[Federal Register Volume 88, Number 245 (Friday, December 22, 2023)]
[Notices]
[Pages 88606-88609]
[FR Doc No: 2023-28240]

=======================================================================
-----------------------------------------------------------------------

ENVIRONMENTAL PROTECTION AGENCY

[EPA-HQ-OPPT-2023-0061; FRL-10581-11-OCSPP]

Certain New Chemicals; Receipt and Status Information for
November 2023

AGENCY: Environmental Protection Agency (EPA).

ACTION: Notice.

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

SUMMARY: EPA is required under the Toxic Substances Control Act (TSCA),
as amended by the Frank R. Lautenberg Chemical Safety for the 21st
Century Act, to make information publicly available and to publish
information in the Federal Register pertaining to submissions under
TSCA section 5, including notice of receipt of a Premanufacture notice
(PMN), Significant New Use Notice (SNUN) or Microbial Commercial
Activity Notice (MCAN), including an amended notice or test
information; an exemption application (Biotech exemption); an
application for a test marketing exemption (TME), both pending and/or
concluded; a notice of commencement (NOC) of manufacture (including
import) for new chemical substances; and a periodic status report on
new chemical substances that are currently under EPA review or have
recently concluded review. This document covers the period from 11/01/
2023 to 11/30/2023.

DATES: Comments identified by the specific case number provided in this
document must be received on or before January 22, 2024.

ADDRESSES: Submit your comments, identified by docket identification
(ID) number EPA-HQ-OPPT-2023-0061, through the Federal eRulemaking
Portal at https://www.regulations.gov. Follow the online instructions
for submitting comments. Do not submit electronically any information
you consider to be Confidential Business Information (CBI) or other
information whose disclosure is restricted by statute. Additional
instructions on commenting and visiting the docket, along with more
information about dockets generally, is available at https://www.epa.gov/dockets.

FOR FURTHER INFORMATION CONTACT:
    For technical information contact: Jim Rahai, Project Management
and Operations Division (MC 7407M), Office

of Pollution Prevention and Toxics, Environmental Protection Agency,
1200 Pennsylvania Ave. NW, Washington, DC 20460-0001; telephone number:
(202) 564-8593; email address: [email protected].
    For general information contact: The TSCA-Hotline, ABVI-Goodwill,
422 South Clinton Ave., Rochester, NY 14620; telephone number: (202)
554-1404; email address: [email protected].

SUPPLEMENTARY INFORMATION:

I. Executive Summary

A. What action is the Agency taking?

    This document provides the receipt and status reports for the
period from 11/01/2023 to 11/30/2023. The Agency is providing notice of
receipt of PMNs, SNUNs, and MCANs (including amended notices and test
information); an exemption application under 40 CFR part 725 (Biotech
exemption); TMEs, both pending and/or concluded; NOCs to manufacture a
new chemical substance; and a periodic status report on new chemical
substances that are currently under EPA review or have recently
concluded review.
    EPA is also providing information on its website about cases
reviewed under the amended TSCA, including the section 5 PMN/SNUN/MCAN
and exemption notices received, the date of receipt, the final EPA
determination on the notice, and the effective date of EPA's
determination for PMN/SNUN/MCAN notices on its website at: https://www.epa.gov/reviewing-new-chemicals-under-toxic-substances-control-act-tsca/status-pre-manufacture-notices. This information is updated on a
weekly basis.

B. What is the Agency's authority for taking this action?

    Under the Toxic Substances Control Act (TSCA), 15 U.S.C. 2601 et
seq., a chemical substance may be either an ``existing'' chemical
substance or a ``new'' chemical substance. Any chemical substance that
is not on EPA's TSCA Inventory of Chemical Substances (TSCA Inventory)
is classified as a ``new chemical substance,'' while a chemical
substance that is listed on the TSCA Inventory is classified as an
``existing chemical substance.'' (See TSCA section 3(11).) For more
information about the TSCA Inventory please go to: https://www.epa.gov/tsca-inventory.
    Any person who intends to manufacture (including import) a new
chemical substance for a non-exempt commercial purpose, or to
manufacture or process a chemical substance in a non-exempt manner for
a use that EPA has determined is a significant new use, is required by
TSCA section 5 to provide EPA with a PMN, MCAN, or SNUN, as
appropriate, before initiating the activity. EPA will review the
notice, make a risk determination on the chemical substance or
significant new use, and take appropriate action as described in TSCA
section 5(a)(3).
    TSCA section 5(h)(1) authorizes EPA to allow persons, upon
application and under appropriate restrictions, to manufacture or
process a new chemical substance, or a chemical substance subject to a
significant new use rule (SNUR) issued under TSCA section 5(a)(2), for
``test marketing'' purposes, upon a showing that the manufacture,
processing, distribution in commerce, use, and disposal of the chemical
will not present an unreasonable risk of injury to health or the
environment. This is referred to as a test marketing exemption, or TME.
For more information about the requirements applicable to a new
chemical go to: https://www.epa.gov/chemicals-under-tsca.
    Under TSCA sections 5 and 8 and EPA regulations, EPA is required to
publish in the Federal Register certain information, including notice
of receipt of a PMN/SNUN/MCAN (including amended notices and test
information); an exemption application under 40 CFR part 725 (biotech
exemption); an application for a TME, both pending and concluded; NOCs
to manufacture a new chemical substance; and a periodic status report
on the new chemical substances that are currently under EPA review or
have recently concluded review.

C. Does this action apply to me?

    This action provides information that is directed to the public in
general.

D. Does this action have any incremental economic impacts or paperwork
burdens?

    No.

E. What should I consider as I prepare my comments for EPA?

    1. Submitting confidential business information (CBI). Do not
submit this information to EPA through regulations.gov or email.
Clearly mark the part or all of the information that you claim to be
CBI. For CBI information in a disk or CD-ROM that you mail to EPA, mark
the outside of the disk or CD-ROM as CBI and then identify
electronically within the disk or CD-ROM the specific information that
is claimed as CBI. In addition to one complete version of the comment
that includes information claimed as CBI, a copy of the comment that
does not contain the information claimed as CBI must be submitted for
inclusion in the public docket. Information so marked will not be
disclosed except in accordance with procedures set forth in 40 CFR part
2.
    2. Tips for preparing your comments. When preparing and submitting
your comments, see the commenting tips at https://www.epa.gov/dockets/commenting-epa-dockets.

II. Status Reports

    In the past, EPA has published individual notices reflecting the
status of TSCA section 5 filings received, pending, or concluded. In
1995, the Agency modified its approach and streamlined the information
published in the Federal Register after providing notice of such
changes to the public and an opportunity to comment (see the Federal
Register of May 12, 1995 (60 FR 25798) (FRL-4942-7)). Since the passage
of the Lautenberg amendments to TSCA in 2016, public interest in
information on the status of section 5 cases under EPA review and, in
particular, the final determination of such cases, has increased. In an
effort to be responsive to the regulated community, the users of this
information, and the general public, to comply with the requirements of
TSCA, to conserve EPA resources and to streamline the process and make
it more timely, EPA is providing information on its website about cases
reviewed under the amended TSCA, including the section 5 PMN/SNUN/MCAN
and exemption notices received, the date of receipt, the final EPA
determination on the notice, and the effective date of EPA's
determination for PMN/SNUN/MCAN notices on its website at: https://www.epa.gov/reviewing-new-chemicals-under-toxic-substances-control-act-tsca/status-pre-manufacture-notices. This information is updated on a
weekly basis.

III. Receipt Reports

    For the PMN/SNUN/MCANs that have passed an initial screening by EPA
during this period, Table I provides the following information (to the
extent that such information is not subject to a CBI claim) on the
notices screened by EPA during this period: The EPA case number
assigned to the notice that indicates whether the submission is an
initial submission, or an amendment, a notation of which version was
received, the date the notice was received by EPA, the submitting
manufacturer (i.e., domestic producer or importer), the potential uses
identified by the

manufacturer in the notice, and the chemical substance identity.
    As used in each of the tables in this unit, (S) indicates that the
information in the table is the specific information provided by the
submitter, and (G) indicates that this information in the table is
generic information because the specific information provided by the
submitter was claimed as CBI. Submissions which are initial submissions
will not have a letter following the case number. Submissions which are
amendments to previous submissions will have a case number followed by
the letter ``A'' (e.g., P-18-1234A). The version column designates
submissions in sequence as ``1'', ``2'', ``3'', etc. Note that in some
cases, an initial submission is not numbered as version 1; this is
because earlier version(s) were rejected as incomplete or invalid
submissions. Note also that future versions of the following tables may
adjust slightly as the Agency works to automate population of the data
in the tables.

                        Table I--PMN/SNUN/MCANs Approved * From 11/01/2023 to 11/30/2023
----------------------------------------------------------------------------------------------------------------
                                     Received
        Case No.          Version      date        Manufacturer           Use             Chemical substance
----------------------------------------------------------------------------------------------------------------
J-23-0005A.............         2   09/26/2023  CBI..............  (G) Production of  (G) Microorganisms
                                                                    an enzyme.         transformed to express an
                                                                                enzyme.
J-23-0006A.............         2   09/26/2023  CBI..............  (G) Production of  (G) Microorganisms
                                                                    an enzyme.         transformed to express an
                                                                                enzyme.
P-22-0113A.............         5   11/02/2023  SOLUGEN INC......  (G) Chemical       (S) D-Glucaric acid.
                                                                    intermediate,
                                                                    Additive.
P-22-0123A.............         4   11/13/2023  CBI..............  (G) Mineral        (G) Propaneamine, 3-
                                                                    processing aid.    (alkyloxy)-, structural
                                                                                variants.
P-22-0140A.............         4   11/28/2023  Colonial           (G) Corrosion      (G) 6-[(alkyl-1-
                                                 Chemical, Inc.     inhibitor.         oxohexyl)amino]-hexanoic
                                                                                acid, compd. with
                                                                                cyclohexylamine (1:1).
P-23-0069A.............         4   11/08/2023  CBI..............  (S) Encapsulating  (G) Pisum sativum oil,
                                                                    Shell Polymer      glycerol, crosspolymer
                                                                    for Fragrance;     with linear and cyclic
                                                                    Encapsulates for   aliphatic isocyanates.
                                                                    Industrial or
                                                                    Household
                                                                    Consumer
                                                                    Products such as
                                                                    Detergents and
                                                                    Fabric Softeners.
P-24-0001..............         1   10/03/2023  Cabot Corporation  (G) Additive used  (G) Carbon Nanostructures,
                                                                    in industrial      purified.
                                                                    applications.
P-24-0005A.............         8   11/16/2023  CBI..............  (G) Plastic        (G) Polycarbomonocyclic
                                                                    article            diol reaction products
                                                                    production.        with
                                                                                cycloalkylcarbomonocycle
                                                                                and polysubstituted
                                                                                heteromonocycle.
P-24-0007..............         2   11/08/2023  Kenrich            (S) Use as a       (S) Titanium, branched and
                                                 Petrochemicals,    dispersant for     linear C16-18 and C18-
                                                 Inc.               powders, all       unsatd. fatty acids iso-
                                                                    forms KR PTOA,     Pr alc. complexes.
                                                                    CAPOW KR PTOA
                                                                    and CAPS KR
                                                                    PTOA.; Use as an
                                                                    adhesion
                                                                    promoter in
                                                                    adhesives and
                                                                    sealants all
                                                                    forms KR PTOA,
                                                                    CAPOW KR PTOA
                                                                    and CAPS KR PTOA.
P-24-0024..............         1   11/08/2023  Enchem America,    (G) Electrolyte    (G) Heteroatom-substituted
                                                 LLC.               additive.          dihalo acid, methyl
                                                                                substituted-alkyl ester.
P-24-0030..............         1   11/10/2023  Barentz North      (S) 2-             (S) Heptane, 3,3'-
                                                 America, LLC.      Ethylhexylal       [methylenebis(oxymethylen
                                                                    currently has      e)]bis- (9CI, ACI).
                                                                    widespread use
                                                                    as a functional
                                                                    fluid in
                                                                    lubricants,
                                                                    greases, and
                                                                    other release
                                                                    products; 2-
                                                                    Ethylhexylal
                                                                    currently has
                                                                    widespread use
                                                                    in laboratories
                                                                    as a non-
                                                                    reactive
                                                                    processing aid
                                                                    with no
                                                                    inclusion into
                                                                    or onto the
                                                                    article.; 2-
                                                                    Ethylhexylal is
                                                                    also used in
                                                                    consumer
                                                                    products as a
                                                                    solvent or
                                                                    cosolvent in
                                                                    coating products.
P-24-0032..............         1   11/15/2023  Equinor Marketing  (S) Hydrocarbon    (S) Naphtha (glyceridic),
                                                 & Trading (US),    value for fuel     light catalytic cracked.
                                                 Inc.               applications
                                                                    (e.g., use in
                                                                    motor fuel,
                                                                    blending stock
                                                                    for other fuels).
----------------------------------------------------------------------------------------------------------------

    In Table II of this unit, EPA provides the following information
(to the extent that such information is not claimed as CBI) on the NOCs
that have passed an initial screening by EPA during this period: The
EPA case number assigned to the NOC including whether the submission
was an initial or amended submission, the date the NOC was

received by EPA, the date of commencement provided by the submitter in
the NOC, a notation of the type of amendment (e.g., amendment to
generic name, specific name, technical contact information, etc.) and
chemical substance identity.

                                                 Table II--NOCs Approved * From 11/01/2023 to 11/30/2023
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                            Commencement
                Case No.                   Received date        date         If amendment, type of amendment              Chemical substance
--------------------------------------------------------------------------------------------------------------------------------------------------------
P-16-0313...............................      11/15/2023        11/02/2023  N                                 (S) Tar acids (shale oil), C6-9 fraction,
                                                                                alkylphenols, low-boiling.
P-18-0158...............................      11/28/2023        11/01/2023  N                                 (G) Sulfonium, triphenyl-, salt with 2,3-
                                                                                bis(substituted) 5-sulfocarbopolycyclic-
                                                                                2,3-carboxylate derivative (1:1).
P-20-0054...............................      11/07/2023        10/07/2020  N                                 (S) Nitrile Hydratase.
P-20-0178A..............................      11/29/2023        08/02/2023  Amended Generic Chemical Name     (G) Carbopolycyclic alkenyl, 2-carboxylic
                                                                                acid, 2-[[[[[(isocyanatophenyl)alkyl]
                                                                                carbocycle]-amino]carbonyl]oxy]ethyl
                                                                                ester.
P-21-0042...............................      11/28/2023        11/01/2023  N                                 (G) Sulfonium, tricarbocyclic-, 2-
                                                                                heteroatom-substituted-4-
                                                                                (alkyl)carbomonocyclic carboxylate (1:1).
P-21-0131...............................      11/28/2023        11/01/2023  N                                 (G) Sulfonium, tricarbocyclic-, 2-(4-
                                                                                alkoxyhalocarbomonocyclic)-alpha, alpha,
                                                                                beta, beta-polyhalopolyhydro-4,7-methano-
                                                                                1,3-heteropolycyclic-5-alkanesulfonate
                                                                                (1:1).
P-22-0018...............................      11/20/2023        11/03/2023  N                                 (G) Substituted polyalkylenepoly, reaction
                                                                                products with substituted heteromonocycle
                                                                                substituted heteromonocycle polyalkylene
                                                                                derivs.
P-22-0022...............................      11/14/2023        11/04/2023  N                                 (G) Aryl-substituted-heterocyclic-
                                                                                polyamine, reaction products with
                                                                                polyethylene glycol alkyl-ether, and
                                                                                nitrogen and alkyl-substituted benzene.
P-23-0013...............................      11/17/2023        11/15/2023  N                                 (S) Phenol, polymer with 4,4'-
                                                                                bis(chloromethyl)-1,1'-biphenyl.
--------------------------------------------------------------------------------------------------------------------------------------------------------

    In Table III of this unit, EPA provides the following information
(to the extent such information is not subject to a CBI claim) on the
test information that has been received during this time period: The
EPA case number assigned to the test information; the date the test
information was received by EPA, the type of test information
submitted, and chemical substance identity.

                       Table III--Test Information Received From 11/01/2023 to 11/30/2023
----------------------------------------------------------------------------------------------------------------
                                                                  Type of test
              Case No.                    Received date           information             Chemical substance
----------------------------------------------------------------------------------------------------------------
L-23-0173...........................            11/22/2023  Algal Toxicity (OECD     (G) Cis-Alkenoic Acid.
                                                             Test Guideline 201).
P-16-0543...........................            11/21/2023  Exposure Monitoring      (G) Halogenophosphoric acid
                                                             Report.                  metal salt.
P-23-0017...........................            11/29/2023  Human Repeated Insult    (G) Hydrolyzed collagen,
                                                             Patch Testing.           polymer with aromatic
                                                                                isocyanate, n-
                                                                                triethoxysylil-alkanamine,
                                                                                pectic polysaccharide and
                                                                                poly alkyl alcohol.
----------------------------------------------------------------------------------------------------------------

    If you are interested in information that is not included in these
tables, you may contact EPA's technical information contact or general
information contact as described under FOR FURTHER INFORMATION CONTACT
to access additional non-CBI information that may be available.
    Authority: 15 U.S.C. 2601 et seq.

    Dated: December 18, 2023.
Pamela Myrick,
Director, Project Management and Operations Division, Office of
Pollution Prevention and Toxics.
[FR Doc. 2023-28240 Filed 12-21-23; 8:45 am]
BILLING CODE 6560-50-P


[Federal Register Volume 87, Number 8 (Wednesday, January 12, 2022)]
[Notices]
[Pages 1797-1804]
[FR Doc No: 2022-00383]

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

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-93924; File No. SR-NASDAQ-2021-045]

Self-Regulatory Organizations; The Nasdaq Stock Market LLC;
Notice of Filing of Proposed Rule Change, as Modified by Amendment No.
2, To Modify Certain Pricing Limitations for Companies Listing in
Connection With a Direct Listing Primary Offering

January 6, 2022.
    On June 11, 2021, The Nasdaq Stock Market LLC (``Nasdaq'' or the
``Exchange'') filed with the Securities and Exchange Commission
(``Commission''), pursuant to Section 19(b)(1) \1\ of the Securities
Exchange Act of 1934 (``Act'') \2\ and Rule 19b-4 thereunder,\3\ a
proposed rule change to modify certain pricing limitations for
companies listing in connection with a direct listing 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 June 30, 2021.\4\ On
August 12, 2021, pursuant to Section 19(b)(2) of the Act,\5\ the
Commission designated a longer period within which to either approve or
disapprove the proposed rule change, or institute proceedings to
determine whether to disapprove the proposed rule change.\6\ On
September 24, 2021, the Commission instituted proceedings under Section
19(b)(2)(B) of the Act \7\ to determine whether to approve or

disapprove the proposed rule change.\8\ On December 20, 2021, the
Commission extended the time period for approving or disapproving the
proposal to February 25, 2022.\9\
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 15 U.S.C. 78a.
    \3\ 17 CFR 240.19b-4.
    \4\ See Securities Exchange Act Release No. 92256 (June 24,
2021), 86 FR 34815 (June 30, 2021). Comments received on the
proposal are available on the Commission's website at: https://www.sec.gov/comments/sr-nasdaq-2021-045/srnasdaq2021045.htm.
    \5\ 15 U.S.C. 78s(b)(2).
    \6\ See Securities Exchange Act Release No. 92649 (August 12,
2021), 86 FR 46295 (August 18, 2021). The Commission designated
September 28, 2021, as the date by which it should approve,
disapprove, or institute proceedings to determine whether to
disapprove the proposed rule change.
    \7\ 15 U.S.C. 78s(b)(2)(B).
    \8\ See Securities Exchange Act Release No. 93119 (September 24,
2021), 86 FR 54262 (September 30, 2021).
    \9\ See Securities Exchange Act Release No. 93830 (December 20,
2021), 86 FR 73071 (December 23, 2021).
---------------------------------------------------------------------------

    On December 22, 2021, the Exchange filed Amendment No. 2 to the
proposed rule change, which superseded the proposed rule change as
originally filed. Amendment No. 2 to the proposed rule change is
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, as modified by Amendment No. 2,
from interested persons.

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

    The Exchange proposes to modify certain pricing limitations for
companies listing in connection with a Direct Listing primary offering
in which the company will sell shares itself in the opening auction on
the first day of trading on Nasdaq. This Amendment No. 2 supersedes the
original filing in its entirety.\10\
---------------------------------------------------------------------------

    \10\ On December 21, 2021, Nasdaq submitted Amendment No. 1,
which was subsequently withdrawn.
---------------------------------------------------------------------------

    The text of the proposed rule change is available on the Exchange's
website at https://listingcenter.nasdaq.com/rulebook/nasdaq/rules, at
the principal office of the Exchange, and at the Commission's Public
Reference Room.

II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change

    In its filing with the Commission, the Exchange included statements
concerning the purpose of and basis for the proposed rule change and
discussed any comments it received on the proposed rule change. The
text of these statements may be examined at the places specified in
Item IV below. The Exchange has prepared summaries, set forth in
sections A, B, and C below, of the most significant aspects of such
statements.

A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change

1. Purpose
Summary of Amendment
    Nasdaq is filing this amendment to SR-NASDAQ-2021-045 \11\ in order
to address the issues the Commission raised in the OIP and make other
modifications to clarify the proposed rule language.
---------------------------------------------------------------------------

    \11\ Securities Exchange Act Release No. 92256 (June 24, 2021),
86 FR 34815 (June 30, 2021) (the ``Initial Proposal''). The
Commission issued an Order Instituting Proceedings to Determine
Whether To Approve or Disapprove the Initial Proposal. See
Securities Exchange Act Release No. 93119 (September 24, 2021), 86
FR 54262 (September 30, 2021) (the ``OIP'').
---------------------------------------------------------------------------

    As a preliminary matter, in this Amendment No. 2 (the
``Amendment'') Nasdaq proposes to clarify how the main provisions of
Rules 4120(c)(8)(A) and (c)(9)(A) apply to a Direct Listing with a
Capital Raise by restating the provisions of these rule in a clear and
direct manner. This change will make the rules easier to understand and
apply.
    Also in this Amendment, Nasdaq proposes to modify the Initial
Proposal to require 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). Nasdaq also proposes to
clarify that the price range in the preliminary prospectus included in
the effective registration statement must be a bona fide price range in
accordance with Item 501(b)(3) of Regulation S-K.
    Nasdaq also proposes to revise the certification process described
in the Initial Proposal such that two certifications would be required
in certain circumstances. In its initial certification to Nasdaq, which
would be publicly disclosed and provided to Nasdaq prior to the
beginning of the Display Only Period, the Company must confirm that its
registration statement contains a sensitivity analysis explaining how
the company's plans would change if the actual proceeds from the
offering exceed or are less than [sic] the amount assumed in the price
range established by the issuer in its effective registration
statement.
    Further, Nasdaq proposes to add to the operation of the Cross, in
certain circumstances, a Post-Pricing Period. Specifically, if the
actual price calculated by the Cross is not at or above the price that
is 20% below the lowest price and at or below the price that is 20%
above the highest price [sic] of the price range established by the
issuer in its effective registration statement, Nasdaq will initiate a
brief Post-Pricing Period following the calculation of the actual
price. In instances where the Post-Pricing Period is triggered, the
issuer must confirm to Nasdaq during the Post-Pricing Period that no
additional disclosures are required under federal securities laws based
on the actual price calculated by the Cross. During the Post-Pricing
Period no additional orders for the security may be entered in the
Cross and no existing orders in the Cross may be modified. The Post-
Pricing Period will end and the security will be released for trading
immediately after the issuer provides such confirmation to Nasdaq. If
the Company cannot provide the required confirmation, Nasdaq will
postpone and reschedule the offering.
    In the Amendment, Nasdaq proposes to prohibit market orders (other
than by the company) from the opening of a Direct Listing with a
Capital Raise. In addition, Nasdaq undertakes to disseminate, free of
charge, the Current Reference Price, on a public website, such as
Nasdaq.com, during the Pre-Launch Period and to indicate whether the
Current Reference Price is within the price range established by the
issuer in its effective registration statement. Nasdaq 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. The Price
Volatility Constraint requires that the Current Reference Price has not
deviated by 10% or more from any Current Reference Price within the
previous 10 minutes. The Pre-Launch Period will continue until the
Price Volatility Constraint has been satisfied.
    Nasdaq also proposes in this Amendment to impose specific
requirements on Nasdaq members with respect to a Direct Listing with a
Capital Raise. These rules will require members to provide to a
customer, before that customer places an order to be executed in the
Cross, a notice describing the mechanics of pricing a security subject
to a Direct Listing with a Capital Raise in the Cross, including
information regarding the dissemination of the Current Reference Price
by Nasdaq on a public website such as Nasdaq.com.
    Nasdaq also proposes to provide that it will 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 that describes any special

characteristics of the offering, and Nasdaq'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 they must provide customers and other
Nasdaq rules that:
     Require members to 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; and
     require members in recommending transactions for a
security subject to a Direct Listing with a Capital Raise to 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.
    Nasdaq also proposes to make minor technical changes to improve the
clarity of this proposal. Nasdaq believes that this amendment addresses
the issues raised by the Commission in the OIP. This amendment
supersedes and replaces the Initial Proposal in its entirety.
Description of Proposed Rule, as Amended
    Nasdaq recently adopted Listing Rule IM-5315-2 to permit a company
to list in connection 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 (a ``Direct Listing with a Capital Raise''); \12\
created a new order type (the ``CDL Order''), which is used during the
Nasdaq Halt Cross (the ``Cross'') for the shares offered by the company
in a Direct Listing with a Capital Raise; and established requirements
for disseminating information, establishing the opening price and
initiating trading through the Cross in a Direct Listing with a Capital
Raise.\13\ For a Direct Listing with a Capital Raise, Nasdaq rules
currently require that the actual price calculated by the Cross be 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 (the ``Pricing Range Limitation'').
---------------------------------------------------------------------------

    \12\ A Direct Listing with a Capital Raise includes situations
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.
    \13\ See Securities Exchange Act Release No. 91947 (May 19,
2021), 86 FR 28169 (May 25, 2021) (the ``Approval Order'').
---------------------------------------------------------------------------

    Nasdaq now proposes to modify the Pricing Range Limitation such
that a Direct Listing with a Capital Raise can be executed in the Cross
at a price that is at or above the price that is 20% below the lowest
price and at or below the price that is 20% above the highest price of
the price range established by the issuer in its effective registration
statement.\14\ In addition, Nasdaq proposes to modify the Pricing Range
Limitation such that a Direct Listing with a Capital Raise can be
executed in the Cross at a price above the price that is 20% above the
highest price of such price range, provided 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 exceed the amount assumed in such price range and the company
has publicly disclosed and certified to Nasdaq that the company does
not expect that such price would materially change the company's
previous disclosure in its effective registration statement. Nasdaq
also proposes to make related conforming changes.
---------------------------------------------------------------------------

    \14\ References in this proposal to the price range established
by the issuer in its effective registration statement are to the
price range disclosed in the prospectus in such registration
statement. Separately, as explained in more details below, Nasdaq
proposes to prescribe that the 20% threshold will be calculated
using the high end of the price range in the prospectus at the time
of effectiveness and may be measured from either the high end (in
the case of an increase in the price) or low end (in the case of a
decrease in the price) of that range [sic].
---------------------------------------------------------------------------

    Listing Rule IM-5315-2 requires that securities listing in
connection with a Direct Listing with a Capital Raise must begin
trading on Nasdaq following the initial pricing through the Cross,
which is described in Rules 4120(c)(9) and 4753. Rule 4120(c)(9)
requires that in the case of a Direct Listing with a Capital Raise, for
purposes of releasing securities for trading on the first day of
listing, Nasdaq, in consultation with the financial advisor to the
issuer, will make the determination of whether the security is ready to
trade.
    Currently, in the case of the Direct Listing with a Capital Raise,
a security is not released for trading by Nasdaq unless the actual
price calculated by the 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.\15\ Specifically, under Rule
4120(c)(9)(B) Nasdaq shall release the security for trading only if:
(i) All market orders will be executed in the Cross; and (ii) the
actual price calculated by the Cross complies with the Pricing Range
Limitation. If there is insufficient buy interest to satisfy the CDL
Order and all other market orders, as required by the current rule, or
if the actual price calculated by the Cross is outside the price range
established by the issuer in its effective registration statement, the
Cross would not proceed and such security would not begin trading.
Nasdaq shall postpone and reschedule the offering only if either or
both such conditions are not met. In such event, because the Cross
cannot be conducted, the Exchange would postpone and reschedule the
offering and notify market 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.
---------------------------------------------------------------------------

    \15\ See Rule 4120(c)(9)(B).
---------------------------------------------------------------------------

Proposed Change to Rule 4120(c)(9)
    While many companies are interested in alternatives to the
traditional IPOs, based on conversations with companies and their
advisors Nasdaq believes that there may be a reluctance to use the
existing Direct Listing with a Capital Raise rules because of concerns
about the Pricing Range Limitation.
    One potential benefit of a Direct Listing with a Capital Raise as
an alternative to a traditional IPO is that it could maximize the
chances of more efficient price discovery of the initial public sale of
securities for issuers and investors. Unlike an IPO where the offering
price is informed by underwriter engagement with potential investors to
gauge interest in the offering, but ultimately decided through
negotiations between the issuer and the underwriters for the offering,
in a Direct Listing with a Capital Raise 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. In that regard,
in the Approval Order the Commission stated that:

    The opening auction in a Direct Listing with a Capital Raise
provides for a different price discovery method for IPOs which may
reduce the spread between the IPO price and subsequent market
trades, a potential benefit to existing and potential investors. In
this way, the proposed rule change may result in additional
investment opportunities while providing companies more options for
becoming publicly traded.\16\
---------------------------------------------------------------------------

    \16\ See Approval Order, 86 FR at 28177.

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

    A successful initial public offering of shares requires sufficient
investor interest. 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. The Pricing Range Limitation imposed on a Direct Listing
with a Capital Raise (but not on a traditional IPO) increases the
probability of such 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. In the Approval Order, the Commission noted a
frequent academic observation of traditional firm commitment
underwritten offerings that the IPO price, established through
negotiation between the underwriters and the issuer, is often lower
than the price that the issuer could have obtained for the securities,
based on a comparison of the IPO price to the closing price on the
first day of trading.\17\ Nasdaq believes that the price range in a
company's effective registration statement for a Direct Listing with a
Capital Raise would similarly be determined by the company and its
advisors and, therefore, there may be instances of offerings where the
price determined by the Nasdaq opening auction will exceed the highest
price of the price range in the company's effective registration
statement.
---------------------------------------------------------------------------

    \17\ See Approval Order, footnote 91.
---------------------------------------------------------------------------

    As explained above, under the existing rule a security subject to a
Direct Listing with a Capital Raise cannot be released for trading by
Nasdaq if the actual price calculated by the Cross is above the highest
price of the price range established by the issuer in its effective
registration statement. In this case, Nasdaq would have to cancel or
postpone the offering until the company amends its effective
registration statement. At a minimum, such a delay exposes the company
to market risk of changing investor sentiment in the event of an
adverse market event. In addition, as explained above, 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 Nasdaq's view, could
make companies reluctant to use this alternative method of going public
despite its expected potential benefits.
    Accordingly, Nasdaq proposes to modify the Pricing Range Limitation
such that in the case of the Direct Listing with a Capital Raise, a
security shall not be released for trading by Nasdaq unless the actual
price at which the Cross would occur is at or above the price that is
20% below the lowest price of the price range established by the issuer
in its effective registration statement and at or below the price that
is 20% above the highest price of the price range. In other words,
Nasdaq would release the security for trading, provided all other
necessary conditions are satisfied, even if the actual price calculated
by the Cross is outside the price range established by the issuer in
its effective registration statement; provided however that the actual
price cannot be more than 20% below the lowest price or more than 20%
above the highest price of such range; and the company specified the
quantity of shares registered, as permitted by Securities Act Rule 457,
as explained below. In addition, there would be no limitation on
releasing the security for trading at a price above the price that is
20% above the highest price of the price range established by the
issuer in its effective registration statement if the company publicly
disclosed and has certified to Nasdaq prior to beginning of the Display
Only Period that the company does not expect that such offering price
would materially change the company's previous disclosure in its
effective registration statement and the company's registration
statement contains a sensitivity analysis explaining how the company's
plans would change if the actual proceeds from the offering exceed the
amount assumed in the price range established by the issuer in its
effective registration statement.\18\ The goal of the requirement is to
have disclosure that allows investors to see how changes in share price
ripple through critical elements of the disclosure.\19\
---------------------------------------------------------------------------

    \18\ The price range in the preliminary prospectus included in
the effective registration statement is [sic] a bona fide price
range in accordance with Item 501(b)(3) of Regulation S-K.
    \19\ Sensitivity analysis disclosure may include but is not
limited to: Use of proceeds; balance sheet and capitalization; and
the company's liquidity position after the offering. An example of
this disclosure could be: We will apply the net proceeds from this
offering first to repay all borrowings under our credit facility and
then, to the extent of any proceeds remaining, to general corporate
purposes.
---------------------------------------------------------------------------

    Nasdaq believes that this approach is consistent with SEC Rule 430A
and question 227.03 of the SEC Staff's Compliance and Disclosure
Interpretations, which 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.\20\ Nasdaq 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.
Accordingly, Nasdaq 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 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) when there is a deviation above the price
range beyond the 20% threshold noted in 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. For purposes of this rule, the
20% threshold 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 430 [sic].
---------------------------------------------------------------------------

    \20\ 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. Nasdaq 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 also Compliance & Disclosure
Interpretation of Securities Act Rules #227.03 at https://www.sec.gov/divisions/corpfin/guidance/securitiesactrules-interps.htm.
---------------------------------------------------------------------------

    Finally, given that, as proposed, there may be a Direct Listing
with a Capital Raise that could price outside the price range of the
company's effective registration statement and that there may be no
upside limit above which the Cross could not proceed, Nasdaq proposes
to enhance price discovery transparency by providing readily available,
real time pricing information to investors. To that end Nasdaq will
disseminate, free of charge, the Current Reference Price on a public
website, such as Nasdaq.com, during the Pre-Launch Period (as described
in the Proposal) and indicate whether the Current Reference Price is
within the price range established by the issuer in its effective
registration statement. Nasdaq 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. The Price Volatility Constraint requires that the Current
Reference Price has not deviated by 10% or more from any Current
Reference Price within the previous 10 minutes. The Pre-Launch Period
will continue until the Price Volatility Constraint has been satisfied.
This change will provide investors with notice that the Cross nears
execution.
    Nasdaq 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. This will assure 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 will use any additional proceeds raised.
    In addition, to protect investors and assure that they are informed
about the attributes of a Direct Listing with a Capital Raise, Nasdaq
proposes to impose specific requirements on Nasdaq members with respect
to a Direct Listing with a Capital Raise. These rules will require
members to provide to a customer, before that customer places an order
to be executed in the Cross, a notice describing the mechanics of
pricing a security subject to a Direct Listing with a Capital Raise in
the Cross, including information regarding the location of the public
website where Nasdaq will disseminate the Current Reference Price.
    To assure that members have the necessary information to be
provided to their customers, Nasdaq 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 that describes any special
characteristics of the offering, and Nasdaq'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 they must provide customers and other
Nasdaq rules that:
     Require members to 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; and
     require members in recommending transactions for a
security subject to a Direct Listing with a Capital Raise to 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.
    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.
    In each instance of a Direct Listing with a Capital Raise, Nasdaq's
information circular \21\ will inform the market participants that the
auction could price up to 20% below the lowest price of the price range
in the company's effective registration statement and specify what that
price is. Nasdaq will also indicate in such circular whether or not
there is an upside limit above which the Cross could not proceed, based
on the company's certification, as described above. Nasdaq will also
remind the market participants that Nasdaq prohibits market orders
(other than by the Company) from the opening of a Direct Listing with a
Capital Raise.
---------------------------------------------------------------------------

    \21\ The Information circular is an industry wide free service
provided by Nasdaq.
---------------------------------------------------------------------------

    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, Nasdaq proposes to
introduce to the operation of the Cross a brief Post-Pricing Period, in
circumstances where the actual price calculated by the Cross is above
the price that is 20% above the highest price of the price range
established by the issuer in its effective registration statement.
Specifically, in such circumstances, Nasdaq will initiate a Post-
Pricing Period following the calculation of the actual price. During
the Post-Pricing Period the issuer must confirm to Nasdaq that no
additional disclosures are required under federal securities laws based
on the actual price calculated by the Cross. During the Post-Pricing
Period no additional orders for the security may be entered in the
Cross and no existing orders in the Cross may be modified. The security
shall be released for trading immediately following the Post-Pricing
Period. If the Company cannot provide the required confirmation, then
Nasdaq will postpone and reschedule the offering.
Proposed Conforming Changes to Listing Rule IM-5315-2
    Listing Rule IM-5315-2 allows a company that has not previously had
its common equity securities registered under the Act to list its
common equity securities on the Nasdaq Global Select Market at the time
of effectiveness of a registration statement pursuant to which the
company itself will sell shares in the opening auction on the first day
of trading on the Exchange.
    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
\22\ for initial listing on the Nasdaq Global Select Market, the
Exchange will deem such company to have met the applicable requirement
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).
---------------------------------------------------------------------------

    \22\ See Listing Rules 5005(a)(23) and 5005(a)(45).
---------------------------------------------------------------------------

    Listing Rule IM-5315-2 further provides that, for this purpose, the
Market Value of Unrestricted Publicly Held Shares will be calculated
using a price per share equal to the lowest price of the price range
disclosed by the issuer in its effective registration statement.
    Because Nasdaq proposes to allow the opening auction to price up to
20% below the lowest price of the price range established by the issuer
in its effective registration statement, Nasdaq proposes to make a
conforming change to Listing Rule IM-5315-2 to provide that the price
used to determine such company's compliance with the Market Value of
Unrestricted Publicly Held Shares is the 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 as this is the
minimum price at which the company could qualify to be listed. Nasdaq
will determine that the company has met the applicable bid price and
market capitalization requirements based on the same per share price.
    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.\23\
---------------------------------------------------------------------------

    \23\ See Listing Rules 5315(f)(1), (e)(1) and (2), respectively.
Rule 5315(f)(1) requires a security to have: (A) At least 550 total
holders and an average monthly trading volume over the prior 12
months of at least 1,100,000 shares per month; or (B) at least 2,200
total holders; or (C) a minimum of 450 round lot holders and at
least 50% of such round lot holders must each hold unrestricted
securities with a market value of at least $2,500.
---------------------------------------------------------------------------

Proposed Conforming Changes to Rules 4753(a)(3)(A) and 4753(b)(2)
    Nasdaq proposes to amend Rules 4753(a)(3)(A) and 4753(b)(2) to
conform the requirements for disseminating information and establishing
the opening price through the 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 price range established by
the issuer in its effective registration statement.
    Specifically, Nasdaq proposes changes to 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, in the case of a Direct Listing with a Capital Raise and for
how the price at which the Cross will execute. These rules currently
provide that where there are multiple prices that would satisfy the
conditions for determining a 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 price range disclosed by the issuer in its effective
registration statement.\24\
---------------------------------------------------------------------------

    \24\ To illustrate: The bottom of the range is $10. More than
one price exists within the range under the previous set of tie-
breakers such that both $10.15 and $10.25, satisfy all other
requirements. The operation of the fourth tie-breaker will result in
the auction price of $10.15 because it is the price that is closest
to $10.
---------------------------------------------------------------------------

    To conform these rules to the modification of the Pricing Range
Limitation change, as described above, Nasdaq 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 price range disclosed by the issuer in its effective registration
statement.\25\
---------------------------------------------------------------------------

    \25\ Note that using the price that is 20% below the lowest
price of the price range disclosed by the issuer in its effective
registration statement as a tie-breaker (rather than the price
representing the bottom of the range) does not change the outcome in
the example in footnote 24 above because $10.15 is the price that is
closest to either.
---------------------------------------------------------------------------

    Lastly, Nasdaq proposes to clarify several provisions of the
existing rules without changing them. Specifically, Nasdaq proposes to
clarify the mechanics of the Cross by specifying that Nasdaq will
initiate a 10-minute Display Only Period only after the CDL Order had
been entered. This clarification simply states what is already implied
by the rule because the Cross and the offering may not proceed without
the company's order to sell the securities in a Direct Listing with a
Capital Raise. Similarly, Nasdaq proposes to clarify without changing
the existing rule that Nasdaq shall select price bands for purposes of
applying the price validation test in the Cross in connection with a
Direct Listing with a Capital Raise. Under the price validation test,
the System compares the Expected Price with the actual price calculated
by the Cross to ascertain that the difference, if any, is within the
price bands. Nasdaq shall select an upper price band and a lower price
band. The default for an upper and a lower price band is set at zero.
If a security does not pass the price validation test, Nasdaq may, but
is not required to, select different price bands before recommencing
the process to release the security for trading.\26\ Nasdaq also
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 bands test.
---------------------------------------------------------------------------

    \26\ This function is provided by the underwriter in an IPO and
by a Financial Advisor in a Direct Listing. The Commission
previously approved Nasdaq performing this function. See Approval
Order.
---------------------------------------------------------------------------

2. Statutory Basis
    The Exchange believes that its proposal is consistent with Section
6(b) of the Act,\27\ in general, and furthers the objectives of Section
6(b)(5) of the Act,\28\ in particular, in that it is designed 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.
---------------------------------------------------------------------------

    \27\ 15 U.S.C. 78f(b).
    \28\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

    Nasdaq believes that the proposed amendment to modify the Pricing
Range Limitation is consistent with the protection of investors because
this approach 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 in accordance with the SEC's
Staff guidance, as described above.\29\ Specifically, Nasdaq 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 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) when there is a deviation above the price range
beyond the 20% threshold noted in 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. As a result, Nasdaq will allow the Cross
to take place as low as 20% below the lowest price of the price range
disclosed by the issuer in its effective registration statement, but no
lower, and so this is the minimum price at which the company could be
listed. In addition, to better inform investors and market
participants, Nasdaq will issue an industry wide circular to inform the
participants that the auction could price up to 20% below the lowest
price of the price range in the company's effective registration
statement and specify what that price is. Nasdaq will also indicate in
such circular whether or not there is an upside limit above which the
Cross could not proceed, based on the company's certification, as
described above. Nasdaq will also remind the market participants that
Nasdaq prohibits market orders (other than by the Company) from the
opening of a Direct Listing with a Capital Raise.
---------------------------------------------------------------------------

    \29\ In a recent speech, SEC Chair Gary Gensler emphasized that
an overarching principle of regulation is that like activities ought
to be treated alike. See https://www.sec.gov/news/speech/gensler-healthy-markets-association-conference-120921.
---------------------------------------------------------------------------

    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, Nasdaq proposes to
introduce to the operation of the Cross a brief Post-Pricing Period, in
circumstances where the actual price calculated by the Cross is above
the price that is 20% above the highest price of the price range
established by the issuer in its effective registration statement.
Specifically, in such circumstances, Nasdaq will initiate a Post-
Pricing Period following the calculation of the actual price. During
the Post-Pricing Period the issuer must

confirm to Nasdaq that no additional disclosures are required under
federal securities laws based on the actual price calculated by the
Cross. During the Post-Pricing Period no additional orders for the
security may be entered in the Cross and no existing orders in the
Cross may be modified. The security shall be released for trading
immediately following the Post-Pricing Period. If the Company cannot
provide the required confirmation, then Nasdaq will postpone and
reschedule the offering. Nasdaq believes that this modification is
designed to promote just and equitable principles of trade, to remove
impediments to and perfect the mechanism of a free and open market
because it will help assure that a company listing in connection with a
Direct Listing with a Capital Raise complies with the disclosure
requirements under federal securities laws.
    Nasdaq believes that the proposal to allow a Direct Listing with a
Capital Raise to price above any price above the price range of the
company's effective registration statement is designed to promote just
and equitable principles of trade, to remove impediments to and perfect
the mechanism of a free and open market investors because this approach
is similar to that of pricing a traditional IPO. In addition, to
protect investors Nasdaq proposes to enhance price discovery
transparency by providing readily available, real time pricing
information to investors. To that end Nasdaq will 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 price range established by the
issuer in its effective registration statement. Nasdaq 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. The Price
Volatility Constraint requires that the Current Reference Price has not
deviated by 10% or more from any Current Reference Price within the
previous 10 minutes. The Pre-Launch Period will continue until the
Price Volatility Constraint has been satisfied. This change will
provide investors with notice that the Cross nears execution.
    Nasdaq believes that the provision prohibiting market orders (other
than by the Company) from the opening of a Direct Listing with a
Capital Raise is designed to protect investors because this provision
will assure that investors only purchase shares at a price that is 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 will use
any additional proceeds raised.
    In addition, to protect investors and assure that they are informed
about the attributes of a Direct Listing with a Capital Raise, Nasdaq
proposes to impose specific requirements on Nasdaq members with respect
to a Direct Listing with a Capital Raise. These rules will require
members to provide to a customer, before that customer places an order
to be executed in the Cross, a notice describing the mechanics of
pricing a security subject to a Direct Listing with a Capital Raise in
the Cross, including information regarding the dissemination of the
Current Reference Price on a public website such as Nasdaq.com.
    To assure that members have the necessary information to be
provided to their customers, Nasdaq 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 that describes any special
characteristics of the offering, and Nasdaq'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 they must provide customers and other
Nasdaq rules that:
     Require members to 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; and
     require members in recommending transactions for a
security subject to a Direct Listing with a Capital Raise to 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.
    These member requirements are consistent with the protection of
investors because they are designed to remind members of its
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.
    Nasdaq believes that the Commission Staff has already concluded
that pricing up to 20% below the lowest price and at a price above the
highest price of the price range in the company's effective
registration statement is appropriate for a company conducting an
initial public offering notwithstanding it being outside of the range
stated in an effective registration statement, and investors have
become familiar with this approach at least since the Commission Staff
last revised Compliance and Disclosure Interpretation 227.03 in January
2009.\30\ Allowing Direct Listings with a Capital Raise to similarly
price up to 20% below the lowest price and at a price above the highest
price of the price range in the company's effective registration
statement would be consistent with Chair Gensler's recent call to treat
``like cases alike.'' \31\
---------------------------------------------------------------------------

    \30\ https://www.sec.gov/divisions/corpfin/guidance/securitiesactrules-interps.htm.
    \31\ See https://www.sec.gov/news/speech/gensler-healthy-markets-association-conference-120921.
---------------------------------------------------------------------------

    Nasdaq believes that the proposed amendments to Listing Rule IM-
5315-2 and Rules 4753(a)(3)(A) and 4753(b)(2) to conform these rules to
the modification of the Pricing Range Limitation is consistent with the
protection of investors. These amendments would simply substitute
Nasdaq's reliance on the price equal to the lowest price of the price
range disclosed by the issuer in its effective registration statement
to the price that is 20% below such lowest price. In the case of
Listing Rule IM-5315-2, a company listing in connection with a Direct
Listing with a Capital Raise would still need to meet all applicable
initial listing requirements based on the price that is 20% below the
lowest price of the price range disclosed by the issuer in its
effective registration statement. In the case of the Rules
4753(a)(3)(A) and 4753(b)(2) such price, which is the minimum price at
which the Cross will occur, will serve as the fourth tie-breaker where
there are multiple prices that would satisfy the conditions for
determining the auction price, as described above. Nasdaq believes that
this proposal to resolve a potential tie among the prices that satisfy
all other requirements in the Cross, by choosing the price that is
closest to the price that is 20% below the range, is consistent with
Section 6(b)(5) of the Act because it is designed to protect investors
by providing them with the most advantageous offering price among
possible alternative prices.

    Nasdaq also believes that the proposal, by eliminating an
impediment to companies using a Direct Listing with a Capital Raise,
will help removing potential impediments to free and open markets
consistent with Section 6(b)(5) of the Exchange Act while also
supporting capital formation.
    Finally, Nasdaq believes that the proposal to clarify several
provisions of the existing rules without changing them is designed to
remove impediments to and perfect the mechanism of a free and open
market because such changes make the rules easier to understand and
apply without changing their substance.

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

    The Exchange does not believe that the proposed rule change will
impose any burden on competition not necessary or appropriate in
furtherance of the purposes of the Act. The proposed amendments would
not impose any burden on competition, but would rather increase
competition. Nasdaq believes that allowing listing venues to improve
their rules enhances competition among exchanges. Nasdaq also believes
that this proposed change will give issuers interested in this pathway
to access the capital markets additional flexibility in becoming a
public company, and in that way promote competition among service
providers, such as underwriters and other advisors, to such companies.

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

    No written comments were either solicited or received.

III. Solicitation of Comments

    Interested persons are invited to submit written data, views, and
arguments concerning the foregoing, including whether the proposed rule
change, as modified by Amendment No. 2, is consistent with the Act.
Comments may be submitted by any of the following methods:

Electronic Comments

     Use the Commission's internet comment form (http://www.sec.gov/rules/sro.shtml); or
     Send an email to [email protected]. Please include
File Number SR-NASDAQ-2021-045 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-2021-045. 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-2021-045, and should be submitted
on or before February 2, 2022.
---------------------------------------------------------------------------

    \32\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\32\
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2022-00383 Filed 1-11-22; 8:45 am]
BILLING CODE 8011-01-P