Document ID: SEC-2016-2079-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: NASDAQ Stock Market, LLC
Posted Date: 2016-11-28T05:00Z

[Federal Register Volume 81, Number 228 (Monday, November 28, 2016)]
[Notices]
[Pages 85663-85666]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-28461]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-79366; File No. SR-NASDAQ-2016-106]

Self-Regulatory Organizations; The Nasdaq Stock Market LLC; Order 
Granting Approval of Proposed Rule Change To Modify Rule IM-5900-7 To 
Adjust the Entitlement to Services of Acquisition Companies

November 21, 2016.

I. Introduction

    On September 22, 2016, 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'') \1\ and Rule 19b-4 thereunder,\2\ a 
proposed rule change to modify the treatment of acquisition companies 
under Rule IM-5900-7 so that acquisition companies will not be entitled 
to complimentary services under IM-5900-7 until they complete an 
acquisition meeting the Exchange's requirements, as described below. 
The proposed rule change was published in the Federal Register on 
October 7, 2016.\3\ The Commission received no comments on the 
proposal. This order grants approval of the proposed rule change.
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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. 79025 (October 3, 
2016), 81 FR 69881 (October 7, 2016) (``Notice'').
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II. Description of the Proposal

    The Exchange proposed to amend Rule IM-5900-7 to adjust the timing 
of when complimentary services are provided to listed acquisition 
companies under that rule. Under the current rules, except as described 
below, Nasdaq generally does not permit the initial or continued 
listing of a company that has no specific business plan or that has 
indicated that its business plan is to engage in a merger or 
acquisition with an unidentified company or companies. However, in the 
case of a company whose business plan is to complete an initial public 
offering (``IPO'') and engage in a merger or acquisition with one or 
more unidentified companies within a specific period of time (an 
``Acquisition Company''), Nasdaq will permit the listing on the Nasdaq 
Global Market or Capital Market if the company meets all applicable 
initial listing requirements, as well as the additional conditions 
described in Nasdaq Rule IM-5101-2 (Listing of Companies Whose Business 
Plan is to Complete One or More Acquisitions).\4\ Pursuant to Rule IM-
5101-2(b), among other requirements, within 36 months of the 
effectiveness of its IPO registration statement, or such shorter period 
that the company specified in its registration statement, the company 
must complete one or more business combinations having an aggregate 
fair market value of at least 80% of the value of the deposit account 
(excluding any deferred underwriters fees and taxes payable on the 
income earned on the deposit account) at the time of the agreement to 
enter into the initial combination (a business combination that 
satisfies the conditions of IM-5101-2(b) is referred to as a ``Business 
Combination'').\5\ Rule IM-5101-2 also requires that following each 
Business Combination, the combined company must meet the requirements 
for initial listing.\6\
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    \4\ Id. at 69882. Rule IM-5101-2(a) requires that at least 90% 
of the gross proceeds from the IPO and any concurrent sale by the 
company of equity securities must be deposited in a trust account 
maintained by an independent trustee, an escrow account maintained 
by an ``insured depository institution,'' as that term is defined in 
Section 3(c)(2) of the Federal Deposit Insurance Act, or in a 
separate bank account established by a registered broker or dealer 
(collectively, a ``deposit account''). For a full set of 
requirements to list an Acquisition Company, see Rule IM-5101-2. The 
Exchange permits Acquisition Companies to list only on the Capital 
and Global Markets but not the Global Select Market. See Notice, 
supra note 3, at 69882 (citing Rule 5310(i), which provides that a 
company subject to IM-5101-2 is not eligible to list on the Global 
Select Market).
    \5\ Rule IM-5101-2 also provides, among other things, that if 
the company does not meet the requirements for initial listing 
following a business combination or does not comply with one of the 
requirements set forth in the rule, Nasdaq will issue a Staff 
Delisting Determination to delist the company's securities.
    \6\ See Rule IM-5101-2. If the company does not meet the 
requirements for initial listing following a Business Combination or 
does not comply with one of the requirements set forth in the IM-
5101-2, Nasdaq will issue a Staff Delisting Determination under 
Nasdaq Rule 5810 to delist the company's securities. Id.
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    As set forth in Rule IM-5900-7, the Exchange offers certain 
complimentary services to companies newly listing on the Nasdaq Global 
and Global Select Markets in connection with an IPO, upon emerging from 
bankruptcy, or in connection with a spin-off or carve-out from another 
company (``Eligible New Listings'') and to companies that switch their 
listing from the New York Stock Exchange (``NYSE'') to the Global or 
Global Select Markets (``Eligible Switches'').\7\ The complimentary 
services provided to some listed companies under IM-5900-7 are not, 
however, available to companies listing on the Capital Market. The 
Exchange also noted that, as of the date of filing its proposal with 
the Commission, all companies listing as an Acquisition Company have 
listed on the Capital Market.\8\
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    \7\ In addition, all companies listed on Nasdaq receive services 
from Nasdaq, including Nasdaq Online and the Market Intelligence 
Desk. See Notice, supra note 3, at 69882.
    \8\ See Notice, supra note 3, at 69882.
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    Currently, pursuant to Rule IM-5900-7, the services offered include 
a whistleblower hotline (with a retail value of approximately $4,000 
annually), an investor relations Web site (with a retail value of 
approximately $16,000 annually), disclosure services for earnings or 
other press releases (with a retail value ranging from $15,000 to 
$20,000 annually, depending on the company's market capitalization and 
whether it is an Eligible New Listing or an Eligible Switch), audio 
webcasting (with a retail value of approximately $6,500 annually), 
market analytic tools (with a retail value ranging from approximately 
$29,000 to $51,000 annually, depending on the number of users granted 
access), and may include market advisory tools such as stock 
surveillance (with a retail value of approximately $51,000 annually), 
global targeting (with a retail value of approximately $40,000 
annually), monthly ownership analytics and event driven targeting (with 
a retail value of approximately $46,000 annually), and an annual 
perception study (with a retail value of approximately $35,000 
annually).\9\ The total retail value of the services provided ranges 
from approximately $70,500 to $188,500 annually, depending on a 
company's market capitalization and whether it is an Eligible New 
Listing or an Eligible Switch.\10\ In addition, one-time development 
fees of approximately $3,500 to establish the services in the first 
year are waived.\11\ The length of the complimentary period that a 
company receives services under IM-5900-7 is either two or four years 
from the listing date, depending on a company's market capitalization 
and whether it is an

[[Page 85664]]

Eligible New Listing or an Eligible Switch.\12\ Notwithstanding the 
foregoing, if an Eligible New Listing or Eligible Switch begins to use 
a particular service provided under IM-5900-7 within 30 days after the 
date of listing, the complimentary period for that service begins on 
the date of first use.\13\
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    \9\ The Exchange noted that it does not propose to make any 
changes in its filing to the values of the various services provided 
to eligible listed companies discussed above, which values are 
specified in Rule IM-5900-7. See Notice, supra note 3, at 69882.
    \10\ See Rule IM-5900-7.
    \11\ Id.
    \12\ Id.
    \13\ Id.
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    The Exchange has now proposed to amend Rule IM-5900-7 to provide 
that an Acquisition Company will no longer be deemed to be an Eligible 
New Listing or an Eligible Switch at the time of its initial listing, 
but instead will be deemed to be an Eligible New Listing at such time 
as it has completed a Business Combination and lists such merged 
company on the Global or Global Select Market in conjunction with that 
Business Combination.\14\ Thus, under the proposal, an Acquisition 
Company will no longer be eligible to receive complimentary services 
under IM-5900-7 at the time of its initial listing on the Global Market 
before it has completed a Business Combination, but will instead be 
entitled to receive such services if and when it completes a Business 
Combination and lists on the Global or Global Select Market in 
conjunction with that Business Combination.
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    \14\ The Exchange stated that after completing the Business 
Combination, the company would receive the same services under IM-
5900-7, with the same value, as any other Eligible New Listing. See 
Notice, supra note 3, at 69882.
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    Under the proposal, for purposes of providing complimentary 
services under IM-5900-7 to certain listed companies, the Exchange 
would treat a company previously listed on the Nasdaq Capital Market as 
listing on the Global or Global Select Market in conjunction with a 
Business Combination if it files an application to list on the Global 
or Global Select Market before completing the combination and 
demonstrates compliance with all applicable criteria within 60 days of 
completing the Business Combination. According to the Exchange, this 
additional 60-day period may be required, in some cases, to allow time 
for the issuance of shares in the transaction and then for the newly 
formed entity to obtain information from third parties to demonstrate 
compliance with the shareholder and public float requirements of 
Nasdaq's Global or Global Select Market.\15\
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    \15\ See Notice, supra note 3, at 69882. See, e.g., Nasdaq Rules 
5315 and 5405, which set forth the quantitative listing requirements 
for Primary Equity Securities for the Nasdaq Global Select and 
Global Markets.
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    Under the proposed rules, if the Acquisition Company is listed on 
the Global Market at the time it completes a Business Combination and 
remains listed on the Global Market or transfers to the Global Select 
Market, the complimentary period for services under IM-5900-7 would 
commence on the date of such Business Combination.\16\ If the 
Acquisition Company is listed on the Capital Market at the time it 
completes the Business Combination, under the proposed rules the 
Acquisition Company would be given 60 days to demonstrate that it meets 
the listing criteria of the Global or Global Select Market; if it does 
qualify within 60 days, the complimentary period for services under IM-
5900-7 would commence on the date of listing on the Global or Global 
Select Market.\17\ In either case, however, if the company lists on the 
Global or Global Select Market and begins to use a particular service 
provided under IM-5900-7 within 30 days after the date of the Business 
Combination, the complimentary period for that service would begin on 
the date of first use.
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    \16\ The Exchange noted that an Acquisition Company must meet 
the initial listing requirements at the time of its Business 
Combination even if it is already listed on the Global Market. See 
Notice, supra note 3, at 69883 (citing Rule IM-5101-2(d)).
    \17\ The Exchange stated that an Acquisition Company that was 
listed on the Capital Market before the Business Combination would 
remain on the Capital Market until it demonstrates compliance with 
the applicable Global or Global Select Market initial listing 
criteria. See Notice, supra note 3, at 69882.
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    Finally, the Exchange proposed to make various non-substantive 
technical and conforming revisions to its Rules.\18\
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    \18\ Specifically, the Exchange proposed to delete a reference 
in the existing rule text to ``NASDAQ'' when referring to the Global 
and Global Select Markets, to conform to other references to the 
Global and Global Select Markets within the rule. In addition, the 
Exchange proposed to update the introductory note in Rule IM-5900-7 
to include the specific date that a prior change to the rule was 
approved. See Securities Exchange Act Release No. 78806 (September 
9, 2016), 81 FR 63523 (September 15, 2016) (approving NASDAQ-2016-
098) (``NASDAQ 2016 Order'').
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III. Discussion and Commission's Findings

    The Commission has carefully reviewed the proposed rule change and 
finds that it is consistent with the requirements of Section 6 of the 
Act.\19\ Specifically, the Commission believes it is consistent with 
the provisions of Sections 6(b)(4) and (5) of the Act,\20\ in 
particular, in that it is designed to provide for the equitable 
allocation of reasonable dues, fees, and other charges among Exchange 
members, issuers, and other persons using the Exchange's facilities, 
and is not designed to permit unfair discrimination between customers, 
issuers, brokers, or dealers. Moreover, the Commission believes that 
the proposed rule change is consistent with Section 6(b)(8) of the Act 
\21\ in that it does not impose any burden on competition not necessary 
or appropriate in furtherance of the purposes of the Act.
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    \19\ 15 U.S.C. 78f. 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).
    \20\ 15 U.S.C. 78f(b)(4) and (5).
    \21\ 15 U.S.C. 78f(b)(8).
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    The Commission believes that it is consistent with the Act for the 
Exchange to adjust the timing of when Acquisition Companies are 
eligible to receive complimentary services under IM-5900-7 from the 
time of initial listing of the Acquisition Company on the Global Market 
in connection with an IPO or with switching their listing from the 
NYSE,\22\ to the time of listing on the Global or Global Select Market 
in conjunction with a Business Combination. The Exchange represented 
that, in its view, Acquisition Companies do not generally need the 
services provided under IM-5900-7 upon listing, but would find these 
services useful if they remain listed after they complete a Business 
Combination.\23\ The Exchange explained that at the time of initial 
listing, Acquisition Companies do not have operating businesses, issue 
few press releases, and frequently do not have detailed Web sites.\24\ 
The Exchange stated when an Acquisition Company completes a Business 
Combination with an operating company, the combined company is similar 
to other Eligible New Listings, such as IPOs, and will have increased 
need to focus on identifying and communicating with its 
shareholders.\25\ The Exchange explained that like the other Eligible 
New Listings that receive complimentary services under the existing 
rule, these companies are transitioning to the traditional public

[[Page 85665]]

company model and the complimentary services provided under IM-5900-7 
will help ease that transition.\26\ Therefore, the Exchange stated that 
it believes that it is not an inequitable allocation of fees nor 
unfairly discriminatory to offer the services to an Acquisition 
Company, as described in IM-5101-2, only upon completion of a Business 
Combination.\27\
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    \22\ An Acquisition Company that has not yet completed a 
Business Combination may switch from NYSE to the Capital or Global 
Market, but would only be eligible to receive the services under IM-
5900-7 at the time it completes a Business Combination.
    \23\ See Notice, supra note 3, at 69882.
    \24\ Id. The Exchange stated in its filing that Acquisition 
Companies tend to trade infrequently and in a tight range until the 
company completes an acquisition. Id. The Exchange also stated that 
it typically takes more than two years for an Acquisition Company to 
identify a target and complete an acquisition and, as a result, the 
term of any complimentary services offered to an Acquisition Company 
upon initial listing would usually expire before the company 
acquired a target and began operating as an operating company that 
could benefit from the services. Id.
    \25\ See id. at 69883.
    \26\ Id.
    \27\ Id.
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    In addition, the Exchange stated that in many cases Acquisition 
Companies will consider transferring to a new listing venue at the time 
they complete a Business Combination, and that the proposed rule change 
will enable the Exchange to compete to retain these companies by 
offering them a package of complimentary services that assists their 
transition to becoming a traditional public operating company.\28\
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    \28\ Id.
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    The Exchange also recognized that not all Acquisition Companies 
will complete a Business Combination and that some listed Acquisition 
Companies will therefore never become eligible for the complimentary 
services under IM-5900-7.\29\ However, the Exchange reiterated that it 
does not believe that the services under IM-5900-7 generally would be 
useful to an Acquisition Company and that any such Acquisition Company 
therefore would not suffer any meaningful detriment as a 
consequence.\30\
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    \29\ Id.
    \30\ Id.
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    As noted in the previous order approving IM-5900-7, Section 6(b)(5) 
of the Act does not require that all issuers be treated the same; 
rather, the Act requires that the rules of an Exchange not unfairly 
discriminate between issuers.\31\ In its proposal, the Exchange has 
made representations that reasonably justify treating an Acquisition 
Company that lists on the Global or Global Select Market in conjunction 
with a Business Combination similar to a newly-listed operating 
company. In addition, when listed as an Acquisition Company, the 
Acquisition Company will also be eligible to receive complimentary 
products through the Exchange's Market Intelligence Desk and NASDAQ 
Online similar to all listed companies.\32\ The Commission further 
notes that an Acquisition Company that completes a Business Combination 
will be receiving the same package of services as an Eligible New 
Listing \33\ and that it will not be receiving any additional benefits 
or services by virtue of the proposed rule change. The Commission has 
previously found that the package of complimentary services offered to 
Eligible New Listings and Eligible Switches is equitably allocated 
among issuers consistent with Section 6(b)(4) of the Act and that 
describing the values of the services adds greater transparency to the 
Exchange's rules and to the fees applicable to such companies.\34\ The 
Commission also believes that describing in the exchange's rules the 
products and services available to listed companies and their 
associated values will ensure that individual listed companies are not 
given specially negotiated packages of products or services to list, or 
remain listed, that would raise unfair discrimination issues under the 
Act.\35\ Based on the foregoing, the Commission believes that the 
Exchange has provided a sufficient basis for adjusting the timing of 
when Acquisition Companies are eligible to receive the additional 
complimentary services set forth under IM-5900-7 from the time of an 
Acquisition Company's initial listing on the Global Market in 
connection with an IPO or with switching their listing from NYSE, to 
the time of an Acquisition Company's listing on the Global or Global 
Select Market in conjunction with a Business Combination, and that this 
change does not unfairly discriminate among issuers and is therefore 
consistent with the Act. For similar reasons, and as the value of the 
services offered are not changing, only the timing of when such 
services are provided to an Acquisition Company, we find that the 
proposal is consistent with Section 6(b)(4) of the Act.\36\
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    \31\ 15 U.S.C. 78f(b)(5); see also Securities Exchange Act 
Release No. 65963 (December 15, 2011), 76 FR 79262 (December 21, 
2011) (approving NASDAQ-2011-122) (``NASDAQ 2011 Order'').
    \32\ See supra, note 7; see also NASDAQ 2011 Order, supra note 
31, at 79262.
    \33\ See Rule IM-5101-2, requiring, among other things, that an 
Acquisition Company meet the requirements for initial listing after 
it meets the business combination requirements of IM-5101-2(b) just 
as is required for other Eligible New Listings.
    \34\ See NASDAQ 2011 Order, supra note 31, at 79266 and NASDAQ 
2016 Order, supra note 18, at 63525.
    \35\ See, e.g., Securities Exchange Act Release No. 65127 
(August 12, 2011), 76 FR 51449, 51452 (August 18, 2011) (approving 
NYSE-2011-20).
    \36\ The Commission has also approved similar rule proposals 
filed by other exchanges. See infra note 48 and accompanying text.
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    The Commission also believes that it is consistent with the Act for 
the Exchange to allow the complimentary period for a particular service 
to begin on the date of first use if an Acquisition Company that has 
completed a Business Combination begins to use the service within 30 
days after the date of the Business Combination. The Exchange stated in 
its filing that, in its experience, it can take companies a period of 
time to review and complete necessary contracts and training for the 
complimentary services under IM-5900-7 following their becoming 
eligible for those services and that allowing this modest 30 day 
period, if the company needs it, will help to ensure that the company 
will have the benefit of the full period permitted under the rule to 
actually use the services, thus giving companies the full intended 
benefit.\37\ The Commission notes that Rule IM-5900-7 currently allows 
an Eligible New Listing or an Eligible Switch to begin using services 
within 30 days of its initial listing date.\38\ As noted in the NASDAQ 
2014 Order, the Commission believes that this would provide only a 
short window of additional time to allow companies to finalize their 
contracts for the complimentary services. The Commission notes that 
under the proposed rule this additional 30 day window would only be 
available to Acquisition Companies that list on the Global or Global 
Select Markets in conjunction with a Business Combination and thereby 
treats such Acquisition Companies, at the time they qualify for listing 
as an operating company, the same as other newly-listed companies that 
qualify as Eligible New Listings under Rule IM-5900-7.\39\
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    \37\ See Notice, supra note 3, at 69883.
    \38\ See Securities Exchange Act Release No. 72669 (July 24, 
2014), 79 FR 44234 (July 30, 2014) (approving NASDAQ-2014-058) 
(``NASDAQ 2014 Order'').
    \39\ The Commission expects the Exchange to track the start (and 
end) date of each free service.
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    The Commission believes that it is consistent with the Act for the 
Exchange to define a company listing on Nasdaq's Global or Global 
Select Markets in conjunction with a Business Combination to include a 
company that is listed on the Capital Market at the time of the 
Business Combination if it both filed an application to list on the 
Global or Global Select Market before completing the Business 
Combination and demonstrates compliance with all applicable criteria 
for the Global or Global Select Market within 60 days of completing the 
Business Combination, and to provide that the period of complimentary 
services for such a company will commence on the date of its listing on 
the Global or Global Select Market. The Exchange represented that, in 
its experience, such a company may need a period of as long as 60 days 
to obtain information from third parties to demonstrate compliance with 
the listing

[[Page 85666]]

requirements.\40\ The Exchange stated that this 60-day period 
appropriately recognizes the practical problem that a company may have 
with demonstrating compliance with the initial listing requirements for 
the Global or Global Select Market at exactly the time of its Business 
Combination.\41\ The Exchange further stated that it believes that it 
is not unfairly discriminatory to limit this 60-day period to 
Acquisition Companies transitioning from the Capital Market to the 
Global or Global Select Market, as the Exchange expects it would be 
rare for a company already on the Global Market to need additional time 
to demonstrate compliance with initial listing requirements.\42\ The 
Commission also notes that the treatment of an Acquisition Company 
completing a Business Combination on the Capital Market as an Eligible 
New Listing under IM-5900-7 for purposes of listing on the Global and 
Global Select Markets, as long as it completes the Business Combination 
and lists no later than 60 days from that date, is consistent with the 
other changes noted above concerning when complimentary services are 
received by an Acquisition Company listed on the Global and Global 
Select Markets.
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    \40\ See Notice, supra note 3, at 69883. As noted above, the 
Exchange stated that this additional time may be required, in some 
cases, to allow the issuance of shares in the transaction and then 
for the newly formed entity to obtain information from third parties 
to demonstrate compliance with the shareholder and public float 
requirements. See supra note 15 and accompanying text.
    \41\ See Notice, supra note 3, at 69883.
    \42\ See id. For example, the Exchange explained that an 
Acquisition Company that is already listed on the Global Market 
would be required to have 400 round lot holders upon initially 
listing and would be required to have 400 total holders for 
continued listing. Id.
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    In addition, the Exchange stated that beginning the complimentary 
period for a company in this situation on the date of its listing on 
the Global or Global Select Market (rather than on the date of the 
Business Combination as is the case for companies listed on Global 
Market at the time of the Business Combination) is consistent with the 
period provided to other Eligible New Listings and Eligible Switches 
under the current rules, which begins on the date of listing.\43\ The 
Exchange also noted that, prior to the point of demonstrating 
compliance with the listing requirements, there is no certainty as to 
whether the company will qualify for the Global or Global Select Market 
and be eligible to receive the services and, as a result, complimentary 
services could not be provided prior to that date.\44\ Furthermore, the 
Exchange noted that the proposal provides that a company that takes 
advantage of the 60-day time period to demonstrate compliance cannot 
further extend the start of the complimentary period by using an 
additional 30-day period to start using the complimentary services.\45\
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    \43\ As described above, while the complimentary period will 
begin on the date of listing on the Global or Global Select Markets, 
if the company begins to use a particular service within 30 days 
after the date of the Business Combination, the period begins for 
that service on the date of first use.
    \44\ See Notice, supra note 3, at 69883.
    \45\ See id. For example, if a company completes a Business 
Combination on Day 1, demonstrates compliance with Global or Global 
Select Market listing standards and becomes listed on that market on 
Day 45, and begins using a certain complimentary service on Day 90, 
the complimentary period for that service would begin on Day 45, the 
day of listing. However, if a company completes a Business 
Combination on Day 1 and demonstrates compliance with Global or 
Global Select Market listing standards and becomes listed on one of 
those markets on Day 15, and begins using a certain complimentary 
service on Day 30, the complimentary period for that service would 
begin on Day 30, which is 30 days from the Business Combination or 
15 days after listing.
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    Based on the foregoing, the Commission believes that the Exchange 
has provided a sufficient basis for treating a company listed on the 
Capital Market at the time it completes a Business Combination as 
listing on the Global or Global Select Market in conjunction with a 
Business Combination if it files an application to list on the Global 
or Global Select Market before completing the combination and 
demonstrates compliance with all applicable criteria within 60 days of 
completing the Business Combination, and for beginning the 
complimentary period for a company in this situation on the date of its 
listing on the Global or Global Select Market rather than on the date 
of the Business Combination, and that these changes do not unfairly 
discriminate among issuers and are therefore consistent with Section 
6(b)(5) of the Act.
    The Commission also believes that the Exchange is responding to 
competitive pressures in the market for listings in making this 
proposal. Specifically, the Exchange has represented that, in many 
cases, an Acquisition Company will consider transferring to a new 
listing venue when it completes a Business Combination and that the 
proposed rule change would allow it to compete to retain these 
companies by offering them a package of complimentary services that 
assists their transition to being a traditional public company.\46\ The 
Exchange also represented that when the complimentary period ends, a 
former Acquisition Company that had acquired an operating business will 
be more likely to continue to use the Nasdaq Corporate Solutions 
service or a competing service, whereas otherwise they may not be 
exposed to the value of these services and therefore may not purchase 
any, which will create additional users of the service class and 
enhance competition among service providers.\47\ Further, the 
Commission notes that it has recently approved similar proposals filed 
by other exchanges with respect to the timing of complimentary services 
offered to Acquisition Companies under their rules.\48\ The Commission 
also notes that nothing in the Exchange's rules requires an Acquisition 
Company to remain listed on the Exchange after it completes a Business 
Combination and that such company is free to list on other markets. 
Accordingly, the Commission believes that the proposed rule reflects 
the current competitive environment for exchange listings among 
national securities exchanges, and is appropriate and consistent with 
Section 6(b)(8) of the Act.\49\
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    \46\ See Notice, supra note 3, at 69883.
    \47\ See id. The Exchange also noted that other service 
providers can also offer similar services to companies, thereby 
increasing competition to the benefit of those companies and their 
shareholders. Id.
    \48\ See Securities Exchange Act Release Nos. 79056 (October 6, 
2016), 81 FR 70449 (October 12, 2016) (approving NYSEMKT-2016-62) 
and 79187 (October 28, 2016), 81 FR 76403 (November 2, 2016) 
(approving NYSE-2016-58).
    \49\ 15 U.S.C. 78f(b)(8).
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    Finally, the Commission finds that it is consistent with Section 
6(b)(5) of the Act \50\ for the Exchange to make various technical and 
conforming revisions to facilitate clarity of its Rules.
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    \50\ 15 U.S.C. 78f(b)(5).
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IV. Conclusion

    It is therefore ordered, pursuant to Section 19(b)(2) of the 
Act,\51\ that the proposed rule change (SR-NASDAQ-2016-106) be, and it 
hereby is, approved.
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    \51\ 15 U.S.C. 78s(b)(2).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\52\
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    \52\ 17 CFR 200.30-3(a)(12).
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Robert W. Errett,
Deputy Secretary.
[FR Doc. 2016-28461 Filed 11-25-16; 8:45 am]
 BILLING CODE 8011-01-P