Document ID: SEC-2009-1559-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; The NASDAQ Stock Market LLC; Notice of Filing of Proposed Rule Change To Modify the Fees for Listing on the Nasdaq Stock Market and the Fee for Written Interpretations of Nasdaq Listing Rules
Posted Date: 2009-11-04T05:00Z

[Federal Register: November 4, 2009 (Volume 74, Number 212)]
[Notices]               
[Page 57212-57214]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr04no09-113]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-60899; File No. SR-NASDAQ-2009-081]

 
Self-Regulatory Organizations; The NASDAQ Stock Market LLC; 
Notice of Filing of Proposed Rule Change To Modify the Fees for Listing 
on the Nasdaq Stock Market and the Fee for Written Interpretations of 
Nasdaq Listing Rules

October 28, 2009.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that 
on October 6, 2009, The NASDAQ Stock Market LLC (``Nasdaq'') filed with 
the Securities and Exchange Commission (``Commission'') the proposed 
rule change as described in Items I, II and III below, which Items have 
been prepared by Nasdaq. 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

    Nasdaq proposes to modify the fees for listing on the Nasdaq Stock 
Market.

II. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

    In its filing with the Commission, Nasdaq 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. Nasdaq 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 proposing modifications to the application, entry and 
annual fees currently charged to issuers listed on the Nasdaq Global 
and Global Select Markets \3\ and to the fee for a written 
interpretation of Nasdaq listing rules, as set forth below.
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    \3\ Fees for the Global and Global Select Market are set forth 
in Rule 5910. Because the Global Select Market is a segment of the 
Global Market, the same fees apply to securities listed on the 
Global Select Market as apply to securities listed on the Global 
Market. See Rules 5005(a)(25) and (29).
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    Nasdaq Global and Global Select Application, Entry and Annual Fees
    Nasdaq currently imposes a $5,000 application fee on a company 
applying to list on the Nasdaq Global or Global Select Markets.\4\ This 
fee helps offset the cost of Nasdaq's review of the company's 
application. Nasdaq proposes to increase this fee to $25,000. The 
application fee would continue to be credited against entry fees upon 
listing, and thus this change would not affect the overall fees a 
company pays to list, but would better reflect the level of effort and 
cost associated with the review of an application and provide a 
stronger disincentive for frivolous applications.
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    \4\ The application fee is non-refundable.
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    Nasdaq also proposes to modify the entry fee a company pays when 
listing on the Nasdaq Global or Global Select Market. Currently, those 
fees are charged in three tiers, based on the number of shares the 
company has outstanding, and range from $100,000 to $150,000. Nasdaq 
proposes to create an additional tier for companies issuing over 50 
million to 100 million shares and to increase the entry fee by $25,000 
to $75,000, depending on the number of shares to be listed. The effect 
of adding a new tier will be to increase the number of shares a company 
must have outstanding before the company must pay a higher listing 
fee.\5\ Nasdaq believes that the proposed increase to the entry fees 
would reflect the overall rise in costs since these fees were last 
increased in January 2002 \6\ and take into account a number of new 
initiatives by Nasdaq since that time, including Nasdaq's new online 
listing application center \7\ and the IPO cross (an open auction 
process, which is used for every initial public offering on Nasdaq and 
maximizes transparency at the opening of trading of an initial public 
offering).\8\
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    \5\ The Commission notes that, under the current fee structure, 
companies pay an entry fee of $150,000 for any issuances over 50 
million shares. Therefore, the Commission notes that, under Nasdaq's 
proposal, the entry fees will increase to $200,000 for companies 
issuing over 50 million shares to 100 million shares and to $225,000 
for those companies issuing over 100 million shares.
    \6\ See Securities Exchange Act Release No. 45206 (December 28, 
2001), 67 FR 621 (January 4, 2002) (approving SR-NASD-2001-76).
    \7\ https://listingapplications.nasdaqomx.com/.
    \8\ Rules 4120(c)(7)(B) and 4753. The IPO cross is the process 
by which an initial public offering is released for trading. Prior 
to the IPO cross, trading is halted in the security.
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    In addition, Nasdaq proposes to modify the annual fee imposed on 
domestic and foreign issues and American Depositary Receipts (ADRs) 
listed on the Nasdaq Global and Global Select Markets. The proposed 
change would result in revised annual fees for domestic and foreign 
issues ranging from $35,000 to $99,500, based on their shares 
outstanding, and a maximum increase of $5,000, depending on the 
company's total shares outstanding.\9\ In addition, Nasdaq proposes to 
combine two of the existing seven fee tiers to create a new tier for 
companies with over 10 million to 50 million shares outstanding. As a 
result, there would be no fee increase for approximately 25% of Nasdaq 
companies.\10\ Annual fees for domestic companies were last increased 
in January 2007.\11\ The revised fee applicable to ADRs would result in 
an annual increase ranging from $8,775 to $20,000, and the revised fee 
would range from $30,000 to $50,000, depending on the number of ADRs 
outstanding.\12\ In addition, Nasdaq proposes to expand the size of the 
tiers of shares outstanding on which the fees are based, so that 
companies are more likely to be in a lower tier.\13\ Annual fees for 
ADRs were last increased in February 2004.\14\ Nasdaq believes that the 
proposed increases to the annual fees would reflect the overall rise in 
costs since the last increases and take into account a number of 
regulatory and other initiatives implemented by Nasdaq since that time, 
including substantial enhancements to Nasdaq's

[[Page 57213]]

website to facilitate compliance by listed companies.\15\ In addition, 
the change to the ADR fees would reduce the disparity in fees paid by 
ADR issuers and other Nasdaq-listed companies.
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    \9\ The current annual fees range from $30,000 to $95,000. Rule 
5910(c).
    \10\ Companies with from 25 million to 50 million shares 
outstanding would not face a fee increase under the proposed change.
    \11\ See Securities Exchange Act Release No. 55202 (January 30, 
2007), 72 FR 6017 (February 8, 2007) (approving SR-NASDAQ-2006-40).
    \12\ The current annual fees range from $21,225 to $30,000. Rule 
5910(d).
    \13\ The current tiers of over 10 million--25 million ADRs 
outstanding, over 25 million--50 million ADRs outstanding, and over 
50 million ADRs outstanding would be changed to over 10 million--50 
million ADRs outstanding, over 50 million--75 million ADRs 
outstanding and over 75 million ADRs outstanding.
    \14\ See Securities Exchange Act Release No. 49169 (February 2, 
2004), 69 FR 6009 (February 9, 2004) (approving SR-NASD-2003-178).
    \15\ See http://www.nasdaq.com/services/insidenasdaq.stm. This 
website includes over 375 frequently asked questions about Nasdaq's 
listing rules, over 80 decisions of the Nasdaq Listing and Hearing 
Review Council, and summaries of over 275 interpretations issued by 
the Nasdaq staff in response to requests for written 
interpretations, as discussed below. This material provides 
transparency to Nasdaq's application of the listing rules and serves 
as a valuable resource to listed companies.
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    Fee for Written Interpretations of Nasdaq Listing Rules
    Nasdaq also proposes to change the fee for written interpretations 
of Nasdaq listing rules. In connection with such a request today, a 
company is required to submit a non-refundable fee of $5,000 for a 
regular request, which is generally completed within four weeks from 
the date Nasdaq receives all information necessary to respond to the 
request, or $15,000 for an expedited request, in which the company 
requests a response by a specific date that is less than four weeks 
after the date Nasdaq receives all necessary information.
    Since January 1, 2008, nearly 75% of all requests were submitted on 
an expedited basis. However, Nasdaq staff responded to many requests 
that were not submitted on an expedited basis in less than four weeks 
and some requests submitted on an expedited basis have taken longer 
than requested. In each case, Nasdaq staff attempts to respond as 
quickly as possible and, since adopting this process, Nasdaq has 
observed that the level of effort in each case, whether submitted on an 
expedited basis or not, is virtually the same. As such, Nasdaq proposes 
to eliminate the alternative for a non-expedited request and require 
all companies seeking an interpretation to pay $15,000. Nasdaq believes 
that this amount is reasonable given the level of attention required by 
these requests and that the fee change will not discourage such 
requests given the relatively few companies that have opted for non-
expedited requests. Further, Nasdaq proposes to modify the timeframes 
stated in the rule in which Nasdaq will respond to interpretive 
requests. As revised, the rule would state that Nasdaq will respond to 
all requests for a written interpretation within four weeks from the 
date Nasdaq receives all information necessary to respond to the 
request,\16\ although Nasdaq will attempt to respond by a sooner date 
if the Company so requires. Nasdaq believes that this modified time 
frame, which is similar to the time frame now provided for non-
expedited requests, better aligns the rule with Nasdaq's experience as 
to the amount of time it takes to make appropriate decisions as to the 
application of the rules and respond to interpretive requests.\17\
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    \16\ The Commission notes that under the proposal, Rule 5602 
regarding Written Interpretations of Nasdaq Listing Rules states 
that ``A response to a request for a written interpretation 
generally will be provided within four weeks from the date Nasdaq 
receives all information necessary to respond to the request * * *'' 
(emphasis added).
    \17\ The Commission notes that Nasdaq has stated that it does 
not charge companies for oral interpretation requests of their 
rules. Telephone conversation on October 28, 2009 between Arnold 
Golub, Vice President and Associate General Counsel, Nasdaq and 
Sharon Lawson, Senior Special Counsel, Commission.
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    Implementation
    The revised annual fee schedule will be effective January 1, 
2010.\18\ The application and entry fee schedule will be effective for 
companies that apply for listing after SEC approval of the proposed 
rule change; thus a company that applied and paid the application fee 
prior to SEC approval would be charged an entry fee according to the 
fee schedule in effect at the time of its application. The change to 
the interpretive fees will be effective upon approval.
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    \18\ Following the date of approval of the proposed rule change 
until January 1, 2010, Nasdaq would include language at the start of 
Rule 5910 on its website notifying users that amendments to the rule 
have been approved and will be effective January 1, 2010. This 
notice will allow users to click a link to view the text of the rule 
as it will be in effect on January 1, 2010, showing the revisions 
made by this filing. As such, Nasdaq believes there will be no 
confusion as to the currently applicable rule language (and fees) 
and users also will be able to see the approved fees that will 
become effective on January 1, 2010.
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2. Statutory Basis
    Nasdaq believes that the proposed rule change is consistent with 
the provisions of Section 6 of the Act,\19\ in general and with 
Sections 6(b)(4) and 6(b)(5) of the Act \20\ in particular. The 
proposed rule change is consistent with Section 6(b)(4) in that it 
provides for the equitable allocation of reasonable fees, dues, and 
other charges among members and issuers and other persons using any 
facility or system which Nasdaq operates or controls, and with Section 
6(b)(5) of the Act, which requires rules that are not designed to 
permit unfair discrimination between customers, issuers, brokers or 
dealers. Nasdaq's proposed fees are consistent with fees charged by 
competing listing markets and include a competitive service offering. 
The proposed fees will apply equally to similarly situated companies.
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    \19\ 15 U.S.C. 78f.
    \20\ 15 U.S.C. 78f(b)(4) and 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.

C. Self-Regulatory Organization's Statement on Comments on the Proposed 
Rule Change Received From Members, Participants or Others

    Written comments were neither solicited nor received.
III. Date of Effectiveness of the Proposed Rule Change and Timing for 
Commission Action
    Within 35 days of the date of publication of this notice in the 
Federal Register or within such longer period (i) as the Commission may 
designate up to 90 days of such date if it finds such longer period to 
be appropriate and publishes its reasons for so finding or (ii) as to 
which the self-regulatory organization consents, the Commission will:
    A. By order approve such proposed rule change, or
    B. Institute proceedings to determine whether the proposed rule 
change should be disapproved.

IV. Solicitation of Comments

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

Electronic Comments

     Use the Commission's Internet comment form (http://
www.sec.gov/rules/sro.shtml); or
     Send an e-mail to rule-comments@sec.gov. Please include 
File Number SR-NASDAQ-2009-081 on the subject line.

Paper Comments

     Send paper comments in triplicate to Elizabeth M. Murphy, 
Secretary, Securities and Exchange Commission, 100 F Street, NE., 
Washington, DC 20549-1090.

All submissions should refer to File Number SR-NASDAQ-2009-081. This 
file number should be included on the subject line if e-mail 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

[[Page 57214]]

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 inspection and copying in the Commission's 
Public Reference Room, 100 F Street, NE., Washington, DC 20549, on 
official business days between the hours of 10 a.m. and 3 p.m. Copies 
of 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; 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 No. SR-NASDAQ-2009-081 and should be submitted on or before 
November 25, 2009.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\21\
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    \21\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. E9-26513 Filed 11-3-09; 8:45 am]

BILLING CODE 8011-01-P