Notice2023-26724
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
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Published
December 6, 2023
Issuing agencies
Securities and Exchange Commission
Full Text
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<title>Federal Register, Volume 88 Issue 233 (Wednesday, December 6, 2023)</title>
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[Federal Register Volume 88, Number 233 (Wednesday, December 6, 2023)]
[Notices]
[Pages 84857-84861]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2023-26724]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-99042; File No. SR-NASDAQ-2023-048]
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
November 30, 2023.
Pursuant to Section 19(b)(1) \1\ of the Securities Exchange Act of
1934 (``Act'') and Rule 19b-4 thereunder,\2\ notice is hereby given
that on November 15, 2023, 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, 2024.
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 the
Statutory Basis for, the Proposed Rule Change
1. Purpose
The purpose of the proposed rule change is to (i) modify the entry
fee for a Company that 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 certain domestic and foreign
companies listing equity securities on the Nasdaq Global Select, Global
and Capital Markets; and (iii) replace the tiered all-inclusive annual
listing fee structure with a flat fee of $81,000 for an Acquisition
Company, as defined below.
All revised fees will be applied in the same manner to all issuers
and the changes will not disproportionately affect any specific
category of issuers. While these changes are effective upon filing,
Nasdaq has designated the proposed amendments to be operative on
January 1, 2024.
Entry Fees on the Nasdaq Global Market
Currently, Nasdaq charges companies listing pursuant to Rule
5910(a)(1)(A)(i) a $270,000 entry fee the first time the company lists
a class of its securities (not otherwise identified in the Rule 5900
Series) on the Nasdaq Global and Global Select Market. Nasdaq is
proposing to increase the entry fee for these companies from $270,000
to $295,000 to better align its fees with the value of a listing to
issuers and to reflect costs in servicing these listings, such as from
the remodeling of a portion of the New York Headquarters used for
company events, including market opening and closing bells, conducting
the required associated regulatory oversight, and Nasdaq's advocacy
efforts on behalf of the public company model. In establishing these
fee changes Nasdaq also considered the competitive atmosphere in which
the Exchange operates.
Nasdaq does not propose to increase the minimum entry fees
described in Rule 5910(a) charged for additional classes of equity
securities, Acquisition Companies, Closed-End Funds, and any
[[Page 84858]]
class of rights.\3\ The Exchange believes that the benefits issuers
receive in connection with those listings are consistent with the
current fee levels. Further, issuers of those types of listings are not
generally entitled to the types of services provided and resources
offered in connection with a primary equity security listing. As such,
the Exchange has not incurred the same level of cost increases
associated with them.
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\3\ Nasdaq also is not proposing to amend the Entry Fees on the
Nasdaq Capital Market.
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While the new entry fees are effective upon filing and Nasdaq has
proposed that they be operative on January 1, 2024, Nasdaq will offer a
short period for any company that applies before January 1, 2024 to
complete the listing process and list under the current fee schedule.
Specifically, any company that submits its application to Nasdaq before
January 1, 2024, and lists before February 15, 2024, would be subject
to fees under the existing fee schedule. Nasdaq believes that it is
appropriate to continue to apply the prior fee schedule for these
companies because they will be substantially far along in the process
of going public at the time of this filing and may have made decisions
based on that fee schedule.
All-Inclusive Annual Listing Fees
Currently, for companies listed on the Capital Market, other than
Acquisition Companies (i.e., 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), ADRs, Closed-end Funds and
Limited Partnerships, the all-inclusive annual fee described in Listing
Rule 5920 ranges from $47,000 to $84,000; for Acquisition Companies
listing on the Capital Market the all-inclusive annual fee ranges from
$70,000 to $81,000; and for ADRs listed on the Capital Market the all-
inclusive annual fee ranges from $47,000 to $56,500.\4\ On the Global
and Global Select Markets, the all-inclusive annual fee described in
Listing Rule 5910 for companies other than Acquisition Companies, ADRs,
Closed-end Funds and Limited Partnerships ranges from $50,000 to
$173,500; for Acquisition Companies on the Global and Global Select
Markets the all-inclusive annual fee ranges from $70,000 to $81,000;
for ADRs the all-inclusive annual fee ranges from $50,000 to
$89,500.\5\ In each case, a company's all-inclusive annual fee is based
on its total shares outstanding.\6\
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\4\ Nasdaq is not proposing to amend the all-inclusive annual
fee for Closed-end Funds and Limited Partnerships on any Nasdaq
tier.
\5\ 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. Nasdaq is not
proposing to amend these rules.
\6\ 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 certain
domestic and foreign companies listing equity securities on the Nasdaq
Global Select, Global and Capital Markets to the following amounts,\7\
effective January 1, 2024:
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\7\ In establishing the fee changes described in this rule
filing, Nasdaq considered various factors that distinguish
companies, including market tier, shares outstanding, and security
type, as well as the perceived use of various Nasdaq regulatory and
support services by companies of various characteristics to better
align fees with the size of the companies that pay those fees.
Pricing for similar securities on other national securities
exchanges was also considered. Based on this analysis, Nasdaq does
not propose to modify the structure and the number of fee tiers
within the annual fee schedule at this time.
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Global/Global Select Markets
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Annual fee Annual fee
before the effective
Total shares outstanding proposed January 1,
change 2024
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Equity securities other than, in part, Up to 10 million shares......... $50,000 $52,500
Acquisition Companies, ADRs, Closed-end Funds
and Limited Partnerships.
10+ to 50 million shares........ 62,000 65,500
50+ to 75 million shares........ 84,000 85,000
75+ to 100 million shares....... 112,000 113,500
100+ to 125 million shares...... 140,000 141,500
125+ to 150 million shares...... 151,500 157,500
Over 150 million shares......... 173,500 182,500
ADRs.......................................... Up to 10 million ADRs and other 50,000 52,500
listed equity securities.
10+ to 50 million ADRs and other 56,500 59,500
listed equity securities.
50+ to 75 million ADRs and other 67,000 70,500
listed equity securities.
Over 75 million ADRs and other 89,500 94,000
listed equity securities.
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Capital Market
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Annual fee Annual fee
before the effective
Total shares outstanding proposed January 1,
change 2024
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Equity securities other than Acquisition Up to 10 million shares......... $47,000 $49,500
Companies, ADRs, Closed-end Funds and Limited
Partnerships.
10+ to 50 million shares........ 62,000 65,500
Over 50 million shares.......... 84,000 85,000
[[Page 84859]]
ADRs.......................................... Up to 10 million ADRs and other 47,000 49,500
listed equity securities.
Over10 million ADRs and other 56,500 59,500
listed equity securities.
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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 2024.
Nasdaq proposes to make the aforementioned fee increases to better
reflect the Exchange's costs related to listing equity securities, such
as from the remodeling of a portion of the New York Headquarters used
for company events, including market opening and closing bells,
conducting the required associated regulatory oversight, and Nasdaq's
advocacy efforts on behalf of listed companies, and the corresponding
value of such listing to companies. In establishing these fee changes
Nasdaq also considered the competitive atmosphere in which the Exchange
operates.
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: \8\
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\8\ See Listing Rules 5910(b)(2)(F) and 5920(b)(2)(G).
Up to 50 million shares $70,000
Over 50 million shares $81,000
Nasdaq now proposes to replace the tiered structure for Acquisition
Companies listed on the Nasdaq Capital, Global and Global Select
Markets with a flat fee of $81,000 effective January 1, 2024. 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 all-inclusive annual listing fee for
Acquisition Companies because the value of the listing for an
Acquisition Company, given the limited scope of operations and the
requirement to engage in a merger or acquisition with one or more
unidentified companies within a 36 months of the effectiveness of the
Acquisition Company's IPO registration statement, is substantially
similar regardless of the number of shares the Acquisition Company has
outstanding.
2. Statutory Basis
The Exchange believes that its proposal is consistent with Section
6(b) of the Act,\9\ in general, and furthers the objectives of Sections
6(b)(4) and 6(b)(5) of the Act,\10\ 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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\9\ 15 U.S.C. 78f(b).
\10\ 15 U.S.C. 78f(b)(4) and (5).
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As a preliminary matter, Nasdaq notes that the Exchange operates in
a highly competitive marketplace for the listing of companies.\11\ 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 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. Moreover, new competitors can enter the space, including
existing exchanges without listing programs.\12\ Accordingly,
competitive forces constrain the Exchange's listing fees and changes to
the listing fees can have a direct effect on the ability of Nasdaq to
compete for new listings and retain existing listings.
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\11\ 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>.
\12\ In that regard, Nasdaq notes that CBOE BZX has announced a
new listing offering. See ``Cboe Launches New Global Listing
Offering for Companies and ETFs of the Purpose-Driven Innovation
Economy'' (June 2, 2023), available at <a href="https://ir.cboe.com/news/news-details/2023/Cboe-Launches-New-Global-Listing-Offering-for-Companies-and-ETFs-of-the-Purpose-Driven-Innovation-Economy-06-02-2023/default.aspx">https://ir.cboe.com/news/news-details/2023/Cboe-Launches-New-Global-Listing-Offering-for-Companies-and-ETFs-of-the-Purpose-Driven-Innovation-Economy-06-02-2023/default.aspx</a>.
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Entry Fees on the Nasdaq Global Market
Nasdaq believes that the modification of the entry fees on the
Nasdaq Global and Global Select Markets represents a reasonable attempt
to address the Exchange's increased costs in servicing these listings
and conducting the required associated regulatory oversight while also
considering competitive dynamics and continuing to attract new
listings. Nasdaq proposes to make the aforementioned fee change to
better reflect the value of such listing to companies. While newly
listing companies would pay a higher initial listing fee under the
proposed fee than under the current rule, 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 consistent with the proposed fees. Nasdaq does not
propose to increase the entry fees described in Rule 5910(a) charged
for additional classes of equity securities, Acquisition Companies,
Closed-End Funds, and any class of rights. The Exchange believes that
the benefits issuers receive in connection with those listings are
consistent with the current fee levels, as those types of listings do
not generally entitle issuers to the types of services provided in
connection with a primary common or preferred stock listing of an
operating company and the Exchange has therefore not incurred the same
level of cost increase associated with them. As such, Nasdaq does not
think it is unfairly discriminatory to increase the entry fees only for
operating companies listing their primary equity security.
Nasdaq also does not think it is unfairly discriminatory to allow
companies that apply to list before January 1, 2024, and list before
February 15, 2024, to pay the existing fee schedule. These companies
will be substantially far along in the process of going public at the
time of this filing and may have made decisions based on the existing
fee schedule.
All-Inclusive Annual Listing Fees
Nasdaq believes that the proposed amendments to Listing Rules
5910(b)(2) and 5920(b)(2) to increase the all-inclusive annual fees
listing fees as set
[[Page 84860]]
forth above are reasonable because of the increased costs incurred by
Nasdaq, including due to price inflation. In that regard, the Exchange
notes that its general costs to support listed companies and conduct
the required associated regulatory oversight have increased. 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 the remodeling of a portion of Nasdaq's New York Headquarters
used for company events, including market opening and closing bells,
and the investment in technology to support ongoing trading.
The Exchange also believes that the proposed amendments to the
annual fees for equity securities are equitable because they do not
change the existing framework for such fees, but simply increase the
amount of certain of the fees to reflect increases in operating costs
and the perceived value of a listing, including as a result of Nasdaq's
advocacy efforts on behalf of listed companies. Similarly, as the fee
structure remains effectively unchanged apart from increases in the
rates paid by certain issuers, as described above, the changes to
annual fees for equity securities neither target nor will they have a
disparate impact on any particular category of issuer of equity
securities.
The Exchange believes that the proposal to increase annual fees for
operating companies is not unfairly discriminatory because Nasdaq will
maintain the current fee structure, based on shares outstanding, and
the same fee schedule will apply to all such issuers. While the
Exchange does not propose to increase the minimum annual fees charged
for various products including Closed-end Funds, Limited Partnerships,
and securities covered by Rule 5930 (that sets forth the all-inclusive
annual listing fees applicable to SEEDS and Other Securities), Rule
5935 (that sets forth the all-inclusive annual listing fees applicable
to Non-Convertible Bonds) and Rule 5940 (that sets forth the all-
inclusive annual listing fees applicable to Exchange Traded Products),
the Exchange believes that this is not unfairly discriminatory because
the benefits the issuers of those other types of securities receive in
connection with their listings are consistent with the current fee
levels paid by those issuers. Specifically, those types of listings do
not generally benefit to the same extent from services provided by the
Exchange and the Exchange's advocacy efforts as do issuers of operating
company equity securities.
All-Inclusive Annual Listing Fee for Acquisition Companies
Nasdaq believes the proposed change to apply a flat all-inclusive
annual fee for all listed Acquisition Companies is reasonable, and not
unfairly discriminatory, because the value of the listing to an
Acquisition Company, and Nasdaq's costs in regulating and supporting
the listing of an Acquisition Company, is substantially similar
regardless of the number of shares the company has outstanding or its
market tier, and, as revised, all Acquisition Companies would pay the
same fee. While some companies would pay a higher fee under the
proposed flat fee than under the current rate, Nasdaq believes that
this change is not unfairly discriminatory because the value of the
listing to an Acquisition Company is substantially similar regardless
of the number of shares the company has outstanding. Pricing for
similar securities on other national securities exchanges was also
considered, and Nasdaq believes that a proposed flat all-inclusive
annual listing fee for Acquisition Companies is reasonable given the
competitive landscape.\13\
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\13\ See, e.g., Section 902.11 of the NYSE Listed Company Manual
imposing a flat annual fee of $85,000 on Acquisition Companies.
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The proposed renumbering of 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
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 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. The Exchange also
does not believe that the proposed rule change will have any meaningful
impact on competition among listed companies because all similarly
situated companies will be charged the same fee.
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.\14\
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\14\ 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="https://www.sec.gov/rules/sro.shtml">https://www.sec.gov/rules/sro.shtml</a>); or
<bullet> Send an email to <a href="/cdn-cgi/l/email-protection#047671686129676b6969616a7077447761672a636b72"><span class="__cf_email__" data-cfemail="e496918881c9878b8989818a9097a4978187ca838b92">[email protected]</span></a>. Please include
file number SR-NASDAQ-2023-048 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-2023-048. 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="https://www.sec.gov/rules/sro.shtml">https://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
[[Page 84861]]
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
a.m. and 3 p.m. Copies of the filing also will be available for
inspection and copying at the principal office of the Exchange. Do not
include personal identifiable information in submissions; you should
submit only information that you wish to make available publicly. We
may redact in part or withhold entirely from publication submitted
material that is obscene or subject to copyright protection. All
submissions should refer to file number SR-NASDAQ-2023-048 and should
be submitted on or before December 27, 2023.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\15\
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\15\ 17 CFR 200.30-3(a)(12).
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Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2023-26724 Filed 12-5-23; 8:45 am]
BILLING CODE 8011-01-P
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