Document ID: SEC-2007-1246-0001
Agency: sec
Document Type: Notice
Title: Self-regulatory organizations; proposed rule changes: NASDAQ Stock Market LLC
Posted Date: 2007-09-07T04:00Z

[Federal Register: September 7, 2007 (Volume 72, Number 173)]
[Notices]               
[Page 51485-51486]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr07se07-103]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-56339; File No. SR--NASDAQ-2007-042]

 
Self-Regulatory Organizations; The NASDAQ Stock Market LLC; Order 
Approving a Proposed Rule Change, as Modified by Amendment No. 1, To 
Modify the Entry and Annual Fees Paid by a Company That Lists on Nasdaq 
Upon Emerging From Bankruptcy

August 30, 2007.

I. Introduction

    On April 13, 2007, The NASDAQ Stock Market LLC (``Nasdaq'' or 
``Exchange'') filed with the Securities and Exchange Commission 
(``Commission''), pursuant to Section 19(b)(1) of the Securities 
Exchange Act of 1934 (``Act'' or ``Exchange Act'') \1\ and Rule 19b-4 
thereunder,\2\ a proposal to modify the entry and annual fees paid by a 
company that lists on Nasdaq upon emerging from bankruptcy. The 
Exchange filed Amendment No. 1 to the proposed rule change on June 28, 
2007. The proposal was published for comment in the Federal Register on 
July 25, 2007.\3\ The Commission received no comments on the proposal. 
This order approves the proposed rule change, as modified by Amendment 
No. 1.
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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. 56092 (June 18, 
2007), 72 FR 40915.
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II. Description of the Proposal

    The Exchange proposes to modify the fees charged to companies that 
list upon emerging from bankruptcy. Specifically, Nasdaq proposes to 
waive the entry fee (including the application fee) \4\ that such 
companies would otherwise be required to pay. In addition, for 
companies listing on the NASDAQ Global Market (including the NASDAQ 
Global Select Market), Nasdaq proposes to charge the company the 
minimum annual listing fee applicable to companies on that market 
(currently $30,000) for the first (prorated) year that

[[Page 51486]]

such a company is listed \5\ and for each of the subsequent two full 
calendar years.\6\ Finally, Nasdaq proposes that a company that emerges 
from bankruptcy and relists during the same year that it has previously 
paid an annual fee will not be required to pay a second annual fee for 
that year.
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    \4\ Nasdaq's entry fee includes a $5,000 non-refundable 
application fee. The proposed waiver would also waive this part of 
the fee.
    \5\ Nasdaq prorates the annual fee for the year a company lists, 
based on the month in which the company lists.
    \6\ All domestic companies on the NASDAQ Capital Market pay the 
same annual fee.
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    The Exchange believes that the proposed fee waivers are justified 
by the unique circumstances faced by companies emerging from 
bankruptcy. According to the Exchange, these companies typically are 
not raising any new capital at the time of listing, so the payment of 
entry and listing fees is more burdensome than for companies that are 
listing upon an initial public offering. Also, because of the desire in 
bankruptcy proceedings to ensure that creditors are paid as much as 
possible, the Exchange believes these companies are much more sensitive 
to both the initial and continued costs associated with listing. As 
such, the Exchange believes the proposed fees are reasonable and 
equitably allocated.
    The Exchange has represented that the proposed rule change would 
not affect its commitment of resources to its regulatory oversight of 
the listing process or its other regulatory programs. Nasdaq reports 
that historically it has not listed a large number of companies 
emerging from bankruptcy in any given year.\7\ Moreover, Nasdaq stated 
that it would still conduct a complete review of these companies for 
compliance with Nasdaq listing standards in the same manner as any 
other company applying for listing on Nasdaq. The company must 
successfully complete that review process and demonstrate compliance 
with the initial listing requirements prior to being approved for 
listing.
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    \7\ Nasdaq listed four companies upon their emergence from 
bankruptcy from January 1, 2006, through March 31, 2007.
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III. Discussion

    After careful consideration, the Commission finds that the proposed 
rule change, as amended, is consistent with the requirements of the Act 
and the rules and regulations thereunder applicable to a national 
securities exchange.\8\ In particular, the Commission finds that the 
proposal is consistent with Section 6(b)(4) of the Act,\9\ which 
requires that an exchange have rules that provide for the equitable 
allocation of reasonable dues, fees, and other charges among its 
members and other persons using its facilities. The Commission also 
finds that the proposal is consistent with Section 6(b)(5) of the 
Act,\10\ which requires, inter alia, that the rules of a national 
securities exchange be designed to remove impediments to and perfect 
the mechanism of a free and open market and a national market system, 
and not designed to permit unfair discrimination between issuers. The 
Commission has not received any comments on the proposal. This order 
approves the proposed rule change, as modified by Amendment No 1.
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    \8\ In approving this 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).
    \9\ 15 U.S.C. 78f(b)(4).
    \10\ 15 U.S.C. 78f(b)(5).
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    The Commission notes that a company who relists upon emerging from 
bankruptcy has usually paid either an entry fee to the Exchange or a 
similar initial listing fee to another national securities exchange at 
the time of its initial listing. In addition, with respect to the 
application of the minimum annual listing fee to a company which lists 
upon emergence from bankruptcy and the waiver of the annual fee for a 
company that emerges from bankruptcy and relists during the same year 
that it has previously paid an annual fee, the Commission notes that 
this fee reduction or waiver is a temporary one, designed to enable 
recently bankrupt companies to manage the costs associated with 
listing, consistent with the desire in bankruptcy proceeding to ensure 
that creditors are paid as much as possible. For these reasons, the 
Exchange believes that reduction or waiver of the Exchange's fees in 
these cases is equitable.
    The Commission also notes that the Exchange has represented that 
the waiver of entry fees and the reduction or waiver of annual listing 
fees in these limited circumstances should not affect its commitment of 
resources to its regulatory oversight of the listing process or its 
other regulatory programs.
    Further, the proposed fee changes would not have any impact on 
whether a company is actually eligible to list on the Exchange. The 
Commission expects, and the Exchange has represented, that a full and 
independent review of compliance with Nasdaq listing standards will be 
conducted for any company seeking to take advantage of the proposed fee 
changes, in the same manner as for any company that applies for listing 
on the Exchange.
    In light of these arguments, the Commission agrees that the 
proposed waiver and fee cap, which are retroactively effective to April 
13, 2007, the date of the filing of the proposed rule change, do not 
constitute an inequitable allocation of reasonable dues, fees, and 
other charges, do not permit unfair discrimination between issuers, and 
are generally consistent with the Act.

IV. Conclusion

    It is therefore ordered, pursuant to Section 19(b)(2) of the 
Act,\11\ that the proposed rule change (File No. SR--NASDAQ-2007-042), 
as modified by Amendment No. 1, be, and it hereby is, approved.
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    \11\ Id.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\12\
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    \12\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. E7-17669 Filed 9-6-07; 8:45 am]

BILLING CODE 8010-01-P