Document ID: SEC-2011-1153-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: NASDAQ Stock Market LLC
Posted Date: 2011-08-10T04:00Z

[Federal Register Volume 76, Number 154 (Wednesday, August 10, 2011)]
[Notices]
[Pages 49515-49517]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2011-20274]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-65038; File No. SR-NASDAQ-2011-100]

Self-Regulatory Organizations; The NASDAQ Stock Market LLC; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To 
Modify the Defined Term ``Closed-End Fund'' in Rules 5910 and 5920

August 5, 2011.
    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 26, 2011, The NASDAQ Stock Market LLC (``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 substantially prepared by Nasdaq. Nasdaq has designated the 
proposed rule change as effecting a change described under Rule 19b-
4(f)(6) under the Act,\3\ which renders the proposal effective upon 
filing with the Commission. 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\ 17 CFR 240.19b-4(f)(6).
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I. Self-Regulatory Organization's Statement of the Terms of the 
Substance of the Proposed Rule Change

    Nasdaq proposes to modify the defined term ``Closed-End Fund'' in 
Rules 5910 and 5920 to include business development companies.
    The text of the proposed rule change is below. Proposed new 
language is in italics; proposed deletions are in brackets.\4\
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    \4\ Changes are marked to the rule text that appears in the 
electronic manual of Nasdaq found at http://nasdaq.cchwallstreet.com.
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5910. The NASDAQ Global Market

    (a) Entry Fee
    (1)-(2) No change.
    (3) A closed-end management investment company [registered] 
regulated under the Investment Company Act of 1940, as amended (a 
``Closed-End Fund''), that submits an application for listing on the 
Nasdaq Global Market shall pay to Nasdaq an

[[Page 49516]]

entry fee of $5,000 (of which $1,000 represents a non-refundable 
application fee).
    (4)-(10) No change.
    (b)-(f) No change.

5920. The Nasdaq Capital Market

    (a) Entry Fee
    (1)-(2) No change.
    (3) A closed-end management investment company [registered] 
regulated under the Investment Company Act of 1940, as amended (a 
``Closed-End Fund''), that submits an application for listing on the 
Nasdaq Capital Market shall pay to Nasdaq an entry fee of $5,000 (of 
which $1,000 represents a non-refundable application fee).
    (4)-(9) No change.
    (b)-(e) 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 proposed rule change. 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
    A business development company is a type of closed-end management 
investment company that is regulated under the Investment Company Act 
of 1940 (the ``1940 Act'').\5\ While Nasdaq has historically treated 
business development companies as closed-end funds for purposes of 
computing listing fees, in defining a closed-end fund for these 
purposes Nasdaq inadvertently excluded business development companies. 
Specifically, Nasdaq defines a closed-end fund in Rules 5910(a)(3) and 
5920(a)(3) as a closed-end management investment company that is 
registered under the 1940 Act. While business development companies are 
regulated under the 1940 Act, they are not registered under the 1940 
Act.\6\
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    \5\ 15 U.S.C. 80a-1 et seq.
    \6\ Under Section 2(a)(48) of the 1940 Act, 15 U.S.C. 80a-
2(a)(48), a business development company is a closed-end company 
which elects to be subject to certain provisions of the 1940 Act. 
Such a company is exempt from the other requirements of the 1940 
Act, including the registration requirements of Section 8, 15 U.S.C. 
80a-8, pursuant to Section 6(f)(1), 15 U.S.C. 80a-6(f)(1).
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    It was never Nasdaq's intent to exclude business development 
companies from the definition of a closed-end fund and Nasdaq has 
historically treated them as closed-end funds \7\ and charged them the 
fees applicable to closed-end funds. In this filing, Nasdaq proposes to 
modify the definition of a closed-end fund contained in Rules 
5910(a)(3) and 5920(a)(3) to include business development companies. As 
revised, a closed-end fund will be defined as a closed-end management 
investment company regulated under the 1940 Act.
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    \7\ For example, when Nasdaq recently adopted a cap on Listing 
of Additional Shares fees for closed-end funds, Nasdaq described a 
closed-end fund as a type of company ``regulated'' under the 1940 
Act. Exchange Act Release No. 63732 (January 19, 2011), 76 FR 4401 
(January 25, 2011) (SR-NASDAQ-2011-007). In adopting this cap, 
Nasdaq's intent was for it to apply to business development 
companies and, in fact, the rule change adopting a cap for all 
closed-end funds replaced a filing where Nasdaq proposed to adopt 
the cap only for business development companies. See SR-NASDAQ-2010-
119 (withdrawn), available at http://nasdaq.cchwallstreet.com/NASDAQ/pdf/nasdaq-filings/2010/SR-NASDAQ-2010-119.pdf.
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2. Statutory Basis
    Nasdaq believes that the proposed rule change is consistent with 
the provisions of Section 6 of the Act,\8\ in general, and Section 
6(b)(5) of the Act,\9\ in particular, because it is designed to prevent 
fraudulent and manipulative acts and practices, to promote just and 
equitable principles of trade, to foster cooperation and coordination 
with persons engaged in regulating, clearing, settling, processing 
information with respect to, and facilitating transactions in 
securities, to remove impediments to and perfect the mechanism of a 
free and open market and a national market system, and, in general, to 
protect investors and the public interest. Specifically, Nasdaq 
believes the proposed rule change will clarify Nasdaq's treatment of 
business development companies as closed-end funds, thereby eliminating 
any confusion surrounding Nasdaq's rules.
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    \8\ 15 U.S.C. 78f.
    \9\ 15 U.S.C. 78f(b)(5).
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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

    Written comments were neither solicited nor 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) of the Act \10\ and Rule 19b-4(f)(6) \11\ thereunder in 
that it effects a change that: (i) Does not significantly affect the 
protection of investors or the public interest; (ii) does not impose 
any significant burden on competition; and (iii) by its terms, does not 
become operative for 30 days after the date of the filing, or such 
shorter time as the Commission may designate if consistent with the 
protection of investors and the public interest. In addition, 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 business days prior to the date of 
filing of the proposed rule change. The proposed rule change will 
clarify the treatment of business development companies under Nasdaq's 
rules and consistent with the way Nasdaq has historically applied those 
rules. Therefore, Nasdaq believes it does not significantly affect the 
protection of investors or the public interest or raise any novel or 
significant regulatory issues.
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    \10\ 15 U.S.C. 78s(b)(3)(A).
    \11\ 17 CFR 240.19b-4(f)(6).
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    At any time within 60 days of the filing of the proposed rule 
change, the Commission 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 of disapproved.

IV. Solicitation of Comments

    Interested persons are invited to submit written data, views, and 
arguments concerning the foregoing, including whether the proposed rule 
change is consistent with the Act. Comments may be submitted by any of 
the following methods:

[[Page 49517]]

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-2011-100 on the subject line.

Paper Comments

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

All submissions should refer to File Number SR-NASDAQ-2011-100. 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 website 
viewing and printing in the Commission's Public Reference Room on 
official business days between the hours of 10 a.m. and 3 p.m. Copies 
of the filing also will be available for inspection and copying at the 
principal office of Nasdaq. All comments received will be posted 
without change; the Commission does not edit personal identifying 
information from submissions. You should submit only information that 
you wish to make available publicly.
    All submissions should refer to File Number SR-NASDAQ-2011-100 and 
should be submitted on or before August 31, 2011.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\12\
Elizabeth M. Murphy,
Secretary.
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    \12\ 17 CFR 200.30-3(a)(12).
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 [FR Doc. 2011-20274 Filed 8-9-11; 8:45 am]
BILLING CODE 8011-01-P