```

[Federal Register Volume 79, Number 227 (Tuesday, November 25, 2014)]
[Notices]
[Pages 70232-70237]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2014-27879]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-73647; File No. SR-NASDAQ-2014-087]

Self-Regulatory Organizations; The NASDAQ Stock Market LLC; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To 
Adopt an All-Inclusive Annual Listing Fee and Modify Certain Other 
Listing Fees

November 19, 2014.
    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 November 7, 2014, 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, II, and III, below, which Items have been prepared by the 
Exchange. The Commission is publishing this notice to solicit comments 
on the proposed rule change from interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange proposes to adopt an all-inclusive annual listing fee 
and modify certain other listing fees. While these amendments are 
effective upon filing, the Exchange has designated the proposed 
amendments to be operative on January 1, 2015.
    The text of the proposed rule change is available at http://nasdaq.cchwallstreet.com, at NASDAQ's principal office, 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 proposes to adopt an all-inclusive annual listing fee, which 
will simplify billing and provide transparency and certainty to 
companies as to the annual cost of listing, modify annual fees for 
listed companies that remain on the existing fee schedule, and clarify 
certain fee rules.
    Nasdaq understands from speaking with listed companies that many 
companies object to the number and in some cases the variable nature of 
certain of Nasdaq's listing fees. For example, a company may owe fees 
when it issues additional shares as a result of events that do not 
raise money and cannot always be forecasted or budgeted for by the 
company, such as the exercise by employees of stock options or the 
implementation of a reverse stock split. To address such concerns, 
Nasdaq has determined to create an alternative fee schedule, which 
eliminates fees related to the issuance of additional shares, record-
keeping changes, and substitution listing events, thereby simplifying 
and clarifying for companies the annual fees to which they are subject. 
In addition, under this alternative fee structure, Nasdaq will also 
eliminate the fee for a written interpretation of the listing rules and 
for review by Nasdaq Staff of a compliance plan. As a result, companies 
subject to this alternative structure will pay only a single annual fee 
to Nasdaq, which will include all the ordinary costs of listing for the 
year.\3\ This change will also benefit Nasdaq, by eliminating the 
multiple invoices that must be sent to a company each year \4\ and 
providing more certainty as to revenue.
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    \3\ A company that receives a delisting determination or public 
reprimand letter must still pay fees for review of that decision by 
an independent Hearings Panel or the Nasdaq Listing and Hearing 
Review Council. Companies also will pay application and entry fees 
to list new classes of securities.
    \4\ In addition to the annual fee, companies are also billed 
quarterly for listing of additional shares fees and upon the 
occurrence of events that result in record keeping and substitution 
listing fees.
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    As detailed in the charts below, for companies listed on the 
Capital Market, other than ADRs and Closed-end Funds, the all-inclusive 
annual fee will range from $42,000 to $75,000; for ADRs listed on the 
Capital Market the all-inclusive annual fee will range from $37,000 to 
$45,000. On the Global and Global Select Markets, the all-inclusive 
annual fee for companies other than ADRs and Closed-end Funds will 
range from $45,000 to $155,000 and the all-inclusive annual fee for 
ADRs will range from $45,000 to $75,000. The all-inclusive annual fee 
for Closed-end Funds listed on any market tier will range from $30,000 
to $100,000. In each case, a company's all-inclusive annual fee will be 
based on its total shares outstanding.\5\
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    \5\ In establishing the fee changes described in this rule 
filing, including the changes to the number and cut-off point of 
pricing tiers, Nasdaq considered various factors that distinguish 
companies, including market tier, shares outstanding, and security 
type, as well as the perceived use of various Nasdaq regulatory and 
support services by companies of various characteristics. Pricing 
for similar securities on other national securities exchanges was 
also considered. Based on this analysis, Nasdaq proposes to modify 
the number of fee tiers within the annual fee schedule to better 
align fees with the size of the companies that pay those fees and 
the use Nasdaq believes that companies of various sizes typically 
make of Nasdaq's services. In setting the all-inclusive annual fee, 
Nasdaq reviewed the billing history of more than 1,800 companies 
that had been listed on Nasdaq for at least four years to determine 
the fees assessed these companies for all listing-related services, 
including those assessed for listing of additional shares, record-
keeping changes, substitution listing events, rule interpretations, 
and compliance plan reviews. Nasdaq established the all-inclusive 
annual fee for each security type and shares outstanding tier based 
on this analysis of historical fees paid and regulatory services 
used, taking into account the changes also proposed to the annual 
fee schedule.
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    While this alternative is being introduced in response to feedback 
from Nasdaq's listed-companies, Nasdaq also understands that this 
innovation may not be appealing to all companies and therefore proposes 
to allow currently listed companies the option to switch to the 
proposed all-inclusive annual fee schedule for 2015 or to wait until 
2018, when it will become mandatory for all companies. However, Nasdaq 
will offer incentives to companies that voluntarily elect the all-
inclusive annual fee schedule for 2015.\6\ Specifically, any company 
that chooses to be subject to

[[Page 70233]]

the all-inclusive annual fee beginning in 2015 will be billed for 2015, 
2016 and 2017 based on the lower of its then-current total shares 
outstanding or the total shares outstanding reflected in information 
held by Nasdaq as of December 31, 2014. As such, regardless of any 
increase in the company's shares outstanding during that time, the tier 
upon which its all-inclusive annual fee is based will not increase 
until at least January 1, 2018. In addition, because listing of 
additional shares fees are billed based on a company's public filings, 
share changes in the last reporting period of 2014 could be billed 
after the company has opted in and, in many cases, not until 2015. In 
order to eliminate confusion by companies that elect to pay the all-
inclusive annual fee, and therefore believe they should not receive any 
further listing of additional shares fee bills, Nasdaq proposes to 
forgive these listing of additional shares fees. Specifically, a 
company that elects to be subject to the all-inclusive annual fee will 
not be billed for listing of additional shares after it notifies Nasdaq 
of its election by filing the required form. As such, fees for shares 
issued in the final period of 2014, which otherwise could be billed 
during 2015, will be forgiven. Nasdaq does not believe that these 
incentives will have any adverse impact on the amount of funds 
available for its regulatory programs.
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    \6\ Companies may make this election on the NASDAQ OMX Listing 
Center Web site. A copy of the electronic form that will be used for 
this purpose is attached to the rule filing as Exhibit 3.
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    All companies that list after January 1, 2015 will be subject to 
the proposed all-inclusive annual fee. However, Nasdaq acknowledges 
that companies that have already applied to list, or apply in the near 
term, may have made their listing decision based on Nasdaq's current 
fee schedule. As such, Nasdaq proposes to make the following 
accommodation for any company that applied to list on Nasdaq prior to 
January 1, 2015, and lists after that date. Until December 31, 2017, 
such an applicant will be billed the all-inclusive annual fee based on 
the lower of its then-current total shares outstanding or the total 
shares outstanding reflected in information held by Nasdaq as of the 
date of listing. As such, regardless of any increase in shares 
outstanding, the tier upon which the all-inclusive annual fee is based 
for such companies will not increase until at least January 1, 2018.
    The proposed rule change also raises the annual fees that will be 
paid by listed companies that remain on the existing fee schedule. The 
annual fee paid by most Capital Market companies last increased 
effective January 1, 2013.\7\ Fees have not been increased on Global 
Market companies since January 1, 2010.\8\ Since then, Nasdaq has 
invested in upgrades to the NASDAQ MarketSite, which houses a state-of-
the-art digital broadcast studio and can be utilized as a New York 
venue by listed companies, and the MarketSite Tower. In addition, 
Nasdaq has invested in its online tools, including the Listing Center 
and Reference Library. The Listing Center allows companies to submit 
their notifications to Nasdaq electronically, using on-line forms that 
are pre-populated with much of the required information. The Reference 
Library contains more than 400 frequently asked questions describing 
the application of the listing rules, and summaries of approximately 
450 interpretive letters and decisions of the Nasdaq Listing and 
Hearing Review Council. These tools, which provide transparency to the 
application of the listing rules and simplify some burdens of being a 
listed company, have had approximately 440,000 page views from January 
1 to July 31, 2014. Nasdaq believes it is appropriate to modify its 
fees to allow continued investment in these initiatives and other 
innovative ideas that benefit listed companies and enhance the 
effectiveness of Nasdaq's regulatory program.\9\
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    \7\ Securities Exchange Act Release No. 68129 (November 1, 
2012), 77 FR 66907 (November 7, 2012) (approving SR-NASDAQ-2012-
120).
    \8\ Securities Exchange Act Release No. 61669 (March 5, 2010), 
75 FR 11958 (March 12, 2010) (approving SR-NASDAQ-2009-081).
    \9\ The proposed all-inclusive annual fee described above was 
based off of the proposed increased annual fees and also reflects 
Nasdaq's investment in these initiatives and enhancements.
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    The revised annual fees for most companies listed on the Capital 
Market will range from $32,000 to $45,000 based on total shares 
outstanding, compared with the current $32,000. The revised annual fees 
for most companies listed on the Global or Global Select Markets will 
range from $40,000 to $125,000 based on total shares outstanding, 
compared with the current range of $35,000 to $99,500.
    The following charts summarize the current annual fee, the proposed 
annual fee and the proposed all-inclusive annual fee applicable to 
domestic and foreign companies, ADRs, and Closed-end Funds.
    The revised fees for domestic and foreign companies, other than 
ADRs and Closed-end Funds, are as follows:

----------------------------------------------------------------------------------------------------------------
                                                                                                     2015 all-
                    Total shares outstanding                        2014 annual     2015 annual    inclusive fee
                                                                       fee *           fee *            **
----------------------------------------------------------------------------------------------------------------
                                          Global/Global Select Markets
----------------------------------------------------------------------------------------------------------------
Up to 10 million shares.........................................         $35,000         $40,000         $45,000
10+ to 50 million shares........................................          37,500          40,000          55,000
50+ to 75 million shares........................................          46,500          46,500          75,000
75+ to 100 million shares.......................................          68,500          69,000         100,000
100+ to 125 million shares......................................          89,000          93,000         125,000
125+ to 150 million shares......................................          89,000         125,000         135,000

[[Page 70234]]

 
Over 150 million shares.........................................          99,500         125,000         155,000
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                                                 Capital Market
----------------------------------------------------------------------------------------------------------------
Up to 10 million shares.........................................         $32,000         $32,000         $42,000
10+ to 50 million shares........................................          32,000          40,000          55,000
Over 50 million shares..........................................          32,000          45,000          75,000
----------------------------------------------------------------------------------------------------------------

    The revised fees for ADRs and Closed-end Funds are as follows:

--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                NASDAQ Global/Global Select Market                     NASDAQ Capital Market
                                                         -----------------------------------------------------------------------------------------------
                 Total ADRs outstanding                                                      2015 all-                                       2015 all-
                                                            2014 annual     2015 annual    inclusive fee    2014 annual     2015 annual    inclusive fee
                                                               fee *           fee *            **             fee *           fee *            **
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                          ADRs
--------------------------------------------------------------------------------------------------------------------------------------------------------
Up to 10 million ADRs...................................         $30,000         $40,000         $45,000         $32,000         $32,000         $37,000
10+ to 50 million ADRs..................................          37,500          40,000          45,000          32,000          40,000          45,000
50+ to 75 million ADRs..................................          42,500          46,500          52,500          32,000          40,000          45,000
Over 75 million ADRs....................................          50,000          69,000          75,000          32,000          40,000          45,000
--------------------------------------------------------------------------------------------------------------------------------------------------------

 
                                                                     NASDAQ Global/Global Select and  Capital
                                                                                      Markets
                                                                 -----------------------------------------------
                    Total shares outstanding                                                         2015 all-
                                                                    2014 annual     2015 annual    inclusive fee
                                                                       fee *           fee *            **
----------------------------------------------------------------------------------------------------------------
                                                Closed-end Funds
----------------------------------------------------------------------------------------------------------------
Up to 5 million shares..........................................         $15,000         $22,500         $30,000
5 to 10 million shares..........................................          17,500          22,500          30,000
10 to 25 million shares.........................................          20,000          22,500          30,000
25 to 50 million shares.........................................          22,500          22,500          30,000
50+ to 100 million shares.......................................          30,000          35,000          50,000
100+ to 250 million shares......................................          50,000          55,000          75,000
Over 250 million shares.........................................          75,000          80,000         100,000
----------------------------------------------------------------------------------------------------------------
* Company must also pay listing of additional shares, record-keeping, substitution listing, and certain
  regulatory fees.
** Company does not pay any additional listing of additional shares, record-keeping, substitution listing, or
  certain regulatory fees in connection with its continued listing.

    Finally, Nasdaq proposes to make certain clarifying changes to the 
existing annual fee rule text and incorporate these same concepts in 
the proposed all-inclusive fee. First, Nasdaq proposes to clarify how 
annual fees (including the proposed all-inclusive annual fees) are 
assessed when a company first lists or transfers between market tiers. 
Specifically, Nasdaq proposes to codify its practice of pro-rating 
annual fees based on the month of a company's listing, and provide 
examples to demonstrate how this proration is applied. Nasdaq's rules 
already provide that annual fees previously paid are not refundable if 
a company's securities are removed from Nasdaq. Nasdaq proposes to 
continue to apply this provision to the proposed all-inclusive fee and 
to also clarify under both the annual fee and the all-inclusive fee 
that if a company is removed before it has paid the applicable fee, the 
fee is nonetheless owed and that Nasdaq will not waive the amount 
owed.\10\ In recognition of the fact that a company does not get a 
refund or waiver of annual fees or all-inclusive annual fees if its 
securities are delisted, Nasdaq also proposes to clarify that if a 
company relists in the same year where it had previously paid an annual 
fee, that the company would not be subject to a second annual fee for 
that same year.
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    \10\ This situation would most commonly arise when the Company 
delists early in the year before it has paid its annual fee invoice.
---------------------------------------------------------------------------

    In the case of a company that transfers between Nasdaq's tiers, the 
proposed rule change would clarify that the annual fee or all-inclusive 
annual fee, as applicable, would be prorated based on the month of the 
company's transfer. However, no amount of the annual fee previously 
assessed or paid would be refunded if the prorated fee for the new 
market tier is lower.
    The proposed rule would also modify the way a company is charged if 
it has securities listed on both the Global or Global Select Market and 
the Capital Market under both the standard annual fee and the all-
inclusive annual fee. Presently, while Nasdaq's rules provide that 
Nasdaq will aggregate shares of all securities listed on the Global 
Market (including the Global Select Market) in calculating the fee for 
the Global Market and shares of all securities listed on the Capital 
Market in calculating the fee for the Capital Market, the rules do not 
address the situation where the same company has a security listed on 
each the Global or Global Select Market and the Capital Market. As a 
result, a company presently is charged separately for the securities on 
each market tier. Nasdaq believes that this is an inequitable result, 
and proposes to modify the rules such that in this situation shares 
listed on the Capital Market are not assessed a separate fee for the 
Capital Market, but instead are aggregated with the shares listed on 
the Global or Global Select Market in calculating the fee for that 
market.\11\
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    \11\ This situation currently affects fewer than five companies, 
which have their common stock listed on the Global or Global Select 
Market and a secondary class listed on the Capital Market. Each of 
these companies would pay less under the proposed rule change than 
they would if Nasdaq continued to assess fees separately for each 
market tier.

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[[Page 70235]]

    Nasdaq proposes to clarify that where Nasdaq rules waive fees in 
connection with certain merger situations, the company will receive a 
credit for the amount waived if the acquired company has already paid 
that fee. Conversely, in cases where the acquired company has not paid 
the fee, the forgiven fee will be treated as a waiver. The proposed 
rule will also extend those fee waivers and credits to companies paying 
the all-inclusive annual fee. In addition, the proposed rule change 
will specify which of the entities involved in a merger will receive 
the waiver or credit. Further, while the rule currently requires that a 
company apply for a fee waiver if it is applicable, Nasdaq proposes 
instead to apply these waivers and credits automatically for all 
eligible companies.
    Nasdaq also proposes to delete current IM-5920-1, which provides a 
waiver for listed securities exempt from registration under Section 
12(g) of the Act pursuant to Rule 12g3-2(b). After Nasdaq registered as 
a national securities exchange, these securities were initially 
permitted to list pursuant to an exemption from Section 12(a) of the 
Act.\12\ This exemption expired on August 1, 2009, and companies 
described in the interpretive material can no longer be listed on 
Nasdaq.
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    \12\ Securities Exchange Act Release No. 54241 (July 31, 2006), 
71 FR 45359 (August 8, 2006).
---------------------------------------------------------------------------

    The proposed rule change will also modify the fee accommodation 
available to companies that list upon emerging from bankruptcy to 
reflect the addition of the all-inclusive annual fee alternative. Under 
that rule, the annual fee for a company that lists upon emerging from 
bankruptcy is the minimum annual fee for the year of listing and the 
subsequent two full calendar years (the ``Bankruptcy Annual Fee 
Accommodation''). As revised, such a company can opt to transition to 
the all-inclusive annual fee for 2015, just like any other company. 
And, consistent with the current rule, a company that does so will pay 
the minimum all-inclusive annual fee until the end of its second full 
calendar year following listing. In this manner, irrespective of when 
the company listed, it will receive the benefit of the Bankruptcy 
Annual Fee Accommodation. Moreover, the company will receive the 
benefits of proposed IM-5910-1(b)(1) for the period after the 
Bankruptcy Annual Fee Accommodation ends until December 31, 2017.\13\
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    \13\ If the company initially listed in 2014, it would pay the 
minimum $45,000 all-inclusive annual fee for 2015 and 2016 and be 
subject to the all-inclusive annual fee in 2017 based on its total 
shares outstanding as of December 31, 2014. Alternatively, if the 
company initially listed in 2013, it would pay the minimum $45,000 
all-inclusive annual fee for 2015 and be subject to the all-
inclusive annual fee in 2016 and 2017 based on its total shares 
outstanding as of December 31, 2014. Fewer than 10 companies have 
listed on Nasdaq upon emerging from bankruptcy in 2013 or 2014.
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    Last, Nasdaq proposes to modify a cross reference to the record-
keeping fee in Rule 5250(e)(3), since that fee will not be payable by 
all companies, update the preamble to the listing fee section to 
reflect the changes discussed herein and remove from the rules certain 
effective dates that are no longer applicable.
    While the changes proposed herein are effective upon filing, Nasdaq 
has designated that the changes be operative on January 1, 2015. Until 
January 1, 2015, Nasdaq will maintain the existing, applicable fee 
schedule in its online manual, and will also display the changes 
proposed herein as being effective in the future.
2. Statutory Basis
    Nasdaq believes that the proposed rule change is consistent with 
the provisions of Section 6 of the Act,\14\ in general and with 
Sections 6(b)(4) and (5) of the Act,\15\ in particular, in that it 
provides for the equitable allocation of reasonable dues, fees, and 
other charges among its members, issuers and other persons using its 
facilities, and does not unfairly discriminate between customers, 
issuers, brokers or dealers.
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    \14\ 15 U.S.C. 78f.
    \15\ 15 U.S.C. 78f(b)(4) and (5).
---------------------------------------------------------------------------

    As a preliminary matter, Nasdaq competes for listings with other 
national securities exchanges and companies can easily choose to list 
on, or transfer to, those alternative venues.\16\ As a result, the fees 
Nasdaq can charge listed companies are constrained by the fees charged 
by its competitors and Nasdaq cannot charge prices in a manner that 
would be unreasonable, inequitable or unfairly discriminatory.
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    \16\ The Justice Department noted the intense competitive 
environment for exchange listings. See ``NASDAQ OMX Group Inc. and 
IntercontinentalExchange Inc. Abandon Their Proposed Acquisition Of 
NYSE Euronext After Justice Department Threatens Lawsuit'' (May 16, 
2011), available at http://www.justice.gov/atr/public/press_releases/2011/271214.htm.
---------------------------------------------------------------------------

    Nasdaq believes that the proposed all-inclusive annual fees are 
reasonable because Nasdaq is eliminating multiple fees in favor of a 
single annual fee for listed companies. Under the proposed fee 
structure, companies can pay less than they would if they remain on the 
existing structure and pay annual fees, listing of additional shares 
fees (which can be as much as $65,000 annually) or incur record-keeping 
or substitution listing fees. The proposed all-inclusive annual fees 
are also equitably allocated and not unfairly discriminatory because 
they will be assessed based on a company's shares outstanding, 
consistent with the way Nasdaq and other national securities exchanges 
charge fees today.\17\ This allocation method, previously approved by 
the Commission, is not inequitable or unfairly discriminatory because 
companies with fewer shares outstanding tend to be smaller companies, 
which may use fewer of the Exchange's services and be more willing to 
forgo an exchange listing if it costs more. In addition, while 
companies may pay separate fees today for certain corporate actions, 
record-keeping events, and share issuances, as well as fees for written 
interpretations of listing rules and reviews of compliance plans, it is 
not inequitable or unfairly discriminatory to eliminate those fees 
because all companies will benefit similarly from that elimination in 
years where they otherwise would have had to pay these fees. In that 
regard, Nasdaq reviewed the historic activities of companies with 
various amounts of shares outstanding to assess the use of listing-
related services, and established the all-inclusive annual fee for each 
security type and tier of outstanding shares based on this 
analysis.\18\ Further, the expenses associated with maintaining the 
infrastructure to process share issuances and corporate actions and 
events and to review rule interpretation requests and compliance plans 
is part of Nasdaq's overhead, which helps Nasdaq protect investors and 
the public interest to the benefit of all listed companies. That 
necessary overhead does not vary materially based on the number of 
companies that utilize these services, and it is therefore equitable to 
spread their costs across all companies. All listed companies also 
benefit from the transparency provided when Nasdaq publishes summaries 
of its interpretive letters. As such, spreading the costs of such 
interpretations across all listed companies represents an equitable 
allocation of reasonable fees and is not unfairly discriminatory.
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    \17\ See NYSE Listed Company Manual Section 902.03 (charging an 
annual fee per share); NYSE MKT Company Guide Section 141 (charging 
an annual fee based on tiers of outstanding shares).
    \18\ See footnote 5, supra.
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    Nasdaq also believes that the proposed incentives offered to 
companies that elect the all-inclusive annual listing fee for 2015 are 
reasonable and not unfairly

[[Page 70236]]

discriminatory. These incentives are available equally to all companies 
and would provide the same benefit to all companies that make the 
election. In addition, as noted above, Nasdaq will accrue benefits from 
companies electing the all-inclusive annual listing fee structure, 
including by eliminating the multiple invoices that are sent to a 
company each year and providing more certainty as to revenue, and the 
incentives are designed to help Nasdaq capture these benefits sooner, 
which is a reasonable and non-discriminatory reason to provide the 
incentives to companies.
    The proposed increase to the annual fee for companies that do not 
elect the all-inclusive fee, which increase is also reflected in the 
all-inclusive annual fee, is also an equitable allocation of reasonable 
fees and not unfairly discriminatory based on the enhancements Nasdaq 
has made since fees were last increased in 2010, for Global and Global 
Select Market companies, and 2013, for most Capital Market 
companies.\19\ As described above, Nasdaq has invested in upgrades to 
the NASDAQ MarketSite and MarketSite Tower, and its online tools, 
including the Listing Center and Reference Library, to the benefit of 
all listed companies and their investors and prospective investors. The 
proposed increase also will help Nasdaq continue to invest in these 
initiatives and its regulatory programs.
---------------------------------------------------------------------------

    \19\ See footnotes 7 and 8, supra.
---------------------------------------------------------------------------

    Changes to the tier ranges for fees charged issuers that do not 
elect the all-inclusive fee, including ADRs and Closed-end Funds, are 
not unreasonable nor unfairly discriminatory because these changes were 
based on a review of the number and size of companies in the existing 
tier ranges, their historic use of listing-related services, and the 
fees charged by other markets.
    Nasdaq believes that having lower maximum fees for ADRs under the 
proposed all-inclusive and standard annual fees is an equitable 
allocation of reasonable fees and not unfairly discriminatory because 
the U.S. listing is not typically an ADR's primary listing. In 
addition, because ADRs are foreign private issuers, which currently pay 
a maximum listing of additional shares fee of $7,500, it is appropriate 
to charge ADRs a lower all-inclusive annual fee than a domestic 
company, which could pay a listing of additional shares fee of up to 
$65,000. On the other hand, Nasdaq believes that it is no longer 
appropriate to grant a preference for listing of additional shares fees 
to foreign private issuers other than ADRs, because Nasdaq is generally 
the primary listing for such companies and other exchanges charge 
additional listing fees for these companies in the same manner as 
domestic companies. As a result, Nasdaq proposes that foreign private 
issuers other than ADRs pay the same all-inclusive annual fee as 
domestic issuers, even though they are subject to a lower listing of 
additional shares fee under the current fee schedule. Nasdaq would 
continue to base its fees for these companies only on the shares issued 
and outstanding in the United States, however, so to the extent a 
foreign private issuer has another listing, it would only pay fees on 
those shares that trade on Nasdaq. As a result, Nasdaq believes it is 
an equitable allocation of reasonable fees and not unfairly 
discriminatory to require foreign private issuers, other than ADRs, pay 
all-inclusive fees on the same schedule as domestic companies. In 
addition, in light of the historic benefit provided to foreign private 
issuers by way of a lower listing of additional shares fee, Nasdaq 
believes it is not unreasonable nor unfairly discriminatory to maintain 
that benefit until the existing annual fee schedule is completely 
phased out in 2018.
    Nasdaq also believes that it is appropriate to maintain a separate 
fee schedule for Closed-end Funds based on their unique 
characteristics. These companies are particularly sensitive to the 
expenses they incur, given that they compete for investment dollars 
based on return. In addition, they need to issue shares as a primary 
means to expand their businesses and raise additional money to invest. 
As such, Nasdaq already applies a different annual fee and maximum 
quarterly listing of additional shares fee for these companies, and the 
proposed rule change maintains a separate, lower fee schedule for them, 
which remains an equitable allocation of reasonable fees that is not 
unfairly discriminatory. Nasdaq believes that continuing to assess 
separate fees for the review of delisting decisions by the Hearings 
Panels and the Nasdaq Listing and Hearing Review Council is an 
equitable allocation of reasonable fees that is not unfairly 
discriminatory. These reviews come only after Nasdaq staff has either 
allowed the company the maximum extension permitted under the listing 
rules or determined that such an extension is inappropriate. Such 
reviews are not an ordinary cost of a company's annual listing and any 
benefit from consideration by the Hearings Panel or Listing and Hearing 
Review Council is limited to the particular company that requests 
review and is not precedential with respect to other companies. As 
such, Nasdaq believes it is appropriate to exclude the fees associated 
with these activities from the all-inclusive annual fee.
    Nasdaq believes that the proposed clarifying changes describing how 
fees are assessed when a company first lists or transfers between 
Nasdaq's tiers is an equitable allocation of reasonable fees. In 
addition, these changes and the addition of examples demonstrating the 
application of various rules will clarify Nasdaq's rules, and thereby 
remove impediments to and perfect the mechanism of a free and open 
market and a national market system, and, in general, protect investors 
and the public interest. Nasdaq rules already provide that a company 
that is removed or voluntarily delists will not receive a refund of the 
listing fee. Clarifying that a company that transfers to the Capital 
Market from the Global or Global Select Market receives a credit for 
the fee previously assessed, but not a refund, aligns the treatment 
within the rules of these companies with that of companies that are 
removed or voluntarily delist. Similarly, clarifying that a company 
that paid an annual fee or all-inclusive annual fee for the year will 
not be subject to a second fee if it delists and relists in the same 
year assures that companies do not pay twice for the same services. As 
such, in each of these cases the company receives listing services for 
the year it paid the annual fee, and the proposed changes are therefore 
equitable allocations of reasonable fees.
    Prorating fees for new listings based on the month of listing or 
transfer assures that companies are not subject to fees before listing 
and are not subject to the higher fees of a particular market tier 
before they are listed on that tier, subject to the constraints of 
Nasdaq's monthly billing cycles. The rules already allocate annual fees 
in this manner for companies that transfer between Nasdaq market 
tiers.\20\ As such, this method of assessing fees is an equitable 
allocation of reasonable fees.
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    \20\ Nasdaq Rules 5910(c)(3), 5910(d)(6) and 5920(c)(5).
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    Aggregating shares listed on the Global or Global Select Market 
with shares listed on the Capital Market when calculating fees provides 
an equitable allocation of fees in a manner that is not unfairly 
discriminatory because it provides the same benefit to a company with 
shares on both market tiers as is available to a company with all of 
its shares on the Global or Global Select Market and such a company 
does

[[Page 70237]]

not receive any additional benefit from having some of its shares 
listed on the Capital Market.
    A company that listed upon emerging from bankruptcy currently pays 
the minimum annual fee for the year of listing and subsequent two 
years. Allowing such companies that opt in to the all-inclusive annual 
fee to also pay the minimum fee on that fee schedule during the same 
period, and forgiving a portion of the all-inclusive annual fee in 
certain merger situations where the annual fee is similarly forgiven, 
is not unreasonable or unfairly discriminatory because these proposed 
changes extend benefits available to companies under the existing fee 
schedule to companies that will be on the all-inclusive fee schedule, 
thereby perpetuating features that the Commission has previously 
concluded satisfy the statutory requirements. Clarifying when a company 
receives a credit, instead of a waiver, and which company involved in a 
merger receives that credit or waiver clarifies Nasdaq's rules and is 
not unreasonable or unfairly discriminatory because these 
clarifications give effect to the intent of the current waivers while 
respecting the difference between the two entities involved in a 
merger.
    Finally, Nasdaq believes that the proposed fees are consistent with 
the investor protection objectives of Section 6(b)(5) of the Act \21\ 
in that they are designed to promote just and equitable principles of 
trade, to remove impediments to a free and open market and national 
market system, and in general to protect investors and the public 
interest. Specifically, the fees are designed, in part, to ensure that 
there are adequate resources for Nasdaq's listing compliance program, 
which helps to assure that listing standards are properly enforced and 
investors are protected.
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    \21\ 15 U.S.C. 78f(b)(5).
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B. Self-Regulatory Organization's Statement on Burden on Competition

    Nasdaq does not believe that the proposed rule change will result 
in any burden on competition that is not necessary or appropriate in 
furtherance of the purposes of the Act, as amended. The market for 
listing services is extremely competitive and listed companies may 
freely choose alternative venues based on the aggregate fees assessed, 
and the value provided by each listing. This rule proposal does not 
burden competition with other listing venues, which are similarly free 
to set their fees. Further, this proposed rule change would introduce 
an all-inclusive annual listing fee, which no other market currently 
offers and which may therefore increase competition with other listing 
venues. Nasdaq believes that this innovative fee proposal reflects the 
existing competition between listing venues and will further enhance 
such competition. For these reasons, Nasdaq does not believe that the 
proposed rule change will result in any burden on competition for 
listings.

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

    The foregoing rule change has become effective pursuant to Section 
19(b)(3)(A)(ii) of the Act \22\ and paragraph (f) of Rule 19b-4 
thereunder.\23\
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    \22\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \23\ 17 CFR 240.19b-4(f).
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    At any time within 60 days of the filing of the proposed rule 
change, the Commission summarily may temporarily suspend such rule 
change if it appears to the Commission that such action is necessary or 
appropriate in the public interest; for the protection of investors; or 
otherwise in furtherance of the purposes of the Act.

IV. Solicitation of Comments

    Interested persons are invited to submit written data, views, and 
arguments concerning the foregoing, including whether the proposed rule 
change is consistent with the Act. Comments may be submitted by any of 
the following methods:

Electronic Comments

     Use the Commission's Internet comment form (http://www.sec.gov/rules/sro.shtml); or
     Send an email to [email protected]. Please include 
File Number SR-NASDAQ-2014-087 on the subject line.

Paper Comments

     Send paper comments in triplicate to Brent J. Fields, 
Secretary, Securities and Exchange Commission, 100 F Street NE., 
Washington, DC 20549-1090.

All submissions should refer to File Number SR-NASDAQ-2014-087. 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 Web site (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 Web site viewing and 
printing in the Commission's Public Reference Room, 100 F Street NE., 
Washington, DC 20549, on official business days between the hours of 
10:00 a.m. and 3:00 p.m. Copies of the filing also will be available 
for inspection and copying at the principal office of the Exchange. All 
comments received will be posted without change; the Commission does 
not edit personal identifying information from submissions. You should 
submit only information that you wish to make available publicly. All 
submissions should refer to File Number SR-NASDAQ-2014-087 and should 
be submitted on or before December 16, 2014.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\24\

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    \24\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2014-27879 Filed 11-24-14; 8:45 am]
BILLING CODE 8011-01-P
```