Document ID: SEC-2005-0456-0001
Agency: sec
Document Type: Notice
Title: Self-regulatory organizations; proposed rule changes: National Association of Securities Dealers, Inc.
Posted Date: 2005-12-29T05:00Z

[Federal Register: December 29, 2005 (Volume 70, Number 249)]
[Notices]               
[Page 77222-77223]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr29de05-109]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-52997; File No. SR-NASD-2005-143]

 
Self-Regulatory Organizations; National Association of Securities 
Dealers, Inc.; Notice of Filing and Immediate Effectiveness of Proposed 
Rule Change To Allow Nasdaq Capital Market Issuers That Transfer Their 
Listing to the Nasdaq National Market To Apply the Amount of the 
Capital Market Entry Fee Toward the Entry Fee Payable for Listing on 
the National Market, and To Make Other Clarifying Changes

December 22, 2005.
    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 December 1, 2005, the National Association of Securities Dealers, 
Inc. (``NASD''), through its subsidiary, The Nasdaq Stock Market, Inc. 
(``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. Nasdaq filed 
the proposal as a ``non-controversial'' proposed rule change pursuant 
to Section 19(b)(3)(A) of the Act \3\ and Rule 19b-4(f)(6) 
thereunder,\4\ which renders the proposal effective upon filing with 
the Commission.\5\ 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.
    \3\ 15 U.S.C. 78s(b)(3)(A).
    \4\ 17 CFR 240.19b-4(f)(6).
    \5\ As required by Rule 19b-4(f)(6)(iii), 17 CFR 240.19b-
4(f)(6)(iii), the Nasdaq submitted written notice of its intent to 
file the proposed rule change, along with a brief description and 
text of the proposed rule change, at least five business days prior 
to the date of filing.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    Nasdaq proposes to add new language to NASD Rules 4510(a) and 
4520(a) to allow Nasdaq Capital Market issuers that transfer their 
listing to the Nasdaq National Market to apply the amount of the 
Capital Market entry fee previously paid to the entry fee payable for 
listing on the National Market, and to make other clarifying changes. 
The text of the proposed rule change is below. Proposed additions are 
in italics.
4510. The Nasdaq National Market
    (a) Entry Fee
    (1)-(8) No change.
    (9) An issuer that transfers its listing from The Nasdaq Capital 
Market to The Nasdaq National Market shall pay the entry fee described 
in this Rule 4510(a) less the entry fee that was previously paid by the 
issuer to Nasdaq in connection with listing on The Nasdaq Capital 
Market. Such issuer is not required to pay the application fee 
described in Rule 4510(a) in connection with the application to 
transfer listing.
    (10) An issuer that submits an application for listing on The 
Nasdaq Capital Market, but prior to listing revises its application to 
seek listing on The Nasdaq National Market, is not required to pay the 
application fee described in Rule 4510(a) in connection with the 
revised application.
    (b)-(e) No change.
4520. The Nasdaq Capital Market
    (a) Entry Fee
    (1)-(7) No change.
    (8) An issuer that submits an application for listing on The Nasdaq 
National Market, but prior to listing revises its application to seek 
listing on The Nasdaq Capital Market, is not required to pay the 
application fee described in Rule 4520(a) in connection with the 
revised application.
    (b)-(d) No change.
* * * * *

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 proposal. 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
    The purpose of the proposed rule change is to permit existing 
Nasdaq issuers that seek to transfer their listing from the Nasdaq 
Capital Market to the Nasdaq National Market to apply the amount of the 
Capital Market entry fee previously paid to the entry fee payable for 
listing on the National Market. Currently, issuers listing a class of 
securities on the Nasdaq Capital Market pay an entry fee based on total 
shares outstanding that ranges from $25,000 to $50,000.\6\ Under the 
existing rules, an issuer that later applies to ``phase up'' its 
listing from the Capital Market to the National Market is required to 
pay the applicable entry fee for new issuers listing on the National 
Market, which currently ranges from $100,000 to $150,000.\7\
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    \6\ NASD Rule 4520(a)(1). This fee includes a $5,000 non-
refundable application fee that is submitted with the issuer's 
initial listing application. The remainder of the entry fee is 
assessed on the date of entry on the Capital Market.
    \7\ NASD Rule 4510(a)(1). This fee includes a $5,000 non-
refundable application fee that is submitted with the issuer's 
initial listing application. The remainder of the entry fee is 
assessed on the date of entry on the National Market. Under Rule 
4510(a)(3), Closed-End Funds pay an entry fee of $5,000 per class of 
securities (of which $1,000 is a non-refundable application fee).
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    Under the proposed rule change, a Capital Market issuer that 
applies to ``phase up'' its listing would pay the applicable National 
Market entry fee less the amount of the entry fee that it paid to list 
on the Capital Market. Because the issuer previously paid a non-
refundable application fee when applying to list on the Capital Market, 
the issuer would not be required to pay an additional application fee 
in connection with the transfer to the National Market. For example, an 
issuer that paid an entry fee of $50,000 (of which $5,000 was a non-
refundable application fee) upon inclusion of a class of securities in 
the Capital Market would receive a $45,000 credit toward the applicable 
National Market entry fee upon phase up and the application fee would 
be waived.
    Nasdaq believes that the reduction in fees resulting from the entry 
fee credit is justified by the corresponding reduction in time and 
effort needed to review a phase up application. Nasdaq's experience has 
shown that the review process for phase up applications generally is 
less time-consuming for the staff than the review required for issuers 
that list on the National Market after an initial public offering or 
through other means. Furthermore, the proposed rule change creates an 
incentive for issuers that list on the Capital Market to transfer to 
the National Market rather than seek a listing elsewhere, thereby 
promoting competition between Nasdaq and exchange markets.

[[Page 77223]]

    Nasdaq also proposes to clarify that an issuer that applies for 
listing on one tier of Nasdaq, but prior to listing decides to apply to 
list instead on the other tier, is not required to pay an additional 
application fee in connection with its revised application. For 
example, an issuer that submits an application for inclusion of a class 
of securities in the Nasdaq National Market is required to pay a $5,000 
nonrefundable application fee that is submitted with the issuer's 
application. If prior to listing the issuer decides to apply to list on 
the Nasdaq Capital Market instead, the issuer would not be required to 
pay an additional $5,000 application fee in connection with its revised 
application.
2. Statutory Basis
    Nasdaq believes that the proposed rule change is consistent with 
the provisions of Section 15A of the Act,\8\ in general, and with 
Sections 15A(b)(5) \9\ and 15A(b)(6) \10\ of the Act, in particular, 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 the Nasdaq operates or controls, and is 
designed to remove impediments to and perfect the mechanism of a free 
and open market and a national market system. Nasdaq believes the 
proposed rule change provides for an equitable allocation of reasonable 
fees because, although Capital Market issuers that transfer their 
listing to the National Market would continue to pay an entry fee for 
each class of securities listed, such fee would be reduced in 
recognition that these issuers already paid an entry fee upon listing 
on the Capital Market, and that there is a corresponding reduction in 
the time and effort necessary to process listing applications of such 
companies. In addition, the proposed rule change should enhance 
competition among markets by allowing issuers to better evaluate the 
benefits of maintaining a listing on Nasdaq.
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    \8\ 15 U.S.C. 78o-3.
    \9\ 15 U.S.C. 78o-3(b)(5).
    \10\ 15 U.S.C. 78o-3(b)(6).
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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

    Nasdaq has neither solicited nor received comments on the proposed 
rule change.

III. Date of Effectiveness of the Proposed Rule Change and Timing for 
Commission Action

    Because the foregoing proposed rule change does not: (i) 
Significantly affect the protection of investors or the public 
interest; (ii) impose any significant burden on competition; and (iii) 
become operative for 30 days from the date on which it was filed, or 
such shorter time as the Commission may designate if consistent with 
the protection of investors and the public interest, and Nasdaq 
provided the Commission with written notice of its intent to file the 
proposed rule change, along with a brief description and text of the 
proposed rule change, at least five days prior to the filing date,\11\ 
the proposed rule change has become effective pursuant to Section 
19(b)(3)(A) of the Act \12\ and Rule 19b-4(f)(6) thereunder.\13\
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    \11\ See footnote 5, supra.
    \12\ 15 U.S.C. 78s(b)(3)(A).
    \13\ 17 CFR 240.19b-4(f)(6).
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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-NASD-2005-143 on the subject line.

Paper Comments

     Send paper comments in triplicate to Jonathan G. Katz, 
Secretary, Securities and Exchange Commission, 100 F Street, NE., 
Washington, DC 20549-9303.

All submissions should refer to File Number SR-NASD-2005-143. 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 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. Copies of the filing 
also will be available for inspection and copying at the principal 
office of the NASD.
    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-NASD-2005-143 
and should be submitted on or before January 19, 2006.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\14\
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    \14\ 17 CFR 200.30-3(a)(12).
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Jonathan G. Katz,
Secretary.
[FR Doc. E5-8055 Filed 12-28-05; 8:45 am]

BILLING CODE 8010-01-P