Prof. Jayanth R. Varma’s Financial Markets Blog

A blog on financial markets and their regulation

Does it take three years to register securities?

Yesterday, the US SEC issued an exemption
order
allowing NASDAQ
members to continue to trade (till August 2009) a handful of
securities that have not been registered with the SEC nor are deemed
to be registered with it. The vast majority of NASDAQ listed stocks
are covered by a separate
order
under which the SEC treats them as registered securities on
the basis of the information that they have already filed with the SEC
under different statutory provisions. The exemption order that I am
focusing on covers only four insurance companies and nine private
foreign issuers. Even for these issuers, I can well
understand the need for a transitional provision as the NASDAQ
converts itself
into an exchange, but I am amazed that this
exemption lasts for as long as three years. An SEC
registration is an expensive and time consuming process, but to the
best of my knowledge the time involved is measured in months and not
in years. A one year exemption would have been much more
appropriate especially when the number of issuers involved is so small.

By granting a three year exemption, the SEC is signaling that it
regards the conversion of NASDAQ into an exchange to be a mere change
of nomenclature in which nothing substantive changes.

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