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]

Download as PDF 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

SECURITIES AND EXCHANGE COMMISSION

[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]


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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.
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    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.
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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.
---------------------------------------------------------------------------

    \10\ 15 U.S.C. 78f(b).
    \11\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

    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.
---------------------------------------------------------------------------

    \12\ See supra note 3.
---------------------------------------------------------------------------

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\
---------------------------------------------------------------------------

    \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.
---------------------------------------------------------------------------

    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\
---------------------------------------------------------------------------

    \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).
---------------------------------------------------------------------------

    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

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