Self-Regulatory Organizations; The Nasdaq Stock Market LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change to Nasdaq Rule 5615(b)(4) To Change the Threshold for Qualifying as a Smaller Reporting Company To Qualify for Certain Exemptions From the Compensation Committee Requirements, 60545-60547 [2018-25731]
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Federal Register / Vol. 83, No. 227 / Monday, November 26, 2018 / Notices
Paper Comments
• Send paper comments in triplicate
to Secretary, Securities and Exchange
Commission, 100 F Street NE,
Washington, DC 20549.
All submissions should refer to File
Number SR–OCC–2018–804. 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 (https://www.sec.gov/
rules/sro.shtml). Copies of the
submission, all subsequent
amendments, all written statements
with respect to the advance notice that
are filed with the Commission, and all
written communications relating to the
advance notice 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
self-regulatory organization.
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–OCC–2018–804 and should
be submitted on or before December 17,
2018.
By the Commission.
Brent J. Fields,
Secretary.
[FR Doc. 2018–25606 Filed 11–23–18; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–84629; File No. SR–
NASDAQ–2018–095]
Self-Regulatory Organizations; The
Nasdaq Stock Market LLC; Notice of
Filing and Immediate Effectiveness of
Proposed Rule Change to Nasdaq Rule
5615(b)(4) To Change the Threshold for
Qualifying as a Smaller Reporting
Company To Qualify for Certain
Exemptions From the Compensation
Committee Requirements
November 20, 2018.
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 November
14, 2018, The Nasdaq Stock Market LLC
(‘‘Nasdaq’’ or the ‘‘Exchange’’) filed with
the Securities and Exchange
Commission (‘‘SEC’’ or ‘‘Commission’’)
the proposed rule change as described
in Items I and II below, which Items
have been prepared by the Exchange.
The Commission is publishing this
notice to solicit comments on the
proposed rule change from interested
persons.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The Exchange proposes to amend
Nasdaq Rule 5615(b)(4) to change the
threshold for listed companies that are
eligible to benefit from the exemptions
from the Exchange’s compensation
committee requirements applicable to
smaller reporting companies so that all
companies that qualify for smaller
reporting company status under the
revised SEC definition will qualify for
the Exchange’s exemptions.
The text of the proposed rule change
is available on the Exchange’s website at
https://nasdaq.cchwallstreet.com, 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
1 15
2 17
VerDate Sep<11>2014
17:28 Nov 23, 2018
Jkt 247001
PO 00000
U.S.C. 78s(b)(1).
CFR 240.19b–4.
Frm 00155
Fmt 4703
60545
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 Rule 5615(b)(4) to
change the threshold for listed
companies that are eligible to benefit
from the exemptions from the
Exchange’s compensation committee
requirements applicable to smaller
reporting companies so that all
companies that qualify for smaller
reporting company status under the
revised SEC definition will qualify for
the Exchange’s exemptions.
The SEC recently adopted 3
amendments to the definition of
‘‘smaller reporting company’’ set forth
in Item 10(f)(1) of Regulation S–K,4 Rule
12b–2 under the Act 5 and Rule 405
under the Securities Act of 1933.6 The
amendments raise the smaller reporting
company cap from less than $75 million
in public float to less than $250 million
and also include as smaller reporting
companies issuers with less than $100
million in annual revenues if they also
have either no public float or a public
float that is less than $700 million. The
amendments became effective on
September 10, 2018. As a result of the
SEC rule changes, an expanded number
of registrants, and hence, of listed
companies, will qualify for smaller
reporting company status than was
previously the case.7
Smaller reporting companies are
entitled to avail themselves of certain
exemptions from Nasdaq’s
compensation committee requirements.8
3 See Release Nos. 33–10513 and 34–83550 (June
28, 2018); 83 FR 31992 (July 10, 2018) (the
‘‘Adopting Release’’).
4 17 CFR 229.10(f)(1).
5 17 CFR 240.12b–2.
6 17 CFR 230.405.
7 See the Adopting Release.
8 Specifically, pursuant to Rule 5605(d)(5), a
listed company that satisfies the definition of
smaller reporting company is not required to
comply with: (i) The additional requirements with
respect to the independence of compensation
committee members set forth in Rule 5605(d)(2)(A);
(ii) the requirements with respect to the specific
compensation committee responsibilities and
authority set forth in Rule 5605(d)(3) and the
requirement to include such responsibilities and
authority in its compensation committee charter as
set forth in Rule 5605(d)(1)(D); or (iii) the
requirement with respect to the compensation
committee’s responsibility to review and reassess
the adequacy of its compensation committee charter
on an annual basis. A listed smaller reporting
company must comply with all other applicable
Exchange corporate governance requirements,
Continued
Sfmt 4703
E:\FR\FM\26NON1.SGM
26NON1
60546
Federal Register / Vol. 83, No. 227 / Monday, November 26, 2018 / Notices
Rule 5615(b)(4) includes a provision
describing the period within which a
company must comply with all
applicable compensation committee
requirements after it ceases to be a
smaller reporting company.9 This
provision currently states explicitly that
a smaller reporting company must have
less than $75 million in public float. In
light of the recent changes to the SEC’s
rules with respect to smaller reporting
companies, the Exchange proposes to
delete this reference to the $75 million
public float cap and revise the provision
to state simply that a smaller reporting
company that fails to meet the
requirements for smaller reporting
company status as of the last business
day of its second fiscal quarter (the
Determination Date) will cease to be a
smaller reporting company as of the
beginning of the following fiscal year.
The effect of the proposed rule change
is to change the threshold for listed
companies that are eligible to benefit
from the exemptions from the
Exchange’s compensation committee
requirements applicable to smaller
reporting companies so that all
companies that qualify for smaller
reporting company status under the
revised SEC definition will qualify for
the Exchange’s exemptions.
acts and practices, to promote just and
equitable principles of trade, to foster
cooperation and coordination with
persons engaged in regulating, clearing,
settling, processing information with
respect to, and facilitating transactions
in securities, to remove impediments to
and perfect the mechanism of a free and
open market and a national market
system, and, in general, to protect
investors and the public interest.
As noted above, the effect of the
proposed rule change is to change the
threshold for listed companies that are
eligible to benefit from the exemptions
from the Exchange’s compensation
committee requirements applicable to
smaller reporting companies so that all
companies that qualify for smaller
reporting company status under the
revised SEC definition will qualify for
the Exchange’s exemptions. A listed
smaller reporting company must comply
with all other applicable Exchange
corporate governance requirements,
including all other applicable
compensation committee requirements,
unless it qualifies for some other
exemption from those requirements.
The Commission has already
determined through its own rulemaking
that the revised thresholds for smaller
reporting company status proposed in
this rule proposal are consistent with
2. Statutory Basis
the goal of the Act to further the
Nasdaq believes that the proposed
protection of investors and the public
rule change is consistent with Section
12
6(b) of the Act,10 in general, and furthers interest and the Exchange believes
that
its
own
proposal is consistent with
the objectives of Section 6(b)(5) of the
Act,11 in particular, in that it is designed Section 6(b)(5) of the Act for the same
reasons. The Exchange also believes that
to prevent fraudulent and manipulative
the proposed rule change fosters
cooperation and coordination with
including all other applicable compensation
persons engaged in regulating, clearing,
committee requirements, unless it qualifies for
another exemption from those requirements.
settling, processing information with
9 Under the SEC rules set forth above with respect
respect to, and facilitating transactions
to smaller reporting companies, a company tests its
in securities because it conforms Rule
status as a smaller reporting company on an annual
5615(b)(4) to a rule change made by the
basis at the end of its most recently completed
second fiscal quarter (‘‘Determination Date’’). A
Commission.
smaller reporting company ceases to be a smaller
reporting company as of the beginning of the fiscal
year following the Determination Date (‘‘Start
Date’’). By six months from the Start Date, a
company must comply with Rule 5605(d)(3) and
certify to Nasdaq that: (i) It has complied with the
requirement in Rule 5605(d)(1) to adopt a formal
written compensation committee charter including
the content specified in Rule 5605(d)(1)(A)- (D); and
(ii) it has complied, or within the applicable phasein schedule will comply, with the additional
requirements in Rule 5605(d)(2)(A) regarding
compensation committee composition. A company
shall be permitted to phase in its compliance with
the additional compensation committee eligibility
requirements of Rule 5605(d)(2)(A) relating to
compensatory fees and affiliation as follows: (i) One
member must satisfy the requirements by six
months from the Start Date; (ii) a majority of
members must satisfy the requirements by nine
months from the Start Date; and (iii) all members
must satisfy the requirements by one year from the
Start Date.
10 15 U.S.C. 78f(b).
11 15 U.S.C. 78f(b)(5).
VerDate Sep<11>2014
17:28 Nov 23, 2018
Jkt 247001
B. Self-Regulatory Organization’s
Statement on Burden on Competition
Nasdaq does not believe that the
proposed rule change will impose any
burden on competition not necessary or
appropriate in furtherance of the
purposes of the Act. The proposed rule
change will not impose any burden on
competition as its sole purpose is to
change the threshold for listed
companies that are eligible to benefit
from the exemptions from the
Exchange’s compensation committee
requirements applicable to smaller
reporting companies so that all
companies that qualify for smaller
reporting company status under the
12 See
PO 00000
supra note 3.
Frm 00156
Fmt 4703
Sfmt 4703
revised SEC definition will qualify for
the Exchange’s exemptions.
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 Exchange has filed the proposed
rule change pursuant to Section
19(b)(3)(A) of the Act 13 and Rule 19b–
4(f)(6) thereunder.14 Because the
proposed rule change does not: (i)
Significantly affect the protection of
investors or the public interest; (ii)
impose any significant burden on
competition; and (iii) become operative
for 30 days from the date on which it
was filed, or such shorter time as the
Commission may designate, it has
become effective pursuant to Section
19(b)(3)(A) of the Act and Rule 19b–
4(f)(6)(iii) thereunder. 15
A proposed rule change filed under
Rule 19b–4(f)(6)16 normally does not
become operative for 30 days after the
date of the filing. However, pursuant to
Rule 19b–4(f)(6)(iii),17 the Commission
may designate a shorter time if such
action is consistent with the protection
of investors and the public interest. In
its filing with the Commission, Nasdaq
has asked the Commission to waive the
30-day operative delay to make Nasdaq
Rule 5615(b)(4) consistent with the
Commission’s revised definition of
smaller reporting company that became
effective on September 10, 2018. As
such, the Commission believes that
waiver of the 30-day operative delay is
consistent with the protection of
investors and the public interest and
designates the proposed rule change
operative upon filing.18
At any time within 60 days of the
filing of such proposed rule change, the
Commission summarily may
temporarily suspend such rule change if
it appears to the Commission that such
action is necessary or appropriate in the
13 15
U.S.C. 78s(b)(3)(A)(iii).
CFR 240.19b–4(f)(6).
15 In addition, Rule 19b–4(f)(6)(iii) requires a selfregulatory organization to give the Commission
written notice of its intent to file the proposed rule
change at least five business days prior to the date
of filing of the proposed rule change, or such
shorter time as designated by the Commission. The
Exchange has satisfied this requirement.
16 17 CFR 240.19b–4(f)(6).
17 17 CFR 240.19b–4(f)(6)(iii).
18 For purposes only of waiving the operative
delay, the Commission has considered the proposed
rule’s impact on efficiency, competition, and capital
formation. See 15 U.S.C. 78c(f).
14 17
E:\FR\FM\26NON1.SGM
26NON1
Federal Register / Vol. 83, No. 227 / Monday, November 26, 2018 / Notices
public interest, for the protection of
investors, or otherwise in furtherance of
the purposes of the Act. If the
Commission takes such action, the
Commission shall institute proceedings
under Section 19(b)(2)(B) 19 of the Act to
determine whether the proposed rule
change 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
• Use the Commission’s internet
comment form (https://www.sec.gov/
rules/sro.shtml); or
• Send an email to rule-comments@
sec.gov. Please include File Number SR–
NASDAQ–2018–095 on the subject line.
Paper Comments
• Send paper comments in triplicate
to Secretary, Securities and Exchange
Commission, 100 F Street NE,
Washington, DC 20549–1090.
All submissions should refer to File
Number SR–NASDAQ–2018–095. 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 (https://www.sec.gov/
rules/sro.shtml). Copies of the
submission, all subsequent
amendments, all written statements
with respect to the proposed rule
change that are filed with the
Commission, and all written
communications relating to the
proposed rule change between the
Commission and any person, other than
those that may be withheld from the
public in accordance with the
provisions of 5 U.S.C. 552, will be
available for website viewing and
printing in the Commission’s Public
Reference Room, 100 F Street NE,
Washington, DC 20549 on official
business days between the hours of
10:00 a.m. and 3:00 p.m. Copies of such
filing also will be available for
inspection and copying at the principal
office of the Exchange. All comments
received will be posted without change.
Persons submitting comments are
cautioned that we do not redact or edit
personal identifying information from
comment submissions. You should
19 15
U.S.C. 78s(b)(2)(B).
VerDate Sep<11>2014
17:28 Nov 23, 2018
Jkt 247001
submit only information that you wish
to make available publicly. All
submissions should refer to File
Number SR–NASDAQ–2018–095, and
should be submitted on or before
December 17, 2018.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.20
Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2018–25731 Filed 11–23–18; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–84624; File No. SR–Phlx–
2018–72]
Self-Regulatory Organizations; Nasdaq
PHLX LLC; Notice of Filing of
Proposed Rule Change To Establish
Rules Governing the Give Up of a
Clearing Member by a Member
Organization on Exchange
Transactions
November 19, 2018.
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 November
6, 2018, Nasdaq PHLX LLC (‘‘Phlx’’ 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.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The Exchange proposes to establish
rules governing the give up of a Clearing
Member 3 by a member organization on
Exchange transactions.
The text of the proposed rule change
is available on the Exchange’s website at
https://nasdaqphlx.cchwallstreet.com/,
at the principal office of the Exchange,
and at the Commission’s Public
Reference Room.
20 17
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
3 Clearing Member means a member organization
which has been admitted to membership in the
Options Clearing Corporation pursuant to the
provisions of the rules of the Options Clearing
Corporation. See Rule 1000(b)(3).
60547
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 Exchange proposes to amend
Phlx Rule 1037, which is currently
reserved, to establish requirements
related to the give up of a Clearing
Member by a member organization on
Exchange transactions.
By way of background, to enter
transactions on the Exchange, a member
organization must either be a Clearing
Member or have a clearing arrangement
with a Clearing Member.4 Rule 1052
currently provides that every Clearing
Member shall be responsible for the
clearance of the Exchange options
transactions of such Clearing Member
and of each member organization who
gives up the name of such Clearing
Member in an Exchange options
transaction, provided the Clearing
Member has authorized such member
organization to give up its name with
respect to Exchange options
transactions.
Recently, certain Clearing Members,
in conjunction with the Securities
Industry and Financial Markets
Association (‘‘SIFMA’’), expressed
concerns related to the process by
which executing brokers on U.S. options
exchanges (‘‘Exchanges’’) are allowed to
designate or ‘give up’ a clearing firm for
purposes of clearing particular
transactions. The SIFMA-affiliated
Clearing Members have recently
identified the current give up process as
a significant source of risk for clearing
firms, and subsequently requested that
the Exchanges alleviate this risk by
amending Exchange rules governing the
give up process.5
1 15
PO 00000
Frm 00157
Fmt 4703
Sfmt 4703
4 See
Rule 1046.
Arca Inc. (‘‘Arca’’) recently filed to amend
its give up procedures. Arca’s proposal would allow
a Designated Give Up to opt out of acting as the give
up for certain OTP Holders and OTP Firms. See
5 NYSE
E:\FR\FM\26NON1.SGM
Continued
26NON1
]]>Agencies
[Federal Register Volume 83, Number 227 (Monday, November 26, 2018)]
[Notices]
[Pages 60545-60547]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-25731]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-84629; File No. SR-NASDAQ-2018-095]
Self-Regulatory Organizations; The Nasdaq Stock Market LLC;
Notice of Filing and Immediate Effectiveness of Proposed Rule Change to
Nasdaq Rule 5615(b)(4) To Change the Threshold for Qualifying as a
Smaller Reporting Company To Qualify for Certain Exemptions From the
Compensation Committee Requirements
November 20, 2018.
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 November 14, 2018, The Nasdaq Stock Market LLC (``Nasdaq'' or the
``Exchange'') filed with the Securities and Exchange Commission
(``SEC'' or ``Commission'') the proposed rule change as described in
Items I and II below, which Items have been prepared by the Exchange.
The Commission is publishing this notice to solicit comments on the
proposed rule change from interested persons.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------
I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Exchange proposes to amend Nasdaq Rule 5615(b)(4) to change the
threshold for listed companies that are eligible to benefit from the
exemptions from the Exchange's compensation committee requirements
applicable to smaller reporting companies so that all companies that
qualify for smaller reporting company status under the revised SEC
definition will qualify for the Exchange's exemptions.
The text of the proposed rule change is available on the Exchange's
website at https://nasdaq.cchwallstreet.com, 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 Rule 5615(b)(4)
to change the threshold for listed companies that are eligible to
benefit from the exemptions from the Exchange's compensation committee
requirements applicable to smaller reporting companies so that all
companies that qualify for smaller reporting company status under the
revised SEC definition will qualify for the Exchange's exemptions.
The SEC recently adopted \3\ amendments to the definition of
``smaller reporting company'' set forth in Item 10(f)(1) of Regulation
S-K,\4\ Rule 12b-2 under the Act \5\ and Rule 405 under the Securities
Act of 1933.\6\ The amendments raise the smaller reporting company cap
from less than $75 million in public float to less than $250 million
and also include as smaller reporting companies issuers with less than
$100 million in annual revenues if they also have either no public
float or a public float that is less than $700 million. The amendments
became effective on September 10, 2018. As a result of the SEC rule
changes, an expanded number of registrants, and hence, of listed
companies, will qualify for smaller reporting company status than was
previously the case.\7\
---------------------------------------------------------------------------
\3\ See Release Nos. 33-10513 and 34-83550 (June 28, 2018); 83
FR 31992 (July 10, 2018) (the ``Adopting Release'').
\4\ 17 CFR 229.10(f)(1).
\5\ 17 CFR 240.12b-2.
\6\ 17 CFR 230.405.
\7\ See the Adopting Release.
---------------------------------------------------------------------------
Smaller reporting companies are entitled to avail themselves of
certain exemptions from Nasdaq's compensation committee
requirements.\8\
[[Page 60546]]
Rule 5615(b)(4) includes a provision describing the period within which
a company must comply with all applicable compensation committee
requirements after it ceases to be a smaller reporting company.\9\ This
provision currently states explicitly that a smaller reporting company
must have less than $75 million in public float. In light of the recent
changes to the SEC's rules with respect to smaller reporting companies,
the Exchange proposes to delete this reference to the $75 million
public float cap and revise the provision to state simply that a
smaller reporting company that fails to meet the requirements for
smaller reporting company status as of the last business day of its
second fiscal quarter (the Determination Date) will cease to be a
smaller reporting company as of the beginning of the following fiscal
year. The effect of the proposed rule change is to change the threshold
for listed companies that are eligible to benefit from the exemptions
from the Exchange's compensation committee requirements applicable to
smaller reporting companies so that all companies that qualify for
smaller reporting company status under the revised SEC definition will
qualify for the Exchange's exemptions.
---------------------------------------------------------------------------
\8\ Specifically, pursuant to Rule 5605(d)(5), a listed company
that satisfies the definition of smaller reporting company is not
required to comply with: (i) The additional requirements with
respect to the independence of compensation committee members set
forth in Rule 5605(d)(2)(A); (ii) the requirements with respect to
the specific compensation committee responsibilities and authority
set forth in Rule 5605(d)(3) and the requirement to include such
responsibilities and authority in its compensation committee charter
as set forth in Rule 5605(d)(1)(D); or (iii) the requirement with
respect to the compensation committee's responsibility to review and
reassess the adequacy of its compensation committee charter on an
annual basis. A listed smaller reporting company must comply with
all other applicable Exchange corporate governance requirements,
including all other applicable compensation committee requirements,
unless it qualifies for another exemption from those requirements.
\9\ Under the SEC rules set forth above with respect to smaller
reporting companies, a company tests its status as a smaller
reporting company on an annual basis at the end of its most recently
completed second fiscal quarter (``Determination Date''). A smaller
reporting company ceases to be a smaller reporting company as of the
beginning of the fiscal year following the Determination Date
(``Start Date''). By six months from the Start Date, a company must
comply with Rule 5605(d)(3) and certify to Nasdaq that: (i) It has
complied with the requirement in Rule 5605(d)(1) to adopt a formal
written compensation committee charter including the content
specified in Rule 5605(d)(1)(A)- (D); and (ii) it has complied, or
within the applicable phase-in schedule will comply, with the
additional requirements in Rule 5605(d)(2)(A) regarding compensation
committee composition. A company shall be permitted to phase in its
compliance with the additional compensation committee eligibility
requirements of Rule 5605(d)(2)(A) relating to compensatory fees and
affiliation as follows: (i) One member must satisfy the requirements
by six months from the Start Date; (ii) a majority of members must
satisfy the requirements by nine months from the Start Date; and
(iii) all members must satisfy the requirements by one year from the
Start Date.
---------------------------------------------------------------------------
2. Statutory Basis
Nasdaq believes that the proposed rule change is consistent with
Section 6(b) of the Act,\10\ in general, and furthers the objectives of
Section 6(b)(5) of the Act,\11\ in particular, in that it is designed
to prevent fraudulent and manipulative acts and practices, to promote
just and equitable principles of trade, to foster cooperation and
coordination with persons engaged in regulating, clearing, settling,
processing information with respect to, and facilitating transactions
in securities, to remove impediments to and perfect the mechanism of a
free and open market and a national market system, and, in general, to
protect investors and the public interest.
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\10\ 15 U.S.C. 78f(b).
\11\ 15 U.S.C. 78f(b)(5).
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As noted above, the effect of the proposed rule change is to change
the threshold for listed companies that are eligible to benefit from
the exemptions from the Exchange's compensation committee requirements
applicable to smaller reporting companies so that all companies that
qualify for smaller reporting company status under the revised SEC
definition will qualify for the Exchange's exemptions. A listed smaller
reporting company must comply with all other applicable Exchange
corporate governance requirements, including all other applicable
compensation committee requirements, unless it qualifies for some other
exemption from those requirements. The Commission has already
determined through its own rulemaking that the revised thresholds for
smaller reporting company status proposed in this rule proposal are
consistent with the goal of the Act to further the protection of
investors and the public interest \12\ and the Exchange believes that
its own proposal is consistent with Section 6(b)(5) of the Act for the
same reasons. The Exchange also believes that the proposed rule change
fosters cooperation and coordination with persons engaged in
regulating, clearing, settling, processing information with respect to,
and facilitating transactions in securities because it conforms Rule
5615(b)(4) to a rule change made by the Commission.
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\12\ See supra note 3.
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B. Self-Regulatory Organization's Statement on Burden on Competition
Nasdaq does not believe that the proposed rule change will impose
any burden on competition not necessary or appropriate in furtherance
of the purposes of the Act. The proposed rule change will not impose
any burden on competition as its sole purpose is to change the
threshold for listed companies that are eligible to benefit from the
exemptions from the Exchange's compensation committee requirements
applicable to smaller reporting companies so that all companies that
qualify for smaller reporting company status under the revised SEC
definition will qualify for the Exchange's exemptions.
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 Exchange has filed the proposed rule change pursuant to Section
19(b)(3)(A) of the Act \13\ and Rule 19b-4(f)(6) thereunder.\14\
Because the proposed rule change does not: (i) Significantly affect the
protection of investors or the public interest; (ii) impose any
significant burden on competition; and (iii) become operative for 30
days from the date on which it was filed, or such shorter time as the
Commission may designate, it has become effective pursuant to Section
19(b)(3)(A) of the Act and Rule 19b-4(f)(6)(iii) thereunder. \15\
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\13\ 15 U.S.C. 78s(b)(3)(A)(iii).
\14\ 17 CFR 240.19b-4(f)(6).
\15\ In addition, Rule 19b-4(f)(6)(iii) requires a self-
regulatory organization to give the Commission written notice of its
intent to file the proposed rule change at least five business days
prior to the date of filing of the proposed rule change, or such
shorter time as designated by the Commission. The Exchange has
satisfied this requirement.
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A proposed rule change filed under Rule 19b-4(f)(6)\16\ normally
does not become operative for 30 days after the date of the filing.
However, pursuant to Rule 19b-4(f)(6)(iii),\17\ the Commission may
designate a shorter time if such action is consistent with the
protection of investors and the public interest. In its filing with the
Commission, Nasdaq has asked the Commission to waive the 30-day
operative delay to make Nasdaq Rule 5615(b)(4) consistent with the
Commission's revised definition of smaller reporting company that
became effective on September 10, 2018. As such, the Commission
believes that waiver of the 30-day operative delay is consistent with
the protection of investors and the public interest and designates the
proposed rule change operative upon filing.\18\
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\16\ 17 CFR 240.19b-4(f)(6).
\17\ 17 CFR 240.19b-4(f)(6)(iii).
\18\ For purposes only of waiving the operative delay, the
Commission has considered the proposed rule's impact on efficiency,
competition, and capital formation. See 15 U.S.C. 78c(f).
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At any time within 60 days of the filing of such proposed rule
change, the Commission summarily may temporarily suspend such rule
change if it appears to the Commission that such action is necessary or
appropriate in the
[[Page 60547]]
public interest, for the protection of investors, or otherwise in
furtherance of the purposes of the Act. If the Commission takes such
action, the Commission shall institute proceedings under Section
19(b)(2)(B) \19\ of the Act to determine whether the proposed rule
change should be approved or disapproved.
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\19\ 15 U.S.C. 78s(b)(2)(B).
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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
Use the Commission's internet comment form (https://www.sec.gov/rules/sro.shtml); or
Send an email to [email protected]. Please include
File Number SR-NASDAQ-2018-095 on the subject line.
Paper Comments
Send paper comments in triplicate to Secretary, Securities
and Exchange Commission, 100 F Street NE, Washington, DC 20549-1090.
All submissions should refer to File Number SR-NASDAQ-2018-095. 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 (https://www.sec.gov/rules/sro.shtml).
Copies of the submission, all subsequent amendments, all written
statements with respect to the proposed rule change that are filed with
the Commission, and all written communications relating to the proposed
rule change between the Commission and any person, other than those
that may be withheld from the public in accordance with the provisions
of 5 U.S.C. 552, will be available for website viewing and printing in
the Commission's Public Reference Room, 100 F Street NE, Washington, DC
20549 on official business days between the hours of 10:00 a.m. and
3:00 p.m. Copies of such filing also will be available for inspection
and copying at the principal office of the Exchange. All comments
received will be posted without change. Persons submitting comments are
cautioned that we do not redact or edit personal identifying
information from comment submissions. You should submit only
information that you wish to make available publicly. All submissions
should refer to File Number SR-NASDAQ-2018-095, and should be submitted
on or before December 17, 2018.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\20\
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\20\ 17 CFR 200.30-3(a)(12).
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Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2018-25731 Filed 11-23-18; 8:45 am]
BILLING CODE 8011-01-P
