83 FR 14683 - Self-Regulatory Organizations; The Nasdaq Stock Market LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Modify the Disclosure Services Offered To Certain New Listings

SECURITIES AND EXCHANGE COMMISSION

Federal Register Volume 83, Issue 66 (April 5, 2018)

[Federal Register Volume 83, Number 66 (Thursday, April 5, 2018)]
[Notices]
[Pages 14683-14684]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2018-06917]



[[Page 14683]]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-82976; File No. SR-NASDAQ-2018-023]


Self-Regulatory Organizations; The Nasdaq Stock Market LLC; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To 
Modify the Disclosure Services Offered To Certain New Listings

March 30, 2018.
    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 March 20, 2018, 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 and II 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

    The Exchange proposes to modify the disclosure services provided 
under IM-5900-7 to certain new listings. While these amendments are 
effective upon filing, the Exchange has designated the proposed 
amendments to be operative for new listings on or after April 23, 2018.
    The text of the proposed rule change is available on the Exchange's 
website 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 offers complimentary services under IM-5900-7 to companies 
listing on the Nasdaq Global and Global Select Markets in connection 
with an initial public offering (other than a company listed under IM-
5101-2), upon emerging from bankruptcy, in connection with a spin-off 
or carve-out from another company, or in conjunction with a business 
combination that satisfies the conditions in Nasdaq IM-5101-2(b) 
(``Eligible New Listings'') and to companies (other than a company 
listed under IM-5101-2) switching their listing from the New York Stock 
Exchange (``NYSE'') to the Global or Global Select Markets (``Eligible 
Switches'').\3\ Nasdaq believes that the complimentary service program 
offers valuable services to newly listing companies, designed to help 
ease the transition of becoming a public company or switching markets, 
and makes listing on Nasdaq more attractive to these companies. The 
services offered include a whistleblower hotline, investor relations 
website, disclosure services for earnings or other press releases, 
webcasting, market analytic tools, and may include market advisory 
tools such as stock surveillance (collectively the ``Service 
Package'').\4\
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    \3\ See Exchange Act Release No. 65963 (December 15, 2011), 76 
FR 79262 (December 21, 2011) (SR-NASDAQ-2011-122) (adopting IM-5900-
7); Exchange Act Release No. 72669 (July 24, 2014), 79 FR 44234 
(July 30, 2014) (SR-NASDAQ-2014-058) (adopting changes to IM-5900-
7); Exchange Act Release No. 78806 (September 9, 2016), 81 FR 63523 
(September 15, 2016) (SR-NASDAQ-2016-098); Exchange Act Release No. 
79366 (November 21, 2016), 81 FR 85663 (November 28, 2016) (SR-
NASDAQ-2016-106).
    \4\ In addition, all companies listed on Nasdaq receive services 
from Nasdaq, including Nasdaq Online and the Market Intelligence 
Desk.
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    As part of the Service Package, Eligible New Listings and Eligible 
Switches with a market capitalization less than $750 million currently 
receive a $15,000 annual stipend for disclosure services; Eligible New 
Listings and Eligible Switches with a market capitalization of $750 
million or more currently receive a $20,000 annual stipend for 
disclosure services. These stipends can be used ``for disclosure 
services for earnings or other press releases, including photographs, 
and filing of EDGAR and XBRL reports.'' Customers have indicated that 
the annual stipend makes it difficult for them to know what 
specifically they will receive and also to compare the Nasdaq Service 
Package with similar offerings from competitors. Based on this 
feedback, Nasdaq proposes to modify the disclosure services offered so 
that instead of an annual stipend to spend on any disclosure services, 
companies instead will receive a pre-determined package of disclosure 
services for earnings or other press releases and the filing of related 
regulatory reports.\5\ The revised package of services will maintain 
the same approximate retail value as the amount of the stipend 
currently provided. All companies in the same market capitalization 
tier will be eligible for the same package of services.
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    \5\ Regulatory reports include XBRL and EDGAR filings and could 
also include filings with non-U.S. regulators or banking regulators.
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    The proposed rule change will be operative for new listings on or 
after April 23, 2018. Companies that list before that date will 
continue to receive services as described in the current rule.
    Nasdaq also proposes to make non-substantive changes to the rule 
text to specify that the 2016 package is no longer the current package 
of for companies listing on or after April 23, 2018, and to clarify 
which package is provided to a company with exactly $750 million market 
capitalization.
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 Sections 
6(b)(4),\7\ 6(b)(5),\8\ and 6(b)(8),\9\ in particular, in that the 
proposal is designed, among other things, to provide for the equitable 
allocation of reasonable dues, fees, and other charges among Exchange 
members and issuers and other persons using its facilities and to 
promote just and equitable principles of trade, and is not designed to 
permit unfair discrimination between issuers, and that the rules of the 
Exchange do not impose any burden on competition not necessary or 
appropriate in furtherance of the purposes of the Act.
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    \6\ 15 U.S.C. 78f.
    \7\ 15 U.S.C. 78f(4).
    \8\ 15 U.S.C. 78f(5).
    \9\ 15 U.S.C. 78f(8).
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    Nasdaq faces competition in the market for listing services,\10\ 
and competes, in part, by offering valuable services to companies. 
Nasdaq believes that it is reasonable to offer

[[Page 14684]]

complimentary services to attract and retain listings as part of this 
competition. All similarly situated companies are eligible for the same 
package of services and the eligibility of companies for services is 
not changing under this proposed rule change. In addition, while under 
the proposed change a package of disclosure services will be offered 
instead of a stipend, the types of services and the approximate retail 
value of the services offered will not change. Accordingly, Nasdaq does 
not believe this update has an effect on the allocation of fees nor 
does it permit unfair discrimination and the proposed rule change is 
consistent with the requirements of Section 6(b)(4) and (5) of the Act.
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    \10\ The Justice Department has 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.
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    Nasdaq represents, and this proposed rule change will help ensure, 
that individual listed companies are not given specially negotiated 
packages of products or services to list, or remain listed, which the 
Commission has previously stated would raise unfair discrimination 
issues under the Act.\11\
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    \11\ See Exchange Act Release No. 79366, 81 FR 85663 at 85665 
(citing Securities Exchange Act Release No. 65127 (August 12, 2011), 
76 FR 51449, 51452 (August 18, 2011) (approving NYSE-2011-20)).
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    Further, the disclosure services offered in the Services Package 
reflect the current competitive environment for exchange listings among 
national securities exchanges, and is appropriate and consistent with 
Section 6(b)(8) in furtherance of the purposes of the Act. 
Specifically, based on customer feedback, Nasdaq believes that the 
revised rule will be more transparent to customers and better enable 
customers to compare offerings from various exchanges. Nasdaq also 
believes that this enhanced transparency will promote just and 
equitable principles of trade as required by Section 6(b)(5) of the 
Act.
    Finally, Nasdaq notes that the proposed non-substantive changes to 
the rule text to specify that the 2016 package is no longer the current 
package for companies listing on or after April 23, 2018, and to 
clarify which package is provided to a company with exactly $750 
million market capitalization are consistent with Section 6(b)(5) of 
the Act because they will clarify the rule without making any 
substantive change.

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

    The Exchange does not believe that the proposed rule change will 
impose any burden on competition not necessary or appropriate in 
furtherance of the purposes of the Act. As noted above, Nasdaq faces 
competition in the market for listing services, and competes, in part, 
by offering valuable services to companies. Nasdaq believes that the 
proposed rule change will make the rule text more transparent to 
customers and better enable customers to compare offerings from various 
exchanges, which reflects that competition, but does not impose any 
burden on the competition with other exchanges.

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

    Because the foregoing proposed rule change does not: (i) 
Significantly affect the protection of investors or the public 
interest; (ii) impose any significant burden on competition; and (iii) 
become operative for 30 days from the date on which it was filed, or 
such shorter time as the Commission may designate, it has become 
effective pursuant to Section 19(b)(3)(A) of the Act \12\ and Rule 19b-
4(f)(6) thereunder.\13\
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    \12\ 15 U.S.C. 78s(b)(3)(A).
    \13\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)(iii) 
requires a self-regulatory organization to give the Commission 
written notice of its intent to file the proposed rule change, along 
with a brief description and text of the proposed rule change, at 
least five business days prior to the date of filing of the proposed 
rule change, or such shorter time as designated by the Commission. 
The Exchange has satisfied this requirement.
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    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.

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-2018-023 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-2018-023. 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 website (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 website 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. Persons submitting comments are 
cautioned that we do not redact or edit personal identifying 
information from comment submissions. You should submit only 
information that you wish to make available publicly. All submissions 
should refer to File Number SR-NASDAQ-2018-023, and should be submitted 
on or before April 26, 2018.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\14\
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    \14\ 17 CFR 200.30-3(a)(12).
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Eduardo Aleman,
Assistant Secretary.
[FR Doc. 2018-06917 Filed 4-4-18; 8:45 am]
 BILLING CODE 8011-01-P