[Federal Register Volume 87, Number 133 (Wednesday, July 13, 2022)]
[Notices]
[Pages 41780-41788]
[FR Doc No: 2022-14887]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-95220; File No. SR-NASDAQ-2022-027]

Self-Regulatory Organizations; The Nasdaq Stock Market LLC; Order
Instituting Proceedings To Determine Whether To Approve or Disapprove a
Proposed Rule Change, as Modified by Amendment No. 1, To Modify Certain
Pricing Limitations for Companies Listing in Connection With a Direct
Listing With a Capital Raise

July 7, 2022

I. Introduction

    On March 21, 2022, The Nasdaq Stock Market LLC (``Nasdaq'' or the
``Exchange'') filed with the Securities and Exchange Commission
(``SEC'' or ``Commission''), pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934 (``Exchange Act'') \1\ and Rule 19b-4
thereunder,\2\ a proposed rule change to modify certain pricing
limitations for companies listing in connection with a direct listing
with a primary offering in which the company will sell shares itself in
the opening auction on the first day of trading on the Exchange. The
proposed rule change was published for comment in the Federal Register
on April 8, 2022.\3\ On May 19, 2022, pursuant to Section 19(b)(2) of
the Exchange Act,\4\ the Commission designated a longer period within
which to either approve the proposed rule change, disapprove the
proposed rule change, or institute proceedings to determine whether to
disapprove the proposed rule change.\5\
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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. 94592 (April 4,
2022), 87 FR 20905 (April 8, 2022).
    \4\ 15 U.S.C. 78s(b)(2).
    \5\ See Securities Exchange Act Release No. 94947 (May 19,
2022), 87 FR 31915 (May 25, 2022). The Commission designated July 7,
2022, as the date by which it should approve, disapprove, or
institute proceedings to determine whether to disapprove the
proposed rule change.
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    On May 23, 2022, the Exchange filed Amendment No. 1 to the proposed
rule change, which superseded the proposed rule change as originally
filed. Amendment No. 1 was published for comment in the Federal
Register on June 2, 2022.\6\ The Commission has received no comments on
the proposal. This order institutes proceedings under Section
19(b)(2)(B) of the Exchange Act \7\ to determine whether to approve or
disapprove the proposed rule change, as modified by Amendment No. 1.
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    \6\ See Securities Exchange Act Release No. 94989 (May 26,
2022), 87 FR 33558 (June 2, 2022) (``Notice'').
    \7\ 15 U.S.C. 78s(b)(2)(B).
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II. Description of the Proposal

    Nasdaq Listing Rule IM-5315-2 provides listing requirements for
Nasdaq's Global Select Market for a company that has not previously had
its common equity securities registered under the Exchange Act to list
its common equity securities on the Exchange at the time of
effectiveness of a registration statement \8\ pursuant to which the
company will sell shares itself in the opening auction on the first day
of trading on the Exchange (a ``Direct Listing with a Capital
Raise'').\9\ Securities qualified for listing under Nasdaq Listing Rule
IM-5315-2 must begin trading on the Exchange following the initial
pricing through the mechanism outlined in Nasdaq Rule 4120(c)(9) and
Nasdaq Rule 4753 for the opening auction, otherwise known as the Nasdaq
Halt Cross.\10\ Currently, in the case of a Direct Listing with a
Capital Raise, the Exchange will release the security for trading on
the first day of listing if, among other things, the actual price
calculated by the Nasdaq Halt Cross is at or above the lowest price and
at or below the highest price of the price range established by the
issuer in its effective registration statement \11\ (the ``Pricing
Range Limitation'').
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    \8\ The reference to a registration statement refers to a
registration statement effective under the Securities Act of 1933
(``Securities Act'').
    \9\ A Direct Listing with a Capital Raise includes listings
where either: (i) only the company itself is selling shares in the
opening auction on the first day of trading; or (ii) the company is
selling shares and selling shareholders may also sell shares in such
opening auction. See Nasdaq Listing Rule IM-5315-2. See also
Securities Exchange Act Release No. 91947 (May 19, 2021), 86 FR
28169 (May 25, 2021) (order approving rules to permit a Direct
Listing with a Capital Raise and adopting related rules concerning
how the opening transaction for such listing will be effected)
(``2021 Order''). The Exchange's rules provide for a company listing
pursuant to a Direct Listing with a Capital Raise to list only on
the Nasdaq Global Select Market.
    \10\ See Nasdaq Listing Rule IM-5315-2. ``Nasdaq Halt Cross''
means the process for determining the price at which Eligible
Interest shall be executed at the open of trading for a halted
security and for executing that Eligible Interest. See Nasdaq Rule
4753(a)(4). ``Eligible Interest'' means any quotation or any order
that has been entered into the system and designated with a time-in-
force that would allow the order to be in force at the time of the
Nasdaq Halt Cross. See Nasdaq Rule 4753(a)(5). Pursuant to Nasdaq
Rule 4120, the Exchange will halt trading in a security that is the
subject of an initial public offering (or direct listing), and
terminate that halt when the Exchange releases the security for
trading upon certain conditions being met, as discussed further
below. See Nasdaq Rule 4120(a)(7) and (c)(8).
    \11\ The Exchange states that references in the proposal to the
price range established by the issuer in its effective registration
statement refer to the price range disclosed in the prospectus in
such effective registration statement. See Notice, supra note 6, 87
FR at 33559 n.10. Throughout this order, we refer to this as the
``disclosed price range.''

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    The Exchange has proposed to modify the Pricing Range Limitation to
provide that the Exchange would release the security for trading if:
(a) the actual price calculated by the Nasdaq Halt Cross is at or above
the price that is 20% below the lowest price of the disclosed price
range; or (b) the actual price calculated by the Nasdaq Halt Cross is
at a price above the highest price of such price range. For the Nasdaq
Halt Cross to execute at a price outside of the disclosed price range,
the company would be required to publicly disclose and certify to the
Exchange that the company does not expect that such price would
materially change the company's previous disclosure in its effective
registration statement and that its effective registration statement
contains a sensitivity analysis explaining how the company's plans
would change if the actual proceeds from the offering are less than or
exceed the amount in the disclosed price range.\12\ The Exchange would
calculate the 20% threshold below the disclosed price range based on
the maximum offering price set forth in the registration fee table in
the company's effective registration statement, which the Exchange
argues is consistent with the Instruction to paragraph (a) of
Securities Act Rule 430A.\13\ The Exchange has also proposed to make
related conforming changes.
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    \12\ See proposed Nasdaq Rule 4120(c)(9)(B)(vii)d.2. The
Exchange has proposed additional conditions, as discussed in more
detail below, before the Nasdaq Halt Cross could proceed including a
Post-Pricing Period and that the Price Volatility Constraint has
been satisfied.
    \13\ See proposed Nasdaq Rule 4120(c)(9)(B). If the company
provides an upper limit in its certification, that price would serve
as the upper limit of the price range within which the Nasdaq Halt
Cross could proceed. See proposed Nasdaq Rule 4120(c)(9)(B)(vii)d.2.
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    Currently Nasdaq Rule 4120(c)(9)(B) states that, notwithstanding
the provisions of Nasdaq Rule 4120(c)(8)(A) and (c)(9)(A), in the case
of a Direct Listing with a Capital Raise, for purposes of releasing
securities for trading on the first day of listing, the Exchange, in
consultation with the financial advisor to the issuer, will make the
determination of whether the security is ready to trade. The Exchange
will release the security for trading if: (i) all market orders will be
executed in the Nasdaq Halt Cross; and (ii) the actual price calculated
by the Nasdaq Halt Cross complies with the Pricing Range Limitation.
The Exchange will postpone and reschedule the offering only if either
or both of such conditions are not met.\14\ The Exchange states that if
there is insufficient buy interest to satisfy the CDL Order \15\ and
all other market orders or if the Pricing Range Limitation is not
satisfied, the Nasdaq Halt Cross would not proceed and such security
would not begin trading.\16\
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    \14\ See Nasdaq Rule 4120(c)(9)(B).
    \15\ A ``Company Direct Listing Order'' or ``CDL Order'' is a
market order that may be entered only on behalf of the issuer and
may be executed only in the Nasdaq Halt Cross for a Direct Listing
with a Capital Raise. The CDL Order is entered without a price (with
a price later set in accordance with the requirements of Nasdaq Rule
4120(c)(9)(B)), must be for the quantity of shares offered by the
issuer as disclosed in its effective registration statement, must be
executed in full in the Nasdaq Halt Cross, and may not be canceled
or modified. See Nasdaq Rule 4702(b)(16).
    \16\ See Notice, supra note 6, 87 FR at 33559. The Exchange
represents that in such event, because the Nasdaq Halt Cross cannot
be conducted, the Exchange would postpone and reschedule the
offering and notify participants via a Trader Update that the Direct
Listing with a Capital Raise scheduled for that date has been
cancelled and any orders for that security that have been entered on
the Exchange would be cancelled back to the entering firms. See id.
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    According to the Exchange, based on conversations it has had with
companies and their advisors, the Exchange believes that some companies
may be reluctant to use the existing rules for a Direct Listing with a
Capital Raise because of concerns about the Pricing Range
Limitation.\17\ The Exchange states it believes ``that the Pricing
Range Limitation imposed on a Direct Listing with a Capital Raise (but
not on a traditional IPO) increases the probability of a failed
offering because the offering cannot proceed without some delay not
only for the lack of investor interest, but also if investor interest
is greater than the company and its advisors anticipated.'' \18\
According to the Exchange, the Exchange believes that there may be
instances of offerings where the price determined by the Exchange's
opening auction will exceed the highest price of the price range
disclosed in the company's effective registration statement.\19\ The
Exchange states that, under the existing rule, a security subject to a
Direct Listing with a Capital Raise cannot be released for trading by
the Exchange if the actual price calculated by the Nasdaq Halt Cross is
above the highest price of the disclosed price range.\20\ The Exchange
further states that, in this case, the Exchange would have to cancel or
postpone the offering until the company amends its effective
registration statement, and that, at a minimum, such a delay exposes
the company to market risk of changing investor sentiment in the event
of an adverse market event.\21\ In addition, the Exchange states that
the determination of the public offering price of a traditional IPO is
not subject to limitations similar to the Pricing Range Limitation for
a Direct Listing with a Capital Raise, which, in the Exchange's view,
could make companies reluctant to use this alternative method of going
public despite its expected potential benefits.\22\
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    \17\ See id. The Exchange states that it believes a Direct
Listing with a Capital Raise could maximize the chances of more
efficient price discovery of the initial public sale of securities
for issuers and investors, because, unlike in a traditional firm
commitment underwritten initial public offering (``IPO'') the
initial sale price is determined based on market interest and the
matching of buy and sell orders in an auction open to all market
participants. See id.
    \18\ See id. The Exchange states that if an offering cannot be
completed due to lack of investor interest, there is likely to be a
substantial amount of negative publicity for the company and the
offering may be delayed or cancelled. See id.
    \19\ See id. at 33559-60.
    \20\ See id. at 33560.
    \21\ See id.
    \22\ See id.
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    The Exchange has proposed to modify the Pricing Range Limitation
such that even if the actual price calculated by the Nasdaq Halt Cross
is outside the disclosed price range, the Exchange would release a
security for trading if the actual price at which the Nasdaq Halt Cross
would occur is as much as 20% below the lowest price of the disclosed
price range or above the highest price of the disclosed price range,
provided all other necessary conditions are satisfied, and that the
company has specified the quantity of shares registered, as permitted
by Securities Act Rule 457.\23\ In such circumstances, the company's
registration statement would be required to contain a sensitivity
analysis explaining how the company's plans would change if the actual
proceeds from the offering are less than or exceed the amount assumed
in the disclosed price range, and, as stated above, the company would
be required to certify to the Exchange that it has met this
requirement.\24\ In addition, the company would be required to publicly
disclose and certify to the Exchange prior to the beginning of the
Display Only Period \25\ that the company does not expect that such
offering price would materially change the company's previous
disclosure in its effective registration statement.\26\ If the
company's certification submitted to the Exchange in that regard
includes an upside limit, the Exchange would not execute the Nasdaq
Halt Cross if it would result in

an offering price above such limit.\27\ The Exchange states that the
goal of these requirements is to have disclosure that allows investors
to see how changes in share price ripple through critical elements of
the disclosure.\28\
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    \23\ See id.
    \24\ See Notice, supra note 6, 87 FR at 33560.
    \25\ See Nasdaq Rule 4120(c)(7)(A) and proposed Nasdaq Rule
4120(c)(9)(B)(iii)-(v) for a description of the ``Display Only
Period.''
    \26\ See Notice, supra note 6, 87 FR at 33560.
    \27\ See id. The Exchange proposes to define the ``Price Range''
as the price range established by the issuer in its preliminary
prospectus included in the effective registration statement. See
proposed Nasdaq Rule 4120(c)(9)(B). In addition, the Exchange
proposes to define the ``DLCR Price Range'' as the price range
starting from the price that is at or above 20% below the lowest
price of the Price Range and continuing above the highest price of
the Price Range, with an upper limit if one is provided by the
company in its certification. See proposed Nasdaq Rule
4120(c)(9)(B)(vii)d.2.
    \28\ See Notice, supra note 6, 87 FR at 33560.
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    The Exchange states that it believes that its proposed approach is
consistent with Securities Act Rule 430A and staff guidance, which,
according to the Exchange, generally allow a company to price a public
offering 20% outside of the disclosed price range without regard to the
materiality of the changes to the disclosure contained in the company's
registration statement.\29\ According to the Exchange, the Exchange
believes such guidance also allows deviation above the price range
beyond the 20% threshold if such change or deviation does not
materially change the previous disclosure.\30\ The Exchange states
that, accordingly, the Exchange believes that a company listing in
connection with a Direct Listing with a Capital Raise can specify the
quantity of shares registered, as permitted by Securities Act Rule 457,
and, when an auction prices outside of the disclosed price range, use a
Rule 424(b) prospectus, rather than a post-effective amendment, when
either: (i) the 20% threshold noted in the instructions to Rule 430A is
not exceeded, regardless of the materiality or non-materiality of
resulting changes to the registration statement disclosure that would
be contained in the Rule 424(b) prospectus, or (ii) there is a
deviation above the price range beyond the 20% threshold noted in the
instructions to Rule 430A if such deviation would not materially change
the previous disclosure, in each case assuming the number of shares
issued is not increased from the number of shares disclosed in the
prospectus.\31\ The Exchange states that, for purposes of this rule,
the 20% threshold would be calculated based on the maximum offering
price set forth in the registration fee table, and that this method of
calculation is consistent with the SEC Staff's guidance on Securities
Act Rule 430A.\32\
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    \29\ See id. The Exchange states that Securities Act Rule 457
permits issuers to register securities either by specifying the
quantity of shares registered, pursuant to Rule 457(a), or the
proposed maximum aggregate offering amount, and the Exchange
proposes to require that companies selling shares through a Direct
Listing with a Capital Raise will register securities by specifying
the quantity of shares registered and not a maximum offering amount.
See id. at 33560 n.17. The Exchange also states that the Exchange
believes that the proposed modification of the Pricing Range
Limitation is consistent with the protection of investors, because,
according to the Exchange, this approach is similar to the pricing
of an IPO where an issuer is permitted to price outside of the
disclosed price range in accordance with the SEC Staff's guidance.
See id. at 33563.
    \30\ See id. at 33560. The Exchange states that in a prior
proposal that the Commission disapproved, the Exchange proposed
different requirements based on whether the Nasdaq Halt Cross would
occur at a price that was within 20% of the disclosed price range,
but that the Exchange is eliminating this proposed distinction and
instead proposing to treat uniformly all instances when the actual
price of the Nasdaq Halt Cross would occur outside of the disclosed
price range. See id. at 33560 n.16 (citing Securities Exchange Act
Release No. 94311 (February 24, 2022), 87 FR 11780 (March 2, 2022)).
    \31\ See Notice, supra note 6, 87 FR at 33560.
    \32\ See id.
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    The Exchange states that the burden of complying with the
disclosures required under federal securities laws, including providing
any disclosure necessary to avoid any material misstatements or
omissions, remains with the issuer.\33\ The Exchange further states
that, in that regard, the Post-Pricing Period (as defined below), which
is applicable in circumstances where the actual price calculated by the
Nasdaq Halt Cross is outside of the disclosed price range, provides the
company an opportunity, prior to the completion of the offering, to
provide any additional disclosures that are dependent on the price of
the offering, if any, or to determine and confirm to the Exchange that
no additional disclosures are required under federal securities laws
based on the actual price calculated by the Nasdaq Halt Cross.\34\
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    \33\ See id. The Commission previously stated that while
Securities Act Rule 430A permits companies to omit specified price-
related information from the prospectus included in the registration
statement at the time of effectiveness, and later file the omitted
information with the Commission as specified in the rule, it neither
prohibits a company from conducting a registered offering at prices
beyond those that would permit a company to provide pricing
information through a Securities Act Rule 424(b) prospectus
supplement nor absolves any company relying on the rule from any
liability for potentially misleading disclosure under the federal
securities laws. See id. (citing Securities Exchange Act Release No.
93119 (September 24, 2021), 86 FR 54262 (September 30, 2021)).
    \34\ See Notice, supra note 6, 87 FR at 33560-61.
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    The Exchange also proposes to adopt a new Price Volatility
Constraint and disseminate information about whether the Price
Volatility Constraint has been satisfied, which will indicate whether
the security may be ready to trade.\35\ The Exchange states that prior
to releasing a security for trading, the Exchange allows a ``Pre-Launch
Period'' of indeterminate length, during which price discovery takes
place.\36\ The ``Price Volatility Constraint'' would require that the
Current Reference Price has not deviated by 10% or more from any
Current Reference Price during the Pre-Launch Period within the
previous 10 minutes.\37\ The Pre-Launch Period would continue until at
least five minutes after the Price Volatility Constraint has been
satisfied.\38\ The Exchange states that this change would provide
investors with notice that the Nasdaq Halt Cross nears execution and
allow a period of at least five minutes for investors to modify their
orders, if needed, based on the Near Execution Price, prior to the
execution of the Nasdaq Halt Cross and the pricing of the offering.\39\
The Exchange also states that to assure that the Near Execution Price
is a meaningful benchmark for investors and that the offering price
does not deviate substantially from the Near Execution Price, the
Exchange proposes to require that the Nasdaq Halt Cross may execute
only if the actual price calculated by the Nasdaq Halt Cross is no more
than 10% below or above the Near Execution Price (the ``10% Price
Collar''), in addition to the other existing conditions stated in
proposed Nasdaq Rule 4120(c)(9)(B)(vii).\40\
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    \35\ See id. at 33561.
    \36\ See id.
    \37\ See id. See Nasdaq Rule 4753(a)(3) for a description of the
``Current Reference Price.''
    \38\ See Notice, supra note 6, 87 FR at 33561.
    \39\ See id. The Exchange proposes to define ``Near Execution
Price'' as the Current Reference Price at the time the Price
Volatility Constraint has been satisfied, and to define the ``Near
Execution Time'' as such time. See id.
    \40\ See id.
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    The Exchange states that an imbalance between buy and sell orders
could sometimes cause the Current Reference Price to fall outside of
the 10% Price Collar after the Price Volatility Constraint has been
satisfied.\41\ According to the Exchange, such price fluctuations could
be temporary and the Current Reference Price may return to and remain
within the 10% Price Collar, or the price fluctuation could be lasting
such that the Current Reference Price remains outside of the 10% Price
Collar.\42\ The Exchange proposes to assess the Current Reference Price
as compared to the 10% Price Collar 30 minutes after the Near Execution
Time.\43\ If at that time the Current Reference Price is outside of the
10% Price Collar, all requirements of the Pre-Launch Period would reset
and

would need to be satisfied again.\44\ Alternatively, if at that time
the Current Reference Price is within the 10% Price Collar, price
formation would continue without limitations until the Exchange, in
consultation with the financial advisor to the issuer, makes the
determination that the security is ready to trade and the conditions in
proposed Nasdaq Rule 4120(c)(9)(B)(vii) and (viii) are met, at which
time the Pre-Launch Period would end.\45\
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    \41\ See id.
    \42\ See id.
    \43\ See id.
    \44\ See id. The Exchange states that once the Price Volatility
Constraint has been satisfied anew, the Current Reference Price at
such time would become the updated Near Execution Price and such
time would become the Near Execution Time. See id. The Exchange
further states that this process would continue iteratively if new
resets are triggered, until the Nasdaq Halt Cross is executed or the
offering is postponed. See id.
    \45\ See id.; proposed Nasdaq Rule 4120(c)(9)(B)(vii). The
Exchange states that if at any time more than 30 minutes after the
Near Execution Time the Current Reference Price falls outside of the
10% Price Collar, all requirements of the Pre-Launch Period would
reset and would need to be satisfied again. See Notice, supra note
6, 87 FR at 33561.
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    According to the Exchange, given that there may be a Direct Listing
with a Capital Raise that could price outside of the disclosed price
range and that there may be no upside limit above which the Nasdaq Halt
Cross could not proceed, the Exchange proposes to enhance transparency
by providing readily available, real time pricing information to
investors.\46\ To that end, the Exchange states that it would
disseminate, free of charge, the Current Reference Price on a public
website, such as Nasdaq.com, during the Pre-Launch Period and indicate
whether the Current Reference Price is within the disclosed price
range.\47\ Once the Price Volatility Constraint has been satisfied, the
Exchange would also disseminate the Near Execution Price, the Near
Execution Time, and the 30-minute countdown from such time.\48\ The
Exchange states that, in this way, investors interested in
participating in the opening auction would be informed when volatility
has settled to a range that would allow the opening auction to take
place, would be informed of the price range at which the auction would
take place, and, if the price remains outside of that range for 30
minutes, would have at least five minutes to reevaluate their
investment decision.\49\
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    \46\ See Notice, supra note 6, 87 FR at 33561. The Exchange
states that if the company's certification submitted to the Exchange
includes an upside limit and the actual price calculated by the
Nasdaq Halt Cross exceeds such limit, the Exchange will postpone and
reschedule the offering. See id. at 33561 n.23.
    \47\ See id. at 33561.
    \48\ See id. The Exchange represents that the disclosure would
indicate that the Near Execution Price and the Near Execution Time
may be reset if the security is not released for trading within 30
minutes of the Near Execution Time and the Current Reference Price
at such time (or any time thereafter) is more than 10% below or more
than 10% above the Near Execution Price. See id.
    \49\ See id.
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    The Exchange also proposes to prohibit market orders (other than by
the company through its CDL Order) from the opening of a Direct Listing
with a Capital Raise.\50\ The Exchange states that this would protect
investors by assuring that investors only purchase shares at a price at
or better than the price they affirmatively set, after having the
opportunity to review the company's effective registration statement,
including the sensitivity analysis describing how the company would use
any additional proceeds raised.\51\ The Exchange states that,
accordingly, an investor participating in a Direct Listing with a
Capital Raise would make their initial investment decision prior to the
launch of the offering by setting a price in their limit order above
which they will not buy shares in the offering, but would also have the
opportunity to reevaluate their initial investment decision during the
price formation process of the Pre-Launch Period based on the Near
Execution Price, and would have at least five minutes once the Near
Execution Price has been set and before the offering may be priced by
the Exchange to modify their order, if needed.\52\
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    \50\ See id.
    \51\ See id.
    \52\ See id.
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    In addition, the Exchange states that to protect investors and
assure that they are informed about the attributes of a Direct Listing
with a Capital Raise, the Exchange proposes to impose specific
requirements on Nasdaq members with respect to a Direct Listing with a
Capital Raise.\53\ These rules would require members to provide to a
customer, before that customer places an order to be executed in the
Nasdaq Halt Cross, a notice describing the mechanics of pricing a
security subject to a Direct Listing with a Capital Raise in the Nasdaq
Halt Cross, including information regarding the location of the public
website where the Exchange would disseminate the Current Reference
Price.\54\
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    \53\ See id. at 33562.
    \54\ See id.
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    The Exchange states that to assure that members have the necessary
information to be provided to their customers, the Exchange proposes to
distribute, at least one business day prior to the commencement of
trading of a security listing in connection with a Direct Listing with
a Capital Raise, an information circular to its members.\55\ This
information circular would describe any special characteristics of the
offering and the Exchange's rules that apply to the initial pricing
through the mechanism outlined in Nasdaq Rule 4120(c)(9)(B) and Nasdaq
Rule 4753 for the opening auction, including information about the
notice that members must provide to their customers.\56\ This
information circular would also describe other requirements that: (a)
members use reasonable diligence in regard to the opening and
maintenance of every account, to know (and retain) the essential facts
concerning every customer, and concerning the authority of each person
acting on behalf of such customer; (b) members in recommending
transactions for a security subject to a Direct Listing with a Capital
Raise have a reasonable basis to believe that (i) the recommendation is
suitable for a customer given reasonable inquiry concerning the
customer's investment objectives, financial situation, needs, and any
other information known by such members, and (ii) the customer can
evaluate the special characteristics, and is able to bear the financial
risks, of an investment in such security; and (c) members cannot accept
market orders to be executed in the Nasdaq Halt Cross.\57\ The Exchange
states that these member requirements are intended to remind members of
their obligations to ``know their customers,'' increase transparency of
the pricing mechanisms of a Direct Listing with a Capital Raise, and
help assure that investors have sufficient price discovery
information.\58\
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    \55\ See id. The Exchange states that an information circular is
an industry-wide, free service provided by the Exchange. See id. at
33562 n.25.
    \56\ See id. at 33562.
    \57\ See id.; proposed Nasdaq Rule 4120(c)(9)(B)(i).
    \58\ See Notice, supra note 6, 87 FR at 33562.
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    The Exchange represents that in each instance of a Direct Listing
with a Capital Raise, the Exchange's information circular would inform
market participants that the auction could price up to 20% below the
lowest price of the disclosed price range and would specify that price.
The Exchange also represents that it would indicate in such circular
whether or not there is an upside limit above which the Nasdaq Halt
Cross could not proceed, based on the company's certification.\59\
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    \59\ See id. The Exchange states that it believes that investors
have become familiar with the approach of pricing an IPO outside of
the price range stated in an effective registration statement. See
id. at 33565.
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    The Exchange states that to assure that the issuer has the ability,
prior to the completion of the offering, to

provide any necessary additional disclosures that are dependent on the
price of the offering, the Exchange proposes to introduce to the
operation of the Nasdaq Halt Cross a brief Post-Pricing Period, in
circumstances where the actual price calculated by the Nasdaq Halt
Cross is outside of the disclosed price range.\60\ Specifically, in
such circumstances, the Exchange would initiate a ``Post-Pricing
Period'' following the calculation of the actual price.'' \61\ During
the Post-Pricing Period, the issuer must confirm to the Exchange that
no additional disclosures are required under the federal securities
laws based on the actual price calculated by the Nasdaq Halt Cross.
Further, during this period no additional orders for the security could
be entered in the Nasdaq Halt Cross, and no existing orders could be
modified.\62\ The Exchange states that the security would be released
for trading immediately following the Post-Pricing Period.\63\ However,
if the company cannot provide the required confirmation, then the
Exchange would postpone and reschedule the offering.\64\
---------------------------------------------------------------------------

    \60\ See id. at 33562.
    \61\ See id.
    \62\ See id.
    \63\ See id.
    \64\ See id.
---------------------------------------------------------------------------

    The Exchange also proposes to clarify several provisions of
existing rules by restating the provisions of Nasdaq Rule 4120(c)(8)(A)
and (c)(9)(A) in a clear and direct manner in proposed Nasdaq Rule
4120(c)(9)(B) without substantively changing the requirements.\65\
Specifically, the Exchange proposes to clarify the mechanics of the
Nasdaq Halt Cross by specifying that the Exchange will initiate a 10-
minute Display Only Period only after the CDL Order has been entered
and that the Exchange shall select price bands for purposes of applying
the price validation test in the Nasdaq Halt Cross in connection with a
Direct Listing with a Capital Raise.\66\ The Exchange proposes to
clarify that the ``actual price,'' as the term is used in the rule, is
the Current Reference Price at the time the system applies the price
validation test.\67\
---------------------------------------------------------------------------

    \65\ See id.
    \66\ See id. The Exchange would select an upper price band and a
lower price band with the default for an upper and lower price band
set at zero. The Exchange represents that if a security does not
pass the price validation test, the Exchange may select different
price bands before recommencing the process to release the security
for trading. See id.
    \67\ See id.
---------------------------------------------------------------------------

    Nasdaq Listing Rule IM-5315-2 provides that in determining whether
a company listing in connection with a Direct Listing with a Capital
Raise satisfies the Market Value of Unrestricted Publicly Held Shares
\68\ for initial listing on the Nasdaq Global Select Market, the
Exchange will deem such company to have met the applicable requirement
\69\ if the amount of the company's Unrestricted Publicly Held Shares
before the offering, along with the market value of the shares to be
sold by the company in the Exchange's opening auction in the Direct
Listing with a Capital Raise, is at least $110 million (or $100
million, if the company has stockholders' equity of at least $110
million). For this purpose, under current rules, the Market Value of
Unrestricted Publicly Held Shares will be calculated using a price per
share equal to the lowest price of the disclosed price range.\70\ The
Exchange states that because the Exchange proposes to allow the opening
auction to price up to 20% below the lowest price of the disclosed
price range, the Exchange proposes to make a conforming change to
Nasdaq Listing Rule IM-5315-2 to provide that the price used to
determine such company's compliance with the required Market Value of
Unrestricted Publicly Held Shares would be the price per share equal to
the price that is 20% below the lowest price of the disclosed price
range.\71\ The Exchange further states that this is the minimum price
at which the company could sell its shares in the opening transaction
for a Direct Listing with a Capital Raise and thus assures that the
company will satisfy the listing requirements at any price at which the
opening auction successfully executes.\72\
---------------------------------------------------------------------------

    \68\ See Nasdaq Listing Rule 5005(a)(23) and (45) for the
definitions of ``Market Value'' and ``Unrestricted Publicly Held
Shares,'' respectively.
    \69\ See Nasdaq Listing Rule 5315(f)(2).
    \70\ See Nasdaq Listing Rule IM-5315-2. The Exchange will
determine that the company has met the applicable bid price and
market capitalization requirements based on the same per share
price. See id.
    \71\ See Notice, supra note 6, 87 FR at 33562.
    \72\ See id.
---------------------------------------------------------------------------

    The Exchange states that any company listing in connection with a
Direct Listing with a Capital Raise would continue to be subject to,
and required to meet, all other applicable initial listing
requirements, including the requirements to have the applicable number
of shareholders and at least 1,250,000 Unrestricted Publicly Held
Shares outstanding at the time of initial listing, and the requirement
to have a price per share of at least $4.00 at the time of initial
listing.\73\ The Exchange also proposes to amend Nasdaq Listing Rule
IM-5315-2 to specify that a company offering securities for sale in
connection with a Direct Listing with a Capital Raise must register
securities by specifying the quantity of shares registered, as
permitted by Securities Act Rule 457(a), and that securities qualified
for listing under Nasdaq Listing Rule IM-5315-2 must satisfy the
additional requirements of Nasdaq Rule 4120(c)(9)(B).\74\
---------------------------------------------------------------------------

    \73\ See id. (citing Nasdaq Listing Rules 5315(e)(1) and (2) and
5315(f)(1)).
    \74\ See proposed Nasdaq Listing Rule IM-5315-2.
---------------------------------------------------------------------------

    Finally, the Exchange has proposed to amend Nasdaq Rules
4753(a)(3)(A) and 4753(b)(2) to conform the requirements for
disseminating information and establishing the opening price through
the Nasdaq Halt Cross in a Direct Listing with a Capital Raise to the
proposed amendment to allow the opening auction to price as much as 20%
below the lowest price of the disclosed price range.\75\ Specifically,
the Exchange proposes changes to Nasdaq Rules 4753(a)(3)(A) and
4753(b)(2) to make adjustments to the calculation of the Current
Reference Price, which is disseminated in the Nasdaq Order Imbalance
Indicator,\76\ and to the calculation of the price at which the Nasdaq
Halt Cross will execute, for a Direct Listing with a Capital Raise.
Under these rules currently, where there are multiple prices that would
satisfy the conditions for determining the price, the fourth tie-
breaker for a Direct Listing with a Capital Raise is the price that is
closest to the lowest price of the disclosed price range. The Exchange
states that, to conform these rules to the proposed modification of the
price range within which the opening auction would proceed, the
Exchange proposes to modify the fourth tie-breaker for a Direct Listing
with a Capital Raise to use the price closest to the price that is 20%
below the lowest price of the disclosed price range.\77\
---------------------------------------------------------------------------

    \75\ See proposed Nasdaq Rules 4753(a)(3)(A)(iv)c. and
4753(b)(2)(D)(iii).
    \76\ See Nasdaq Rule 4753(a)(3) for a description of the ``Order
Imbalance Indicator.''
    \77\ See Notice, supra note 6, 87 FR at 33562-63.
---------------------------------------------------------------------------

III. Proceedings To Determine Whether To Approve or Disapprove SR-
NASDAQ-2022-027 and Grounds for Disapproval Under Consideration

    The Commission is instituting proceedings pursuant to Section
19(b)(2)(B) of the Exchange Act to determine whether the proposal
should be approved or disapproved.\78\ Institution of such proceedings
is appropriate at this time in view of the legal and policy issues
raised by the proposed rule change, as modified by Amendment No. 1, as
discussed below. Institution of disapproval proceedings does not
indicate that the Commission

has reached any conclusions with respect to any of the issues involved.
---------------------------------------------------------------------------

    \78\ 15 U.S.C. 78s(b)(2)(B).
---------------------------------------------------------------------------

    Pursuant to Section 19(b)(2)(B) of the Exchange Act, the Commission
is providing notice of the grounds for disapproval under consideration.
The Commission is instituting proceedings to allow for additional
analysis and input concerning the proposed rule change's consistency
with the Exchange Act and, in particular, with Section 6(b)(5) \79\ of
the Exchange Act, which requires, among other things, that the rules of
a national securities exchange be designed to prevent fraudulent and
manipulative acts and practices, to promote just and equitable
principles of trade, 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; and are not
designed to permit unfair discrimination between customers, issuers,
brokers, or dealers.\80\
---------------------------------------------------------------------------

    \79\ 15 U.S.C. 78f(b)(5).
    \80\ Id.
---------------------------------------------------------------------------

    The Commission has consistently recognized the importance of
national securities exchange listing standards. Among other things,
such listing standards help ensure that exchange-listed companies will
have sufficient public float, investor base, and trading interest to
provide the depth and liquidity necessary to promote fair and orderly
markets.\81\
---------------------------------------------------------------------------

    \81\ The Commission has stated in approving national securities
exchange listing requirements that the development and enforcement
of adequate standards governing the listing of securities on an
exchange is an activity of critical importance to the financial
markets and the investing public. In addition, once a security has
been approved for initial listing, maintenance criteria allow an
exchange to monitor the status and trading characteristics of that
issue to ensure that it continues to meet the exchange's standards
for market depth and liquidity so that fair and orderly markets can
be maintained. See, e.g., 2021 Order, supra note 9, 86 FR at 28172
n.47; Securities Exchange Act Release Nos. 90768 (December 22,
2020), 85 FR 85807, 85811 n.55 (December 29, 2020) (SR-NYSE-2019-67)
(``NYSE 2020 Order''); 82627 (February 2, 2018), 83 FR 5650, 5653
n.53 (February 8, 2018) (SR-NYSE-2017-30) (``NYSE 2018 Order'');
81856 (October 11, 2017), 82 FR 48296, 48298 (October 17, 2017) (SR-
NYSE-2017-31); 81079 (July 5, 2017), 82 FR 32022, 32023 (July 11,
2017) (SR-NYSE-2017-11). The Commission has stated that adequate
listing standards, by promoting fair and orderly markets, are
consistent with Section 6(b)(5) of the Exchange Act, in that they
are, among other things, designed to prevent fraudulent and
manipulative acts and practices, promote just and equitable
principles of trade, and protect investors and the public interest.
See, e.g., 2021 Order, supra note 9, 86 FR at 28172 n.47; NYSE 2020
Order, 85 FR at 85811 n.55; NYSE 2018 Order, 83 FR at 5653 n.53;
Securities Exchange Act Release Nos. 87648 (December 3, 2019), 84 FR
67308, 67314 n.42 (December 9, 2019) (SR-NASDAQ-2019-059); 88716
(April 21, 2020), 85 FR 23393, 23395 n.22 (April 27, 2020) (SR-
NASDAQ-2020-001).
---------------------------------------------------------------------------

    The Exchange is proposing to modify the rules concerning the
opening transaction on the first day of trading for a Direct Listing
with a Capital Raise so that the opening transaction is not constrained
by the Pricing Range Limitation, which limits the price of the opening
transaction to the price range disclosed in the issuer's effective
registration statement. Instead, the proposal would allow the opening
transaction to proceed, provided other requirements are satisfied, at
or above the price that is as low as 20% below the lowest price in the
disclosed price range; or at a price above the highest price of such
price range.
    Specifically, under the proposal, to execute at a price outside of
the disclosed price range, the company has to certify to Nasdaq and
publicly disclose that the company does not expect that such price
would materially change the company's previous disclosure in its
effective registration statement and that the company's registration
statement contains a sensitivity analysis explaining how the company's
plans would change if the actual proceeds from the offering were less
than or exceeded the amount assumed in such price range.
    In support of its proposal, the Exchange states that allowing an
opening transaction to proceed at prices not within the disclosed price
range is consistent with the protection of investors because it ``is
similar to the pricing of an IPO where an issuer is permitted to price
outside of the price range disclosed by the issuer in its effective
registration statement.'' \82\ Nasdaq also states that various aspects
of its proposal are designed to protect investors, including, among
others, those intended to increase the transparency and information
available to investors on the price discovery process during the
opening auction, provide investors an opportunity to modify their
orders after notice that the Nasdaq Halt Cross nears execution, and
ensure that the offering price does not deviate substantially from the
Near Execution Price.\83\ Nasdaq also states that allowing Direct
Listings with a Capital Raise to price up to 20% below the lowest price
and at a price above the highest price of the disclosed price range
would be consistent with Chair Gensler's recent call to treat ``like
cases alike.'' \84\
---------------------------------------------------------------------------

    \82\ See Notice, supra note 6, 87 FR at 33563.
    \83\ See generally id. at 33564-65.
    \84\ See id. at 33565.
---------------------------------------------------------------------------

    We have concerns about whether the Exchange has met its burden to
demonstrate that its proposal to expand the conditions under which
Direct Listings with a Capital Raise are permitted \85\ is consistent
with the protection of investors and the public interest, and other
relevant provisions under Section 6(b)(5) and the Exchange Act and the
rules and regulations thereunder. Under existing Nasdaq rules that
permit Direct Listings with a Capital Raise, such offerings are
required to price within the price range disclosed in the issuer's
effective registration statement. When these rules were approved in
2021, the Commission considered that required feature and also stated
that the related registration statements would include, among other
disclosures, a bona fide price range.\86\ The Exchange has indicated
that it believes that some companies may be reluctant to use the
existing rules for a Direct Listing with a Capital Raise because of
concerns about the Pricing Range Limitation.\87\ Permitting Direct
Listings with a Capital Raise to price outside of the disclosed price
range could increase the frequency of such offerings and may raise
investor protection concerns.
---------------------------------------------------------------------------

    \85\ Under the Nasdaq rules for a Direct Listing with a Capital
Raise approved by the Commission in May 2021, the actual price
calculated by the Cross must be at or above the lowest price and at
or below the highest price of the disclosed price range.
    \86\ See 2021 Order, supra note 9, 86 FR at 28174-75, 28177.
    \87\ See Notice, supra note 6, 87 FR at 33559.
---------------------------------------------------------------------------

    While the Exchange has indicated that the proposal is intended to
treat like cases alike with respect to pricing flexibility, it has not
addressed certain differences between listings that would occur under
this proposed rule change and firm commitment underwritten initial
public offerings on the Exchange that may affect investor protection,
including the lack of a named underwriter,\88\ any challenges to

bringing claims under Section 11 of the Securities Act due to the
potential assertion of tracing defenses,\89\ and how those differences
could affect the consistency of the proposal with Section 6(b)(5) of
the Exchange Act.\90\ It is not clear from the proposal what
consideration, if any, the Exchange has given to addressing these
issues, or why it believes the proposal is consistent with investor
protection, as required by Section 6(b)(5) of the Exchange Act, in
light of the pricing flexibility proposed by the Exchange.
---------------------------------------------------------------------------

    \88\ Section 2(a)(11) of the Securities Act defines
``underwriter'' to mean ``any person who has purchased from an
issuer with a view to, or offers or sells for an issuer in
connection with, the distribution of any security, or participates,
or has a direct or indirect participation in the direct or indirect
underwriting of any such undertaking.'' Given this broad definition
of ``underwriter,'' a financial advisor to an issuer engaged in a
Direct Listing with a Capital Raise may, depending on the facts and
circumstances including the nature and extent of the financial
advisor's activities, be deemed a statutory ``underwriter'' with
respect to the securities offering, with attendant underwriter
liabilities. See 2021 Order, supra note 9, 86 FR at 28176. Whether
or not any person would be considered a statutory underwriter would
be evaluated based on the particular facts and circumstances, in
light of the definition of underwriter contained in Section
2(a)(11). In the context of a firm commitment underwritten initial
public offering, Item 508 of Regulation S-K requires the
underwriters to be named in the registration statement.
    \89\ Where a Securities Act registration statement, at the time
of effectiveness, contains an untrue statement of a material fact or
omits to state a material fact required to be stated therein or
necessary to make the statements therein not misleading, Section
11(a) of the Securities Act provides a cause of action to ``any
person acquiring such security,'' unless it is proved that at the
time of the acquisition the person knew of such untruth or omission.
Courts have interpreted this statutory provision to permit
aftermarket purchasers (i.e., those who acquire their securities in
secondary market transactions rather than in the initial
distribution from the issuer or underwriter) to recover damages
under Section 11, but only if they can ``trace'' the acquired shares
back to the offering covered by the false or misleading registration
statement. See, e.g., In re Century Aluminum Co. Sec. Litig., 729
F.3d 1104 (9th Cir. 2013). Tracing is not set forth in Section 11
and is a judicially-developed doctrine. The Commission has
previously stated that shareholders' ability to pursue claims
pursuant to Section 11 of the Securities Act due to traceability
issues are not exclusive to nor necessarily inherent in direct
listings with a primary capital-raising component, and that this
issue is potentially implicated any time securities that are not the
subject of a recently effective registration statement trade in the
same market as the shares issued pursuant to the registration
statement. See 2021 Order, supra note 9, 86 FR at 28176. The Ninth
Circuit has held that investors who purchase shares in a direct
listing may bring claims pursuant to Section 11, even if they cannot
prove that the shares they acquired were registered shares. See
Pirani v. Slack Techs., Inc., 13 F.4th 940 (9th Cir. 2021).
    \90\ Tracing concerns may be more prevalent in direct listings
than traditional underwritten initial public offerings. As compared
to traditional firm commitment underwritten initial public offerings
in which lock-up arrangements are routinely imposed, direct listings
to date typically have not imposed lock-up arrangements. This raises
a concern that there may be a heightened risk that investors in
direct listings may face difficulties tracing their shares,
potentially jeopardizing their ability to pursue Section 11 claims.
See supra note 89. Given the limited judicial precedent addressing
tracing requirements in the context of direct listings, and the
typical absence of lock-up arrangements in connection with direct
listings to date, we are considering whether the Exchange has met
its burden of establishing that the proposal to allow a direct
listing to proceed at a price outside of the disclosed price range
is consistent with Section 6(b)(5) of the Exchange Act that requires
the rules of the Exchange be designed to protect investors and the
public interest.
---------------------------------------------------------------------------

    In a firm commitment underwritten initial public offering, issuers
often adjust the price range disclosed in their registration statements
prior to effectiveness in light of pricing feedback received from
market analysts and potential investors. These revisions to the
disclosed price range may provide valuable information to potential
investors as to the issuer's valuation. If, under the proposal, the
opening auction can proceed at any price above the disclosed price
range, and up to 20% below the low end of the disclosed price range, it
is not clear whether issuers pursuing Direct Listings with a Capital
Raise would make similar revisions to the disclosed price range based
on investor or market analyst sentiment, and whether the absence of any
such corrective price signaling would detrimentally affect investors.
    In the absence of a named underwriter in a direct listing where the
opening price is executed outside of the disclosed price range, there
may not be an adequate assurance that a party who may meet the
definition of underwriter will review the information disclosed in the
registration statement and take the steps necessary to claim a ``due
diligence'' defense. To assert such a defense, a party must establish
that, after reasonable investigation, the party had reasonable ground
to believe and did believe, at the time the registration statement
became effective, that the statements therein were true and that there
was no omission to state a material fact required to be stated therein
or necessary to make the statements therein not misleading.\91\
Underwriters play a critical role in the securities offering process as
gatekeepers to the public markets.\92\
---------------------------------------------------------------------------

    \91\ See U.S.C. 77k(b)(3).
    \92\ See Securities Act Release No. 7393 (February 20, 1997), 62
FR 9276 (February 28, 1997) (``The due diligence efforts performed
by underwriters, accounting professionals and others play a critical
role in the integrity of our disclosure system.''); Securities Act
Release No. 6335 (August 6, 1981), 46 FR 42015 (August 18, 1981)
(``[T]he Securities Act imposes a high standard of conduct on
specific persons, including underwriters and directors, associated
with a registered public offering of securities. Under Section 11,
they must make a reasonable investigation and have reasonable
grounds to believe the disclosures in the registration statement are
accurate.'').
---------------------------------------------------------------------------

    The Exchange's proposed expansion of its rules permitting Direct
Listings with a Capital Raise could potentially result in increased
regulatory arbitrage, if and to the extent that issuers and
intermediaries, including financial advisors, are not subject to
equivalent liability standards in the direct listings context as they
would be in traditional firm commitment underwritten initial public
offerings. Any ability of issuers or intermediaries to minimize
potential liability through choosing a direct listing over other
methods to become listed on the Exchange could be inconsistent with
Section 6(b)(5) of the Exchange Act.
    Although financial advisors may, depending on facts and
circumstances, be held liable as statutory underwriters, absent greater
clarity as to a financial advisor's status as a statutory underwriter
in listings that would occur under this proposed rule change, investors
would have no way to know whether financial advisors named as assisting
with the direct listing would face Section 11 liability for the
disclosure in the registration statement. Investors also may assume
that financial advisors would incur equivalent liability, without any
assurance that such is the case. Some legal observers have raised
concerns that, without clarity on whether financial advisors would be
held liable as statutory underwriters, any due diligence may not be as
robust as that performed by named underwriters in traditional initial
public offerings.\93\ Less robust due diligence could result in reduced
disclosure quality and lead investors to improperly value the
securities offered under the proposed rules. As the proposed rules
would permit direct listings to be conducted at prices outside of the
disclosed price range, would investors be able to make reasonable
pricing decisions without greater clarity as to whether financial
advisors would face liability as statutory underwriters? Without
increased clarity on this point, would the proposed rule change be
inconsistent with investor protection and the public interest?
---------------------------------------------------------------------------

    \93\ See Tuch, Andrew F. and Seligman, Joel, The Further Erosion
of Investor Protection: Expanded Exemptions, SPAC Mergers and Direct
Listings (December 15, 2021), at 70-71, Washington University in St.
Louis Legal Studies Research Paper No. 22-01-03, available at SSRN:
https://ssrn.com/abstract=4020460 (questioning the extent of due
diligence performed by financial advisors in direct listings);
Horton, Brent J., Spotify's Direct Listing: Is It a Recipe for
Gatekeeper Failure?, 72 SMU L. Rev. 177 (2019). In the NYSE 2020
Order, the Commission stated that ``financial advisors to issuers in
Primary Direct Floor Listings have incentives to engage in robust
due diligence, given their reputational interests and potential
liability, including as statutory underwriters under the broad
definition of that term.'' NYSE 2020 Order, supra note 81, 85 FR at
85815.
---------------------------------------------------------------------------

    There are a number of additional questions relating to investor
protection and Securities Act liability that merit examination in
connection with our consideration of whether the Exchange has met its
burden to demonstrate its proposal is consistent with Section 6(b)(5)
of the Exchange Act. It is not clear what role a financial advisor
would perform, in relation to price range disclosures, in a direct
listing where the offering can price outside of the disclosed price
range. Would additional transparency into the functions performed by
financial

advisors in a direct listing where the offering can price outside of
the disclosed price range be necessary for investors to determine how
much reliance to place on issuer disclosures?
    Would any tracing concerns be exacerbated, thus raising investor
protection concerns, in the context of direct listings where the
offering can price outside of the disclosed price range? \94\ What are
the implications if the expansion of Direct Listings with a Capital
Raise, as proposed by the Exchange, resulted in fewer investor
protections in a direct listing? If under the proposal to modify the
Pricing Range Limitation there is continued uncertainty as to whether a
financial advisor would be liable as a statutory underwriter, is the
liability of any other gatekeepers in the offering sufficient to
protect investors?
---------------------------------------------------------------------------

    \94\ See notes 89 and 90, supra, and accompanying text. The
Commission disapproved a prior proposal of Nasdaq to expand the
direct listing price range. See Securities Exchange Act Release No.
94311 (February 24, 2022). 87 FR 11780 (March 2, 2022)
(``Disapproval Order''). In the Disapproval Order, the Commission
stated that the Exchange did not respond to one commenter's
concerns, among others, that investors in direct listings, including
direct listings with a capital raise, are likely to continue to have
fewer legal rights than investors in a traditional public offering
and concerns relating to ``tracing'' share purchases for purposes of
Section 11 claims. See Disapproval Order, 87 FR at 11785 n.82.
---------------------------------------------------------------------------

    The Commission also has concerns about the potential effect of the
proposed rules on the usefulness of price range disclosure provided to
investors in Securities Act registration statements.\95\ Given the
possibility under the proposed rules that the offering might price far
outside the disclosed price range, would issuers be less likely to
update their disclosed price ranges, compared to firm commitment
underwritten initial public offerings? \96\ Similarly, would disclosed
price ranges for direct listings be less reliable as indicators of
management's perceived valuation of the issuer? How would the ability
to ultimately conduct the auction up to 20% below or anywhere above the
disclosed price range affect issuer decisions as to what price range to
disclose in the registration statement? Would this impact the
usefulness of price range disclosure to potential investors or market
analysts? If so, this raises concerns about the consistency of the
proposal with investor protection and the public interest under Section
6(b)(5) of the Exchange Act.
---------------------------------------------------------------------------

    \95\ Under the proposed rule change, to execute at a price
outside of the disclosed price range, the company must certify to
Nasdaq and publicly disclose that the company does not expect that
such price would materially change the company's previous disclosure
in its effective registration statement and that the company's
registration statement contains a sensitivity analysis explaining
how the company's plans would change if the actual proceeds from the
offering were less than or exceeded the amount assumed in such price
range.
    \96\ The Exchange has stated that its proposal to permit more
flexibility as to pricing would allow Direct Listings with a Capital
Raise to be treated similarly to other initial public offerings. See
Notice, supra note 6, 87 FR at 33563, 33565.
---------------------------------------------------------------------------

    Finally, it is not clear whether the proposed changes would result
in the Exchange using the minimum price at which the opening auction
could occur as the per share price for purposes of evaluating whether
the issuer satisfies the applicable market value of publicly held
shares requirement and other applicable bid price and market
capitalization requirements. The Exchange proposes to amend Nasdaq
Listing Rule IM-5315-2 to provide that the Exchange would calculate the
market value of unrestricted publicly held shares, as well as
applicable bid price and market capitalization requirements, using a
price per share equal to the price that is 20% below the lowest price
of the price range disclosed by the issuer in its effective
registration statement.\97\ The Exchange also proposes to specify in
Nasdaq Rule 4120(c)(9)(B) that ``[t]he 20% threshold below the Price
Range will be calculated based on the maximum offering price set forth
in the registration fee table, consistent with the Instruction to
paragraph (a) of Securities Act Rule 430A.'' \98\ Further, the Exchange
states its belief that the proposed change to Nasdaq Listing Rule IM-
5315-2 for calculating the market value of unrestricted publicly held
shares, bid price, and market capitalization conforms these rules to
the modifications of the Pricing Range Limitation and ``is the minimum
price at which the company could sell its shares in the Direct Listing
with a Capital Raise transaction and so assure that the company will
satisfy these requirements at any price at which the auction
successfully executes.'' \99\ Is further clarification needed as to the
precise manner of computing the 20% threshold under proposed Nasdaq
Rule 4120(c)(9)(B) and whether that computation would lead to the same
minimum price contemplated by the proposed revisions to Nasdaq Listing
Rule IM-5315-2? Similarly, there are questions about whether the
proposed change to the fourth-tie breaker in a Direct Listing with a
Capital Raise that proposes to use ``the price that is 20% below the
lowest price of the price range disclosed by the issuer in its
effective statement'' to ``conform these rules to the modifications to
the Pricing Range Limitation'' \100\ would also result in using the
minimum price at which the opening auction could occur given the
proposed changes described above in Nasdaq Rule 4120(c)(9)(B) for
calculating the price that is 20% below the lowest price of the Price
Range.
---------------------------------------------------------------------------

    \97\ See Notice, supra note 6, 87 FR at 33562.
    \98\ See id. at 33560.
    \99\ See id. at 33562.
    \100\ Id. at 33563.
---------------------------------------------------------------------------

    Under the Commission's Rules of Practice, the ``burden to
demonstrate that a proposed rule change is consistent with the Exchange
Act and the rules and regulations issued thereunder . . . is on the
self-regulatory organization [`SRO'] that proposed the rule change.''
\101\ The description of a proposed rule change, its purpose and
operation, its effect, and a legal analysis of its consistency with
applicable requirements must all be sufficiently detailed and specific
to support an affirmative Commission finding,\102\ and any failure of
an SRO to provide this information may result in the Commission not
having a sufficient basis to make an affirmative finding that a
proposed rule change is consistent with the Exchange Act and the
applicable rules and regulations.\103\
---------------------------------------------------------------------------

    \101\ Rule 700(b)(3), Commission Rules of Practice, 17 CFR
201.700(b)(3).
    \102\ See id.
    \103\ See id.
---------------------------------------------------------------------------

    For these reasons, the Commission believes it is appropriate to
institute proceedings pursuant to Section 19(b)(2)(B) of the Exchange
Act \104\ to determine whether the proposal should be approved or
disapproved.
---------------------------------------------------------------------------

    \104\ 15 U.S.C. 78s(b)(2)(B).
---------------------------------------------------------------------------

IV. Commission's Solicitation of Comments

    The Commission requests that interested persons provide written
submissions of their views, data, and arguments with respect to the
issues identified above, as well as any other concerns they may have
with the proposal. In particular, the Commission invites the written
view of interested persons concerning whether the proposal is
consistent with Section 6(b)(5) or any other provision of the Exchange
Act, or the rules and regulations thereunder. Although there do not
appear to be any issues relevant to approval or disapproval that would
be facilitated by an oral presentation of views, data, and arguments,
the Commission will consider, pursuant to Rule 19b-4, any request for
an opportunity to make an oral presentation.\105\
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    \105\ Section 19(b)(2) of the Exchange Act, as amended by the
Securities Act Amendments of 1975, Public Law 94-29 (June 4, 1975),
grants the Commission flexibility to determine what type of
proceeding--either oral or notice and opportunity for written
comments--is appropriate for consideration of a particular proposal
by a self-regulatory organization. See Securities Act Amendments of
1975, Senate Comm. on Banking, Housing & Urban Affairs, S. Rep. No.
75, 94th Cong., 1st Sess. 30 (1975).

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    Interested persons are invited to submit written data, views, and
arguments regarding whether the proposal should be approved or
disapproved by August 3, 2022. Any person who wishes to file a rebuttal
to any other person's submission must file that rebuttal by August 17,
2022.
    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 protected]. Please include
File Number SR-NASDAQ-2022-027 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-2022-027. 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 website (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 website 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. Persons submitting comments are
cautioned that we do not redact or edit personal identifying
information from comment submissions. You should submit only
information that you wish to make available publicly. All submissions
should refer to File Number SR-NASDAQ-2022-027 and should be submitted
on or before August 3, 2022. Rebuttal comments should be submitted by
August 17, 2022.

    For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\106\
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    \106\ 17 CFR 200.30-3(a)(57).
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J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2022-14887 Filed 7-12-22; 8:45 am]
BILLING CODE 8011-01-P


( i) A State shall notify EPA of its intent to exclude one or more measured exceedances of an applicable ambient air quality standard as being due to an exceptional event by placing a flag in the appropriate field for the data record of concern not later than 180 days prior to the date on which EPA intends to propose determinations with respect to violations of applicable national ambient air quality standards.

( ii) Flags placed on data in accordance with this section shall be deemed informational only, and the data shall not be excluded from determinations with respect to exceedances or violations of the national ambient air quality standards unless and until EPA notifies the State of its concurrence by placing a concurrence flag in the appropriate field for the data record in the AQS database.

( 3) Submission of demonstrations. 103 ( i) A State that has flagged data as being due to an exceptional event shall, after notice and opportunity for public comment, submit a complete demonstration to EPA in support of its request for exclusion not later than 180 days prior to the date on which EPA intends to propose determinations with respect to violations of applicable national ambient air quality standards.

( 4) EPA review and concurrence or nonconcurrence ( i) EPA shall complete its review and concur or nonconcur with a State's request for exclusion not later than 30 days following receipt of a complete submission from the State. EPA shall notify the State of its concurrence or nonconcurrence by placing a flag in the appropriate field for the data record in the AQS database.

A. Extensions. Where additional time is needed to complete its review of the States demonstration, EPA may extend the time for review by not more than an additional 30 days.

B. [ Reserved] 104 PART 51 NATIONAL PRIMARY AND SECONDARY NATIONAL AMBIENT AIR QUALITY STANDARDS 1. The authority citation for part 51 continues to read as follows:

Authority: 42 U. S. C. 7401, et seq.

2. Adding Amend § 51._ as follows OPTION 1 ( Proposed Option) for § 51.__:

§ 51.__ Mitigation of Exceptional Events.

( a) As a condition for EPA's approval of a request to exclude air quality data due to exceptional events from use, each State must take appropriate and reasonable actions to protect public health from exceedances or violations of the national ambient air quality standards due to exceptional events. The State must:

( 1) Provide for prompt public notification whenever air quality concentrations exceed or are expected to exceed an applicable ambient air quality standard.

( 2) Provide for public education concerning actions that individuals may take to reduce exposures to unhealthy levels of air quality during and following an exceptional event. 105 ( 3) Provide for the implementation of reasonable measures to protect public health from exceedances or violations of ambient air quality standards caused by exceptional events.

( b) [ Reserved]

OPTION 2 for § 51.__:

§ 51.__ Mitigation of Exceptional Events.

( a) As a condition for EPA's approval of a request to exclude air quality data due to exceptional events from use, each plan must include a mitigation action plan which provides for appropriate actions to protect public health from exceedances or violations of the national ambient air quality standards due to exceptional events. Each mitigation action plan must:

( 1) Provide for prompt public notification whenever air quality concentrations exceed or are expected to exceed an applicable ambient air quality standard.

( 2) Provide for public education concerning actions that individuals may take to reduce exposures to unhealthy levels of air quality during and following an exceptional event.

( 3) Describe the procedures by which appropriate actions will be identified and taken to prevent 106 or mitigate public health threats associated with exceptional events.

( 4) Provide for the implementation of reasonably available control measures to reduce emissions from those anthropogenic sources which are not exempt under § 50.13( a)( 1)( ii) and which interact with recurring natural events to contribute to exceedances or violations of applicable national ambient air quality standards.

( b) States should periodically reevaluate mitigation action plans for adequacy and revise them as necessary and appropriate.

OPTION 3 for § 51.__:

§ 51.__ Mitigation of Exceptional Events.

( a) As a condition for EPA's approval of a request to exclude air quality data due to exceptional events from use in determinations with respect to exceedances or violations of the national ambient air quality standards, each State must adopt and implement a mitigation action plan for an affected area which provides for appropriate actions to protect public health from exceedances or violations of national ambient air quality standards due to exceptional 107 events which is to be implemented in an affected area on an episodic basis. Mitigation action plans need not be incorporated into the applicable implementation plan, but each mitigation action plan must:

( 1) Provide for prompt public notification whenever air quality concentrations exceed or are expected to exceed an applicable ambient air quality standard.

( 2) Provide for public education concerning actions that individuals may take to reduce exposures to unhealthy levels of air quality during and following an exceptional event.

( 3) Describe the procedures by which appropriate actions will be identified and taken to prevent or mitigate public health threats associated with exceptional events.

( 4) Provide for the implementation of reasonably available control measures to reduce emissions from those anthropogenic sources which are not exempt under § 50.13( a)( 1)( ii) and which interact with recurring natural events to contribute to exceedances or violations of applicable national ambient air quality standards.

( b) States should periodically reevaluate mitigation 108 action plans for adequacy and revise them as necessary and appropriate.


[Federal Register Volume 79, Number 180 (Wednesday, September 17, 2014)]
[Notices]
[Page 55800]
[FR Doc No: 2014-22123]

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DEPARTMENT OF HEALTH AND HUMAN SERVICES

Food and Drug Administration

[Docket No. FDA-2013-N-0730]

Agency Information Collection Activities; Announcement of Office
of Management and Budget Approval; Threshold of Regulation for
Substances Used in Food-Contact Articles

AGENCY: Food and Drug Administration, HHS.

ACTION: Notice.

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SUMMARY: The Food and Drug Administration (FDA) is announcing that a
collection of information entitled, ``Threshold of Regulation for
Substances Used in Food-Contact Articles'' has been approved by the
Office of Management and Budget (OMB) under the Paperwork Reduction Act
of 1995.

FOR FURTHER INFORMATION CONTACT: FDA PRA Staff, Office of Operations,
Food and Drug Administration, 8455 Colesville Road; COLE-14526, Silver
Spring, MD 20993-0002<EMAIL_ADDRESS>
SUPPLEMENTARY INFORMATION: On October 30, 2013, the Agency submitted a
proposed collection of information entitled, ``Threshold of Regulation
for Substances Used in Food-Contact Articles'' to OMB for review and
clearance under 44 U.S.C. 3507. An Agency may not conduct or sponsor,
and a person is not required to respond to, a collection of information
unless it displays a currently valid OMB control number. OMB has now
approved the information collection and has assigned OMB control number
0910-0298. The approval expires on January 31, 2017. A copy of the
supporting statement for this information collection is available on
the Internet at http://www.reginfo.gov/public/do/PRAMain.

    Dated: September 11, 2014.
Leslie Kux,
Assistant Commissioner for Policy.
[FR Doc. 2014-22123 Filed 9-16-14; 8:45 am]
BILLING CODE 4164-01-P


[Federal Register Volume 77, Number 115 (Thursday, June 14, 2012)]
[Notices]
[Pages 35729-35731]
[FR Doc No: 2012-14532]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-67167; File No. SR-ISE-2012-47]

Self-Regulatory Organizations; International Securities Exchange,
LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule
Change Regarding Fees

June 8, 2012.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(the ``Exchange Act'') \1\ and Rule 19b-4 thereunder,\2\ notice is
hereby given that on June 1, 2012, the International Securities
Exchange, LLC (the ``Exchange'' or the ``ISE'') filed with the
Securities and Exchange Commission (``Commission'') the proposed rule
change as described in Items I and II 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

    The ISE is proposing to change the treatment of certain orders
executed in the Exchange's Facilitation and Solicited Order Mechanisms.
The text of the proposed rule change is available on the Exchange's Web
site (http://www.ise.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 self-regulatory organization
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 self-regulatory organization
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
    In 2010, the Exchange began assessing per contract transaction fees
and rebates to market participants that add or remove liquidity from
the Exchange (``maker/taker fees and rebates'') \3\ in a number of
options classes (the ``Select Symbols'').\4\ The Exchange's maker/taker
fees and rebates are applicable to regular and complex orders executed
in the Select Symbols. The Exchange subsequently adopted maker/taker
fees and rebates for complex orders in symbols that are in the Penny
Pilot program but are not a Select Symbol (``Non-Select Penny Pilot
Symbols'') \5\ and then adopted maker/taker fees and rebates for
complex orders in all symbols that are not in the Penny Pilot Program
(``Non-Penny Pilot Symbols'').\6\
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    \3\ See Exchange Act Release No. 61869 (April 7, 2010), 75 FR
19449 (April 14, 2010) (SR-ISE-2010-25).
    \4\ The Select Symbols are identified by their ticker symbol on
the Exchange's Schedule of Fees.
    \5\ See Exchange Act Release No. 65724 (November 10, 2011), 76
FR 71413 (November 17, 2011) (SR-ISE-2011-72).
    \6\ See Exchange Act Release Nos. 66084 (January 3, 2012), 77 FR
1103 (January 9, 2012) (SR-ISE-2011-84); and 66392 (February 14,
2012), 77 FR 10016 (February 21, 2012) (SR-ISE-2012-06).
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    Pursuant to Commission approval, the Exchange will soon introduce a
new order type called ``Add Liquidity Order'' or ``ALO.'' \7\ ALOs are
limit orders that will only be executed as a ``maker'' on the Exchange.
An ALO allows market participants to specify that they only seek to
provide liquidity, thus avoiding taker fees. Currently, when a
Facilitation or Solicitation order interacts with pre-existing orders
and quotes, the pre-existing order or quote is treated as taker of
liquidity and the Facilitation or Solicitation order that interacts
with the pre-existing order or quote is provided with a rebate.\8\ The
Exchange believes that all pre-existing orders and quotes in the Select
Symbols, the Non-Select Penny Pilot Symbols and the Non-Penny Pilot
Symbols should be

treated as ``maker,'' not ``taker,'' and this distinction becomes more
pertinent when the Exchange introduces ALO. As proposed, Facilitation
and Solicitation orders that previously received a ``break-up'' rebate
when they interacted with pre-existing orders and quotes that were
being treated as ``taker'' will no longer receive such a rebate. The
Exchange believes it is appropriate, and generally expected by market
participants, to treat pre-existing orders and quotes as maker, rather
than taker. The Exchange proposes to adopt rule text in its Schedule of
Fees to make clear that incoming Facilitation and Solicitation orders
that interact with pre-existing orders and quotes on the Exchange's
orderbooks will not receive the ``break-up'' rebate for contracts they
don't interact with. With this proposed rule change, pre-existing
orders and quotes, when interacting with Facilitation and Solicitation
orders in the Select Symbols, the Non-Select Penny Pilot Symbols and
the Non-Penny Pilot Symbols will be subject to the Exchange's maker
fee, as noted in the Exchange's Schedule of Fees. Orders and quotes
which arrive at the exchange after the commencement of a Facilitation
or Solicitation order will continue to be charged taker fees.
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    \7\ See Exchange Act Release No. 66617 (March 19, 2012), 77 FR
17102 (March 23, 2012) (SR-ISE-2012-20). The Exchange expects to
launch ALO on June 4, 2012.
    \8\ Currently, the Exchange provides a rebate of $0.15 to
contracts that do not trade with the contra order in the
Facilitation Mechanism and Solicited Order Mechanism. This rebate
currently applies to the Select Symbols and to Non-Select Penny
Pilot Symbols and does not apply to Non-Penny Pilot Symbols.
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    Further, the ``break-up'' rebate noted in footnote 2 on page 19 of
the Exchange's Schedule of Fees relates to orders executed on the
Exchange's Facilitation Mechanism, Solicited Order Mechanism and Price
Improvement Mechanism and does not apply to complex orders executed on
the Exchange. Therefore, the Exchange proposes to remove the reference
to footnote 2 from all the complex order fee columns on page 19 of the
Exchange's Schedule of Fees.
2. Statutory Basis
    The Exchange believes that its proposal to amend its Schedule of
Fees is consistent with Section 6(b) of the Securities and Exchange Act
of 1934 (the ``Exchange Act'') \9\ in general, and furthers the
objectives of Section 6(b)(4) of the Exchange Act \10\ in particular,
in that it is an equitable allocation of reasonable dues, fees and
other charges among Exchange members and other persons using its
facilities. The Exchange believes it is reasonable and equitable and
not unfairly discriminatory to treat pre-existing orders and quotes as
maker, rather than taker, and thus charge the appropriate maker fees.
The Exchange believes that the proposed fees it charges for options
overlying the Select Symbols, the Non-Select Penny Pilot Symbols and
the Non-Penny Pilot Symbols remain competitive with fees charged by
other exchanges and therefore continue to be reasonable and equitably
allocated to those members that opt to direct orders to the Exchange
rather than to a competing exchange. The Exchange further notes that
market participants generally expect pre-existing orders and quotes in
the Exchange's Facilitation Mechanism and Solicited Order Mechanism to
be treated as maker not taker. The Exchange believes this distinction
is even more pertinent in the context of the Exchange's planned launch
of the ALO order type. Market participants who choose to utilize ALO
will fully expect the Exchange to treat their orders as providers of
liquidity; to treat these orders differently will be contrary to the
intent of the ALO order type and the expectation of these market
participants.
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    \9\ 15 U.S.C. 78f(b).
    \10\ 15 U.S.C. 78f(b)(4).
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    The Exchange believes that treating a Facilitation or Solicitation
order that interacts with pre-existing orders and quotes as takers of
liquidity (as opposed to makers of liquidity which is how these orders
are currently treated), thus charging these orders a taker fee furthers
the objectives of Section 6(b)(5) of the Exchange Act, in that it is
designed to make the Exchange's fee structure for ALO orders consistent
with its overall maker/taker fee structure, thereby removing
impediments to and perfecting the mechanism of a free and open market
and a national market system.
    The Exchange believes it is reasonable and equitable to remove
footnote 2 from the complex order fee columns on the Exchange's
Schedule of Fees because doing so will clarify that footnote 2 is not
applicable to complex orders executed on the Exchange and therefore,
Members would benefit from clear guidance in the rule text describing
the manner in which Exchange fees and rebates are assessed. The
Exchange further believes the proposed rule change is reasonable
because removing footnote 2 from the complex order fee columns on the
Schedule of Fees will provide clarity and greater transparency
regarding the Exchange's fees and rebates. The Exchange notes that the
proposed rule change is also equitably allocated and not unfairly
discriminatory in that it treats similarly situated market participants
in the same manner, i.e., the removal of footnote 2 from the complex
order fee column will impact all market participants equally on the
Exchange.

B. Self-Regulatory Organization's Statement on Burden on Competition

    The proposed rule change does not impose any burden on competition
that is not necessary or appropriate in furtherance of the purposes of
the Exchange Act.

C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others

    The Exchange has not solicited, and does not intend to solicit,
comments on this proposed rule change. The Exchange has not received
any unsolicited written comments from members or other interested
parties.

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 Exchange Act.\11\ At any time within 60 days of
the filing of such 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 Exchange Act. If the Commission takes such action, the
Commission shall institute proceedings to determine whether the
proposed rule should be approved or disapproved.
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    \11\ 15 U.S.C. 78s(b)(3)(A)(ii).
---------------------------------------------------------------------------

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 Exchange 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-ISE-2012-47 on the subject line.

Paper Comments

     Send paper comments in triplicate to Elizabeth M. Murphy,
Secretary, Securities and Exchange Commission, 100 F Street NE.,
Washington, DC 20549-1090.
    All submissions should refer to File Number SR-ISE-2012-47. 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-ISE-2012-47 and should be
submitted on or before July 5, 2012.

    For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\12\
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    \12\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2012-14532 Filed 6-13-12; 8:45 am]
BILLING CODE 8011-01-P