Document ID: SEC-2015-1326-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: NASDAQ Stock Market, LLC
Posted Date: 2015-08-10T04:00Z

[Federal Register Volume 80, Number 153 (Monday, August 10, 2015)]
[Notices]
[Pages 47974-47976]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2015-19538]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-75601; File No. SR- NASDAQ-2015-087]

Self-Regulatory Organizations; The NASDAQ Stock Market LLC; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To 
Allow Listed Companies To Opt in to Nasdaq's All-Inclusive Annual 
Listing Fee

DATES: August 4, 2015.
    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 22, 2015, 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 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

    Nasdaq proposes to allow listed companies not currently subject to 
Nasdaq's all-inclusive annual listing fee to opt in to that fee program 
for 2016. The text of the proposed rule change is available on the 
Exchange's Web site 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
    Effective January 1, 2015, Nasdaq adopted an all-inclusive annual 
listing fee, which simplifies billing and provides transparency and 
certainty to companies as to the annual cost of listing.\3\ This new 
fee structure was designed, primarily, to address customer complaints 
about the number and in some cases the variable nature of certain of 
Nasdaq's listing fees. It also provides benefits to Nasdaq, including 
eliminating the multiple invoices that were sent to a company each year 
and providing more certainty as to revenue.\4\
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    \3\ Securities Exchange Act Release No. 73647 (November 19, 
2014), 79 FR 70232 (November 25, 2014) (SR-NASDAQ-2014-087).
    \4\ Id.
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    While this new fee structure will become operative for all listed 
companies in 2018, listed companies were allowed to elect to be subject 
to the all-inclusive annual listing fee effective January 1, 2015, and 
were provided certain incentives to do so.\5\ Companies have reacted 
favorably to the new fee program and these incentives.
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    \5\ See IM-5910-1(b)(1) and IM-5920-1(b)(1).
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    Nasdaq now proposes to allow currently listed companies that did 
not previously opt in to the all-inclusive annual fee program to do so 
effective January 1, 2016. In addition, Nasdaq proposes to offer 
companies an incentive to opt in, similar to the incentive offered 
companies that opted in to the all-inclusive annual fee program for 
2015. Specifically, from July 22, 2015 until December 31, 2015, Nasdaq 
will allow companies to opt in to the all-inclusive annual fee program 
starting in 2016. Any company that does so will not be billed for the 
listing of additional shares after it submits the opt-in form to 
Nasdaq, regardless of when the shares were issued.\6\ In

[[Page 47975]]

addition, the company will be billed for 2016 and 2017 based on the 
lower of its then-current total shares outstanding or the total shares 
outstanding reflected in information held by Nasdaq as of December 31, 
2015.\7\ As such, the number of shares outstanding reflected in 
information held by Nasdaq as of December 31, 2015, will be the maximum 
number of shares used to determine the company's all-inclusive annual 
listing fee until at least January 1, 2018.\8\ Nasdaq does not believe 
that these incentives will have any adverse impact on the amount of 
funds available for its regulatory programs.
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    \6\ In addition to incentivizing companies to elect to switch to 
the all-inclusive annual fee program, this incentive may also reduce 
confusion about the switch to the all-inclusive annual fee program 
for some companies. Because listing of additional shares fees are 
billed based on a company's public filings, share changes could be 
billed after the company has opted in and potentially not until 
2016, when the company believes it should not receive any further 
listing of additional shares fee bills. While some of these 
issuances would also be billed in 2015, Nasdaq believes that the 
simplicity of ending billing of listing of additional shares fees on 
the date the company opts-in offsets any potential revenue lost from 
such bills. Share issuances already billed at the time the company 
submits the opt-in form will not be forgiven.
    \7\ Under the ordinary operation of the existing rules, 
companies are billed for 2016 based on the total shares outstanding 
as of December 31, 2015. The incentive described will extend the use 
of that number of total shares outstanding for purposes of 
determining the company's 2017 bill. The number of shares 
outstanding used to calculate annual fees for 2016 and 2017 may 
include shares issued after the company has opted in to the all-
inclusive annual listing fee, if such shares are reflected in a 
public filing or other information held by Nasdaq as of December 31, 
2015.
    \8\ A company that opted in during 2014 is billed until December 
31, 2017, based on the lower of its total shares outstanding at the 
time of billing or the total shares outstanding reflected in 
information held by Nasdaq as of December 31, 2014.
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    The proposed rule change also conforms certain language in IM-5920-
1 with the comparable provision of IM-5910-1 and [sic] clarifies that 
total shares outstanding includes the aggregate number of all 
securities outstanding for each class of listed equity securities.\9\ 
In addition, the proposed rule change modifies the fee schedule for 
ADRs and the description of how fees are assessed on a foreign private 
issuer to clarify that the all-inclusive annual fee is based not just 
on ``shares'' but, like a domestic company, is based on the total of 
all of the foreign private issuer's listed equity securities, 
including, for example, ADRs and warrants, and such companies are not 
charged separately for each individual equity security listed. Nasdaq 
also proposes to make changes to the rule text to reflect that the all-
inclusive fee program has already become effective.
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    \9\ This is the same definition of total shares outstanding used 
for the standard annual fee in Rule 5910(c)(4) and 5920(c)(6).
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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,\10\ in general, and with 
Sections 6(b)(4) and (5) of the Act,\11\ in particular, in that it 
provides for the equitable allocation of reasonable dues, fees, and 
other charges among its members, issuers and other persons using its 
facilities, and does not unfairly discriminate between customers, 
issuers, brokers or dealers.
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    \10\ 15 U.S.C. 78f.
    \11\ 15 U.S.C. 78f(b)(4) and (5).
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    Nasdaq believes that the proposed incentives offered to companies 
that elect the all-inclusive annual listing fee starting in 2016 are 
reasonable, equitable and not unfairly discriminatory. These incentives 
are available equally to all companies and would provide the same 
benefit to all companies that make the election. Moreover, no company 
is required to opt in to the all-inclusive annual fee program under 
this change. In addition, as noted above, Nasdaq will accrue benefits 
from companies electing the all-inclusive annual listing fee structure, 
including by eliminating the multiple invoices that are sent to a 
company each year and providing more certainty as to revenue, and the 
incentives are designed to help Nasdaq capture these benefits sooner, 
which is a reasonable and non-discriminatory reason to provide the 
incentives to companies. Companies that elected to be subject to the 
all-inclusive fee during the initial opt-in period, effective for 2015, 
would not be disadvantaged in that they receive the benefit of having 
their fees calculated based on the maximum total shares outstanding as 
of the earlier December 31, 2014, date applicable to companies that 
opted in during 2014, and they received the benefits of the all-
inclusive annual fee program for 2015.
    The proposed changes to conform certain language in IM-5920-1 with 
the comparable provision of IM-5910-1, clarify that for both domestic 
and foreign issuers, total shares outstanding includes the aggregate 
number of all securities outstanding for each class of listed equity 
securities, and clarify that the fee charged a foreign private issuer 
is based not just on ``shares'' but, like a domestic company, is based 
on the total of all equity securities outstanding, are reasonable, 
equitable and not unfairly discriminatory in that they clarify Nasdaq's 
calculation of fees and conform the treatment for foreign private 
issuers with that of domestic companies, allowing the aggregation of 
all equity securities issued by the company.
    Finally, Nasdaq believes that the proposed incentives are 
consistent with the investor protection objectives of Section 6(b)(5) 
of the Act \12\ 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 proposed change will not impact the 
resources available for Nasdaq's listing compliance program, which 
helps to assure that listing standards are properly enforced and 
investors are protected.
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    \12\ 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, but rather reflects the competition between listing 
venues and will further enhance such competition. 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 \13\ and paragraph (f) of Rule 19b-4 
thereunder.\14\
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    \13\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \14\ 17 CFR 240.19b-4(f).
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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 necessary or 
appropriate in the public interest; for the protection of investors; or 
otherwise in furtherance of the purposes of the Act.

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 47976]]

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-2015-087 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-2015-087. 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-2015-087 and should 
be submitted on or before August 31, 2015.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\15\
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    \15\ 17 CFR 200.30-3(a)(12).
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Robert W. Errett,
Deputy Secretary.
[FR Doc. 2015-19538 Filed 8-7-15; 8:45 am]
 BILLING CODE 8011-01-P