80 FR 9285 - Self-Regulatory Organizations; The NASDAQ Stock Market LLC; Order Granting Approval of Proposed Rule Change To Require That a Company Publicly Disclose the Denial of a Listing Application
SECURITIES AND EXCHANGE COMMISSION Federal Register Volume 80, Issue 34 (February 20, 2015)
Federal Register Volume 80, Issue 34 (February 20, 2015)
| Page Range | 9285-9286 | |
| FR Document | 2015-03518 |
[Federal Register Volume 80, Number 34 (Friday, February 20, 2015)] [Notices] [Pages 9285-9286] From the Federal Register Online [www.thefederalregister.org] [FR Doc No: 2015-03518] ----------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION [Release No. 34-74279; File No. SR-NASDAQ-2014-102] Self-Regulatory Organizations; The NASDAQ Stock Market LLC; Order Granting Approval of Proposed Rule Change To Require That a Company Publicly Disclose the Denial of a Listing Application February 13, 2015. I. Introduction On December 11, 2014, The NASDAQ Stock Market LLC (``Nasdaq'' or ``Exchange'') 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 require companies to disclose the denial of an initial listing application. The proposed rule change was published for comment in the Federal Register on December 30, 2014.\3\ The Commission received no comments on the proposed rule change. This order approves the proposed rule change. --------------------------------------------------------------------------- \1\ 15 U.S.C. 78s(b)(1). \2\ 17 CFR 240.19b-4. \3\ See Securities Exchange Act Release No. 73912 (December 22, 2014), 79 FR 78540 (December 30, 2014) (``Notice''). --------------------------------------------------------------------------- II. Description of Proposed Rule Change In its filing, Nasdaq stated that it processes between 200 and 300 applications each year from companies seeking to list securities on Nasdaq. According to the Exchange, while most applicants meet the listing requirements (or are prepared to take action to meet those requirements before listing) in some cases a company does not meet the requirements and is not willing, or able, to comply. Nasdaq may also deny a listing application based on public interest concerns even though the company meets all quantitative listing requirements.\4\ In either case, Nasdaq will inform the company of the outcome, and the company may withdraw its application before the application is formally denied. If the company does not withdraw its application, then the Nasdaq Listing Qualifications Department will issue a written denial to the company.\5\ A company denied listing on Nasdaq may appeal the denial to a Listing Qualifications Hearings Panel (``Hearings Panel'').\6\ --------------------------------------------------------------------------- \4\ See Nasdaq Rule 5101 and 5101-1. \5\ See Nasdaq Rule 5810. \6\ See Nasdaq Rule 5815. --------------------------------------------------------------------------- According to Nasdaq, investors view a company's decision to seek initial listing on the Exchange as a positive development, and companies often publicize their intention to apply for listing.\7\ Nasdaq believes that the public is therefore interested in the outcome of an application for initial listing. Nasdaq proposes to require that a company that receives a written determination denying its application for listing must, within four business days, make a public announcement in a press release or other Regulation FD compliant manner about the receipt of the determination and the Nasdaq Rule(s) upon which the determination is based. The company must describe each specific basis and concern identified by Nasdaq in reaching the determination. If the public announcement is not made by the company within the time allotted or does not include all of the required information, Nasdaq will make a public announcement with the required information and, if the company appeals the determination as set forth in Nasdaq Rule 5815, the Hearings Panel will consider the company's failure to make the public announcement in considering whether to list the company. Nasdaq also proposes to clarify in Rule 5205 that a company may withdraw its application for initial listing at any time. --------------------------------------------------------------------------- \7\ See Notice, supra note 3. --------------------------------------------------------------------------- III. Discussion and Commission Findings 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,\9\ which requires, among other things, that the rules of a national securities exchange be designed to prevent fraudulent and manipulative acts and practices, 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 general, to protect [[Page 9286]] investors and the public interest and are not designed to permit unfair discrimination between customers, issuers, brokers, or dealers. --------------------------------------------------------------------------- \8\ In approving this proposal, the Commission has considered the proposed rule's impact on efficiency, competition, and capital formation. See 15 U.S.C. 78c(f). \9\ 15 U.S.C. 78f(b)(5). --------------------------------------------------------------------------- The Commission notes that full and fair disclosure of information by companies is of critical importance to financial markets and the investing public. According to the Exchange, investors view a company's decision to seek initial listing on the Exchange as a positive development, and companies often publicize their intention to apply for listing. The listing of a company on a national securities exchange such as Nasdaq provides benefits including, among others, potential for increased stock liquidity and capital raising benefits.\10\ However, there appears to be no Exchange requirement for the company to publicize when its listing application has been denied and therefore that the company will not be receiving the benefits of an exchange listing. --------------------------------------------------------------------------- \10\ Section 18 of the Securities Act of 1933 (``Securities Act'') provides federal preemption of state blue sky laws for securities listed on certain national securities exchanges. 15 U.S.C. 77r. See also 17 CFR 230.146. --------------------------------------------------------------------------- The Commission believes that the public, including potential future investors, would find a denial of a company's listing application, just as important as the decision to seek an exchange listing which, as noted by Nasdaq, is often publicized. The significance of a denial of listing is also underscored by the existence of both the right to appeal the denial on Nasdaq and the right to obtain Commission review of such appeals. Nasdaq rules provide, as noted above, for due process to appeal a denial of listing.\11\ Denial of listings have also been subject to Commission review under section 19(d) of the Exchange Act.\12\ --------------------------------------------------------------------------- \11\ These appeal provisions have been adopted in accordance with section 6(b)(7) of the Act. 15 U.S.C. 78f(b)(7). \12\ Section 19(d) of the Act provides, among other things, for Commission review of any action self-regulatory organization that, among other things, prohibits or limits any person in respect to access to service offered by such organization. See U.S.C. 78s(d). --------------------------------------------------------------------------- The Commission therefore believes that the proposed rule change will help provide transparency to future, as well as existing, investors about the status of a company's listing application. The Commission also believes that Nasdaq's proposal to require that such disclosure be made by press release, or other Regulation FD compliant manner, will permit companies to disseminate this important information to the public in a broad and inclusive manner and should help to ensure for broad public access to the denial of listing determination and the reasons for the denial. As described above, the proposal will also clarify in Nasdaq's rules that a company may withdraw its application for initial listing at any time during the review process.\13\ The decision to seek listing and submit a listing application is generally a voluntary decision by a company. Consistent with this, it is our understanding that companies seeking listing on Nasdaq are allowed to withdraw their voluntary application at any time during the process. The clarification in Nasdaq's proposal codifies this concept in Nasdaq's rules. The Commission also believes that for, the same reasons noted above, companies should consider any applicable disclosure requirements under the federal securities laws if a company withdraws its listing application with Nasdaq for any reason. --------------------------------------------------------------------------- \13\ See Notice, supra note 3. --------------------------------------------------------------------------- IV. Conclusion It is therefore ordered pursuant to section 19(b)(2) of the Act,\14\ that the proposed rule change (SR-NASDAQ-2014-102) be, and it hereby is, approved. --------------------------------------------------------------------------- \14\ 15 U.S.C. 78s(b)(2). \15\ 17 CFR 200.30-3(a)(12). For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.\15\ Jill M. Peterson, Assistant Secretary. [FR Doc. 2015-03518 Filed 2-19-15; 8:45 am] BILLING CODE 8011-01-P
![Federal Register / Vol. 80, No. 34 / Friday, February 20, 2015 / Notices 9285
and regulations thereunder,6 and, in For the Commission, by the Division of Qualifications Department will issue a
particular, Section 11A(a)(1) of the Act 7 Trading and Markets, pursuant to delegated written denial to the company.5 A
authority.13 company denied listing on Nasdaq may
and Rule 608 thereunder 8 in that it is
necessary or appropriate in the public Brent J. Fields, appeal the denial to a Listing
interest, for the protection of investors Secretary. Qualifications Hearings Panel
and the maintenance of fair and orderly [FR Doc. 2015–03521 Filed 2–19–15; 8:45 am] (‘‘Hearings Panel’’).6
markets, to remove impediments to, and BILLING CODE 8011–01–P According to Nasdaq, investors view
perfect the mechanisms of, a national a company’s decision to seek initial
listing on the Exchange as a positive
market system.
SECURITIES AND EXCHANGE development, and companies often
The proposal is consistent with COMMISSION publicize their intention to apply for
Section 11A(a)(1)(C)(iii) of the Act,9 listing.7 Nasdaq believes that the public
[Release No. 34–74279; File No. SR–
which sets forth Congress’ finding that NASDAQ–2014–102] is therefore interested in the outcome of
it is in the public interest and an application for initial listing. Nasdaq
appropriate for the protection of Self-Regulatory Organizations; The proposes to require that a company that
investors and the maintenance of fair NASDAQ Stock Market LLC; Order receives a written determination
and orderly markets to assure the Granting Approval of Proposed Rule denying its application for listing must,
availability to brokers, dealers, and Change To Require That a Company within four business days, make a
investors of information with respect to Publicly Disclose the Denial of a public announcement in a press release
quotations and transactions in Listing Application or other Regulation FD compliant
securities. These goals are furthered by manner about the receipt of the
February 13, 2015. determination and the Nasdaq Rule(s)
the proposed changes requiring that
Participants report trades as soon as I. Introduction upon which the determination is based.
The company must describe each
practicable, but no later than 10 On December 11, 2014, The NASDAQ
specific basis and concern identified by
seconds, following execution (or Stock Market LLC (‘‘Nasdaq’’ or
Nasdaq in reaching the determination. If
cancellation, as applicable) as they bring ‘‘Exchange’’) filed with the Securities
the public announcement is not made
the trade reporting requirement more in and Exchange Commission
by the company within the time allotted
line with current industry practice, as (‘‘Commission’’), pursuant to section
or does not include all of the required
the markets have become more 19(b)(1) of the Securities Exchange Act
information, Nasdaq will make a public
automated and more efficient. In of 1934 (‘‘Act’’) 1 and Rule 19b–4
announcement with the required
addition, the change will make the trade thereunder,2 a proposed rule change to
information and, if the company appeals
reporting requirement consistent across require companies to disclose the denial
the determination as set forth in Nasdaq
the two transaction reporting plans for of an initial listing application. The
Rule 5815, the Hearings Panel will
equity securities 10 and FINRA.11 proposed rule change was published for consider the company’s failure to make
comment in the Federal Register on the public announcement in considering
IV. Conclusion December 30, 2014.3 The Commission whether to list the company. Nasdaq
received no comments on the proposed also proposes to clarify in Rule 5205
It is therefore ordered, pursuant to rule change. This order approves the
Section 11A of the Act,12 and the rules that a company may withdraw its
proposed rule change. application for initial listing at any time.
thereunder, that the proposed
Amendment to the CTA Plan (File No. II. Description of Proposed Rule Change III. Discussion and Commission
SR–CTA–2014–04) is approved. In its filing, Nasdaq stated that it Findings
processes between 200 and 300 After careful review, the Commission
6 The Commission has considered the proposed applications each year from companies finds that the proposed rule change is
amendment’s impact on efficiency, competition, seeking to list securities on Nasdaq. consistent with the requirements of the
and capital formation. 15 U.S.C. 78c(f). According to the Exchange, while most
7 15 U.S.C. 78k–1(a)(1).
Act and the rules and regulations
applicants meet the listing requirements thereunder applicable to a national
8 17 CFR 240.608.
(or are prepared to take action to meet securities exchange.8 In particular, the
9 15 U.S.C. 78k–1(a)(1)(C)(iii).
10 The participants of the Joint Self-Regulatory
those requirements before listing) in Commission finds that the proposed
Organization Plan Governing the Collection,
some cases a company does not meet rule change is consistent with section
Consolidation and Dissemination of Quotation and the requirements and is not willing, or 6(b)(5) of the Act,9 which requires,
Transaction Information for Nasdaq-Listed able, to comply. Nasdaq may also deny among other things, that the rules of a
Securities Traded on Exchanges on an Unlisted a listing application based on public national securities exchange be
Trading Privileges Basis (‘‘Nasdaq/UTP Plan’’) also interest concerns even though the
proposed to amend the trade reporting requirement designed to prevent fraudulent and
company meets all quantitative listing manipulative acts and practices, to
under the Nasdaq/UTP Plan to require that
transactions be reported as soon as practicable, but requirements.4 In either case, Nasdaq promote just and equitable principles of
no later than 10 seconds following execution. See will inform the company of the trade, to remove impediments to, and
Securities Exchange Act Release No. 73970 outcome, and the company may perfect the mechanism of, a free and
(December 31, 2014), 80 FR 910 (January 7, 2015) withdraw its application before the
(File No. S7–24–89) (Notice of Filing of open market and a national market
application is formally denied. If the system and, in general, to protect
Amendment No. 34 to the Nasdaq/UTP Plan).
company does not withdraw its
TKELLEY on DSK3SPTVN1PROD with NOTICES
11 See Securities Exchange Act Release No. 69561
(May 13, 2013), 78 FR 29190 (May 17, 2013) (File application, then the Nasdaq Listing 5 See Nasdaq Rule 5810.
No. SR–FINRA–2013–013) (order approving FINRA 6 See Nasdaq Rule 5815.
rule to require FINRA members to report over-the- 1 15 U.S.C. 78s(b)(1). 7 See Notice, supra note 3.
counter transactions in Eligible Securities to FINRA 2 17 CFR 240.19b–4. 8 In approving this proposal, the Commission has
as soon as practicable, but no later than 10 seconds 3 See Securities Exchange Act Release No. 73912 considered the proposed rule’s impact on
following execution). (December 22, 2014), 79 FR 78540 (December 30, efficiency, competition, and capital formation. See
12 15 U.S.C. 78k–1. 2014) (‘‘Notice’’). 15 U.S.C. 78c(f).
13 17 CFR 200.30–3(a)(27). 4 See Nasdaq Rule 5101 and 5101–1. 9 15 U.S.C. 78f(b)(5).
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![9286 Federal Register / Vol. 80, No. 34 / Friday, February 20, 2015 / Notices
investors and the public interest and are determination and the reasons for the of 1934 (‘‘Act’’),2 and Rule 19b–4
not designed to permit unfair denial. thereunder,3 a proposed rule change to
discrimination between customers, As described above, the proposal will make certain amendments to its
issuers, brokers, or dealers. also clarify in Nasdaq’s rules that a corporate governance documents in
The Commission notes that full and company may withdraw its application order to effectuate a proposed
fair disclosure of information by for initial listing at any time during the transaction (the ‘‘Transaction’’) in
companies is of critical importance to review process.13 The decision to seek which the Exchange will become a
financial markets and the investing listing and submit a listing application wholly-owned subsidiary of National
public. According to the Exchange, is generally a voluntary decision by a Stock Exchange Holdings, Inc., a
investors view a company’s decision to company. Consistent with this, it is our Delaware corporation (‘‘NSX
seek initial listing on the Exchange as a understanding that companies seeking Holdings’’). The proposed rule change
positive development, and companies listing on Nasdaq are allowed to was published for comment in the
often publicize their intention to apply withdraw their voluntary application at Federal Register on January 2, 2015.4
for listing. The listing of a company on any time during the process. The The Commission received no comments
a national securities exchange such as clarification in Nasdaq’s proposal on the proposal.
Nasdaq provides benefits including, codifies this concept in Nasdaq’s rules. The Commission has reviewed
among others, potential for increased The Commission also believes that for, carefully the proposed rule change and
stock liquidity and capital raising the same reasons noted above, finds that the proposed rule change is
benefits.10 However, there appears to be companies should consider any consistent with the requirements of the
no Exchange requirement for the applicable disclosure requirements Act and the rules and regulations
company to publicize when its listing under the federal securities laws if a thereunder applicable to a national
application has been denied and company withdraws its listing securities exchange.5 In particular, the
therefore that the company will not be application with Nasdaq for any reason. Commission finds that the proposed
receiving the benefits of an exchange rule change is consistent with sections
listing. IV. Conclusion
6(b)(1) and (3) of the Act,6 which,
The Commission believes that the It is therefore ordered pursuant to among other things, require a national
public, including potential future section 19(b)(2) of the Act,14 that the securities exchange to be so organized
investors, would find a denial of a proposed rule change (SR–NASDAQ– and have the capacity to be able to carry
company’s listing application, just as 2014–102) be, and it hereby is, out the purposes of the Act, and to
important as the decision to seek an approved. enforce compliance by its members and
exchange listing which, as noted by persons associated with its members
For the Commission, by the Division of
Nasdaq, is often publicized. The Trading and Markets, pursuant to delegated with the provisions of the Act, the rules
significance of a denial of listing is also authority.15 and regulations thereunder, and the
underscored by the existence of both the Jill M. Peterson, rules of the exchange, and assure the
right to appeal the denial on Nasdaq and fair representation of its members in the
Assistant Secretary.
the right to obtain Commission review selection of its directors and
[FR Doc. 2015–03518 Filed 2–19–15; 8:45 am]
of such appeals. Nasdaq rules provide, administration of its affairs, and provide
BILLING CODE 8011–01–P
as noted above, for due process to that one or more directors shall be
appeal a denial of listing.11 Denial of representative of issuers and investors
listings have also been subject to and not be associated with a member of
SECURITIES AND EXCHANGE
Commission review under section 19(d) the exchange, broker, or dealer. The
COMMISSION
of the Exchange Act.12 Commission also finds that the proposal
The Commission therefore believes is consistent with section 6(b)(5) of the
[Release No. 34–74270; File No. SR–NSX–
that the proposed rule change will help Act,7 which requires that the rules of the
2014–017]
provide transparency to future, as well
exchange be designed to promote just
as existing, investors about the status of Self-Regulatory Organizations; and equitable principles of trade, to
a company’s listing application. The National Stock Exchange, Inc.; Order remove impediments to and perfect the
Commission also believes that Nasdaq’s Granting Approval of Proposed Rule mechanism of a free and open market
proposal to require that such disclosure Change in Connection With a and a national market system, and, in
be made by press release, or other Proposed Transaction in Which general, to protect investors and the
Regulation FD compliant manner, will National Stock Exchange Holdings, public interest.
permit companies to disseminate this Inc. Will Acquire Ownership of the
important information to the public in Exchange From the CBOE Stock II. Discussion
a broad and inclusive manner and Exchange, LLC A. Corporate Structure and Proposed
should help to ensure for broad public
February 13, 2015.
Transaction
access to the denial of listing
I. Introduction Currently, the Exchange is a wholly-
10 Section 18 of the Securities Act of 1933 owned subsidiary of the CBOE Stock
(‘‘Securities Act’’) provides federal preemption of On December 16, 2014, National
state blue sky laws for securities listed on certain Stock Exchange, Inc. (‘‘NSX’’ or the 2 15
national securities exchanges. 15 U.S.C. 77r. See U.S.C. 78a.
also 17 CFR 230.146.
‘‘Exchange’’) filed with the Securities 3 17 CFR 240.19b–4.
TKELLEY on DSK3SPTVN1PROD with NOTICES
11 These appeal provisions have been adopted in and Exchange Commission 4 See Securities Exchange Act Release No. 73944
accordance with section 6(b)(7) of the Act. 15 U.S.C. (‘‘Commission’’), pursuant to section (December 24, 2014), 80 FR 85 (SR–NSX–2014–017)
78f(b)(7). 19(b)(1) 1 of the Securities Exchange Act (‘‘Notice’’).
12 Section 19(d) of the Act provides, among other 5 In approving the proposed rule change, the
things, for Commission review of any action self- Commission has considered its impact on
13 See Notice, supra note 3.
regulatory organization that, among other things, efficiency, competition and capital formation. See
14 15 U.S.C. 78s(b)(2). 15 U.S.C. 78c(f).
prohibits or limits any person in respect to access
15 17 CFR 200.30–3(a)(12). 6 15 U.S.C. 78f(b)(1) and (b)(3).
to service offered by such organization. See U.S.C.
78s(d). 1 15 U.S.C. 78s(b)(1). 7 15 U.S.C. 78f(b)(5).
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Document Created: 2015-12-18 13:02:10
Document Modified: 2015-12-18 13:02:10
| Category | Regulatory Information | |
| Collection | Federal Register | |
| sudoc Class | AE 2.7: GS 4.107: AE 2.106: | |
| Publisher | Office of the Federal Register, National Archives and Records Administration | |
| Section | Notices | |
| FR Citation | 80 FR 9285 |
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