Document ID: SEC-2016-0904-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: NASDAQ Stock Market, LLC
Posted Date: 2016-05-25T04:00Z

[Federal Register Volume 81, Number 101 (Wednesday, May 25, 2016)]
[Notices]
[Pages 33275-33278]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-12237]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-77855; File No. SR-NASDAQ-2016-057]

Self-Regulatory Organizations; The NASDAQ Stock Market LLC; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To 
Amend and Clarify Closed-End Funds Annual Fees

May 19, 2016.
    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 May 12, 2016, The NASDAQ Stock Market LLC (``Exchange'') filed with 
the Securities

[[Page 33276]]

and Exchange Commission (``SEC'' or ``Commission'') the proposed rule 
change as described in Items I, II, and III, 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 clarify and conform the amount of annual 
fees charged to individual closed-end management investment companies 
registered under the Investment Company Act of 1940, as amended 
(``Closed-End Funds'') and two or more Closed-End Funds that have a 
common investment adviser or have investment advisers who are 
``affiliated persons'' as defined in Section 2(a)(3) of the Investment 
Company Act of 1940, as amended (``fund family''). These amendments are 
effective upon filing. The text of the proposed rule change is set 
forth below. Proposed new language is in italics; deleted text is in 
brackets.
* * * * *

5910. The Nasdaq Global Market (Including the Nasdaq Global Select 
Market)

    (a)-(c) No change.
    (d) Standard Annual Fee--American Depositary Receipts (ADRs) and 
Closed-End Funds
    (1)-(3) No change.
    (4) For the purpose of determining the total shares outstanding, 
fund sponsors may aggregate shares outstanding of all Closed-End Funds 
in the same fund family listed on the Nasdaq Global Market or the 
Nasdaq Capital Market, as shown in the Company's most recent periodic 
reports required to be filed with the appropriate regulatory authority 
or in more recent information held by Nasdaq. The maximum annual fee 
applicable to a fund family shall not exceed [$75,000 ]$80,000. For 
purposes of this rule, a ``fund family'' is defined as two or more 
Closed-End Funds that have a common investment adviser or have 
investment advisers who are ``affiliated persons'' as defined in 
Section 2(a)(3) of the Investment Company Act of 1940, as amended.
    (5)-(6) No change.
    (e)-(f) No change.

IM-5910-1. All-Inclusive Annual Listing Fee

    (a)-(c) No change.
    (d) The All-Inclusive Annual Listing Fee will be calculated on 
total shares outstanding according to the following schedules:
    (1)-(2) No change.
    (3) Closed-end Funds:

Up to 50 million shares--$30,000
50+ to 100 million shares--$50,000
100+ to 250 million shares--$75,000
Over 250 million shares--$100,000
    For the purpose of determining the total shares outstanding, fund 
sponsors may aggregate shares outstanding of all Closed-End Funds in 
the same fund family listed on the Nasdaq Global Market or the Nasdaq 
Capital Market, as shown in the Company's most recent periodic reports 
required to be filed with the appropriate regulatory authority or in 
more recent information held by Nasdaq. A fund family is subject to the 
same fee schedule as a single Closed-End Fund and the maximum All-
Inclusive Annual Listing Fee applicable to a fund family shall not 
exceed $100,000. For purposes of this rule, a ``fund family'' is 
defined as two or more Closed-End Funds that have a common investment 
adviser or have investment advisers who are ``affiliated persons'' as 
defined in Section 2(a)(3) of the Investment Company Act of 1940, as 
amended.
    (e) No change.

5920. The Nasdaq Capital Market

    (a)-(b) No change.
    (c) Standard Annual Fee
    (1)-(6) No change.
    (7) Notwithstanding paragraph (6), for the purpose of determining 
the total shares outstanding, fund sponsors may aggregate shares 
outstanding of all Closed-End Funds in the same fund family listed on 
the Nasdaq Global Market and the Nasdaq Capital Market, as shown in the 
Company's most recent periodic reports required to be filed with the 
appropriate regulatory authority or in more recent information held by 
Nasdaq. The maximum annual fee applicable to a fund family shall not 
exceed [$75,000 ]$80,000. For purposes of this rule, a ``fund family'' 
is defined as two or more Closed-End Funds that have a common 
investment adviser or have investment advisers who are ``affiliated 
persons'' as defined in Section 2(a)(3) of the Investment Company Act 
of 1940, as amended.
    (8) No change.
    (d)-(e) No change.

IM-5920-1. All-Inclusive Annual Listing Fee

    (a)-(c) No change.
    (d) The All-Inclusive Annual Listing Fee will be calculated on 
total shares outstanding according to the following schedules:
    (1)-(2) No change.
    (3) Closed-end Funds:

Up to 50 million shares--$30,000
50+ to 100 million shares--$50,000
100+ to 250 million shares--$75,000
Over 250 million shares--$100,000
    For the purpose of determining the total shares outstanding, fund 
sponsors may aggregate shares outstanding of all Closed-End Funds in 
the same fund family listed on the Nasdaq Global Market or the Nasdaq 
Capital Market, as shown in the Company's most recent periodic reports 
required to be filed with the appropriate regulatory authority or in 
more recent information held by Nasdaq. A fund family is subject to the 
same fee schedule as a single Closed-End Fund and the maximum All-
Inclusive Annual Listing Fee applicable to a fund family shall not 
exceed $100,000. For purposes of this rule, a ``fund family'' is 
defined as two or more Closed-End Funds that have a common investment 
adviser or have investment advisers who are ``affiliated persons'' as 
defined in Section 2(a)(3) of the Investment Company Act of 1940, as 
amended.
    (e) No change.
* * * * *
    The text of the proposed rule change is available on the Exchange's 
Website at http://nasdaq.cchwallstreet.com, 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
    The purpose of the proposed rule change is to clarify and conform 
the amount of annual fees charged to a single Closed-End Fund and a 
fund family.
    In 2005, Nasdaq adopted a fee schedule applicable specifically to 
Closed-End Funds and permitted a fund sponsor to aggregate the shares 
outstanding of all Closed-End Funds listed on Nasdaq that are part of 
the

[[Page 33277]]

fund family.\3\ The maximum annual fee payable by a fund family was set 
to $75,000, equal to the maximum annual fee payable by a single Closed-
End Fund.
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    \3\ Securities Exchange Act Release No. 52277 (August 17, 2005), 
70 FR 49347 (August 22, 2005) (approving SR-NASD-2005-96).
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    In 2014, Nasdaq adopted a new All-Inclusive Annual Listing Fee 
schedule and increased the maximum annual fee payable by a single 
Closed-End Fund.\4\ At that time, Nasdaq inadvertently created a 
disparity between the maximum annual fees payable by a single Closed-
End Fund and by a fund family. While Nasdaq increased the maximum 
annual fee payable by a single Closed-End Fund from $75,000 to $80,000 
and introduced a new All-Inclusive Annual Listing Fee schedule with the 
maximum annual fee payable by a single Closed-End Fund equal to 
$100,000,\5\ the maximum annual fee payable by a fund family under the 
standard annual fee was not changed and remained at $75,000. In 
addition, rules specifically allowing for the aggregation of shares in 
a fund family were not included in the new All-Inclusive Annual Fee.
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    \4\ Securities Exchange Act Release No. 73647 (November 19, 
2014), 79 FR 70232 (November 25, 2014) (approving SR-NASDAQ-2014-
87).
    \5\ Id.
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    Nasdaq proposes to amend Listing Rules 5910(d)(4) and 5920(c)(7) to 
increase the maximum annual fee payable by a fund family to $80,000 to 
conform such fee to the maximum annual fee payable by a single Closed 
End Fund. The creation of this disparity between the fees was 
inadvertent and Nasdaq believes that it is reasonable for a fund family 
to be subject to the same maximum fee schedule than a single Closed-End 
Fund.
    In addition, Nasdaq proposes to amend Listing Rules IM-5910-1 and 
IM-5920-1 to clarify that a fund family subject to the All-Inclusive 
Annual Fee can aggregate shares in the same manner as a fund family 
subject to Nasdaq's standard annual fee. Nasdaq also proposes to 
clarify that the All-Inclusive Annual Listing Fee is calculated on 
total shares outstanding.
2. Statutory Basis
    The Exchange believes that its proposal is consistent with Section 
6(b) of the Act,\6\ in general, and furthers the objectives of Sections 
6(b)(4) and 6(b)(5) of the Act,\7\ 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 
or system which the Exchange operates or controls, and is not designed 
to permit unfair discrimination between customers, issuers, brokers, or 
dealers.
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    \6\ 15 U.S.C. 78f(b).
    \7\ 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.
    Nasdaq believes that the proposed increase in the annual maximum 
fee payable by a fund family is reasonable and not unfairly 
discriminatory because such fee is not greater than the fee payable by 
a single Closed-End Fund that could be a part of the same fund family. 
The parity in such fees had previously been approved by the 
Commission.\8\ The proposed rule change makes no adjustments to the fee 
schedule applicable to the Closed-End Funds.
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    \8\ See footnote 3, supra.
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    Nasdaq also believes that the proposed additional interpretive 
material merely clarifies, without changing the substance of the rules, 
Nasdaq's current position that a fund family subject to the All-
Inclusive Annual Listing Fee schedule is subject to the same fee 
schedule as a single Closed-End Fund. These companies are particularly 
sensitive to the expenses they incur, given that they compete for 
investment dollars based on return. In addition, Closed-End Funds need 
to issue shares as a primary means to expand their businesses and raise 
additional money to invest. As such, Nasdaq believes that allowing a 
fund family to aggregate the shares outstanding of all Closed-End Funds 
listed on Nasdaq that are part of the fund family is reasonable and not 
inequitable or unfairly discriminatory.
    Finally, Nasdaq believes that the proposed fees are consistent with 
the investor protection objectives of Section 6(b)(5) of the Act \9\ in 
that they are designed to promote just and equitable principles of 
trade, to remove impediments to a free and open market and national 
market system, and in general to protect investors and the public 
interest. Specifically, the fees are designed, in part, to ensure that 
there are adequate resources for Nasdaq's listing compliance program, 
which helps to assure that listing standards are properly enforced and 
investors are protected.
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    \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. The market for 
listing services is extremely competitive and listed companies may 
freely choose alternative venues based on the aggregate fees assessed, 
and the value provided by each listing. This rule proposal does not 
burden competition with other listing venues, which are similarly free 
to set their fees. Moreover, the proposed rule merely conforms fees 
charged to similarly situated Nasdaq listed Closed-End Funds and fund 
families. For these reasons, Nasdaq does not believe that the proposed 
rule change will result in any burden on competition for listings.

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.\10\
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    \10\ 15 U.S.C. 78s(b)(3)(A)(ii).
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    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: (i) 
Necessary or appropriate in the public interest; (ii) for the 
protection of investors; or (iii) 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.

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

[[Page 33278]]

     Send an e-mail to rule-comments@sec.gov. Please include 
File Number SR-NASDAQ-2016-057 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-2016-057. 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 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 such filing will also be 
available for inspection and copying at the principal office of the 
Exchange. 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-2016-057 and should be submitted on or before June 15, 2016.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\11\
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    \11\ 17 CFR 200.30-3(a)(12).
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Robert W. Errett,
Deputy Secretary.
[FR Doc. 2016-12237 Filed 5-24-16; 8:45 am]
 BILLING CODE 8011-01-P