Notice2025-02150
Self-Regulatory Organizations; The Nasdaq Stock Market LLC; Order Granting Approval of a Proposed Rule Change To Modify the Package of Complimentary Services Provided to Certain Eligible Switches and To Modify the Definition of an Eligible Switch
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
February 4, 2025
Issuing agencies
Securities and Exchange Commission
Full Text
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<title>Federal Register, Volume 90 Issue 22 (Tuesday, February 4, 2025)</title>
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[Federal Register Volume 90, Number 22 (Tuesday, February 4, 2025)]
[Notices]
[Pages 8957-8959]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2025-02150]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-102308; File No. SR-NASDAQ-2024-059]
Self-Regulatory Organizations; The Nasdaq Stock Market LLC; Order
Granting Approval of a Proposed Rule Change To Modify the Package of
Complimentary Services Provided to Certain Eligible Switches and To
Modify the Definition of an Eligible Switch
January 29, 2025.
I. Introduction
On October 17, 2024, The Nasdaq Stock Market LLC (``Nasdaq'' or
``Exchange'') filed with the Securities and Exchange Commission
(``SEC'' or ``Commission''), pursuant to section 19(b)(1) of the
Securities Exchange Act of 1934 (``Act'') \1\ and Rule 19b-4
thereunder,\2\ a proposed rule change to modify the definition of
companies that are eligible for complimentary services when switching
their listing to the Exchange and to modify the package of
complimentary services available to such eligible companies. The
proposed rule change was published for comment in the Federal Register
on November 5, 2024.\3\ On December 18, 2024, the Commission designated
a longer period for the Commission to take action on the proposed rule
change.\4\ This order approves the proposed rule change.
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\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
\3\ See Securities Exchange Act Release No. 101483 (October 30,
2024), 89 FR 87914 (``Notice''). The Commission has received no
comments on the proposed rule change.
\4\ See Securities Exchange Act Release No. 101965, 89 FR 105160
(December 26, 2024).
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II. Description of the Proposed Rule Change
Nasdaq offers complimentary services under Listing Rule IM-5900-7
to Eligible New Listings \5\ and Eligible Switches \6\ newly listing on
Nasdaq's Global or Global Select Market.\7\ Nasdaq states that the
complimentary service program offers valuable services to newly listing
companies, is designed to help ease the transition of becoming a public
company or switching markets, and makes listing on Nasdaq more
attractive to these companies.\8\ The services offered include a
whistleblower hotline, investor relations website, disclosure services
for earnings or other press releases, webcasting, market analytic
tools, environmental, social and governance services, and may include
market advisory tools such as stock surveillance (collectively, the
``Service Package'').\9\
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\5\ Listing Rule IM-5900-7(a)(1) defines an ``Eligible New
Listing'' as ``a Company listing on the Global or Global Select
Market in connection with: (i) an initial public offering in the
United States, including American Depository Receipts (other than a
Company listed under IM-5101-2), (ii) upon emerging from bankruptcy,
(iii) in connection with a spin-off or carve-out from another
Company, (iv) in connection with a Direct Listing as defined in IM-
5315-1 (including the listing of American Depository Receipts), or
(v) in conjunction with a business combination that satisfies the
conditions in IM-5101-2(b).''
\6\ Current Listing Rule IM-5900-7(a)(2) defines an ``Eligible
Switch'' as ``a Company: (i) (other than a Company listed under IM-
5101-2) switching its listing from the New York Stock Exchange to
the Global or Global Select Markets, or (ii) that has switched its
listing from the New York Stock Exchange and listed on Nasdaq under
IM-5101-2 after the Company publicly announced that it entered into
a binding agreement for a business combination and that subsequently
satisfies the conditions in IM-5101-2(b) and lists on the Global or
Global Select Market in conjunction with that business
combination.'' See infra notes 17-19 and accompanying text for
discussion of the proposed changes to the definition of ``Eligible
Switch.''
\7\ See Listing Rule IM-5900-7 (describing the complimentary
services available to certain companies that listed on or after
March 12, 2021, the effective date of SR-NASDAQ-2021-002). See also
Securities Exchange Act Release No. 91318 (March 12, 2021), 86 FR
14774 (March 18, 2021) (SR-NASDAQ-2021-002) (``2021 Order'')
(modifying the package of complimentary services offered to eligible
companies that listed on or after March 12, 2021); Securities
Exchange Act Release No. 98367 (September 12, 2023), 88 FR 64016
(September 18, 2023) (SR-NASDAQ-2023-017) (``2023 Order'')
(modifying the package of complimentary services offered to eligible
companies that listed on or after September 12, 2023).
\8\ See Notice, supra note 3, at 87915.
\9\ Nasdaq states that, in addition, all companies listed on
Nasdaq receive other standard services from Nasdaq, including Nasdaq
Online and the Market Intelligence Desk. See id. at 87915 n.6.
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Currently, an Eligible Switch that has a market capitalization of
$750 million or more but less than $5 billion receives certain
complimentary services for four years, including the choice of one of
the following Market Advisory Tools: Stock Surveillance, Global
Targeting, or an Annual Perception Study.\10\ Instead of providing for
the choice of one of the three Market Advisory Tools for four
years,\11\ Nasdaq proposes to modify Listing Rule IM-5900-7(d)(2) to
provide an Eligible Switch that has a market capitalization of $750
million or more but less than $5 billion that lists on or after the
effective date of this proposed rule change with one Annual Perception
Study during the four-year period and the choice of the remaining two
Market Advisory Tools (i.e., Stock Surveillance or Global Targeting)
for four years.\12\ Nasdaq also proposes to modify Listing Rule IM-
5900-7(d)(2) to reflect that an Eligible Switch that had a market
capitalization of $750 million or more but less than $5 billion that
listed on Nasdaq prior to the effective date of this proposed rule
change is not eligible for the one Annual Perception Study during the
four-year period, but received, upon listing (as provided by the rules
in effect at that time), the choice of Stock Surveillance, Global
Targeting, or Annual Perception Study.\13\
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\10\ See Listing Rule IM-5900-7(d)(2). See also Listing Rule
7(b) for a description of ``Market Advisory Tools'' and,
specifically, the ``Stock Surveillance,'' ``Global Targeting,'' and
``Annual Perception Study'' tools. Nasdaq represents that the total
retail value of these services is up to approximately $220,200 per
year. The company also receives one Virtual Event during the four-
year period, which has a retail value of approximately $11,700. In
addition, the one-time development fees of approximately $6,000 to
establish the services in the first year is waived. See Notice,
supra note 3, at 87915 n.8; Listing Rule IM-5900-7(d)(2).
\11\ Once the company elects a service it cannot subsequently
change to a different alternative, including in a subsequent year.
See Listing Rule IM-5900-7(e); Notice, supra note 3, at 87915 n.9.
\12\ See Notice, supra note 3, at 87915.
\13\ See id.
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Currently, an Eligible Switch that has a market capitalization of
$5 billion or more receives as part of its Service Package the choice
of two Market Advisory Tools for four years.\14\ Nasdaq proposes to
modify Listing Rule IM-5900-7(d)(3)(A) to provide an Eligible Switch
that has a market capitalization of $5 billion or more that lists on or
after the effective date of this proposed rule change with one Annual
Perception Study during the four-year period and both of the remaining
Market Advisory Tools (i.e., Stock Surveillance and Global Targeting)
for four years.\15\ Nasdaq also proposes to modify Listing Rule IM-
5900-7(d)(3) to reflect that an Eligible Switch that had a market
capitalization of $5 billion or more that listed on Nasdaq prior to the
effective date of this proposed rule change is not eligible for the one
Annual Perception Study during the four-year period but received, upon
listing (as provided by the rules in effect at that time), the choice
of two of the following three services: Stock Surveillance, Global
Targeting, or Annual Perception Study.\16\
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\14\ See Listing Rule IM-5900-7(d)(3). Nasdaq represents that
the total retail value of these services is up to approximately
$373,700 per year. The company also receives one Virtual Event
during the four-year period, which has a retail value of
approximately $11,700. In addition, the one-time development fees of
approximately $26,500 to establish the services in the first year is
waived. See Notice, supra note 3, at 87915 n.10; Listing Rule IM-
5900(7)(d)(3)(A).
\15\ See Notice, supra note 3, at 87915. Specifically, Nasdaq
proposes to add new Listing Rule IM-5900-7(d)(3)(B) and move
existing Listing Rule IM-5900-7(d)(3)(B) to Listing Rule IM-5900-
7(d)(3)(C), with modifications.
\16\ See id.
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Finally, Nasdaq proposes to modify the definition of an ``Eligible
Switch'' in Listing Rule IM-5900-7(a)(2) to include
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a company (other than a company listed under Listing Rule IM-5101-2)
switching its listing on or after the effective date of this proposed
rule change to the Global or Global Select Market not only from the New
York Stock Exchange (``NYSE''), as currently provided by Listing Rule
IM-5900-7(a)(2), but also from any other national securities
exchange.\17\ Similarly, Nasdaq proposes to modify this definition so
that a company that has switched its listing from any national
securities exchange on or after the effective date of this proposed
rule change and listed on Nasdaq under Listing Rule IM-5101-2 after the
company publicly announced that it entered into a binding agreement for
a business combination and that subsequently satisfies the conditions
in Listing Rule IM-5101-2(b) and lists on the Global or Global Select
Market in conjunction with that business combination will be an
Eligible Switch and will be entitled to a Service Package, as described
above.\18\ This is an expansion from the current definition of
``Eligible Switch,'' which only includes companies that have switched
their listings from NYSE.\19\
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\17\ See id.
\18\ See id.
\19\ See Securities Exchange Act Release No. 90729 (December 18,
2020), 85 FR 84434 (December 28, 2020) (SR-NASDAQ-2020-060) (adding
a definition of Eligible Switch that includes any company that (i)
switched its listing from NYSE to list on Nasdaq under IM-5101-2
after the company publicly announced that it entered into a binding
agreement for a business combination; and (ii) subsequently
satisfies the conditions in IM-5101-2(b) and lists on the Nasdaq
Global or Global Select Markets, by meeting all listing requirements
of one of these market tiers, in conjunction with that business
combination).
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III. Discussion and Commission Findings
After careful review, the Commission finds that the proposed rule
change is consistent with the requirements of section 6 of the Act.\20\
In particular, the Commission finds that the proposed rule change is
consistent with sections 6(b)(4) and (5) of the Act,\21\ in that it is
designed to provide for the equitable allocation of reasonable dues,
fees, and other charges among Exchange members, issuers, and other
persons using the Exchange's facilities, and, in general, to protect
investors and the public interest, and is not designed to permit unfair
discrimination between customers, issuers, brokers, or dealers. In
addition, the Commission finds that the proposed rule change is
consistent with section 6(b)(8) of the Act,\22\ in that it does not
impose any burden on competition not necessary or appropriate in
furtherance of the purposes of the Act.
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\20\ 15 U.S.C. 78f. In approving this proposed rule change, the
Commission has considered the proposed rule's impact on efficiency,
competition, and capital formation. See 15 U.S.C. 78c(f).
\21\ 15 U.S.C. 78f(b)(4) and (5).
\22\ 15 U.S.C. 78f(b)(8).
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Nasdaq is responding to competitive pressures in the market for
listings in making this proposal. Nasdaq states that it faces
competition in the market for listing services, and competes, in part,
by offering valuable services to companies, including complimentary
services.\23\ According to Nasdaq, the modified complimentary service
packages will increase the value of such packages to the companies
affected by this proposal because one Annual Perception Study will be
provided in addition to four years of Stock Surveillance and/or Global
Targeting, whereas currently some companies may choose the higher-
valued four years of Stock Surveillance and/or Global Targeting without
benefiting from any Annual Perception Study.\24\ Nasdaq also states
these changes will streamline the offering of services to new Eligible
Switches and that new Eligible Switches with a market capitalization of
$750 million or more, generally, would benefit from an Annual
Perception Study that leverages extensive capital markets relationships
and benchmark data, amplifying the companies' efforts to elevate their
story, enhance stakeholder engagement, identify risk, and attract new
capital.\25\
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\23\ See Notice, supra note 3, at 87916. Nasdaq also states that
all similarly situated companies are eligible for the same package
of services. See id.
\24\ See id. at 87915-16. Nasdaq represents that Stock
Surveillance, Global Targeting, and Annual Perception Study have a
retail value of approximately $56,500, $48,000, and $45,000 per
year, respectively. Nasdaq states that, in describing the value of
the services in the rule text, it presumed that a company would use
Stock Surveillance and Global Targeting, where there is the choice
of two services; and that a company would use the Stock
Surveillance, where there is the choice of one service. See id. at
87916 n.11.
\25\ See id. at 87916.
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The Commission finds that it is consistent with the Act to modify
the packages of complimentary services offered to Eligible Switches
with a market capitalization of $750 million or more that list on or
after the effective date of this proposed rule change as described
herein. As Nasdaq states, the proposed modifications relate to how
Market Advisory Tools are provided and would likely increase the value
of complimentary services packages to the companies affected by this
proposal.\26\ The Commission finds that this is reasonable and
consistent with section 6(b)(5) of the Act.\27\ In addition, the
Commission finds that the proposed rule change reflects the current
competitive environment for exchange listings among national securities
exchanges and is consistent with section 6(b)(8) of the Act.\28\
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\26\ See id. at 87915-16.
\27\ 15 U.S.C. 78f(b)(5).
\28\ 15 U.S.C. 78f(b)(8).
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As stated in the Commission's previous order approving Listing Rule
IM-5900-7, section 6(b)(5) of the Act \29\ does not require that all
issuers be treated the same; rather, the Act requires that the rules of
an exchange not unfairly discriminate between issuers.\30\ The
Commission has previously found that it is reasonable for Nasdaq to
provide different services to tiers based on market capitalization
since larger capitalized companies generally will need and use more
services.\31\ In addition, describing the services available to listing
companies and their associated values, as well as the length of time
companies are entitled to receive such services, in the Exchange's
rules will ensure that individual listed companies are not given
specially negotiated packages or services to list or remain listed that
would raise unfair discrimination issues under section 6(b)(5) of the
Act.\32\ The Commission also previously found that the package of
complimentary services offered to Eligible Switches is equitably
allocated among issuers consistent with section 6(b)(4) of the Act and
that describing the values of the services adds greater transparency to
the Exchange's rules and to the fees applicable to such rules.\33\
Further, Nasdaq states it is not unfairly discriminatory to offer
different services based on a company's market capitalization given
that larger companies generally will need more and different Market
Advisory Tools, and that those issuers will likely bring
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greater future value to Nasdaq than will other issuers with lower
market capitalizations by switching to its market.\34\ Based on the
foregoing, the Commission finds that the proposal to modify the
packages of complimentary services offered to Eligible Switches with a
market capitalization of $750 million or more that list on or after the
effective date of this proposed rule change does not unfairly
discriminate among issuers and therefore is consistent with section
6(b)(5) of the Act.\35\ For similar reasons, the Commission finds that,
with the proposed changes to the provision of Market Advisory Tools,
the packages of complimentary services are equitably allocated among
issuers consistent with section 6(b)(4) of the Act.\36\
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\29\ 15 U.S.C. 78f(b)(5).
\30\ See Securities Exchange Act Release No. 65963 (December 15,
2011), 76 FR 79262, 79266 (December 21, 2011) (approving SR-NASDAQ-
2011-122) (``2011 Approval Order''). The Commission concluded in the
2011 Approval Order that ``Nasdaq has provided a sufficient basis
for its different treatment of Eligible Switches and that this
portion of Nasdaq's proposal meets the requirements of the Act in
that it reflects competition between exchanges, with Nasdaq offering
discounts for transfers of listings from a competing exchange.'' Id.
See also 2023 Order, supra note 7; 2021 Order, supra note 7;
Securities Exchange Act Release No. 79366 (November 21, 2016), 81 FR
85663, 85665 (November 28, 2016) (approving SR-NASDAQ-2016-106)
(``2016 Approval Order'').
\31\ See 2011 Approval Order, supra note 30, at 79266.
\32\ See also 2016 Approval Order, supra note 30, at 85665; 2011
Approval Order, supra note 30, at 79266.
\33\ See 2016 Approval Order, supra note 30, at 85665; 2011
Approval Order, supra note 30, at 79266.
\34\ See Notice, supra note 3, at 87916.
\35\ 15 U.S.C. 78f(b)(5).
\36\ 15 U.S.C. 78f(b)(4).
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The Commission also finds that it is consistent with the Act for
Nasdaq to modify the definition of an Eligible Switch in Listing Rule
IM-5900-7(a)(2) to include companies switching their listing not only
from the NYSE, as currently provided, but also from any other national
securities exchange. In Nasdaq's 2011 proposal to limit Eligible
Switches only to companies switching their listing from the NYSE,
Nasdaq stated that those listings would bring greater future value to
Nasdaq.\37\ In the instant filing, Nasdaq states that expanding the
definition of Eligible Switch to including listings from any national
securities exchange is designed to increase competition with other
national securities exchanges.\38\ The Commission finds that this
aspect of the proposed change also does not unfairly discriminate among
issuers and reflects the current competitive environment for exchange
listings among national securities exchanges and is therefore
consistent with sections 6(b)(5) and 6(b)(8) of the Act.\39\ For
similar reasons, the Commission finds that expanding the definition of
``Eligible Switch'' as proposed would allow complimentary services
packages to remain equitably allocated among issuers consistent with
section 6(b)(4) of the Act.\40\
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\37\ See 2011 Approval Order, supra note 30, at 79265.
\38\ See Notice, supra note 3, at 87917.
\39\ 15 U.S.C. 78f(b)(5) and (8).
\40\ 15 U.S.C. 78f(b)(4).
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IV. Conclusion
It is therefore ordered, pursuant to section 19(b)(2) of the
Act,\41\ that the proposed rule change (SR-NASDAQ-2024-059) be, and
hereby is, approved.
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\41\ 15 U.S.C. 78s(b)(2).
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\42\
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\42\ 17 CFR 200.30-3(a)(12).
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Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2025-02150 Filed 2-3-25; 8:45 am]
BILLING CODE 8011-01-P
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