80 FR 76605 - Self-Regulatory Organizations; The NASDAQ Stock Market LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Adopt Record Keeping Change and Substitution Listing Event Fees for Securities Listed Under the Rule 5700 Series

SECURITIES AND EXCHANGE COMMISSION

Federal Register Volume 80, Issue 236 (December 9, 2015)

[Federal Register Volume 80, Number 236 (Wednesday, December 9, 2015)]
[Notices]
[Pages 76605-76607]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2015-30941]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-76550; File No. SR-NASDAQ-2015-146]


Self-Regulatory Organizations; The NASDAQ Stock Market LLC; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To 
Adopt Record Keeping Change and Substitution Listing Event Fees for 
Securities Listed Under the Rule 5700 Series

December 3, 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 November 23, 2015, The NASDAQ Stock Market LLC (``Nasdaq'' or 
``Exchange'') filed with the Securities and Exchange Commission 
(``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.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    Nasdaq is proposing to adopt record keeping change and substitution 
listing event fees for securities listed under the Rule 5700 Series.\3\ 
The text of the proposed rule change is available at 
nasdaq.cchwallstreet.com, at Nasdaq's principal office, and at the 
Commission's Public Reference Room.
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    \3\ The Exchange originally filed SR-NASDAQ-2015-118 on October 
23, 2015, which was replaced by SR-NASDAQ-2015-139 on November 4, 
2015. SR-NASDAQ-2015-139 was replaced by SR-NASDAQ-2015-141 on 
November 11, 2015. The instant proposal replaces SR-NASDAQ-2015-141 
in its entirety.
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II. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

    In its filing with the Commission, Nasdaq 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 those 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 parts of such 
statements.

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

1. Purpose
    Nasdaq rules require issuers to notify Nasdaq about certain record 
keeping changes and substitution listing events. Specifically, Rule 
5250(e)(3) defines a ``Record Keeping Change'' as any change to a 
company's name, the par value or title of its security, its symbol, or 
a similar change and requires a listed company to provide notification 
to Nasdaq no later than 10 days after the change. Rule 5005(a)(40) 
defines a ``Substitution Listing Event'' as certain changes in the 
equity or legal structure of a company\4\ and Rule 5250(e)(4) requires 
a listed company to provide notification to Nasdaq about these events 
no later than 15 calendar days prior to the implementation of the 
event. While most listed companies pay fees in connection with these 
notifications,\5\ issuers of securities listed under the Rule 5700 
Series, including Linked Securities and Exchange Traded Products such 
as Portfolio Depository Receipts, Index Fund Shares, and Managed Fund 
Shares, are required to notify Nasdaq about Record Keeping Changes and 
Substitution Listing Events, but are not currently subject to the fees 
for such notifications. Nasdaq proposes to adopt a $2,500 fee for any 
such issuer providing a Record Keeping Change and a $5,000 fee for any 
such issuer effecting a Substitution Listing Event. These fees will 
apply for each security affected by the event. The fees will be used to 
address the costs associated with maintaining and revising Nasdaq's 
records, collecting and verifying the underlying information, and 
distributing the information to market participants when issuers with 
securities listed under the

[[Page 76606]]

Rule 5700 Series engage in these actions. In addition, in the case of a 
Substitution Listing Event, the fee will also offset the cost of 
Nasdaq's review of the substituted entity for compliance with the 
listing requirements.
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    \4\ A ``Substitution Listing Event'' means: A reverse stock 
split, re-incorporation or a change in the company's place of 
organization, the formation of a holding company that replaces a 
listed company, reclassification or exchange of a company's listed 
shares for another security, the listing of a new class of 
securities in substitution for a previously-listed class of 
securities, a business combination described in IM-5101-2 (unless 
the transaction was publicly announced in a press release or Form 8-
K prior to October 15, 2013), or any technical change whereby the 
Shareholders of the original company receive a share-for-share 
interest in the new company without any change in their equity 
position or rights.
    \5\ The fee is $7,500 for a company making a Record Keeping 
Change and $15,000 for a company executing a Substitution Listing 
Event. See Rules 5910(e) and (f) (Nasdaq Global and Global Select 
Markets) and Rules 5920(d) and (e) (Nasdaq Capital Market). 
Companies on the all-inclusive annual fee are not subject to these 
separate fees. See IM-5910-1(c) and IM-5920-1(c).
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2. Statutory Basis
    Nasdaq believes that the proposed rule change is consistent with 
the provisions of Section 6 of the Act,\6\ in general, and with 
Sections 6(b)(4) and (5) of the Act,\7\ 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.
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    \6\ 15 U.S.C. 78f.
    \7\ 15 U.S.C. 78f(b)(4) and (5).
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    The proposed Record Keeping Change and Substitution Listing Event 
fees are reasonable and equitably allocated in that they are designed 
to compensate Nasdaq for the work required in connection with effecting 
changes that the issuer has initiated. Record Keeping Changes require 
Nasdaq to update its systems and distribute information about the 
changes to the marketplace. Substitution Listing Events involve similar 
updates and information dissemination and also require Nasdaq to review 
the issuer's listing compliance. Other listed companies currently pay 
fees for these changes and it is reasonable and equitable to similarly 
allocate costs through these modest fees to issuers of securities 
listed under the Rule 5700 Series when they take actions resulting in 
Record Keeping Changes or Substitution Listing Events.
    In addition, while the proposed fees could be lower than those 
charged other companies for similar actions, Nasdaq believes it is not 
unfairly discriminatory to charge a slightly lower fee for these 
issuers. First, the listing fees for securities listed under the Rule 
5700 Series are generally lower than the listing fees for other types 
of issuers, reflecting the passive nature of these issuers and the 
extreme focus on their expenses as a means for various products to 
compete.\8\ In that regard, the proposed $5,000 Substitution Listing 
Event fee is the same amount as the minimum Entry Fee paid under Rules 
5930 and 5940 for these products, and will similarly offset the costs 
of reviewing the substitute entity for compliance with the listing 
requirements. On the other hand, the $7,500 Record Keeping Fee and 
$15,000 Substitution Listing Fee charged other companies would exceed 
the minimum entry fee that companies listed under the Rule 5700 Series 
are charged, and charging such a higher amount for these changes would 
be incongruent with the lower entry fees they are charged. Further, 
other companies that could pay the Record Keeping Fee and Substitution 
Listing Fee had the option to avoid the fee by electing to be on 
Nasdaq's all-inclusive annual fee, which eliminates the fees for these 
events. Securities listed under the Rule 5700 Series do not have the 
option to elect an all-inclusive fee alternative, and it is therefore 
reasonable and equitable to charge them a lower amount. Nasdaq also 
notes that other market centers also charge lower fees when these types 
of issuers make changes.\9\ Nasdaq believes that the lower existing 
fees, lack of an all-inclusive fee alternative, and competitive 
considerations are reasonable, fair and equitable reasons to propose 
charging issuers of securities listed under the Rule 5700 Series 
different fees than other Nasdaq-listed companies.\10\
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    \8\ For example, entry fees for securities listed on the Nasdaq 
Global Market under the Rule 5700 Series range from $5,000 to 
$45,000 pursuant to Rules 5930 and 5940, whereas entry fees for 
other companies listed on the Nasdaq Global Market range from 
$125,000 to $225,000 pursuant to Rule 5910(a).
    \9\ NYSE Arca charges $2,500 for equivalent events. See NYSE 
Arca Equities: Listing Fees. BATS does not charge a fee for 
equivalent events. See Chapter XIV of the Rules of the BATS Exchange 
and Rule 14.13 of the BATS Exchange Listing Rules.
    \10\ Nasdaq also notes that Rules 5910(f) and 5920(e) provide 
that the Substitution Listing Event Fee is not applicable to 
securities that are listed on a national securities exchange other 
than Nasdaq and not designated by Nasdaq as Nasdaq national market 
system securities. Nasdaq IM-5220 describes the only current 
circumstance where Nasdaq does not designate a security as a Nasdaq 
national market system security. Specifically, IM-5220 provides that 
Nasdaq will not designate securities that are listed on the New York 
Stock Exchange (NYSE) when the issuing company also lists those 
securities on The Nasdaq Global Market, and that such securities 
therefore will not become subject to the Nasdaq UTP Plan, the 
national market system plan governing securities designated by 
Nasdaq. Because NYSE does not list exchange traded products (such 
products are listed on the affiliated NYSE Arca Exchange), this fee 
exemption is not necessary in Rules 5930 and 5940 because the 
securities listed under the Rule 5700 Series would not be dually 
listed on the NYSE. If Nasdaq later determines to dually list 
products listed under the Rule 5700 Series, including those listed 
on NYSE Arca or BATS Exchange, Nasdaq would file a rule change and 
address whether the Substitution Listing Event Fee should be 
applicable to those securities.
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    Finally, Nasdaq believes that the proposed fees are consistent with 
the investor protection objectives of Section 6(b)(5) of the Act \11\ 
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 help ensure adequate 
resources are available for Nasdaq to process Record Keeping Changes 
and Substitution Listing Events and distribute information to the 
marketplace about these changes and events.
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    \11\ 15 U.S.C. 78f(b)(5).
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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 the listing. This rule proposal does not 
burden competition with other listing venues, which are similarly free 
to set their fees, but rather reflects the competition between listing 
venues and will further enhance such competition. For these reasons, 
Nasdaq does not believe that the proposed rule change will result in 
any burden on competition for listings.

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

    Written comments were neither solicited nor received.

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

    The foregoing change has become effective pursuant to Section 
19(b)(3)(A)(ii) of the Act\12\. 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 necessary or appropriate in the public interest, 
for the protection of investors, or otherwise in furtherance of the 
purposes of the Act.
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    \12\ 15 U.S.C. 78s(b)(3)(A)(ii).
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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:

[[Page 76607]]

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-2015-146 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-2015-146. 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 the 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-2015-146 and should 
be submitted on or before December 30, 2015.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\13\
Robert W. Errett,
Deputy Secretary.
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    \13\ 17 CFR 200.30-3(a)(12).
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[FR Doc. 2015-30941 Filed 12-8-15; 8:45 am]
BILLING CODE 8011-01-P