Document ID: SEC-2020-1199-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: The Nasdaq Stock Market, LLC
Posted Date: 2020-07-29T04:00Z

[Federal Register Volume 85, Number 146 (Wednesday, July 29, 2020)]
[Notices]
[Pages 45720-45722]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-16372]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-89386; File No. SR-NASDAQ-2020-039]

Self-Regulatory Organizations; The Nasdaq Stock Market LLC; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To 
Amend Listing Rule IM-5900-4 To Waive the All-Inclusive Annual Listing 
Fee for Any Company Not Listed on a National Securities Exchange That 
Is Listing Upon Closing of Its Acquisition of a Special Purpose 
Acquisition Company Listed on Another National Securities Exchange

July 23, 2020.
    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 July 9, 2020, 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 and II 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 amend Listing Rule IM-5900-4 to waive the 
All-Inclusive Annual Listing Fee for any company not listed on a 
national securities exchange that is listing upon closing of its 
acquisition of a special purpose acquisition company listed on another 
national securities exchange.
    The text of the proposed rule change is available on the Exchange's 
website at https://listingcenter.nasdaq.com/rulebook/nasdaq/rules, at 
the principal office of the Exchange, 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 amend Listing Rule IM-5900-4 to waive the All-
Inclusive Annual Listing Fee for any company not listed on a national 
securities exchange that is listing upon closing of its acquisition of 
a special purpose acquisition company (``Acquisition Company'') listed 
on another national securities exchange.
    When an Acquisition Company consummates its business combination, 
it may choose a new listing venue for its post-business combination 
existence as an operating company. In most such cases, the Acquisition 
Company is the legal acquirer in the business combination transaction 
and thus the company transferring its listing to Nasdaq is the same 
entity as was listed on the other national securities exchange prior to 
the acquisition (i.e., the Acquisition Company). When an Acquisition 
Company that is the legal acquirer transfers its listing to Nasdaq 
following the business combination, the first All-Inclusive Annual 
Listing Fee is waived. Specifically, Listing Rule IM-5900-4 provides 
that ``Nasdaq has determined to waive for the year of transfer the All-
Inclusive Annual Listing Fee applicable to the year such transfer is 
made in the case of securities that . . . are listed on a national 
securities exchange but not listed on Nasdaq, if the issuer of such 
securities transfers their listing exclusively to Nasdaq.''
    However, in fulfilling the requirements for an Acquisition Company 
to complete an acquisition under applicable exchange rules, 
occasionally the Acquisition Company is not the legal acquirer in the 
business combination and, instead, the business combination is 
structured so that the Acquisition Company is acquired by the operating 
company. Under the current

[[Page 45721]]

Nasdaq rules, a company listing in connection with its acquisition of 
an Acquisition Company listed on another national securities exchange 
would not benefit from a similar waiver of listing fees.
    To address this disparity, Nasdaq proposes to amend the fee waiver 
provisions of Listing Rule IM-5900-4. Specifically, the Exchange 
proposes to extend to any company that is not listed immediately prior 
to listing its class of primary equity securities upon closing of its 
acquisition of an Acquisition Company listed on another national 
securities exchange the benefits similar to those provided by Listing 
Rule IM-5900-4 that waives for companies transferring their securities 
from another exchange the requirement to pay the All-Inclusive Annual 
Listing Fee with respect to that class of primary equity securities or 
any other securities transferred in conjunction therewith for the 
remainder of the calendar year in which the transfer occurs. The 
decision whether to structure a business combination with the 
Acquisition Company as the legal acquirer rather than the other party 
does not result in the listing of a substantively different entity. 
Accordingly, the Exchange believes there is no basis for charging fees 
purely on the basis of the structure of the business combination chosen 
by the parties. The Exchange does not expect there to be a significant 
number of listings in which this proposed fee waiver will be 
applicable. Consequently, the proposed rule change would not affect the 
Exchange's commitment of resources to its regulatory oversight of the 
listing process or its regulatory programs.
2. Statutory Basis
    The Exchange believes that its proposal is consistent with Section 
6(b) of the Act,\3\ in general, and furthers the objectives of Sections 
6(b)(4) and 6(b)(5) of the Act,\4\ 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, and is 
not designed to permit unfair discrimination between customers, 
issuers, brokers, or dealers.
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    \3\ 15 U.S.C. 78f(b).
    \4\ 15 U.S.C. 78f(b)(4) and (5).
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    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. 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.
    The Exchange believes that the proposed fee waivers are equitable 
as it being implemented to avoid an anomalous fee outcome arising from 
the manner in which an Acquisition Company business combination has 
been structured.
    The Exchange believes that the proposal is not unfairly 
discriminatory, because the proposed waivers are intended to avoid the 
impact on a small group of issuers of an anomalous fee outcome arising 
from the manner in which an Acquisition Company business combination 
has been structured. Nasdaq also notes that such waiver is not intended 
to provide these issuers with any benefit that would place them in a 
more favorable position than other newly-listed companies, including 
specifically other previously unlisted companies that list upon 
completion of an acquisition of a company listed on Nasdaq.\5\ An 
Acquisition Company is a shell company with no business operations. 
Consequently, the parties to a business combination between an 
Acquisition Company and an operating company have significant 
flexibility in how they choose to structure the business combination, 
including in determining which entity will be the legal acquirer.
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    \5\ Listing Rule IM-5900-1 provides for certain credits that 
benefit a non-Nasdaq company that lists in connection with its 
acquisition of a Nasdaq listed company.
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    Accordingly, the Exchange is proposing to amend its fee structure 
to reflect the incidental nature of the resulting Acquisition Company 
business combination and to avoid treating companies undergoing similar 
business combinations disparately.
    By contrast to an Acquisition Company business combination, there 
are typically more significant limitations on the ability of the 
parties to a merger between two operating companies to make decisions 
about which entity will be the acquirer, including, for example, the 
desire to maintain the acquirer's SEC registration and concerns about 
how to present the combined entity to the market. As such, it is much 
more likely that the listing fee implications of how the transaction is 
structured would be a major consideration for the parties to an 
Acquisition Company business combination than would be the case in a 
merger between two operating companies. As the implications of the 
proposed fee waivers for decisions relating to the transaction 
structures utilized by unlisted companies listing in connection with 
the acquisition of an Acquisition Company are typically greater than 
for other companies listing in conjunction with merger transactions, 
the proposed waivers are not unfairly discriminatory.
    For the foregoing reasons, the Exchange believes that the proposal 
is consistent with the Act.

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

    The Exchange does not believe that the proposed rule change will 
impose any burden on competition not necessary or appropriate in 
furtherance of the purposes of the Act.
    The proposed waiver will be available to all similarly situated 
issuers on the same basis. The Exchange does not believe that the 
proposed waivers will have any meaningful effect on the competition 
among issuers listed on the Exchange.
    The Exchange operates in a highly competitive market in which 
issuers can readily choose to list new securities on other exchanges 
and transfer listings to other exchanges if they deem fee levels at 
those other venues to be more favorable. Because competitors are free 
to modify their own fees in response, and because issuers may change 
their listing venue, the Exchange does not believe its proposed fee 
change can impose any burden on intermarket competition.

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 \6\ and Rule 19b-4(f)(2) \7\ thereunder. 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. If the Commission takes such 
action, the Commission shall institute proceedings to determine whether 
the proposed rule should be approved or disapproved.
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    \6\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \7\ 17 CFR 240.19b-4(f)(2).

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[[Page 45722]]

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-2020-039 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-2020-039. 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 website (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 website 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. Persons submitting comments are 
cautioned that we do not redact or 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-2020-039 and should be submitted on or before 
August 19, 2020.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\8\
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    \8\ 17 CFR 200.30-3(a)(12).
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J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2020-16372 Filed 7-28-20; 8:45 am]
BILLING CODE 8011-01-P