Notice2022-27911
Self-Regulatory Organizations; The Nasdaq Stock Market LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change to Modify Entry and All-Inclusive Annual Fees for Certain Companies
Primary source
Metadata and text below are from the Federal Register, a public-domain U.S. government work. Always verify the official published version before relying on it for any legal matter.
Published
December 23, 2022
Issuing agencies
Securities and Exchange Commission
Full Text
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<title>Federal Register, Volume 87 Issue 246 (Friday, December 23, 2022)</title>
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[Federal Register Volume 87, Number 246 (Friday, December 23, 2022)]
[Notices]
[Pages 79028-79033]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2022-27911]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-96532; File No. SR-NASDAQ-2022-068]
Self-Regulatory Organizations; The Nasdaq Stock Market LLC;
Notice of Filing and Immediate Effectiveness of Proposed Rule Change to
Modify Entry and All-Inclusive Annual Fees for Certain Companies
December 19, 2022.
Pursuant to section 19(b)(1) of the Securities Exchange Act of 1934
(``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that
on December 12, 2022, The Nasdaq Stock Market LLC (``Nasdaq'' or
``Exchange'') filed with the Securities and Exchange Commission
(``Commission'') the proposed rule change as described in Items I, II,
and III, below, which Items have been prepared by the Exchange. The
Commission is publishing this notice to solicit comments on the
proposed rule change from interested persons.
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\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Exchange proposes to modify entry and all-inclusive annual fees
for certain companies, as described below. While changes proposed
herein are effective upon filing, the Exchange has designated the
proposed amendments to be operative on January 1, 2023.
The text of the proposed rule change is available on the Exchange's
website at <a href="https://listingcenter.nasdaq.com/rulebook/nasdaq/rules">https://listingcenter.nasdaq.com/rulebook/nasdaq/rules</a>, 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
The purpose of the proposed rule change is to (i) replace the
tiered entry fee structure with a flat fee of $270,000 when a Company
first lists a class of equity securities on the Nasdaq Global or Global
Select Market; (ii) modify the Exchange's all-inclusive annual listing
fees for all domestic and foreign companies listing equity securities
covered by Listing Rules 5910 and 5920 on the Nasdaq Global Select,
Global and Capital Markets; (iii) replace the two-tier entry fee
structure with a flat fee of $80,000 when an Acquisition Company, as
defined below, first lists a class of equity securities on Nasdaq; (iv)
to adopt an all-inclusive annual listing fee structure specific to
Acquisition Companies listing on the Nasdaq Capital Market; and (v) to
replace the current three-tier all-inclusive annual listing fee
structure for all Acquisition Companies with a two-tier structure, as
described below.
Entry Fees on the Nasdaq Global Market \3\
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\3\ Nasdaq is not proposing to amend the Entry Fees on the
Nasdaq Capital Market, except for the Acquisition Companies, as
explained below.
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Currently, Nasdaq charges Companies listing pursuant to Rule
5910(a)(1), other than Acquisition Companies, entry fees for the Nasdaq
Global and Global Select Market based on the number of shares
outstanding according to the following tiers: \4\
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\4\ Companies must also submit a $25,000 initial application
fee, which is credited towards the entry fee upon listing. The
initial application fee for an Acquisition Company is $5,000. See
Rule 5910(a)(11).
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Up to 30 million shares $150,000
30+ to 40 million shares $170,000
40+ to 50 million shares $210,000
50+ to 60 million shares $250,000
[[Page 79029]]
60+ to 70 million shares $290,000
Over 70 million shares $295,000
These fees are based on the aggregate of all classes of equity
securities to be listed on the Nasdaq Global and Global Select Market,
as shown in the company's most recent periodic report or in more recent
information held by Nasdaq or, in the case of new issues, as shown in
the offering circular or registration statement. In the case of foreign
companies, total shares outstanding includes only those shares issued
and outstanding in the United States.
The entry fees for companies listing on the Nasdaq Global and
Global Select Markets were last modified in 2018.\5\ Nasdaq now
proposes to replace the tiered structure with a flat fee of $270,000
when a Company, other than an Acquisition Company, first lists a class
of equity securities on the Nasdaq Global or Global Select Market.
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\5\ See Securities Exchange Act Release No. 84930 (December 21,
2018), 83 FR 67752 (December 31, 2018) (SR-NASDAQ-2018-105).
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Nasdaq proposes to make this change to better reflect the value of
such listing to companies. In particular, the Exchange believes it is
reasonable to apply a flat entry fee when a Company first lists a class
of securities as the value of the listing to a company is substantially
the same regardless of the number of shares the company has
outstanding. While some companies would pay a higher (or lower) initial
listing fee under the proposed flat fee than under the current rate,
Nasdaq believes that this change is not unfairly discriminatory
because, similarly, the value of the listing to a company is
substantially the same regardless of the number of shares the company
has outstanding.
Nasdaq also proposes to provide that any company, including an
Acquisition Company (until it has satisfied the condition in Rule IM-
5101-2(b)),\6\ that lists an additional class of equity securities (not
otherwise identified in Rule 5900 Series) is not subject to entry fees
but is charged a non-refundable $25,000 initial application fee (except
for an Acquisition Company that is charged a non-refundable $5,000
initial application fee).\7\ Currently, Rule 5910(a)(1) provides that a
company, including an Acquisition Company, that submits an application
to list any class of its securities (not otherwise identified in Rule
5900 Series) on the Nasdaq Global Market is subject to the entry fees.
Nasdaq proposes to make this change to better reflect the value of
listing an additional class of securities for already listed companies
and to better align such value with Nasdaq's regulatory resources
expended in connection with such applications. In particular, the
Exchange believes it is reasonable to charge only a non-refundable
$25,000 initial application fee (except for an Acquisition Company that
is charged a non-refundable $5,000 initial application fee) because the
company listing an additional class of equity securities is already
subject to Nasdaq rules, including the applicable corporate governance
requirements. Accordingly, Nasdaq, typically, expends less regulatory
resources qualifying an additional class of equity securities for
listing.
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\6\ After an Acquisition Company completes a business
combination where all conditions in Rule IM-5101-2(b) are met, the
combined Company must meet the requirements for initial listing, but
the company is not subject to Entry Fee because the company is
either already listed on Nasdaq or the Entry Fees do not apply
pursuant to Listing Rule 5910(a)(7)(v). After that, the combined
Company is no longer subject to the additional requirements of
Listing Rule IM-5101-2.
\7\ Nasdaq is not proposing to change Rule 5910(a)(11), which
provides that a company (except for an Acquisition Company) subject
to the Entry Fee described in Rule 5910(a)(1) must submit a non-
refundable $25,000 initial application fee with its application. An
Acquisition Company must submit a non-refundable $5,000 initial
application fee with its application.
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All-Inclusive Annual Listing Fees
Currently, for companies listed on the Capital Market, other than
ADRs, Closed-end Funds and Limited Partnerships, the all-inclusive
annual fee ranges from $45,000 to $81,000; for ADRs listed on the
Capital Market the all-inclusive annual fee ranges from $45,000 to
$54,500; and for Limited Partnerships listed on the Capital Market the
all-inclusive annual fee ranges from $33,000 to $40,500. On the Global
and Global Select Markets, the all-inclusive annual fee for companies
other than, in part,\8\ ADRs, Closed-end Funds and Limited Partnerships
ranges from $48,000 to $167,000; for ADRs the all-inclusive annual fee
ranges from $48,000 to $86,000; and for Limited Partnerships the all-
inclusive annual fee ranges from $40,500 to $83,500. The all-inclusive
annual fee for Closed-end Funds listed on any market tier ranges from
$33,000 to $107,500. In each case, a company's all-inclusive annual fee
is based on its total shares outstanding.\9\
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\8\ Rule 5930 sets forth the all-inclusive annual listing fees
applicable to SEEDS and Other Securities; and Rule 5940 sets forth
the all-inclusive annual listing fees applicable to Exchange Traded
Products that are listed on the Nasdaq Global Market.
\9\ REITs are subject to the same fee schedule as other equity
securities; however for the purpose of determining the total shares
outstanding, shares outstanding of all members in a REIT Family
listed on the same Nasdaq market tier may be aggregated. Similarly,
for the purpose of determining the total shares outstanding, fund
sponsors may aggregate shares outstanding of all Closed-End Funds in
the same fund family listed on the Nasdaq Global Market or the
Nasdaq Capital Market. See Listing Rules 5910(b)(2) and 5920(b)(2).
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Nasdaq proposes to amend the all-inclusive annual fee for all
domestic and foreign companies listing equity securities on the Nasdaq
Global Select, Global and Capital Markets to the following amounts,\10\
effective January 1, 2023:
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\10\ The proposed fee change reflects about a 4.0% increase
rounded to the nearest $500.
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Global/Global Select Markets
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Annual fee Annual Fee
Total shares outstanding before the effective
proposed change January 1, 2023
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Equity securities other than, in part, Up to 10 million shares...... $48,000 $50,000
ADRs, Closed-end Funds and Limited
Partnerships.
10+ to 50 million shares..... 59,500 62,000
50+ to 75 million shares..... 81,000 84,000
75+ to 100 million shares.... 107,500 112,000
100+ to 125 million shares... 134,500 140,000
125+ to 150 million shares... 145,500 151,500
Over 150 million shares...... 167,000 173,500
ADRs....................................... Up to 10 million ADRs and 48,000 50,000
other listed equity
securities.
10+ to 50 million ADRs and 54,500 56,500
other listed equity
securities.
[[Page 79030]]
50+ to 75 million ADRs and 64,500 67,000
other listed equity
securities.
Over 75 million ADRs and 86,000 89,500
other listed equity
securities.
Closed-end Funds........................... Up to 50 million shares...... 33,000 34,500
50+ to 100 million shares.... 54,500 56,500
100+ to 250 million shares... 81,000 84,000
Over 250 million shares...... 107,500 112,000
Limited Partnerships....................... Up to 75 million shares...... 40,500 42,000
75+ to 100 million shares.... 54,500 56,500
100+ to 125 million shares... 67,000 69,500
125+ to 150 million shares... 72,500 75,500
Over 150 million shares...... 83,500 87,000
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Capital Market
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Annual fee before Annual Fee
Total shares outstanding the proposed effective
change January 1, 2023
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Equity securities other than ADRs, Closed- Up to 10 million shares...... $45,000 $47,000
end Funds and Limited Partnerships.
10+ to 50 million shares..... 59,500 62,000
Over 50 million shares....... 81,000 84,000
ADRs....................................... Up to 10 million ADRs and 45,000 47,000
other listed equity
securities.
Over10 million ADRs and other 54,500 56,500
listed equity securities.
Closed-end Funds........................... Up to 50 million shares...... 33,000 34,500
50+ to 100 million shares.... 54,500 56,500
100+ to 250 million shares... 81,000 84,000
Over 250 million shares...... 107,500 112,000
Limited Partnerships....................... Up to 75 million shares...... 33,000 34,500
Over 75 million shares....... 40,500 42,000
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Nasdaq also proposes to update the maximum fee applicable to a
Closed-End Fund family to $112,000 and the maximum fee applicable to a
REIT Family listed on the Nasdaq Global Market and the Nasdaq Capital
Market to $173,500 and $84,000, respectively, to reflect the proposed
fee change for other equity securities, as described above.\11\
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\11\ See footnote 9 above.
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Finally, Nasdaq proposes to update amounts in examples in Listing
Rules 5910(b)(3)(D) and 5920(b)(3)(D), clarifying the application of
the rules for companies transferring between Nasdaq tiers, to align the
fee amounts with the fees applicable in year 2023.
As described below, Nasdaq proposes to make the aforementioned fee
increases to better reflect the Exchange's costs related to listing
equity securities and the corresponding value of such listing to
companies.
Nasdaq also proposes to remove references to fees that are no
longer applicable because they were superseded by new fee rates
specified in the rule text.
Entry Fee for Acquisition Companies
Nasdaq proposes to modify the Entry Fee for companies whose
business plan is to complete an initial public offering and engage in a
merger or acquisition with one or more unidentified companies within a
specific period of time, as described in IM-5101-2, (``Acquisition
Companies'').
Nasdaq currently charges entry fees for Acquisition Companies
listing on the Nasdaq Capital, Global and Global Select Markets based
on the number of shares outstanding according to the following tiers:
\12\
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\12\ Listing Rules 5910(a)(1)(B) and 5920(a)(1) for the Nasdaq
Global or Global Select Market and the Nasdaq Capital Market,
respectively. Companies must also submit a $5,000 initial
application fee, which is credited towards the entry fee upon
listing. See Listing Rules 5910(a)(11) and 5920(a)(11).
Up to 15 million shares $50,000
Over 15 million shares $75,000
These fees are based on the aggregate of all classes of equity
securities to be listed on Nasdaq, as shown in the company's most
recent periodic report or in more recent information held by Nasdaq or,
in the case of new issues, as shown in the offering circular or
registration statement. In the case of foreign companies, total shares
outstanding includes only those shares issued and outstanding in the
United States.
Nasdaq now proposes to replace the two-tier structure with a flat
fee of $80,000 when an Acquisition Company first lists a class of
equity securities on Nasdaq. The flat entry fee would cover both an
Acquisition Company's common shares and also warrants and rights, if
any.
Nasdaq proposes to make these fee increases to better reflect the
value of such listing to companies. In particular, the Exchange
believes it is reasonable to apply a flat entry fee when an Acquisition
Company first lists a class of securities as the value of the listing
to a company is substantially the same regardless of the number of
shares the company has outstanding. While companies would pay a higher
initial listing fee under the proposed flat fee than under the current
rate, Nasdaq believes that this increase is not unfairly discriminatory
because, similarly, the value of the listing to a company is
[[Page 79031]]
substantially the same regardless of the number of shares the company
has outstanding. Nasdaq also believes that the fee increase is
reasonable given the substantial increase in new listings of the
Acquisition Companies in the last few years, which caused Nasdaq to
dedicate additional resources to conduct regulatory reviews of
Acquisition Companies' IPOs and subsequent business combination
transactions with operating companies.
In addition, the Exchange observes that many companies may not know
their share structure or how many shares will ultimately be outstanding
at the time they are considering whether to list on the Exchange.
Therefore, the Exchange believes that adopting a flat entry fee will
provide prospective Acquisition Companies listing on Nasdaq with
greater transparency on the costs associated with initially listing on
the Exchange.
All-Inclusive Annual Listing Fee for Acquisition Companies
Nasdaq currently charges an All-Inclusive Annual Listing Fee for
Acquisition Companies listed on the Nasdaq Capital, Global and Global
Select Markets based on the number of shares outstanding according to
the following tiers:
Up to 10 million shares $45,000
10+ to 50 million shares $59,500
Over 50 million shares $81,000
Currently, the securities of an Acquisition Company listing on the
Nasdaq Capital Market are subject to the same all-inclusive annual fee
schedule as all domestic and foreign companies listing equity
securities on the Nasdaq Capital Market. These fees were last modified
in 2021, effective for 2022, as part of the Exchange's modification of
all-inclusive annual listing fees for all domestic and foreign
companies listing equity securities covered by Listing Rules 5910 and
5920 on the Nasdaq Global Select, Global and Capital Markets.\13\ The
securities of an Acquisition Company listing on the Nasdaq Global and
Global Select Markets are subject to the same all-inclusive annual fee
schedule as the securities of an Acquisition Company listing on the
Nasdaq Capital Market as provided in Listing Rule 5910(a)(1)(B)
[sic].\14\
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\13\ See Securities Exchange Act Release No. 34- 93713 (December
3, 2021), 86 FR 70156 (December 9, 2021) (SR-NASDAQ-2021-091).
\14\ See Securities Exchange Act Release No. 92345 (July 7,
2021), 86 FR 36807 (July 13, 2021) (SR-NASDAQ-2021-055). In this
filing Nasdaq explained its belief that Acquisition Companies listed
on the Nasdaq Global Market receive the same services as Acquisition
Companies listed on the Nasdaq Capital Market making it appropriate
for Nasdaq to charge such companies the same fees.
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Nasdaq now proposes to adopt a fee structure specifically for
Acquisition Companies listing on the Nasdaq Capital Market and to
replace the current three-tier structure for Acquisition Companies
listing on the Nasdaq Capital, Global and Global Select Markets with
the following two-tier structure:
Up to 50 million shares $70,000
Over 50 million shares $81,000
As described above, securities listed on the Nasdaq Capital Market
by an Acquisition Company are, and have been, subject to the same
annual fee schedule as all domestic and foreign companies listing
equity securities on the Nasdaq Capital Market. This structure was
maintained since Nasdaq first adopted a rule to impose additional
listing requirements on Acquisition Companies, which allowed such
companies to list on Nasdaq.
In establishing the proposed All-Inclusive Annual Fees for
Acquisition Companies across all tiers, including the changes to the
number and cut-off point of pricing tiers, Nasdaq considered various
factors that distinguish Acquisition Companies from other issuers of
primary equity securities on Nasdaq, the use of various Nasdaq
regulatory and support services by Acquisition Companies, as well as,
pricing for similar securities on other national securities exchanges.
Based on this analysis, Nasdaq proposes to modify the number of fee
tiers within the annual fee schedule to better align fees with the size
of the companies that pay those fees and the use that companies of
various sizes typically make of Nasdaq's services. In setting the
proposed All-Inclusive Annual Fee, Nasdaq reviewed the billing history
of more than 450 Acquisition Companies that had been listed on Nasdaq
to determine the fees assessed these companies. Nasdaq also reviewed
listing-related services provided to Acquisition Companies, including
reviews of various regulatory forms, rule interpretations requests, and
compliance plan reviews. Nasdaq established the proposed two tier All-
Inclusive Annual Fee for Acquisition Companies and shares outstanding
tier based on this analysis of historical fees paid and regulatory
services used.
Based on this analysis, Nasdaq determined that only a small
minority of Acquisition companies were listed on Nasdaq with less than
10 million of total shares outstanding, but the services provided to
them and the Exchange's regulatory resources dedicated to such listings
are substantially the same regardless of the number of shares the
company has outstanding. The vast majority of listed Acquisition
companies fall within the current second tier. Accordingly, Nasdaq
believes that the new tier of up to 50 million shares better reflects
both the value of the listing to Acquisition Companies and the
expenditure of regulatory resources by Nasdaq. Nasdaq also believes
that the all-inclusive fee increase for this tier is reasonable given
the substantial increase in new listings of the Acquisition Companies
in the last few years, which caused Nasdaq to dedicate additional
resources to conduct regulatory reviews of Acquisition Companies' IPOs
and subsequent business combination transactions.
While there is a small minority of Acquisition Companies that fall
within the current third tier (over 50 million shares) and that will
not be affected by the proposed fee change, Nasdaq believes that this
is not unfairly discriminatory because such large Acquisition Companies
tend to have better known and more experienced sponsors and advisors,
and therefore require fewer resources from Nasdaq. In addition, Nasdaq
obtains value from being associated with these experienced sponsors.
Pricing for similar securities on other national securities exchanges
was also considered, and Nasdaq believes that maintaining this tier as
is, is reasonable given the competitive landscape.
Nasdaq also proposes to renumber certain rules to improve the
clarity and readability of these rules.
While these changes are effective upon filing, Nasdaq has
designated the proposed amendments to be operative on January 1, 2023.
2. Statutory Basis
The Exchange believes that its proposal is consistent with section
6(b) of the Act,\15\ in general, and furthers the objectives of
sections 6(b)(4) and 6(b)(5) of the Act,\16\ in particular, in that it
provides for the equitable allocation of reasonable dues, fees and
other charges among members and issuers and other persons using any
facility, and is not designed to permit unfair discrimination between
customers, issuers, brokers, or dealers.
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\15\ 15 U.S.C. 78f(b).
\16\ 15 U.S.C. 78f(b)(4) and (5).
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Nasdaq believes that the adoption of a flat entry fee on the Nasdaq
Global and Global Select Markets represents a reasonable attempt to
address the Exchange's increased costs in servicing these listings
while continuing to attract and retain listings. Nasdaq proposes to
[[Page 79032]]
make the aforementioned fee structure change to better reflect the
value of such listing to companies. In particular, the Exchange
believes it is reasonable to apply a flat fee when a company first
lists a class of securities as the value to the company is
substantially the same regardless of the number of shares the company
has outstanding. While some companies would pay a higher initial
listing fee under the proposed flat fee than under the current rate,
the Exchange believes that this increase is not unfairly
discriminatory, as the resources the Exchange expends in connection
with the initial listing of those companies are typically consistent
with the resources the Exchange expends on many companies that are
already subject to the similar fees under the current structure. This
proposal is consistent with the approach of other exchanges.\17\
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\17\ See Section 902.03 Fees for Listed Equity Securities; of
the NYSE Listed Company Manual.
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Nasdaq believes that it is not unfairly discriminatory and
represents an equitable allocation of reasonable fees to amend Listing
Rule 5910(a)(1) to provide that any company, including an Acquisition
Company (until it has satisfied the condition in Rule IM-5101-2(b)),
that lists an additional class of equity securities (not otherwise
identified in Rule 5900 Series) is not subject to entry fees under this
rule but is charged a non-refundable $25,000 initial application fee
(except for an Acquisition Company that is charged a non-refundable
$5,000 initial application fee) because this change better reflects the
value of listing an additional class of securities for already listed
companies and better aligns such value with Nasdaq's regulatory
resources expended in connection with such applications. In particular,
the Exchange believes it is reasonable to charge only a non-refundable
$25,000 initial application fee (except for an Acquisition Company that
is charged a non-refundable $5,000 initial application fee), because
the company listing an additional class of equity securities is already
subject to Nasdaq rules, including the applicable corporate governance
requirements. Accordingly, Nasdaq, typically, expends less regulatory
resources qualifying an additional class of equity securities for
listing.
Nasdaq believes that it is not unfairly discriminatory and
represents an equitable allocation of reasonable fees to amend Listing
Rules 5910(b)(2) and 5920(b)(2) to increase the all-inclusive annual
fees listing fees \18\ as set forth above because of the increased
costs incurred by Nasdaq since it established the current rates. In
that regard, the Exchange notes that its general costs to support our
listed companies have increased, including due to price inflation. The
Exchange also continues to expand and improve the services it provides
to listed companies, the technology to deliver those services and the
customer experience at the Nasdaq MarketSite. These improvements
include, ESG services, governance solutions and support, the remodeling
of a portion of the New York Headquarters and the investment in
technology to support direct listings with a capital raise, IPO
innovations and ongoing trading.
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\18\ Effective January 1, 2022, Nasdaq modified the fee schedule
for all domestic and foreign companies listing equity securities
covered by Listing Rules 5910 and 5920 on the Nasdaq Global Select,
Global and Capital Markets. Securities Exchange Act Release No.
93713 (December 3, 2022), 86 FR 70156 (December 9, 2022) (SR-NASDAQ-
2021-095).
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Nasdaq also believes that it is not unfairly discriminatory and
represents an equitable allocation of reasonable fees to amend Listing
Rules 5910(b)(2) and 5920(b)(2) to increase the all-inclusive annual
listing fees while rounding the 4% increase to the nearest $500 as set
forth above because such rounding represents de minimis variation in
fees for Nasdaq listed companies. In addition, Nasdaq has used the same
methodology since the adoption of the all-inclusive annual listing fee
schedule and all annual listing fees under Listing Rules 5910(b)(2) and
5920(b)(2) are rounded to $500.
The proposed change to update amounts in examples clarifying the
application of the rules for companies transferring between Nasdaq
tiers and to update the maximum fee applicable to a Closed-End Fund
family and the maximum fee applicable to a REIT Family to reflect the
proposed fee change for other equity securities, as described above, is
not unfairly discriminatory because it merely provides transparency to
the application of fees without changing the substance of the rule.
Nasdaq believes that the Exchange operates in a highly competitive
marketplace for the listing of companies, including the Acquisition
Companies.\19\ The Commission has repeatedly expressed its preference
for competition over regulatory intervention in determining prices,
products, and services in the securities markets. The Exchange believes
that the ever-shifting market share among the exchanges with respect to
new listings and the transfer of existing listings between competitor
exchanges demonstrates that issuers can choose different listing
markets in response to fee changes. Accordingly, competitive forces
constrain exchange's listing fees. In other words, changes to exchange
listing fees can have a direct effect on the ability of an exchange to
compete for new listings and retain existing listings.
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\19\ The Justice Department has noted the intense competitive
environment for exchange listings. See ``NASDAQ OMX Group Inc. and
Intercontinental Exchange Inc. Abandon Their Proposed Acquisition Of
NYSE Euronext After Justice Department Threatens Lawsuit'' (May 16,
2011), available at <a href="http://www.justice.gov/atr/public/press_releases/2011/271214.htm">http://www.justice.gov/atr/public/press_releases/2011/271214.htm</a>.
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Given this competitive environment, Nasdaq believes that the
adoption of a flat Entry Fee and a modification to the All-Inclusive
Annual Fee schedule for Acquisition Companies represent a reasonable
attempt to address the Exchange's increased costs in servicing these
listings while continuing to attract and retain listings.
Nasdaq believes it is reasonable to apply a flat Entry Fee when an
Acquisition Company lists a class of securities as the value of the
listing to a company is substantially the same regardless of the number
of shares the company has outstanding. While Acquisition Companies
would pay a higher initial listing fee under the proposed flat fee than
under the current rate, Nasdaq believes that this increase is not
unfairly discriminatory, similarly, the value of the listing to a
company is substantially the same regardless of the number of shares
the company has outstanding. Nasdaq also believes that the fee increase
is reasonable given the substantial increase in new listings of the
Acquisition Companies in the last few years, which caused Nasdaq to
dedicate additional resources to conduct regulatory reviews of
Acquisition Companies' IPOs and subsequent business combination
transactions.
Nasdaq believes it is reasonable to transition from the current
three-tier structure for the All-Inclusive Annual Fee for Acquisition
Companies to the proposed two-tier structure because Nasdaq's analysis,
as described above, indicates that the proposed structure better
reflects the value of services Nasdaq provides to Acquisition
Companies. Nasdaq also believes that the All-Inclusive Fee increase for
the proposed first tier is reasonable given the substantial increase in
new listings of the Acquisition Companies in the last few years, which
caused Nasdaq to dedicate additional resources to conduct regulatory
reviews of Acquisition Companies' IPOs and subsequent business
combination transactions.
[[Page 79033]]
While there is a small minority of Acquisition Companies that fall
within the proposed second tier (over 50 million shares) that will not
be affected by the proposed fee change, Nasdaq believes that this is
not unfairly discriminatory because such large Acquisition Companies
tend to have better known and more experienced sponsors and advisors,
and therefore have more value to Nasdaq when they list. Pricing for
similar securities on other national securities exchanges was also
considered, and Nasdaq believes that maintaining this tier as is, is
reasonable given the competitive landscape.
The proposed removal of text relating to fees that are no longer
applicable and renumbering certain rules to improve their clarity and
readability is ministerial in nature and has no substantive effect.
B. Self-Regulatory Organization's Statement on Burden on Competition
Nasdaq does not believe that the proposed rule change will result
in any burden on competition that is not necessary or appropriate in
furtherance of the purposes of the Act, as amended. The market for
listing services is extremely competitive and listed companies may
freely choose alternative venues, both within the U.S. and
internationally. For this reason, Nasdaq does not believe that the
proposed rule change will result in any burden on competition for
listings.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others
No written comments were either solicited or received.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
The foregoing rule change has become effective pursuant to section
19(b)(3)(A)(ii) of the Act.\20\
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\20\ 15 U.S.C. 78s(b)(3)(A)(ii).
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At any time within 60 days of the filing of the proposed rule
change, the Commission summarily may temporarily suspend such rule
change if it appears to the Commission that such action is: (i)
necessary or appropriate in the public interest; (ii) for the
protection of investors; or (iii) otherwise in furtherance of the
purposes of the Act. If the Commission takes such action, the
Commission shall institute proceedings to determine whether the
proposed rule should be approved or disapproved.
IV. Solicitation of Comments
Interested persons are invited to submit written data, views, and
arguments concerning the foregoing, including whether the proposed rule
change is consistent with the Act. Comments may be submitted by any of
the following methods:
Electronic Comments
<bullet> Use the Commission's internet comment form (<a href="http://www.sec.gov/rules/sro.shtml">http://www.sec.gov/rules/sro.shtml</a>); or
<bullet> Send an email to <a href="/cdn-cgi/l/email-protection#552720393078363a3838303b2126152630367b323a23"><span class="__cf_email__" data-cfemail="0674736a632b65696b6b636872754675636528616970">[email protected]</span></a>. Please include
File Number SR-NASDAQ-2022-068 on the subject line.
Paper Comments
<bullet> 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-2022-068. 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 (<a href="http://www.sec.gov/rules/sro.shtml">http://www.sec.gov/rules/sro.shtml</a>).
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 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. 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-2022-068 and
should be submitted on or before January 13, 2023.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\21\
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\21\ 17 CFR 200.30-3(a)(12).
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Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2022-27911 Filed 12-22-22; 8:45 am]
BILLING CODE 8011-01-P
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</html>Indexed from Federal Register on December 23, 2022.
This is legal information, not legal advice. Laws vary by jurisdiction and change frequently. Always verify current law with official sources and consult a licensed attorney in your jurisdiction for advice on your specific situation.