Document ID: SEC-2007-0197-0001
Agency: sec
Document Type: Notice
Title: Self-regulatory organizations; proposed rule changes: NASDAQ Stock Market LLC
Posted Date: 2007-02-08T05:00Z

[Federal Register: February 8, 2007 (Volume 72, Number 26)]
[Notices]               
[Page 6017-6021]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr08fe07-88]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-55202; File No. SR-NASDAQ-2006-040]

 
Self-Regulatory Organizations; The NASDAQ Stock Market LLC; 
Notice of Filing of Amendment No. 3 to the Proposed Rule Change, and 
Order Granting Accelerated Approval of Proposed Rule Change as Modified 
by Amendment Nos. 2 and 3 To Modify Certain Fees for Listing on The 
NASDAQ Stock Market and To Make Available Certain Products and Services

January 30, 2007.

I. Introduction

    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 2, 2006, The NASDAQ Stock Market LLC (``Nasdaq'') filed with 
the Securities and Exchange Commission (``Commission'' or ``SEC'') a 
proposed rule change to modify certain fees for listing on The Nasdaq 
Stock Market and to make available certain products and services. On 
October 30, 2006, Nasdaq filed Amendment No. 1.\3\ Nasdaq filed 
Amendment No. 2 on October 31, 2006. The Commission published notice of 
the proposed rule change, as amended, in the Federal Register on 
November 21, 2006.\4\ The Commission received 131 comment letters.\5\ 
On January 16, 2007,

[[Page 6018]]

Nasdaq filed a response to comments,\6\ and also filed Amendment No. 3 
to the proposed rule change, asking the Commission to grant accelerated 
approval of the proposed rule change, as amended. The Commission hereby 
issues notice of the filing of Amendment No. 3 and simultaneously 
grants accelerated approval to the proposed rule change as modified by 
Amendment Nos. 2 and 3.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ Amendment No. 1 was improperly filed, and has no impact on 
this proposed rule change.
    \4\ See Securities Exchange Act Release No. 54752 (November 14, 
2006), 71 FR 67410.
    \5\ Five comment letters were submitted before publication of 
the notice in the Federal Register. See October 13, 2006 letter from 
David B. Armon, Chief Operating Officer (``COO''), PR Newswire, to 
Arnold Golub, Associate General Counsel (``AGC''), Nasdaq, and 
October 25, 2006 letter from Jon Olson, Chief Financial Officer 
(``CFO''), Xilinx, Inc. to Arnold Golub, AGC, Nasdaq. These two 
letters were included as exhibits to Amendment No. 2. See also 
November 3, 2006 letter from David B. Armon, COO, PR Newswire, to 
Arnold Golub, AGC, Nasdaq; November 3, 2006 letter from James R. 
Doty, Baker Botts LLP to Edward S. Knight, Executive Vice President 
(``EVP''), Nasdaq; November 15, 2006 letter from Michael Nowlan, 
Chief Executive Officer (``CEO''), Market Wire to Christopher Cox, 
Chairman, SEC.
    The Commission received 117 letters after the publication of the 
notice but before Nasdaq filed Amendment No. 3: November 22, 2006 
letter from Mark Borman, Vice President (``VP'')--Investor Relations 
(``IR''), ADC; November 22, 2006 letter from David Humphrey, 
Director of IR, Arkansas Best Corporation; November 22, 2006 letter 
from Paul Richins, VP of IR, Utah Medical Products, Inc.; November 
22, 2006 letter from Ralph Walther, Controller, Brooklyn Federal 
Bancorp, Inc.; November 24, 2006 letter from Frank Cinatl, VP, 
Abatix Corp.; November 24, 2006 letter from Scott C. Harvard, 
President/CEO, Shore Financial Corporation; November 25, 2006 letter 
from Leslie Green, Green Communications Consulting, LLC; November 
26, 2006 letter from Robert Shuster, CFO, Independent Bank 
Corporation; November 27, 2006 letter from Thomas J. Linneman, CEO, 
Cheviot Financial Corp.; November 27, 2006 letter from Bill 
Newbould, VP, Corporation Communications, Endo Pharmaceuticals, 
Inc.; November 27, 2006 letter from Robert Falconi; November 27, 
2006 letter from Pamela Murphy, VP IR and Corporate Communications, 
Incyte Corporation; November 27, 2006 letter from Kevin R. Rhodes, 
CFO, Edgewater Technology, Inc.; November 27, 2006 letter from 
Wesley A. Harris, Senior Director--Corporate and Investor 
Communications, International Speedway Corporation; November 27, 
2006 letter from Vicki L. La Mar; November 27, 2006 letter from 
David W. Dunlap, CFO, Socket Communications, Inc.; November 27, 2006 
letter from Ken Maples, CFO, Hiland Partners, LP & Hiland Holdings 
GP, LP; November 27, 2006 letter from Don T. Seaquist; November 27, 
2006 letter from Mitchell A. Derenzo, EVP and CFO, American River 
Bankshares; November 27, 2006 letter from Nadine Padilla, VP, IR, 
Biosite Incorporated; November 28, 2006 letter from Jim Bauer, VP-
IR, ARRIS Group, Inc.; November 28, 2006 letter from Deirdre 
Skolfield; November 28, 2006 letter from Bill Perry, Director, 
Public & IR, SumTotal Systems; November 28, 2006 letter from Don 
Jennings, President, Kentucky First Federal Bancorp; undated letter 
from Paul Jennings, President and CEO, Innospec Inc.; November 29, 
2006 letter from Darin Sahler, Global Public Relations Manager, FARO 
Technologies; November 29, 2006 letter from William C. Monigle, 
President, Bill Monigle Associates; November 29, 2006 letter from 
Robert C. Weiner, VP, IR, PSS World Medical, Inc.; November 29, 2006 
letter from Donovan Chin; November 29, 2006 letter from Donald F. 
Kuratko, The Jack M. Gill Chair of Entrepreneurship, The Kelley 
School of Business, Indiana University, Bloomington; November 29, 
2006 letter from E.E. Wang; November 29, 2006 letter from David 
Chidester, CFO, Overstock.com; November 29, 2006 letter from Michael 
W. Dosland, President and CEO, First Federal Bankshares, Inc.; 
November 30, 2006 letter from Ronald Remick, SVP and CFO, K-Tron 
International, Inc.; November 30, 2006 letter from Robert J. Caso, 
CFO, Cellegy Pharmaceuticals; November 30, 2006 letter from Bill 
Richardson, Governor of New Mexico; December 1, 2006 letter from 
Shannon Burns, CFA, Gander Mountain Company; December 1, 2006 letter 
from Ken Maples, CFO, Hiland Partners, LP; December 4, 2006 letter 
from Melvin J. Thompson; December 4, 2006 letter from Steven D. 
Carr, Managing Director, Dresner Corporate Services; December 4, 
2006 letter from Geoffrey M. Boyd, CFO, Eschelon Telecom, Inc.; 
December 4, 2006 letter from Ann M. Storberg, VP--IR, American 
Physicians Capital, Inc.; December 6, 2006 letter from Michael 
Frank, Director of IR, EDGAR Online, Inc.; December 6, 2006 letter 
from David G. Wallace, IR Officer, Bancshares of Florida, Inc.; 
December 7, 2006 letter from Andrew J. Simmons, CFO, Stealthgas, 
Inc.; December 7, 2006 letter from J.O. Michael; December 6, 2006 
letter from Betsy Atkins; December 7, 2006 letter from Diane 
Helland, Director, IR and Corporate Communications, Quality 
Distribution; December 7, 2006 letter from Earle A. MacKenzie, EVP, 
Shenandoah Telecommunication Company; December 7, 2006 letter from 
Bradley Gittings; December 7, 2006 letter from Michael Walsh, 
Principal, IR Associates; December 7, 2006 letter from Scott 
Poirier, NewStar Financial, Inc.; December 7, 2006 letter from Rich 
Jeffers, Director, IR, NetBank, Inc.; December 7, 2006 letter from 
Christine Cassiano, Director, Corporate Communications and IR, 
Abraxis BioScience, Inc.; December 8, 2006 letter from Terry D. 
Frandsen, CFO, Escalade, Inc.; December 8, 2006 letter from Bruce N. 
Beckloff, VP of IR, ARM Holdings; December 7, 2006 letter from Mark 
E. Reese, SVP and CFO, EMC Insurance Group Inc.; December 8, 2006 
letter from Scott Leslie, President, One Good Call; December 8, 2006 
letter from John Scott; December 8, 2006 letter from Scott Huber; 
December 8, 2006 letter from James Scott; December 8, 2006 letter 
from Constantine Konstans, Professor and Director of the Institute 
for Excellence in Corporate Governance, School of Management, 
University of Texas at Dallas; December 8, 2006 letter from 
Charlotte F. Shropshire, Business Development Ashton Partners; 
December 8, 2006 letter from Bill Turcotte; December 8, 2006 letter 
from David H. Chun, CEO, Equilar, Inc.; December 8, 2006 letter from 
Marlon S. Evans, Non-Profit Executive Director; December 9, 2006 
letter from Willa M. McManmon, Director, IR, Trimble; December 10, 
2006 letter from Venkatraman Balakrishnan, CFO, Infosys Technologies 
Limited; December 10, 2006 letter from Brad Burke, Managing 
Director, Rice Alliance for Technology and Entrepreneurship; 
December 10, 2006 letter from Judith A. Lindsay, Retired IRO; 
December 11, 2006 letter from Freddie Liu, CFO, ASE Test Limited; 
December 11, 2006 letter from Jos [sic] Ignacio Del Barrio; December 
11, 2006 letter from Joy Basu, CFO, Rediff.com India Limited; 
December 11, 2006 letter from Jacqueline Borer, Borer Financial 
Communications, LLC; December 11, 2006 letter from Steve D. 
Albright, VP and CFO, Reliv International, Inc.; December 11, 2006 
letter from Roland Sackers, CFO, QIAGEN N.V.; December 11, 2006 
letter from Mary Ryan; December 11, 2006 letter from Mari-Anne 
Pisarri, Pickard and Djinis LLP, on behalf of Thomson Financial LLC; 
December 11, 2006 letter from Ann M. Jones, IR Consultant; December 
11, 2006 letter from Mariann Caprino; December 11, 2006 letter from 
Donovan Chin; December 11, 2006 letter from Gale Blackburn, 
Corporate VP of IR, AmCOMP Incorporated; December 11, 2006 letter 
from Christopher S. Keenan, Director, IR, Cytokinetics; December 11, 
2006 letter from Lillian Vassilatos, IR, Eclipsys Corporation; 
December 11, 2006 letter from Tammy Thayer, President, Center for 
Advanced Studies in Business, UW-Madison; December 11, 2006 letter 
from Sarah Norton, IR; December 11, 2006 letter from Matthew J. 
Pfeffer, CPA, CFO and SVP, Finance and Administration; December 11, 
2006 letter from Athan Demakos; December 11, 2006 letter from John 
L. Hunter; December 11, 2006 letter from Suresh K. Bhaskaran; 
December 11, 2006 letter from Marc R. Paul and Margaret R. Blake, 
Baker & McKenzie LLP, on behalf of PR Newswire; December 11, 2006 
letter from F. Scott Dueser, President and CEO, First Financial 
Bankshares; December 11, 2006 letter from Robert L. Stolebarger, 
Roger Myers, and Richard M. Mooney, Holme Roberts & Owen LLP, and 
James R. Doty and Brad Bennett, Baker Botts LLP, on behalf of 
Business Wire; December 12, 2006 letter from Tom G. Howitt, CFO, 
Genetic Technologies Limited; December 12, 2006 letter from Simon C. 
Adams; December 12, 2006 letter from Ramasubramanian 
Venkatasubramanian, Company Secretary, Sify Limited; December 12, 
2006 letter from Eric P. Merrigan, CPA, Member, CPA Australia; 
December 12, 2006 letter from Efstathios D. Gourdomichalis, CFO, 
Freeseas; December 12, 2006 letter from Paul McBarron; December 12, 
2006 letter from Julian Thomson, IR Manager, Acergy S.A.; December 
12, 2006 letter from John W. Sinders, Jr., Director--Transportation, 
Oil Service and Emerging Markets, Jefferies & Company, Inc.; 
December 12, 2006 letter from Dominic Jones, Principal, 
IRWebReport.com; December 12, 2006 letter from Fran Butera, CFA, 
WPP, Director of IR; December 12, 2006 letter from Michael P. Black, 
Associate of the Charted Institute of Management Accountants; 
December 12, 2006 letter from Patrick J. Healy, CPA, MBA, CEO, 
Issuer Advisory Group; December 12, 2006 letter from Len Cereghino, 
The Cereghino Group; December 12, 2006 letter from Louis Ploth, Jr., 
VP and CFO, Repros Therapeutics Inc.; December 12, 2006 letter from 
Jonathan E. Drayna, VP, IR, Associated Banc-Corp; December 12, 2006 
letter from Michael N. Sohn and Donna E. Patterson, Arnold & Porter 
LLP, on behalf of Nasdaq; December 12, 2006 letter from Andrew A. 
Sauter, VP, Finance--Avigen, Inc.; December 12, 2006 letter from 
Richard Sommer; December 12, 2006 letter from Lisa Ann Sanders; 
December 13, 2006 letter from David Chidester, CFO, Overstock.com; 
December 13, 2006 letter from Jose Ignacio Del Barrio, EVP Business 
Development and Head of IR--TELVENT GIT; December 13, 2006 letter 
from David K. Waldman on behalf of Perma-Fix Environmental Services; 
December 15, 2006 letter from Adam Yan, eFuture Information Tech 
Inc.; undated letter from Douglas Ian Shaw, SVP and Corporate 
Secretary, Suffolk County National Bank, Suffolk Bancorp. The 
Commission also received nine letters after Nasdaq filed Amendment 
No. 3. See footnote 5 infra. January 23, 2007 letter from Marc R. 
Paul and Margaret R. Blake, Baker & McKenzie LLP, on behalf of PR 
Newswire; January 23, 2007 letter from Frank J. Cinatl, CFO, Abatix 
Corp.; January 24, 2007 letter from Kelly A. Richards, Marketing 
Director, Inforte; January 23, 2007 letter from Garry D. Kline; 
January 23, 2007 letter from Douglas Ian Shaw, SVP and Corporate 
Secretary, Suffolk Bancorp; January 23, 2007 letter from Steve 
Loomis, CardioDynamics--the ICG Company; January 25, 2007 letter 
from Steve Loomis, asking to recall January 23, 2007 letter; January 
25, 2007 letter from Robert L. Stolebarger, Roger Myers, Holme 
Roberts & Owen LLP and James R. Doty, Brad Bennett, Baker Botts LLP; 
January 29, 2007 letter from Marc R. Paul and Margaret R. Blake, 
Baker & McKenzie LLP.
    \6\ See January 16, 2007 letter to Nancy M. Morris, Secretary, 
SEC, from Edward S. Knight, Executive Vice President and General 
Counsel, Nasdaq (``Nasdaq Response'').
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II. Description of the Proposed Rule Change

    With the initial proposed rule change and Amendment No. 2, Nasdaq 
proposed the following:
     To modify the entry fees payable by issuers listing on the 
Nasdaq Capital Market (``Capital Market'') (assessed on the date of 
entry and calculated based on total shares outstanding) by increasing 
the minimum entry fee from $25,000 for listing up to five million 
shares of securities with a maximum of $50,000 for listing over 15 
million shares, to $50,000 for an issuer listing up to 15 million 
shares with a maximum of $75,000 for an issuer listing over 15 million 
shares;
     To modify the fees for listing additional shares by 
domestic companies listed on the Nasdaq Global Market (``Global 
Market'') or the Capital Market by increasing the minimum quarterly fee 
from $2,500 or $0.01 per

[[Page 6019]]

additional shares (whichever is higher) up to an annual maximum of 
$45,000 per issuer, to $5,000 with the maximum fee increasing to 
$65,000 per year (the rule would continue to provide that no fee be 
charged for issuances of up to 49,999 additional shares per quarter);
     To introduce an LAS fee of $5,000 for non-U.S. companies 
that list additional shares or additional shares underlying American 
Depositary Receipts (``ADRs'') in a given fiscal year (historically, 
Nasdaq did not charge these companies an LAS fee), calculating the fee 
annually based on the change in the issuer's total shares outstanding 
as reported on its annual reports filed with the SEC (excluding 
issuances of up to 49,999 additional shares per year);
     To increase annual fees on the Global Market from a 
minimum of $24,500 and a maximum of $75,000, to a minimum of $30,000 
and a maximum of $95,000;
     To increase annual fees on the Capital Market from a 
minimum of $17,500 and a maximum of $21,000 to a $27,500 flat fee for 
any amount of shares outstanding (annual fees for ADRs listed on the 
Capital Market and ADRs and Closed End Funds on the Global Market would 
remain unchanged);
     To increase the non-refundable fee for a written 
interpretation from Nasdaq as to how Nasdaq's rules apply to a specific 
action or transaction that an issuer is considering from $2,000 to 
$5,000; additionally, Nasdaq proposes to increase the fee from $10,000 
to $15,000 when the issuer seeks this same service on an expedited 
basis;
     To adopt new Interpretive Material to clarify that, in the 
case where a Nasdaq-listed company is acquired by a non-Nasdaq company 
and the surviving entity of the merger lists on the Global Market or 
the Capital Market, the company would receive a pro-rated waiver of the 
annual fee for the period of time following the merger;
     To waive the entry fee if a non-listed company acquires a 
company listed on another market, and, in connection with the 
acquisition, the surviving entity lists on Nasdaq;
     To eliminate the entry fee for most companies transferring 
between the Capital Market and the Global Market. The Global Market 
entry fee would not be applicable to a transfer from the Capital Market 
to the Global Market, except if a company that qualified for the Global 
Market chose to initially list after January 1, 2007 on the Capital 
Market instead. In that limited case, when the company seeks to 
transfer, Nasdaq proposes to charge the company the difference between 
the Global Market Fee in effect at the time of the transfer and the 
Capital Market fee previously paid.
     To make available products and services intended to assist 
companies with their disclosure and regulatory obligations, shareholder 
communications, and other corporate objectives.
    With Amendment No. 3, Nasdaq withdrew from the proposal its initial 
offer of products and services. Specifically, Nasdaq has determined not 
to rely on the previously offered service that converts companies' 
annual reports and proxy materials into dynamic, online documents for 
use by current and potential shareholders, four audio webcasts, four 
press releases, four Form 8-K (or 6-K) filings, and customized reports 
to help analyze issuers' risk of exposure to securities litigation, as 
a basis for the proposed fee increases.

III. Summary of Comments

    A large number of comment letters focused on Nasdaq's offer of a 
bundle of products and services described above. While there were 65 
letters in favor of the proposal and the bundle of services,\7\ most of 
the remainder of the letters objected to the proposal, citing issues 
that included alleged illegal tying arrangements and other antitrust 
violations, and potential conflicts of interest.\8\ Because Nasdaq 
filed Amendment No. 3 to remove the bundle of services from the 
proposed rule change, these issues are now moot, and therefore are not 
discussed in this Summary of Comments.
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    \7\ Many of the commenters expressing support of the proposed 
bundle of services cited increased competition as a positive outcome 
of the proposed rule change. See, e.g., November 28, 2006 letter 
from Deirdre Skolfield (``I am certainly willing to pay a bit more 
for an even wider breath [sic] of services delivered to my desktop. 
Competition is heating up in the capital markets and NASDAQ offers 
timely, accessible information to keep Officers and Directors of 
public companies on top of things''); December 7, 2006 letter from 
Bradley Gittings (``I believe increased competition is good for the 
market place. * * * I also believe that offering these services will 
enhance competition among the providers of those services.''); 
December 6, 2006 letter from Betsy Atkins (``This proposal creates 
increased competition, better pricing and enhanced service.''). 
Other commenters supported the proposal because the approach is 
innovative and offers new services to its customers. See, e.g., 
November 29, 2006 letter from E.E. Wang ``I support NASDAQ's attempt 
to provide value-added, complimentary services to its customers.''); 
November 29, 2006 letter from Donald F. Kuratko (``This is another 
example where NASDAQ, using continuous innovation in all products 
and services, seeks to maximize the level of service and value of 
listing for its listed companies and their investors.''); December 
8, 2006 letter from Constantine Konstans (``NASDAQ is to be 
commended once again for taking innovative and progressive actions 
that will certainly increase the level of service to their listees 
as well as to the investors in NASDAQ-listed companies.'').
    \8\ See, e.g., October 13, 2006 letter from David B. Armon, COO, 
PR Newswire; December 11, 2006 letter from Mari-Anne Pisarri, 
Pickard and Djinis LLP on behalf of Thomson Financial LLC; December 
11, 2006 letter from Marc R. Paul and Margaret R. Blake, Baker & 
McKenzie LLP on behalf of PR Newswire; December 11, 2006 from Robert 
L. Stolebarger, Roger Myers, Richard M. Mooney, Holme Roberts & Owen 
LLP and James R. Doty, Brad Bennett, Baker Botts LLP.
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    The Commission notes that a number of commenters objected to the 
proposed rule change on the basis that the fees Nasdaq was proposing 
were too high,\9\ regardless of the bundle of services. The Commission 
believes those same commenters would continue to express their 
disapproval of Nasdaq's proposed fee structure after Nasdaq filed 
Amendment No. 3, for the fees remain at the initially-proposed level, 
despite the removal of the bundle of services from the proposed rule 
change.\10\ Therefore, the Commission weighed those comments as opposed 
to the filing in deciding to approve the proposed rule change.
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    \9\ See, e.g., October 25, 2006 letter from Jon Olson, CFO, 
Xilinx, Inc. (``* * *Xilinx's fee increase is $20,000, which we do 
not view as a `nominal amount'.''); November 22, 2006 letter from 
Paul Richins, VP of IR, Utah Medical Products, Inc. (``The proposed 
increase is more than 3x higher than we currently pay for the 
services we would get for `free' under the proposal.''); November 
24, 2006 letter from Frank Cinatl, VP, Abatix Corp. (``* * *the 
proposed increase in our fees to Nasdaq are estimated to be 40% more 
than my old fees plus what I paid for the proposed bundled 
services.'') (See also January 23, 2007 letter from Frank Cinatl, 
VP, Abatix Corp., citing no opposition to a moderate fee increase, 
but disagreeing with the proposed rule change, as amended.)
    \10\ See, e.g., January 29, 2007 letter from Marc R. Paul and 
Margaret R. Blake, Baker & McKenzie LLP on behalf of PR Newswire 
Association LLC (``* * *although a justification for the listing 
fees has been removed, NASDAQ proposes no corresponding decrease in 
the amount of its proposed fee increase.'').
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IV. Nasdaq's Response to Comments

    Nasdaq believes the proposed annual listing fees are reasonable per 
se because the proposed fees ``are generally below those of other 
markets.''\11\ Given that fact, Nasdaq believes the proposed fee 
increase meets the reasonableness standard of Section 6(b)(4) of the 
Act.\12\
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    \11\ Nasdaq Response at 3. Nasdaq offers comparisons of its fees 
with those of NYSE Arca, the American Stock Exchange, and the New 
York Stock Exchange (``NYSE'').
    \12\ Id. at 3. 15 U.S.C. 78f(b)(4).
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    As noted previously in this approval order, Nasdaq modified the 
proposed rule change to remove its previously planned offering of (i) 
The service that converts annual reports and proxy materials into 
online documents; (ii) four audio webcasts; (iii) four press releases; 
(iv) four Form 8-K (or 6-K) filings; and (v) the customized report to

[[Page 6020]]

analyze risk of exposure to securities litigation. As a result of this 
modification to the proposed rule change, Nasdaq did not address the 
arguments raised by commenters that objected to Nasdaq providing these 
services, for these services are no longer a basis for the proposed fee 
increase.\13\
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    \13\ Nasdaq Response at 2. Nasdaq's proposed enhancements to 
NASDAQ Online and the Market Intelligence Desk remain part of this 
proposed rule change.
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    Even with the removal of these services from the proposed rule 
change, Nasdaq believes the proposed fee increase is reasonable because 
of ``the substantial resources Nasdaq dedicates to its regulatory 
programs'' which Nasdaq cites in detail.\14\ Additionally, Nasdaq 
states that the proposed increase in listing fees for companies listed 
on the Capital Market, though a greater percentage increase than that 
for Global and Global Select Market companies, is also appropriate 
because the fees for companies listed on the Capital Market remain 
lower than the fees of companies listed on the Global and Global Select 
Markets, while those companies share in all of the regulatory programs 
cited in the Nasdaq Response.\15\ Finally, Nasdaq believes that the 
proposed fees are equitably allocated because other fee structures that 
allocate listing fees by shares outstanding have been approved by the 
Commission.\16\
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    \14\ Id. For example, Nasdaq cites its Listing Qualifications 
and MarketWatch Departments, initiatives Nasdaq has undertaken to 
increase issuer visibility such as MarketSite and international 
conferences and the renaming of the Nasdaq SmallCap Market as the 
Nasdaq Capital Market, enhancements to its trading platform, and 
enhancements made to Nasdaq Online and the Market Intelligence Desk.
    \15\ Id.
    \16\ Id. at 3. Nasdaq references analogous fee structures in 
place at the NYSE, NYSE Arca and the American Stock Exchange.
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V. Discussion and Commission Findings

    The Commission has reviewed the proposed rule change, the comment 
letters, and Nasdaq's Response Letter,\17\ and finds that the proposed 
rule change is consistent with the requirements of the Act and the 
rules and regulations thereunder applicable to a self-regulatory 
organization.\18\ Specifically, the Commission finds that the proposed 
rule change is consistent with Section 6(b)(4) of the Act,\19\ which 
requires that the rules of an exchange provide for the equitable 
allocation of reasonable dues, fees, and other charges among members 
and issuers and other persons using any facilities or system which it 
operates or controls.
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    \17\ The Commission believes that Nasdaq has responded 
adequately to the comments.
    \18\ In approving the proposed rule change, the Commission has 
considered the proposed rule's impact on efficiency, competition and 
capital formation. See 15 U.S.C. 78c(f).
    \19\ 15 U.S.C. 78f(b)(4).
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    The Commission believes that Nasdaq's proposed fee increases are 
reasonable, for the resultant fees are comparable to similar fees of 
other self-regulatory organizations. The Commission recognizes that 
competition for listings is becoming increasingly vigorous, and that 
such competition should help assure the reasonableness of fees among 
the markets vying for new listings. Nasdaq also has cited the resources 
it dedicates to its regulatory programs as evidence of value added for 
the increase in fees. The Commission believes that Nasdaq's proposed 
fee increases are reasonable, given the current competitive landscape, 
the listing fees charged by other self-regulatory organizations, and 
the value Nasdaq offers issuers that choose to list with Nasdaq. For 
these reasons, the Commission believes the proposed fee increases meet 
the statutory standard of an equitable allocation of reasonable dues, 
fees and other charges.
    The proposal would also eliminate the entry fee for most companies 
transferring between the Capital Market and the Global Market, and 
waive the entry fee if a non-listed company acquires a company listed 
on another market (and in connection with the acquisition the surviving 
entity lists on Nasdaq). The Commission believes that these changes to 
Nasdaq's fee structure are consistent with Section 6(b)(4) of the 
Act,\20\ and notes that they result in a reduction of fees. Also, the 
Commission believes Nasdaq's adoption of new Interpretive Material to 
clarify that Nasdaq would provide a pro-rated waiver of the annual fee 
for the period of time following a merger in the case where a Nasdaq-
listed company is acquired by a non-Nasdaq company and the surviving 
entity of the merger lists on the Global Market or the Capital Market 
is both reasonable and a benefit to those issuers choosing to list on 
Nasdaq in these particular circumstances.\21\
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    \20\ 15 U.S.C. 78f(b)(4).
    \21\ One commenter objects in principle to Nasdaq venturing 
beyond being ``a regulated entity in the narrow market for listing 
services'' to operating other businesses. See January 25, 2007 
letter from Robert L. Stolebarger, et al., at 5-10. Another 
commenter objects to Nasdaq allegedly using fees to subsidize ``non-
exchange-related commercial activities.'' See January 29, 2007 
letter from Marc R. Paul and Margaret R. Blake, Baker & McKenzie 
LLP. The Commission notes that these issues are beyond the scope of 
this proposed rule change, since Nasdaq has removed its initial 
offer of products and services with the filing of Amendment No. 3.
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    The Commission finds good cause for approving the proposed rule 
change, as amended, prior to the 30th day after the date of publication 
of the notice thereof in the Federal Register. The Commission believes 
the proposed rule change will allow Nasdaq to more effectively compete 
for listings with other markets. The Commission believes that no novel 
issues are raised by Amendment No. 3. Therefore, the Commission finds 
that there is good cause, consistent with Section 19(b)(2) of the Act, 
to approve the proposed rule change on an accelerated basis.

VI. 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-2006-040 on the subject line.

Paper Comments

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

All submissions should refer to File Number NASDAQ-2006-040. 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 
offices of Nasdaq. All comments received will be posted without change; 
the Commission does not edit personal identifying

[[Page 6021]]

information from submissions. You should submit only information that 
you wish to make available publicly. All submissions should refer to 
File Number SR-NASDAQ-2006-040 and should be submitted on or before 
March 1, 2007.

VII. Conclusion

    It is therefore ordered, pursuant to Section 19(b)(2) of the Act, 
that the proposed rule change (SR-NASDAQ-2006-040), as modified by 
Amendment Nos. 2 and 3, be, and hereby is, approved on an accelerated 
basis.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\22\
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    \22\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
 [FR Doc. E7-2083 Filed 2-7-07; 8:45 am]

BILLING CODE 8010-01-P