[Federal Register Volume 80, Number 51 (Tuesday, March 17, 2015)]
[Notices]
[Pages 13925-13927]
[FR Doc No: 2015-06015]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-74472; File No. SR-NASDAQ-2015-017]

Self-Regulatory Organizations; The NASDAQ Stock Market LLC;
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To
Provide a Limited Price Guarantee to Certain Companies That Switch
Their Listing to Nasdaq From Another Exchange

March 11, 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 February 25, 2015, The NASDAQ Stock Market LLC (``Nasdaq'' or
``Exchange'') filed with the Securities 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 the
Substance of the Proposed Rule Change

    Nasdaq proposes to provide a limited price guarantee to certain
companies that switch their listing to Nasdaq from another securities
exchange. 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
    Nasdaq recently 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) (approving SR-NASDAQ-2014-
087).
    \4\ Id.
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    While this new fee structure will become operative for all listed
companies in 2018, currently 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\ In addition,
because they may have made their listing decision based on Nasdaq's
prior fee schedule, any company that applied to list on Nasdaq prior to
January 1, 2015, and lists after that date, is also provided an

accommodation: Until December 31, 2017, such a company will be billed
the all-inclusive annual fee based on the lower of its then-current
total shares outstanding or the total shares outstanding reflected in
information held by Nasdaq as of the date of listing. As such,
regardless of any increase in shares outstanding, the tier upon which
the all-inclusive annual fee is based for such companies will not
increase until at least January 1, 2018.\6\ 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).
    \6\ IM-5910-1(b)(2) and IM-5910-2(b)(2).
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    Nasdaq now proposes to offer certain other newly listing companies
the same incentive provided to any company that applied to list on
Nasdaq prior to January 1, 2015. Specifically, Rules 5910(a)(7) and
5920(a)(7) currently waive entry fees upon listing on Nasdaq for a
company that switches from another national securities exchange
(including if it is currently dually listed on such exchange) and when
an unlisted company acquires a company listed on another national
securities exchange and lists on Nasdaq in connection with the
transaction.\7\ In order to better compete for these listings, Nasdaq
proposes to charge them based on the lower of their shares outstanding
as of the date of listing or at the time of billing until January 1,
2018. This will provide certainty to the companies as to their fee
until at least 2018 and provides an incentive for a company to switch
its listing to Nasdaq sooner than it might otherwise, before issuing
additional shares that would result in the company being in a higher
fee tier and paying a higher annual fee. Nasdaq believes that this
proposed change will enhance the ability of Nasdaq to compete for these
listings and may ultimately benefit all issuers and investors.\8\
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    \7\ See Securities Exchange Act Release No. 51004 (January 10,
2005), 70 FR 2917 (January 18, 2005) (approving SR-NASDAQ-2004-140);
Securities Exchange Act Release No. 55202 (January 30, 2007), 72 FR
6017 (February 8, 2007) (approving SR-NASDAQ-2006-040).
    \8\ See Release No. 51004, 70 FR at 2917 (expressing the
Commission's belief that the adoption of the waivers now codified in
Rules 5910(a)(7)(i) and (ii) and 5920(a)(7) (i) and (ii) ``may
ultimately benefit issuers and investors because competition among
listing markets has the potential to enhance the quality of services
that listing markets provide.'').
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    Nasdaq notes that few companies qualify for the waivers in Rule
5910(a)(7) and 5920(a)(7). In addition, it is Nasdaq's experience that
a company will typically do an extensive review of Nasdaq's
requirements before switching to Nasdaq, and therefore companies
present few regulatory issues during the first few years after
switching. As such, while the incentive may be meaningful to individual
companies considering whether, and when, to switch their listing,
Nasdaq does not believe that these incentives, in the aggregate, will
have any adverse impact on the availability of funds for its regulatory
programs.\9\
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    \9\ The proposed rule change will also modify existing rule
language to reflect the expiration of the January 1, 2015 deadline
for listed companies to opt in to the all-inclusive fee for 2016.
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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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    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.\12\ As a result, Nasdaq
must carefully tailor its fees and incentives to compete with other
listing venues and Nasdaq cannot charge prices in a manner that would
be unreasonable, inequitable or unfairly discriminatory.
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    \12\ The Justice Department noted the intense competitive
environment for exchange listings. See ``NASDAQ OMX Group Inc. and
IntercontinentalExchange Inc. Abandon Their Proposed Acquisition of
NYSE Euronext After Justice Department Threatens Lawsuit'' (May 16,
2011), available at http://www.justice.gov/atr/public/press_releases/2011/271214.htm.
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    Nasdaq also believes that the proposed incentives are reasonable
and not unfairly discriminatory. These incentives would be provided to
a category of companies aligned with another exchange and for which
Nasdaq must therefore compete aggressively to have them transfer their
listing. Moreover, attracting significant companies to switch listing
venues to Nasdaq promotes the Exchange's image, which benefits all
companies listed on Nasdaq. For these reasons, Nasdaq has already
determined to waive entry fees for these companies and selecting only
these companies for the proposed incentive is not an unfairly
discriminatory basis to distinguish among companies.
    Finally, Nasdaq believes that the proposed fees are consistent with
the investor protection objectives of Section 6(b)(5) of the Act \13\
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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    \13\ 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. Further, Nasdaq believes the proposed change
reflects the existing competition between listing venues and will
further enhance such competition.\14\ For these reasons, Nasdaq does
not believe that the proposed rule change will result in any burden on
competition for listings.
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    \14\ See footnote 8, supra.
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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.\15\
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    \15\ 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
     Send an email to<EMAIL_ADDRESS>Please include
File Number SR-NASDAQ-2015-017 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-2015-017. 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 such 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-2015-017, and should
be submitted on or before April 7, 2015.

    For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\16\
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    \16\ 17 CFR 200.30-3(a)(12).
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Brent J. Fields,
Secretary.
[FR Doc. 2015-06015 Filed 3-16-15; 8:45 am]
 BILLING CODE 8011-01-P