Summary
This 8-K filing by The Nasdaq Stock Market, Inc. (NDAQ) details a significant agreement with the National Association of Securities Dealers, Inc. (NASD) concerning the OTC Bulletin Board (OTCBB). Effective October 1, 2005, Nasdaq will transfer operational responsibility for the OTCBB back to NASD. This move is a strategic decision driven by SEC concerns about Nasdaq operating the OTCBB following its registration as a national securities exchange. In exchange for transferring OTCBB assets, Nasdaq will receive substantial service fees from NASD for continuing to operate the OTCBB under an outsourced model for an initial two-year period, with potential for renewals. This agreement is expected to have a neutral impact on Nasdaq's overall operations. Investors should note that the transaction is contingent upon SEC approval.
Key Highlights
- 1Nasdaq is transferring operational responsibility for the OTC Bulletin Board (OTCBB) back to the National Association of Securities Dealers (NASD).
- 2The agreement addresses SEC concerns regarding Nasdaq operating the OTCBB after registering as a national securities exchange.
- 3Nasdaq is selling all OTCBB-related assets to NASD.
- 4NASD will outsource the operation of the OTCBB back to Nasdaq for an initial two-year period.
- 5Nasdaq will receive service fees from NASD: $14.2 million in year one and $14.7 million in year two.
- 6The transfer of the OTCBB is not expected to materially impact Nasdaq's operations.
- 7The agreement is subject to SEC approval.