[Federal Register: November 29, 2004 (Volume 69, Number 228)]
[Notices]
[Page 69435-69440]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr29no04-129]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-50710, File No. SR-NASD-2004-157]
Self-Regulatory Organizations; Notice of Filing and Order
Granting Accelerated Approval of Proposed Rule Change by National
Association of Securities Dealers, Inc. Relating to the Listing and
Trading of Performance Leveraged Upside Securities Linked to the
Russell 2000 Index
November 19, 2004.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act'') \1\, and Rule 19b-4 thereunder,\2\ notice is hereby given
that on October 21, 2004, the National Association of Securities
Dealers, Inc. (``NASD''), through its subsidiary, the Nasdaq Stock
Market, Inc. (``Nasdaq''), filed with the Securities and Exchange
Commission (``Commission'') the proposed rule change as described in
Items I and II
[[Page 69436]]
below, which Items have been prepared by Nasdaq. The Commission is
publishing this notice to solicit comments on the proposed rule change
from interested persons and is approving the proposal on an accelerated
basis.
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\1\ 15 U.S.C. 78s(b)(1).
\2\ CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of the
Substance of the Proposed Rule Change
Nasdaq proposes to list and trade Performance Leveraged Upside
SecuritiesSM (``PLUS''), the return on which is based upon
the Russell 2000 Index (``Notes'') issued by Morgan Stanley.
II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
In its filing with the Commission, Nasdaq included statements
concerning the purpose of and basis for the proposed rule change and
discussed any comments it received on the proposed rule change. The
text of these statements may be examined at the places specified in
Item III below. Nasdaq has prepared summaries, set forth in Sections A,
B, and C, below, of the most significant aspects of such statements.
A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
1. Purpose
Nasdaq proposed to list and trade the PLUS which provide for a
return based upon the Russell 2000 Index (the ``Index'').
Index
The Index is a capitalization-weighted index maintained by Frank
Russell company (``FRC'').\3\ It is designed to track the performance
of 2,000 common stocks of corporations with small market
capitalizations relative to other stocks in the U.S. equity market. The
companies represented in the Index are domiciled in the U.S. and its
territories and cover a wide range of industry groups. All 2,000 stocks
are traded on the New York Stock Exchange, the American Stock Exchange,
or Nasdaq and form a part of the Russell 3000 Index. The Russell 3000
Index is composed of the 3,000 largest U.S. companies, based on market
capitalization, and represents approximately 98% of the U.S. equity
market.
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\3\ For additional information regarding the Index see http://www.russell.com
.
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The Index measures the price performance of the shares of common
stock of the smallest 2,000 companies included in the Russell 3000
Index, which represent approximately 8% of the total market
capitalization of the Russell 3000 Index as of August 31, 2004.\4\ The
Index is designed to track the performance of the small capitalization
segment of the U.S. equity market. The Index is defined, assembled and
calculated by FRC without regard to the Notes.
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\4\ As of August 31, 2004, the total market capitalization of
the Index was $953.34 billion.
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Only companies domiciled in the U.S. and its territories are
eligible for inclusion in the Index. Companies domiciled in other
countries are excluded, even if their common stock shares are traded on
U.S. markets. Preferred stock, convertible preferred stock,
participating preferred stock, paired shares, warrants, and rights are
also excluded. Trust receipts, Royalty Trusts, limited liability
companies, OTC Bulletin Board and Pink Sheets' quoted stock, closed-end
mutual funds, and limited partnerships that are traded on U.S.
exchanges, are also ineligible for inclusion. Real Estate Investment
Trusts and Beneficial Trusts are eligible for inclusion, however. In
general, only one class of securities of a company is allowed in the
Russell 3000 Index, although exceptions to this general rule have been
made where FRC has determined that each class of securities acts
independent of the other.
The primary criteria used to determine the initial list of
securities eligible for the Russell 3000 Index is total market
capitalization, which is defined as the price of the shares times the
total number of shares outstanding. Based on closing values on May 31
of each year, FRC reconstitutes the composition of the Russell 3000
Index using the then existing market capitalizations of eligible
companies to reflect changes in capitalization rankings and shares
available. If a stock ceases to trade as a result of a merger or
acquisition during the year, the stock is deleted from the Index and
will be replaced during the subsequent annual recapitalization. No
interim replacements will be made. As of June 30 of each year, the
Index is adjusted to reflect the reconstitution of the Russell 3000
Index for that year.
As of September 30, 2004, the market capitalization of the Index
components ranged from approximately $68 million to approximately
$2.353 billion. As of the same date, the Index's highest weighted
component stock constituted approximately 0.213% of the Index's market
capitalization, and the top five component stock constituted
approximately 0.9968% of the Index's market capitalization. For a 30-
day period prior to August 19, 2004, the average daily trading volume
of the average of all of the Index's components was approximately
195,000 shares.\5\
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\5\ Telephone conference between Alex Kogan, Associate General
Counsel, Nasdaq, and Florence Harmon, Senior Special Counsel,
Division of Market Regulation, (``Division''), Commission, dated
November 16, 2004.
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As a capitalization-weighted index, the Index reflects changes in
the capitalization, or market value, of the component stocks relative
to the capitalization on a base date. The current index value is
calculated by adding the market values of the Index's component stocks,
which are derived by multiplying the price of each stock by the number
of shares outstanding, to arrive at the total market capitalization of
the 2,000 stocks. The total market capitalization is then divided by a
divisor, which represents the ``adjusted'' capitalization of the Index
on the base date of December 31, 1986. To calculate the Index, last
sale prices are used for exchanged-traded and Nasdaq stocks. If a
component stock is not open for trading, the most recently traded price
for that security is used in calculating the Index. In order to provide
continuity for the Index's value, the divisor is adjusted periodically
to reflect events including changes in the number of common shares
outstanding for component stocks, company additions or deletions,
corporate restructurings and other capitalization changes.
The Index value is widely disseminated throughout the trading day
because complete, ``real time'' dissemination of the Index value
updated at least every 15 seconds, is available from sources
independent of the issuer and Nasdaq, such as numerous vendors,
including Bloomberg and Rueters. The value of the Index on a delayed
basis can be accessed by individual investors at http://finance.yahoo.com/q?s=
[caret]RUT&d=t. The last sale information for the
Notes is disseminated on a real time basis on Tape C and a variety of
other sources.\6\ In the event that the calculation and dissemination
of the Index from an independent third-party source is discontinued,
Nasdaq states that it will delist the Notes.\7\
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\6\ November 16, 2004 telephone conference between Alex Kogan,
Associate General Counsel, Nasdaq, and Florence Harmon, Senior
Special Counsel, Division, Commission.
\7\ November 16, 2004 telephone conference between Alex Kogan,
Associate General Counsel, Nasdaq, and Florence Harmon, Senior
Special Counsel, Division, Commission.
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[[Page 69437]]
Other Information
Under Rule 4420(f), Nasdaq may approve for listing and trading
innovative securities that cannot be readily categorized under
traditional listing guidelines.\8\ Nasdaq proposes to list and trade
notes based on the Index under Rule 4420(f).
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\8\ See Securities Exchange Act Release No. 32988 (September 29,
1993), 58 FR 52124 (October 6, 1993) (SR-NASD-93-15).
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The Notes, which will be registered under Section 12 of the Act,
will initially be subject to Nasdaq's listing criteria for other
securities under Rule 4420(f). Specifically, under Rule 4420(f)(1):
(A) The issuer shall have assets in excess of $100 million and
(B) stockholders' equity of at least $10 million.\9\ In the case of
an issuer which is unable to satisfy the income criteria set forth in
Rule 4420(a)(1), Nasdaq generally will require the issuer to have the
following: (i) Assets in excess of $200 million and stockholders'
equity of at least $10 million; or (ii) assets in excess of $100
million and stockholders' equity of at least $20 million;
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\9\ Morgan Stanley satisfies this listing criterion.
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(C) There must be a minimum of 400 holders of the security;
provided, however, that if the instrument is traded in $1,000
denominations, there must be a minimum of 100 holders;
(D) For equity securities designated pursuant to this paragraph,
there must be a minimum public distribution of 1,000,000 trading units;
(E) The aggregate market value/principal amount of the security
will be at least $4 million.
In addition, Morgan Stanley satisfies the listed marketplace
requirement set forth in Rule 4420(f)(2).\10\ Lastly, pursuant to Rule
4420(f)(3), prior to the commencement of trading of the Notes, Nasdaq
will distribute a circular to members providing guidance regarding
compliance responsibilities, and requirements, including suitability
recommendations, and highlighting the special risks and characteristics
of the Notes. In particular, Nasdaq will advice members recommending a
transaction in the Notes to: (1) Determine that such transaction is
suitable for the customer; and (2) have a reasonable basis for
believing that the customer can evaluate the special characteristics
of, and is able to bear the financial risks of, such transaction. In
addition, pursuant to NASD Rule 2310(b), before executing a transaction
in the Notes that has been recommended to a non-institutional customer,
a member shall make reasonable efforts to obtain information
concerning: (1) The customer's financial status; (2) the customer's tax
status; (3) the customer's investment objectives; and (4) such other
information used or considered to be reasonable by such member in
making recommendations to the customer.
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\10\ NASD Rule 4420(f)(2) requires issuers of securities
designated pursuant to this paragraph to be listed on The Nasdaq
National Market or the New York Stock Exchange (``NYSE'') or be an
affiliate of a company listed on The Nasdaq National Market or the
NYSE; provided, however, that the provisions of Rule 4450 will be
applied to sovereign issuers of ``other'' securities on a case-by-
case basis.
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The Notes will be subject to Nasdaq's continued listing criterion
for other securities pursuant to Rule 4450(c). Under this criterion,
the aggregate market value or principal amount of publicly held units
must be at least $1 million. The Notes also must have at least two
registered and active market makers, which is a continued listing
requirement under Rule 4310(c)(1). The Notes will be subject to the
NASD's existing trading halt rules. Nasdaq represents that it will
consider prohibiting the continued listing of the Notes if Morgan
Stanley is not able to meet its obligations on the Notes.
Description of the Notes
The Notes are a series of medium-term, senior non-convertible debt
securities that will be issued by Morgan Stanley. The original public
offering price of the Notes will be $10 per PLUS. The Notes will not
pay interest and are not subject to redemption by Morgan Stanley or at
the option of any beneficial owner before maturity (approximately 1.25
years from the pricing date).
At maturity, if the value of the Index has increased, a beneficial
owner will be entitled to receive a payment on the Notes based on 300%
the amount of that percentage increase, subject to a maximum total
payment at maturity that is expected to be between $11.35 and $11.65
per Note (the ``Maximum Payment at Maturity'').\11\ Thus, the Notes
provide investors the opportunity to obtain leveraged returns based on
the Index subject to a cap that is expected to represent an
appreciation of 11.5% to 16.5% over the original issue price of the
Notes. However, the Notes are not leveraged on the downside; rather,
the value of the Notes declines on a one-to-one basis with the Index.
Unlike ordinary debt securities, the Notes do not guarantee any return
of principal at maturity. Therefore, if the value of the Index has
declined from the time of pricing to the time of maturity, a beneficial
owner will receive less, and possibly significantly less, than the
original issue price of $10 per PLUS.
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\11\ The actual Maximum Payment at Maturity will be determined
at the time of pricing of the Notes.
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The payment that a beneficial owner will be entitled to receive at
maturity depends entirely on the relation of the value of the Index
generally on the second trading day prior to the date when the Notes
are due (the ``Final Index Value'') and the value of the Index on the
day they are priced for initial sale to the public (the ``Initial Index
Value''). If the Final Index Value is greater than the Initial Index
Value, the payment at maturity per PLUS will equal the lesser of (a)
$10 plus the Leveraged Upside Payment \12\ and (b) the Maximum Payment
at Maturity. If the Final Index Value is less than or equal to the
Initial Index Value, the payment at maturity per PLUS will equal $10
times the Index Performance Factor.\13\
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\12\ The Leveraged Upside Payment is the product of (i) $10 and
(ii) 300% and (iii) the Index Percent Increase (a fraction, the
numerator of which is the Final Index Value minus the Initial Index
Value and the denominator of which is the Initial Index Value).
\13\ The Index Performance Factor is a fraction, the numerator
of which is the Final Index Value and the denominator of which is
the Initial Index Value.
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The Notes are cash-settled in U.S. dollars and do not give the
holder any right to receive a portfolio security, dividend payments or
any other ownership right or interest in the portfolio or index of
securities comprising the Index. The Commission has previously approved
the listing of options on, and other securities the performance of
which have been linked to or based on, the Index and to other Russell
indexes.\14\
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\14\ See Securities Exchange Act Release No. 31382 (October 30,
1992), 57 FR 52802 (November 5, 1992) (SR-CBOE-92-02) (approving the
listing and trading of options on the Index); Securities Exchange
Act Release No. 49388 (March 10, 2004), 69 FR 12720 (March 17, 2004)
(SR-CBOE-2003-51) (approving the listing and trading of options on 3
Russell indexes; order contains the list of 12 additional Russell
indexes that were approved by the Commission at various times in the
past for option listing and trading).
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Since the Notes will be deemed equity securities for the purpose of
Rule 4420(f), the NASD and Nasdaq's existing equity trading rules will
apply to the Notes. First, pursuant to Rule 2310 and IM-2310-2, members
must have reasonable grounds for believing that a recommendation to a
customer regarding the purchase, sale or exchange of any security is
suitable for such customer upon the basis of the facts, if any,
disclosed by such customer as to his other security holdings and as to
his financial situation and needs.\15\ In
[[Page 69438]]
addition, as previously described, Nasdaq will distribute a circular to
members providing guidance regarding compliance responsibilities and
requirements, including suitability recommendations, and highlighting
the special risks and characteristics of the Notes. Furthermore, the
Notes will be subject to the equity margin rules. Lastly, the regular
equity trading hours of 9:30 a.m. to 4 p.m. will apply to transactions
in the Notes.
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\15\ As stated, prior to the execution of a transaction in the
Notes that has been recommended to a non-institutional customer,
Rule 2310(b) requires members to make reasonable efforts to obtain
information concerning a customer's financial status, a customer's
tax status, the customer's investment objectives, and such other
information used or considered to be reasonable by such member or
registered representative in making recommendations to the customer.
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Nasdaq represents that NASD Regulation's surveillance procedures
are adequate to properly monitor the trading of the Notes.
Specifically, NASD Regulation will rely on its current surveillance
procedures governing equity securities and will include additional
monitoring on key pricing dates.
Pursuant to Securities Exchange Act Rule 10A-3, 17 CFR 240.10A-3
and Section 3 of the Sarbanes-Oxley Act of 2002, Pub. L. No. 107-204,
116 Stat. 745 (2002), Nasdaq will prohibit the initial or continued
listing of any security of an issuer that is not in compliance with the
requirements set forth therein.
Morgan Stanley will deliver a prospectus in connection with the
initial purchase of the Notes. The procedure for the delivery of a
prospectus will be the same as Morgan Stanley's current procedure
involving primary offerings.
2. Statutory Basis
Nasdaq believes that the proposed rule change is consistent with
the provisions of Section 15A of the Act,\16\ in general, and with
Section 15A(b)(6) \17\ of the Act, in particular, in that the proposal
is designed to prevent fraudulent and manipulative acts and practices,
to promote just and equitable principles of trade, to remove
impediments to and perfect the mechanism of a free and open market and,
in general, to protect investors and the public interest. Specifically,
the proposed rule change will provide investors with another investment
vehicle based on the Index.
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\16\ 15 U.S.C. 78o-3.
\17\ 15 U.S.c. 78o3(b)(6).
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B. Self-Regulatory Organization's Statement on Burden on Competition
Nasdaq does not believe that the proposed rule change will result
in any burden on competition that is not necessary or appropriate in
furtherance of the purposes of the Act, as amended.
C. Self-Regulatory Organization 's Statement on Comments on the
Proposed Rule Change Received From Members, Participants, or Others
Written comments were neither solicited nor received.
III. Solicitation of Comments
Interested persons are invited to submit written data, views, and
arguments concerning the foregoing, including whether the proposed rule
change, is consistent with the Act. Comments may be submitted by any of
the following methods:
Electronic Comments
Use the Commission's Internet comment form (http://www.sec.gov/rules/sro.shtml.
); or Send an e-mail to rule-comments@sec.gov. Please include
File Number SR-NASD-2004-157 on the subject line.
Paper Comments
Send paper comments in triplicate to Jonathan G. Katz,
Secretary, Securities and Exchange Commission, 450 Fifth Street, NW.,
Washington, DC 20549-0609.
All submissions should refer to File Number SR-NASD-2004-157. This
file number should be included on the subject line if e-mail is used.
To help the Commission process and review your comments more
efficiently, please use only one method. The Commission will post all
comments on the Commission's Internet Web site (http://www.sec.gov/rules/sro.shtml
). Copies of the submission, all subsequent amendments,
all written statements with respect to the proposed rule change that
are filed with the Commission, and all written communications relating
to the proposed rule change between the Commission and any person,
other than those that may be withheld from the public in accordance
with the provisions of 5 U.S.C. 552, will be available for inspection
and copying in the Commission's Public Reference Section, 450 Fifth
Street, NW., Washington, DC 20549. Copies of such filing also will be
available for inspection and copying at the principal office of the
NASD. All comments received will be posted without change; the
Commission does not edit personal identifying information from
submissions. You should submit only information that you wish to make
available publicly.
All submissions should refer to File Number SR-NASD-2004-157 and
should be submitted on or before December 20, 2004.
IV. Commission's Findings and Order Granting Accelerated Approval for
Proposed Rule Change
Nasdaq has asked the Commission to approve the proposal on an
accelerated basis to accommodate the timetable for listing the Notes.
After careful consideration, the Commission finds that the proposed
rule change is consistent with the requirements of the Act and the
rules and regulations thereunder applicable to a national securities
association, and, in particular, with the requirements of Section
15A(b)(6) of the Act,\18\ which requires in part that the rules be
designed to promote just and equitable principles of trade, to remove
impediments to and perfect the mechanism of a free and open market, and
in general, to protect investors and the public interest.\19\
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\18\ 15 U.S.C. 78o-3(b)(6).
\19\ In approving the proposed rule, the Commission has
considered the proposed rule's impact on efficiency, competition,
and capital formation. 15 U.S.C. 78c(f).
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The Notes are medium-term, senior non-convertible debt securities
the return on which is based on the Index. The Notes, however, will not
pay interest and are not subject to redemption by Morgan Stanley or at
the option of any beneficial owner before maturity (approximately 1.25
years from the pricing date). Unlike ordinary debt securities, the
Notes do not guarantee any return of principal at maturity. Therefore,
if the value of the Index has declined from the time of pricing to the
time of maturity, a beneficial owner will receive less, and possibly
significantly less, than the original issue price of $10 per PLUS. The
Commission believes that the Notes provide investors with the
opportunity to obtain upside leveraged returns based on the Index
subject to a cap that is expected to represent an appreciation of 13.5%
to 16.5% over the original issue price of the Notes. The Commission
notes that the return of the Notes, if the Index declines, is not
leveraged.
The Commission notes that issues are raised by the fact that the
Notes are debt securities that do not guarantee a return of principal,
that return on the Notes is limited by the Maximum Payment at maturity,
and that the Final Index Value is derivatively priced and based on the
performance value of an index of securities. As set forth below, the
Commission believes that these concerns are adequately addressed by
Nasdaq's proposals.
[[Page 69439]]
First, the Commission notes that NASD Rule 4420(f) addresses the
concerns stemming from the trading of hybrid securities such as the
Notes. The Commission believes that the hybrid listing standards,
suitability for recommendations standards \20\ and compliance
requirements will enable Nasdaq to address the potential problems that
could arise from the hybrid nature of the Notes. The Commission notes
that pursuant to Rule 4420(f)(3), prior to the commencement of trading
on the Notes, Nasdaq will distribute a circular to members providing
guidance regarding compliance responsibilities and requirements,
including suitability recommendations, and highlighting the special
risks and characteristics of the Notes. Specifically, among other
things, the circular will note that the Notes do not guarantee a total
return of principal at maturity, that they are subject to maximum total
payment at maturity that is expected to be between $11.35 and $11.65
per Note (the ``Maximum Payment at Maturity''), that the Notes will not
pay interest, and that the Notes will provide exposure to the Index.
Distribution of the circular should help to ensure that only customers
with an understanding of the risks attendant to the trading of the
Notes and who are able to bear the financial risks associated with the
transactions in the Notes will trade the Notes. Nasdaq also represents
that Morgan Stanley will deliver a prospectus in connection with the
initial purchase of the Notes.
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\20\ Nasdaq will advise members recommending a transaction in
the Notes to: (1) Determine that the transaction is suitable for a
customer; and (2) have a reasonable basis for believing that the
customer can evaluate the special characteristics of, and is able to
bear the financial risks involved in the transaction.
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Second, the Commission notes that the final rate of return on the
Notes depends in part upon the individual credit of the issuer, Morgan
Stanley. To come extent this credit risk is minimized by NASD's listing
standards in NASK Rule 4420(f), which provide that only issuers
satisfying substantial asset and equity requirements may issue these
types of hybrid securities. NASD's hybrid listing standards further
require that the Notes have at least $4 million in market value. In
addition, financial information regarding Morgan Stanley will be
publicly available.
Third, the Notes will be registered under Section 12 of the Act.
NASD and Nasdaq's existing equity trading rules will apply to the Notes
which will be subject to equity margin rules and will trade during the
regular equity trading hours of 9:30 a.m. and 4 p.m. NASD Regulation's
surveillance procedures for the Notes will be the same as its current
surveillance procedures for equity securities and will include
additional monitoring on key pricing dates. The Commission believes
that these rules and procedures will deter potential manipulation of
the Notes.
Fourth, the Commission has a systematic concern that a broker-
dealer, such as Morgan Stanley, or a subsidiary providing a hedge for
the issuer will incur position exposure. As discussed in prior approval
orders for other hybrid instruments issued by broker dealers,\21\ the
Commission believes that this concern is minimal, given the size of the
Notes issuance in relation to the net worth of Morgan Stanley.
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\21\ See Securities and Exchange Act Release Nos. 44913 (October
9, 2001), 66 FR 52469 (October 15, 2001) (order approving File No.
SR-NASD-2001-73) (approving the listing and trading of notes issued
by Morgan Stanley Dean Witter & Co. whose return is based on the
performance of the Index); 44483 (June 27, 2001), 66 FR 35677 (July
6, 2001) (order approving File No. SR-Amex-2001-40) (approving the
listing and trading of notes issued by Merrill Lynch whose return is
based on a portfolio of 20 securities selected by the Amex
Institutional Index); and 37744 (September 27, 1996) (order
approving File No. SR-Amex-96-27) (approving the listing and trading
of notes issued by Merrill Lynch the return of which is based on a
weighted portfolio of healthcare/biotechnology industry securities).
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Fifth, the Commission believes the general broad diversification,
level of capitalization, and trading activity in the markets for the
Index's component stocks minimize the potential for manipulation of the
Index. The Index is a capitalization-weighted index maintained by FRC.
It is designed to track the performance of 2,000 common stocks of
corporations with small market capitalizations relative to other stocks
in the U.S. equity market. The companies represented in the Index are
domiciled in the U.S. and its territories and represent a wide range of
industry groups. All 2,000 stocks are traded on the New York Stock
Exchange, the American Stock Exchange, or Nasdaq and form a part of the
Russell 3000 Index. As of August 31, 2004, the total market
capitalization of the Index was $953.34 billion and as of September 31,
2004, the market capitalization of the Index components ranged from
approximately $68 million to approximately $2.353 billion. As of the
same date, the Index's highest weighted component stock constituted
approximately 0.213% of the Index's market capitalization and the top
five component stocks constituted approximately 0.9968% of the Index's
market capitalization. For a 30-day period prior to August 19, 2004,
the average daily trading volume of the average of all of the Index's
components was approximately 195,000 shares. The Commission notes that
the overwhelming majority of the stocks that comprise the Index are not
inactively traded. The Commission also believes that the listing and
trading of the Notes should not unduly impact the market for underlying
securities comprising the Index. Finally, the Commission notes that the
value of the Russell 2000 Index will be widely disseminated on a real-
time basis (at least every 15 seconds) throughout the trading day. In
the event that the calculation and dissemination of the index from an
independent third-party source is discontinued, Nasdaq states that it
will delist the Notes.
The Commission finds good cause for approving the proposed rule
change prior to the thirtieth day after the date of publication of
notice thereof in the Federal Register. In determining to grant the
accelerated approval for good cause, the Commission notes that it has
previously approved the listing of options on/ and or securities, the
performance of which has been based on the Index.\22\ In addition, the
Commission has previously approved the listing of securities with a
structure that is the same or substantially the same as the Notes.\23\
The Commission believes the Notes will provide investors with an
additional investment choice and that the accelerated approval of the
proposal will allow investors to begin trading the Notes promptly.
Accordingly, the Commission finds good cause, pursuant to Section
19(b)(2) of the Act for approving the proposed rule change prior to the
thirtieth day after the date of publication in the Federal Register.
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\22\ See Securities Exchange Act Release No. 31382 (October 30,
1992), 57 FR 52802 (November 5, 1992) (SR-CBOE-92-02) (approving the
listing and trading of options on the Index); Securities Exchange
Act Release No. 49388 (March 10, 2004), 69 FR 12720 (March 17, 2004)
(SR-CBOE-2003-51) (approving the listing and trading of options on 3
Russell indexes; order contains the list of 12 additional Russell
indexes that were approved by the Commission at various times in the
past for option listing and trading).
\23\ See Securities Exchange Act Release No. 50501 (October 7,
2004), 69 FR 61533 (October 19, 2004) (SR-NASD-2004-138) (approving
the listing and trading of PLUS based on the value of the Dow Jones
Euro Stoxx 50 Index); Securities Exchange Act Release No. 48065
(June 19, 2003), 68 FR 38414 (June 27, 2003) (SR-NASD-2003-100)
(approving the listing and trading of PLUS based on the value of the
Nasdaq-100).
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V. Conclusion
It is therefore ordered, pursuant to Section 19(b)(2) of the Act
\24\ that the proposed rule change (SR-NASD-2004-
[[Page 69440]]
157) is hereby approved on an accelerated basis.
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\24\ 15 U.S.C. 78s(b)(2).
For the Commission, by the Division of Market Regulation,
pursuant to delegated authority.\25\
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\25\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 04-26304 Filed 11-26-04; 8:45 am]
BILLING CODE 8010-01-M