Document ID: SEC-2016-1041-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: NASDAQ Stock Market LLC
Posted Date: 2016-06-17T04:00Z

[Federal Register Volume 81, Number 117 (Friday, June 17, 2016)]
[Notices]
[Pages 39736-39738]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-14310]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-78047; File No. SR-NASDAQ-2016-077]

Self-Regulatory Organizations; The NASDAQ Stock Market LLC; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To 
Eliminate Certain Fees Charged to Securities Listed on Nasdaq Under the 
Rule 5700 Series

June 13, 2016.
    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 June 1, 2016, 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 eliminate certain fees charged to 
securities listed on Nasdaq under the Rule 5700 Series.
    The text of the proposed rule change is detailed below. Proposed 
new language is italicized and proposed deletions are in brackets.

* * * * *
5930. Linked Securities, SEEDS, and Other Securities
    (a)-(b) No change.
[(c) Record-Keeping Fee
    A Company that makes a change such as a change to its name, the par 
value or title of its security, or its symbol shall pay a fee of $2,500 
to Nasdaq and submit the appropriate form as designated by Nasdaq.
(d) Substitution Listing Fee
    A Company that implements a Substitution Listing Event, including 
the replacement of, or any significant modification to, the index, 
portfolio, or Reference Asset underlying a security, shall pay a fee of 
$5,000 to Nasdaq for each event or change and submit the appropriate 
form as designated by Nasdaq.]

[[Page 39737]]

5940. Exchange Traded Products
    The fees in this Rule 5940 shall apply to securities listed under 
the Rule 5700 Series where no other fee schedule is specifically 
applicable. These securities include, but are not limited to, Portfolio 
Depository Receipts, Index Fund Shares, Managed Fund Shares, and 
NextShares.
    (a)-(b) No change.
[(c) Record-Keeping Fee
    A Company that makes a change such as a change to its name, the par 
value or title of its security, or its symbol shall pay a fee of $2,500 
to Nasdaq and submit the appropriate form as designated by Nasdaq.
(d) Substitution Listing Fee
    A Company that implements a Substitution Listing Event, including 
the replacement of, or any significant modification to, the index, 
portfolio, or Reference Asset underlying a security, shall pay a fee of 
$5,000 to Nasdaq for each event or change and submit the appropriate 
form as designated by Nasdaq.]

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
    The purpose of the proposed rule change is to eliminate the fees 
for record-keeping changes and substitution listing events charged to 
Linked Securities, SEEDS, Other Securities, and Exchange Traded 
Products listed on Nasdaq. These fees were adopted in November 2015,\3\ 
and, upon further reflection, Nasdaq has determined to remove them. The 
proposed rule change would not affect the notice companies must give 
Nasdaq about record-keeping changes or substitution listing events.\4\
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    \3\ Securities Exchange Act Release No. 76550 (December 3, 
2015), 80 FR 76605 (December 9, 2015) (SR-NASDAQ-2015-146).
    \4\ Rule 5250(e)(3) defines a ``Record Keeping Change'' as any 
change to a company's name, the par value or title of its security, 
its symbol, or a similar change and requires a listed company to 
provide notification to Nasdaq no later than 10 days after the 
change. Rule 5005(a)(40) defines a ``Substitution Listing Event'' as 
certain changes in the equity or legal structure of a company, 
including the replacement of, or any significant modification to, 
the index, portfolio or Reference Asset underlying a security listed 
under the Rule 5700 Series (including, but not limited to, a 
significant modification to the index methodology, a change in the 
index provider, or a change in control of the index provider). Rule 
5250(e)(4) requires a listed company to provide notification to 
Nasdaq about a Substitution Listing Event no later than 15 calendar 
days prior to the implementation of the event.
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2. Statutory Basis
    Nasdaq believes that this proposal is consistent with Section 6(b) 
of the Act,\5\ in general, and furthers the objectives of Sections 
6(b)(4) and 6(b)(5) of the Act,\6\ in particular, in that it provides 
for the equitable allocation of reasonable dues, fees, and other 
charges among members and issuers and other persons using any facility 
or system which the Exchange operates or controls. This proposal is, in 
addition, not designed to permit unfair discrimination between 
customers, issuers, brokers, or dealers.
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    \5\ 15 U.S.C. 78f(b).
    \6\ 15 U.S.C. 78f(b)(4) and (5).
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    The Commission and the courts have repeatedly expressed their 
preference for competition over regulatory intervention in determining 
prices, products, and services in the securities markets. In Regulation 
NMS, while adopting a series of steps to improve the current market 
model, the Commission highlighted the importance of market forces in 
determining prices and SRO revenues and, also, recognized that current 
regulation of the market system ``has been remarkably successful in 
promoting market competition in its broader forms that are most 
important to investors and listed companies.'' \7\ Similarly, the 
Justice Department has noted the intense competitive environment for 
exchange listings.\8\
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    \7\ Securities Exchange Act Release No. 51808 (June 9, 2005), 70 
FR 37496, 37499 (June 29, 2005).
    \8\ 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.
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    Nasdaq believes that the proposed change to eliminate the recently 
adopted fees for record-keeping changes and substitution listing events 
charged to securities listed under the Rule 5700 Series is reasonable 
because it is a competitive response to the fees of other exchanges and 
issuers' reaction to Nasdaq's fee change.\9\
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    \9\ BATS does not charge a fee for equivalent events. See 
Chapter XIV of the Rules of the BATS Exchange and Rule 14.13 of the 
BATS Exchange Listing Rules. NYSE Arca charges $2,500 for equivalent 
events, but has recently modified other listing fees in connection 
with the listing of Exchange Traded Products. See NYSE Arca 
Equities: Listing Fees; Securities Exchange Act Release No. 77883 
(May 23, 2016), 81 FR 33720 (May 27, 2016) (SR-NYSEArca-2016-69).
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    Nasdaq also believes that the proposed change is an equitable 
allocation and is not unfairly discriminatory because the Exchange will 
apply the same fee to all similarly situated issuers. While issuers of 
securities listed under the Rule 5700 Series will not be subject to 
fees for record-keeping changes and substitution listing events, and 
other companies will be subject to such fees, this difference is not 
unfairly discriminatory.
    The proposed change merely reinstates a longstanding difference by 
removing fees that were only recently adopted. This longstanding 
difference is not unfairly discriminatory because the fees for 
securities listed under the Rule 5700 Series are generally lower than 
the listing fees for other types of issuers, reflecting the passive 
nature of these issuers and the extreme focus on their expenses as a 
means for various products to compete.\10\
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    \10\ For example, entry fees for securities listed on the Nasdaq 
Global Market under the Rule 5700 Series range from $5,000 to 
$45,000 pursuant to Rules 5930 and 5940, whereas entry fees for 
other companies listed on the Nasdaq Global Market range from 
$125,000 to $225,000 pursuant to Rule 5910(a).
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    Further, other companies that could pay fees for record-keeping 
changes and substitution listing events had the option to avoid the fee 
by electing to be on Nasdaq's all-inclusive annual fee, which 
eliminates the fees for these events. Securities listed under the Rule 
5700 Series do not, at this time, have the option to elect an all-
inclusive fee alternative. Nasdaq believes that the lower existing 
fees, lack of an all-inclusive fee alternative, and competitive 
considerations are reasonable, fair, and equitable reasons to charge 
issuers of securities listed under the Rule 5700 Series different fees 
than other Nasdaq-listed companies, including not charging them for 
record-keeping changes and substitution listing events.
    The proposed change will not impact the resources available to 
Nasdaq's regulatory program. In that regard, Nasdaq notes that these 
fees were traditionally not charged to securities listed under the Rule 
5700 Series and that there will be no significant decline

[[Page 39738]]

in expected revenue by eliminating the fees.

B. Self-Regulatory Organization's Statement on Burden on Competition

    The proposed rule change will not impose any burden on competition 
not necessary or appropriate in furtherance of the purposes of the Act.
    The market for listing services is extremely competitive and listed 
companies may easily list on competing venues if they deem fee levels 
at a particular exchange to be excessive. In such an environment, the 
Exchange must continually adjust its fees to remain competitive with 
other exchanges.
    This rule proposal does not burden competition with other listing 
venues, which are similarly free to set their fees, but rather reflects 
the 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.\11\
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    \11\ 15 U.S.C. 78s(b)(3)(A)(ii).
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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: (i) 
Necessary or appropriate in the public interest; (ii) for the 
protection of investors; or (iii) otherwise in furtherance of the 
purposes of the Act. If the Commission takes such action, the 
Commission shall institute proceedings to determine whether the 
proposed rule should be approved or 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 email to rule-comments@sec.gov. Please include 
File Number SR-NASDAQ-2016-077 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-2016-077.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-2016-077 and should 
be submitted on or before July 8, 2016.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\12\
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    \12\ 17 CFR 200.30-3(a)(12).
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Robert W. Errett,
Deputy Secretary.
[FR Doc. 2016-14310 Filed 6-16-16; 8:45 am]
 BILLING CODE 8011-01-P