Document ID: SEC-2014-1151-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: The NASDAQ Stock Market, LLC
Posted Date: 2014-07-10T04:00Z

[Federal Register Volume 79, Number 132 (Thursday, July 10, 2014)]
[Notices]
[Pages 39446-39447]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2014-16097]

-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-72538; File No. SR-NASDAQ-2014-067]

Self-Regulatory Organizations; The NASDAQ Stock Market LLC; 
Notice of Filing of Proposed Rule Change to Rule 5305 To Eliminate the 
Automatic Transfer of Companies From The NASDAQ Global Market to The 
NASDAQ Global Select Market

July 3, 2014.
    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 June 25, 2014, The NASDAQ Stock Market LLC (``NASDAQ'' or 
``Exchange'') 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 prepared by NASDAQ. The Commission 
is publishing this notice to solicit comments on the proposed rule 
change from interested persons.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------

I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    NASDAQ proposes to modify Rule 5305 to eliminate the automatic 
transfer of companies from The NASDAQ Global Market to The NASDAQ 
Global Select Market.
    The text of the proposed rule change is below. Proposed new 
language is italicized; proposed deletions are bracketed.\3\
---------------------------------------------------------------------------

    \3\ Changes are marked to the rule text that appears in the 
electronic manual of Nasdaq found at http://nasdaqomx.cchwallstreet.com.
---------------------------------------------------------------------------

* * * * *

5305. General Information for The Nasdaq Global Select Market

    (a) No change.
    (b) Reserved. [Each October, Nasdaq will review the qualifications 
of all securities listed on the Nasdaq Global Market that are not 
included in the Nasdaq Global Select Market. Any security that meets 
the requirements for initial listing on the Nasdaq Global Select Market 
contained in Rule 5315 at the time of this review will be transferred 
to the Global Select Market the following January, provided it meets 
the continued listing criteria at that time. A Company will not owe any 
application or entry fees in connection with such a transfer.]
    (c)-(f) 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
    NASDAQ consists of three listing tiers: The NASDAQ Global Select 
Market, The NASDAQ Global Market, and The NASDAQ Capital Market. Each 
tier has different listing requirements, designed to appeal to 
companies with different characteristics.
    When NASDAQ created the Global Select tier in 2006, it implemented 
a process whereby NASDAQ conducts an annual review of all Global Market 
listed companies' qualifications and automatically places qualified 
Global Market companies in the Global Select segment the following 
January.\4\ While this annual review occurs automatically, a Global 
Market listed company may also apply to list on the Global Select 
Market at any time. Companies transferring from the Global Market to 
the Global Select Market, whether as part of the annual review process 
or upon their own application, are not assessed entry or application 
fees.
---------------------------------------------------------------------------

    \4\ This review is conducted in November and December based on 
data as of October 31.
---------------------------------------------------------------------------

    NASDAQ initiated this automatic review process in 2006 to provide a 
proactive mechanism to notify companies about their qualification for 
this new market tier, which was then unfamiliar to companies. NASDAQ 
believes that companies generally are now familiar with the three tiers 
of NASDAQ and that the automatic review and transfer to the Global 
Select Market is no longer necessary. In addition, NASDAQ also believed 
that the automatic annual review would achieve economies of scale by 
allowing review of all Global Market companies at the same time, rather 
than individually. However, in recent years there have been fewer 
companies that qualify for transfer \5\ and, as such, these economies 
of scale are reduced. Finally, a Global Market company may still seek 
to transfer to the Global Select tier at any point in the year by 
submitting a listing application. Accordingly, NASDAQ proposes to 
eliminate the automatic annual review and will review Global Market 
companies for transfer to the Global Select Market only upon 
application by the company. NASDAQ acknowledges that, as a result, 
companies will have to monitor whether they qualify to transfer rather 
than rely on NASDAQ's automatic review. But, while a company does not 
currently have to submit an application, much of the information 
required for the application is pre-populated for a company, and 
NASDAQ, therefore, does not believe that the application is 
burdensome.\6\
---------------------------------------------------------------------------

    \5\ Based on NASDAQ's automatic review, 228 securities 
transferred in January 2011. This number reflected a number of 
issues that first qualified based on a new listing standard adopted 
during 2010. In 2012, 2013 and 2014, between 58 and 77 securities 
transferred each year.
    \6\ The application to transfer from the Global Market to the 
Global Select Market is available on the NASDAQ Listing Center 
(https://listingcenter.nasdaqomx.com) and is completed online. Based 
on a company's symbol and CIK code or CUSIP number, the application 
is pre-populated with the company's identifying information. The 
applicant generally will only need to provide contact information, 
affirm the accuracy of the information in the application and accept 
the Listing Agreement.
---------------------------------------------------------------------------

    NASDAQ proposes to implement this change upon approval. As such, 
companies transferred in January 2014 would be the last group 
automatically transferred upon NASDAQ's review under existing Rule 
5305(b). NASDAQ will notify Global Market listed companies about this 
change via an email communication. A company can continue to request 
transfer at any point during the year, and the review of an application 
to transfer from the Global Market to the Global Select Market will 
continue to be conducted without cost to the issuer. Qualified 
companies also will not owe any entry or other fees in connection with 
a transfer from the

[[Page 39447]]

Global Market to the Global Select Market.
2. Statutory Basis
    NASDAQ believes that the proposed rule change is consistent with 
the provisions of Section 6 of the Act,\7\ in general and with Section 
6(b)(5) of the Act,\8\ in particular in that 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. The proposed rule change is 
designed to eliminate the annual review of companies for transfer from 
the Global Market to the Global Select Market, which NASDAQ believes is 
an unnecessary process. This would remove an unnecessary burden on 
NASDAQ staff. However, given the ease of the automated application 
process, it would continue to be simple for qualified companies to 
request review at any time, and without cost. Qualified companies that 
apply could transfer immediately upon confirmation by NASDAQ staff that 
the company meets the listing requirements. NASDAQ recognizes that 
companies will have to monitor whether they qualify for transfer, 
rather than rely upon NASDAQ's automatic review. However, on balance, 
NASDAQ does not believe that this burden is significant enough to 
warrant continuing the automatic transfer process.
---------------------------------------------------------------------------

    \7\ 15 U.S.C. 78f.
    \8\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

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 proposed rule 
change would simply require an eligible company to initiate the 
transfer from the Global Market to the Global Select Market, which will 
result in no additional burden on competition between NASDAQ and other 
exchanges.

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

    Within 45 days of the date of publication of this notice in the 
Federal Register or within such longer period (i) as the Commission may 
designate up to 90 days of such date if it finds such longer period to 
be appropriate and publishes its reasons for so finding or (ii) as to 
which the self-regulatory organization consents, the Commission will:
    (A) By order approve or disapprove the proposed rule change, or
    (B) institute proceedings to determine whether the proposed rule 
change should be 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
     Send an email to rule-comments@sec.gov. Please include 
File Number SR-NASDAQ-2014-067 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-2014-067. 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 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 Web site 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; 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-2014-067 and should 
be submitted on or before July 31, 2014.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\9\
---------------------------------------------------------------------------

    \9\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Jill M. Peterson,
Assistant Secretary.
[FR Doc. 2014-16097 Filed 7-9-14; 8:45 am]
BILLING CODE 8011-01-P