[Federal Register: November 13, 2008 (Volume 73, Number 220)]
[Notices]
[Page 67218-67235]
[DOCID:fr13no08-84]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-58904; File No. 4-533]

Joint Industry Plan; Order Approving the National Market System
Plan for the Selection and Reservation of Securities Symbols Submitted
by the Chicago Stock Exchange, Inc., The Nasdaq Stock Market, Inc.,
National Association of Securities Dealers, Inc. (n/k/a Financial
Industry Regulatory Authority, Inc.), National Stock Exchange, Inc.,
and Philadelphia Stock Exchange, Inc.

November 6, 2008.

I. Introduction

    On July 17, 2007, the Commission published for comment \1\ a
detailed summary of two proposed plans for the purpose of the selection
and reservation of securities symbols: the Five-Characters Plan and the
Three-Characters Plan. On January 25, 2008, the Commission published
Amendment No. 1 to the Three-Characters Plan for public comment.\2\ The
proposed plans were filed jointly by two different groups of self-
regulatory organizations (``SROs'') pursuant to Rule 608 of Regulation
NMS under the Securities Exchange Act of 1934 (``Act'') (``Rule
608'').\3\ The Chicago Stock Exchange, Inc. (``CHX''), The Nasdaq Stock
Market, Inc. (``Nasdaq''), National Association of Securities Dealers,
Inc. (``NASD'') (n/k/a Financial Industry Regulatory Authority, Inc.
(``FINRA'')),\4\ National Stock Exchange, Inc. (``NSX''), and
Philadelphia Stock Exchange, Inc. (``Phlx'') filed the Five-Characters
Plan.\5\ The American Stock Exchange LLC (``Amex''), Chicago Board
Options Exchange, Incorporated (``CBOE''), International Securities
Exchange, LLC (``ISE''), the New York Stock Exchange LLC (``NYSE''),
and NYSE Arca, Inc. (``NYSE Arca'') filed the Three-Characters Plan.\6\
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    \1\ See Securities Exchange Act Release No. 56037 (July 10,
2007), 72 FR 39096 (File Nos. 4-533 and 4-534) (``Symbology
Notice''). The full text of each plan is also available to
interested persons on the Commission's Web site at http://
www.sec.gov/rules/sro/nms.shtml#4-534 and http://www.sec.gov/rules/
sro/nms.shtml#4-533, respectively.
    \2\ See Securities Exchange Act Release No. 57171 (January 18,
2008), 73 FR 4645.
    \3\ 17 CFR 242.608.
    \4\ On July 26, 2007, the Commission approved a proposed rule
change filed by NASD to amend NASD's Certificate of Incorporation to
reflect its name change to Financial Industry Regulatory Authority
Inc., or FINRA, in connection with the consolidation of the member
firm regulatory functions of NASD and NYSE Regulation, Inc. See
Securities Exchange Act Release No. 56146 (July 26, 2007), 72 FR
42190 (August 1, 2007) (SR-NASD-2007-053).
    \5\ FINRA, Nasdaq, NSX, and Phlx filed the Five-Characters Plan
with the Commission on March 23, 2007. CHX, FINRA, Nasdaq, NSX, and
Phlx filed a Supplement to this proposed plan on April 23, 2007. In
the Supplement, CHX joined as a party proposing the Five-Characters
Plan.
    \6\ On March 23, 2007, Amex, NYSE and NYSE Arca filed the Three-
Characters Plan with the Commission. In Amendment No. 1 to the
Three-Characters Plan, filed on August 3, 2007, CBOE and ISE joined
as parties to the proposed plan.
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    Although the two plans are identical in many respects, they differ
on several significant matters. The primary difference between the two
plans is their scope. The Three-Characters Plan would only cover one-,
two-, and three-character symbols; the Five-Characters Plan would cover
one-, two-, three-, four-, and five-character symbols. In addition, the
plans differ with regard to the parties that are eligible to join the
plan; the reservation rights for perpetual and limited-time
reservations; the portability of symbols for issuers that move their
listing from one market to another; the allocation of costs relating to
the plan; and the process of withdrawing from the plan.
    The Commission received 61 comments on the proposed plans from 56
commenters.\7\ Twenty-two

commenters generally supported the Three-Characters Plan or aspects
thereof,\8\ while 22 commenters generally supported the Five-Characters
Plan or aspects thereof.\9\ The remaining 12 commenters did not
expressly support one plan or another.\10\
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    \7\ Letters to the Commission from Edward F. Tancer, Vice
President & General Counsel, FPL Group, Inc., dated March 28, 2007
(``FPL Letter''); Jason Korstange, SVP, Director of Corporate
Communications, TCF Financial Corporation, dated March 28, 2007
(``TCF Letter''); Timothy J. O'Donovan, Chairman of the Board, Chief
Executive Officer, Wolverine World Wide, Inc., dated March 28, 2007
(``Wolverine Letter''); Leo Liebowitz, Chairman and Chief Executive
Officer, Getty Realty Corp., dated March 29, 2007 (``Getty
Letter''); Edward W. Moore, Vice President, General Counsel &
Secretary, RPM International Inc., dated March 29, 2007 (``RPM
Letter''); Cathy Burzik, President and Chief Executive Officer,
Kinetic Concepts, Inc., dated March 30, 2007 (``KCI Letter'');
Clifton H. Morris, Jr., Chairman, AmeriCredit Corp., dated April 2,
2007 (``AmeriCredit Letter''); David M. Brain, President and CEO,
Entertainment Properties Trust, dated April 3, 2007 (``Entertainment
Properties Letter''); Steven S. Fishman, Chairman, Chief Executive
Officer and President, Big Lots, Inc., dated April 4, 2007 (``Big
Lots Letter''); Mary J. McGinn, Secretary and Deputy General
Counsel, The Allstate Corporation, dated April 5, 2007 (``Allstate
Letter''); Eric W. Nodiff, Sr. V.P. and General Counsel, Cantel
Medical Corp., dated April 9, 2007 (``Cantel Letter''); James C.
Smith, Chairman and CEO, Webster Financial Corporation, dated April
16, 2007 (``Webster Letter''); Michael Tenenbaum, PE, Trustee,
Strategic Technologies Employees Pension Fund Trust, dated May 2,
2007 (``Strategic Technologies Letter''); Craig D. Mallick,
Corporate Secretary, United States Steel Corporation, dated May 4,
2007 (``U.S. Steel Letter''); Bart J. Ward, Chief Executive Officer,
Ward & Company, dated May 8, 2007 (``Ward Letter''); Jack Sennott,
Senior Vice President and Chief Financial Officer, Darwin
Professional Underwriters, Inc., dated May 8, 2007 (``Darwin
Letter''); James J. Angel, Ph.D., CFA, Associate Professor of
Finance, McDonough School of Business, Georgetown University, dated
May 9, 2007 (``Angel Letter I''); M. Farooq Kathwari, Chairman,
President and CEO, Ethan Allen Interiors, Inc., dated May 9, 2007
(``Ethan Allen Letter''); Carol Kaufman, Sr. VP Legal Affairs, The
Cooper Companies, Inc., dated May 14, 2007 (``Cooper Letter''); Jack
R. Hartung, Chief Finance and Development Officer, Chipotle Mexican
Grill, Inc., dated May 15, 2007 (``Chipotle Letter''); Larry A.
Mizel, Chairman of the Board and Chief Executive Officer, M.D.C.
Holdings, Inc., dated May 17, 2007 (``MDC Letter''); Will Matthews,
dated May 21, 2007 (``Matthews Letter''); Stephen M. Klein, J.D.,
Chairman and Chief Executive Officer, Omni National Bank, dated May
21, 2007 (``Omni Letter''); Edward J. Resch, Executive Vice
President, Chief Financial Officer and Treasurer, State Street
Corporation, dated May 21, 2007 (``State Street Letter''); Faith
Pomeroy-Ward, Manager, Investor Relations, Adams Respiratory
Therapeutics, dated May 22, 2007 (``Adams Letter''); Shayn Carlson,
Director of Investor Relations, G&K Services, dated May 22, 2007
(``G&K Letter''); Alan R. Spachman, dated May 22, 2007 (``Spachman
Letter''); Mark L. Heimbouch, Chief Financial Officer and EVP,
Jackson Hewitt Tax Service Inc., dated July 10, 2007 (``Jackson
Hewitt Letter''); Daniel R. Coker, President & CEO, Amerigon
Incorporated, dated July 31, 2007 (``Amerigon Letter''); Betsy
Atkins, dated August 2, 2007 (``Atkins Letter''); Eric A. Blanchard,
Senior Vice President, General Counsel and Secretary, United
Stationers Supply Company, dated August 3, 2007 (``United Stationers
Letter''); Albert A. Pimentel, Executive Vice President and Chief
Financial Officer, Glu Mobile Inc., dated August 3, 2007 (``Glu
Letter''); Ryan Ellis, Executive Director, American Shareholders
Association, dated August 3, 2007 (``ASA Letter''); Rick Stewart,
CEO, Amarin Corporation plc, dated August 9, 2007 (``Amarin
Letter''); Steve Bene, Senior Vice President and General Counsel,
Electronic Arts Inc., dated August 9, 2007 (``Electronic Arts
Letter''); Bing Yeh, President & CEO, Silicon Storage Technology,
Inc., dated August 10, 2007 (``Silicon Storage Letter''); Kathy
Lanterman, Senior Vice President and Chief Financial Officer,
Silicon Graphics, Inc., dated August 9, 2007 (``SGI Letter''); Paul
Jennings, President and CEO, Innospec Inc., dated August 10, 2007
(``Innospec Letter''); Harry W. Kellogg, Jr., Vice Chairman, SVB
Financial Group, dated August 10, 2007 (``SVB Letter''); Arlen W.
Gelbard, Chief Administrative Officer and General Counsel, E*Trade,
dated August 10, 2007 (``E*Trade Letter''); MDS Office, Sobha
Developers Ltd, dated August 10, 2007 (``Sobha Letter''); John
Ritchie, Chief Financial Officer, Electronics For Imaging, dated
August 10, 2007 (``EFI Letter''); Adi Bar-Lev, Director of IR, Top
Image Systems Ltd., dated August 13, 2007 (``Top Image Letter'');
Lonnie R. Brock, CFO, Double Eagle Petroleum Co., dated August 13,
2007 (``Double Eagle Letter''); Joe Ovsenek, Senior Vice President,
Corporate, Silver Standard Resources Inc., dated August 15, 2007
(``Silver Standard Letter''); James J. Angel, Ph.D., CFA, Associate
Professor of Finance, McDonough School of Business, Georgetown
University, dated August 16, 2007 (``Angel Letter II''); Manisha
Kimmel, Executive Director, Financial Information Forum, dated
August 23, 2007 (``FIF Letter I''); Patrick J. Healy, Issuer
Advisory Group, dated September 6, 2007 (``Issuer Advisory
Letter''); S. Lee Clifford, President and CEO, SFB Market Systems,
dated September 25, 2007 (``SFB Letter''); Joan C. Conley, Senior
Vice President and Corporate Secretary, The NASDAQ Stock Market LLC,
dated November 2, 2007 (``Nasdaq Letter I''); Barbara Sweeney,
Senior Vice President and Corporate Secretary, The Financial
Industry Regulatory Authority, Inc., dated November 27, 2007
(``FINRA Letter''); Mary Yeager, Assistant Secretary, New York Stock
Exchange, LLC, dated January 15, 2008 (``NYSE Letter''); James J.
Angel, Ph.D., CFA, Associate Professor of Finance, McDonough School
of Business, Georgetown University, dated February 13, 2008 (``Angel
Letter III''); Manisha Kimmel, Executive Director, Financial
Information Forum, dated February 14, 2008 (``FIF Letter II'');
Marianne Brown, Chief Executive Officer, Omgeo, LLC, dated February
15, 2008 (``Omgeo Letter''); Joan Conley, Senior Vice President &
Corporate Secretary, The NASDAQ Stock Market LLC, dated February 26,
2008 (``Nasdaq Letter II''); John Panchery, Managing Director, Art
Trager, Vice President, and Ann Vlcek, Managing Director and
Associate General Counsel, Securities Industry and Financial Markets
Association, dated February 28, 2008 (``SIFMA Letter''); Julian
Rainero, Partner, Bracewell & Guiliani LLP, dated March 10, 2008
(``Bracewell & Guiliani Letter''); Jamie Shay, Head of SWIFT
Standards, Society for Worldwide Interbank Financial
Telecommunication, dated March 18, 2008 (``SWIFT Letter''); Scott
Atwell, FPL Global Steering Committee Co-Chair, FIX Protocol, dated
March 24, 2008 (``FIX Letter''); and Thomas P. Moran, Associate Vice
President & Associate General Counsel, Nasdaq, dated March 26, 2008
(``Nasdaq Letter III'').
    \8\ See FPL Letter, TCF Letter, Wolverine Letter, Getty Letter,
Kinetic Concepts Letter, AmeriCredit Letter, Entertainment
Properties Letter, Big Lots Letter, Allstate Letter, Cantel Letter,
Webster Letter, Strategic Technologies Letter, U.S. Steel Letter,
Ward Letter, Darwin Letter, Ethan Allen Letter, Cooper Letter,
Chipotle Letter, MDC Letter, State Street Letter, Jackson Hewitt
Letter, and NYSE Letter.
    \9\ See Matthews Letter, Omni Letter, Adams Letter, G&K Letter,
Amerigon Letter, Atkins Letter, United Stationers Letter, Glu
Letter, ASA Letter, Amarin Letter, Electronic Arts Letter, Silicon
Storage Letter, SGI Letter, Innospec Letter, SVB Letter, E*Trade
Letter, Sobha Letter, EFI Letter, Top Image Letter, Double Eagle
Letter, Silver Standard Letter, Nasdaq Letter I, and Nasdaq Letter
II.
    \10\ See RPM Letter, Angel Letter I, Angel Letter II, Angel
Letter III, Spachman Letter, FIF Letter I, FIF Letter II, Issuer
Advisory Letter, SFB Letter, FINRA Letter, Omgeo Letter, SIFMA
Letter, Bracewell & Guiliani Letter, SWIFT Letter, and FIX Letter.
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    This order approves the Five-Characters Plan, with changes and
subject to conditions as the Commission deems necessary or appropriate,
thus authorizing CHX, FINRA, Nasdaq, NSX, and Phlx to act jointly to
implement the Five-Characters Plan, as modified herein, as a means of
facilitating a national market system in accordance with the
requirements of Section 11A of the Act.\11\ This order also requires,
within 60 days of this approval order, that any SRO that chooses to
list securities or to designate securities for quoting on a quotation
medium to join the Five-Characters Plan, as modified herein, and to act
jointly with CHX, FINRA, Nasdaq, NSX, and Phlx to implement the
approved plan.\12\ The approved Five-Characters Plan is attached here
as Appendix A.
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    \11\ 15 U.S.C. 78k-1. See also 17 CFR 242.608(b)(2).
    \12\ 15 U.S.C. 78k-1(a)(3)(B).
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II. Background

A. Section 11A of the Act

    In 1975, Congress directed the Commission, through the enactment of
Section 11A of the Act,\13\ to facilitate the establishment of a
national market system to link together the individual markets that
trade securities. Congress found the development of a national market
system to be in the public interest and appropriate for the protection
of investors and the maintenance of fair and orderly markets to assure
fair competition among the exchange markets.\14\ Section 11A(a)(3)(B)
of the Act directs the Commission, ``by rule or order, to authorize or
require self-regulatory organizations to act jointly with respect to
matters as to which they share authority under this title in planning,
developing, operating, or regulating a national market system (or a
subsystem thereof) or one or more facilities.'' \15\ The Commission's
approval of a national market system plan is conditioned upon a finding
that the proposed plan is ``necessary or appropriate in the public
interest, for the protection of investors and the maintenance of fair
and orderly markets, to remove impediments to, and perfect the
mechanism of, a national market system, or otherwise in furtherance of
the purposes of the Act.'' \16\
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    \13\ 15 U.S.C. 78k-1.
    \14\ 15 U.S.C. 78k-1(a)(1)(C).
    \15\ 15 U.S.C. 78k-1(a)(3)(B).
    \16\ 17 CFR 242.608(b)(2). See also 15 U.S.C. 78k-1(a).
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B. Limited Symbol Supply

    Pursuant to Rule 601 of Regulation NMS under the Act,\17\ all SROs
are required to report every trade in listed equity securities \18\ and
Nasdaq securities \19\ made through their facilities, and to make such
information public. Each SRO reports every transaction to the ticker
tape using the ticker symbol for that security, the volume of the
trade, and the price of the trade. Currently, there are three ticker
tapes: Tape A reports the stocks that are listed on NYSE, Tape B
reports the

stocks that are listed on Amex, as well as securities listed on any
other national securities exchange (except securities also listed on
NYSE and Nasdaq), and Tape C reports the stocks that are listed on
Nasdaq. Tapes A and B disseminate market information pursuant to the
Consolidated Tape Association Plan (``CTA Plan''), while Tape C
disseminates market information pursuant to the Nasdaq Unlisted Trading
Privileges Plan.
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    \17\ 17 CFR 242.601.
    \18\ 17 CFR 242.600(b)(34) defines ``listed equity security'' as
``any equity security listed and registered, or admitted to unlisted
trading privileges, on a national securities exchange.''
    \19\ 17 CFR 242.600(b)(41) defines ``Nasdaq security'' as ``any
registered security listed on The Nasdaq Stock Market, Inc.''
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    Securities symbols are a key element in the operation of a national
market system and essential to the dissemination of trade information
in a common format. The term ``ticker symbol'' originates from the
ticker tape.\20\ Prior to the introduction of the ticker, it was
customary for messengers to manually disseminate quotations.\21\ In
1867, an employee of the NYSE developed the stock ticker.\22\ A system
of symbols and abbreviations developed as the only practical method for
reporting transactions, because the full description of the issuer,
security, number of shares sold, the price, and other market data would
slow the dissemination of trade information so that the ticker would
fall behind the market.\23\ In December 1966, the ticker tape was fully
automated.\24\
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    \20\ The ticker tape started in 1867, when all trades made on an
exchange were sent out by telegraph and printed on a piece of paper.
Although the process is now automated, the securities industry
participants continue to refer to the electronic reporting of
information as the ``tape.'' See Hal McIntyre, How the US Securities
Industry Works, 194-95 (The Summit Group Press) (2000).
    \21\ See S. S. Huebner, Ph.D., Sc.D., The Stock Market, 218
(Appleton-Century-Crofts, Inc.) (1934).
    \22\ E.A. Calahan. See George L. Leffler, Ph.D., The Stock
Market, 162 (The Ronald Press Company) (1951).
    \23\ See note 21 supra at 222. The first ticker was very slow
and not practical, until Thomas A. Edison, another employee of the
NYSE, improved its speed and efficiency. See note 22 supra at 162.
    \24\ See Richard J. Teweles and Edward S. Bradley, The Stock
Market, 148 (John Wiley & Sons, Inc.) (1998).
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    Recently, concerns about the scarcity of available symbols have
highlighted the need for a symbol reservation national market system
plan to efficiently and fairly manage symbol supply. As the securities
markets have grown over the years, the availability of one-, two-, and
three-character symbols has diminished.\25\ Several factors have been
increasing the demand for one-, two-, and three-character symbols. In
recent years, exchanges have begun listing new and innovative products,
such as exchange-traded funds, that are now competing with listed
companies for symbols.
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    \25\ There are 26 combinations for one-character symbols, 676
combinations for two-character symbols, and 17,576 combinations for
three-character symbols, for a total of 18,278 one-, two-, and
three-character symbols.
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    In addition, Nasdaq, which when operated as a facility of NASD (n/
k/a FINRA) \26\ only listed securities with four- and five-character
symbols, has begun using two- and three-character symbols and has
expressed its desire to use one-character symbols as well for Nasdaq-
listed issuers. It has been the practice of the NYSE to list companies
using one-, two-, and three-character symbols and of other exchanges
(including Amex and regional exchanges) to list companies using two-
and three-character symbols. Until recently, Nasdaq was the only
listing market that did not assign securities one-, two-, or three-
character symbols; instead, Nasdaq had assigned securities it listed
four- and five-character symbols. In November 2005, however, Nasdaq
announced its intention to begin listing companies with one-, two-, and
three-character symbols.\27\ Since that time, Nasdaq has made a series
of announcements detailing its plans, and has worked with the industry
to test trading systems to ensure the proper functionality for such
symbols.\28\ In March 2007, Nasdaq filed with the Commission a proposed
rule change to allow companies transferring their listings to Nasdaq to
retain their three-character symbols.\29\ And, in April 2008, Nasdaq
filed with the Commission an immediately effective proposed rule change
to allow an issuer with a two-character symbol to transfer its listing
to Nasdaq and retain its two-character symbol.\30\
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    \26\ Nasdaq began operations as a national securities exchange
in Nasdaq-listed securities on August 1, 2006, and in non-Nasdaq-
listed securities on February 12, 2007. See http://www.nasdaq.com/
about/FAQsExchange.stm. See also Securities Exchange Act Release No.
53128 (January 13, 2006), 71 FR 3550 (January 23, 2006) (File No.
10-131).
    \27\ See Head Trader Alert 2005-133 (November 14, 2005),
available at http://www.nasdaqtrader.com.
    \28\ See e.g., Nasdaq Head Trader Alerts 2006-144 (September 29,
2006), 2006-193 (November 16, 2006), 2006-201 (December 6, 2006),
and 2007-008 (January 25, 2007), each available at http://
www.nasdaqtrader.com.
    \29\ See Securities Exchange Act Release No. 55563 (March 30,
2007), 72 FR 16391 (April 4, 2007) (SR-NASDAQ-2007-031) (notice for
the proposal to allow three-character symbol portability for
companies transferring their listings to Nasdaq). The Commission
approved this proposal in July 2007. See Securities Exchange Act
Release No. 56028 (July 9, 2007), 72 FR 38639 (July 13, 2007)
(``Nasdaq Three-Character Portability Order''). See also Securities
Exchange Act Release No. 55519 (March 26, 2007), 72 FR 15737 (April
2, 2007) (SR-NASDAQ-2007-025) (allowing a single company, Delta
Financial Corp., to retain its three-character symbol upon
transferring its listing from Amex to Nasdaq).
    \30\ See Securities Exchange Act Release No. 57696 (April 22,
2008), 73 FR 22987 (April 28, 2008) (SR-NASDAQ-2008-034). The
Commission notes that its approval of the Five-Characters Plan, as
modified herein, is consistent with this change and with its
approval of the Nasdaq Three-Character Portability Order. See id. As
discussed further below, see infra notes 105-117 and accompanying
text, the approved plan would allow the automatic portability of all
one-, two-, three-, four-, and five-character symbols of issuers
transferring their listing from one exchange to another.
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    Finally, the proliferation of standardized options has decreased
the availability of three-character symbols.\31\ Developing a formal
process to reserve, select, and allocate symbols fairly and efficiently
among the listing markets should help promote a fair and orderly
national market system and protect investors.
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    \31\ The options exchanges have expressed their intention to
shift to a different symbology. See http://www.theocc.com/
initiatives/symbology/default.jsp.
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C. Weaknesses in the Existing Reservation System

    Currently, the listing markets assign securities symbols under an
informal understanding among the markets. Under this system, each SRO
keeps its own records of reserved symbols. If an SRO wishes to reserve
a particular symbol, the SRO will consult its own list of reserved
symbols and then, if it believes that the symbol is available, will
notify the other SROs that it is reserving that symbol. If no other SRO
objects, then the listing SRO has successfully reserved that symbol and
each SRO would be responsible for updating its own records of reserved
symbols accordingly.
    There are several weaknesses in the current informal system. The
absence of universal reservation records may lead to confusion about
the availability of certain symbols and may result in disputes between
listing markets about the availability of particular symbols. Any such
confusion or disagreement between the listing markets could disrupt the
listing process or raise the potential for symbol duplication and
investor confusion.
    In addition, under the existing system, listing markets may reserve
an excess amount of symbols indefinitely, which could exacerbate the
strain on symbol supply. Market fears about supply constraints and
competition for listings could drive listing markets to reserve an
excess amount of symbols, either to protect their interests in the
event of needing such symbols in the future or to give themselves
advantages over their competitors in securing future listings. For
example, a listing market could use the existing symbol reservation
system to withhold unused symbols from their competitors, trade
reserved symbols only with certain, allied exchanges, or use their
power to

withhold desired symbols to compel other listing markets not to trade
symbols with their direct competitors.
    Finally, the existing system does not universally permit issuers
transferring their listing to a new exchange to keep their ticker
symbols. Thus, the original listing market and the new listing market
for a transferred listing could become embroiled in a dispute over the
right to use the issuer's ticker symbol, which could disrupt trading in
that security, and such uncertainty could affect an issuer's decision
in selecting a listing venue or moving from one venue to another.
    Disagreements over the use of securities symbols have arisen in the
past. For example, in 1999, NYSE, Amex, and Nasdaq were involved in a
dispute regarding the symbol ``Q,'' which Amex and Nasdaq planned to
use for the Nasdaq 100 Trust. However, NYSE claimed that it had
reserved that symbol and sued to enjoin the use of that symbol. Amex
and Nasdaq eventually agreed to use a different symbol for the Nasdaq
100 Trust.\32\
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    \32\ See, e.g., Big Board Drops its Lawsuit Against Amex, The
New York Times, March 10, 1999, Section C, p. 10.
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    These weaknesses in the existing informal symbol reservation system
could potentially have significant market consequences as exchanges
compete more aggressively for listings and the supply of available
symbols becomes more restricted over time. For this reason, the
Commission believes that it is necessary to adopt a national market
system plan for reserving and allocating symbols among the SROs to
maintain fair and orderly markets. Consistent with the principles of
Section 11A of the Act, in February 2005, Commission staff requested
the listing markets to commence joint discussions to develop such a
national market system plan.\33\ A national market system plan for
symbology should mitigate confusion or disagreement about the rights to
particular securities symbols and should allow symbols to be used in a
manner that is efficient and promotes competition between the listing
markets.
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    \33\ See Letters from Annette L. Nazareth, then Director of the
Division of Market Regulation, Commission, to Amex, Boston Stock
Exchange (``BSE''), CBOE, CHX, ISE, Nasdaq, NASD, NSX, NYSE, Pacific
Exchange (the predecessor to NYSE Arca) and Phlx, dated February 7,
2005 (``February 2005 Letters'').
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III. Discussion

    In the notice publishing for comment both the Three-Characters Plan
and the Five-Characters Plan, the Commission asked for comments on
whether it should approve one or two plans. Four commenters provided
feedback on this issue and each supported the approval of a single
symbology plan.\34\ One of these commenters stated that having two
different plans for short and long tickers adds needless complexity to
an already complex market structure and that the additional complexity
of two plans would create increased costs for SROs as well as
additional costs to the Commission to regulate two plans, which would
be borne ultimately by taxpayers and investors.\35\ The Commission
agrees with these commenters that approving two plans for the
reservation of symbols would place undue costs and burdens on listing
SROs, including new entrants. The Commission also notes that,
currently, the proposed plans both establish a process for the
selection and reservation of one-, two-, and three-character securities
symbols. Therefore, approval of both plans would establish two
competing, inconsistent systems for selecting and reserving one-, two-,
and three-character symbols, which the Commission believes would not be
in furtherance of the purposes of the Act. The Commission finds that
approving a single plan, rather than both plans, is necessary or
appropriate in the public interest, for the protection of investors and
the maintenance of fair and orderly markets, to remove impediments to,
and perfect the mechanisms of a national market system and is in
furtherance of the purposes of the Act because a single plan would
promote the smooth and orderly operation of the marketplace.
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    \34\ See FIF Letter I, FIF Letter II at 1, Angel Letter II at 3,
Angel Letter III at 1, Omgeo Letter at 1, and SWIFT Letter.
    \35\ See Angel Letter II at 3 and Angel Letter III at 2.
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    After carefully considering the proposed plans and the issues
raised by the comment letters, the Commission has determined to
approve, pursuant to Section 11A(a)(3)(B) of the Act \36\ and Rule
608,\37\ the Five-Characters Plan, with changes and subject to
conditions set forth herein as the Commission has deemed necessary or
appropriate.\38\ As discussed in detail below, in approving the Five-
Characters Plan, the Commission finds that the Five-Characters Plan is
necessary and appropriate in the public interest and in furtherance of
the purposes of the Act. The Five-Characters Plan is more comprehensive
than the Three-Characters Plan because it covers one-, two-, three-,
four-, and five-character symbols. The Commission also believes it
would better promote fair competition among exchanges that list
securities because it does not constrain the portability of symbols (as
the Three-Characters Plan does), but instead makes all symbols
automatically portable when a listed issuer transfers its listing to
another exchange. This portability would enable issuers to make listing
decisions based on factors that relate to the quality of the listing
markets such as trading quality, costs, and branding, rather than on
considerations of symbol portability. In summary, the Five-Characters
Plan provides a system for reserving and allocating securities symbols
that should provide clarity and order to the symbol reservation
process, mitigate the current constraints on symbol supply, and promote
fair competition between the various SROs.
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    \36\ 15 U.S.C. 78k-1(a)(3)(B).
    \37\ 17 CFR 242.608.
    \38\ The Commission has modified the proposed Five-Characters
Plan to make the following changes: (i) To modify the plan to state
that, 90 days following the Commission's approval, it will be the
exclusive means of allocating and using symbols of one-, two-,
three-, four-, and five-characters in length and to specify that
there is no difference between capital and lowercase letters (see
infra note 41 and accompanying text); (ii) to modify the start date
for the initial reservation process from upon Commission approval of
the plan to 60 days following the Comission's approval (see infra
notes 141-143 and 190-191 and accompanying text); (iii) to limit the
use of one-, two-, and three-character symbols for securities listed
on a national securities exchange and to restrict securities trading
over-the-counter to using only four- or five-character symbols (see
infra notes 85-89 and accompanying text); and (iv) to clarify that
securities that de-list and trade on the over-the-counter market
would not have portability rights for the original listing symbol
(see infra notes 168-172 and accompanying text).
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    This order authorizes CHX, FINRA, Nasdaq, NSX, and Phlx to act
jointly to implement the Five-Characters Plan, as modified herein, as a
means of facilitating a national market system in accordance with the
requirements of Section 11A of the Act.\39\ This order also requires
any SRO that chooses to list securities on its market or to designate
securities for quoting on a quotation medium to join the Five-
Characters Plan and to act jointly with other parties to the plan to
implement the approved plan.\40\
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    \39\ 15 U.S.C. 78k-1.
    \40\ 15 U.S.C. 78k-1(a)(3)(B). The Commission did not receive
any comments regarding whether it should require SROs to join an
approved plan.
---------------------------------------------------------------------------

    In connection with requiring SROs that list, or designate for
quoting, securities, the Commission is also modifying the plan to
provide that, 90 days from the date of this Order, the Five-Characters
Plan shall be the exclusive means of allocating and using symbols of
one-, two-, three-, four-, or five-characters in length. In addition,
for clarity, the Commission is specifying that there will be no
difference between capital letters and lowercase letters,

thus limiting the choices of letters to 26. The Commission believes
these changes are necessary and appropriate for the dissemination of
trade information in a common format.\41\
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    \41\ The Commission notes that, while the proposed plans were
silent on these points, this clarification is necessary to avoid the
possibility of confusion regarding the scope of the approved plan.
---------------------------------------------------------------------------

A. Five-Characters Plan's Consistency With Section 11A of the Act

    Many of the provisions of the proposed Five-Characters Plan are
similar or identical to parallel provisions in the proposed Three-
Characters Plan. Particularly, the plans would establish the
Intermarket Symbol Reservation Authority (``ISRA'') composed of plan
participants and set forth how it would be administered. Both plans
also have the same provisions regarding the use of a third-party
processor and a symbol reservation database, the general process of
reserving perpetual and limited-time reservations, the use of a waiting
list, the right to reuse a symbol, the ability to request the release
of a symbol, the terms of confidentiality, the non-transferability of
rights under the plan, and the process of amending the plan.\42\
Despite these significant areas of consensus, however, there are
several important differences between the proposed plans.
---------------------------------------------------------------------------

    \42\ See discussion infra Part III(B) for a discussion of these
provisions.
---------------------------------------------------------------------------

    Many of the commenters that favored the proposed Five-Characters
Plan asserted that it would enhance competition among markets by
putting all exchanges on a fair and level playing field and would
reduce the potential for investor confusion by allowing a fair
framework for symbol portability.\43\ Several commenters stated that
the proposed Five-Characters Plan would give all exchanges equal rights
under the proposal.\44\ Some of these commenters also stated that the
proposed Five-Characters Plan would provide greater choice for public
companies and cause less confusion for investors.\45\ One commenter
asserted that the proposed Five-Characters Plan is inherently more fair
and reasonable than the proposed Three-Characters Plan.\46\
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    \43\ See Amerigon Letter, United Stationers Letter, Glu Letter,
Electronic Arts Letter, Silicon Storage Letter, Silicon Graphics
Letter, Innospec Letter, SVB Letter, E*Trade Letter, EFI Letter, Top
Image Letter, Double Eagle Letter, and Silver Standard Letter.
    \44\ See Adams Letter, Atkins Letter, and Sobha Letter. See also
ASA Letter, which stated that fair and equal competition is the core
of the Five-Characters Plan.
    \45\ See Amerigon Letter, United Stationers Letter, Glu Letter,
Amarin Letter, Electronic Arts Letter, Silicon Graphics Letter, SVB
Letter, E*Trade Letter, Top Image Letter, Double Eagle Letter, and
Silver Standard Letter.
    \46\ See Matthews Letter.
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    The Commission agrees with the commenters supporting the Five-
Characters Plan and finds that, as discussed in greater detail below,
the Five-Characters Plan, as modified herein, is consistent with
Section 11A of the Act, and is necessary and appropriate in the public
interest, for the protection of investors and the maintenance of fair
and orderly markets.
1. Scope of Plan
    One primary difference between the two proposed plans relates to
scope: the proposed Three-Characters Plan would only cover one-, two-,
and three-character symbols; the Five-Characters Plan, on the other
hand, would cover the reservation and allocation of all one-, two-,
three-, four-, and five-character symbols. Both of the proposed plans
would cover only root symbols, without any suffix or special
conditional identifier.\47\
---------------------------------------------------------------------------

    \47\ See Section IV(a) of the proposed plans.
---------------------------------------------------------------------------

    The Commission believes that the Five-Characters Plan, which would
establish a uniform system for the selection and reservation of symbols
(``Symbol Reservation System'') of one-, two-, three-, four-, or five-
character securities symbols,\48\ is more comprehensive, and therefore
offers a more efficient and effective mechanism for allocating symbols
than the Three-Characters Plan.\49\ The Three-Characters Plan would
leave unanswered the appropriate methodology for allocating four- and
five-character symbols.
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    \48\ See Section I(b) of the Five-Characters Plan. The Five-
Characters Plan would cover only root symbols (i.e., without any
suffix or special conditional identifier) that are NMS securities as
currently defined in Rule 600(a)(46) of Regulation NMS under Act and
any other equity securities quoted, traded, and/or trade reported
through an SRO facility. See Preamble and Sections I(b) and IV(a) of
the Five-Characters Plan. The Three-Characters Plan would cover only
root symbols of one-, two- or three-characters for Network A and
Network B Eligible Securities (as defined in the CTA Plan) and
listed options reported to OPRA. The Three-Characters Plan states
that, for listed equity securities, no such symbols would be
allocated or used other than for Network A or Network B Eligible
Securities. See Sections I(b) and IV(a) of the Three-Characters
Plan.
    \49\ As discussed below, one commenter suggested expanding the
length of securities symbols to 10 or 12 characters. See Angel
Letter III at 3. Currently, the markets only use root symbols of
one- through five-characters in length.
---------------------------------------------------------------------------

    Although Nasdaq is currently the primary listing exchange for
issuers using four- and five-character symbols,\50\ the Commission
believes that it will further the purposes of the Act to approve a plan
for the reservation and allocation of symbols with one-, two-, three-,
four-, and five-character symbols in order to permit all exchanges to
begin utilizing such symbols, particularly in light of the limited
availability of one-, two-, and three-character symbols. Indeed, the
Commission believes that allowing all exchanges to list four- and five-
character securities symbols should help ensure that the supply of
available securities symbols does not become constrained.
---------------------------------------------------------------------------

    \50\ The Commission notes that NYSE Arca currently lists an
issuer with a four-character security symbol, namely Golden Cycle
Gold Corporation (ticker symbol: GCGC).
---------------------------------------------------------------------------

    Some commenters urged a broader scope than that proposed in either
plan. Seven commenters advocated the adoption of a national market
system plan that provides a single suffix symbology across all
SROs.\51\ In response, Nasdaq had initially commented that the plan
should only cover root symbols because the use of symbol suffixes is
unique to individual markets.\52\ Subsequently, however, Nasdaq urged
that the Commission commence a process for adopting a uniform inter-
market equity symbol suffix plan.\53\ The Commission is supportive of
considering such an initiative. To avoid a delay in the implementation
of a symbology national market system plan for root symbols, however,
the Commission believes it is appropriate to consider any such
initiative separately following the approval of the Five-Characters
Plan. Accordingly, the Commission finds the scope of the Five-
Characters Plan in its focus on root symbols is appropriate in the
public interest and that it will further the purposes of the Act.
---------------------------------------------------------------------------

    \51\ See FIF Letter I, FIF Letter II at 1, Angel Letter II at 3,
Angel Letter III at 1, Omgeo Letter at 1, SIFMA Letter, Bracewell &
Guiliani Letter, SWIFT Letter, and FIX Letter. One commenter also
noted that current inconsistencies in suffix symbology and condition
identifiers make it difficult for data vendors to pass through
accurate data, which can cause confusion and loss for investors. See
Angel Letter I at 8 and Angel Letter III at 1. This commenter also
believed that the plan should cover, in addition to equity
securities, options, futures, securities futures, mutual funds, and
indices and that it should incorporate representation from the
derivatives exchanges, issuers, investors, and brokers. See Angel
Letter I at 10, Angel Letter II at 4, and Angel Letter III at 1. In
addition, this commenter urged the development of a new symbology
plan in what he anticipates will be a global trading environment.
See Angel Letter III at 2.
    \52\ See Nasdaq Letter II at 3.
    \53\ See Nasdaq Letter III. See also Head Trader Alert 2008-36
(March 27, 2008), available at http://www.nasdaqtrader.com.
---------------------------------------------------------------------------

2. Parties to the Plan
    The proposed plans have different criteria for determining the
eligibility for parties to join their plan. The

proposed Three-Characters Plan would only allow an SRO to join the plan
if it maintains a market for the listing and trading of securities that
are identified by one-, two-, or three-character symbols and if their
listed equity securities are also ``Network A'' or ``Network B''
``Eligible Securities'' as those terms are defined in the CTA Plan.\54\
---------------------------------------------------------------------------

    \54\ The CTA Plan defines ``Network A Eligible Securities'' to
mean Eligible Securities listed on NYSE and ``Network B Eligible
Securities'' to mean, in relevant part, Eligible Securities listed
on the Amex, BSE, CBOE, CHX, ISE, NSX, NYSE Arca, Phlx or on any
other exchange other than Nasdaq, but not also listed on NYSE.
---------------------------------------------------------------------------

    The Five-Characters Plan, on the other hand, would allow any SRO to
join the plan as long as it maintains a market for the listing and
trading of securities that are identified by one-, two-, three-, four-,
or five-character symbols.\55\ A party would also be required to have
the actual technical and physical capability through its facilities to
immediately quote and report trades in securities either using one-,
two-, or three-character symbols, if it seeks to reserve symbols of
one-, two-, or three-characters in length, or using four-or five-
character symbols, if it seeks to reserve symbols of four-or five-
characters in length.\56\ In addition, this plan would require, as
conditions to becoming a new participant, that an SRO pay a
proportionate share of the aggregate development costs and sign a
current copy of the plan.\57\
---------------------------------------------------------------------------

    \55\ See also supra note 48.
    \56\ See Section I(b) of the Five-Characters Plan.
    \57\ See Section I(c) of the Five-Characters Plan. For
additional discussion regarding the plan's provision relating to
costs, see discussion infra notes 118-124 and accompanying text.
---------------------------------------------------------------------------

    Many commenters argued that Nasdaq should not be allowed to list
one-, two-, and three-character symbols because such symbols are
indicative of an NYSE listing.\58\ Some of these commenters argued that
an issuer's use of a one-, two-, or three-character symbol signaled the
NYSE brand and ``companies listed on NYSE meet the highest corporate
governance and financial standards in the world;'' \59\ consequently,
some stated, the Nasdaq issuers' use of such symbols could lead to
investor confusion.\60\ One such commenter, a trustee and portfolio
manager of a small pension fund, stated that it relies on the use of
one-, two-, and three-character symbols to identify NYSE securities and
makes investment decisions based on such reliance, citing the financial
reporting requirements and stability of earnings of NYSE securities;
this commenter further stated that it generally performs ``an extra
level of scrutiny in view of the longevity of firms that have been
listed in the over the counter market'' because it presumes that those
securities are not NYSE-listed securities.\61\ NYSE also argued that
Nasdaq's attempt to use three-character symbols exacerbates the
existing supply problems without justification.\62\
---------------------------------------------------------------------------

    \58\ See FPL Letter, TCF Letter, Wolverine Letter, Getty Letter,
KCI Letter, AmeriCredit Letter, Entertainment Properties Letter, Big
Lots Letter, Allstate Letter, Cantel Letter, Webster Letter,
Strategic Technologies Letter, U.S. Steel Letter, Ward Letter,
Darwin Letter, Ethan Allen Letter, Cooper Letter, Chipotle Letter,
State Street Letter, and Jackson Hewitt Letter. See also NYSE Letter
at 2.
    \59\ See Allstate Letter; see also, e.g., FPL Letter, TCF
Letter, Wolverine Letter, Getty Letter, KCI Letter, AmeriCredit
Letter, Entertainment Properties Letter, Big Lots Letter, Cantel
Letter, Webster Letter, Strategic Technologies Letter, U.S. Steel
Letter, Darwin Letter, Ethan Allen Letter, Cooper Letter, Chipotle
Letter, State Street Letter, and Jackson Hewitt Letter. See also
NYSE Letter at 4.
    \60\ See TCF Letter, Wolverine Letter, Big Lots Letter, Ward
Letter. See also NYSE Letter at 3.
    \61\ See Strategic Technologies Letter. The NYSE Letter also
argued that investors, securities issuers, and the public rely on
the different symbol lengths to distinguish NYSE and Nasdaq
securities. See NYSE Letter at 2.
    \62\ See NYSE Letter at 5.
---------------------------------------------------------------------------

    Many other commenters, however, challenged these assertions and
argued that Nasdaq should have the same rights to list one-, two-, or
three-character symbols as NYSE and any other exchange.\63\ One
commenter noted that one-, two-, and three-character ticker symbols
have previously been used by Amex and other regional exchanges and that
commenters implying that one-, two-, and three-character symbols are
associated only with NYSE ignore current practice and the historical
record.\64\ Another commenter stated that, due to the fact that markets
can no longer claim a majority share of the trading in their listed
securities, the correlation of the number of letters in a ticker symbol
and its listing on a particular exchange is an increasingly obsolete
consideration.\65\ One commenter also noted that NYSE and Amex issuers,
similarly, should have the flexibility to use longer ticker symbols
that may be more readily identifiable with their company.\66\
---------------------------------------------------------------------------

    \63\ See G&K Letter, Amerigon Letter, United Stationers Letter,
Glu Letter, Electronic Arts Letter, Silicon Graphics Letter, E*Trade
Letter, Silicon Storage Letter, Innospec Letter, EFI Letter, and
Nasdaq Letter I. See also SVB Letter, Top Image Letter, and Double
Eagle Letter, which state that all exchanges and issuers should be
able to list three- or fewer character symbols.
    \64\ This commenter stated that Amex, BSE, and other regional
exchanges have used one- or two-character ticker symbols in the
past. See Angel Letter I at 6, Angel Letter II at 2, and Angel
Letter III at 2. This commenter also argued that shorter ticker
symbols should go to the most actively-traded stocks, some of which
are Nasdaq-listed, because the reduced typing and remembering effort
required for such symbols would make it a more economically
efficient solution. See Angel Letter I at 5.
    \65\ See Issuer Advisory Letter at 2. See also Angel Letter I at
4.
    \66\ See Angel Letter II at 3.
---------------------------------------------------------------------------

    The Commission believes that any SRO with the capacity to maintain
a market for the listing of securities that are identified by one-,
two-, three-, four-, or five-character symbols should be able to
reserve those symbols.\67\ As noted above, the Five-Characters Plan
would permit any SRO that maintains a market for the listing and
trading of plan securities to become a party to the plan.\68\ The
Commission believes that SROs that have listing standards for plan
securities, though they may not be actively listing such securities,
and that maintain a market for the trading of plan securities would
satisfy this requirement and would be permitted, though not required,
to become parties to the plan. Joining the plan would enable such SROs
to reserve symbols in anticipation of beginning a listings
business.\69\ In addition, the Commission is requiring any SRO that
chooses to list securities on its market or to designate securities for
quoting on a quotation medium to join the approved plan.\70\
---------------------------------------------------------------------------

    \67\ The Commission notes that Nasdaq is no longer a facility of
a national securities association and is now a national securities
exchange. See supra note 26.
    \68\ See Section I(c) of the Five-Characters Plan.
    \69\ Parties to the plan are entitled to place up to 20 symbols
on each of its perpetual reservation lists for one-, two-, or three-
character symbols and four- or five-character symbols, respectively.
See infra notes 90 and 93-95 and accompanying text. The Commission
notes that, for limited-time reservations, the plan requires a party
to have a reasonable basis for using a limited-time reservation
within a 24-month period. See infra notes 91-92 and accompanying
text.
    \70\ See infra notes 192 and 197-198 and accompanying text.
---------------------------------------------------------------------------

    The Commission does not agree with commenters who believe that the
use of one-, two-or three-character symbols by Nasdaq issuers will
``blur and diminish the financial and other significant achievements
commonly associated with NYSE listed companies'' \71\ or confuse
investors who today purportedly identify such symbols as associated
with NYSE. Many issuers not listed on NYSE utilize such symbols and
have for a significant period of time and, therefore, any automatic
association of such symbols with NYSE's listing standards or brand is
mistaken.\72\ Therefore, the Commission finds that the provision on
eligible parties in the proposed Five-Characters Plan is preferable and
is necessary and appropriate in the public interest, for the protection
of investors and the

maintenance of fair and orderly markets, and that it assures fair
competition among exchange markets, consistent with Section
11A(a)(1)(C)(ii) of the Act.\73\
---------------------------------------------------------------------------

    \71\ See Big Lots Letter.
    \72\ See supra note 64 and accompanying text.
    \73\ See 15 U.S.C. 78k-1(a)(1)(C)(ii).
    One commenter also argued that rights to ticker symbols should
be allocated directly to issuers, rather than to the SROs. See
Issuer Advisory Letter at 3. See also Angel Letter I at 3 and Angel
Letter III at 4, arguing that issuers have stronger claims to
symbols than their exchanges. The Commission believes, however, that
developing a symbol reservation plan directly among the issuers
would present significant challenges--including implementation and
administrative challenges, and believes that continuing to allow
listing markets to reserve and then allocate those symbols to
qualified issuers is more workable and efficient.
    Because the Five-Characters Plan, as filed, listed the name of
all SROs, including those that were not signatories to the plan, the
Commission has deleted the names of SROs listed in Section I(a) of
the Five-Characters Plan who are not signatories to the plan at this
time.
---------------------------------------------------------------------------

    The Commission also believes that the Five-Characters Plan will
further the purposes of the Act because it promotes competition among
listing markets, including potential new listing markets. As described
in further detail below, and unlike the Three-Characters Plan, the
Five-Characters Plan provides each party to the plan with an equal
allotment of perpetual and limited-time reservations.\74\ The Five-
Characters Plan also permits the portability of an issuer's symbol from
one SRO to another, allowing competing listing venues to attract
transferred listings without requiring issuers to change their ticker
symbol.\75\ In addition, the Five-Characters Plan would allocate to any
new party joining the plan a pro-rata portion of the initial
development costs based upon the number of symbols initially reserved
by such new party during its first twelve months as a party to the
plan.\76\
---------------------------------------------------------------------------

    \74\ See discussion infra notes 77-104 and accompanying text.
    \75\ See discussion infra notes 105-117 and accompanying text.
    \76\ See discussion infra notes 118-124 and accompanying text.
---------------------------------------------------------------------------

3. Reservation and Use of Symbols
    Both proposed plans have provisions allowing parties to the plan to
reserve symbols in perpetuity (``perpetual reservations'') and for a
limited time (``limited-time reservations''). Specifically, both
proposed plans provide that, within 30 days of Commission approval of
the plan (unless such time is extended by the Policy Committee),\77\
parties may submit to the Processor \78\ requests for initial
reservation of symbols.\79\ The proposed plans' differ as follows: (1)
How reservation rights are allocated among the individual parties; (2)
the number of symbols that may be reserved on the perpetual reservation
and limited-time reservation lists, respectively; and (3) how limited-
time reservations may be secured. These differences and the reasons the
Commission finds that the Five-Characters Plan's provisions on
reservation rights, as modified herein, are appropriate in the public
interest for the maintenance of fair and orderly markets and fair
competition between the markets, consistent with the Section
11A(a)(1)(C) of the Act,\80\ are discussed below.
---------------------------------------------------------------------------

    \77\ ISRA will be administered by a Policy Committee, which will
consist of one voting member and one alternate voting member
representing each party. See Section II(a) and (c) of the Five-
Characters Plan. See also Section II(a) and (c) of the Three-
Characters Plan, which is identical to the corresponding provision
of the Five-Characters Plan.
    \78\ The Processor will be an independent third party to which
ISRA will delegate the operation of the Symbol Reservation System.
See Section III of the Five-Characters Plan. See also Section III of
the Three-Characters Plan, which is identical to the Five-Characters
Plan.
    \79\ The Commission is modifying the Five-Characters Plan's
provision on the timing for the initial reservation process. See
infra notes 77-104 and accompanying text for the discussion of this
modification.
    \80\ 15 U.S.C. 78k-1(a)(1)(C).
---------------------------------------------------------------------------

a. Allocation of Reservation Rights Among Parties
    The proposed Three-Characters Plan awards greater reservation
rights to NYSE and Amex than to the other parties to the plan.
Specifically, the proposed Three-Characters Plan would allow NYSE and
Amex each to reserve 200 symbols as perpetual reservations and 1,500
symbols as limited-time reservations, while other parties to the plan
could only reserve 40 symbols as perpetual reservations and up to 500
limited-time reservations.\81\ The Five-Characters Plan, on the other
hand, awards equal reservation rights among all the parties--any
eligible party to the plan could reserve 20 perpetual reservations and
1,500 limited-time reservations of one-, two-, and three-character
symbols and 20 perpetual reservations and 1,500 limited-time
reservations of four- and five-character symbols.\82\ The Five-
Characters Plan also requires a party intending to include a symbol on
its limited-time reservations lists to have a reasonable basis for
using such symbol within 24 months.
---------------------------------------------------------------------------

    \81\ The proposed Three-Characters Plan, as amended, provided
that NYSE Arca and CBOE each may have 500 limited-time reservations
and that ISE may have 200 limited-time reservations. The plan would
leave the precise number of limited-time reservations for other SROs
to be decided when such SROs join the proposed plan.
    \82\ See Section IV(b)(1)(A) and (B) of the Five-Characters
Plan. The Commission notes that the reservation lists do not apply
to securities symbols already in use, but rather relate to unused
ticker symbols.
---------------------------------------------------------------------------

    With respect to these provisions on reservation rights, the
Commission finds that the Five-Characters Plan will further the
purposes of the Act. The Five-Characters Plan allocates all reservation
rights equally among all parties to the plan, consistent with fair
competition principles. NYSE argued that the proposed Three-Characters
Plan reservation provisions reflect the reality of its own likelihood
to list a greater number of securities than the other markets.\83\
Nasdaq, however, disputed this assertion and stated that the allocation
of reservations in this provision of the Three-Characters Plan is out
of proportion to historic symbol usage.\84\ Nasdaq also argued that
this provision would be discriminatory and that such discrimination is
not compelled by market needs and is inconsistent with the equal
regulation and pro-competition mandates of the Act. While the
Commission recognizes that currently NYSE and Amex markets encompass
the overwhelming majority of primary listings for issuers with one-,
two-, and three-character symbols, the Commission does not believe that
the dominance of any particular market should be enshrined in a
national market system plan. Moreover, the Commission believes that the
Five-Characters Plan's proposed allotments would permit active listing
markets to reserve more than enough securities symbols for their
listing business. The Five-Characters Plan, in contrast to the proposed
Three-Characters Plan, would promote fair competition among the markets
by providing all participants with the same number of reservations.
Such equal reservation rights make it easier for an existing SRO or new
entrant to compete on an equal basis with primary listing markets.
---------------------------------------------------------------------------

    \83\ See NYSE Letter at 6.
    \84\ See Nasdaq Letter II at 2.
---------------------------------------------------------------------------

    One commenter stated that OTC Bulletin Board (``OTCBB'')\85\ and
Pink Sheet \86\ issuers should not have the same rights to use
securities symbols as issuers listed on national securities
exchanges.\87\ The commenter noted that,

in the past, if a Nasdaq-listed firm desired to use a ticker symbol
that was in use by an OTCBB or Pink Sheet issuer, it could usually get
such a symbol. In addition, the commenter noted that such issuers have
not paid any listing fees to be traded on those markets and that many
of them are shell companies with no operations or defunct companies.
The commenter believed that only ``legitimate'' SEC registrants that
meet the listing standards of the exchanges should be able to establish
rights to ticker symbols.
---------------------------------------------------------------------------

    \85\ The OTCBB is a quotation service for over-the-counter
equity securities run by FINRA, a national securities association.
    \86\ Pink Sheets is an interdealer electronic quotation system
that displays quotes from market makers for many over-the-counter
securities. To be quoted on the Pink Sheets, an issuer need only
find one market maker to quote its shares, and Pink Sheets-traded
issuers need not have audited financial statements. See http://
www.pinksheets.com.
    \87\ See Angel Letter I at 10.
---------------------------------------------------------------------------

    The Commission agrees and believes that significant investor
confusion and harm could occur if such securities, which currently
trade using four-or five-character symbols, were to begin trading with
one-, two-, or three-character symbols. The Commission believes that it
is important to distinguish between securities trading only on over-
the-counter trading venues and those listed on national securities
exchanges. Exchange listing standards are approved by the Commission
and must include corporate governance requirements that comply with
Rule 10A-3 under the Act.\88\ Issuers traded on over-the-counter equity
venues (including the OTCBB and Pink Sheets) are not subject to such
listing standards. Therefore, such securities can be substantially
different from those listed on a national securities exchange. The
Commission does not believe any similar distinction exists among the
national securities exchanges. Accordingly, the Commission believes
that it is appropriate to limit securities not listed on a national
securities exchange to using four-or five-character symbols, whereas it
is not appropriate to similarly distinguish between exchange-listed
securities. The Commission believes that issuers trading solely on the
OTCBB, Pink Sheets, and any other over-the-counter venue should be
limited to using four- and five-character symbols, as they do today, as
any change from this current practice would unnecessarily confuse
investors and could lead to investor harm. The Commission finds that it
is necessary and appropriate in the public interest, and for the
protection of investors and the maintenance of fair and orderly
markets, that only issuers listed on a national securities exchange be
allowed to use one-, two-, and three-character symbols.\89\ Therefore,
the Commission is modifying the Five-Characters Plan to prohibit an SRO
from reserving or using one-, two-, and three-character symbols for any
issuer not listed on a national securities exchange.
---------------------------------------------------------------------------

    \88\ 17 CFR 240.10A-3.
    \89\ 17 CFR 242.608.
---------------------------------------------------------------------------

b. Number of Perpetual and Limited-Time Reservations
    The Three-Characters Plan contemplates allocating some SROs as many
as 200 perpetual reservations. In contrast, the Five-Characters Plan
would allow no more than 40 perpetual reservations for each party.\90\
The Commission believes that, because the Five-Characters Plan allows
the overwhelming majority of unused symbols remain available for future
use, exchanges would not be able to hold securities symbols in a manner
that stifles or burdens competition. In this regard, the Commission
believes that the perpetual reservation provisions of the Five-
Characters Plan are more favorable to new entrants. The Commission also
believes that the Five-Characters Plan's allotment of 1,500 limited-
time reservations for one-, two-, and three-character symbols and 1,500
limited-time reservations for four- and five-character symbols should
adequately offset the low number of permitted perpetual reservations,
and allow SROs to reserve a sufficient number of symbols in the short-
term for any pending use.
---------------------------------------------------------------------------

    \90\ The Five-Characters Plan would allow each party to place 20
symbols on each of its perpetual reservation lists for one-, two-,
or three-character symbols and four- or five-character symbols,
respectively.
---------------------------------------------------------------------------

    Both proposed plans permit limited-time reservations for a period
of 24 months, after which time the Processor would release such symbols
to be available for reservation by parties on the waiting list for a
given symbol or, in the absence of a waiting list, for general
availability.\91\ The Five-Characters Plan requires a party to have a
reasonable basis for using a limited-time reservation within such 24-
month period while the Three-Characters Plan has no such comparable
requirement.\92\ Under the Five-Characters Plan, if a party does not
use a limited-time reservation within the 24-month reservation period
and no party reserves the symbol after the Processor releases it, then
the original party would be able to subsequently reserve the symbol for
an additional 24-month period, once again subject to the requirement
that it has a reasonable basis for doing so. The Commission does not
view the ``reasonable basis'' requirement in the Five-Characters Plan
as mandating the usage of a symbol within 24 months, but believes that
this requirement should help prevent the arbitrary reservation of
symbols, particularly in an anti-competitive manner.
---------------------------------------------------------------------------

    \91\ See Sections IV(b)(1)(B) and IV(b)(5) of the proposed
plans.
    \92\ Because ``reasonable basis'' was not defined in the Five-
Characters Plan, the Commission requested comment about it in the
Symbology Notice. No commenters specifically responded to this
request. The Commission believes that it is necessary and
appropriate in the public interest to have the Policy Committee
determine the appropriate interpretation and application of terms
used in the plan, such as the term ``reasonable basis.'' To the
extent that any of the parties to the plan are aggrieved by the
determination of the Policy Committee in this regard, the Commission
notes that it has the authority to hear appeals by such parties. See
Rule 608(d), 17 CFR 242.608(d); see also supra notes 133-137 and
accompanying text.
---------------------------------------------------------------------------

    One commenter argued that there should be no perpetual reservations
because having a perpetual reservation would allow an exchange to
exclude others from ever using a symbol.\93\ The Commission notes that,
though they disagreed on the precise number of perpetual reservations
each party should be able to reserve, the signatory SROs to both
proposed plans agreed to the availability of perpetual
reservations,\94\ and believes that perpetual reservations are not
inconsistent with Rule 608 under the Act, which requires that the plan
be necessary or appropriate in the public interest, for the protection
of investors and the maintenance of fair and orderly markets, to remove
impediments to, and perfect the mechanisms of, a national market
system, or otherwise in furtherance of the purposes of the Act.
Nonetheless, the Commission believes that the number of such perpetual
reservations should be kept to a minimum and believes that the Five-
Characters Plan's allocation of 40 perpetual reservations to each party
is appropriate. The Commission acknowledges that new entrants that join
the plan after the initial reservation process would have fewer options
for selecting their perpetual reservations, as compared to the parties
participating in the initial reservation process. But the Commission
believes that, given the relatively low number of perpetual
reservations allowed under the Five-Characters Plan (particularly as
compared to the Three-Characters Plan), such new entrants would still
have access to an adequate number of symbols and notes that they would
also have the same right to have 40 perpetual reservations each. In
addition, the Commission notes that, once an SRO assigns a symbol from
its perpetual reservation list to an issuer, that symbol becomes
portable to other listing markets if the issuer using the symbol were
to transfer its listing to another

SRO.\95\ Because the Five-Characters Plan would limit each party to no
more than 40 perpetual reservations and because an issuer using such a
symbol could transfer its listing to another SRO if it chose to do so,
the Commission finds that the Five-Characters Plan's provisions with
respect to perpetual reservations are not anticompetitive and are
appropriate in the public interest.
---------------------------------------------------------------------------

    \93\ See Angel Letter I at 6, 9 and Angel Letter II at 3, and
Angel Letter III at 4.
    \94\ See Section IV(b)(1)(A) of the proposed plans.
    \95\ See Section IV(f) of the Five-Characters Plan.
---------------------------------------------------------------------------

    Finally, one commenter also stated that symbols should be allocated
on a ``first-come, first-served'' basis with a ``use it or lose it''
feature.\96\ The Commission believes that the Five-Characters Plan's
provisions relating to processing symbol requests for limited-time
reservations incorporate this very principle.
---------------------------------------------------------------------------

    \96\ See Angel Letter I at 9 and Angel Letter III at 4.
---------------------------------------------------------------------------

c. Legacy Reservations
    Under both proposed plans, during the initial reservation process,
a party in reserving a symbol that it claims was properly reserved
under the current informal system prior to the effective date of the
plan would have priority over other parties also reserving such
symbol.\97\ Under the Five-Characters Plan, however, such party would
have priority over other SROs to retain reservation of that symbol (a
``legacy reservation'') only if the party represents that it has a
reasonable basis \98\ to believe that it would utilize such symbol
within the next six months. Moreover, such reservation would not count
towards the party's perpetual reservations or limited-time
reservations, but instead be reserved as a separate, additional legacy
reservation.\99\ If the party does not use such symbol within the
allotted six-month period, it would lose the reservation unless the
party requests an extension for an additional six-month period. In
requesting such an extension, the party would have to have a reasonable
basis to believe that it would utilize such symbol within the
additional six-month period. If the symbol has not been used within the
additional six-month period, the symbol would be released by the
Processor.\100\ The Three-Characters Plan also assigns priority for
symbol reservations to parties that claim to have properly reserved
such symbols under the current informal system prior to the effective
date of the plan, but it does not place such reservations on a separate
``legacy reservation'' list nor does it establish a separate process
for using such symbols.\101\
---------------------------------------------------------------------------

    \97\ See Section IV(b)(2)(A) of the proposed plans.
    \98\ See supra note 92.
    \99\ See Section IV(b)(2)(A) of the proposed plans.
    \100\ See id.
    \101\ See Section IV(b)(2)(A) of the Three-Characters Plan.
---------------------------------------------------------------------------

    One commenter suggested establishing a 90-day remaining life to all
symbols currently reserved by the exchanges, after which all symbol
reservations by exchanges will cease to exist.\102\ Another commenter
endorsed an approach similar to that in the Five-Characters Plan,
proposing a transitional provision allowing for an exchange to assert a
legacy reservation for up to 12 months for a pending use.\103\ The
Commission finds that the legacy reservation provision in the Five-
Characters Plan is in the public interest, consistent with Section
11A(a)(1)(C) of the Act, because it provides an appropriate transition
period for symbol reservations held prior to the Commission's approval
of the Five-Characters Plan.\104\
---------------------------------------------------------------------------

    \102\ See Issuer Advisory Letter at 3.
    \103\ See Sobha Letter.
    \104\ 15 U.S.C. 78k-1(a)(1)(C).
---------------------------------------------------------------------------

4. Portability of Symbols
    Another key difference between the two proposed plans relates to
the portability of symbols. In Amendment No. 1 to the proposed Three-
Characters Plan, that plan was amended to allow for the automatic
portability of three-character symbols (i.e., allowing an issuer with a
three-character ticker symbol to automatically continue to use that
symbol upon transferring its listing to another SRO).\105\ Nonetheless,
the proposed Three-Characters Plan maintains that one- and two-
character symbols would not be automatically portable if a listed
issuer moves to another exchange. Under that proposed plan, the rights
to a one-or two-character symbol of the issuer transferring to another
exchange would remain with the former SRO unless the former SRO
consents to the transfer of the symbol to the new SRO. The only
exception would be, in the case of two-character symbols, if the new
SRO demonstrates that it has a compelling business need that
substantially outweighs the business needs of the former SRO. This
determination would be made by the Processor and would be final. Under
the proposed Three-Characters Plan, this exception would not apply to
one-character symbols, which could not be transferred to a new SRO
without the consent of the former SRO, even if the new SRO was able to
demonstrate a compelling business need that substantially outweighed
the business needs of the former SRO. In contrast, the Five-Characters
Plan would provide the automatic portability of any symbol in the event
that an issuer transfers its listing to another exchange (i.e., without
requiring the consent of the former SRO).\106\
---------------------------------------------------------------------------

    \105\ Two commenters expressed concerns that an earlier proposed
rule change of Nasdaq to allow the transfer of issuers with three-
character symbols to Nasdaq (SR-NASDAQ-2007-031) could circumvent
efforts to develop a national market system plan for symbology. See
RPM Letter and MDC Letter. In the Nasdaq Three-Character Portability
Order, see supra note 29, the Commission addressed this concern and
noted that its approval of that proposed rule change was independent
of its consideration of the proposed NMS plans. As the Commission
stated then, ``[p]articipants in any such plan would be required to
comply with its requirements, which could necessitate changes to SRO
rules.''  See Nasdaq Three-Character Portability Order at 38641.
    \106\ See Section IV(f) of the Five-Characters Plan.
---------------------------------------------------------------------------

    Many commenters have supported the portability provision of the
Five-Characters Plan.\107\ Some commenters argued that the portability
provision of the proposed Three-Characters Plan would create artificial
restrictions on symbol use and portability that would not benefit
listed companies or the investing public.\108\ One commenter stated
that disallowing symbol portability is an anti-competitive and unfair
practice.\109\ Another commenter argued that the inconvenience and
transition costs involved with requiring a company to change its ticker
symbol upon transferring from the NYSE to another exchange amount to an
unfair restraint of trade.\110\ Two commenters also likened securities
symbols to telephone numbers and argued that they should belong to the
issuer and be fully portable.\111\
---------------------------------------------------------------------------

    \107\ See Omni Letter, Adams Letter, Amerigon Letter, Atkins
Letter, United Stationers Letter, Glu Letter, ASA Letter, Electronic
Arts Letter, Silicon Storage Letter, Silicon Graphics Letter,
E*Trade Letter, Innospec Letter, SVB Letter, EFI Letter, Top Image
Letter, and Double Eagle Letter, and Nasdaq Letter II at 3.
    \108\ See Amerigon Letter, United Stationers Letter, Glu Letter,
Electronic Arts Letter, Silicon Storage Letter, Silicon Graphics
Letter, Innospec Letter, E*Trade Letter, EFI Letter, Top Image
Letter, Double Eagle Letter.
    \109\ See Issuer Advisory Letter at 2.
    \110\ See ASA Letter.
    \111\ See Spachman Letter, Angel Letter I at 5-6, Angel Letter
II at 2, and Angel Letter III at 3 and 4.
---------------------------------------------------------------------------

    One commenter noted that issuers expend more effort and resources
to associate a particular symbol with their company than anyone else,
and therefore should be allowed to take their symbol with them when
they move to another exchange.\112\ This commenter also stated that,
over time, investors tend to associate a particular ticker symbol far
more with a company than with a particular exchange and that,
therefore, in terms of reducing investors' search and transaction
costs, it makes

sense to award the rights to a particular ticker symbol to the issuer
that has been using the ticker symbol, rather than the exchange where
it originally listed.\113\ Furthermore, this commenter stated that
changing an issuer's ticker symbol can result in confusion for
investors and researchers and be the source of costly investment
mistakes, noting that data vendors often do not catch a symbol change
on time.\114\ One issuer cited its own experience with transferring its
listing from NYSE to Nasdaq and consequently changing its symbol;
though it ultimately decided to switch listing venues, the issuer
stated the need to change its ticker symbol was a negative factor
because of the time and resources it had to expend to make sure its
investors were aware of the symbol change.\115\ Finally, one commenter
also noted that allowing symbol portability would strengthen
competition between markets.\116\
---------------------------------------------------------------------------

    \112\ See Angel Letter I at 4.
    \113\ Id.
    \114\ See Angel Letter I at 5. See also Nasdaq Letter II at 3.
    \115\ See E*Trade Letter. See also Nasdaq Letter II at 3.
    \116\ See Angel Letter II at 2.
---------------------------------------------------------------------------

    The Commission finds that allowing the automatic portability of a
symbol in the event that an issuer transfers its listing to another
exchange will further the purposes of the Act and should reduce
investor confusion by allowing the symbol already associated with the
issuer to continue to be used by the issuer on the new exchange. The
Commission also finds that allowing automatic symbol portability would
remove a burden on competition among markets not necessary or
appropriate in furtherance of the purposes of the Act by making it
easier for listed issuers to transfer their listings to another
exchange, thereby enhancing competition among exchanges in the business
of providing a listing venue. Eliminating the costs and administrative
efforts associated with acquiring a new symbol for transferred listings
should allow listed issuers to make decisions about listing based on
factors such as listing costs and the quality of markets. The
Commission believes that automatic symbol portability is preferable to
allowing an issuer's former listing exchange to retain the rights to a
symbol once a listed issuer has transferred to another market,
particularly as the former market likely would not reuse the symbol in
the near term without causing undue investor confusion. Therefore, the
Commission finds that the automatic symbol portability provision in the
Five-Characters Plan is in the public interest, appropriate for the
protection of investors and the maintenance of fair and orderly
markets, and assures fair competition among exchange markets,
consistent with the Section 11A(a)(1)(C) of the Act.\117\
---------------------------------------------------------------------------

    \117\ 15 U.S.C. 78k-1(a)(1)(C).
---------------------------------------------------------------------------

5. Allocation of Plan Costs
    The two proposed plans also differ with respect to the allocation
of the initial development costs and ongoing costs of the plan. The
proposed Three-Characters Plan would have all initial and ongoing costs
shared equally among all the parties.
    The Five-Characters Plan provides that the parties would share the
initial development costs pro-rata based on the number of symbols
initially reserved by each party. Any new party that joins the plan
would also be responsible for a pro-rata portion of the initial
development costs based upon the number of symbols initially reserved
by such new party during the first twelve months of the new party's
membership in the plan.\118\ The Five-Characters Plan also provides
that the continuing costs and expenses of ISRA would be shared among
the parties pro-rata based on the number of additional symbols reserved
in each calendar year, estimated quarterly.\119\ In addition, under the
Five-Characters Plan, the Policy Committee \120\ may develop
alternative cost-allocation methodologies for special development
projects outside the initial development period. One commenter
expressed support for this provision in the Five-Characters Plan as it
would require exchanges to bear the costs of the system only to the
extent they reserve and use symbols.\121\
---------------------------------------------------------------------------

    \118\ See Section V(a) of the Five-Characters Plan.
    \119\ See Section V(b) of the Five-Characters Plan.
    \120\ See infra notes 125-137 and accompanying text.
    \121\ See Adams Letter.
---------------------------------------------------------------------------

    The Commission finds that the Five-Characters Plan's provision for
the allocation of costs will further the purposes of the Act in that it
establishes an equitable means of allocating costs among the plan
parties.\122\ The SROs supportive of the Three-Characters Plan
anticipate that certain SROs, such as NYSE and Amex, would likely use
the reservation system more than other SROs.\123\ It is the proposed
Five-Characters Plan, however, that recognized this likelihood by
allocating costs based on an SRO's use of the reservation system.
Moreover, the parties' usage of the system will likely vary as markets
compete for listings. Under the Five-Characters Plan, the cost
allocation will similarly vary with any changes in use of the
reservations. Therefore, the Commission finds that the cost allocation
provision of the Five-Characters Plan is in the public interest,
appropriate for the protection of investors and the maintenance of fair
and orderly markets, and assures fair competition among exchange
markets, consistent with Section 11A(a)(1)(C) of the Act.\124\
---------------------------------------------------------------------------

    \122\ One commenter argued, based on its belief that the issuers
have rights to the symbols, that issuers should pay for the plan in
accordance with the Regulation NMS market data revenue formula. See
Angel Letter II at 3. The Commission notes, however, that the
listing markets charge initial and ongoing listing fees to issuers
listed on their markets, and therefore issuers are likely to pay
indirectly.
    \123\ This expectation is the basis for the proposed Three-
Characters Plan providing more reservations to NYSE and Amex than
the other SROs. See NYSE Letter at 6.
    \124\ 15 U.S.C. 78k-1(a)(1)(C).
---------------------------------------------------------------------------

B. Similar Provisions Among the Proposed Plans

    Other than the areas of substantive differences between the
proposed plans discussed above, the remaining provisions of the Five-
Characters Plan are substantially similar or identical to parallel
provisions in the proposed Three-Characters Plan. The Commission
believes that such similarities evidence a broad consensus among the
SROs as to the overall framework and most of the main provisions of the
Five-Characters Plan, a result of the collaboration by and negotiations
between the SROs following the issuance of the February 2005 Letters to
discuss the terms of an appropriate national market system plan for the
reservation and allocation of securities symbols. Therefore, the
Commission believes that these aspects of the Five-Characters Plan
represent a fair and workable symbol reservation system for the
prospective parties to the plan.
    The following section discusses the remaining provisions of the
Five-Characters Plan, which are substantially similar or identical to
provisions in the proposed Three-Characters Plan.
1. Administration of ISRA
    The Five-Characters Plan would establish a body composed of the
signatory SROs called the Intermarket Symbols Reservation
Authority.\125\ A Policy Committee, consisting of representatives of
each of the signatory SROs, would administer the ISRA and, unless
expressly provided otherwise in the plan, would make all policy
decisions on behalf of the ISRA in furtherance of the functions and
objectives of the ISRA under the Act and the plan. Specifically, the
Policy

Committee would: (1) Oversee the operation of the Symbol Reservation
System; (2) make all determinations pertaining to contracts with
parties to the plan and persons who provide goods or services to the
ISRA; and (3) determine all other questions pertaining to the planning,
developing, and operating of the ISRA, including those pertaining to
budgetary or financial matters.\126\
---------------------------------------------------------------------------

    \125\ See Section II(a) of the Five-Characters Plan.
    \126\ See Section II(b) of the Five-Characters Plan.
---------------------------------------------------------------------------

    One voting member and one alternate voting member representing each
party would compose the Policy Committee.\127\ Each party would have
one vote on all matters voted upon by the Policy Committee and actions
of the ISRA under each plan would be authorized by a majority vote of
the Policy Committee members, subject to Commission approval when
required by applicable securities law.\128\ Authorized actions under
the plan would be binding upon all the parties. However, an aggrieved
party may present contrary views to any regulatory body or in any other
appropriate forum.\129\ A meeting of the Policy Committee would be held
at least annually and other meetings would be held as determined by the
Policy Committee, subject to the notice provisions for regular and
special meetings and the organization of the meetings.\130\
---------------------------------------------------------------------------

    \127\ See Section II(c) of the Five-Characters Plan.
    \128\ See Section II(d) of the Five-Characters Plan.
    \129\ Id.
    \130\ See Section II(e) of the Five-Characters Plan.
---------------------------------------------------------------------------

    The Commission finds that the provisions of the Five-Characters
Plan relating to the establishment of the ISRA and the administration
of the ISRA by the Policy Committee will further the purposes of the
Act and should assure fair competition between exchange markets,
consistent with Section 11A(a)(1)(C) of the Act.\131\ The Commission
believes that, because the Policy Committee is composed of one voting
member representing each party, that each party would be limited in its
ability to act in an anti-competitive manner.\132\
---------------------------------------------------------------------------

    \131\ 15 U.S.C. 78k-1(a)(1)(C).
    \132\ See Section II(c) of the Five-Characters Plan.
---------------------------------------------------------------------------

    Two commenters have recommended the adoption of a formal dispute
resolution mechanism for the plan.\133\ The Commission notes that
Section 11A of the Act and Rule 608 require national market system
plans to describe, to the extent applicable, the method by which
disputes in connection with the operation of the plan will be
resolved.\134\ The Five-Characters Plan specifies a dispute resolution
mechanism with respect to the initial reservation of securities
symbols, where disagreements are most likely to arise.\135\ With regard
to the operation of the plan following the initial reservation period,
the Commission believes that the likelihood of disputes among the
parties arising under the plan is minimal because the plan specifies
the methods relating to submitting reservation requests, requesting
releases of symbols, the operation of waiting lists, the reuse of
symbols, and all other aspects of reserving and allocating
symbols.\136\ To the extent that disputes nonetheless arise and the
parties are not able to resolve them, the Commission notes that under
Rule 608(d) of the Act, the Commission has broad discretion to review,
either on its own motion or upon the application of any person
aggrieved thereby, actions taken (or failures to act) by any person in
connection with an effective national market system plan.\137\
Therefore, the Commission finds that the Five-Characters Plan's
provision on dispute resolution is appropriate in the public interest.
---------------------------------------------------------------------------

    \133\ See Angel Letter I at 11. See also Issuer Advisory Letter
at 3.
    \134\ See 17 CFR 242.608(a)(5)(iv).
    \135\ See Section IV(b)(2) of the Five-Characters Plan.
    \136\ See Sections IV(b)(6), IV(c), and IV(d), respectfully, of
the Five-Characters Plan.
    \137\ See Rule 608(d)(1).
---------------------------------------------------------------------------

2. The Processor for the Symbol Reservation System
    Under the Five-Characters Plan, the ISRA would delegate the
operation of the Symbol Reservation System to an independent third
party (the ``Processor'') and would enter into contracts with the
Processor relating to the operation of the Symbol Reservation
System.\138\ The Processor would receive reservation requests from the
parties and reserve and allocate symbols among the parties in
accordance with the terms of the plan.\139\ To this end, the Processor
would create and maintain a symbol reservation database.\140\ Parties
to the Five-Characters Plan would determine the method and frequency of
the evaluation of the Processor at a later time.
---------------------------------------------------------------------------

    \138\ See Section III of the Five-Characters Plan.
    \139\ One commenter suggested that the Commission could assign
the rights to unused ticker symbols directly to issuers by auction.
See Angel Letter III at 4-5. The Commission believes that the
proposed allocation of symbol reservation rights using the Processor
under the Five-Characters Plan is in furtherance of the purposes of
the Act.
    \140\ See infra notes 175-178 and accompanying text for further
discussion of the plan provisions on the database.
---------------------------------------------------------------------------

    The Commission finds that provisions of the Five-Characters Plan
relating to the Processor promote the maintenance of fair and orderly
markets by ensuring that a symbol is used for only one security. The
capacity and capability of the Processor to completely maintain
processes and systems for the reservation and allocation of symbols
under the plan is integral to this plan's effective implementation.
Accordingly, the Commission expects the parties to the Five-Characters
Plan to regularly evaluate the Processor's performance.
3. Symbol Reservation System
    The Five-Characters Plan provides that, within 30 days of the
Commission's approval of the Five-Characters Plan (unless such time is
extended by the Policy Committee), a participant in the plan may submit
to the Processor requests for the initial reservation of symbols.\141\
A party may reserve symbols for: (i) The listing of common stock or any
other security, including options; (ii) with respect to four- and five-
character symbols,\142\ the trading of any over-the-counter security;
(iii) the dissemination of a securities index or other index
information; or (iv) any other purpose authorized by a majority vote.
---------------------------------------------------------------------------

    \141\ See Section IV(b)(1) of the Five-Characters Plan.
    \142\ See discussion supra notes 85-89 and accompanying text
relating to limiting the use of securities symbols by issuers traded
other than on national securities exchanges to four- and five-
character symbols.
---------------------------------------------------------------------------

    To provide sufficient time for SROs to join the plan and for the
plan participants and the Processor to implement the Symbol Reservation
System, the Commission is modifying Section IV(b)(1) of the plan to
provide that the initial symbol reservation process will begin 60 days
after the Commission's approval of the plan and will ensue for a 30-day
period.\143\
---------------------------------------------------------------------------

    \143\ To conform to the Commission's modification of the initial
reservation process, the Commission is also modifying Section
IV(c)(1) of the Five-Characters Plan to clarify that the waiting
list procedure applies during the initial reservation period rather
than within 30 days of the effective date of the plan.
---------------------------------------------------------------------------

a. Perpetual and Limited-Time Reservations
    As noted earlier, under the Five-Characters Plan, a party may
reserve a limited number of symbols in perpetuity.\144\ There would be
two perpetual reservation lists for each party--one list for one-, two-
, and three-character symbols and one list for four- and five-character
symbols. Each party could reserve up to 20 one-, two-, or three-
character symbols as perpetual reservations, and up to 20 four- or
five-

character symbols as perpetual reservations.
---------------------------------------------------------------------------

    \144\ See Section IV(b)(1)(A) of the Five-Characters Plan.
---------------------------------------------------------------------------

    A party that requests perpetual reservations for more symbols than
permitted would be required to place its symbols requests in priority
ranking. A party could not add symbols to its perpetual reservation
list after the initial reservation process, except when reserving a
symbol for reuse.\145\
---------------------------------------------------------------------------

    \145\ See infra notes 166-174 and accompanying text for
discussion of the plan provision on reusing a symbol.
---------------------------------------------------------------------------

    Symbols could also be reserved for a limited-time period of 24
months.\146\ Each party would have two limited-time reservation lists--
one list for one-, two-, and three-character symbols and one list for
four- and five-character symbols. Each party could reserve up to 1,500
symbols under the one-, two-, or three-character limited-time
reservations list and up to 1,500 symbols under the four-or five-
character limited-time reservations list. A party may not make a
limited-time reservation with respect to a particular symbol unless the
party has a reasonable basis to utilize the symbol within the next 24
months.
---------------------------------------------------------------------------

    \146\ See Section IV(b)(1)(B) of the Five-Characters Plan.
---------------------------------------------------------------------------

    As with perpetual reservation requests, a party that requests
limited-time reservations for more symbols than permitted would be
required to place its symbols requests in priority ranking.
b. Processing Reservation Requests
    If there is only one party that claims a legacy reservation, such
party would have priority over other SROs to retain its reservation of
that symbol.\147\ If more than one party lays claim to a single legacy
reservation, the Five-Characters Plan provides a process for resolving
such claims.\148\ This process is as follows: First, the Processor
would notify all such parties of the conflicting claims. Then the
parties would have five business days to reach a mutually acceptable
agreement as to which party would be permitted to reserve the symbol.
In the absence of an agreement, the Policy Committee would resolve the
issue by a majority vote of the parties not claiming the symbol. Where
there is no agreement but the Policy Committee is able to determine
which party has the earliest proper claim to such symbol, the plan
would require it to resolve the disagreement in favor of such party. In
the event of a tie vote, the Policy Committee would establish a random
order of the parties to determine which party may reserve the
symbol.\149\ The Commission believes that the plan provisions with
respect to resolving legacy reservation claims are consistent with Rule
608 under the Act which requires the plan be necessary or appropriate
in the public interest, for the protection of investors and the
maintenance of fair and orderly markets, to remove impediments to, and
perfect the mechanisms of, a national market system, or otherwise in
furtherance of the purposes of the Act.
---------------------------------------------------------------------------

    \147\ See supra notes 97-104 and accompanying text for a
discussion of the legacy reservation process.
    \148\ See Section IV(b)(2)(B) of the Five-Characters Plan.
    \149\ See id. Because the ``random order'' process was not
described in the proposed plans, the Commission requested comment
about it in the Symbology Notice. No commenters specifically
responded to this request. The Commission believes that it is
necessary and appropriate in the public interest to have the Policy
Committee determine the appropriate interpretation and application
of the plan provisions relating to the ``random order'' process.
However, the Commission believes that the Policy Committee must
establish a random order process that will not be susceptible to
gaming by parties to the plan. For example, the Policy Committee
should not use a system which would allow SROs to know ahead of time
if they are the party next in line to reserve a given symbol. To the
extent that any of the parties to the plan are aggrieved by the
determination of the Policy Committee in this regard, the Commission
notes that it has the authority to hear appeals by such parties. See
Rule 608(d), 17 CFR 242.608(d); see also supra notes 133-137 and
accompanying text.
---------------------------------------------------------------------------

    For the reservation of symbols other than legacy reservations, if
only one party seeks to reserve a symbol, then the Processor would
reserve such symbol for that party.\150\ If multiple parties seek to
reserve a symbol, the Processor would reserve the symbol based on a
random ordering established by the Policy Committee.\151\ If a symbol
is not available for reservation, the Processor would place the
requesting party on a wait list.\152\ The Processor would process a
party's symbol reservation requests by first reserving symbols up to
the party's limit for its perpetual reservations list and then
reserving the remaining requested symbols up to the limit for its
limited-time reservations.\153\
---------------------------------------------------------------------------

    \150\ See Section IV(b)(2)(C) of the Five-Characters Plan.
    \151\ See Section IV(b)(2)(D) of the Five-Characters Plan. See
also supra note 149.
    \152\ See Section IV(b)(2)(E) of the Five-Characters Plan. See
also infra notes 162-165 and accompanying text for a discussion on
the waiting list plan provision.
    \153\ See Section IV(b)(2)(F) of the Five-Characters Plan.
---------------------------------------------------------------------------

    After the initial reservation process, if a party submits to the
Processor a request for a limited-time reservation and the symbol is
available, the Processor would reserve such symbol, provided that the
party has not already reached its maximum number of allowed limited-
time reservations.\154\ If a symbol requested is not available, the
Processor would place the requesting party on the waiting list for such
symbol.\155\
---------------------------------------------------------------------------

    \154\ See Section IV(b)(3)(A) of the Five-Characters Plan.
    \155\ See Section IV(b)(3)(B) of the Five-Characters Plan.
---------------------------------------------------------------------------

c. Non-Use or Release of Symbols Within Time Period
    The Processor would release any limited-time reservation symbols
not used within the 24-month time period.\156\ A party could also
voluntarily release a reserved symbol. In either case, upon the release
of a symbol, the Processor would notify the parties on the waiting
list, if any, of the symbol's availability. If there is no waiting list
or if no party on the waiting list elects to reserve such symbol, the
Processor would notify all parties to the plan of the availability of
the symbol. Then, if more than one party requests the reservation of
such symbol within two business days of the notice, the Processor would
assign the symbol to one party and place the other parties on the
waiting list pursuant to a random order of priority established by the
Policy Committee.\157\
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    \156\ See Section IV(b)(5) of the Five-Characters Plan.
    \157\ See supra note 149.
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d. Request for Release of a Symbol
    If a party has an immediate need to use a symbol that another party
has reserved, the requesting party would ask the party that reserved
the symbol and any other parties on the waiting list whether such
parties would be willing to release the reserved symbol.\158\ If the
parties do not agree to release the symbol, the requesting party would
not obtain the reserved symbol. If the parties do agree to release the
symbol, the requesting party could include such symbol as one of its
limited-time reservations. If the requesting party does not use a
released symbol within the 24-month period, absent the consent of all
parties initially required to be contacted, the reservation and waiting
list priority in effect when the requesting party first made its
request for the release of the symbol would again be in effect.\159\
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    \158\ See Section IV(b)(6) of the Five-Characters Plan.
    \159\ See infra notes 160-161 and accompanying text for a
discussion of ``redesignation'' relating to requests for release of
symbols under Section IV(b)(6) of the Five-Characters Plan, which
the Commission is modifying.
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e. Reserving Symbols after Reaching Maximum Number of Permitted
Reservations
    Paragraph (5) of Section IV(b) of the proposed plans states that a
party may ``redesignate'' a security in certain

situations. Specifically, following the initial reservation process, if
a party wishes to add a symbol to its limited-time reservations and
such party already has the maximum number of reservations permitted,
such party ``must voluntarily release or redesignate a symbol, as
described in subparagraph (3)(A) above, before it can reserve the
assigned symbol.'' \160\ Similarly, if a party has an immediate need to
use a symbol that another party has reserved, the requesting party
would ask the party that reserved the symbol, and any other parties on
the waiting list, whether such parties would be willing to release the
reserved symbol.\161\ Then, under paragraph (6) of Section IV(b) of the
Five-Characters Plan, if the requesting party is already at the maximum
number of limited-time reservations, the party could either surrender
or redesignate a symbol as described in subparagraph (3)(A) of the
Plan, before it can reserve the assigned symbol.
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    \160\ See Section IV(b)(5) of the proposed plans.
    \161\ See Section IV(b)(6) of the Five-Characters Plan.
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    The Commission requested comment as to the meaning of
``redesignating'' a symbol when a party is at the maximum number of
limited-time reservations, but did not receive any comments. Because
subparagraph (3)(A) of Section IV(b) of either plan does not discuss
redesignating symbols, the Commission finds it is necessary and
appropriate in the public interest to remove the reference to
``redesignate'' in paragraphs (5) and (6) of Section IV(b) of the Five-
Characters Plan. Thus, if a requesting party is already at the maximum
number of limited-time reservations when reserving a requested symbol,
such party would have to surrender another symbol in order to reserve
the requested symbol.
f. Waiting Lists
    When one or more parties request to reserve a symbol that another
party has reserved, the Processor would place such parties on the
waiting list for that symbol.\162\ The waiting list would be based on
time priority--that is, the earliest request would have precedence.
However, as proposed, the Five-Characters Plans states that, if more
than one party seeks to use a symbol already in use within either 30
days of the effective date of the plan or two business days of notice
of a symbol's availability, the Policy Committee would establish a
random order of such parties to determine priority on the waiting
list.\163\
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    \162\ See Section IV(c)(1) of the Five-Characters Plan.
    \163\ To ensure consistency with the Commission's modification
of the initial reservation process timeline (see discussion supra
notes 141-143 and accompanying text), the Commission is also
modifying Section IV(c)(1) of the Five-Characters Plan to clarify
that the waiting list procedure applies during the initial
reservation process.
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    When a symbol becomes available, the Processor would notify the
party with priority on the waiting list.\164\ Such party would then
have two business days to reserve that symbol; otherwise, the Processor
would repeat the process as necessary with all parties on the waiting
list, in order of priority. The maximum number of symbols for which a
party may be on the waiting list at any time would be 100 symbols.\165\
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    \164\ See Section IV(c)(2) of the Five-Characters Plan.
    \165\ See Section IV(c)(3) of the Five-Characters Plan.
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g. Reuse of a Symbol and Portability of Symbols in Use
    If a party ceases to use a symbol, such party automatically
reserves that symbol, notwithstanding any other limits on the number of
reserved symbols under the plan.\166\
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    \166\ See Section IV(d) of the Five-Characters Plan.
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    However, there is an exception to this automatic reservation right
when an issuer transfers its listing from one SRO to another. In this
case, the SRO to which a listing is transferred would have the rights
to that issuer's symbol.\167\ One commenter, FINRA, noted that Section
(IV)(f) of the Five-Characters Plan allows the portability of a symbol
only when an issuer ``lists'' on a new SRO.\168\ FINRA noted that this
language may create some ambiguity in the case when a security delists
from an exchange and is traded on an SRO's OTC equity market. A strict
interpretation of the text of Section (IV)(f) of the Five-Characters,
as proposed, could lead to the conclusion that an issuer that delists
from an exchange and trades on an OTC market would lose its rights to
its original symbol. FINRA asked that this provision of the Five-
Characters Plan be amended to explicitly provide that the portability
rights for an issuer transferring its listing to another exchange also
be extended to issuers that delist from an exchange and trade on an OTC
equity market.
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    \167\ See Section IV(f) of the Five-Characters Plan.
    \168\ See FINRA Letter at 2.
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    NYSE, however, argued that securities have always lost their listed
symbols after delisting for failure to meet continue listing standards,
and that this practice is desirable because it alerts investors as to
the failure of the issuer to meet those standards.\169\ NYSE noted
that, otherwise, investors might mistake the delisted security for a
security that continues to meet exchange listing standards. The
Commission agrees with NYSE's comments with respect to the potential
for investor confusion and hereby clarifies that issuers that delist
from an exchange and trade on an OTC equity market shall not have
portability rights for their original symbol.\170\ In such cases,
Section IV(d) of the Five-Characters Plan would apply and the SRO from
which the issuer delisted would automatically have such symbol
reserved. At the same time, the Commission believes that the near-term
reuse of a delisted security's original symbol while the delisted
security trades on an OTC equity market could cause investor
confusion.\171\ A symbol could not be reused by a party to identify a
new security unless the party reasonably determines that such use would
not cause investor confusion.\172\
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    \169\ See NYSE Letter at 7.
    \170\ As discussed above, see supra notes 85-89 and accompanying
text, securities that trade solely over-the-counter, which are not
subject to listing standards approved by the Commission, should be
clearly distinguished from exchange-listed securities. The
Commission believes that a change to an issuer's symbol following
delisting is desirable to inform investors of the change in status
of the issuer. Therefore, the Commission believes that it is
appropriate to prohibit symbol portability rights for delisted
issuers that trade on an OTC equity market with security symbols of
any length, including symbols with four- or five-characters.
    \171\ See Section IV(d) of the Five-Characters Plan (providing
that a symbol may not be reused by a party to the plan to identify a
new security, other than the security that has been trading under
such symbol, unless the party reasonably determines that such use
would not cause investor confusion).
    \172\ See Section IV(d) of the Five-Characters Plan. One
commenter stated that symbols should not be reassigned until six
months after an issuer ceases to use such symbol in order to avoid
customer confusion. See Angel Letter I at 9. The Commission notes
that this plan provision, without providing a specific timeframe,
prohibits an exchange from assigning a reused symbol at any time if
doing so would cause investor confusion. The Commission does not
believe that specifying a six-month timeframe to be appropriate as
such a time period may, in some cases, be too short and the reuse of
a security symbol in such cases may still cause investor confusion.
Although the passage of time is one key factor, other factors may
need to be considered as well. For example, whether the original
issuer's securities are traded over-the-counter or have ceased
trading altogether is another factor in evaluating the potential for
confusion with regards to the original listing symbol.
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    A symbol being reused pursuant to this provision could be reserved
as a perpetual reservation if the party has not yet reserved the full
number of perpetual reservations available to it.\173\ Otherwise, such
symbol would be

reserved as a limited-time reservation and the additional symbol could
exceed the limit of the maximum number of limited-time reservations
permitted to a party under the plan.
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    \173\ Section IV(d) of the Five-Characters Plan also provides
that a party could move a symbol from its perpetual reservations
list to its limited-time reservations list in order to place the
symbol being reused on its perpetual reservations list.
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    The Commission finds that the foregoing symbol reservation system
provisions of the Five-Characters Plan will further the purposes of the
Act and that, in particular, they should maintain fair and orderly
markets to assure fair competition between exchange markets, consistent
with Section 11A(a)(1)(C) of the Act.\174\
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    \174\ 15 U.S.C. 78k-1(a)(1)(C).
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4. Database
    Under the Five-Characters Plan, the Processor would create and
maintain a symbol reservation database.\175\ The database would show
all symbols currently in use and the party using such symbols.\176\ A
party would be required to notify the Processor when the party begins
using a reserved symbol. In addition, the database would show all
symbols reserved on the perpetual reservations and limited-time
reservations lists, including the reserving party and the expiration
date for limited-time reservations.\177\ The database would also show
the waiting list and the priority order of the waiting list for each
symbol.\178\
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    \175\ See Section IV(e) of the Five-Characters Plan. One
commenter has expressed an interest in acting as the Processor for
the adopted plan. See SFB Letter. Another commenter suggested that
FINRA be the Processor. See Issuer Advisory Letter at 3.
    \176\ See Section IV(e)(1) of the Five-Characters Plan.
    \177\ See Section IV(e)(2) of the Five-Characters Plan.
    \178\ See Section IV(e)(3) of the Five-Characters Plan.
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    The Commission finds that the provisions of the Five-Characters
Plan relating to the symbols database will further the purposes of the
Act because the database of symbols is essential to ensure that a
symbol is used to identify only one security and therefore will help in
the maintenance of fair and orderly markets.
5. Confidentiality
    The Processor would maintain all information received from the
parties in strictest confidence and the only information that the
Processor would make available to the parties is the symbol reservation
database.\179\ The Processor would not make the symbol reservation
database available to any person except the Commission or the parties,
unless otherwise required by applicable law.
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    \179\ See Section VI of the Five-Characters Plan.
---------------------------------------------------------------------------

    One commenter questioned the need for confidentiality of the
information in this database, arguing that issuers may want to know if
a symbol is available to reserve it in advance.\180\ The Commission
does not believe that the Act imposes any requirement to make this
information available publicly.\181\ Therefore, the Commission finds
that the confidentiality provisions of the Five-Characters Plan are
appropriate in the public interest.
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    \180\ See Angel Letter II at 5.
    \181\ The Commission also notes that the confidentiality
requirement under the plan applies only to the Processor, and that
nothing under the plan requires confidentiality on the part of the
parties. Therefore, to the extent an issuer wants to know if a
symbol is available, it could request such information from one of
the parties.
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6. Term of Plan Withdrawal--Non-Transferability of Rights under the
Plan
    A party wishing to withdraw from the plan would be required to
provide at least six months prior written notice to the other
parties.\182\ The withdrawing party would remain liable for its
proportionate share of costs and expenses during the time it was a
party to the plan, but would have no further obligations after the
withdrawal.
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    \182\ See Section VII of the Five-Characters Plan.
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    In addition, an SRO would cease to be a party to the plan when it
ceases to maintain a facility for the quoting and trade reporting of
securities transactions or ceases to use symbols subject to the plan,
except upon the agreement of the remaining parties.\183\ To be approved
as a continuing party, the plan would require a majority vote of the
remaining parties.
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    \183\ See Section I(d) of the Five-Characters Plan.
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    The right of a party to participate in the Symbol Reservation
System under the plan is not transferable without the consent of the
other parties.\184\ However, if a party is subject to a merger,
combination, or other reorganization or the sale of all or
substantially all of its assets, including its registration as an SRO,
the surviving entity would automatically become subject to the plan and
could use the Symbol Reservation System.
---------------------------------------------------------------------------

    \184\ See Section VII of the Five-Characters Plan.
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    The Commission finds that the provisions of the Five-Characters
Plan relating to a party withdrawing from the plan will further the
purposes of the Act because, by specifying a party's terms of
withdrawal, the plan helps to ensure a fair and orderly market.
7. Amendments to the Plan
    The plan may be amended from time to time when authorized by the
affirmative vote of all the parties, subject to any required approval
of the Commission.\185\ One commenter questioned the efficacy of
requiring unanimous approval for plan changes.\186\ Although the
Commission agrees that the plan's unanimity provision with respect to
amendments may, in some cases, not be the most efficient method, the
Commission notes that the signatory SROs to both proposed plans agreed
to this required voting methodology and the Commission is reluctant to
require a different voting methodology for plan amendments at this
time.
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    \185\ See Section VIII of the Five-Characters Plan.
    \186\ See Angel Letter II at 4. The Commission notes, however,
that other national market system plans have similar provisions
(see, e.g., the Options Linkage Plan at http://
www.optionsclearing.com/initiatives/ola/ola.jsp).
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    The Commission finds that the provision of the Five-Characters Plan
relating to amendments to the plan is in furtherance of the purposes of
the Act in that it specifies the method by which the plan may be
amended. The Commission will monitor this process to determine whether
the unanimity provision is used for anti-competitive purposes or for
any other purpose not consistent with the Act. The Commission notes
that SROs proposing an amendment to a national market system plan must
file such amendment with the Commission pursuant to Rule 608 under the
Act.\187\ The Commission also notes that it has the authority to amend
any effective national market system plan under Rule 608 under the
Act.\188\
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    \187\ See 17 CFR 242.608(a).
    \188\ See 17 CFR 242.608(a)(2) and (b)(2).
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8. Development and Implementation Phases of the Plan
    The Five-Characters Plan states that it would be implemented upon
the Commission's approval. Although the letters accompanying both
proposed plans state that the parties will determine the development
and implementation phase later or in accordance to a timetable to which
the parties and the Processor will agree,\189\ the plans as submitted
to the Commission both provided that the parties would commence the
initial reservation process upon Commission approval.\190\ As discussed
above, however, the Commission has modified the Five-Characters Plan to
commence the initial reservation process 60 days from the Commission's
approval of the plan.\191\ The Commission has made this modification in
order to give the SROs that are not signatories to the Five-Characters
Plan time to obtain the

necessary approvals to join the approved plan. The Commission believes
60 days is a reasonable period of time to obtain such approval. The
Commission notes that this approval order only requires SROs that
choose to list securities or designate securities for quoting on a
quotation medium to join the plan (and all such SROs were party to one
of the two submitted plans); those SROs that do not intend to list or
designate securities for quoting are not required to join the
plan.\192\
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    \189\ See Paragraph 4 of the letters accompanying each proposed
plan.
    \190\ See Sections IV(b)(1) of both proposed plans.
    \191\ See discussion supra notes 141-143 and accompanying text.
    \192\ See supra notes 68-70 and accompanying text.
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    The Commission finds that the modified implementation provision of
the Five-Characters Plan will further the purposes of the Act because
it allots additional time for non-signatory SROs to join the approved
plan.
9. Terms and Conditions of Access
    Any SRO that meets the eligibility standards of the plan may become
a party thereto by signing a current copy of the plan and paying to the
other parties a share of the aggregate development costs previously
paid by such parties to the Processor.
    The Commission finds that this provision of the Five-Characters
Plan will further the purposes of the Act in that it should assure fair
competition among exchange markets, in particular new SROs, consistent
with Section 11A(a)(1)(C)(ii) of the Act.\193\
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    \193\ 15 U.S.C. 78k-l(a)(1)(C)(ii).
---------------------------------------------------------------------------