"This is an application to be recognized formally for what we essentially already are," commented Richard G. Ketchum, president of Nasdaq®. "It is a change in our legal status, as opposed to the way Nasdaq operates. While this administrative procedure changes little for investors and most market practitioners, it is an important step for Nasdaq. Once approved, Nasdaq will be able to complete its separation from the NASD and be a truly independent organization owned by investors. At that point Nasdaq will be able to access the capital markets to fund technology improvements and to continue building the world's first global equity marketplace. We thank the SEC for getting this application out for comment and will work with all interested parties to complete as expeditiously and seamlessly as possible, the process of becoming designated as an exchange."
Background of the Exchange Registration Process
The Nasdaq Stock Market® is registering as a securities exchange under the federal securities laws. Exchange registration is primarily a change in legal status for Nasdaq as opposed to a change in the way Nasdaq operates. It is part of the process, begun over a year ago, of separating Nasdaq® from its parent company, the National Association of Securities Dealers, Inc. (NASD®).
As a subsidiary of the NASD, Nasdaq operates under the NASD's self-regulatory organization (SRO) status as a national securities association. Although there are minor distinctions between a national securities exchange and a national securities association, in practical terms, there is little that is different between the two. For all intents and purposes, Nasdaq functionally operates very much like an exchange now, without formal recognition as an exchange by the SEC.
An overview of the process of becoming an exchange is provided below:
- Filing a Form 1 application, including Nasdaq's by-laws and rules. Nasdaq's application was filed with the SEC on November 9, 2000.
- Publication of the application in the Federal Register and commencement of a 45-day comment period.
- Close of comment period on July 30, 2001.
- SEC review of comment letters.
- Nasdaq response to comment letters.
- SEC either issues an order granting registration or begins proceedings to deny the application.
The Nasdaq Stock Market lists more than 4,400 companies, has a larger dollar volume, and trades more shares per day than any other U.S. market. Nasdaq is a subsidiary of the National Association of Securities Dealers, Inc. (NASD®), the largest securities-industry, self-regulatory organization in the United States. For more information about Nasdaq, visit the Nasdaq Web site at www.nasdaq.com or the Nasdaq NewsroomSM at www.nasdaqnews.com.
