[Federal Register Volume 89, Number 214 (Tuesday, November 5, 2024)]
[Notices]
[Pages 87914-87917]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-25639]


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

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-101483; File No. SR-NASDAQ-2024-059]


Self-Regulatory Organizations; The Nasdaq Stock Market LLC; 
Notice of Filing of Proposed Rule Change To Modify the Package of 
Complimentary Services Provided to Certain Eligible Switches and To 
Modify the Definition of an Eligible Switch

October 30, 2024.
    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 October 17, 2024, 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.
---------------------------------------------------------------------------

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

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

    The Exchange proposes to modify the package of complimentary 
services provided to certain Eligible Switches and to modify the 
definition of an Eligible Switch.
    The text of the proposed rule change is available on the Exchange's 
website at https://listingcenter.nasdaq.com/rulebook/nasdaq/rules, 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

[[Page 87915]]

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 Listing Rule IM-5900-7 
to Eligible New Listings \3\ and Eligible Switches \4\ newly listing on 
Nasdaq.\5\ 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, environmental, social and governance 
services, and may include market advisory tools such as stock 
surveillance (collectively the ``Service Package'').\6\ Based on 
Nasdaq's experience with the program and given the competitive 
landscape, Nasdaq is filing this proposed rule change to modify the 
manner in which Market Advisory Tools are offered to Eligible Switches 
that have a market capitalization of $750 million or more, as described 
below. Nasdaq is also proposing to modify the definition of an Eligible 
Switch to include a company (other than a company listed under Listing 
Rule IM-5101-2) switching its listing to the Global or Global Select 
Market not only from the New York Stock Exchange, as currently provided 
by Listing Rule IM-5900-7(a)(2), but also from any other national 
securities exchange. Similarly, Nasdaq is proposing to modify the 
definition of an Eligible Switch to also include a company that 
switched its listing from another national securities exchange and 
listed on Nasdaq under Listing Rule IM-5101-2 after the company 
publicly announced that it entered into a binding agreement for a 
business combination and that subsequently satisfies the conditions in 
Listing Rule IM-5101-2(b) and lists on the Global or Global Select 
Market in conjunction with that business combination.\7\
---------------------------------------------------------------------------

    \3\ IM-5900-7 defines an Eligible New Listing as ``a Company 
listing on the Global or Global Select Market in connection with: 
(i) an initial public offering in the United States, including 
American Depository Receipts (other than a Company listed under IM-
5101-2), (ii) upon emerging from bankruptcy, (iii) in connection 
with a spin-off or carve-out from another Company, (iv) in 
connection with a Direct Listing as defined in IM-5315-1 (including 
the listing of American Depository Receipts), or (v) in conjunction 
with a business combination that satisfies the conditions in IM-
5101-2(b).''
    \4\ IM-5900-7 defines an Eligible Switch as ``a Company: (i) 
(other than a Company listed under IM-5101-2) switching its listing 
from the New York Stock Exchange to the Global or Global Select 
Markets, or (ii) that has switched its listing from the New York 
Stock Exchange and listed on Nasdaq under IM-5101-2 after the 
Company publicly announced that it entered into a binding agreement 
for a business combination and that subsequently satisfies the 
conditions in IM-5101-2(b) and lists on the Global or Global Select 
Market in conjunction with that business combination.''
    \5\ IM-5900-7A describes the Service Package available to 
companies that listed before March 12, 2021, the effective date of 
SR-Nasdaq-2021-002. See Securities Exchange Act Release No. 91318 
(March 12, 2021), 86 FR 14774 (March 18, 2021) (modifying the 
package of complimentary services provided to eligible companies and 
memorializing as IM-5900-7A the services offered to eligible 
companies that listed before the effective date of the change).
    \6\ In addition, all companies listed on Nasdaq receive other 
standard services from Nasdaq, including Nasdaq Online and the 
Market Intelligence Desk.
    \7\ The definition of an Eligible Switch already includes such a 
company that was previously listed on the New York Stock Exchange.
---------------------------------------------------------------------------

    Currently, an Eligible Switch that has a market capitalization of 
$750 million or more but less than $5 billion receives the following 
complimentary services for four years: Whistleblower Hotline, Investor 
Relations website, $20,000 per year of Disclosure Services, Audio 
Webcasting, Media Monitoring/Social Listening, Market Analytic Tools 
for three users, the Core ESG Software Solution, ESG Education & Sector 
Benchmarking Services, and the choice of one Market Advisory Tool.\8\ 
Instead of the choice of one of the three Market Advisory Tools (e.g., 
Stock Surveillance, Global Targeting, or an Annual Perception Study) 
for four years,\9\ Nasdaq proposes to modify Listing Rule IM-5900-
7(d)(2) to provide an Eligible Switch that has a market capitalization 
of $750 million or more but less than $5 billion with one Annual 
Perception Study during the four-year period and the choice of the 
remaining two Market Advisory Tools (i.e., Stock Surveillance or Global 
Targeting) for four years.
---------------------------------------------------------------------------

    \8\ The total retail value of these services is up to 
approximately $220,200 per year. The company also receives one 
Virtual Event during the four-year period, which has a retail value 
of approximately $11,700. In addition, one-time development fees of 
approximately $6,000 to establish the services in the first year is 
waived. See Listing Rule IM-5900-7(d)(2).
    \9\ Once the Company elects a service it cannot subsequently 
change to a different alternative, including in a subsequent year. 
See Listing Rule IM-5900-7(e).
---------------------------------------------------------------------------

    Nasdaq also proposes to modify Listing Rule IM-5900-7(d)(2) to 
reflect that an Eligible Switch that had a market capitalization of 
$750 million or more but less than $5 billion that listed on Nasdaq 
prior to the effective date of this proposed rule change is not 
eligible for the one Annual Perception Study during the four-year 
period but received, upon listing (as provided by the rules in effect 
at that time), the choice of Stock Surveillance, Global Targeting or 
Annual Perception Study.
    Currently, an Eligible Switch that has a market capitalization of 
$5 billion or more receives the following complimentary services for 
four years: Whistleblower Hotline, Investor Relations website, $20,000 
per year of Disclosure Services, Audio Webcasting, Media Monitoring/
Social Listening, Market Analytic Tools for four users, the Advanced 
ESG Software Solution, ESG Education & Sector Benchmarking Service, 
$60,000 per year of ESG Advisory Services, and the choice of two Market 
Advisory Tools.\10\ Instead of the choice of two of the three Market 
Advisory Tools (e.g., Stock Surveillance, Global Targeting, or Annual 
Perception Study) for four years, Nasdaq proposes to modify Listing 
Rule IM-5900-7(d)(3) to provide an Eligible Switch that has a market 
capitalization of $5 billion or more with one Annual Perception Study 
during the four-year period and with both of the remaining Market 
Advisory Tools (i.e., Stock Surveillance and Global Targeting) for four 
years.
---------------------------------------------------------------------------

    \10\ The total retail value of these services is up to 
approximately $373,700 per year. The company also receives one 
Virtual Event during the four-year period, which has a retail value 
of approximately $11,700. In addition, one-time development fees of 
approximately $26,500 to establish the services in the first year is 
waived. See Listing Rule IM-5900-7(d)(3).
---------------------------------------------------------------------------

    Nasdaq also proposes to modify Listing Rule IM-5900-7(d)(3) to 
reflect that an Eligible Switch that had a market capitalization of $5 
billion or more that listed on Nasdaq prior to the effective date of 
this proposed rule change is not eligible for the one Annual Perception 
Study during the four-year period but received, upon listing (as 
provided by the rules in effect at that time), the choice of two of the 
following three services: Stock Surveillance, Global Targeting or 
Annual Perception Study.
    Nasdaq believes that these changes will increase the value of the 
Service Package to the companies affected by this proposal because the 
perception study will be provided in addition to the Stock Surveillance 
and/or Global Targeting, whereas currently some companies may choose 
services that have higher value without benefiting

[[Page 87916]]

from the perception study.\11\ Nasdaq also believes these changes will 
streamline the offering of services to Eligible Switches because 
Eligible Switches with a market capitalization of $750 million or more, 
generally, would benefit from a perception study that leverages 
extensive capital markets relationships and benchmark data amplifying 
the company's efforts to elevate their story, enhance stakeholder 
engagement, identify risk and attract new capital. Accordingly, Nasdaq 
believes these changes will make the package more attractive to the 
affected companies.
---------------------------------------------------------------------------

    \11\ Stock Surveillance, Global Targeting, and Annual Perception 
Study have a retail value of approximately $56,500, $48,000, and 
$45,000 per year, respectively. In describing the value of the 
services in the rule text, Nasdaq presumed that a company would use 
stock surveillance and global targeting, where there is the choice 
of two services; and that a company would use the Stock 
Surveillance, where there is the choice of one service.
---------------------------------------------------------------------------

    Finally, Nasdaq proposes to modify the definition of an Eligible 
Switch to include a company (other than a company listed under Listing 
Rule IM-5101-2) switching its listing to the Global or Global Select 
Market not only from the New York Stock Exchange, as currently provided 
by Listing Rule IM-5900-7(a)(2), but also from any other national 
securities exchange. Similarly, Nasdaq proposes to modify the 
definition of an Eligible Switch to include a company that switched its 
listing from another national securities exchange and listed on Nasdaq 
under Listing Rule IM-5101-2 after the company publicly announced that 
it entered into a binding agreement for a business combination and that 
subsequently satisfies the conditions in Listing Rule IM-5101-2(b) and 
lists on the Global or Global Select Market in conjunction with that 
business combination.\12\ Nasdaq believes that given the competitive 
landscape and the increasing number of listing venues, issuers 
switching its listing to the Global or Global Select Market from other 
national securities exchanges will likely bring greater future value to 
Nasdaq than will other issuers by listing on its market.
---------------------------------------------------------------------------

    \12\ Listing Rule IM-5101-2 imposes additional listing 
requirements on a company whose business plan is to complete an 
initial public offering (``IPO'') and engage in a merger or 
acquisition with one or more unidentified companies within a 
specific period of time (``Acquisition Companies''). An Acquisition 
Company does not have an operating business and tends to trade 
infrequently and in a tight range until the company completes an 
acquisition. Therefore, these Acquisition Companies do not generally 
need shareholder communication services, market analytic tools or 
market advisory tools and, upon listing (whether as an IPO or when 
switching from another market), these Acquisition Companies do not 
receive complimentary services from Nasdaq under Listing Rule IM-
5900-7. However, a company completing a business combination with a 
Nasdaq-listed Acquisition Company is eligible to receive services 
under Listing Rule IM-5900-7 when it lists on the Nasdaq Global or 
Global Select Market in conjunction with a business combination that 
satisfies the conditions in Listing Rule IM-5101-2(b). At this 
point, the Acquisition Company transitions to being an operating 
company and has a similar need as other companies for shareholder 
communication services, market analytic tools and market advisory 
tools.
---------------------------------------------------------------------------

2. Statutory Basis
    The Exchange believes that its proposal is consistent with Section 
6(b) of the Act,\13\ in general, and furthers the objectives of Section 
6(b)(5) of the Act,\14\ in particular, in that it is designed 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 investors and the public 
interest. It is also consistent with this provision because it is not 
designed to permit unfair discrimination between issuers. Nasdaq also 
believes that the proposed rule change is consistent with the 
provisions of Sections 6(b)(4) \15\ and 6(b)(8),\16\ 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 that the 
rules of the Exchange do not impose any burden on competition not 
necessary or appropriate in furtherance of the purposes of the Exchange 
Act.
---------------------------------------------------------------------------

    \13\ 15 U.S.C. 78f(b).
    \14\ 15 U.S.C. 78f(b)(5).
    \15\ 15 U.S.C. 78f(4).
    \16\ 15 U.S.C. 78f(8).
---------------------------------------------------------------------------

    Nasdaq faces competition in the market for listing services,\17\ 
and competes, in part, by offering valuable services to companies. 
Nasdaq believes that it is reasonable to offer complimentary services 
to attract and retain listings as part of this competition. All 
similarly situated companies are eligible for the same package of 
services. Nasdaq believes that the proposed changes to the manner in 
which Market Advisory Tools are offered to Eligible Switches that have 
a market capitalization of $750 million or more will help eligible 
companies leverage extensive capital markets relationships and 
benchmark data amplifying the company's efforts to elevate their story, 
enhance stakeholder engagement, identify risk and attract new capital. 
While the proposed changes will affect services that will be available 
only to Eligible Switches with a market capitalization of $750 million 
or more, Nasdaq does not believe that it is unfairly discriminatory to 
offer different services based on a company's market capitalization 
given that larger companies generally will need more and different 
Market Advisory Tools, and that those issuers will likely bring greater 
future value to Nasdaq than will other issuers with lower market 
capitalization by switching to its market.\18\
---------------------------------------------------------------------------

    \17\ The Justice Department has noted the intense competitive 
environment for exchange listings. See ``NASDAQ OMX Group Inc. and 
Intercontinental Exchange 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.
    \18\ See Securities Exchange Act Release No. 65963 (December 15, 
2011), 76 FR 79262 at 79265 (December 21, 2011).
---------------------------------------------------------------------------

    Nasdaq believes that the proposal to modify the definition of an 
Eligible Switch to include companies (including companies listed under 
Listing Rule IM-5101-2) switching their listing to the Nasdaq Global or 
Global Select Market not only from the New York Stock Exchange, as 
currently provided by Listing Rule IM-5900-7(a)(2), but also from any 
other national securities exchange is designed 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 
does not impose any burden on competition not necessary or appropriate 
in furtherance of the purposes of the Exchange Act because the proposal 
is, in part, designed to enhance competition with other national 
securities exchanges. Nasdaq believes that given the competitive 
landscape and the increasing number of listing venues, issuers 
switching its listing to the Global or Global Select Market from other 
national securities exchanges will likely bring greater future value to 
Nasdaq than will other issuers by listing on its market.
    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 Exchange Act.\19\
---------------------------------------------------------------------------

    \19\ 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)).

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

[[Page 87917]]

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 it is 
reasonable to offer complimentary services to attract and retain 
listings as part of this competition. The proposed rule changes reflect 
that competition, but do not impose any burden on the competition with 
other exchanges. Other exchanges can also offer similar services to 
companies, thereby increasing competition to the benefit of those 
companies and their shareholders.
    Further, all similarly situated companies are eligible for the same 
package of services. While the proposed changes will affect services 
that will be available only to Eligible Switches with a market 
capitalization of $750 million or more, Nasdaq does not believe that it 
is unfairly discriminatory to offer different services based on a 
company's market capitalization given that larger companies generally 
will need more and different Market Advisory Tools, and that those 
issuers will likely bring greater future value to Nasdaq by switching 
to its market than would other issuers.
    Nasdaq also believes that the proposal to modify the definition of 
an Eligible Switch to include companies switching their listing not 
only from the New York Stock Exchange, as currently provided by Listing 
Rule IM-5900-7(a)(2), but also from any other national securities 
exchange will eliminate a potential existing burden on competition 
between companies listed on different exchanges, in that it will treat 
exchange-listed companies in a uniform manner, regardless of which 
national securities exchange they are currently listed on. Further, 
this change is designed to increase competition with other national 
securities exchanges.
    Accordingly, Nasdaq does not believe the proposed rule change will 
impose any burden on competition that is not necessary or appropriate 
in furtherance of the purposes of the Exchange Act, as amended.

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

    Within 45 days of the date of publication of this notice in the 
Federal Register or within such longer period up to 90 days (i) as the 
Commission may designate if it finds such longer period to be 
appropriate and publishes its reasons for so finding or (ii) as to 
which the Exchange consents, the Commission shall: (a) by order approve 
or disapprove such proposed rule change, or (b) institute proceedings 
to determine whether the proposed rule change should be 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

    <bullet> Use the Commission's internet comment form (https://www.sec.gov/rules/sro.shtml); or
    <bullet> Send an email to <a href="/cdn-cgi/l/email-protection#83f1f6efe6aee0eceeeee6edf7f0c3f0e6e0ade4ecf5"><span class="__cf_email__" data-cfemail="becccbd2db93ddd1d3d3dbd0cacdfecddbdd90d9d1c8">[email protected]</span></a>. Please include 
file number SR-NASDAQ-2024-059 on the subject line.

Paper Comments

    <bullet> 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-2024-059. 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 (https://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 
a.m. and 3 p.m. Copies of the filing also will be available for 
inspection and copying at the principal office of the Exchange. Do not 
include personal identifiable information in submissions; you should 
submit only information that you wish to make available publicly. We 
may redact in part or withhold entirely from publication submitted 
material that is obscene or subject to copyright protection. All 
submissions should refer to file number SR-NASDAQ-2024-059 and should 
be submitted on or before November 26, 2024.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\20\
---------------------------------------------------------------------------

    \20\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2024-25639 Filed 11-4-24; 8:45 am]
BILLING CODE 8011-01-P


</pre><script data-cfasync="false" src="/cdn-cgi/scripts/5c5dd728/cloudflare-static/email-decode.min.js"></script></body>
</html>