Document ID: SEC-2010-0380-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: NASDAQ Stock Market LLC
Posted Date: 2010-03-12T05:00Z

[Federal Register: March 12, 2010 (Volume 75, Number 48)]
[Notices]               
[Page 11958-11962]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr12mr10-171]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-61669; File No. SR-NASDAQ-2009-081]

 
Self-Regulatory Organizations; The NASDAQ Stock Market LLC; Order 
Granting Approval 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

March 5, 2010.

I. Introduction

    On October 6, 2009, The NASDAQ Stock Market LLC (``Nasdaq'') filed 
with the Securities and Exchange Commission (``Commission''), pursuant 
to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act''),\1\ and Rule 19b-4 thereunder,\2\ a proposed rule change 
modifying the application, entry and annual fees currently charged to 
issuers listed on the Nasdaq Global and Nasdaq Global Select Markets, 
as well as the fee for written interpretations of Nasdaq listing rules. 
The proposed rule change was published for comment in the Federal 
Register on November 4, 2009.\3\ The Commission received three comment 
letters from one commenter on the proposal.\4\ Nasdaq submitted four 
letters in response to the comments.\5\ This order approves the 
proposed rule change.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ See Securities Exchange Act Release No. 60899 (October 28, 
2009), 74 FR 57212 (``Notice'').
    \4\ See Letters to Elizabeth M. Murphy, Secretary, Commission, 
from Jesse W. Markham, Jr., Roger Myers, and Stephen Ryerson, Holme 
Roberts & Owen LLP (writing on behalf of Business Wire, Inc.), dated 
November 24, 2009 (``Business Wire Letter 1''); January 8, 2010 
(stating its intent to respond to Nasdaq's response to its initial 
letter); and January 14, 2010 (``Business Wire Letter 2'').
    \5\ See Letter to Elizabeth M. Murphy, Secretary, Commission, 
from Arnold P. Golub, Vice President and Associate General Counsel, 
The NASDAQ Stock Market LLC, dated December 23, 2009 (``Nasdaq 
Letter 1''); from Michael N. Sohn and Donna E. Patterson, Arnold & 
Porter, LLP, dated December 23, 2009 (writing on behalf of Nasdaq) 
(``Nasdaq Letter 2''); from Arnold P. Golub, Vice President and 
Associate General Counsel, The NASDAQ Stock Market LLC, dated 
January 22, 2010 (``Nasdaq Letter 3''); and February 5, 2010 
(``Nasdaq Letter 4'').
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II. Description of the Proposal

A. 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 Nasdaq Global Select 
Markets.\6\ Nasdaq

[[Page 11959]]

proposes to increase this fee to $25,000. The application fee would 
continue to be credited towards entry fees upon listing, and thus, this 
change would not affect the overall fees a company pays to list.
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    \6\ The application fee is non-refundable. The Global Select 
Market is a segment of The Nasdaq Global Market. See Nasdaq Rule 
5005(a)(25) and (29).
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    Nasdaq also proposes to modify the entry fee a company pays when 
listing on the Nasdaq Global or Nasdaq Global Select Markets. 
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.\7\ Nasdaq proposes to create, for Nasdaq Global and Nasdaq 
Global Select listings, 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.\8\ 
These fees were last increased in January 2002.\9\
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    \7\ The current entry fees for Nasdaq Global and Nasdaq Global 
Select listings are as follows: $100,000 for up to 30 million 
shares; $125,000 for 30+ to 50 million shares; and $150,000 for over 
50 million shares. See Nasdaq Rule 5910(a).
    \8\ The proposed entry fees for Nasdaq Global and Nasdaq Global 
Select listings are as follows: $125,000 for up to 30 million 
shares; $150,000 for 30+ to 50 million shares; $200,000 for 50+ to 
100 million shares; and $225,000 for shares over 100 million.
    \9\ See Securities Exchange Act Release No. 45206 (December 28, 
2001), 67 FR 621 (January 4, 2002) (approving SR-NASD-2001-76).
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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 Nasdaq Global Select Markets. The 
proposed change would result in revised annual fees for domestic and 
foreign issues for Nasdaq Global and Nasdaq Global Select listings, 
ranging from $35,000 to $99,500, based on the number of shares 
outstanding, and a maximum increase of $5,000, depending on the 
company's total shares outstanding.\10\ 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, according to Nasdaq, there would be no fee increase for 
approximately 25 percent of Nasdaq companies.\11\ Annual fees for 
domestic and foreign \12\ companies were last increased in January 
2007.\13\ The revised annual fee applicable to ADRs listed on Nasdaq 
Global and Nasdaq Global Select 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.\14\ In 
addition, Nasdaq proposes to expand the size of the tiers of shares 
outstanding on which these proposed fees are based. Annual fees for 
ADRs were last increased in February 2004.\15\
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    \10\ The current annual fees for domestic and foreign issues 
listed on Nasdaq Global and Nasdaq Global Select are as follows: 
$30,000 for up to 10 million shares; $35,000 for 10+ to 25 million 
shares; $37,500 for 25+ to 50 million shares; $45,000 for 50+ to 75 
million shares; $65,500 for 75+ to 100 million shares; $85,000 for 
100+ to 150 million shares; and $95,000 for over 150 million shares. 
See Nasdaq Rule 5910(c).
    \11\ The proposed annual fees for domestic and foreign issues 
listed on Nasdaq Global or Nasdaq Global Select are as follows: 
$35,000 for up to 10 million shares; $37,500 for 10+ to 50 million 
shares; $46,500 for 50+ to 75 million shares; $68,500 for 75+ to 100 
million shares; $89,000 for 100+ to 150 million shares; and $99,500 
for shares over 150 million. Companies with 25 million to 50 million 
shares outstanding would not face a fee increase under the proposed 
change.
    \12\ Telephone conversation between Arnold Golub, Vice President 
and Associate General Counsel, Nasdaq, and Terri Evans, Special 
Counsel, and Arisa Tinaves, Special Counsel, Division of Trading and 
Markets, Commission, on November 5, 2009 (clarifying that fees for 
foreign companies also were last increased in January 2007).
    \13\ See Securities Exchange Act Release No. 55202 (January 30, 
2007), 72 FR 6017 (February 8, 2007) (approving SR-NASDAQ-2006-40).
    \14\ The current annual fees for ADRs listed on Nasdaq Global 
and Nasdaq Global Select are as follows: $21,225 for up to 10 
million ADRs; $26,500 for 10+ to 25 million ADRs; $29,820 for 25+ to 
50 million ADRs; and $30,000 for over 50 million ADRs. See Nasdaq 
Rule 5910(d). The proposed annual fee for ADRs is as follows: 
$30,000 for up to 10 million ADRs; $37,500 for 10+ to 50 million 
ADRs; $42,500 for 50+ to 75 million ADRs; and $50,000 for ADRs over 
75 million.
    \15\ See Securities Exchange Act Release No. 49169 (February 2, 
2004), 69 FR 6009 (February 9, 2004) (approving SR-NASD-2003-178).
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B. Fee for Written Interpretations of Nasdaq Listing Rules

    Nasdaq also proposes to change the fee for written interpretations 
of Nasdaq listing rules 5000 through 5900 \16\ for all companies listed 
on Nasdaq's Capital, Global and Global Select Markets. Currently, for a 
written interpretation, 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.
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    \16\ The Commission notes that the 5000 series Rules are 
entitled NASDAQ Listing Rules.
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    Nasdaq proposes to eliminate the alternative for a non-expedited 
request and require all companies seeking a written interpretation to 
pay $15,000. Further, Nasdaq proposes to modify the timeframes in which 
Nasdaq would respond to interpretive requests. As revised, the rule 
would state that Nasdaq would generally respond to all requests for a 
written interpretation within four weeks from the date Nasdaq receives 
all information necessary to respond to the request, although Nasdaq 
would attempt to respond by a sooner date if the company so requires. 
Nasdaq will continue, as it currently does, to not charge companies for 
oral interpretations of its rules.\17\
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    \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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C. Implementation

    The revised annual fee schedule would be effective January 1, 2010. 
The application and entry fee schedule would be effective for companies 
that apply for listing after Commission approval of the proposed rule 
change; thus a company that applied and paid the application fee prior 
to Commission approval would be charged an entry fee according to the 
fee schedule in effect at the time of its application. Finally, we note 
that the change to the interpretive fees is effective upon approval of 
the fee in this order.

III. Summary of Comments

    The Commission received three comment letters on the proposed rule 
change from Business Wire.\18\ Generally, Business Wire requests that 
the Commission: ``(1) deny Nasdaq's proposal to increase its fees 
absent assurances that Nasdaq is not engaged in cross-subsidization of 
its information dissemination services subsidiary through application, 
entry, and annual fees for listings; (2) require transparency in all 
future pricing proposals from Nasdaq; and (3) restrict Nasdaq's 
ownership of and/or involvement in business outside its core function 
that create actual or apparent conflicts of interest.'' \19\
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    \18\ See supra note 4.
    \19\ See Business Wire Letters 1 and 2.
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    According to Business Wire, Nasdaq is increasing its ``fee 
structure to cover unspecified cost increases at the same time it is 
attempting to attract new listings by offering millions of dollars in 
`free' Information Dissemination Services [(``IDSs'')] bundled into the 
listing fee.'' \20\ Business Wire believes that Nasdaq is, in fact, 
raising its fees to subsidize the delivery of free or discounted IDSs 
to current or prospective listed companies through GlobeNewswire and 
other affiliates that provide IDSs such as press release services, 
webcasting, Web hosting and

[[Page 11960]]

EDGAR filings, all of which Nasdaq refers to as its ``Core Services,'' 
and which are offered under the umbrella of Nasdaq affiliate Nasdaq OMX 
Group Corporate Services, Inc. (``NOCS'').\21\ According to Business 
Wire, Nasdaq jointly markets itself and the IDSs offered by NOCS, to 
induce companies listed on other exchanges to switch listings or to 
retain Nasdaq listings, by effectively reducing a company's listing 
costs through the provision of IDSs.\22\ Specifically, Business Wire 
asserts that Nasdaq offers extensive free or discounted IDSs to certain 
listed companies and that, in fact, Nasdaq has offered ``up to five 
years of free or heavily discounted wire distribution * * * to certain 
companies either as an inducement to switch listings or as part of a 
package deal to reduce the cost of the company's existing listing on 
Nasdaq.'' \23\ According to Business Wire, the alleged cross-
subsidization unduly burdens competition and inequitably allocates fees 
among its issuers in violation of Sections 6(b)(4), (5) and (8) of the 
Act, as well as Sections 1 and 2 of the Sherman Act.\24\
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    \20\ See Business Wire Letter 1; see also Business Wire Letter 2 
(stating that the proposed rule change fails to explain why 
additional revenue is needed).
    \21\ See Business Wire Letter 1. The Commission notes that 
Nasdaq clarified that NOCS and Nasdaq are separate subsidiaries of 
NASDAQ OMX Group, Inc. See Nasdaq Letter 1. Nasdaq also clarified 
that references in its letters to Nasdaq Corporate Services, Inc., 
NASDAQ OMX Corporate Services, Inc., and Nasdaq Corporate Services, 
LLC should all be references to NASDAQ OMX Group Corporate Services, 
Inc. Telephone conversation on March 3, 2010 between Arnold Golub, 
Vice President and Associate General Counsel, Nasdaq, and Terri 
Evans, Special Counsel, Commission.
    \22\ See Business Wire Letter 2.
    \23\ See Business Wire Letter 2.
    \24\ See Business Wire Letter 1.
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    Specifically, Business Wire argues that Nasdaq's proposal fails to 
satisfy Section 6(b)(4) of the Act, which requires the equitable 
allocation of reasonable dues, fees and other charges among its 
issuers, because listed companies that use Nasdaq's free or discounted 
IDSs pay the same listing fees as listed companies that elect not to do 
so and purchase such services from third parties. Business Wire 
believes that Nasdaq's fees are not equitably allocated because one set 
of listed companies is subsidizing another by effectively paying, 
through their listing fees, a portion of the costs that are incurred by 
Nasdaq to provide free or discounted IDSs.\25\ Business Wire further 
asserts that the proposed fee increases would facilitate Nasdaq's 
alleged tying and cross-subsidization in violation of the antitrust 
laws and would, therefore, be inconsistent with just and equitable 
principles of trade under Section 6(b)(5) of the Act.\26\ Moreover, 
Business Wire believes that Nasdaq's proposed fee increases would 
impose a burden on competition not necessary or appropriate in 
furtherance of the purposes of the Act. According to Business Wire, 
Nasdaq's ``cross-subsidization provides no significant benefit to 
investors, listed companies, or the exchange system that might make 
such a significant impact on competition necessary or appropriate.'' 
\27\
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    \25\ See Business Wire Letter 1.
    \26\ See Business Wire Letter 1.
    \27\ See Business Wire Letter 1.
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    Business Wire also alleges that Nasdaq is tying its IDSs to its 
listing services in violation of Section 1 of the Sherman Act. 
According to Business Wire, a tying arrangement violates Section 1 of 
the Sherman Act ``if the seller has appreciable economic power in the 
tying product market and if the arrangement affects a substantial 
volume of commerce in the tied market.'' \28\ Business Wire believes 
that Nasdaq's free or discounted offerings meet the legal standard of a 
tying arrangement in violation of the antitrust laws.\29\
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    \28\ See Business Wire Letter 1.
    \29\ Business Wire believes that Nasdaq is tying together its 
listing services and its IDSs because customers that list on Nasdaq 
and are provided such free or discounted services will effectively 
be precluded from switching to another source of IDSs since they 
would be paying for Nasdaq's IDSs, whether they use them or not, 
through the elevated listing fees. Business Wire further alleges 
that Nasdaq has sufficient market power to coerce purchase of the 
tied product since the only way to avoid the indirect cost of 
Nasdaq's IDSs would be for a company to either not list on Nasdaq or 
incur significant costs to move their listing to a different 
exchange. Lastly, Business Wire asserts that the amount of commerce 
affected in the IDSs' market is far above the ``not insubstantial'' 
requirement of the Sherman Act (asserting that Nasdaq is offering 
millions of dollars of free wire distribution and other IDSs). See 
Business Wire Letters 1 and 2.
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    Additionally, Business Wire alleges that Nasdaq, by offering free 
or discounted IDSs, evinces an attempt to monopolize in violation of 
Section 2 of the Sherman Act.\30\ Specifically, Business Wire alleges 
that Nasdaq is engaging in predatory anti-competitive conduct. Business 
Wire urges the Commission to ensure that no part of the proposed fee 
increase is used to subsidize Nasdaq's provision of IDSs.
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    \30\ See Business Wire Letter 1.
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    Finally, Business Wire states that Nasdaq's offering of IDSs 
creates a conflict of interest with its role as a self-regulatory 
organization. For example, Business Wire believes that Nasdaq's role in 
enforcing compliance with rules relating to the dissemination of 
material information by listed companies could result in Nasdaq 
effectively becoming the ``preferred provider'' of IDSs.\31\ 
Accordingly, Business Wire believes that not only should Nasdaq's 
proposal be rejected, but that Nasdaq should be required to sell 
GlobeNewswire or operate it on a strict arms-length basis.\32\
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    \31\ See Business Wire Letter 1; see also Business Wire Letter 2 
(stating by ``intertwining its listing services with Globe's 
Information Dissemination Services, Nasdaq is circumventing any 
controls between its regulatory function and the non-regulated 
services provided by its affiliated entities.'')
    \32\ See Business Wire Letters 1 and 2.
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IV. Response to Comments

    In response to Business Wire's comments, Nasdaq asserts that its 
proposed fee change satisfies the requirements of the Act.\33\ 
Specifically, Nasdaq states that its ``proposed fees are in all cases 
equal to, or less than, the fees charges by other exchanges'' and are 
supported by improvements to its market and regulatory process, as well 
as by changes in the marketplace.\34\
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    \33\ See Nasdaq Letters 1, 3 and 4.
    \34\ See Nasdaq Letter 4.
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    According to Nasdaq, it must now ``spread its fixed costs, 
including the costs for regulation, across fewer listed companies and 
applicants than in the past.'' \35\ Specifically, Nasdaq states that 
the number of companies listed on Nasdaq has declined approximately ten 
percent, but that its regulatory costs have either remained constant or 
increased.\36\ Nasdaq also asserts that the proposal does not permit 
unfair discrimination between customers, issuers, brokers, or dealers. 
According to Nasdaq the proposed fees are ``allocated based on shares 
outstanding, as are Nasdaq's current fees and fees for other exchanges, 
and that similarly situated companies would be charged the same fees.'' 
\37\
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    \35\ See Nasdaq Letter 1.
    \36\ See Nasdaq Letter 3. Nasdaq represents that from December 
31, 2006 until December 31, 2009, the number of companies listed on 
Nasdaq has declined from 3,193 companies to 2,852 companies.
    \37\ See Nasdaq Letter 1.
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    Further, in response to Business Wire's concern that Nasdaq's 
proposed fees unduly burden competition in violation of Section 6(b)(8) 
of the Act, Nasdaq believes that in assessing competition, the 
Commission should be concerned with competition among the entities it 
regulates, such as exchanges, brokers, dealers, and issuers, and not 
competitive issues in other areas of the economy.\38\ Accordingly, 
Nasdaq asserts that the only competitive impact of the proposed rule 
change would be to allow Nasdaq ``to recover the costs of, and continue 
to make, improvements to its market and regulatory process, and

[[Page 11961]]

therefore to continue to compete with other listing markets * * *.'' 
\39\ Nasdaq also believes that any potential conflicts of interest are 
addressed by its separation of its regulatory functions, including the 
listing department, from its business functions, as well as through the 
rule filing process.\40\ Moreover, the effectiveness of its regulatory 
program is subject to periodic Commission examination.\41\
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    \38\ See Nasdaq Letter 1.
    \39\ See Nasdaq Letter 1.
    \40\ See Nasdaq Letter 1.
    \41\ See Nasdaq Letter 1.
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    Nasdaq also represents that its proposed fee changes are not 
designed to recoup GlobeNewswire's costs,\42\ and that ``GlobeNewswire 
is profitable on a stand-alone basis, even after considering the 
marketing expenses it incurs when offering products for free on a trial 
basis, and there is therefore no need for Nasdaq to cross-subsidize 
GlobeNewswire * * *.'' \43\ According to Nasdaq, GlobeNewswire makes 
promotional and partnership offers to current and prospective customers 
as part of its marketing efforts.\44\ However, Nasdaq acknowledges that 
such marketing efforts on behalf of NOCS, including GlobeNewswire, 
``typically occur in meetings and discussions about the company's 
choice of listing market.'' \45\ Nasdaq represents, however, that while 
NOCS will continue to offer a sample of services on a complimentary or 
discounted basis, such offers will be made regardless of where the 
company is listed or determines to list.\46\ In addition, Nasdaq 
represents that while NOCS, including GlobeNewswire, may offer, without 
regard to the company's choice of listing market, promotional packages 
of services to broad categories of companies with certain 
characteristics, it will not offer any individually customized packages 
of free or discounted services to any company.\47\ Accordingly, Nasdaq 
believes that ``any discounts provided for NOCS products cannot be 
misconstrued as being offered in connection with a company's listing on 
Nasdaq.'' \48\
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    \42\ See Nasdaq Letter 1.
    \43\ See Nasdaq Letter 3.
    \44\ See Nasdaq Letter 1.
    \45\ See Nasdaq Letter 4.
    \46\ Nasdaq represents that any future offers of free and 
discounted services by NOCS will explicitly and expressly provide 
that companies are free to accept the offer whether or not they 
choose to list on Nasdaq. See Nasdaq Letter 4.
    \47\ See Nasdaq Letter 4. Nasdaq has represented that it will 
not offer any customized packages of free or discounted services, 
unless the Commission specifically states that it is permitted to do 
so. Telephone conversation on February 22, 2010 between Arnold 
Golub, Vice President and Associate General Counsel, Nasdaq and 
Sharon Lawson, Senior Special Counsel, Commission.
    \48\ See Nasdaq Letter 4.
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    Also, in response to Business Wire's antitrust claims, Nasdaq 
disputes Business Wire's allegation that Nasdaq illegally ties 
GlobeNewswire and other IDSs to a company's listing on Nasdaq.\49\ 
Nasdaq asserts that companies wishing to list on Nasdaq are not forced 
to use IDSs provided by Nasdaq since neither the receipt of such 
services nor a Nasdaq listing are conditioned on the other.\50\ 
Therefore, Nasdaq believes that the promotional offers for 
GlobeNewswire services do not constitute tying.\51\ Nasdaq further 
asserts that ``Business Wire's claim that the costs of the * * * 
promotions are the unstated basis for Nasdaq's listing fee proposal is 
pure speculation.'' \52\
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    \49\ See Nasdaq Letter 2. Nasdaq maintains that NOCS, Nasdaq's 
affiliate, has offered and plans to offer a limited amount of free 
or discounted ``Core Services'' to all companies whether the company 
is listed on Nasdaq or not.
    \50\ According to Nasdaq, ``[i]llegal tying is the `seller's 
exploitation of its control over the tying product * * * to force 
the buyer into the purchase of a tied product * * * that the buyer 
either did not want at all, or might have preferred to purchase 
elsewhere on different terms.'' See Nasdaq Letter 2.
    \51\ See Nasdaq Letter 2. Nasdaq asserts, among other things, 
that any offers of GlobeNewswire free or discounted services when 
competing for listings would fail the coercion element of the 
Sherman Act, since Nasdaq is willing to and does offer the listing 
service alone without the IDSs. Additionally, according to Nasdaq, 
because Nasdaq must compete for listings, Nasdaq does not have the 
requisite market power required under the Sherman Act for a tying 
claim. See Nasdaq Letter 2.
    \52\ See Nasdaq Letter 2.
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    Finally, Nasdaq asserts that the promotional nature of the offering 
alone precludes a predatory pricing claim constituting attempted 
monopolization under Section 2 of the Sherman Act. Nasdaq notes that 
courts routinely hold that promotional offers cannot constitute 
predatory pricing.\53\
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    \53\ Nasdaq further states that GlobeNewswire does not pose a 
real danger of driving competitors from the market, since 
GlobeNewswire only processes approximately 10 percent of corporate 
news releases in the U.S. Nasdaq also notes the substantial 
resources available to Business Wire. See Nasdaq Letter 2.
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V. Discussion and Commission's Findings

    The Commission finds that the proposed rule change is consistent 
with the requirements of the Act and the rules and regulations 
thereunder applicable to a national securities exchange.\54\ 
Specifically, the Commission finds that the proposed rule change is 
consistent with Sections 6(b)(4), (b)(5), and (b)(8) of the Act,\55\ 
which require, in part, that the rules of an exchange: (i) Provide for 
the equitable allocation of reasonable dues, fees, and other charges 
among its members and issuers and other persons using its facilities; 
(ii) are not designed to permit unfair discrimination between 
customers, issuers, brokers or dealers; and (iii) do not impose any 
burden on competition not necessary or appropriate in furtherance of 
the purposes of the Act.
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    \54\ In approving the proposed rule change, the Commission has 
considered the proposed rule's impact on efficiency, competition, 
and capital formation. 15 U.S.C. 78c(f).
    \55\ 15 U.S.C. 78f(b)(4), (b)(5) and (b)(8).
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    The Commission believes that assurances it has received from Nasdaq 
in response to the comments of Business Wire adequately address the 
concerns expressed that Nasdaq is acting in an anti-competitive manner 
that is inconsistent with the Act. Specifically, Nasdaq has represented 
that promotional offers of IDSs made by its affiliate, NOCS, are made 
regardless of whether or not a prospective customer is listed or may 
become listed on Nasdaq. Furthermore, NOCS will limit its promotional 
activities to: (1) Offering a free or discounted sampling of IDSs--its 
``Core Services'' package--to all prospective customers; and (2) 
perhaps offering other packages of complimentary or discounted IDSs to 
broad categories of companies. In either case, the free or discounted 
services offered by NOCS ``will explicitly and expressly provide that 
companies will be free to accept the offer and test NOCS services 
whether or not they choose to list on Nasdaq.'' \56\
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    \56\ See Nasdaq Letter 4. In expressly and explicitly notifying 
companies that permitted offers are not contingent on a Nasdaq 
listing, Nasdaq further represents that any mention of a permitted 
offer on a Nasdaq or NOCS Web site will also state that the offer is 
not conditioned on the companies' choice of listing market. The 
Commission notes it is important that any communications, 
irrespective of the method, on permitted free or discounted services 
make it expressly and explicitly clear that such services are 
available whether or not the company lists on Nasdaq.
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    Based on Nasdaq's representation that offers of IDSs by NOCS will 
be made independent of the listing status of NOCS customers or 
potential customers, as well as additional information contained in 
Nasdaq's responses,\57\ the Commission does not believe that the 
proposed increases in listing fees cross-subsidize NOCS services in any 
way that constitutes an inappropriate burden on competition or an 
inequitable allocation of fees, or fails to promote just and equitable 
principles of trade, in a manner inconsistent with the Act. 
Accordingly, we find that the proposed changes to Nasdaq listing fees 
is consistent with the requirements of the

[[Page 11962]]

Act and, in particular, provides for an equitable allocation of 
reasonable fees among its issuers consistent with Section 6(b)(4) of 
the Act, does not unfairly discriminate between issuers consistent with 
Section 6(b)(5) of the Act, and is consistent with Section 6(b)(8) of 
the Act.
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    \57\ See Nasdaq Letters 1-4.
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    As to the concerns raised by Business Wire that the offering of 
IDSs by NOCS creates a conflict of interest with Nasdaq's self-
regulatory functions since, among other things, Nasdaq enforces rules 
relating to the dissemination of material information by listed 
companies, Nasdaq has represented that it has effectively separated its 
regulatory functions from its business functions, and that its business 
functions, including those of NOCS, in no way influence the regulatory 
oversight of listed companies and their disclosure requirements.\58\ 
The Commission believes that Nasdaq's assurances concerning the 
separation of its business and regulatory functions adequately address 
the conflict of interest concerns raised by Business Wire. The 
Commission also notes that it oversees Nasdaq as a registered national 
securities exchange, including the performance of its regulatory 
functions in a manner consistent with the Act.
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    \58\ Telephone conversation on March 5, 2010 between Arnold 
Golub, Vice President and Associate General Counsel, Nasdaq and 
Sharon Lawson, Senior Special Counsel, Commission.
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    With respect to its application, annual, and entry fees, Nasdaq has 
represented that the proposed increase in fees better reflects the 
costs associated with, among other things, listing application reviews, 
Nasdaq's new on-line application center, and enhancements to its 
listings compliance systems.\59\ Moreover, Nasdaq notes that the number 
of listed companies on Nasdaq has declined approximately 10% since 
2006, so that its regulatory costs must be allocated among fewer listed 
companies.\60\ Nasdaq further notes that, despite the decline in 
listings, because of enhancements to its compliance programs and 
changes in regulatory requirements, the number of issuer filings that 
it reviews has substantially increased since 2002, and that the 
workload to monitor compliance in recent years has increased due to 
market conditions and other issues.
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    \59\ See Nasdaq Letter 4.
    \60\ See Nasdaq Letter 3.
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    The Commission notes that Nasdaq's fees are comparable to and, in 
some instances, less than similar fees of the New York Stock 
Exchange.\61\ Further, the Commission did not receive any comment 
letters from currently-listed Nasdaq companies or prospective listed 
companies opposing the fee increase. Thus, the Commission finds that 
Nasdaq's proposed fees are reasonable, equitably allocated among 
issuers, and otherwise consistent with the requirements of the Act.
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    \61\ See NYSE Sections 902.02 and 902.03 of the NYSE Listed 
Company Manual.
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    Finally, with respect to the increased fee for written 
interpretations, Nasdaq has represented that the fee increase is 
reasonable given the costs incurred by Nasdaq in connection with such 
requests. Nasdaq is proposing to charge $15,000 for all written 
interpretation requests, and eliminate the distinction between a 
regular request, which currently costs $5,000, and an expedited request 
which currently costs $15,000. Nasdaq noted that since January 2008, 
the large majority of requests for a written interpretation (nearly 
75%) are expedited reviews. While the Commission would be concerned if 
the written interpretive fee was set at a level so high that issuers 
were deterred from seeking such written interpretations when needed, 
this does not appear to be the case since the majority of issuers today 
elect to pay $15,000 for an expedited review. Accordingly, the 
Commission believes that the proposed fee increase provides for the 
equitable allocation of reasonable fees among issuers consistent with 
Section 6(b)(4) of the Act, does not unfairly discriminate between 
issuers consistent with Section 6(b)(5) of the Act, and is otherwise 
consistent with the requirements of the Act. Moreover, the Commission 
notes that with respect to interpretations, issuers will still continue 
to receive oral interpretations at no charge.\62\
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    \62\ See supra note 17.
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VI. Conclusion

    It is therefore ordered, pursuant to Section 19(b)(2) of the 
Act,\63\ that the proposed rule change (SR-Nasdaq-2009-081) be, and it 
hereby is, approved.
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    \63\ 15 U.S.C. 78s(b)(2).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\64\
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    \64\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010-5413 Filed 3-11-10; 8:45 am]
BILLING CODE 8011-01-P