80 FR 13925 - Self-Regulatory Organizations; The NASDAQ Stock Market LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Provide a Limited Price Guarantee to Certain Companies That Switch Their Listing to Nasdaq From Another Exchange

SECURITIES AND EXCHANGE COMMISSION

Federal Register Volume 80, Issue 51 (March 17, 2015)

[Federal Register Volume 80, Number 51 (Tuesday, March 17, 2015)]
[Notices]
[Pages 13925-13927]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2015-06015]


-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-74472; File No. SR-NASDAQ-2015-017]


Self-Regulatory Organizations; The NASDAQ Stock Market LLC; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To 
Provide a Limited Price Guarantee to Certain Companies That Switch 
Their Listing to Nasdaq From Another Exchange

March 11, 2015.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act'') \1\, and Rule 19b-4 thereunder,\2\ notice is hereby given 
that, on February 25, 2015, The NASDAQ Stock Market LLC (``Nasdaq'' or 
``Exchange'') filed with the Securities and Exchange Commission 
(``SEC'' or ``Commission'') the proposed rule change as described in 
Items I, II, and III below, which Items have been prepared by the 
Exchange. The Commission is publishing this notice to solicit comments 
on the proposed rule change from interested persons.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------

I. Self-Regulatory Organization's Statement of the Terms of the 
Substance of the Proposed Rule Change

    Nasdaq proposes to provide a limited price guarantee to certain 
companies that switch their listing to Nasdaq from another securities 
exchange. The text of the proposed rule change is available on the 
Exchange's Web site at http://nasdaq.cchwallstreet.com, at the 
principal office of the Exchange, and at the Commission's Public 
Reference Room.

II. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

    In its filing with the Commission, the Exchange included statements 
concerning the purpose of and basis for the proposed rule change and 
discussed any comments it received on the proposed rule change. The 
text of these statements may be examined at the places specified in 
Item IV below. The Exchange has prepared summaries, set forth in 
sections A, B, and C below, of the most significant aspects of such 
statements.

A. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    Nasdaq recently adopted an all-inclusive annual listing fee, which 
simplifies billing and provides transparency and certainty to companies 
as to the annual cost of listing.\3\ This new fee structure was 
designed, primarily, to address customer complaints about the number 
and in some cases the variable nature of certain of Nasdaq's listing 
fees. It also provides benefits to Nasdaq, including eliminating the 
multiple invoices that were sent to a company each year and providing 
more certainty as to revenue.\4\
---------------------------------------------------------------------------

    \3\ Securities Exchange Act Release No. 73647 (November 19, 
2014), 79 FR 70232 (November 25, 2014) (approving SR-NASDAQ-2014-
087).
    \4\ Id.
---------------------------------------------------------------------------

    While this new fee structure will become operative for all listed 
companies in 2018, currently listed companies were allowed to elect to 
be subject to the all-inclusive annual listing fee effective January 1, 
2015, and were provided certain incentives to do so.\5\ In addition, 
because they may have made their listing decision based on Nasdaq's 
prior fee schedule, any company that applied to list on Nasdaq prior to 
January 1, 2015, and lists after that date, is also provided an

[[Page 13926]]

accommodation: Until December 31, 2017, such a company will be billed 
the all-inclusive annual fee based on the lower of its then-current 
total shares outstanding or the total shares outstanding reflected in 
information held by Nasdaq as of the date of listing. As such, 
regardless of any increase in shares outstanding, the tier upon which 
the all-inclusive annual fee is based for such companies will not 
increase until at least January 1, 2018.\6\ Companies have reacted 
favorably to the new fee program and these incentives.
---------------------------------------------------------------------------

    \5\ See IM-5910-1(b)(1) and IM-5920-1(b)(1).
    \6\ IM-5910-1(b)(2) and IM-5910-2(b)(2).
---------------------------------------------------------------------------

    Nasdaq now proposes to offer certain other newly listing companies 
the same incentive provided to any company that applied to list on 
Nasdaq prior to January 1, 2015. Specifically, Rules 5910(a)(7) and 
5920(a)(7) currently waive entry fees upon listing on Nasdaq for a 
company that switches from another national securities exchange 
(including if it is currently dually listed on such exchange) and when 
an unlisted company acquires a company listed on another national 
securities exchange and lists on Nasdaq in connection with the 
transaction.\7\ In order to better compete for these listings, Nasdaq 
proposes to charge them based on the lower of their shares outstanding 
as of the date of listing or at the time of billing until January 1, 
2018. This will provide certainty to the companies as to their fee 
until at least 2018 and provides an incentive for a company to switch 
its listing to Nasdaq sooner than it might otherwise, before issuing 
additional shares that would result in the company being in a higher 
fee tier and paying a higher annual fee. Nasdaq believes that this 
proposed change will enhance the ability of Nasdaq to compete for these 
listings and may ultimately benefit all issuers and investors.\8\
---------------------------------------------------------------------------

    \7\ See Securities Exchange Act Release No. 51004 (January 10, 
2005), 70 FR 2917 (January 18, 2005) (approving SR-NASDAQ-2004-140); 
Securities Exchange Act Release No. 55202 (January 30, 2007), 72 FR 
6017 (February 8, 2007) (approving SR-NASDAQ-2006-040).
    \8\ See Release No. 51004, 70 FR at 2917 (expressing the 
Commission's belief that the adoption of the waivers now codified in 
Rules 5910(a)(7)(i) and (ii) and 5920(a)(7) (i) and (ii) ``may 
ultimately benefit issuers and investors because competition among 
listing markets has the potential to enhance the quality of services 
that listing markets provide.'').
---------------------------------------------------------------------------

    Nasdaq notes that few companies qualify for the waivers in Rule 
5910(a)(7) and 5920(a)(7). In addition, it is Nasdaq's experience that 
a company will typically do an extensive review of Nasdaq's 
requirements before switching to Nasdaq, and therefore companies 
present few regulatory issues during the first few years after 
switching. As such, while the incentive may be meaningful to individual 
companies considering whether, and when, to switch their listing, 
Nasdaq does not believe that these incentives, in the aggregate, will 
have any adverse impact on the availability of funds for its regulatory 
programs.\9\
---------------------------------------------------------------------------

    \9\ The proposed rule change will also modify existing rule 
language to reflect the expiration of the January 1, 2015 deadline 
for listed companies to opt in to the all-inclusive fee for 2016.
---------------------------------------------------------------------------

2. Statutory Basis
    Nasdaq believes that the proposed rule change is consistent with 
the provisions of Section 6 of the Act,\10\ in general and with 
Sections 6(b)(4) and (5) of the Act,\11\ in particular, in that it 
provides for the equitable allocation of reasonable dues, fees, and 
other charges among its members, issuers and other persons using its 
facilities, and does not unfairly discriminate between customers, 
issuers, brokers or dealers.
---------------------------------------------------------------------------

    \10\ 15 U.S.C. 78f.
    \11\ 15 U.S.C. 78f(b)(4) and (5).
---------------------------------------------------------------------------

    As a preliminary matter, Nasdaq competes for listings with other 
national securities exchanges and companies can easily choose to list 
on, or transfer to, those alternative venues.\12\ As a result, Nasdaq 
must carefully tailor its fees and incentives to compete with other 
listing venues and Nasdaq cannot charge prices in a manner that would 
be unreasonable, inequitable or unfairly discriminatory.
---------------------------------------------------------------------------

    \12\ The Justice Department noted the intense competitive 
environment for exchange listings. See ``NASDAQ OMX Group Inc. and 
IntercontinentalExchange Inc. Abandon Their Proposed Acquisition of 
NYSE Euronext After Justice Department Threatens Lawsuit'' (May 16, 
2011), available at http://www.justice.gov/atr/public/press_releases/2011/271214.htm.
---------------------------------------------------------------------------

    Nasdaq also believes that the proposed incentives are reasonable 
and not unfairly discriminatory. These incentives would be provided to 
a category of companies aligned with another exchange and for which 
Nasdaq must therefore compete aggressively to have them transfer their 
listing. Moreover, attracting significant companies to switch listing 
venues to Nasdaq promotes the Exchange's image, which benefits all 
companies listed on Nasdaq. For these reasons, Nasdaq has already 
determined to waive entry fees for these companies and selecting only 
these companies for the proposed incentive is not an unfairly 
discriminatory basis to distinguish among companies.
    Finally, Nasdaq believes that the proposed fees are consistent with 
the investor protection objectives of Section 6(b)(5) of the Act \13\ 
in that they are designed to promote just and equitable principles of 
trade, to remove impediments to a free and open market and national 
market system, and in general to protect investors and the public 
interest. Specifically, the proposed change will not impact the 
resources available for Nasdaq's listing compliance program, which 
helps to assure that listing standards are properly enforced and 
investors are protected.
---------------------------------------------------------------------------

    \13\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

B. Self-Regulatory Organization's Statement on Burden on Competition

    Nasdaq does not believe that the proposed rule change will result 
in any burden on competition that is not necessary or appropriate in 
furtherance of the purposes of the Act, as amended. The market for 
listing services is extremely competitive and listed companies may 
freely choose alternative venues based on the aggregate fees assessed, 
and the value provided by each listing. This rule proposal does not 
burden competition with other listing venues, which are similarly free 
to set their fees. Further, Nasdaq believes the proposed change 
reflects the existing competition between listing venues and will 
further enhance such competition.\14\ For these reasons, Nasdaq does 
not believe that the proposed rule change will result in any burden on 
competition for listings.
---------------------------------------------------------------------------

    \14\ See footnote 8, supra.
---------------------------------------------------------------------------

C. Self-Regulatory Organization's Statement on Comments on the Proposed 
Rule Change Received From Members, Participants, or Others

    No written comments were either solicited or received.

III. Date of Effectiveness of the Proposed Rule Change and Timing for 
Commission Action

    The foregoing rule change has become effective pursuant to Section 
19(b)(3)(A)(ii) of the Act.\15\
---------------------------------------------------------------------------

    \15\ 15 U.S.C. 78s(b)(3)(A)(ii).
---------------------------------------------------------------------------

    At any time within 60 days of the filing of the proposed rule 
change, the Commission summarily may temporarily suspend such rule 
change if it appears to the Commission that such action is: (i) 
Necessary or appropriate in the public interest; (ii) for the 
protection of investors; or (iii) otherwise in furtherance of the 
purposes of the Act. If the Commission takes such action, the 
Commission shall institute proceedings to determine whether the 
proposed rule should be approved or disapproved.

[[Page 13927]]

IV. Solicitation of Comments

    Interested persons are invited to submit written data, views, and 
arguments concerning the foregoing, including whether the proposed rule 
change is consistent with the Act. Comments may be submitted by any of 
the following methods:

Electronic Comments

     Use the Commission's Internet comment form (http://www.sec.gov/rules/sro.shtml); or
     Send an email to [email protected]. Please include 
File Number SR-NASDAQ-2015-017 on the subject line.

Paper Comments

     Send paper comments in triplicate to Secretary, Securities 
and Exchange Commission, 100 F Street NE., Washington, DC 20549-1090.

All submissions should refer to File Number SR-NASDAQ-2015-017. This 
file number should be included on the subject line if email is used. To 
help the Commission process and review your comments more efficiently, 
please use only one method. The Commission will post all comments on 
the Commission's Internet Web site (http://www.sec.gov/rules/sro.shtml). Copies of the submission, all subsequent amendments, all 
written statements with respect to the proposed rule change that are 
filed with the Commission, and all written communications relating to 
the proposed rule change between the Commission and any person, other 
than those that may be withheld from the public in accordance with the 
provisions of 5 U.S.C. 552, will be available for Web site viewing and 
printing in the Commission's Public Reference Room, 100 F Street NE., 
Washington, DC 20549 on official business days between the hours of 
10:00 a.m. and 3:00 p.m. Copies of such filing also will be available 
for inspection and copying at the principal office of the Exchange. All 
comments received will be posted without change; the Commission does 
not edit personal identifying information from submissions. You should 
submit only information that you wish to make available publicly. All 
submissions should refer to File Number SR-NASDAQ-2015-017, and should 
be submitted on or before April 7, 2015.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\16\
---------------------------------------------------------------------------

    \16\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Brent J. Fields,
Secretary.
[FR Doc. 2015-06015 Filed 3-16-15; 8:45 am]
 BILLING CODE 8011-01-P