Listing

    Following initial listing on the Nasdaq Global Select Market,
securities would be subject to the continued listing standards that are
currently applicable to the Nasdaq Global Market. Thus, companies must
satisfy one of the alternatives for continued listing contained in NASD
Rule 4450.\15\
---------------------------------------------------------------------------

    \15\ For inclusion on the Nasdaq Global Select Market, an
initial public offering must be able to satisfy one of the
alternatives for continued listing on the Nasdaq Global Market as
contained in NASD Rule 4450, as well as the requirements for initial
inclusion on the Nasdaq Global Select Market. As a result, the
initial listing standards would, in all cases, exceed the criteria
set forth in Rule 3a51-1(a)(2) of the Act, 17 CFR 240.3a51-1(a)(2).
---------------------------------------------------------------------------

Implementation

    Prior to the planned July 1, 2006, launch of the new segment,
Nasdaq would review all companies' qualifications and assign qualified
Nasdaq Global Market companies to the new Nasdaq Global Select
segment.\16\ In addition, qualified Nasdaq Capital Market companies
would be given the opportunity to be included in the new segment.\17\
Thereafter, beginning in 2007, staff of the Nasdaq Listing
Qualifications Department would review all Nasdaq Global Market
companies' qualifications each October and qualified Nasdaq Global
Market companies would be automatically placed in the new segment the
following January.\18\ While this review would

occur automatically in October, a company may also apply to upgrade at
any point. Companies transferring from the Nasdaq Global Market to the
Nasdaq Global Select Market as part of this process would not be
assessed entry or application fees. New Nasdaq Global Market listings
would also be placed in the Nasdaq Global Select segment if they
qualify, although they would be subject to the applicable entry and
application fee schedule.
---------------------------------------------------------------------------

    \16\ As a result of this review, no company then on the Nasdaq
Global Market would be adversely affected. Note that the fees for
the Nasdaq Global Market and the Nasdaq Global Select Market would
be the same. See NASD Rule 4510. Fees for securities listed on the
Nasdaq Capital Market would continue to differ. See NASD Rule 4520.
Any company not qualifying for the Nasdaq Global Select Market would
remain on the Nasdaq Global Market.
    \17\ See NASD Rule 4425(d).
    \18\ Nasdaq believes that the delay from October to January is
necessary to assure adequate time to complete the required review
and notify issuers and market participants about the change.
Nonetheless, to assure that no company is disadvantaged by this
delay, a company that qualifies for the Nasdaq Global Select Market
when it is reviewed in October would be placed in that segment even
if it falls below one or more of the initial listing requirements in
January when the actual transfer takes place. However, a company
that no longer meets the continued listing requirements for the
Nasdaq Global Market in January would not be transferred to the
Nasdaq Global Select Market, nor would a company that is delinquent
in filing its periodic reports at the time of the transfer or where
staff has raised public interest concerns.
---------------------------------------------------------------------------

    As part of both the initial transfer of companies to the Nasdaq
Global Select Market and Nasdaq's ongoing review of companies'
eligibility to be included in the Nasdaq Global Select Market, a
company that is in a grace or compliance period with respect to a
qualitative listing standard, such as the cure period allowed to
companies that have a vacancy on their audit committee, would be
allowed to transfer to the Nasdaq Global Select Market, subject to the
continuation of that grace period. If a company is non-compliant with a
qualitative listing requirement \19\ that does not provide for a grace
period or if staff has raised a public interest concern, the company
would not be permitted to transfer to the Nasdaq Global Select Market
until the underlying deficiency is resolved. A company that is below a
quantitative listing requirement even if the company has not been below
the requirement for a sufficient period of time to be considered
deficient \20\ and a company in a grace or compliance period with
respect to a quantitative listing requirement would not be allowed to
transfer to the Nasdaq Global Select Market until the underlying
deficiency is resolved, nor would any company before a Nasdaq Listing
Qualifications Panel.
---------------------------------------------------------------------------

    \19\ Qualitative listing requirements include those requirements
contained in NASD Rule 4350.
    \20\ For example, a security with a closing bid price below $1
is not considered deficient until the security has closed below $1
for 30 consecutive business days. Nonetheless, no security with a
closing bid price below $1 would be permitted to list on the Nasdaq
Global Select Market, even if it has closed above $1 in the prior 30
business days.
---------------------------------------------------------------------------

    In connection with the initial transfer of companies to the Nasdaq
Global Select Market, Nasdaq proposes to allow (but not require) any
Nasdaq-listed company that meets the New York Stock Exchange LLC
(``NYSE'') initial listing standards as of July 1, 2006, but that does
not then qualify for the new segment, to be included in the Nasdaq
Global Select Market, subject to an 18 month grace period until January
1, 2008, to achieve compliance.\21\ During that grace period, these
companies would have to achieve compliance with all applicable criteria
for initial listing on the Nasdaq Global Select Market. Any company
that has not achieved compliance with all listing criteria for the
Nasdaq Global Select Market by January 2008 would be moved to the
Nasdaq Global Market at that time.\22\
---------------------------------------------------------------------------

    \21\ Certain companies would qualify for the NYSE but not the
Nasdaq Global Select Market.
    \22\ If any such company fails to meet the continued listing
standards for the Nasdaq Global Market at any point, staff would
begin proceedings under the NASD Rule 4800 Series with respect to
that company.
---------------------------------------------------------------------------

2. Statutory Basis
    Nasdaq believes that the proposed rule change, as amended, is
consistent with the provisions of Section 15A of the Act,\23\ in
general, and with Section 15A(b)(6) of the Act,\24\ in particular.
Section 15A(b)(6) of the Act requires that Nasdaq's rule be designed to
promote just and equitable principles of trade, to remove impediments
to and perfect the mechanism of a free and open market, and to protect
investors and the public interest. Nasdaq believes that changing the
name of the Nasdaq National Market to the Nasdaq Global Market would
more accurately reflect the international reach and leadership of many
of the companies listed on that market and the market itself. Further,
Nasdaq believes that the creation of a market segment within the Nasdaq
Global Market with what it describes as higher initial listing
standards would protect investors and the public interest, and would
foster competition among exchange markets.
---------------------------------------------------------------------------

    \23\ 15 U.S.C. 78o-3.
    \24\ 15 U.S.C. 78o-3(b)(6).
---------------------------------------------------------------------------

B. Self-Regulatory Organization's Statement on Burden on Competition

    Nasdaq does not believe that the proposed rule change, as amended,
would result in any burden on competition that is not necessary or
appropriate in furtherance of the purposes of the Act.

C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others

    Written comments were neither solicited nor received.

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

    Because the foregoing proposed rule change, as amended, does not:
(i) Significantly affect the protection of investors or the public
interest; (ii) impose any significant burden on competition; and (iii)
become operative for 30 days from the date on which it was filed, or
such shorter time as the Commission may designate if consistent with
the protection of investors and the public interest, it has become
effective pursuant to Section 19(b)(3)(A) of the Act \25\ and Rule 19b-
4(f)(6) thereunder.\26\ At any time within 60 days of the filing of the
proposed rule change, the Commission may summarily abrogate such rule
change if it appears to the Commission that such action is necessary or
appropriate in the public interest, for the protection of investors, or
otherwise in furtherance of the purposes of the Act.\27\
---------------------------------------------------------------------------

    \25\ 15 U.S.C. 78s(b)(3)(A).
    \26\ 17 CFR 240.19b-4(f)(6).
    \27\ For purposes of calculating the 60-day period within which
the Commission may summarily abrogate the proposed rule change under
Section 19(b)(3)(C) of the Act, the Commission considers the period
to commence on June 27, 2006, the date Nasdaq filed Amendment No. 4
to the proposed rule change. See 15 U.S.C. 78s(b)(3)(C).
---------------------------------------------------------------------------

    Nasdaq has requested that the Commission waive the 5-day pre-filing
notice requirement and the 30-day operative delay and allow the
proposed rule change, as amended, to become effective upon filing. The
Commission has waived the 5-day pre-filing requirement for this
proposal. In addition, the Commission believes that it is consistent
with the protection of investors and the public interest to waive the
30-day operative delay.\28\ The Commission notes that the proposed rule
change, as amended, is substantially similar to a proposed rule change
filed by the NASDAQ Stock Market LLC.\29\
---------------------------------------------------------------------------

    \28\ For purposes only of waiving the 30-day operative delay of
this proposal, the Commission has considered the proposed rule's
impact on efficiency, competition, and capital formation. 15 U.S.C.
78c(f).
    \29\ See Securities Exchange Act Release No. 53799 (May 12,
2006), 71 FR 29195 (May 19, 2006) (SR-NASDAQ-2006-007).
---------------------------------------------------------------------------

IV. Solicitation of Comments

    Interested persons are invited to submit written data, views, and
arguments concerning the foregoing, including whether the proposed rule
change, as amended, is consistent with the Act.
    Comments may be submitted by any of the following methods:

Electronic Comments

     Use the Commission's Internet comment form (http://www.sec.gov/.
 rules/sro.shtml); or     Send an e-mail to<EMAIL_ADDRESS>Please include

File Number SR-NASD-2006-068 on the subject line.

Paper Comments

     Send paper comments in triplicate to Nancy M. Morris,
Secretary, Securities and Exchange Commission, Station Place, 100 F
Street, NE., Washington, DC 20549-1090.

All submissions should refer to File Number SR-NASD-2006-068. This file
number should be included on the subject line if e-mail is used. To
help the Commission process and review your comments more efficiently,
please use only one method. The Commission will post all comments on
the Commission's Internet Web site (http://www.sec.gov/ rules/

sro.shtml). Copies of the submission, all subsequent amendments, all
written statements with respect to the proposed rule change that are
filed with the Commission, and all written communications relating to
the proposed rule change between the Commission and any person, other
than those that may be withheld from the public in accordance with the
provisions of 5 U.S.C. 552, will be available for inspection and
copying in the Commission's Public Reference Room. Copies of such
filing also will be available for inspection and copying at the
principal office of the NASD.
    All comments received will be posted without change; the Commission
does not edit personal identifying information from submissions. You
should submit only information that you wish to make available
publicly.
    All submissions should refer to File Number SR-NASD-2006-068 and
should be submitted on or before July 31, 2006.
    For the Commission, by the Division of Market Regulation,
pursuant to delegated authority.\30\
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    \30\ 17 CFR 200.30-3(a)(12).

J. Lynn Taylor,
Assistant Secretary.
[FR Doc. 06-6038 Filed 7-7-06; 8:45 am]

BILLING CODE 8010-01-M