Federal Register: NOTICES Joint Industry Plan:: 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.

SECURITIES AND EXCHANGE COMMISSION

Securities and Exchange Commission

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

NOTICE: NOTICES

ACTION: Joint Industry Plan:

SUBJECT CATEGORY: 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.

DOCUMENT SUMMARY: 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 FiveCharacters Plan and the ThreeCharacters Plan. On January 25, 2008, the Commission published Amendment No. 1 to the ThreeCharacters 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 FiveCharacters 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 ThreeCharacters Plan.\6\ \1\ See Securities Exchange Act Release No. 56037 (July 10, 2007), 72 FR 39096 (File Nos. 4533 and 4534) (``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#4534 and http://www.sec.gov/rules/ sro/nms.shtml#4533, 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) (SRNASD2007053).
\5\ FINRA, Nasdaq, NSX, and Phlx filed the FiveCharacters 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 FiveCharacters 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 ThreeCharacters Plan, filed on August 3, 2007, CBOE and ISE joined as parties to the proposed plan.

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 ThreeCharacters Plan would only cover one, two, and threecharacter symbols; the FiveCharacters Plan would cover one, two, three, four, and fivecharacter symbols. In addition, the plans differ with regard to the parties that are eligible to join the plan; the reservation rights for perpetual and limitedtime 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\ Twentytwo
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commenters generally supported the ThreeCharacters Plan or aspects thereof,\8\ while 22 commenters generally supported the FiveCharacters Plan or aspects thereof.\9\ The remaining 12 commenters did not expressly support one plan or another.\10\
\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 PomeroyWard, 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 BarLev, 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 CoChair, 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.

This order approves the FiveCharacters 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 FiveCharacters 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 FiveCharacters Plan, as modified herein, and to act jointly with CHX, FINRA, Nasdaq, NSX, and Phlx to implement the approved plan.\12\ The approved FiveCharacters Plan is attached here as Appendix A.
\11\ 15 U.S.C. 78k1. See also 17 CFR 242.608(b)(2).
\12\ 15 U.S.C. 78k1(a)(3)(B).
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 selfregulatory 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\
\13\ 15 U.S.C. 78k1.
\14\ 15 U.S.C. 78k1(a)(1)(C).
\15\ 15 U.S.C. 78k1(a)(3)(B).
\16\ 17 CFR 242.608(b)(2). See also 15 U.S.C. 78k1(a).

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
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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.
\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.''

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\
\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, 19495 (The Summit Group Press) (2000).
\21\ See S. S. Huebner, Ph.D., Sc.D., The Stock Market, 218 (AppletonCenturyCrofts, 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).

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 threecharacter symbols has diminished.\25\ Several factors have been increasing the demand for one, two, and threecharacter symbols. In recent years, exchanges have begun listing new and innovative products, such as exchangetraded funds, that are now competing with listed companies for symbols.
\25\ There are 26 combinations for onecharacter symbols, 676 combinations for twocharacter symbols, and 17,576 combinations for threecharacter symbols, for a total of 18,278 one, two, and threecharacter symbols.

In addition, Nasdaq, which when operated as a facility of NASD (n/ k/a FINRA) \26\ only listed securities with four and fivecharacter symbols, has begun using two and threecharacter symbols and has expressed its desire to use onecharacter symbols as well for Nasdaq listed issuers. It has been the practice of the NYSE to list companies using one, two, and threecharacter symbols and of other exchanges (including Amex and regional exchanges) to list companies using two and threecharacter 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 fivecharacter symbols. In November 2005, however, Nasdaq announced its intention to begin listing companies with one, two, and threecharacter 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 threecharacter symbols.\29\ And, in April 2008, Nasdaq filed with the Commission an immediately effective proposed rule change to allow an issuer with a twocharacter symbol to transfer its listing to Nasdaq and retain its twocharacter symbol.\30\
\26\ Nasdaq began operations as a national securities exchange in Nasdaqlisted securities on August 1, 2006, and in nonNasdaq 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. 10131).
\27\ See Head Trader Alert 2005133 (November 14, 2005), available at http://www.nasdaqtrader.com. \28\ See e.g., Nasdaq Head Trader Alerts 2006144 (September 29, 2006), 2006193 (November 16, 2006), 2006201 (December 6, 2006), and 2007008 (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) (SRNASDAQ2007031) (notice for the proposal to allow threecharacter 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 ThreeCharacter Portability Order''). See also Securities Exchange Act Release No. 55519 (March 26, 2007), 72 FR 15737 (April 2, 2007) (SRNASDAQ2007025) (allowing a single company, Delta Financial Corp., to retain its threecharacter 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) (SRNASDAQ2008034). The Commission notes that its approval of the FiveCharacters Plan, as modified herein, is consistent with this change and with its approval of the Nasdaq ThreeCharacter Portability Order. See id. As discussed further below, see infra notes 105117 and accompanying text, the approved plan would allow the automatic portability of all one, two, three, four, and fivecharacter symbols of issuers transferring their listing from one exchange to another.

Finally, the proliferation of standardized options has decreased the availability of threecharacter 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.
\31\ The options exchanges have expressed their intention to shift to a different symbology. See http://www.theocc.com/ initiatives/symbology/default.jsp.

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
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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\
\32\ See, e.g., Big Board Drops its Lawsuit Against Amex, The New York Times, March 10, 1999, Section C, p. 10.

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.
\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'').

III. Discussion

In the notice publishing for comment both the ThreeCharacters Plan and the FiveCharacters 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 threecharacter securities symbols. Therefore, approval of both plans would establish two competing, inconsistent systems for selecting and reserving one, two, and threecharacter 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. \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.

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 FiveCharacters 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 FiveCharacters Plan is necessary and appropriate in the public interest and in furtherance of the purposes of the Act. The FiveCharacters Plan is more comprehensive than the ThreeCharacters Plan because it covers one, two, three, four, and fivecharacter 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 ThreeCharacters 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 FiveCharacters 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.
\36\ 15 U.S.C. 78k1(a)(3)(B).
\37\ 17 CFR 242.608.
\38\ The Commission has modified the proposed FiveCharacters 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 fivecharacters 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 141143 and 190191 and accompanying text); (iii) to limit the use of one, two, and threecharacter symbols for securities listed on a national securities exchange and to restrict securities trading overthecounter to using only four or fivecharacter symbols (see infra notes 8589 and accompanying text); and (iv) to clarify that securities that delist and trade on the overthecounter market would not have portability rights for the original listing symbol (see infra notes 168172 and accompanying text).

This order authorizes CHX, FINRA, Nasdaq, NSX, and Phlx to act jointly to implement the FiveCharacters 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\
\39\ 15 U.S.C. 78k1.
\40\ 15 U.S.C. 78k1(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 FiveCharacters Plan shall be the exclusive means of allocating and using symbols of one, two, three, four, or fivecharacters in length. In addition, for clarity, the Commission is specifying that there will be no difference between capital letters and lowercase letters,
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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\
\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. FiveCharacters Plan's Consistency With Section 11A of the Act

Many of the provisions of the proposed FiveCharacters 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 thirdparty processor and a symbol reservation database, the general process of reserving perpetual and limitedtime 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 nontransferability 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 FiveCharacters 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 FiveCharacters Plan would give all exchanges equal rights under the proposal.\44\ Some of these commenters also stated that the proposed FiveCharacters Plan would provide greater choice for public companies and cause less confusion for investors.\45\ One commenter asserted that the proposed FiveCharacters Plan is inherently more fair and reasonable than the proposed ThreeCharacters Plan.\46\
\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 FiveCharacters 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.

The Commission agrees with the commenters supporting the Five Characters Plan and finds that, as discussed in greater detail below, the FiveCharacters 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 ThreeCharacters Plan would only cover one, two, and threecharacter symbols; the FiveCharacters Plan, on the other hand, would cover the reservation and allocation of all one, two, three, four, and fivecharacter 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 FiveCharacters 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 ThreeCharacters Plan.\49\ The ThreeCharacters Plan would leave unanswered the appropriate methodology for allocating four and fivecharacter symbols.
\48\ See Section I(b) of the FiveCharacters 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 FiveCharacters Plan. The ThreeCharacters Plan would cover only root symbols of one, two or threecharacters for Network A and Network B Eligible Securities (as defined in the CTA Plan) and listed options reported to OPRA. The ThreeCharacters 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 ThreeCharacters 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 fivecharacters in length.

Although Nasdaq is currently the primary listing exchange for issuers using four and fivecharacter 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 fivecharacter symbols in order to permit all exchanges to begin utilizing such symbols, particularly in light of the limited availability of one, two, and threecharacter 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 fourcharacter 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 FiveCharacters 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 200836 (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
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proposed ThreeCharacters 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 threecharacter 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 FiveCharacters 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 fivecharacter 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 threecharacter symbols, if it seeks to reserve symbols of one, two, or threecharacters in length, or using fouror five character symbols, if it seeks to reserve symbols of fouror 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 FiveCharacters Plan.
\57\ See Section I(c) of the FiveCharacters Plan. For
additional discussion regarding the plan's provision relating to costs, see discussion infra notes 118124 and accompanying text.

Many commenters argued that Nasdaq should not be allowed to list one, two, and threecharacter 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 threecharacter 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 threecharacter 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 NYSElisted securities.\61\ NYSE also argued that Nasdaq's attempt to use threecharacter 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 threecharacter symbols as NYSE and any other exchange.\63\ One commenter noted that one, two, and threecharacter ticker symbols have previously been used by Amex and other regional exchanges and that commenters implying that one, two, and threecharacter 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 twocharacter 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 activelytraded stocks, some of which are Nasdaqlisted, 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 fivecharacter symbols should be able to reserve those symbols.\67\ As noted above, the FiveCharacters 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 FiveCharacters 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 fivecharacter symbols, respectively. See infra notes 90 and 9395 and accompanying text. The Commission notes that, for limitedtime reservations, the plan requires a party to have a reasonable basis for using a limitedtime reservation within a 24month period. See infra notes 9192 and accompanying text.
\70\ See infra notes 192 and 197198 and accompanying text.

The Commission does not agree with commenters who believe that the use of one, twoor threecharacter 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 FiveCharacters Plan is preferable and is necessary and appropriate in the public interest, for the protection of investors and the
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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. 78k1(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 challengesincluding 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 FiveCharacters 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 FiveCharacters Plan who are not signatories to the plan at this time.

The Commission also believes that the FiveCharacters 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 ThreeCharacters Plan, the FiveCharacters Plan provides each party to the plan with an equal allotment of perpetual and limitedtime 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 FiveCharacters Plan would allocate to any new party joining the plan a prorata 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 77104 and accompanying text. \75\ See discussion infra notes 105117 and accompanying text. \76\ See discussion infra notes 118124 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 (``limitedtime 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 limitedtime reservation lists, respectively; and (3) how limited time reservations may be secured. These differences and the reasons the Commission finds that the FiveCharacters 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 FiveCharacters 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 FiveCharacters Plan. See also Section III of the ThreeCharacters Plan, which is identical to the FiveCharacters Plan.
\79\ The Commission is modifying the FiveCharacters Plan's provision on the timing for the initial reservation process. See infra notes 77104 and accompanying text for the discussion of this modification.
\80\ 15 U.S.C. 78k1(a)(1)(C).

a. Allocation of Reservation Rights Among Parties

The proposed ThreeCharacters Plan awards greater reservation rights to NYSE and Amex than to the other parties to the plan. Specifically, the proposed ThreeCharacters Plan would allow NYSE and Amex each to reserve 200 symbols as perpetual reservations and 1,500 symbols as limitedtime reservations, while other parties to the plan could only reserve 40 symbols as perpetual reservations and up to 500 limitedtime reservations.\81\ The FiveCharacters Plan, on the other hand, awards equal reservation rights among all the partiesany eligible party to the plan could reserve 20 perpetual reservations and 1,500 limitedtime reservations of one, two, and threecharacter symbols and 20 perpetual reservations and 1,500 limitedtime reservations of four and fivecharacter symbols.\82\ The Five Characters Plan also requires a party intending to include a symbol on its limitedtime reservations lists to have a reasonable basis for using such symbol within 24 months.
\81\ The proposed ThreeCharacters Plan, as amended, provided that NYSE Arca and CBOE each may have 500 limitedtime reservations and that ISE may have 200 limitedtime reservations. The plan would leave the precise number of limitedtime 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 FiveCharacters 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 FiveCharacters Plan will further the purposes of the Act. The FiveCharacters Plan allocates all reservation rights equally among all parties to the plan, consistent with fair competition principles. NYSE argued that the proposed ThreeCharacters 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 ThreeCharacters 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 procompetition 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 threecharacter 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 FiveCharacters Plan's proposed allotments would permit active listing markets to reserve more than enough securities symbols for their listing business. The FiveCharacters Plan, in contrast to the proposed ThreeCharacters 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,
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in the past, if a Nasdaqlisted 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 overthecounter 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 overthecounter securities. To be quoted on the Pink Sheets, an issuer need only find one market maker to quote its shares, and Pink Sheetstraded 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 fouror fivecharacter symbols, were to begin trading with one, two, or threecharacter symbols. The Commission believes that it is important to distinguish between securities trading only on over thecounter 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 10A3 under the Act.\88\ Issuers traded on overthecounter 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 fouror fivecharacter symbols, whereas it is not appropriate to similarly distinguish between exchangelisted securities. The Commission believes that issuers trading solely on the OTCBB, Pink Sheets, and any other overthecounter venue should be limited to using four and fivecharacter 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 threecharacter symbols.\89\ Therefore, the Commission is modifying the FiveCharacters Plan to prohibit an SRO from reserving or using one, two, and threecharacter symbols for any issuer not listed on a national securities exchange.
\88\ 17 CFR 240.10A3.
\89\ 17 CFR 242.608.

b. Number of Perpetual and LimitedTime Reservations

The ThreeCharacters Plan contemplates allocating some SROs as many as 200 perpetual reservations. In contrast, the FiveCharacters Plan would allow no more than 40 perpetual reservations for each party.\90\ The Commission believes that, because the FiveCharacters 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 FiveCharacters Plan's allotment of 1,500 limited time reservations for one, two, and threecharacter symbols and 1,500 limitedtime reservations for four and fivecharacter 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 FiveCharacters Plan would allow each party to place 20 symbols on each of its perpetual reservation lists for one, two, or threecharacter symbols and four or fivecharacter symbols, respectively.

Both proposed plans permit limitedtime 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 FiveCharacters Plan requires a party to have a reasonable basis for using a limitedtime reservation within such 24 month period while the ThreeCharacters Plan has no such comparable requirement.\92\ Under the FiveCharacters Plan, if a party does not use a limitedtime reservation within the 24month 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 24month 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 FiveCharacters 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 anticompetitive 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 133137 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

SUMMARY: Order Approving the National Market System Plan for the Selection and Reservation of Securities Symbols Submitted by the Chicago Stock Exchange, Inc., et al,