33558 Federal Register / Vol. 87, No. 106 / Thursday, June 2, 2022 / Notices 

123See Letter from Sam Ahn (Oct. 7, 2021). 

124See Coinbase Letter at 4. 

125As the Commission, for the reasons stated 

above, does not find the proposed rule change is 

consistent with the requirements of the Exchange 

Act and the rules and regulations thereunder, the 

Commission does not address here the Exchange’s 

proposal as it pertains the Trust’s investment 

objective to reflect the performance of bitcoin in 

U.S. dollars on a carbon neutral basis through 

MCO2 Tokens. 

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

2 17 CFR 240.19b–4. 

3See Securities Exchange Act Release No. 94592 

(April 4, 2022), 87 FR 20905 (April 8, 2022). 

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

5See Securities Exchange Act Release No. 94947 

(May 19, 2022), 87 FR 31915 (May 25, 2022). The 

Commission designated July 7, 2022, as the date by 

which it should approve, disapprove, or institute 

proceedings to determine whether to disapprove the 

proposed rule change. 

6Securities Exchange Act Release No. 94592 

(April 4, 2022), 84 FR 20905 (April 8, 2022) (the 

‘‘Initial Proposal’’). 

which the listing exchange had a 

surveillance-sharing agreement was the 

same market on which the underlying 

bitcoin assets (i.e., CME bitcoin futures 

contracts) traded; and thus in each such 

case, the CME’s surveillance can 

reasonably be relied upon to capture the 

effects on the CME bitcoin futures 

market caused by a person attempting to 

manipulate a futures ETP by 

manipulating the price of CME bitcoin 

futures contracts, whether that attempt 

is made by directly trading on the CME 

bitcoin futures market or indirectly by 

trading outside of the CME bitcoin 

futures market. However, as the 

Commission stated, this reasoning does 

not extend to spot bitcoin ETPs. Spot 

bitcoin markets are not currently 

‘‘regulated.’’ As explained in the 

Teucrium Order and the Valkyrie XBTO 

Order, if an exchange seeking to list a 

spot bitcoin ETP relies on the CME as 

the regulated market with which it has 

a comprehensive surveillance-sharing 

agreement, the assets held by the spot 

bitcoin ETP would not be traded on the 

CME; and because of this important 

difference, with respect to a spot bitcoin 

ETP, there would be reason to question 

whether a surveillance-sharing 

agreement with the CME would, in fact, 

assist in detecting and deterring 

fraudulent and manipulative 

misconduct affecting the price of the 

spot bitcoin held by that ETP. In any 

event, however, in the current proposal, 

NYSE Arca does not identify any market 

as a ‘‘market of significant size.’’ 

The Commission also received 

comment letters that addressed the 

general nature of bitcoin 123 and the 

maturation of custodial practices 

relating to the safekeeping of bitcoin.124

Ultimately, however, additional 

discussion of these topics is 

unnecessary, as they do not bear on the 

basis for the Commission’s decision to 

disapprove the proposal. 

IV. Conclusion 

For the reasons set forth above, the 

Commission does not find, pursuant to 

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

that the proposed rule change is 

consistent with the requirements of the 

Exchange Act and the rules and 

regulations thereunder applicable to a 

national securities exchange, and in 

particular, with Section 6(b)(5) of the 

Exchange Act.125

It is therefore ordered, pursuant to 

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

that proposed rule change SR– 

NYSEArca–2021–67 be, and hereby is, 

disapproved. 

By the Commission. 

J. Matthew DeLesDernier, 

Assistant Secretary. 

[FR Doc. 2022–11819 Filed 6–1–22; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–94989; File No. SR– 

NASDAQ–2022–027] 

Self-Regulatory Organizations; The 

Nasdaq Stock Market LLC; Notice of 

Filing of Proposed Rule Change, as 

Modified by Amendment No. 1, To 

Modify Certain Pricing Limitations for 

Companies Listing in Connection With 

a Direct Listing With a Capital Raise 

May 26, 2022. 

On March 21, 2022, 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 allow companies to modify 

certain pricing limitations for 

companies listing in connection with a 

Direct Listing with a Capital Raise in 

which the company will sell shares 

itself in the opening auction on the first 

day of trading on Nasdaq. The proposed 

rule change was published for comment 

in the Federal Register on April 8, 

2022.3 On May 19, 2022, pursuant to 

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

Commission designated a longer period 

within which to either approve or 

disapprove the proposed rule change, or 

institute proceedings to determine 

whether to disapprove the proposed 

rule change.5 The Commission has 

received no comments on the proposed 

rule change. 

On May 23, 2022, the Exchange filed 

Amendment No. 1 to the proposed rule 

change, which superseded the proposed 

rule change as originally filed. 

Amendment No. 1 to the proposed rule 

change is 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, 

as modified by Amendment No. 1, from 

interested persons. 

I. Self-Regulatory Organization’s 

Statement of the Terms of Substance of 

the Proposed Rule Change 

The Exchange proposes to modify 

certain pricing limitations for 

companies listing in connection with a 

Direct Listing with a Capital Raise in 

which the company will sell shares 

itself in the opening auction on the first 

day of trading on Nasdaq. This 

Amendment No. 1 supersedes the 

original filing in its entirety. 

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 

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 is filing this amendment to 

SR–NASDAQ–2022–027 6 in order to: (i) 

Clarify Nasdaq’s view of the 

applicability of Securities Act Rule 

430A and mechanics of complying with 

the disclosures required under federal 

securities laws by a company listing in 

connection with a Direct Listing with a 

Capital Raise in circumstances where 

the actual price calculated by the Cross 

is outside of the price range established 

by the issuer in its effective registration 

statement; (ii) specify that if the 

company’s certification to Nasdaq that 


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7A Direct Listing with a Capital Raise includes 

situations where either: (i) Only the company itself 

is selling shares in the opening auction on the first 

day of trading; or (ii) the company is selling shares 

and selling shareholders may also sell shares in 

such opening auction. 

8See Securities Exchange Act Release No. 91947 

(May 19, 2021), 86 FR 28169 (May 25, 2021) (the 

‘‘Approval Order’’). 

9On February 24, 2022, the Commission issued 

an order disapproving a similar proposal by 

Nasdaq. Securities Exchange Act Release No. 94311 

(February 24, 2022), 87 FR 11780 (March 2, 2022) 

(the ‘‘Disapproval Order’’). Nasdaq believes that this 

proposal addresses the issues raised by the 

Commission in the Disapproval Order. 

10References in this proposal to the price range 

established by the issuer in its effective registration 

statement are to the price range disclosed in the 

prospectus in such registration statement. 

Separately, as explained in more details below, 

Nasdaq proposes to prescribe that the 20% 

threshold below the lowest price in the price range 

will be calculated based on the maximum offering 

price set forth in the registration fee table, 

consistent with the Instruction to paragraph (a) of 

Securities Act Rule 430A. 

11See Listing Rule IM–5315–2. 

12See Rule 4120(c)(9)(B). 

13Nasdaq will postpone and reschedule the 

offering only if either or both such conditions are 

not met. 

14See Approval Order, 86 FR at 28177. 

15See Approval Order, footnote 91. 

the company does not expect that 

offering price above the price range 

would materially change the company’s 

previous disclosure in its effective 

registration statement includes an 

upside limit, Nasdaq will not execute 

the cross if it results in the offering price 

above such limit; and (iii) make minor 

technical changes to improve the 

structure, clarity and readability of the 

proposed rules. This amendment 

supersedes and replaces the Initial 

Proposal in its entirety. 

In 2021, Nasdaq adopted Listing Rule 

IM–5315–2 to permit a company to list 

in connection with a primary offering in 

which the company will sell shares 

itself in the opening auction on the first 

day of trading on the Exchange (a 

‘‘Direct Listing with a Capital Raise’’); 7

created a new order type (the ‘‘CDL 

Order’’), which is used during the 

Nasdaq Halt Cross (the ‘‘Cross’’) for the 

shares offered by the company in a 

Direct Listing with a Capital Raise; and 

established requirements for 

disseminating information, establishing 

the opening price and initiating trading 

through the Cross in a Direct Listing 

with a Capital Raise.8 For a Direct 

Listing with a Capital Raise, Nasdaq 

rules currently require that the actual 

price calculated by the Cross be at or 

above the lowest price and at or below 

the highest price of the price range 

established by the issuer in its effective 

registration statement (the ‘‘Pricing 

Range Limitation’’). 

Nasdaq now proposes to modify the 

Pricing Range Limitation 9 such that, 

provided other requirements are 

satisfied, a Direct Listing with a Capital 

Raise can also be executed in the Cross 

at a price that is at or above the price 

that is as low as 20% below the lowest 

price in the price range established by 

the issuer in its effective registration 

statement; 10 or at a price above the 

highest price of such price range. 

Specifically, to execute at a price 

outside of the price range, the 

company’s registration statement must 

contain a sensitivity analysis explaining 

how the company’s plans would change 

if the actual proceeds from the offering 

were less than or exceeded the amount 

assumed in such price range and the 

company has publicly disclosed and 

certified to Nasdaq that the company 

does not expect that such price would 

materially change the company’s 

previous disclosure in its effective 

registration statement. Nasdaq also 

proposes to make related conforming 

changes. 

Current Direct Listing With a Capital 

Raise Requirements 

Currently, a Direct Listing with a 

Capital Raise must begin trading on 

Nasdaq following the initial pricing 

through the Cross, which is described in 

Rules 4120(c)(9) and 4753.11

Currently, in addition to pricing 

within the Pricing Range Limitation,12

Rule 4120(c)(9) requires that in the case 

of a Direct Listing with a Capital Raise, 

for purposes of releasing securities for 

trading on the first day of listing, 

Nasdaq, in consultation with the 

financial advisor to the issuer, will 

make the determination of whether the 

security is ready to trade. In addition, 

under Rule 4120(c)(9)(B) Nasdaq will 

release the security for trading only if all 

market orders will be executed in the 

Cross. If there is insufficient buy interest 

to satisfy the CDL Order and all other 

market orders, or if the Pricing Range 

Limitation is not satisfied, the Cross 

would not proceed and such security 

would not begin trading. In such event, 

because the Cross cannot be conducted, 

the Exchange would postpone and 

reschedule the offering and notify 

market participants via a Trader Update 

that the Direct Listing with a Capital 

Raise scheduled for that date has been 

cancelled and any orders for that 

security that have been entered on the 

Exchange would be cancelled back to 

the entering firms.13

Proposed Change to Rule 4120(c)(9) 

While many companies are interested 

in alternatives to traditional IPOs, based 

on conversations with companies and 

their advisors Nasdaq believes that there 

may be a reluctance to use the existing 

Direct Listing with a Capital Raise rules 

because of concerns about the Pricing 

Range Limitation. 

One potential benefit of a Direct 

Listing with a Capital Raise as an 

alternative to a traditional IPO is that it 

could maximize the chances of more 

efficient price discovery of the initial 

public sale of securities for issuers and 

investors. Unlike an IPO where the 

offering price is informed by 

underwriter engagement with potential 

investors to gauge interest in the 

offering, but ultimately decided through 

negotiations between the issuer and the 

underwriters for the offering, in a Direct 

Listing with a Capital Raise the initial 

sale price is determined based on 

market interest and the matching of buy 

and sell orders in an auction open to all 

market participants. In that regard, in 

the Approval Order the Commission 

stated that: 

The opening auction in a Direct Listing 

with a Capital Raise provides for a different 

price discovery method for IPOs which may 

reduce the spread between the IPO price and 

subsequent market trades, a potential benefit 

to existing and potential investors. In this 

way, the proposed rule change may result in 

additional investment opportunities while 

providing companies more options for 

becoming publicly traded.14

A successful initial public offering of 

shares requires sufficient investor 

interest. If an offering cannot be 

completed due to lack of investor 

interest, there is likely to be a 

substantial amount of negative publicity 

for the company and the offering may be 

delayed or cancelled. The Pricing Range 

Limitation imposed on a Direct Listing 

with a Capital Raise (but not on a 

traditional IPO) increases the 

probability of such a failed offering 

because the offering cannot proceed 

without some delay not only for the lack 

of investor interest, but also if investor 

interest is greater than the company and 

its advisors anticipated. In the Approval 

Order, the Commission noted a frequent 

academic observation of traditional firm 

commitment underwritten offerings that 

the IPO price, established through 

negotiation between the underwriters 

and the issuer, is often lower than the 

price that the issuer could have 

obtained for the securities, based on a 

comparison of the IPO price to the 

closing price on the first day of 

trading.15 Nasdaq believes that the price 

range in a company’s effective 

registration statement for a Direct 

Listing with a Capital Raise would 

similarly be determined by the company 

and its advisors and, therefore, there 


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16 In the prior proposal, Nasdaq proposed 

different requirements based on whether the Cross 

would occur at a price that was within 20% of the 

price range. See Disapproval Order. Nasdaq is 

eliminating this proposed distinction and is 

proposing herein to treat all prices outside of the 

price range the same. 

17Securities Act Rule 457 permits issuers to 

register securities either by specifying the quantity 

of shares registered, pursuant to Rule 457(a), or the 

proposed maximum aggregate offering amount. 

Nasdaq proposes to require that companies selling 

shares through a Direct Listing with a Capital Raise 

will register securities by specifying the quantity of 

shares registered and not a maximum offering 

amount. See also Compliance & Disclosure 

Interpretation of Securities Act Rules #227.03 at 

https://www.sec.gov/divisions/corpfin/guidance/ 

securitiesactrules-interps.htm. 

18The price range in the preliminary prospectus 

included in the effective registration statement must 

be a bona fide price range in accordance with Item 

501(b)(3) of Regulation S–K. 

19Sensitivity analysis disclosure may include but 

is not limited to: Use of proceeds; balance sheet and 

capitalization; and the company’s liquidity position 

after the offering. An example of this disclosure 

could be: We will apply the net proceeds from this 

offering first to repay all borrowings under our 

credit facility and then, to the extent of any 

proceeds remaining, to general corporate purposes. 

20Nasdaq believes that applying additional 

protections related to the disclosure requirements 

in the registration statement and the certifications 

to Nasdaq, as described above, to all instances 

where the Cross is executed outside the disclosed 

price range addresses an issue the Commission 

raised in the Disapproval Order. See footnote 5 

above. For brevity, proposed rules define the ‘‘Price 

Range’’ as the price range established by the issuer 

in its preliminary prospectus included in the 

effective registration statement, including the 

maximum and the minimum prices of such range; 

and ‘‘DLCR Price Range’’ as the price range that 

includes any price that is below the Price Range 

and at or above the price that is 20% below the 

lowest price of the Price Range, or is above the 

highest price of the Price Range. If the company’s 

certification includes an upside limit, the DLCR 

Price Range is as defined in the preceding sentence, 

but subject to the upper limit provided by the 

Company in its certification. 

21Securities Exchange Act Release No. 93119 

(September 24, 2021), 86 FR 54262 (September 30, 

2021). 

may be instances of offerings where the 

price determined by the Nasdaq opening 

auction will exceed the highest price of 

the price range in the company’s 

effective registration statement. 

As explained above, under the 

existing rule a security subject to a 

Direct Listing with a Capital Raise 

cannot be released for trading by Nasdaq 

if the actual price calculated by the 

Cross is above the highest price of the 

price range established by the issuer in 

its effective registration statement. In 

this case, Nasdaq would have to cancel 

or postpone the offering until the 

company amends its effective 

registration statement. At a minimum, 

such a delay exposes the company to 

market risk of changing investor 

sentiment in the event of an adverse 

market event. In addition, as explained 

above, the determination of the public 

offering price of a traditional IPO is not 

subject to limitations similar to the 

Pricing Range Limitation for a Direct 

Listing with a Capital Raise, which, in 

Nasdaq’s view, could make companies 

reluctant to use this alternative method 

of going public despite its expected 

potential benefits. This reluctance could 

result in denying investors and 

companies the benefits of this different 

price discovery method. 

Accordingly, Nasdaq proposes to 

modify the Pricing Range Limitation 

such that in the case of the Direct 

Listing with a Capital Raise, a security 

could be released for trading by Nasdaq 

if the actual price at which the Cross 

would occur is as much as 20% below 

the lowest price of the price range 

established by the issuer in its effective 

registration statement. In addition, a 

security could be released for trading by 

Nasdaq if the actual price at which the 

Cross would occur was above the 

highest price in the price range 

established by the issuer in its effective 

registration statement.16 In such cases 

(whether lower or higher than the price 

range) the company will be required to 

specify the quantity of shares registered 

in its registration statement, as 

permitted by Securities Act Rule 457,17

and that registration statement will be 

required to contain a sensitivity analysis 

(the company must also certify to 

Nasdaq in that regard) explaining how 

the company’s plans would change if 

the actual proceeds from the offering are 

less than or exceed the amount assumed 

in the price range established by the 

issuer in its effective registration 

statement.18 In addition, the company 

will be required to publicly disclose and 

certify to Nasdaq prior to beginning of 

the Display Only Period that the 

company does not expect that such 

offering price would materially change 

the company’s previous disclosure in its 

effective registration statement. If the 

company’s certification submitted to 

Nasdaq in that regard includes an 

upside limit, as described below, 

Nasdaq will not execute the Cross if it 

results in the offering price above such 

limit. The goal of these requirements is 

to have disclosure that allows investors 

to see how changes in share price ripple 

through critical elements of the 

disclosure.19

Nasdaq believes that this approach is 

consistent with SEC Rule 430A and 

question 227.03 of the SEC Staff’s 

Compliance and Disclosure 

Interpretations, which generally allow a 

company to price a public offering 20% 

outside of the disclosed price range 

without regard to the materiality of the 

changes to the disclosure contained in 

the company’s registration statement. 

Nasdaq believes such guidance also 

allows deviation above the price range 

beyond the 20% threshold if such 

change or deviation does not materially 

change the previous disclosure. 

Accordingly, Nasdaq believes that a 

company listing in connection with a 

Direct Listing with a Capital Raise can 

specify the quantity of shares registered, 

as permitted by Securities Act Rule 457, 

and, when an auction prices outside of 

the disclosed price range, use a Rule 

424(b) prospectus, rather than a posteffective amendment, when either (i) the 

20% threshold noted in the instructions 

to Rule 430A is not exceeded, regardless 

of the materiality or non-materiality of 

resulting changes to the registration 

statement disclosure that would be 

contained in the Rule 424(b) prospectus, 

or (ii) when there is a deviation above 

the price range beyond the 20% 

threshold noted in the instructions to 

Rule 430A if such deviation would not 

materially change the previous 

disclosure, in each case assuming the 

number of shares issued is not increased 

from the number of shares disclosed in 

the prospectus. For purposes of this 

rule, the 20% threshold will be 

calculated based on the maximum 

offering price set forth in the registration 

fee table, consistent with the Instruction 

to paragraph (a) of Securities Act Rule 

430A.20

Nasdaq notes that the Commission 

previously stated that while Securities 

Act Rule 430A permits companies to 

omit specified price-related information 

from the prospectus included in the 

registration statement at the time of 

effectiveness, and later file the omitted 

information with the Commission as 

specified in the rule, it neither prohibits 

a company from conducting a registered 

offering at prices beyond those that 

would permit a company to provide 

pricing information through a Securities 

Act Rule 424(b) prospectus supplement 

nor absolves any company relying on 

the rule from any liability for potentially 

misleading disclosure under the federal 

securities laws.21 Accordingly, the 

burden of complying with the 

disclosures required under federal 

securities laws, including providing any 

disclosure necessary to avoid any 

material misstatements or omissions, 

remains with the issuer. In that regard, 

Nasdaq believes that the Post-Pricing 

Period, applicable in circumstances 

where the actual price calculated by the 

Cross is outside of the price range 

established by the issuer in its effective 

registration statement, as described 

below, provides the Company an 

opportunity, prior to the completion of 


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22For the avoidance of doubt, while the Price 

Volatility Constraint cannot initially be satisfied 

sooner than ten minutes after the beginning of the 

Pre-Launch Period, if it is subsequently reset, the 

Price Volatility Constraint can be satisfied again in 

less than ten minutes because it would look back 

at prior pricing during the Pre-Launch Period 

(including pricing prior to the reset) to determine 

if the Current Reference Price has deviated by 10% 

or more from any Current Reference Price within 

the previous 10 minutes. 

23 If the company’s certification submitted to 

Nasdaq pursuant to proposed Listing Rule 

4120(c)(9)(B)(vii)d.2. includes an upside limit and 

the actual price calculated by the Cross exceeds 

such limit, Nasdaq will postpone and reschedule 

the offering. 

24Nasdaq believes that the introduction, as 

described above, of the 10% Price Collar, the Near 

Execution Price, the Near Execution Time, the 30- 

minute reset and the five minute prohibition on 

executing the Cross after the Price Volatility 

Constraint has been satisfied addresses concerns the 

Commission raised in the Disapproval Order. See 

footnote 5 above. Specifically, in the Disapproval 

Order, the Commission stated that, as previously 

proposed, ‘‘investors could be misled that the 

opening cross ‘nears execution’ and that the 

disseminated Current Reference Price will likely be 

close to the opening auction price when, in fact, the 

auction may not occur for a considerable time and 

the opening auction price may differ substantially.’’ 

As revised, the opening auction price must remain 

within 10% of the price publicly announced as the 

Near Execution Price for the auction to occur and 

investors will have enhanced disclosure about the 

possibility that the Price Volatility Constraint could 

be reset. 

the offering, to provide any necessary 

additional disclosures that are 

dependent on the price of the offering, 

if any; and/or determine and confirm to 

Nasdaq that no additional disclosures 

are required under federal securities 

laws based on the actual price 

calculated by the Cross. 

Nasdaq also proposes to adopt a new 

Price Volatility Constraint and 

disseminate information about whether 

the Price Volatility Constraint has been 

satisfied, which will indicate whether 

the security may be ready to trade. Prior 

to releasing a security for trading, 

Nasdaq allows a ‘‘Pre-Launch Period’’ of 

indeterminate length, during which 

price discovery takes place. The Price 

Volatility Constraint requires that the 

Current Reference Price has not 

deviated by 10% or more from any 

Current Reference Price during the PreLaunch Period within the previous 10 

minutes. The Pre-Launch Period will 

continue until at least five minutes after 

the Price Volatility Constraint has been 

satisfied. Nasdaq will also introduce the 

Near Execution Price which is the 

Current Reference Price at the time the 

Price Volatility Constraint has been 

satisfied; and set the Near Execution 

Time as such time. This change will 

provide investors with notice that the 

Cross nears execution and allows a 

period of at least five minutes for 

investors to modify their orders, if 

needed, based on the Near Execution 

Price, prior to the execution of the Cross 

and the pricing of the offering. Further, 

to assure that the Near Execution Price 

is a meaningful benchmark for 

investors, and that the offering price 

does not deviate substantially from the 

Near Execution Price, Nasdaq proposes 

to require, in addition to other the 

existing conditions stated in proposed 

Rule 4120(c)(9)(B)(vii), that the Cross 

may execute only if the actual price 

calculated by the Cross is no more than 

10% below or above the Near Execution 

Price (the ‘‘10% Price Collar’’). 

Nasdaq notes that imbalance between 

the buy and sell orders could sometimes 

cause the Current Reference Price to fall 

outside the 10% Price Collar after the 

Price Volatility Constraint has been 

satisfied. Such price fluctuations could 

be temporary, and the Current Reference 

Price may return to and remain within 

the 10% Price Collar. The price 

fluctuation could also be lasting such 

that the Current Reference Price remains 

outside the 10% Price Collar. Given 

this, Nasdaq proposes to assess the 

Current Reference Price vis-a`-vis the 

10% Price Collar 30 minutes after the 

Near Execution Time. If at that time the 

Current Reference Price is outside the 

10% Price Collar, all requirements of 

the Pre-Launch Period shall reset and 

must be satisfied again.22 Once the Price 

Volatility Constraint has been satisfied 

anew, the Current Reference Price at 

such time will become the updated Near 

Execution Price and such time will 

become the updated Near Execution 

Time. This process will continue 

iteratively, if new resets are triggered, 

until the Cross is executed, or the 

offering is postponed. 

If the Current Reference Price 30 

minutes after the Near Execution Time 

is within the 10% Price Collar, price 

formation may continue without 

limitations until Nasdaq, in consultation 

with the financial advisor to the issuer, 

makes the determination that the 

security is ready to trade (and certain 

existing conditions restated in proposed 

Rule 4120(c)(9)(B)(vii) are met). 

However, if at any time 30 minutes after 

the Near Execution Time the Current 

Reference Price is outside the 10% Price 

Collar, all requirements of the PreLaunch Period shall reset and must be 

satisfied again, in the same manner as 

described in the immediately preceding 

paragraph. 

Given that, as proposed, there may be 

a Direct Listing with a Capital Raise that 

could price outside the price range of 

the company’s effective registration 

statement and that there may be no 

upside limit above which the Cross 

could not proceed,23 Nasdaq proposes 

to enhance price discovery transparency 

by providing readily available, real time 

pricing information to investors. To that 

end Nasdaq will disseminate, free of 

charge, the Current Reference Price on 

a public website, such as Nasdaq.com, 

during the Pre-Launch Period and 

indicate whether the Current Reference 

Price is within the price range 

established by the issuer in its effective 

registration statement. Once the Price 

Volatility Constraint has been satisfied, 

Nasdaq will also disseminate the Near 

Execution Price, the Near Execution 

Time and the 30-minute countdown 

from such time. The disclosure will 

indicate that the Near Execution Price 

and the Near Execution Time may be 

reset, as described above, if the security 

is not released for trading within 30 

minutes of the Near Execution Time and 

the Current Reference Price at such time 

(or at any time thereafter) is more than 

10% below or more than 10% above the 

Near Execution Price. 

In this way, investors interested in 

participating in the opening auction will 

be informed when volatility has settled 

to a range that will allow the open to 

take place and they will be informed of 

the price range at which the auction 

would take place. If the price moves 

outside, and remains outside this range, 

30 minutes after the original range was 

set they will be informed of the new 

range and will have at least five minutes 

to reevaluate their investment 

decision.24

Nasdaq also proposes to prohibit 

market orders (other than by the 

Company through its CDL Order) from 

the opening of a Direct Listing with a 

Capital Raise. This will protect investors 

by assuring that investors only purchase 

shares at a price at or better than the 

price they affirmatively set, after having 

the opportunity to review the 

Company’s effective registration 

statement including the sensitivity 

analysis describing how the Company 

will use any additional proceeds raised. 

Accordingly, an investor participating 

in a Direct Listing with a Capital Raise 

will make their initial investment 

decision prior to the launch of the 

offering by setting the price in their 

limit order above which they will not 

buy shares in the offering, but will also 

have an opportunity to reevaluate their 

initial investment decision during the 

price formation process of the PreLaunch Period based on the Near 

Execution Price. Under the proposed 

rule, such investor will have at least five 

minutes once the Near Execution Price 

has been set and before the offering may 

be priced by Nasdaq to modify their 

order, if needed. As described above, all 

relevant price formation information 


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25The information circular is an industry wide 

free service provided by Nasdaq. 

26See Listing Rules 5005(a)(23) and 5005(a)(45). 

27See Listing Rules 5315(f)(1), (e)(1) and (2), 

respectively. Rule 5315(f)(1) requires a security to 

have: (A) At least 550 total holders and an average 

monthly trading volume over the prior 12 months 

of at least 1,100,000 shares per month; or (B) at least 

2,200 total holders; or (C) a minimum of 450 round 

lot holders and at least 50% of such round lot 

holders must each hold unrestricted securities with 

a market value of at least $2,500. 

will be disseminated by Nasdaq on a 

public website in real time. 

In addition, to protect investors and 

assure that they are informed about the 

attributes of a Direct Listing with a 

Capital Raise, Nasdaq proposes to 

impose specific requirements on Nasdaq 

members with respect to a Direct Listing 

with a Capital Raise. These rules will 

require members to provide to a 

customer, before that customer places 

an order to be executed in the Cross, a 

notice describing the mechanics of 

pricing a security subject to a Direct 

Listing with a Capital Raise in the Cross, 

including information regarding the 

location of the public website where 

Nasdaq will disseminate the Current 

Reference Price. 

To assure that members have the 

necessary information to be provided to 

their customers, Nasdaq proposes to 

distribute, at least one business day 

prior to the commencement of trading of 

a security listing in connection with a 

Direct Listing with a Capital Raise, an 

information circular to its members that 

describes any special characteristics of 

the offering, and Nasdaq’s rules that 

apply to the initial pricing through the 

mechanism outlined in Nasdaq Rule 

4120(c)(9)(B) and Nasdaq Rule 4753 for 

the opening auction, including 

information about the notice they must 

provide customers and other Nasdaq 

requirements that: 

• Members use reasonable diligence 

in regard to the opening and 

maintenance of every account, to know 

(and retain) the essential facts 

concerning every customer and 

concerning the authority of each person 

acting on behalf of such customer; and 

• members in recommending 

transactions for a security subject to a 

Direct Listing with a Capital Raise have 

a reasonable basis to believe that: (i) The 

recommendation is suitable for a 

customer given reasonable inquiry 

concerning the customer’s investment 

objectives, financial situation, needs, 

and any other information known by 

such members, and (ii) the customer can 

evaluate the special characteristics, and 

is able to bear the financial risks, of an 

investment in such security. 

These member requirements are 

intended to remind members of their 

obligations to ‘‘know their customers,’’ 

increase transparency of the pricing 

mechanisms of a Direct Listing with a 

Capital Raise, and help assure that 

investors have sufficient price discovery 

information. 

In each instance of a Direct Listing 

with a Capital Raise, Nasdaq’s 

information circular 25 will inform the 

market participants that the auction 

could price up to 20% below the lowest 

price of the price range in the 

company’s effective registration 

statement and specify what that price is. 

Nasdaq will also indicate in such 

circular whether or not there is an 

upside limit above which the Cross 

could not proceed, based on the 

company’s certification, as described 

above. Nasdaq will also remind the 

market participants that Nasdaq 

prohibits market orders (other than by 

the Company) from the opening of a 

Direct Listing with a Capital Raise. 

To assure that the issuer has the 

ability, prior to the completion of the 

offering, to provide any necessary 

additional disclosures that are 

dependent on the price of the offering, 

Nasdaq proposes to introduce to the 

operation of the Cross a brief PostPricing Period, in circumstances where 

the actual price calculated by the Cross 

is outside of the price range established 

by the issuer in its effective registration 

statement. Specifically, in such 

circumstances, Nasdaq will initiate a 

Post-Pricing Period following the 

calculation of the actual price. During 

the Post-Pricing Period the issuer must 

confirm to Nasdaq that no additional 

disclosures are required under federal 

securities laws based on the actual price 

calculated by the Cross. During the PostPricing Period no additional orders for 

the security may be entered in the Cross 

and no existing orders in the Cross may 

be modified. The security shall be 

released for trading immediately 

following the Post-Pricing Period. If the 

Company cannot provide the required 

confirmation, then Nasdaq will 

postpone and reschedule the offering. 

Proposed Conforming Changes to 

Listing Rule IM–5315–2 

Listing Rule IM–5315–2 allows a 

company that has not previously had its 

common equity securities registered 

under the Act to list its common equity 

securities on the Nasdaq Global Select 

Market at the time of effectiveness of a 

registration statement pursuant to which 

the company itself will sell shares in the 

opening auction on the first day of 

trading on the Exchange. 

Listing Rule IM–5315–2 provides that 

in determining whether a company 

listing in connection with a Direct 

Listing with a Capital Raise satisfies the 

Market Value of Unrestricted Publicly 

Held Shares 26 for initial listing on the 

Nasdaq Global Select Market, the 

Exchange will deem such company to 

have met the applicable requirement if 

the amount of the company’s 

Unrestricted Publicly Held Shares 

before the offering along with the 

market value of the shares to be sold by 

the company in the Exchange’s opening 

auction in the Direct Listing with a 

Capital Raise is at least $110 million (or 

$100 million, if the company has 

stockholders’ equity of at least $110 

million). 

Listing Rule IM–5315–2 further 

provides that, for this purpose, the 

Market Value of Unrestricted Publicly 

Held Shares will be calculated using a 

price per share equal to the lowest price 

of the price range disclosed by the 

issuer in its effective registration 

statement. 

Because Nasdaq proposes to allow the 

opening auction to price up to 20% 

below the lowest price of the price range 

established by the issuer in its effective 

registration statement, Nasdaq proposes 

to make a conforming change to Listing 

Rule IM–5315–2 to provide that the 

price used to determine such company’s 

compliance with the Market Value of 

Unrestricted Publicly Held Shares is the 

price per share equal to the price that is 

20% below the lowest price of the price 

range disclosed by the issuer in its 

effective registration statement. Nasdaq 

will determine that the company has 

met the applicable bid price and market 

capitalization requirements based on the 

same per share price. This price is the 

minimum price at which the company 

could sell its shares in the Direct Listing 

with a Capital Raise transaction and so 

assures that the company will satisfy 

these requirements at any price at which 

the auction successfully executes. 

Any company listing in connection 

with a Direct Listing with a Capital 

Raise would continue to be subject to, 

and required to meet, all other 

applicable initial listing requirements, 

including the requirements to have the 

applicable number of shareholders and 

at least 1,250,000 Unrestricted Publicly 

Held Shares outstanding at the time of 

initial listing, and the requirement to 

have a price per share of at least $4.00 

at the time of initial listing.27

Proposed Conforming Changes to Rules 

4753(a)(3)(A) and 4753(b)(2) 

Nasdaq proposes to amend Rules 

4753(a)(3)(A) and 4753(b)(2) to conform 


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28To illustrate: The bottom of the range is $10. 

More than one price exists within the range under 

the previous set of tie-breakers such that both 

$10.15 and $10.25, satisfy all other requirements. 

The operation of the fourth tie-breaker will result 

in the auction price of $10.15 because it is the price 

that is closest to $10. 

29Note that using the price that is 20% below the 

lowest price of the price range disclosed by the 

issuer in its effective registration statement as a tiebreaker (rather than the price representing the 

bottom of the range) does not change the outcome 

in the example in footnote 25 above because $10.15 

is the price that is closest to either. 

30This function is provided by the underwriter in 

an IPO and by a Financial Advisor in a Direct 

Listing. The Commission previously approved 

Nasdaq performing this function. See Approval 

Order. 

31 15 U.S.C. 78f(b). 

32 15 U.S.C. 78f(b)(5). 

33 In a recent speech, SEC Chair Gary Gensler 

emphasized that an overarching principle of 

regulation is that like activities ought to be treated 

alike. See https://www.sec.gov/news/speech/ 

gensler-healthy-markets-association-conference120921. 

the requirements for disseminating 

information and establishing the 

opening price through the Cross in a 

Direct Listing with a Capital Raise to the 

proposed amendment to allow the 

opening auction to price as much as 

20% below the lowest price of the price 

range established by the issuer in its 

effective registration statement. 

Specifically, Nasdaq proposes 

changes to Rules 4753(a)(3)(A) and 

4753(b)(2) to make adjustments to the 

calculation of the Current Reference 

Price, which is disseminated in the 

Nasdaq Order Imbalance Indicator, in 

the case of a Direct Listing with a 

Capital Raise and for how the price at 

which the Cross will execute. These 

rules currently provide that where there 

are multiple prices that would satisfy 

the conditions for determining a price, 

the fourth tie-breaker for a Direct Listing 

with a Capital Raise is the price that is 

closest to the lowest price of the price 

range disclosed by the issuer in its 

effective registration statement.28

To conform these rules to the 

modification of the Pricing Range 

Limitation change, as described above, 

Nasdaq proposes to modify the fourth 

tie-breaker for a Direct Listing with a 

Capital Raise, to use the price closest to 

the price that is 20% below the lowest 

price of the price range disclosed by the 

issuer in its effective registration 

statement.29

Lastly, Nasdaq proposes to clarify 

several provisions of the existing rules 

by restating the provisions of Rules 

4120(c)(8)(A) and (c)(9)(A) in a clear and 

direct manner without substantively 

changing them. Specifically, Nasdaq 

proposes to clarify the mechanics of the 

Cross by specifying that Nasdaq will 

initiate a 10-minute Display Only Period 

only after the CDL Order had been 

entered. This clarification simply states 

what is already implied by the rule 

because the Cross and the offering may 

not proceed without the company’s 

order to sell the securities in a Direct 

Listing with a Capital Raise. Similarly, 

Nasdaq proposes to clarify without 

changing the existing rule that Nasdaq 

shall select price bands for purposes of 

applying the price validation test in the 

Cross in connection with a Direct 

Listing with a Capital Raise. Under the 

price validation test, the System 

compares the Expected Price with the 

actual price calculated by the Cross to 

ascertain that the difference, if any, is 

within the price bands. Nasdaq shall 

select an upper price band and a lower 

price band. The default for an upper and 

a lower price band is set at zero. If a 

security does not pass the price 

validation test, Nasdaq may, but is not 

required to, select different price bands 

before recommencing the process to 

release the security for trading.30

Nasdaq also proposes to clarify that the 

‘‘actual price,’’ as the term is used in the 

rule, is the Current Reference Price at 

the time the system applies the price 

bands test. 

2. Statutory Basis 

The Exchange believes that its 

proposal is consistent with Section 6(b) 

of the Act,31 in general, and furthers the 

objectives of Section 6(b)(5) of the Act,32

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. 

Nasdaq believes that the proposed 

amendment to modify the Pricing Range 

Limitation is consistent with the 

protection of investors because this 

approach is similar to the pricing of an 

IPO where an issuer is permitted to 

price outside of the price range 

disclosed by the issuer in its effective 

registration statement in accordance 

with the SEC’s Staff guidance, as 

described above.33 Specifically, Nasdaq 

believes that a company listing in 

connection with a Direct Listing with a 

Capital Raise can specify the quantity of 

shares registered, as permitted by 

Securities Act Rule 457, and, when an 

auction prices outside of the disclosed 

price range, use a Rule 424(b) 

prospectus, rather than a post-effective 

amendment, when either (i) the 20% 

threshold noted in the instructions to 

Rule 430A is not exceeded, regardless of 

the materiality or non-materiality of 

resulting changes to the registration 

statement disclosure that would be 

contained in the Rule 424(b) prospectus, 

or (ii) when there is a deviation above 

the price range beyond the 20% 

threshold noted in the instructions to 

Rule 430A if such deviation would not 

materially change the previous 

disclosure, in each case assuming the 

number of shares issued is not increased 

from the number of shares disclosed in 

the prospectus. As a result, Nasdaq will 

allow the Cross to take place as low as 

20% below the lowest price of the price 

range disclosed by the issuer in its 

effective registration statement, but no 

lower, and so this is the minimum price 

at which the company could be listed. 

In addition, to better inform investors 

and market participants, Nasdaq will 

issue an industry wide circular to 

inform the participants that the auction 

could price up to 20% below the lowest 

price of the price range in the 

company’s effective registration 

statement and specify what that price is. 

Nasdaq will also indicate in such 

circular whether or not there is an 

upside limit above which the Cross 

could not proceed, based on the 

company’s certification, as described 

above. Nasdaq will also remind the 

market participants that Nasdaq 

prohibits market orders (other than by 

the Company) from the opening of a 

Direct Listing with a Capital Raise. 

To assure that the issuer has the 

ability, prior to the completion of the 

offering, to provide any necessary 

additional disclosures that are 

dependent on the price of the offering, 

Nasdaq proposes to introduce to the 

operation of the Cross a brief PostPricing Period, in circumstances where 

the actual price calculated by the Cross 

is at or above the price that is 20% 

below the lowest price and below the 

lowest price of the price range 

established by the issuer in its effective 

registration statement; or is above the 

highest price of the price range 

established by the issuer in its effective 

registration statement (but below the 

upside limit in the company’s 

certification submitted to Nasdaq 

pursuant to proposed Listing Rule 

4120(c)(9)(B)(vii)d.2., if any). 

Specifically, in such circumstances, 

Nasdaq will initiate a Post-Pricing 

Period following the calculation of the 

actual price. During the Post-Pricing 

Period the issuer must confirm to 

Nasdaq that no additional disclosures 

are required under federal securities 

laws based on the actual price 

calculated by the Cross, with such 

confirmation ending the Post-Pricing 

Period. During the Post-Pricing Period 

no additional orders for the security 


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33564 Federal Register / Vol. 87, No. 106 / Thursday, June 2, 2022 / Notices 

may be entered in the Cross and no 

existing orders in the Cross may be 

modified. The security shall be released 

for trading immediately following the 

Post-Pricing Period. If the Company 

cannot provide the required 

confirmation, then Nasdaq will 

postpone and reschedule the offering. 

Nasdaq believes that this modification is 

designed to promote just and equitable 

principles of trade, to remove 

impediments to and perfect the 

mechanism of a free and open market 

because it will help assure that a 

company listing in connection with a 

Direct Listing with a Capital Raise 

complies with the disclosure 

requirements under federal securities 

laws and that investors receive all 

required information. 

Nasdaq believes that the proposal to 

allow a Direct Listing with a Capital 

Raise to price above any price above the 

price range of the company’s effective 

registration statement is designed to 

promote just and equitable principles of 

trade, to remove impediments to and 

perfect the mechanism of a free and 

open market investors because this 

approach is similar to that of pricing a 

traditional IPO. In addition, to protect 

investors Nasdaq proposes to enhance 

price discovery transparency by 

providing readily available, real time 

pricing information to investors. To that 

end Nasdaq will disseminate, free of 

charge, the Current Reference Price on 

a public website (such as Nasdaq.com) 

during the Pre-Launch Period and 

indicate whether the Current Reference 

Price is within the price range 

established by the issuer in its effective 

registration statement. 

Nasdaq believes that the provision 

prohibiting market orders (other than by 

the Company) from the opening of a 

Direct Listing with a Capital Raise is 

designed to protect investors because 

this provision will assure that investors 

only purchase shares at a price that is 

at, or better than, the price they 

affirmatively set, after having the 

opportunity to review the Company’s 

effective registration statement 

including the sensitivity analysis 

describing how the Company will use 

any additional proceeds raised. 

Nasdaq also proposes to adopt a new 

Price Volatility Constraint and 

disseminate information about whether 

the Price Volatility Constraint has been 

satisfied, which will indicate whether 

the security may be ready to trade. The 

Price Volatility Constraint requires that 

the Current Reference Price has not 

deviated by 10% or more from any 

Current Reference Price within the 

previous 10 minutes. The Pre-Launch 

Period will continue until at least five 

minutes after the Price Volatility 

Constraint has been satisfied. Nasdaq 

will also introduce the Near Execution 

Price which is the Current Reference 

Price at the time the Price Volatility 

Constraint has been satisfied; and set 

the Near Execution Time at such time. 

This change will provide investors with 

notice that the Cross nears execution 

and a period of at least five minutes to 

modify their orders, if needed, based on 

the Near Execution Price, prior to the 

execution of the Cross and the pricing 

of the offering. Further, to help assure 

that the offering price does not deviate 

substantially from the Near Execution 

Price, Nasdaq proposes to require, in 

addition to other conditions described 

above, that the Cross may execute only 

if the actual price calculated by the 

Cross is within the 10% Price Collar. 

Nasdaq believes that these changes are 

designed to protect investors and the 

public interest because an investor 

participating in a Direct Listing with a 

Capital Raise will make their initial 

investment decision prior to the launch 

of the offering by setting the price in 

their limit order above which they will 

not buy shares in the offering, but will 

also have an opportunity to reevaluate 

their initial investment decision during 

the price formation process of the PreLaunch Period based on the Near 

Execution Price. Under the proposed 

rule, such investor will have at least five 

minutes once the Near Execution Price 

has been set and before the offering may 

be priced by Nasdaq to modify their 

order, if needed. While the auction may 

take longer than this five minute period 

to complete, investors are protected 

during this time because the Price 

Volatility Constraint will reset if the 

actual price calculated by the Cross is 

more than 10% below or above the Near 

Execution Price. Once the Price 

Volatility Constraint has been satisfied, 

Nasdaq proposes to disseminate the 

Near Execution Price and the Near 

Execution Time on a public website, 

such as Nasdaq.com. 

Nasdaq believes that the proposal to 

reset the Price Volatility Constraint, the 

Near Execution Price and the Near 

Execution Time in the circumstances 

described above is designed to promote 

just and equitable principles of trade, to 

remove impediments to and perfect the 

mechanism of a free and open market 

investors because in certain 

circumstances an imbalance between 

the buy and sell orders could sometimes 

cause the Current Reference Price to fall 

outside the 10% Price Collar after the 

Price Volatility Constraint has been 

satisfied. These provisions will protect 

investors by increasing the information 

available to them in connection with the 

price formation process during the 

opening auction. 

To protect investors and increase 

transparency, Nasdaq also proposes to 

disseminate on a public website, such as 

Nasdaq.com, the 30-minute countdown 

from the Near Execution Time and 

indicate that the Near Execution Price 

and the Near Execution Time may be 

reset, as described above, if the security 

is not released for trading within 30 

minutes of the Near Execution Time and 

the Current Reference Price at such time 

(or at any time thereafter) is outside the 

10% Price Collar. 

In addition, to protect investors and 

assure that they are informed about the 

attributes of a Direct Listing with a 

Capital Raise, Nasdaq proposes to 

impose specific requirements on Nasdaq 

members with respect to a Direct Listing 

with a Capital Raise. These rules will 

require members to provide to a 

customer, before that customer places 

an order to be executed in the Cross, a 

notice describing the mechanics of 

pricing a security subject to a Direct 

Listing with a Capital Raise in the Cross, 

including information regarding the 

dissemination of the Current Reference 

Price on a public website such as 

Nasdaq.com. 

To assure that members have the 

necessary information to be provided to 

their customers, Nasdaq proposes to 

distribute, at least one business day 

prior to the commencement of trading of 

a security listing in connection with a 

Direct Listing with a Capital Raise, an 

information circular to its members that 

describes any special characteristics of 

the offering, and Nasdaq’s rules that 

apply to the initial pricing through the 

mechanism outlined in Nasdaq Rule 

4120(c)(9)(B) and Nasdaq Rule 4753 for 

the opening auction, including 

information about the notice they must 

provide customers and other Nasdaq 

requirements that: 

• Members use reasonable diligence 

in regard to the opening and 

maintenance of every account, to know 

(and retain) the essential facts 

concerning every customer and 

concerning the authority of each person 

acting on behalf of such customer; and 

• members in recommending 

transactions for a security subject to a 

Direct Listing with a Capital Raise have 

a reasonable basis to believe that: (i) The 

recommendation is suitable for a 

customer given reasonable inquiry 

concerning the customer’s investment 

objectives, financial situation, needs, 

and any other information known by 

such members, and (ii) the customer can 

evaluate the special characteristics, and 


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34https://www.sec.gov/divisions/corpfin/ 

guidance/securitiesactrules-interps.htm. 

35See https://www.sec.gov/news/speech/genslerhealthy-markets-association-conference-120921. 36 17 CFR 200.30–3(a)(12). 

is able to bear the financial risks, of an 

investment in such security. 

These member requirements are 

consistent with the protection of 

investors because they are designed to 

remind members of its obligations to 

‘‘know their customers,’’ increase 

transparency of the pricing mechanisms 

of a Direct Listing with a Capital Raise, 

and help assure that investors have 

sufficient price discovery information. 

Nasdaq believes that the Commission 

Staff has already concluded that pricing 

up to 20% below the lowest price and 

at a price above the highest price of the 

price range in the company’s effective 

registration statement is appropriate for 

a company conducting an initial public 

offering notwithstanding it being 

outside of the range stated in an 

effective registration statement, and 

investors have become familiar with this 

approach at least since the Commission 

Staff last revised Compliance and 

Disclosure Interpretation 227.03 in 

January 2009.34 Allowing Direct Listings 

with a Capital Raise to similarly price 

up to 20% below the lowest price and 

at a price above the highest price of the 

price range in the company’s effective 

registration statement would be 

consistent with Chair Gensler’s recent 

call to treat ‘‘like cases alike.’’ 35

Nasdaq believes that the proposed 

amendments to Listing Rule IM–5315–2 

and Rules 4753(a)(3)(A) and 4753(b)(2) 

to conform these rules to the 

modification of the Pricing Range 

Limitation is consistent with the 

protection of investors. These 

amendments would simply substitute 

Nasdaq’s reliance on the price equal to 

the lowest price of the price range 

disclosed by the issuer in its effective 

registration statement to the price that is 

20% below such lowest price, making it 

more difficult to meet the requirements. 

In the case of Listing Rule IM–5315–2, 

a company listing in connection with a 

Direct Listing with a Capital Raise 

would still need to meet all applicable 

initial listing requirements based on the 

price that is 20% below the lowest price 

of the price range disclosed by the 

issuer in its effective registration 

statement. In the case of the Rules 

4753(a)(3)(A) and 4753(b)(2) such price, 

which is the minimum price at which 

the Cross will occur, will serve as the 

fourth tie-breaker where there are 

multiple prices that would satisfy the 

conditions for determining the auction 

price, as described above. Nasdaq 

believes that this proposal to resolve a 

potential tie among the prices that 

satisfy all other requirements in the 

Cross, by choosing the price that is 

closest to the price that is 20% below 

the range, is consistent with Section 

6(b)(5) of the Act because it is designed 

to protect investors by providing them 

with the most advantageous offering 

price among possible alternative prices. 

Nasdaq also believes that the 

proposal, by eliminating an impediment 

to companies using a Direct Listing with 

a Capital Raise, will help removing 

potential impediments to free and open 

markets consistent with Section 6(b)(5) 

of the Exchange Act while also 

supporting capital formation. 

Finally, Nasdaq believes that the 

proposal to clarify several provisions of 

the existing rules without changing 

them is designed to remove 

impediments to and perfect the 

mechanism of a free and open market 

because such changes make the rules 

easier to understand and apply without 

changing their substance. 

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. The 

proposed amendments would not 

impose any burden on competition, but 

would rather increase competition. 

Nasdaq believes that allowing listing 

venues to improve their rules enhances 

competition among exchanges. Nasdaq 

also believes that this proposed change 

will give issuers interested in this 

pathway to access the capital markets 

additional flexibility in becoming a 

public company, and in that way 

promote competition among service 

providers, such as underwriters and 

other advisors, to such companies. 

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. 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– 

NASDAQ–2022–027 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–2022–027. 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–2022–027, and 

should be submitted on or before June 

23, 2022. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.36

J. Matthew DeLesDernier, 

Assistant Secretary. 

[FR Doc. 2022–11785 Filed 6–1–22; 8:45 am] 

BILLING CODE 8011–01–P 


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