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[Federal Register Volume 90, Number 22 (Tuesday, February 4, 2025)]
[Notices]
[Pages 8957-8959]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2025-02150]

[[Page 8957]]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-102308; File No. SR-NASDAQ-2024-059]

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

January 29, 2025.

I. Introduction

    On October 17, 2024, The Nasdaq Stock Market LLC (``Nasdaq'' or 
``Exchange'') filed with the Securities and Exchange Commission 
(``SEC'' or ``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 modify the definition of 
companies that are eligible for complimentary services when switching 
their listing to the Exchange and to modify the package of 
complimentary services available to such eligible companies. The 
proposed rule change was published for comment in the Federal Register 
on November 5, 2024.\3\ On December 18, 2024, the Commission designated 
a longer period for the Commission to take action on the proposed rule 
change.\4\ This order approves the proposed rule change.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ See Securities Exchange Act Release No. 101483 (October 30, 
2024), 89 FR 87914 (``Notice''). The Commission has received no 
comments on the proposed rule change.
    \4\ See Securities Exchange Act Release No. 101965, 89 FR 105160 
(December 26, 2024).
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II. Description of the Proposed Rule Change

    Nasdaq offers complimentary services under Listing Rule IM-5900-7 
to Eligible New Listings \5\ and Eligible Switches \6\ newly listing on 
Nasdaq's Global or Global Select Market.\7\ Nasdaq states that the 
complimentary service program offers valuable services to newly listing 
companies, is designed to help ease the transition of becoming a public 
company or switching markets, and makes listing on Nasdaq more 
attractive to these companies.\8\ 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'').\9\
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    \5\ Listing Rule IM-5900-7(a)(1) 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).''
    \6\ Current Listing Rule IM-5900-7(a)(2) 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.'' See infra notes 17-19 and accompanying text for 
discussion of the proposed changes to the definition of ``Eligible 
Switch.''
    \7\ See Listing Rule IM-5900-7 (describing the complimentary 
services available to certain companies that listed on or after 
March 12, 2021, the effective date of SR-NASDAQ-2021-002). See also 
Securities Exchange Act Release No. 91318 (March 12, 2021), 86 FR 
14774 (March 18, 2021) (SR-NASDAQ-2021-002) (``2021 Order'') 
(modifying the package of complimentary services offered to eligible 
companies that listed on or after March 12, 2021); Securities 
Exchange Act Release No. 98367 (September 12, 2023), 88 FR 64016 
(September 18, 2023) (SR-NASDAQ-2023-017) (``2023 Order'') 
(modifying the package of complimentary services offered to eligible 
companies that listed on or after September 12, 2023).
    \8\ See Notice, supra note 3, at 87915.
    \9\ Nasdaq states that, in addition, all companies listed on 
Nasdaq receive other standard services from Nasdaq, including Nasdaq 
Online and the Market Intelligence Desk. See id. at 87915 n.6.
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    Currently, an Eligible Switch that has a market capitalization of 
$750 million or more but less than $5 billion receives certain 
complimentary services for four years, including the choice of one of 
the following Market Advisory Tools: Stock Surveillance, Global 
Targeting, or an Annual Perception Study.\10\ Instead of providing for 
the choice of one of the three Market Advisory Tools for four 
years,\11\ 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 that lists on or after the 
effective date of this proposed rule change 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.\12\ 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.\13\
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    \10\ See Listing Rule IM-5900-7(d)(2). See also Listing Rule 
7(b) for a description of ``Market Advisory Tools'' and, 
specifically, the ``Stock Surveillance,'' ``Global Targeting,'' and 
``Annual Perception Study'' tools. Nasdaq represents that 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, the one-time development fees of approximately $6,000 to 
establish the services in the first year is waived. See Notice, 
supra note 3, at 87915 n.8; Listing Rule IM-5900-7(d)(2).
    \11\ 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); Notice, supra note 3, at 87915 n.9.
    \12\ See Notice, supra note 3, at 87915.
    \13\ See id.
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    Currently, an Eligible Switch that has a market capitalization of 
$5 billion or more receives as part of its Service Package the choice 
of two Market Advisory Tools for four years.\14\ Nasdaq proposes to 
modify Listing Rule IM-5900-7(d)(3)(A) to provide an Eligible Switch 
that has a market capitalization of $5 billion or more that lists on or 
after the effective date of this proposed rule change with one Annual 
Perception Study during the four-year period and both of the remaining 
Market Advisory Tools (i.e., Stock Surveillance and Global Targeting) 
for four years.\15\ 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.\16\
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    \14\ See Listing Rule IM-5900-7(d)(3). Nasdaq represents that 
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, the one-time development fees of 
approximately $26,500 to establish the services in the first year is 
waived. See Notice, supra note 3, at 87915 n.10; Listing Rule IM-
5900(7)(d)(3)(A).
    \15\ See Notice, supra note 3, at 87915. Specifically, Nasdaq 
proposes to add new Listing Rule IM-5900-7(d)(3)(B) and move 
existing Listing Rule IM-5900-7(d)(3)(B) to Listing Rule IM-5900-
7(d)(3)(C), with modifications.
    \16\ See id.
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    Finally, Nasdaq proposes to modify the definition of an ``Eligible 
Switch'' in Listing Rule IM-5900-7(a)(2) to include

[[Page 8958]]

a company (other than a company listed under Listing Rule IM-5101-2) 
switching its listing on or after the effective date of this proposed 
rule change to the Global or Global Select Market not only from the New 
York Stock Exchange (``NYSE''), as currently provided by Listing Rule 
IM-5900-7(a)(2), but also from any other national securities 
exchange.\17\ Similarly, Nasdaq proposes to modify this definition so 
that a company that has switched its listing from any national 
securities exchange on or after the effective date of this proposed 
rule change 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 will be an 
Eligible Switch and will be entitled to a Service Package, as described 
above.\18\ This is an expansion from the current definition of 
``Eligible Switch,'' which only includes companies that have switched 
their listings from NYSE.\19\
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    \17\ See id.
    \18\ See id.
    \19\ See Securities Exchange Act Release No. 90729 (December 18, 
2020), 85 FR 84434 (December 28, 2020) (SR-NASDAQ-2020-060) (adding 
a definition of Eligible Switch that includes any company that (i) 
switched its listing from NYSE to list on Nasdaq under IM-5101-2 
after the company publicly announced that it entered into a binding 
agreement for a business combination; and (ii) subsequently 
satisfies the conditions in IM-5101-2(b) and lists on the Nasdaq 
Global or Global Select Markets, by meeting all listing requirements 
of one of these market tiers, in conjunction with that business 
combination).
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III. Discussion and Commission Findings

    After careful review, the Commission finds that the proposed rule 
change is consistent with the requirements of section 6 of the Act.\20\ 
In particular, the Commission finds that the proposed rule change is 
consistent with sections 6(b)(4) and (5) of the Act,\21\ in that it is 
designed to provide for the equitable allocation of reasonable dues, 
fees, and other charges among Exchange members, issuers, and other 
persons using the Exchange's facilities, and, in general, to protect 
investors and the public interest, and is not designed to permit unfair 
discrimination between customers, issuers, brokers, or dealers. In 
addition, the Commission finds that the proposed rule change is 
consistent with section 6(b)(8) of the Act,\22\ in that it does not 
impose any burden on competition not necessary or appropriate in 
furtherance of the purposes of the Act.
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    \20\ 15 U.S.C. 78f. In approving this proposed rule change, the 
Commission has considered the proposed rule's impact on efficiency, 
competition, and capital formation. See 15 U.S.C. 78c(f).
    \21\ 15 U.S.C. 78f(b)(4) and (5).
    \22\ 15 U.S.C. 78f(b)(8).
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    Nasdaq is responding to competitive pressures in the market for 
listings in making this proposal. Nasdaq states that it faces 
competition in the market for listing services, and competes, in part, 
by offering valuable services to companies, including complimentary 
services.\23\ According to Nasdaq, the modified complimentary service 
packages will increase the value of such packages to the companies 
affected by this proposal because one Annual Perception Study will be 
provided in addition to four years of Stock Surveillance and/or Global 
Targeting, whereas currently some companies may choose the higher-
valued four years of Stock Surveillance and/or Global Targeting without 
benefiting from any Annual Perception Study.\24\ Nasdaq also states 
these changes will streamline the offering of services to new Eligible 
Switches and that new Eligible Switches with a market capitalization of 
$750 million or more, generally, would benefit from an Annual 
Perception Study that leverages extensive capital markets relationships 
and benchmark data, amplifying the companies' efforts to elevate their 
story, enhance stakeholder engagement, identify risk, and attract new 
capital.\25\
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    \23\ See Notice, supra note 3, at 87916. Nasdaq also states that 
all similarly situated companies are eligible for the same package 
of services. See id.
    \24\ See id. at 87915-16. Nasdaq represents that Stock 
Surveillance, Global Targeting, and Annual Perception Study have a 
retail value of approximately $56,500, $48,000, and $45,000 per 
year, respectively. Nasdaq states that, in describing the value of 
the services in the rule text, it 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. See id. at 
87916 n.11.
    \25\ See id. at 87916.
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    The Commission finds that it is consistent with the Act to modify 
the packages of complimentary services offered to Eligible Switches 
with a market capitalization of $750 million or more that list on or 
after the effective date of this proposed rule change as described 
herein. As Nasdaq states, the proposed modifications relate to how 
Market Advisory Tools are provided and would likely increase the value 
of complimentary services packages to the companies affected by this 
proposal.\26\ The Commission finds that this is reasonable and 
consistent with section 6(b)(5) of the Act.\27\ In addition, the 
Commission finds that the proposed rule change reflects the current 
competitive environment for exchange listings among national securities 
exchanges and is consistent with section 6(b)(8) of the Act.\28\
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    \26\ See id. at 87915-16.
    \27\ 15 U.S.C. 78f(b)(5).
    \28\ 15 U.S.C. 78f(b)(8).
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    As stated in the Commission's previous order approving Listing Rule 
IM-5900-7, section 6(b)(5) of the Act \29\ does not require that all 
issuers be treated the same; rather, the Act requires that the rules of 
an exchange not unfairly discriminate between issuers.\30\ The 
Commission has previously found that it is reasonable for Nasdaq to 
provide different services to tiers based on market capitalization 
since larger capitalized companies generally will need and use more 
services.\31\ In addition, describing the services available to listing 
companies and their associated values, as well as the length of time 
companies are entitled to receive such services, in the Exchange's 
rules will ensure that individual listed companies are not given 
specially negotiated packages or services to list or remain listed that 
would raise unfair discrimination issues under section 6(b)(5) of the 
Act.\32\ The Commission also previously found that the package of 
complimentary services offered to Eligible Switches is equitably 
allocated among issuers consistent with section 6(b)(4) of the Act and 
that describing the values of the services adds greater transparency to 
the Exchange's rules and to the fees applicable to such rules.\33\ 
Further, Nasdaq states it is not 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

[[Page 8959]]

greater future value to Nasdaq than will other issuers with lower 
market capitalizations by switching to its market.\34\ Based on the 
foregoing, the Commission finds that the proposal to modify the 
packages of complimentary services offered to Eligible Switches with a 
market capitalization of $750 million or more that list on or after the 
effective date of this proposed rule change does not unfairly 
discriminate among issuers and therefore is consistent with section 
6(b)(5) of the Act.\35\ For similar reasons, the Commission finds that, 
with the proposed changes to the provision of Market Advisory Tools, 
the packages of complimentary services are equitably allocated among 
issuers consistent with section 6(b)(4) of the Act.\36\
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    \29\ 15 U.S.C. 78f(b)(5).
    \30\ See Securities Exchange Act Release No. 65963 (December 15, 
2011), 76 FR 79262, 79266 (December 21, 2011) (approving SR-NASDAQ-
2011-122) (``2011 Approval Order''). The Commission concluded in the 
2011 Approval Order that ``Nasdaq has provided a sufficient basis 
for its different treatment of Eligible Switches and that this 
portion of Nasdaq's proposal meets the requirements of the Act in 
that it reflects competition between exchanges, with Nasdaq offering 
discounts for transfers of listings from a competing exchange.'' Id. 
See also 2023 Order, supra note 7; 2021 Order, supra note 7; 
Securities Exchange Act Release No. 79366 (November 21, 2016), 81 FR 
85663, 85665 (November 28, 2016) (approving SR-NASDAQ-2016-106) 
(``2016 Approval Order'').
    \31\ See 2011 Approval Order, supra note 30, at 79266.
    \32\ See also 2016 Approval Order, supra note 30, at 85665; 2011 
Approval Order, supra note 30, at 79266.
    \33\ See 2016 Approval Order, supra note 30, at 85665; 2011 
Approval Order, supra note 30, at 79266.
    \34\ See Notice, supra note 3, at 87916.
    \35\ 15 U.S.C. 78f(b)(5).
    \36\ 15 U.S.C. 78f(b)(4).
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    The Commission also finds that it is consistent with the Act for 
Nasdaq to modify the definition of an Eligible Switch in Listing Rule 
IM-5900-7(a)(2) to include companies switching their listing not only 
from the NYSE, as currently provided, but also from any other national 
securities exchange. In Nasdaq's 2011 proposal to limit Eligible 
Switches only to companies switching their listing from the NYSE, 
Nasdaq stated that those listings would bring greater future value to 
Nasdaq.\37\ In the instant filing, Nasdaq states that expanding the 
definition of Eligible Switch to including listings from any national 
securities exchange is designed to increase competition with other 
national securities exchanges.\38\ The Commission finds that this 
aspect of the proposed change also does not unfairly discriminate among 
issuers and reflects the current competitive environment for exchange 
listings among national securities exchanges and is therefore 
consistent with sections 6(b)(5) and 6(b)(8) of the Act.\39\ For 
similar reasons, the Commission finds that expanding the definition of 
``Eligible Switch'' as proposed would allow complimentary services 
packages to remain equitably allocated among issuers consistent with 
section 6(b)(4) of the Act.\40\
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    \37\ See 2011 Approval Order, supra note 30, at 79265.
    \38\ See Notice, supra note 3, at 87917.
    \39\ 15 U.S.C. 78f(b)(5) and (8).
    \40\ 15 U.S.C. 78f(b)(4).
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IV. Conclusion

    It is therefore ordered, pursuant to section 19(b)(2) of the 
Act,\41\ that the proposed rule change (SR-NASDAQ-2024-059) be, and 
hereby is, approved.
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    \41\ 15 U.S.C. 78s(b)(2).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\42\
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    \42\ 17 CFR 200.30-3(a)(12).
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Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2025-02150 Filed 2-3-25; 8:45 am]
BILLING CODE 8011-01-P
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