
[Federal Register: March 12, 2008 (Volume 73, Number 49)]
[Notices]               
[Page 13264-13265]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr12mr08-120]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-57445; File No. SR-NASDAQ-2007-090]

 
Self-Regulatory Organizations; The NASDAQ Stock Market LLC; Order 
Granting Accelerated Approval of Proposed Rule Change, as Modified by 
Amendment No. 1, To Accept Financial Statements Prepared in Accordance 
With International Financial Reporting Standards, as Issued by the 
International Accounting Standards Board, for Certain Foreign Private 
Issuers, Consistent With Commission Rules

March 6, 2008.
    On November 16, 2007, The NASDAQ Stock Market LLC (``Nasdaq'') 
filed with the Securities and Exchange Commission (``Commission''), 
pursuant to section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act''),\1\ and Rule 19b-4 thereunder,\2\ a proposed rule change to 
allow Nasdaq to accept financial statements prepared in accordance with 
International Financial Reporting Standards (``IFRS''), as issued by 
the International Accounting Standards Board (``IASB''), for certain 
foreign private issuers. Nasdaq filed Amendment No. 1 to the proposed 
rule change on February 6, 2008. The proposed rule change was published 
for comment in the Federal Register on February 12, 2008.\3\ The 
Commission received no comments on the proposal. This order approves 
the proposed rule change, as modified by Amendment No. 1, on an 
accelerated basis.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ See Securities Exchange Act Release No. 57290 (February 7, 
2008), 73 FR 8084.
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    The Commission recently amended Form 20-F under the Act and other 
rules under the Securities Act of 1933 that eliminate the requirement 
for U.S. GAAP reconciliation for foreign private issuers that file 
financial statements prepared in accordance with IFRS, as issued by the 
IASB, if certain conditions are met.\4\ These changes apply only to 
foreign private issuers that file on Form 20-F, regardless of whether 
the issuer complies with IFRS as issued by the IASB voluntarily or in 
accordance with the requirements of the issuer's home country regulator 
or the exchange on which its securities are listed.\5\ A foreign 
private issuer will continue to be required to provide a reconciliation 
to U.S. GAAP if its financial statements include deviations from IFRS 
as issued by the IASB, if it does not state unreservedly and explicitly 
that its financial statements are in compliance with IFRS as issued by 
the IASB, if the auditor does not opine on compliance with IFRS as 
issued by the IASB, or if the auditor's report contains any 
qualification relating to compliance with IFRS as issued by the 
IASB.\6\ The Commission's rules are applicable to annual financial 
statements for financial years ending after November 15, 2007, and to 
interim periods within those years, that are contained in filings made 
after March 4, 2008.\7\
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    \4\ See Securities Exchange Act Release No. 57026 (December 21, 
2007), 73 FR 986 (January 4, 2008) (the ``IFRS/IASB Adopting 
Release''). See also Securities Exchange Act Release No. 55998 (July 
2, 2007), 72 FR 37962 (July 11, 2007) (the ``IFRS/IASB Proposing 
Release''). The Commission is also considering whether to allow U.S. 
issuers to satisfy their reporting requirements through the 
provision of financial statements prepared in accordance with IFRS 
instead of U.S. GAAP. See Securities Exchange Act Release No. 56217 
(August 7, 2007), 72 FR 45600 (August 14, 2007). This proposed 
Nasdaq rule change would be applicable only to foreign private 
issuers and would not apply to domestic U.S. companies.
    \5\ IFRS/IASB Adopting Release at 992.
    \6\ Id. at 993. A foreign private issuer using a jurisdictional 
or other variation of IFRS will be able to rely on the amendments if 
that issuer also is able to state compliance with both IFRS as 
issued by the IASB and a jurisdictional variation of IFRS (and does 
so state), and its auditor opines that the financial statements 
comply with both IFRS as issued by the IASB and the jurisdictional 
variation, as long as the statement relating to the former is 
unreserved and explicit. Id.
    \7\ Id. at 994.
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    To allow foreign private issuers to take full advantage of this 
development, Nasdaq has proposed to allow such issuers to evidence 
compliance with Nasdaq's listing requirements on the same basis as 
permitted by the Commission. In its filing, Nasdaq states that to 
require foreign private issuers to provide U.S. GAAP reconciliations to 
list on Nasdaq, when they no longer are required to under Commission 
rules, may cause such issuers not to list in the U.S., thereby denying 
U.S. investors the ability to easily invest in such issuers.
    After careful review, 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 exchange.\8\ 
In particular, the Commission finds that the proposed rule change is 
consistent with section 6(b)(5) of the Act, which requires that an 
exchange have rules designed, among other things, to promote just and 
equitable principles of trade, to remove impediments to and perfect the 
mechanism of a free and open market and a national market system, and 
in

[[Page 13265]]

general to protect investors and the public interest. The Commission 
believes that modifying Nasdaq's listing requirements, that currently 
require U.S. GAAP reconciliation, to reflect the changes made under 
Commission rules will ease the burden of compliance on foreign private 
issuers desiring to list on Nasdaq. In this regard, the Commission 
notes that the changes being made simply allow foreign private issuers 
listing on Nasdaq to be able to prepare their financial statements 
under the same exact terms and conditions as required under Commission 
rules. The Commission further notes that these changes should provide 
benefits to both foreign issuers and investors in the U.S. market, 
consistent with investor protection and the public interest.\9\
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    \8\ In approving this rule change, the Commission notes that it 
has considered the proposed rule's impact on efficiency, 
competition, and capital formation. See 15 U.S.C. 78c(f).
    \9\ See IFRA/IASB Adopting Release at 1006 (noting that moving 
towards a single set of globally accepted accounting standards will 
have positive effects on investors).
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    Finally, the Commission finds good cause to approve the proposed 
rule change prior to the thirtieth day after the date of publication of 
the notice of filing. The Commission notes that approving the proposed 
rule change prior to the thirtieth day after the date of publication of 
the notice of filing will allow Nasdaq to immediately accept financial 
statements prepared in accordance with IFRS, as issued by the IASB, in 
accordance with changes recently made by the Commission that became 
effective March 4, 2008.\10\ Further, as noted above, no comments were 
received on the proposed rule change.
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    \10\ See IFRS/IASB Adopting Release.
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    It is therefore ordered, pursuant to section 19(b)(2) of the 
Act,\11\ that the proposed rule change (SR-NASDAQ-2007-090), as 
modified by Amendment No. 1, be, and hereby is, approved on an 
accelerated basis.
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    \11\ 15 U.S.C. 78s(b)(2).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\12\
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    \12\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. E8-4851 Filed 3-11-08; 8:45 am]

BILLING CODE 8011-01-P
