7754 Federal Register / Vol. 86, No. 19 / Monday, February 1, 2021 / Notices 

11 Id. 

12 17 CFR 200.30–3(a)(31). 

1 15 U.S.C. 78s(b)(1). 

2 15 U.S.C. 78a. 

3 17 CFR 240.19b–4. 

4The Exchange originally filed to amend the 

Schedule of Fees and Charges on December 23, 

2020 (SR–NYSEArca–2020–117). SR–NYSEArca– 

2020–117 was withdrawn and replaced by SR– 

NYSEArca–2020–118. SR–NYSEArca–2020–117 

was subsequently withdrawn and replaced by this 

filing. 

5 ‘‘Exchange Traded Products’’ is defined in 

footnote 3 of the current Schedule of Fees and 

Charges. 

2021 is 180 days from that date, and 

April 1, 2021 is 240 days from that date. 

The Commission finds it appropriate 

to designate a longer period within 

which to issue an order approving or 

disapproving the proposed rule change 

so that it has sufficient time to consider 

the proposed rule change. Accordingly, 

the Commission, pursuant to Section 

19(b)(2) of the Exchange Act,11

designates April 1, 2021 as the date by 

which the Commission shall either 

approve or disapprove the proposed 

rule change (File No. SR–CboeBYX– 

2020–021). 

For the Commission, by the Division 

of Trading and Markets, pursuant to 

delegated authority.12

J. Matthew DeLesDernier, 

Assistant Secretary. 

[FR Doc. 2021–02006 Filed 1–29–21; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–90988; File No. SR– 

NYSEArca–2021–04] 

Self-Regulatory Organizations; NYSE 

Arca, Inc.; Notice of Filing and 

Immediate Effectiveness of Proposed 

Rule Change To Amend Its Schedule of 

Fees and Charges To Establish Annual 

Fees for Exchange Traded Products 

January 26, 2021. 

Pursuant to Section 19(b)(1) 1 of the 

Securities Exchange Act of 1934 (the 

‘‘Act’’) 2 and Rule 19b–4 thereunder,3

notice is hereby given that, on January 

12, 2021, NYSE Arca, Inc. (‘‘NYSE 

Arca’’ or the ‘‘Exchange’’) filed with the 

Securities and Exchange Commission 

(the ‘‘Commission’’) the proposed rule 

change as described in Items I, II, and 

III below, which Items have been 

prepared by the self-regulatory 

organization. The Commission is 

publishing this notice to solicit 

comments on the proposed rule change 

from interested persons. 

I. Self-Regulatory Organization’s 

Statement of the Terms of Substance of 

the Proposed Rule Change 

The Exchange proposes to amend its 

Schedule of Fees and Charges to 

establish annual fees for Exchange 

Traded Products that have a maturity 

date and for products that are based on 

an expected return over a specific 

outcome period. The Exchange proposes 

to implement the fee changes effective 

January 12, 2021.4 The proposed rule 

change is available on the Exchange’s 

website at www.nyse.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 

self-regulatory organization 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 the 

Statutory Basis for, the Proposed Rule 

Change 

1. Purpose 

The Exchange proposes to amend its 

Schedule of Fees and Charges to 

establish annual fees for Exchange 

Traded Products (‘‘ETPs’’) 5 that have a 

maturity date and ETPs that are based 

on an expected return over a specific 

outcome period. As proposed, these 

types of ETPs would be eligible for the 

current annual fees for products that 

track an index. 

The proposed change responds to the 

current extremely competitive 

environment for ETPs listings in which 

issuers can readily favor competing 

venues or transfer their listings if they 

deem fee levels at a particular venue to 

be excessive, or discount opportunities 

available at other venues to be more 

favorable. The Exchange’s current 

annual fees for ETPs is based on the 

number of shares outstanding per issuer 

and provide incentives for issuers to list 

multiple series of certain securities on 

the Exchange. In response to the 

competitive environment for listings, 

the Exchange adopted a competitive 

pricing structure that combines higher 

minimum annual fees for certain 

securities with discounts for issuers that 

list multiple ETPs. The proposed change 

is designed to offer annual listing fees 

for ETPs that have a maturity date and 

ETPs that provide an expected return 

over a specific outcome period based on 

the annual fees for ETPs that track an 

index. 

The Exchange proposes to implement 

the fee changes effective January 12, 

2021. 

Proposed Rule Change 

Annual fees are assessed each January 

in the first full calendar year following 

the year of listing. The aggregate total 

shares outstanding is calculated based 

on the total shares outstanding as 

reported by the Fund issuer or Fund 

‘‘family’’ in its most recent periodic 

filing with the Commission or other 

publicly available information. Annual 

fees apply regardless of whether any of 

these Funds are listed elsewhere. 

The Exchange proposes to offer 

annual listing fees for two types of 

ETPs: (1) ETPs that have a specific 

maturity date, such as a fixed income 

ETP that primarily holds a diversified 

portfolio of fixed income bonds that 

provides regular interest payments and 

distributes a final payout in its stated 

maturity year; and (2) ETPs that provide 

an expected return over a specific 

outcome period, which are designed to 

provide a particular set of returns over 

a specific period based on the 

performance of an underlying 

instrument during the ETP’s outcome 

period. Such ETPs include a buffer 

strategy that seeks to provide 

investment returns that match the gains 

of a particular index(s) up to a 

maximum annual return, or cap level, 

while guarding against declines in the 

same underlying index(s), a buffer level, 

over a particular time period. Currently, 

both types of ETPs are eligible for the 

annual fees set forth in section 6.b. of 

the Schedule of Fees and Charges, 

which are applicable to Managed Fund 

Shares, Managed Trust Securities, 

Active Proxy Portfolio Shares, Managed 

Portfolio Shares and Exchange-Traded 

Fund Shares listed under Rule 5.2– 

E(j)(8) that do not track an index. 

Generally, the products eligible for fees 

under section 6.b. of the Schedule of 

Fees and Charges entail more active 

issuer management and therefore incur 

higher Exchange costs, including costs 

related to issuer services, listing 

administration, product development 

and regulatory oversight. 

The Exchange proposes that ETPs that 

have a maturity date and ETPs that 

provide an expected return over a 

specific outcome period would be 

eligible for the lower fees set forth in 

section 6.a. of the Schedule of Fees and 

Federal Register / Vol. 86, No. 19 / Monday, February 1, 2021 / Notices 7755 

6 15 U.S.C. 78f(b). 

7 15 U.S.C. 78f(b)(4) & (5). 

8See Regulation NMS, 70 FR at 37499. 

Charges for products that track an index, 

as follows: 

Number of shares 

outstanding 

(each issue) 

Annual fee 

Less than 25 million ............. $7,500 

25 million up to 49,999,999 .. 10,000 

50 million up to 99,999,999 .. 15,000 

100 million up to 

249,999,999 ...................... 20,000 

250 million up to 

499,999,999 ...................... 25,000 

500 million and over ............. 30,000 

An ETP designed to provide a 

particular set of returns over a specific 

outcome period utilizing a buffer 

strategy as described above is designed 

to provide investment returns that 

match the gains of a particular index(s) 

up to a maximum cap level while 

guarding against declines in the same 

underlying index(s) below a certain 

buffer level over a specified time period, 

which is very similar to how a fund 

based on an index operates. Moreover, 

an ETP with a maturity date designed to 

end on a specific date would not require 

the same open-ended commitment of 

Exchange resources as the more 

traditional types of actively managed 

products eligible for fees under section 

6.b. of the Schedule of Fees and Charges 

that do not have a specified end date. 

Accordingly, the Exchange believes that 

the proposed lower fees are appropriate 

because ETPS that have a maturity date 

and that provide an expected return 

over a specific outcome period, like 

products that track an index, generally 

require the expenditure of less Exchange 

resources to support listing and 

administration. Charging lower fees for 

such products would thus more closely 

correlate the listing fee applicable to the 

issuer of ETPs to the costs associated 

with listing and trading such products, 

including costs related to issuer 

services, listing administration, product 

development and regulatory oversight. 

Structured products would continue to 

be charged annual fees under section 7 

of the Schedule of Fees and Charges. 

The proposed change described above 

is not otherwise intended to address 

other issues, and the Exchange is not 

aware of any significant problems that 

market participants would have in 

complying with the proposed changes. 

2. Statutory Basis 

The Exchange believes that the 

proposed rule change is consistent with 

Section 6(b) of the Act,6 in general, and 

furthers the objectives of Sections 

6(b)(4) and (5) of the Act,7 in particular, 

because 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. 

The Proposed Change Is Reasonable 

As discussed above, the Exchange 

operates in a highly competitive market 

for the listing of ETPs. Specifically, ETP 

issuers can readily favor competing 

venues or transfer listings if they deem 

fee levels at a particular venue to be 

excessive, or discount opportunities 

available at other venues to be more 

favorable. The Exchange’s current 

annual fees for ETPs are based on the 

number of shares outstanding per issuer 

and provide incentives for issuers to list 

multiple series of certain securities on 

the Exchange. The Commission has 

repeatedly expressed its preference for 

competition over regulatory 

intervention in determining prices, 

products, and services in the securities 

markets. Specifically, in Regulation 

NMS, the Commission highlighted the 

importance of market forces in 

determining prices and SRO revenues 

and, also, recognized that current 

regulation of the market system ‘‘has 

been remarkably successful in 

promoting market competition in its 

broader forms that are most important to 

investors and listed companies.’’ 8

The Exchange believes that the 

ongoing competition among the 

exchanges with respect to new listings 

and the transfer of existing listings 

among competitor exchanges 

demonstrates that issuers can choose 

different listing markets in response to 

fee changes. Accordingly, competitive 

forces constrain exchange listing fees. 

Stated otherwise, changes to exchange 

listing fees can have a direct effect on 

the ability of an exchange to compete for 

new listings and retain existing listings. 

Annual fees for ETPs are based on the 

number of shares outstanding per issuer, 

and then are further differentiated based 

on whether the ETP is index based or 

not, with lower annual fees for ETPs 

that are based on an index. As discussed 

above, the Exchange believes that it is 

reasonable to charge annual fees for 

ETPs that have a maturity date and ETPs 

that provide an expected return over a 

specific outcome period based on that 

same differentiation. The Exchange 

believes that, given the characteristics of 

such ETPs, charging the same, lower 

fees as the Exchange currently charges 

ETPs that track an index would be 

reasonable because those relatively 

lower annual fees better correlate with 

the generally lesser Exchange costs 

associated with listing and trading ETPs 

that track an index, including costs 

related to issuer services, listing 

administration and product 

development. Given the current 

competitive environment, the Exchange 

believes that the proposed change is a 

reasonable attempt to establish listing 

fees for products that, like products that 

track an index, require a decreased 

expenditure of Exchange resources to 

support listing and administration, 

thereby enhancing competition among 

issuers and listing venues. The 

Exchange also believes that lower 

annual fees may reduce the barriers to 

entry and incentivize enhanced 

competition among issuers of ETPs that 

have a maturity date and ETPs that 

provide an expected return over a 

specific outcome period. The proposed 

rule change reflects a competitive 

pricing structure designed to incentivize 

issuers to list new products and transfer 

existing products to the Exchange, 

which the Exchange believes will 

enhance competition both among ETP 

issuers and listing venues, to the benefit 

of investors. 

The Proposal Is An Equitable Allocation 

of Fees 

The Exchange believes the proposal 

equitably allocates its fees among its 

market participants. In the prevailing 

competitive environment, issuers can 

readily favor competing venues or 

transfer listings if they deem fee levels 

at a particular venue to be excessive, or 

discount opportunities available at other 

venues to be more favorable. The 

proposed fees for ETPs that have a 

maturity date and ETPs that provide an 

expected return over a specific outcome 

period are equitable because the 

proposed annual fees would apply 

uniformly to all issuers. Moreover, the 

proposed fees would be equitably 

allocated among issuers because issuers 

would continue to qualify for the annual 

listing fee based on issuing ETPs that 

have a maturity date and that provide an 

expected return over a specific outcome 

period and for the annual fee based on 

the number of shares outstanding and 

under criteria applied uniformly to all 

such issuers. For the same reasons, the 

proposal neither targets nor will it have 

a disparate impact on any particular 

category of market participant. 

The Proposal Is Not Unfairly 

Discriminatory 

The Exchange believes that the 

proposal is not unfairly discriminatory. 

7756 Federal Register / Vol. 86, No. 19 / Monday, February 1, 2021 / Notices 

9 15 U.S.C. 78f(b)(8). 

10 15 U.S.C. 78s(b)(3)(A). 

11 17 CFR 240.19b–4(f)(2). 

12 15 U.S.C. 78s(b)(2)(B). 

In the prevailing competitive 

environment, issuers are free to list 

elsewhere if they believe that alternative 

venues offer them better value. The 

Exchange believes it is not unfairly 

discriminatory to offer the lower annual 

fees for products tracking an index to 

ETPs that have a maturity date and that 

provide an expected return over a 

specific outcome period because the 

proposed fees would apply to and 

potentially benefit all issuers equally. 

Further, the Exchange believes it is not 

unfairly discriminatory to apply the 

same fees applicable to ETPs that track 

an index to ETPs that have a maturity 

date and that provide an expected 

return over a specific outcome period 

because the proposed fees would be 

offered on an equal basis to all issuers 

listing such products on the Exchange. 

Moreover, the proposed annual fees 

would apply to issuers in the same 

manner as the current annual fees for 

ETPs that track an index. 

Finally, the Exchange believes that it 

is subject to significant competitive 

forces, as described below in the 

Exchange’s statement regarding the 

burden on competition. 

For the foregoing reasons, the 

Exchange believes that the proposal is 

consistent with the Act. 

B. Self-Regulatory Organization’s 

Statement on Burden on Competition 

In accordance with Section 6(b)(8) of 

the Act,9 the Exchange believes that the 

proposed rule change would not impose 

any burden on competition that is not 

necessary or appropriate in furtherance 

of the purposes of the Act. Instead, as 

discussed above, the Exchange believes 

that the proposed change would 

encourage competition by offering lower 

annual fees for ETPs that have a 

maturity date and that provide an 

expected return over a specific outcome 

period, thereby incentivizing issuers to 

list such products on the Exchange, 

thereby enhancing competition among 

issuers and listing venues, to the benefit 

of investors. The Exchange believes that 

lower annual fees may reduce the 

barriers to entry and incentivize 

enhanced competition among issuers of 

ETPs that have a maturity date and that 

provide an expected return over a 

specific outcome period. The proposed 

rule changes reflect a competitive 

pricing structure designed to incentivize 

issuers to list and transfer new products 

on the Exchange, which the Exchange 

believes will enhance competition both 

among ETP issuers and listing venues, 

to the benefit of investors. As noted, the 

market for listing services is extremely 

competitive. Issuers have the option to 

list their securities on these alternative 

venues based on the fees charged and 

the value provided by each listing 

exchange. Because issuers have a choice 

to list their securities on a different 

national securities exchange, the 

Exchange does not believe that the 

proposed change imposes a burden on 

competition. 

Intramarket Competition. The 

proposed change is a competitive 

pricing structure designed to encourage 

issuers to list and transfer ETPs that 

have a maturity date and ETPs that 

provide an expected return over a 

specific outcome period on the 

Exchange. The Exchange believes the 

proposal will enhance competition 

among ETP issuers, to the benefit of 

investors. The Exchange does not 

believe the proposed change would 

burden intramarket competition as it 

would apply to and potentially benefit 

all issuers equally and uniformly and, as 

such, the proposed change would not 

impose a disparate burden on 

competition among market participants 

on the Exchange. 

Intermarket Competition. The 

Exchange operates in a highly 

competitive listings market in which 

issuers can readily choose alternative 

listing venues. In such an environment, 

the Exchange must adjust its fees and 

discounts to remain competitive with 

other exchanges competing for the same 

listings. The Exchange believes that 

such proposal will directly enhance 

competition among ETP listing venues 

by reducing the costs associated with 

listing on the Exchange for ETPs that 

have a maturity date and that provide an 

expected return over a specific outcome 

period, to the benefit of investors. As 

such, the proposal is a competitive 

proposal designed to enhance pricing 

competition among listing venues and 

implement pricing for listings that better 

reflects the revenue and expenses 

associated with listing these types of 

ETPs on the Exchange. Because 

competitors are free to modify their own 

fees and discounts in response, and 

because issuers may readily adjust their 

listing decisions and practices, the 

Exchange does not believe its proposed 

change can impose any burden on 

intermarket competition. 

C. Self-Regulatory Organization’s 

Statement on Comments on the 

Proposed Rule Change Received From 

Members, Participants, or Others 

No written comments were solicited 

or received with respect to the proposed 

rule change. 

III. Date of Effectiveness of the 

Proposed Rule Change and Timing for 

Commission Action 

The foregoing rule change is effective 

upon filing pursuant to Section 

19(b)(3)(A) 10 of the Act and 

subparagraph (f)(2) of Rule 19b–4 11

thereunder, because it establishes a due, 

fee, or other charge imposed by the 

Exchange. 

At any time within 60 days of the 

filing of such 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. If the 

Commission takes such action, the 

Commission shall institute proceedings 

under Section 19(b)(2)(B) 12 of the Act to 

determine whether the proposed rule 

change should be approved or 

disapproved. 

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 rule-comments@

sec.gov. Please include File Number SR– 

NYSEArca–2021–04 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–NYSEArca–2021–04. 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 

Federal Register / Vol. 86, No. 19 / Monday, February 1, 2021 / Notices 7757 

13 17 CFR 200.30–3(a)(12). 

1 15 U.S.C. 78s(b)(1). 

2 17 CFR 240.19b–4. 

3See Securities Exchange Act Release No. 90245 

(October 22, 2020), 85 FR 68400 (‘‘Notice’’). 

4 15 U.S.C. 78s(b)(2). 

5See Securities Exchange Act Release No. 90644, 

85 FR 82005 (December 17, 2020). The Commission 

designated January 26, 2021, as the date by which 

the Commission shall either approve or disapprove, 

or institute proceedings to determine whether to 

disapprove, the proposed rule change, as modified 

by Amendment No. 1. 

6Nasdaq defines ‘‘round lot holder’’ as a holder 

of a normal unit of trading of unrestricted 

securities. The number of beneficial holders will be 

considered in addition to holders of record. See 

Nasdaq Rule 5005(a)(40). Nasdaq defines ‘‘normal 

unit of trading’’ to mean 100 shares of a security 

unless, with respect to a particular security, Nasdaq 

determines that a normal unit of trading shall 

constitute other than 100 shares. See Nasdaq Rule 

5005(a)(39). Nasdaq defines ‘‘unrestricted 

securities’’ to mean securities that are not restricted 

securities. See Nasdaq Rule 5005(a)(46). Nasdaq 

defines ‘‘restricted securities’’ to mean securities 

that are subject to resale restrictions for any reason, 

including, but not limited to, securities: (1) 

Acquired directly or indirectly from the issuer or 

an affiliate of the issuer in unregistered offerings 

such as private placements or Regulation D 

offerings; (2) acquired through an employee stock 

benefit plan or as compensation for professional 

services; (3) acquired in reliance on Regulation S, 

which cannot be resold within the United States; (4) 

subject to a lockup agreement or a similar 

contractual restriction; or (5) considered ‘‘restricted 

securities’’ under Rule 144. See Nasdaq Rule 

5005(a)(37). The number of required minimum 

number of round lot holders is 450 holders for the 

Nasdaq Global Select Market; 400 holders for the 

Nasdaq Global Market; and 300 holders for the 

Nasdaq Capital Market. See Nasdaq Rules 

5315(f)(1)(C), 5405(a)(3), and 5505(a)(3). Nasdaq 

defines ‘‘market value’’ as the consolidated closing 

bid price multiplied by the measure to be valued. 

See Nasdaq Rule 5005(a)(23). 

7See Notice, supra note 3, at 68401; Securities 

Exchange Act Release No. 86314 (July 5, 2019), 84 

FR 33102, 33107 (July 11, 2019) (order approving 

SR–NASDAQ–2019–009) (‘‘Required Minimum 

Amount Approval Order’’). In the Required 

Minimum Amount Approval Order, the 

Commission also approved Nasdaq’s proposal to 

exclude restricted securities (see supra note 6) from 

the calculation of publicly held shares, market 

value of publicly held shares, and round lot holders 

for initial listing purposes. According to Nasdaq, 

these changes were designed to help ensure 

adequate distribution, shareholder interest, and a 

liquid trading market for a security. See Notice, 

supra note 3, at 68401; Required Minimum Amount 

Approval Order, supra, at 33103, 33108–09. 

8See Notice, supra note 3, at 68401. See also 

Required Minimum Amount Approval Order, supra 

note 7, at 33109. 

9See Notice, supra note 3, at 68401–02. 

10See id. at 68401; Required Minimum Amount 

Approval Order, supra note 7, at 33109. 

11See Notice, supra note 3, at 68401. Nasdaq Rule 

IM–5101–2 sets forth requirements applicable to 

SPACs and requires, among other things, that at 

least 90% of the gross proceeds raised in the IPO 

and any concurrent sale by the SPAC of equity 

securities must be deposited in a trust account. See 

Nasdaq Rule IM–5101–2(a). Until a SPAC has 

completed business combinations meeting the 

requirements of IM–5101–2(b), each shareholder 

Continued 

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 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. 

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–NYSEArca–2021–04 and 

should be submitted on or before 

February 22, 2021. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.13

J. Matthew DeLesDernier, 

Assistant Secretary. 

[FR Doc. 2021–02003 Filed 1–29–21; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–90995; File No. SR– 

NASDAQ–2020–069] 

Self-Regulatory Organizations; The 

Nasdaq Stock Market LLC; Order 

Approving a Proposed Rule Change, 

as Modified by Amendment No. 1, To 

Exclude Special Purpose Acquisition 

Companies From the Requirement 

That at Least 50% of a Company’s 

Round Lot Holders Each Hold 

Unrestricted Securities With a Market 

Value of at Least $2,500 

January 26, 2021. 

I. Introduction 

On October 8, 2020, 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 

exclude special purpose acquisition 

companies from the requirement that at 

least 50% of a company’s round lot 

holders each hold unrestricted 

securities with a market value of at least 

$2,500. On October 21, 2020, the 

Exchange filed Amendment No. 1 to the 

proposed rule change, which amended 

and replaced the proposed rule change 

in its entirety. The proposed rule 

change, as modified by Amendment No. 

1, was published for comment in the 

Federal Register on October 28, 2020.3

On December 11, 2020, pursuant to 

Section 19(b)(2) of the Act,4 the 

Commission designated a longer period 

within which to approve or disapprove, 

or institute proceedings to determine 

whether to disapprove, the proposed 

rule change, as modified by Amendment 

No. 1.5 This order approves the 

proposed rule change, as modified by 

Amendment No. 1. 

II. Description of the Proposed Rule 

Change, as Modified by Amendment 

No. 1 

The Exchange has proposed to 

exclude companies listed pursuant to 

Nasdaq Rule IM–5101–2 whose business 

plan is to engage in a merger or 

acquisition with one or more 

unidentified companies within a 

specified period of time (‘‘SPACs’’), 

prior to the completion of any such 

merger or acquisition, from the 

requirement that at least 50% of the 

company’s required minimum number 

of round lot holders must each hold 

unrestricted securities with a market 

value of at least $2,500 at the time of 

initial listing (‘‘Required Minimum 

Amount’’).6

The Exchange states in its proposal 

that it imposed the Required Minimum 

Amount to help ensure that at least 50% 

of the required minimum number of 

shareholders hold a meaningful value of 

unrestricted securities and that a 

company has sufficient investor interest 

to support an exchange listing.7 The 

Exchange asserts that, prior to adopting 

the Required Minimum Amount, it had 

noticed problems with companies 

listing where a large number of round 

lot holders held exactly 100 shares, 

which would be worth only $400 in the 

case of a stock that is trading at the 

minimum bid price of $4 per share, or 

as little as $200 in the case of a stock 

listing under alternative price criteria.8

The Exchange further states that such 

holders held shares in the company 

prior to its IPO and that such amount 

was not a representation of genuine 

investor interest in the company 

sufficient to support an exchange 

listing.9 In proposing to adopt the 

standard, the Exchange stated that it 

believed the Required Minimum 

Amount was a more appropriate 

representation of genuine investor 

interest in the company and would 

make it more difficult to circumvent the 

round lot holder requirement through 

share transfers for no value.10

The Exchange states that it does not 

believe the Required Minimum Amount 

is as relevant to the listing of SPACs.11