Notice2024-00851
Self-Regulatory Organizations; The Nasdaq Stock Market LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend the Exchange's Membership Fee at Equity 7, Section 10
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
January 18, 2024
Issuing agencies
Securities and Exchange Commission
Full Text
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<title>Federal Register, Volume 89 Issue 12 (Thursday, January 18, 2024)</title>
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[Federal Register Volume 89, Number 12 (Thursday, January 18, 2024)]
[Notices]
[Pages 3466-3468]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2024-00851]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-99329; File No. SR-NASDAQ-2024-002]
Self-Regulatory Organizations; The Nasdaq Stock Market LLC;
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To
Amend the Exchange's Membership Fee at Equity 7, Section 10
January 11, 2024.
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 January 2, 2024, The Nasdaq Stock Market LLC (``Nasdaq'' or
``Exchange'') filed with the Securities and Exchange Commission
(``SEC'' or ``Commission'') the proposed rule change as described in
Items I, II, and III below, which Items have been prepared by the
Exchange. The Commission is publishing this notice to solicit comments
on the proposed rule change from interested persons.
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\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Exchange proposes to amend the Exchange's Membership Fee at
Equity 7, Section 10.
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 amend the Exchange's
Membership Fee at Equity 7, Section 10. Specifically, the Exchange
proposes to increase its annual membership fee (``Annual Membership
Fee'') from $3,000 per year to $4,000 per year. This fee is assessed on
all Nasdaq members on an annual basis.
Nasdaq has not increased its Annual Membership Fee since 2007.\3\
The Exchange believes the proposed modest fee increase is warranted to
ensure that its Annual Membership Fee better reflects the current value
of being a
[[Page 3467]]
member of the Exchange rather than the value when the Annual Membership
Fee was last increased to $3,000 per year more than 15 years ago. The
Exchange believes that its ability to deliver value to its customers
through technology, liquidity and functionality merits the proposed
change to its Annual Membership Fee. The membership team also provides
ongoing support to Exchange members with respect to membership changes,
registration, and other questions that commonly arise from Exchange
members regarding such matters.
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\3\ See Exchange Act Release No. 56617 (Oct. 4, 2007), 72 FR
58142 (Oct. 12, 2007) (SR-NASDAQ-2007-083).
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Even with the proposed fee increase, the cost of Nasdaq membership
is lower than the cost of membership in other SROs such as the Long-
Term Stock Exchange, Inc. (``LTSE'').\4\
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\4\ See, e.g., Long-Term Stock Exchange, Inc. Rule 15.200(a)
(Annual Membership Fee) at <a href="https://assets-global.website-files.com/6462417e8db99f8baa06952c/64cd4f221126981fa31652b3_LTSE%20Rule%20Book%20through%20June%209%202023%20">https://assets-global.website-files.com/6462417e8db99f8baa06952c/64cd4f221126981fa31652b3_LTSE%20Rule%20Book%20through%20June%209%202023%20</a>(SR-LTSE-2023-01%20Amendment%20No.%202).pdf.
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Ultimately, Exchange membership is voluntary and if Nasdaq is
incorrect in its determination that the proposed Annual Membership Fee
change reflects the value of Exchange membership, then any Exchange
member that is dissatisfied with the proposal can choose not to be a
member of the Exchange and send its order flow to another exchange.
2. Statutory Basis
The Exchange believes that its proposal is consistent with Section
6(b) of the Act,\5\ in general, and furthers the objectives of Sections
6(b)(4) and 6(b)(5) of the Act,\6\ 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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\5\ 15 U.S.C. 78f(b).
\6\ 15 U.S.C. 78f(b)(4) and (5).
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The Exchange believes its proposal to increase its Annual
Membership Fee from $3,000 per year to $4,000 per year is reasonable,
equitable and not unfairly discriminatory. Nasdaq believes that this
modest increase is an equitable method of ensuring that its Annual
Membership Fee better reflects the value of the services it provides
its membership. Nasdaq also believes the proposed modest increase of
Nasdaq membership is reasonable since it has not been increased since
2007 and, even following the proposed increase to its Annual Membership
Fee, the cost of Nasdaq membership still is less than those of other
SROs.\7\ Additionally, the Exchange believes that the proposed change
is both an equitable allocation and is not designed to permit unfair
discrimination between Exchange members because the fee is applied
equally to all Exchange members.
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\7\ Supra note 4.
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The decision to become a member of an exchange is complex, and not
solely based on the non-transactional costs assessed by an exchange.
Becoming a member of an exchange does not ``lock'' a potential member
into a market or diminish the overall competition for exchange
services. The decision to become a member of an exchange is no less
subject to competition than trading fees.
In 2022, MEMX LLC (``MEMX'') commenced assessing a monthly
membership fee.\8\ MEMX reasoned in that rule change that there is
value in becoming a member of the exchange.\9\ MEMX stated that it
believed that its proposed membership fee ``is not unfairly
discriminatory because no broker-dealer is required to become a member
of the Exchange.'' \10\ In this respect, MEMX is correct; a membership
fee is reasonable, equitably allocated and not unfairly discriminatory.
Market participants may voluntarily choose to become a member of one or
more of a number of different exchanges, of which, Nasdaq is but one
choice. Additionally, any Exchange member that is dissatisfied with the
proposal is free to choose not to be a member of the Exchange and send
order flow to another exchange.
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\8\ See Securities Exchange Act Release No. 93927 (January 7,
2022), 87 FR 2191 (January 13, 2022) (SR-MEMX-2021-19).). In 2023,
MEMX filed to establish fees for members of its options exchange.
See Securities Exchange Act Release No. 98648 (September 29, 2023),
88 FR 68762 (October 4, 2023) (SR-MEMX-2023-26).
\9\ Id.
\10\ Id.
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The Exchange's proposal to increase its Annual Membership Fee from
$3,000 per year to $4,000 per year is reasonable, equitable and not
unfairly discriminatory. As a self-regulatory organization, Nasdaq's
membership department reviews existing members and new applicants to
ensure that each complies with its rules and regulations, as well as
other requirements for membership. New applicants must also meet the
Exchange's qualification criteria prior to approval. The membership
review includes, but is not limited to, the registration and
qualification of associated persons, financial health, the validity of
the required clearing relationship, and the history of disciplinary
matters. All members are required to comply with the Exchange's By-Laws
and Rules and are subject to regulation by Nasdaq.
As noted above, if the Exchange is incorrect in its determination
that the proposed Annual Membership Fee change reflects the value of
Exchange membership, then any Exchange member that is dissatisfied with
the proposal may voluntarily decide whether membership to the Exchange
is worthwhile and has the option of sending order flow to another
exchange.
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. Nasdaq believes that the
proposed modest fee increase to its Annual Membership Fee proves
unattractive to market participants, it is likely that Nasdaq will
experience a decline in membership as a result.
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 Exchange notes that it
operates in a highly competitive market in which market participants
can readily favor competing venues if they deem annual membership fees
levels at a particular venue to be excessive or opportunities available
at other venues to be more favorable. Because competitors are free to
modify their own annual membership fees in response, the Exchange
believes that the degree to which annual membership fees changes in
this market may impose any burden on competition is extremely limited.
The Exchange notes that other markets have adopted membership fees.
MEMX recently reasoned that it should be permitted to adopt membership
fees because MEMX's proposed membership fees would be lower than the
cost of membership on other exchanges, and therefore,
. . . may stimulate intramarket competition by attracting additional
firms to become Members on the Exchange or at least should not deter
interested participants from joining the Exchange. In addition,
membership fees are subject to competition from other exchanges.
Accordingly, if the changes proposed herein are unattractive to
market participants, it is likely the Exchange will see a decline in
membership as a result. The proposed fee change will not impact
intermarket competition because it will apply to all Members
equally. The Exchange operates in a highly competitive market in
which market participants can determine whether or not to join the
Exchange based on
[[Page 3468]]
the value received compared to the cost of joining and maintaining
membership on the Exchange.\11\
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\11\ See Securities Exchange Act Release No. 93927 (January 7,
2022), 87 FR 2191 (January 13, 2022) (SR-MEMX-2021-19).
As noted above, Nasdaq's Annual Membership Fee would remain
substantially lower than the analogous fees of LTSE,\12\ and membership
fees are subject to competition from other exchanges. Accordingly, if
the Annual Membership Fee change proposed herein is unattractive to
market participants, it is likely that Nasdaq will experience a decline
in membership as a result.
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\12\ Supra note 4.
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The Exchange 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.\13\
Nasdaq does not believe that the proposed rule change places an
unnecessary burden on competition because it is a modest fee increase
for a fee that has remained unchanged since 2007 and that will now
better reflect the value of the services it provides its membership.
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\13\ 15 U.S.C. 78f(b)(8).
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Accordingly, any Exchange member that is dissatisfied with the
proposal is free to choose not to be a member of the Exchange and send
order flow to another exchange.
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#bdcfc8d1d890ded2d0d0d8d3c9cefdced8de93dad2cb"><span class="__cf_email__" data-cfemail="3d4f485158105e5250505853494e7d4e585e135a524b">[email protected]</span></a>. Please include
file number SR-NASDAQ-2024-002 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-2024-002. 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 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. 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-2024-002, and
should be submitted on or before February 8, 2024.
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. 2024-00851 Filed 1-17-24; 8:45 am]
BILLING CODE 8011-01-P
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