Self-Regulatory Organizations; The Nasdaq Stock Market LLC; Notice of Filing of Proposed Rule Change To Revise the Exchange's Initial Listing Standards Related to Liquidity, 14172-14180 [2019-06935]
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Federal Register / Vol. 84, No. 68 / Tuesday, April 9, 2019 / Notices
19(b)(1) of the Securities Exchange Act
of 1934 (‘‘Act’’) 1 and Rule 19b–4
thereunder,2 a proposed rule change to
adopt a new MIDP routing option under
Rule 4758 and make a conforming
change to Rule 4703(e). The proposed
rule change was published for comment
in the Federal Register on February 19,
2019.3 The Commission has received no
comments on the proposal.
Section 19(b)(2) of the Act 4 provides
that within 45 days of the publication of
notice of the filing of a proposed rule
change, or within such longer period up
to 90 days as the Commission may
designate if it finds such longer period
to be appropriate and publishes its
reasons for so finding or as to which the
self-regulatory organization consents,
the Commission shall either approve the
proposed rule change, disapprove the
proposed rule change, or institute
proceedings to determine whether the
proposed rule change should be
disapproved. The 45th day for this filing
is April 5, 2019.
The Commission is extending the 45day time period for Commission action
on the proposed rule change. The
Commission finds that it is appropriate
to designate a longer period within
which to take action on the proposed
rule change so that it has sufficient time
to consider the proposed rule change.
Accordingly, pursuant to Section
19(b)(2) of the Act,5 the Commission
designates May 20, 2019, as the date by
which the Commission shall either
approve or disapprove, or institute
proceedings to determine whether to
disapprove, the proposed rule change
(File No. SR–NASDAQ–2019–004).
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.6
Eduardo A. Aleman,
Deputy Secretary.
[FR Doc. 2019–06929 Filed 4–8–19; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–85503; File No. SR–
NASDAQ–2019–009]
Self-Regulatory Organizations; The
Nasdaq Stock Market LLC; Notice of
Filing of Proposed Rule Change To
Revise the Exchange’s Initial Listing
Standards Related to Liquidity
April 3, 2019.
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 March 21,
2019, 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 revise the
Exchange’s initial listing standards
related to liquidity.
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.
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A. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
1 15
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
3 See Securities Exchange Act Release No. 85113
(February 12, 2019), 84 FR 4885.
4 15 U.S.C. 78s(b)(2).
5 15 U.S.C. 78s(b)(2).
6 17 CFR 200.30–3(a)(31).
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1. Purpose
Nasdaq proposes several amendments
in this rule change to increase Nasdaq’s
requirements for initial listing and help
1 15
2 17
PO 00000
U.S.C. 78s(b)(1).
CFR 240.19b–4.
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assure adequate liquidity for listed
securities. First, Nasdaq proposes to
revise its initial listing criteria to
exclude restricted securities from the
Exchange’s calculations of a company’s
publicly held shares, market value of
publicly held shares and round lot
holders (‘‘Initial Liquidity
Calculations’’). To do so, Nasdaq
proposes to add three new definitions to
define ‘‘restricted securities’’,
‘‘unrestricted publicly held shares’’ and
‘‘unrestricted securities’’ and proposes
to amend the definition of ‘‘round lot
holder’’. Second, Nasdaq proposes to
impose a new requirement that at least
50% of a company’s round lot holders
must each hold shares with a market
value of at least $2,500. Third, Nasdaq
proposes to adopt a new listing rule
requiring a minimum average daily
trading volume for securities trading
over-the-counter (‘‘OTC’’) at the time of
their listing. Nasdaq is not proposing to
change the requirements for continued
listing purposes at this time, but
believes that these heightened initial
listing requirements will result in
enhanced liquidity for the companies
that satisfy them on an ongoing basis.3
Each amendment is described in more
detail below.
I. Restricted Securities
Nasdaq is proposing to modify its
initial listing standards to exclude
securities subject to resale restrictions
from its Initial Liquidity Calculations.
Currently, securities subject to resale
restrictions are included in the
Exchange’s Initial Liquidity
Calculations, however, such securities
are not freely transferrable or available
for outside investors to purchase and
therefore do not truly contribute to a
security’s liquidity upon listing.
Because the current Initial Liquidity
Calculations include restricted
securities, a security with a substantial
number of restricted securities could
satisfy the Exchange’s initial listing
requirements related to liquidity and list
on the Exchange, even though there
could be few freely tradable shares,
resulting in a security listing on the
Exchange that is illiquid. Nasdaq is
concerned because illiquid securities
may trade infrequently, in a more
volatile manner and with a wider bidask spread, all of which may result in
3 Nasdaq staff may apply additional and more
stringent criteria to a listed company that satisfies
all of the continued listing requirements but where
there are indications that there is insufficient
liquidity in the security to support fair and orderly
trading. In such circumstances, Nasdaq would
typically first allow the company to provide and
implement a plan to increase its liquidity in the
near term.
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Federal Register / Vol. 84, No. 68 / Tuesday, April 9, 2019 / Notices
trading at a price that may not reflect
their true market value. Less liquid
securities also may be more susceptible
to price manipulation, as a relatively
small amount of trading activity can
have an inordinate effect on market
prices.
To address this concern, Nasdaq is
proposing to adopt a new definition of
‘‘restricted securities’’ at Nasdaq Rule
5005(a)(37), which includes any
securities subject to resale restrictions
for any reason, including restricted
securities (1) acquired directly or
indirectly from the issuer or an affiliate
of the issuer in unregistered offerings
such as private placements or
Regulation D offerings; 4 (2) acquired
through an employee stock benefit plan
or as compensation for professional
services; 5 (3) acquired in reliance on
Regulation S, which cannot be resold
within the United States; 6 (4) subject to
a lockup agreement or a similar
contractual restriction; 7 or (5)
considered ‘‘restricted securities’’ under
Rule 144.8 Nasdaq is also proposing to
adopt a new definition of ‘‘unrestricted
securities’’ at Nasdaq Rule 5005(a)(46),
which includes securities of a company
that are not restricted securities. In
connection with these amendments,
Nasdaq is proposing to renumber the
remaining provisions of Rule 5005 to
maintain an organized rule structure.
Rule No.
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5315(e)(2)
5405(a)(2)
5415(a)(1)
5505(a)(2)
5510(a)(3)
5520(g)(3)
.........
.........
.........
.........
.........
.........
The Exchange believes that these
proposed amendments to the listing
rules will enhance its listing criteria and
better protect investors by helping to
ensure that securities listed on Nasdaq
are liquid and have sufficient investor
interest to support an exchange listing.
Nasdaq notes that in developing their
index methodologies the FTSE Russell
and S&P indices take a similar
approach. As disclosed by FTSE
Russell, ‘‘All FTSE Russell equity index
constituents are free float adjusted in
accordance with the index rules, to
reflect the actual availability of stock in
the market for public investment.’’ 9
FTSE Russell excludes shares held
within employee share plans, shares
subject to a ‘‘lock-in’’ clause, and shares
subject to contractual restrictions.10 S&P
Dow Jones adjusts its indices to ‘‘reflect
only those shares available to investors
rather than all of a company’s
outstanding shares.’’ 11
A. Publicly Held Shares
Nasdaq is proposing to modify its
initial listing requirements related to
publicly held shares so that they are
based only on unrestricted shares. A
company is required to have a minimum
number of publicly held shares in order
to list its primary equity securities
(including American Depositary
Receipts or ‘‘ADRs’’) 12 on all tiers of the
Exchange. A company is also required
to have a minimum number of publicly
held shares in order to list its preferred
stock or secondary classes of common
stock on Nasdaq’s Global and Capital
Market tiers; 13 subscription receipts on
Nasdaq’s Capital Market tier; or paired
share units on Nasdaq’s Global Select
Market tier. Currently, Nasdaq Rule
5005(a)(35) defines ‘‘publicly held
shares’’ as ‘‘shares not held directly or
indirectly by an officer, director or any
person who is the beneficial owner of
more than 10 percent of the total shares
outstanding. Determinations of
beneficial ownership in calculating
publicly held shares shall be made in
accordance with Rule 13d–3 under the
Act.’’ As discussed above, the current
definition of publicly held shares does
not exclude securities subject to resale
restrictions, which may result in a
security with limited liquidity satisfying
the Exchange’s initial listing
requirements related to publicly held
shares and qualifying to list on the
Exchange.
Nasdaq proposes adding a new
definition of ‘‘unrestricted publicly held
shares’’ at Nasdaq Rule 5005(a)(45),
which would be defined as publicly
held shares excluding the newly defined
‘‘unrestricted securities.’’ Nasdaq
proposes to revise references to
‘‘publicly held shares’’ to ‘‘unrestricted
publicly held shares’’ in the following
rules:
Current required number
of publicly held shares
Nasdaq Market tier
Security type
Global Select ...........................
Global ......................................
Global ......................................
Capital ......................................
Capital ......................................
Capital ......................................
Primary Equity Security .......................................................
Primary Equity Security .......................................................
Preferred Stock or Secondary Class of Common Stock .....
Primary Equity Security .......................................................
Preferred Stock or Secondary Class of Common Stock .....
Subscription Receipts ..........................................................
At
At
At
At
At
At
least
least
least
least
least
least
1,250,000.
1,100,000.
200,000.
1,000,000.
200,000.
1,100,000.
As a result, only securities that are
freely transferrable will be included in
the calculation of publicly held shares
to determine whether a company
satisfies the Exchange’s initial listing
criteria under these rules. Nasdaq
believes that excluding restricted
securities will better reflect the liquidity
of, and investor interest in, a security
and therefore will better protect
investors.
In addition to the above, Nasdaq
proposes revising references to
‘‘publicly held shares’’ to ‘‘unrestricted
publicly held shares’’ in Rule 5310(d),
which states that ‘‘in computing the
number of publicly held shares for
4 See, e.g., 17 CFR 230.144(a)(3)(i) and (ii), which
states that securities issued in transactions that are
not a public offering or under Regulation D are
considered restricted securities.
5 See, e.g., 17 CFR 230.701(g), which states that
securities issued pursuant to certain compensatory
benefit plans and contracts relating to
compensation are considered restricted securities.
6 See 17 CFR 230.144(a)(3)(v), which states that
securities of domestic issuers acquired in a
transaction in reliance on Regulation S are
considered restricted securities.
7 Securities issued in such transactions would
typically include a ‘‘restrictive’’ legend stating that
the securities cannot be freely resold unless they are
registered with the SEC or in a transaction exempt
from the registration requirements, such as the
exemption available under Rule 144.
8 See generally Securities and Exchange
Commission Investor Publications, Rule 144:
Selling Restricted and Control Securities (January
16, 2013), available at: https://www.sec.gov/
reportspubs/investor-publications/investor
pubsrule144htm.html.
9 See FTSE Russell, ‘‘Free-Float’’, available at:
https://www.ftse.com/products/indices/free-float.
10 See FTSE Russell, ‘‘Free Float Restrictions
v2.0’’, May 2018, available at: https://
www.ftse.com/products/downloads/Free_Float_
Restrictions.pdf.
11 See S&P Dow Jones Indices, ‘‘Float Adjustment
Methodology’’, April 2018, available at: https://
us.spindices.com/documents/index-policies/
methodology-sp-float-adjustment.pdf.
12 Rule 5005(a)(33) defines ‘‘Primary Equity
Security’’ as ‘‘a Company’s first class of Common
Stock, Ordinary Shares, Shares or Certificates of
Beneficial Interest of Trust, Limited Partnership
Interests or American Depositary Receipts (ADR) or
Shares (ADS).’’
13 There are no separate listing requirements on
the Nasdaq Global Select Market for classes of
securities other than primary equity securities.
Instead, pursuant to Rule 5320, if the primary
equity security is listed on the Nasdaq Global Select
Market, generally any other security of that same
company that qualifies for listing on the Nasdaq
Global Market is also included in the Nasdaq Global
Select Market.
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Global Select purposes, Nasdaq will not
consider shares held by an officer,
director or 10% or greater
Shareholder 14 of the Company,’’ and
Rule 5226(b) which requires a paired
share unit to satisfy the security-level
requirements of Rule 5315 or 5405,
including the number of publicly held
shares. Nasdaq also proposes to revise
Rule 5205(g) to reflect the change to
‘‘unrestricted publicly held shares.’’ 15
Nasdaq also proposes revising Rule
5215(b) to state that in considering
whether an ADR satisfies the initial
listing requirements, Nasdaq will
consider the unrestricted publicly held
shares of the underlying security, and
that in determining whether shares of
the underlying security are restricted for
this purpose, Nasdaq will only consider
restrictions that prohibit the resale or
trading of the underlying security on the
company’s home country market, as
discussed below.
B. Market Value of Publicly Held Shares
Nasdaq is proposing to modify its
initial listing requirements related to
market value of publicly held shares so
that they are based only on unrestricted
shares. A company is required to have
a minimum market value of publicly
held shares in order to list its primary
equity securities (including ADRs) on
all tiers of the Exchange. A company is
also required to have a minimum market
value of publicly held shares in order to
list its preferred stock or secondary
classes of common stock on Nasdaq’s
Global and Capital Market tiers;
subscription receipts on Nasdaq’s
Capital Market tier; or paired share units
on Nasdaq’s Global Select Market tier.
The calculation of ‘‘market value of
publicly held shares’’ does not exclude
stock subject to resale restrictions. As
discussed above, restricted securities
may not contribute to liquidity and
therefore the current calculation of
market value of publicly held shares
may result in a security with limited
true liquidity satisfying the listing
requirements related to the market value
of publicly held shares and qualifying to
list.
Nasdaq proposes revising its initial
listing requirements so that they are
based on the market value of
unrestricted publicly held shares, and
therefore exclude restricted securities,
in the following rules:
Rule No.
Nasdaq Market
tier
Security type
Current required market value
5315(c)(1)–(3) ...
Global Select ....
Primary Equity Security of a Closed End Management Investment Company Listed with a Fund
Family.
5315(f)(2)(A)–
(D).
Global Select ....
Primary Equity Securities ..........................................
IM–5315–1 ........
Global Select ....
Direct Listing of Primary Equity Securities ................
5405(b)(1)(C)
5405(b)(2)(C)
5405(b)(3)(B)
5405(b)(4)(B)
Global
Global
Global
Global
Primary
Primary
Primary
Primary
(i) a total market value of the fund family of at least
$220 million; (ii) an average market value of all
funds in the fund family of at least $50 million;
and (iii) a market of each fund in the fund family
of at least $35 million.
(i) at least $110 million; (ii) at least $100 million, if
the company has stockholders’ equity of at least
$110 million; (iii) at least $45 million in the case
of an initial public offering or spin-off; or (iv) at
least $70 million in the case of a closed end management investment company registered under
the Investment Company Act of 1940.
(a) If the Company’s security has had sustained recent trading in a Private Placement Market, the
lesser of (i) the value calculable based on an
independent third-party valuation and (ii) the
value calculable based on the most recent trading
price in a Private Placement Market; or (b)
$250,000,000 for a security that has not had sustained recent trading in a Private Placement Market prior to listing.
At least $8 million (Income Standard).
At least $18 million (Equity Standard).
At least $20 million (Market Value Standard).
At least $20 million (Total Assets/Total Revenue
Standard).
At least $4 million.
....
....
....
....
...............
...............
...............
...............
5415(a)(2) .........
Global ...............
5505(b)(1)(B) ....
5505(b)(2)(C) ....
5505(b)(3)(C) ....
5510(a)(4) .........
Capital
Capital
Capital
Capital
5520(g)(2) .........
Capital ..............
..............
..............
..............
..............
Equity
Equity
Equity
Equity
Securities
Securities
Securities
Securities
..........................................
..........................................
..........................................
..........................................
Preferred Stock or Secondary Classes of Common
Stock.
Primary Equity Securities ..........................................
Primary Equity Securities ..........................................
Primary Equity Securities ..........................................
Preferred Stock or Secondary Classes of Common
Stock.
Subscription Receipts ................................................
At
At
At
At
least
least
least
least
$15 million (Equity Standard).
$15 million (Market Value Standard).
$5 million (Net Income Standard).
$3.5 million.
At least $100 million.
As discussed above, Nasdaq believes
that excluding restricted securities from
the calculation of market value of
publicly held shares will better reflect
the liquidity of, and investor interest in,
a security and therefore will better
protect investors. Specifically, market
value of publicly held shares is an
indication of the size and investor
interest in a company. When restricted
securities are included in that
calculation, a company could
technically meet Nasdaq’s requirement
without actually having sufficient
investor interest, resulting in a security
that is illiquid. Less liquid securities
may be more susceptible to price
manipulation, as a relatively small
14 Rule 5005(a)(40) defines ‘‘Shareholder’’ as ‘‘a
record or beneficial owner of a security listed or
applying to list. For purposes of the Rule 5000
Series, the term ‘‘Shareholder’’ includes, for
example, a limited partner, the owner of a
depository receipt, or unit.’’
15 Rule 5205(g) currently states that ‘‘The
computation of Publicly Held Shares and Market
Value of Publicly Held Shares shall be as of the date
of application of the Company.’’
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amount of trading activity can have an
inordinate effect on market prices and a
company’s market value of publicly
held shares.
In addition to the above, Nasdaq
proposes revising references to ‘‘market
value of publicly held shares’’ to
‘‘market value of unrestricted publicly
held shares’’ in Rule 5226(b), which
requires a paired share unit listing on
Nasdaq’s Global Select or Global Select
Market tiers to satisfy the security-level
requirements of Rule 5315 or 5405,
including the market value of publicly
held shares.16 Nasdaq also proposes to
revise Rule 5205(g) to reflect that the
computation for market value of
unrestricted publicly held shares shall
be as of the date of the application of the
company for all market tiers.17 Nasdaq
also proposes revising Rule 5215(b) to
state that in considering whether an
ADR satisfies the initial listing
requirements, Nasdaq will consider the
market value of unrestricted publicly
held shares of the underlying security,
and that in determining whether shares
of the underlying security are restricted
for this purpose, Nasdaq will only
consider restrictions that prohibit the
resale or trading of the underlying
security on the company’s home
country market, as discussed below.
C. Round Lot Holders
Nasdaq is proposing to revise the
listing criteria related to the minimum
number of round lot holders for
companies seeking to initially list
primary equity securities (including
ADRs), preferred stock, secondary
classes of common stock and warrants
on the Exchange so that they are based
on holders of unrestricted securities.
Currently, Nasdaq defines a ‘‘round lot
holder’’ as ‘‘a holder of a Normal Unit
of Trading’’ and notes that ‘‘beneficial
holders will be considered in addition
14175
to holders of record.’’ 18 Nasdaq defines
a ‘‘round lot or normal unit of trading’’
as ‘‘100 shares of a security unless, with
respect to a particular security, Nasdaq
determines that a normal unit of trading
shall constitute other than 100
shares.’’ 19 A company is required to
have a minimum number of round lot
holders in order to list securities on the
Exchange. While this is another measure
of liquidity designed to help assure that
there will be sufficient investor interest
and trading to support price discovery
once a security is listed, as noted above,
under the existing rule, all the shares
held by a holder could be restricted
securities that do not contribute to
liquidity.
To address this concern, Nasdaq is
proposing to revise the definition of
‘‘round lot holder’’ to mean a holder of
a normal unit of trading of unrestricted
securities. This change will impact the
following rules:
Rule No.
Nasdaq Market
tier
Security type
Current required number of round lot holders
5315(f)(1)(C) .....
Global Select ....
Primary Equity Security .............................................
5405(a)(3) .........
5410(d) .............
Global ...............
Global ...............
Primary Equity Security .............................................
Warrants ....................................................................
5415(a)(4) .........
Global ...............
5505(a)(3) .........
5510(a)(2) .........
Capital ..............
Capital ..............
5515(a)(4) .........
Capital ..............
Preferred Stock or Secondary Class of Common
Stock.
Primary Equity Securities ..........................................
Preferred Stock or Secondary Class of Common
Stock.
Warrants ....................................................................
At least 450 round lot holders or a minimum number of total holders.
At least 400.
At least 400 unless such warrants are listed in connection with an initial firm commitment underwritten public offering.
At least 100.
5520(g)(4) .........
Capital ..............
Subscription Receipts ................................................
At least 300.
At least 100.
At least 400 unless such warrants are listed in connection with an initial firm commitment underwritten public offering.
At least 400.
As a result of these changes, a holder
of only restricted securities would not
be considered in the round lot holder
count. Nasdaq believes that these
amendments will help ensure adequate
distribution and investor interest in a
listed security, which will result in a
more liquid trading market and which
will better protect investors. Illiquid
securities may trade infrequently, in a
more volatile manner and with a wider
bid-ask spread, all of which may result
in trading at a price that may not reflect
their true market value. Less liquid
securities also may be more susceptible
to price manipulation, as a relatively
small amount of trading activity can
have an inordinate effect on market
prices.
In addition to the above, Nasdaq
proposes revising references to ‘‘holder’’
to ‘‘round lot holders’’ in Rule 5226(b),
which requires a paired share unit
applying to list on the Nasdaq Global
Select or Global Market tiers to meet the
security-level requirements of Rule 5315
or 5405, which includes the number of
round lot holders. Nasdaq also proposes
revising Rule 5215(b) to state that in
considering whether an ADR satisfies
this proposed change that determination
of round lot holders be based on holders
of unrestricted securities, Nasdaq will
consider whether round lot holders of
the underlying security hold
unrestricted shares of that underlying
security, and that in determining
whether shares of the underlying
security are restricted for this purpose,
Nasdaq will only consider restrictions
that prohibit the resale or trading of the
underlying security on the company’s
home country market, as discussed
below. Nasdaq will also apply the new
minimum value requirement for round
lot holders to the underlying security, as
proposed below, in addition to the
minimum number of round lot holders
required by the applicable tier that the
company is seeking to list on.
16 Nasdaq is also proposing to capitalize defined
terms in Rule 5226(b) that were previously not
capitalized for consistency and in order to maintain
an organized rule book structure.
17 Rule 5205(g) currently states that ‘‘The
computation of Publicly Held Shares and Market
Value of Publicly Held Shares shall be as of the date
of application of the Company.’’
18 Currently, this is Nasdaq Rule 5005(a)(39) but
will be converted to Nasdaq Rule 5005(a)(40).
19 Currently, this is Nasdaq Rule 5005(a)(38) but
will be converted to Nasdaq Rule 5005(a)(39).
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D. American Depositary Receipts
Lastly, Nasdaq proposes to revise Rule
5215(b) to specify how these new
requirements apply to ADRs.
Specifically, as under the current rule
for calculating publicly held shares,
market value of publicly held shares,
and round lot holders, Nasdaq will
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continue to consider the underlying
security in calculating the unrestricted
publicly held shares and market value
of unrestricted publicly held shares and
in calculating the new definition of a
round lot holder. In determining
whether shares of the underlying
security are ‘‘restricted’’ for these
purposes, only restrictions that prohibit
the resale or trading of the underlying
security on the company’s home
country market would result in those
securities being considered restricted for
purposes of the proposed rules. Thus, if
the restrictions provided as examples in
the new definition of ‘‘restricted
securities’’ would restrict the
underlying security from being freely
sold or tradable on its home country
market, Nasdaq would also consider
such restrictions when calculating
‘‘unrestricted publicly held shares.’’
Nasdaq believes that this is appropriate
because the purpose of the Initial
Liquidity Calculations, and the
proposed changes described herein, is to
establish investor interest in the
company and ensure adequate liquidity
and distribution of the company’s
underlying security on its home country
market, which is held by the depositary
bank and represented by the ADR. For
this reason, existing Rule 5215(b)
currently looks to the underlying
security when calculating publicly held
shares, market value of publicly held
shares, round lot and public holders and
it is similarly appropriate to consider
whether or not the underlying security
is freely tradable in its home country
market when determining unrestricted
publicly held shares, market value of
unrestricted publicly held shares, and
round lot holders. Excluding securities
that are only restricted from resale or
trading in the United States would be
not be an appropriate measure of
investor interest in or liquidity of the
underlying security because the
underlying security will not be listed or
trading in the U.S.20 Moreover, applying
the new definition of restricted
securities to securities trading on a
foreign market, if the securities trading
on the home country market are not
already restricted by the examples set
forth in the new definition of restricted
securities, would unduly impose the
requirements of a U.S. national
securities exchange on those securities,
which will not be listed in the U.S.
In addition, Nasdaq proposes to revise
the reference to Form S–12 in Rule
20 For example, the underlying security may not
be eligible to trade in the U.S., but that would not
cause all shares of that security to be considered
restricted if they are freely tradable on the
company’s home country market.
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5215(b) to Form F–6 in order to refer to
the current form required by the
Commission to register ADRs under the
Securities Act of 1933.21
II. Minimum Value Requirement for
Holders
Nasdaq is also proposing to revise the
listing rules related to round lot holders
listed in Part I.C, above, except for those
applicable to listing warrants, to impose
a new requirement related to the
minimum investment amount held by
shareholders. Under the current
definition of a round lot, a shareholder
may be considered a round lot holder by
holding exactly 100 shares, which
would be worth only $400 in the case
of a stock that is trading at the minimum
bid price of $4 per share.22 Nasdaq
believes that this minimal investment is
not an appropriate representation of
investor interest to support a listing on
a national securities exchange. To
address this concern, Nasdaq proposes
to require that for initial listing at least
50% of a company’s required round lot
holders must each hold shares with a
market value of at least $2,500. Nasdaq
does not propose to impose this
requirement on initial listings of
warrants, however, because warrants do
not have a minimum price requirement
and may have little value at the time of
issuance.23 Nonetheless, warrants are
often issued as part of a unit and the
common stock component of the unit
would be required to satisfy the
minimum value requirement. Further,
in all cases, the security underlying a
warrant must be listed on Nasdaq or be
a covered security, as defined in Section
18(b) of the Securities Act of 1933.24
Nasdaq has not observed problems with
the trading of warrants.
Nasdaq believes that adopting this
amendment will help ensure that a
majority of the required minimum
number of shareholders hold a
meaningful value of stock and that a
company has sufficient investor interest
to support an exchange listing.
III. Average Daily Trading Volume
Nasdaq is proposing to adopt an
additional initial listing criteria for
primary equity securities (including
ADRs), preferred stock, secondary
21 Securities Exchange Act Release No. 34–19612
(March 18, 1983), 48 FR 12346 (March 24, 1983).
22 On the Nasdaq Capital Market, certain
companies are also eligible to list at $2 or $3 and
the minimum value held by such a holder would
be only $200 or $300, respectively. See Listing Rule
5505(a)(1)(B).
23 Warrants issued as part of a unit must satisfy
the initial listing requirements for warrants
applying to list on the applicable market tier in
accordance with Rule 5225.
24 15 U.S.C. 77r(b).
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classes of common stock and paired
share units, previously trading OTC.
The new rules will require such
securities to have a minimum average
daily trading volume over the 30 trading
days prior to listing of at least 2,000
shares a day (including on the primary
market with respect to an ADR), with
trading occurring on more than half of
those 30 days (i.e., at least 16 days).
Nasdaq believes that this will help
ensure a liquid trading market, promote
price discovery and establish an
appropriate market price for the listed
securities.
Nasdaq is proposing to implement
this new requirement by making
identical amendments to Rule 5315(e) to
add a new Rule 5315(e)(4); Rule 5405(a)
to add a new Rule 5404(a)(4); Rule
5415(a) to add a new Rule 5415(a)(6);
Rule 5505(a) to add a new Rule
5505(a)(5); and Rule 5510(a) to add a
new Rule 5510(a)(6). In connection with
the foregoing amendments, Nasdaq is
proposing to revise the cross-references
in Rules 5415(a) and 5510(a) to add new
Rules 5415(a)(6) and 5510(a)(6),
respectively, and renumber the
remaining provisions of Rule 5505(a) to
maintain an organized rule structure. In
addition, Nasdaq is proposing to revise
Rule 5226(b) to clarify that the average
daily trading volume requirement
would apply to companies seeking to
list paired share units on the Exchange.
As noted above, the average daily
trading volume requirement will also
apply to ADRs. Currently, Nasdaq
considers the underlying security of an
ADR when determining annual income
from continuing operations, publicly
held shares, market value of publicly
held shares, stockholders’ equity, round
lot or public holders, operating history,
market value of listed securities, total
assets and total revenue. Nasdaq is
proposing [sic] amend Rule 5215(b) to
state that the average daily trading
volume of the underlying security of an
ADR will be considered in the
Exchange’s computations for this new
requirement too. Nasdaq believes that
this will help demonstrate adequate
investor interest in the company and the
underlying security, which will help
promote price discovery and establish
an appropriate market price for the
ADR.25
Nasdaq is proposing to adopt an
exemption from the proposed average
daily trading volume requirement for
securities (including ADRs) listed in
connection with a firm commitment
25 ADR shares trade separately from the
underlying securities, and often have slightly
different values. However, ADR share values
usually track closely with the value of the
underlying security.
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underwritten public offering of at least
$4 million. Nasdaq believes that the sale
of securities in an underwritten public
offering provides an additional basis for
believing that a liquid trading market
will likely develop for such securities
after listing, since the offering process is
designed to promote appropriate price
discovery. Moreover, the underwriters
in a firm commitment underwritten
public offering will also generally make
a market in the securities for a period
of time after the offering, assisting in the
creation of a liquid trading market. For
these reasons, in part, Nasdaq’s rules
already provide similar exemptions in
other situations involving a firm
commitment underwritten offering.26
Nasdaq believes that the process of a
firm commitment underwritten offering
similarly supports an exception from
the proposed average daily trading
volume requirement. Nasdaq also notes
that the same volume requirement is
being proposed for each of Nasdaq’s
Global Select, Global and Capital Market
tiers, and that it is therefore appropriate
to base the exemption on the same
minimum $4 million offering in each
case, notwithstanding the different
listing criteria generally applicable to
companies seeking to list on each tier.
Finally, Nasdaq believes that the
proposed minimum $4 million firm
commitment underwritten public
offering is large enough to represent a
fundamental change in how the
company will trade following the
offering, such that the prior trading
volume will not be representative of the
volume following the offering. In that
regard, Nasdaq notes that the minimum
$4 million offering would be sufficient
to satisfy Nasdaq’s one million share
public float requirement at the
minimum $4 price for listing on Capital
Market. This exemption will be
included in new Rules 5315(e)(4),
5404(a)(4), 5415(a)(6), 5505(a)(5), and
5510(a)(6).
Nasdaq proposes that this change be
effective 30 days after approval by the
SEC. Nasdaq notes that it had originally
solicited comment on a similar proposal
in October 2018,27 which provided
companies with notice that Nasdaq was
considering adopting the proposed
26 For example, Rules 5410(d) and 5515(a)(4)
provide an exemption from the minimum round lot
holder requirement for warrants listed in
connection with an initial firm commitment
underwritten public offering. Rule 5110(c)(3)
provides an exemption from the requirements
applicable to a company that was formed by a
reverse merger if the company completes a firm
commitment underwritten public offering where
the gross proceeds to the company will be at least
$40 million.
27 See https://listingcenter.nasdaq.com/assets/
Liquidity_Measures_Comment_Solicitation.pdf.
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changes to the Exchange’s Initial
Liquidity Calculations. The proposed
30-day delay from approval until
operation of the proposed rule will
allow companies a short opportunity to
complete an offering or transaction
before the new rules become effective if
they have substantially completed the
Nasdaq review process or are near
completion of an offering or transaction,
and have relied on the existing rules.
2. Statutory Basis
The Exchange believes that its
proposal is consistent with Section 6(b)
of the Act,28 in general, and furthers the
objectives of Section 6(b)(5) of the Act,29
in particular, in that it is designed to
promote just and equitable principles of
trade, 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 set
forth below. Further, the Exchange
believes that this proposal is not
designed to permit unfair
discrimination between customers,
issuers, brokers, or dealers.
The Commission has previously
opined on the importance of meaningful
listing standards for the protection of
investors and the public interest.30 In
particular, the Commission stated:
Among other things, listing standards
provide the means for an exchange to screen
issuers that seek to become listed, and to
provide listed status only to those that are
bona fide companies with sufficient public
float, investor base, and trading interest
likely to generate depth and liquidity
sufficient to promote fair and orderly
markets. Meaningful listing standards also
are important given investor expectations
regarding the nature of securities that have
achieved an exchange listing, and the role of
an exchange in overseeing its market and
assuring compliance with its listing
standards.31
As described below, Nasdaq believes
that the proposed rule changes in this
filing are consistent with the investor
protection requirement of Section
6(b)(5) of the Act because they each will
enable Nasdaq to help ensure that
issuers seeking to list on the Exchange
have sufficient public float, investor
base, and trading interest likely to
generate depth and liquidity. Illiquid
securities may trade infrequently, in a
more volatile manner and with a wider
28 15
29 15
U.S.C. 78f(b).
U.S.C. 78f(b)(5).
30 Securities Exchange Act Release No. 65708
(November 8, 2011), 76 FR 70799 (November 15,
2011) (approving SR–Nasdaq–2011–073 adopting
additional listing requirements for companies
applying to list after consummation of a ‘‘reverse
merger’’ with a shell company).
31 Id.
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14177
bid-ask spread, all of which may result
in trading at a price that may not reflect
their true market value. Less liquid
securities also may be more susceptible
to price manipulation, as a relatively
small amount of trading activity can
have an inordinate effect on market
prices.
I. Restricted Securities
The proposed amendments will adopt
new definitions of ‘‘restricted
securities’’ and ‘‘unrestricted securities’’
in order to exclude securities that are
subject to resale restrictions from the
Exchange’s Initial Liquidity
Calculations. The Exchange believes
that these amendments will bolster the
Exchange’s quantitative shareholder
requirements, and as a result, better
reflect and safeguard the liquidity of a
security. The Commission has
previously noted the importance of
adequate liquidity in a security and the
consequences for investors when a
security is thinly traded. In In the
Matter of the Application of Rocky
Mountain Power Company, the
Commission observed:
We note that the requirement concerning
the number of shareholders is not only an
important listing criterion but is also a
standard used in conjunction with other
standards to ensure that a stock has the
investor following and liquid market
necessary for trading. In response to the
Panel’s questions, the Company’s president
acknowledged that the market for Rocky
Mountain’s shares would be initially ‘‘very,
very small,’’ and that fewer than 20,000 of
the Company’s over 700,000 shares
outstanding were freely tradeable. While
Rocky Mountain, as a technical matter,
complied with the shareholder requirement,
it failed to demonstrate an adequate market
for its shares, which is at the heart of this and
other [Nasdaq] inclusion requirements.32
Nasdaq believes that adopting the
new definitions of restricted securities
and unrestricted securities will promote
just and equitable principles of trade,
remove impediments to and perfect the
mechanism of a free and open market
and a national market system, and
protect investors and the public interest
because securities subject to resale
restrictions are not freely transferrable
and therefore excluding restricted
securities from the Exchange’s Initial
Liquidity Calculations will help ensure
that Nasdaq lists only companies with
liquid securities and sufficient investor
interest to support an exchange listing
meeting the Exchange’s listing criteria,
which will better protect investors.
32 See Rocky Mountain Power Co., Securities
Exchange Act Release No. 40648, 1998 SEC LEXIS
2422; 53 SEC. 979 (November 9, 1998).
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A. Publicly Held Shares
The proposed amendments will adopt
a new definition of ‘‘unrestricted
publicly held shares’’ which excludes
restricted securities and revise Nasdaq’s
initial listing standards to conform the
minimum number of publicly held
shares to the new definition. Nasdaq
believes that these changes will promote
just and equitable principles of trade,
remove impediments to and perfect the
mechanism of a free and open market
and a national market system, and
protect investors and the public interest
because it will help ensure that a
security to be listed has adequate
liquidity and is thus suitable for listing
and trading on an exchange, which will
reduce trading volatility and price
manipulation, thereby protecting
investors and the public interest.
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B. Market Value of Publicly Held Shares
The proposed amendments will revise
the definition of ‘‘market value’’ to
exclude restricted securities from the
calculation of ‘‘market value of
unrestricted publicly held shares’’ and
revise Nasdaq’s initial listing standards
to conform the minimum market value
to the new definition. Nasdaq believes
that these changes will promote just and
equitable principles of trade, remove
impediments to and perfect the
mechanism of a free and open market
and a national market system, and
protect investors and the public interest
because it will help ensure that a
security to be listed has adequate
liquidity and investor interest and is
thus suitable for listing and trading on
an exchange, which will reduce trading
volatility and price manipulation,
thereby protecting investors and the
public interest.
C. Round Lot Holders
The proposed amendments will
exclude restricted securities from the
calculation of the number of round lot
holders required to meet the Exchange’s
initial listing criteria by revising the
definition of ‘‘round lot holder’’ to
exclude restricted securities. Nasdaq
believes that this amendment will
promote just and equitable principles of
trade, remove impediments to and
perfect the mechanism of a free and
open market and a national market
system, and protect investors and the
public interest by helping ensure
adequate distribution, shareholder
interest and a liquid trading market of
a security.
D. American Depositary Receipts
The proposed amendments will
modify Nasdaq’s rules to state that when
considering the security underlying an
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ADR, Nasdaq will only consider
restrictions that prohibit the resale or
trading of the underlying security on the
company’s home country market.
However, any restrictions, including
those provided as examples in the new
definition of ‘‘restricted securities,’’
which would restrict the underlying
security from being freely sold or
tradable on its home country market
would be considered by Nasdaq when
calculating ‘‘unrestricted publicly held
shares.’’ Nasdaq believes that this is
appropriate because the purpose of the
Initial Liquidity Calculations, and the
proposed changes described herein, is to
establish investor interest in the
company and ensure adequate liquidity
and distribution of the company’s
underlying security on its home country
market, which is held by the depositary
bank and represented by the ADR. For
this reason, existing Rule 5215(b)
currently looks to the underlying
security when calculating publicly held
shares, market value of publicly held
shares, round lot and public holders and
it is similarly appropriate to consider
whether or not the underlying security
is freely tradable in its home country
market when determining unrestricted
publicly held shares, market value of
unrestricted publicly held shares, and
round lot holders. Excluding securities
that are only restricted from resale or
trading in the United States would be
not be an appropriate measure of
investor interest in or liquidity of the
underlying security because the
underlying security will not be listed or
trading in the U.S. Moreover, applying
the new definition of restricted
securities to securities trading on a
foreign market, if the securities trading
on the home country market are not
already restricted by the examples set
forth in the new definition of restricted
securities, would unduly impose the
requirements of a U.S. national
securities exchange on those securities,
which will not be listed in the U.S. For
the foregoing reasons, Nasdaq believes
that this provision will promote just and
equitable principles of trade, remove
impediments to and perfect the
mechanism of a free and open market
and a national market system, and
protect investors and the public interest.
Further, the Exchange believes that
this provision is not designed to permit
unfair discrimination between
customers, issuers, brokers, or dealers.
While the Exchange’s Initial Liquidity
Calculations for ADRs would be
calculated differently than other
securities, these differences are not
unfair because they recognize the
unique structure of ADRs, as already
PO 00000
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reflected in the existing treatment of
ADRs under Nasdaq’s rules, where
Nasdaq looks to the underlying security
in order to ensure sufficient investor
interest and adequate liquidity and
distribution of the company’s
underlying security, which is
represented by the ADR.
II. Minimum Value Requirement for
Holders
The Exchange proposes adopting a
new requirement that at least 50% of a
company’s round lot holders hold
securities with a market value of at least
$2,500. Nasdaq believes that the
proposed $2,500 minimum value is
reasonable because the Exchange has
noticed problems with companies
listing where a large number of round
lot holders hold exactly 100 shares,
which would be worth only $400 in the
case of a stock that is trading at the
minimum bid price of $4 per share, or
as little as $200 in the case of a stock
listing under the alternative price
criteria. Nasdaq notes that the proposed
$2,500 threshold is from 6.5 times to
12.5 times larger than the existing
minimum investment, and Nasdaq
believes that this increased amount is a
more appropriate representation of
genuine investor interest in the
company and will make it more difficult
to circumvent the requirement through
share transfers for no value. As such,
Nasdaq believes that these amendments
will promote just and equitable
principles of trade, remove
impediments to and perfect the
mechanism of a free and open market
and a national market system, and
protect investors and the public interest
by requiring more than half of the
required number of shareholders hold a
more significant investment in the
company, and that the company will
therefore have an adequate distribution,
shareholder interest and a liquid trading
market of a security.
Nasdaq does not propose to impose
this requirement on the initial listings of
warrants because warrants do not have
a minimum price requirement and may
have little value at the time of issuance.
The value of warrants is derived from
the value of the underlying security,
which must be listed on Nasdaq or be
a covered security and Nasdaq has not
observed problems with the trading of
warrants. As such, Nasdaq believes that
it is not unfairly discriminatory to treat
warrants differently under this proposal
and that excluding warrants avoids
imposing an unnecessary impediment to
the mechanism of a free and open
market.
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III. Average Daily Trading Volume
The proposed amendments will
generally impose a minimum average
daily trading volume over the 30 trading
days prior to listing of at least 2,000
shares a day (including on the primary
market with respect to an ADR), with
trading occurring on more than half of
those 30 days (i.e., at least 16 days). This
will apply to primary equity securities,
preferred stock, secondary classes of
common stock and ADRs previously
trading OTC that apply to list on the
Exchange. Nasdaq believes this
proposed change will promote just and
equitable principles of trade, remove
impediments to and perfect the
mechanism of a free and open market
and a national market system, and
protect investors and the public interest
by helping to assure adequate liquidity
and price discovery of a security. The
Exchange believes that companies
trading at least 2,000 shares a day over
a period of 30 trading days prior to
listing, with trading occurring on more
than half of those 30 days, can
demonstrate sufficient investor interest
to support sustained trading activity
when listed on a national stock
exchange.
The proposed rule change will
provide a limited exemption to this
requirement for securities (including
ADRs) listed in connection with a firm
commitment underwritten public
offering of at least $4 million. Nasdaq
believes that it is consistent with the
protection of investors and the public
interest, and not unfairly
discriminatory, to exempt from the
proposed average daily trading volume
requirement securities satisfying this
exemption because underwriters
facilitate appropriate price discovery
and will generally make a market in the
securities for a period of time after the
offering, assisting in the creation of a
liquid trading market. Further, Nasdaq
believes that this exemption is
consistent with the protection of
investors and the public interest, and
not unfairly discriminatory, because the
proposed minimum $4 million firm
commitment underwritten public
offering is large enough to represent a
fundamental change in how the
company will trade following the
offering, such that the prior trading
volume will not be representative of the
volume following the offering.
Under the proposed rule, Nasdaq
would consider trading in the security
underlying an ADR in determining
whether a foreign company seeking to
list ADRs satisfies the requirement.
Nasdaq believes that this distinction is
not unfairly discriminatory because the
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trading volume in the underlying
security represents interest in the
company’s security and that interest is
reasonably likely to be indicative of
investor interest in the ADR.
disapprove such proposed rule change,
or (b) institute proceedings to determine
whether the proposed rule change
should be disapproved.
B. Self-Regulatory Organization’s
Statement on Burden on Competition
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:
The Exchange does not believe that
the proposed rule change will impose
any burden on competition not
necessary or appropriate in furtherance
of the purposes of the Act. All domestic
and foreign companies seeking to list
primary equity securities, preferred
stock, secondary classes of common
stock or subscription receipts would be
affected in the same manner by these
changes, across all market tiers. As
discussed above, companies listing
ADRs would be treated differently in
some respects than companies listing
other primary equity securities, but
those differences reflect the unique
characteristics of ADRs and does [sic]
not impose an unnecessary burden on
competition.
To the extent that companies prefer
listing on a market with these proposed
listing standards, other exchanges can
choose to adopt similar enhancements
to their requirements. As such, these
changes are neither intended to, nor
expected to, impose any burden on
competition between exchanges.
C. Self-Regulatory Organization’s
Statement on Comments on the
Proposed Rule Change Received From
Members, Participants, or Others
On October 5, 2018, Nasdaq launched
a formal comment solicitation on
proposals to exclude restricted
securities from the Exchange’s Initial
Liquidity Calculations and adopt a new
initial listing criteria related to prior
trading volume for securities that are
currently trading OTC (‘‘2018
Solicitation’’), a copy of which is
attached hereto as Exhibit 2.33 No
comments were received in response to
the comment solicitation.
III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
Within 45 days of the date of
publication of this notice in the Federal
Register or within such longer period
up to 90 days (i) as the Commission may
designate if it finds such longer period
to be appropriate and publishes its
reasons for so finding or (ii) as to which
the Exchange consents, the Commission
shall: (a) By order approve or
33 The Commission notes that Exhibit 2 is
attached to the Exchange’s Form 19b–4 relating to
the proposed rule change and not to this notice.
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IV. Solicitation of Comments
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–2019–009 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–2019–009. 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–2019–009, and
should be submitted on or before April
30, 2019.
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For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.34
Eduardo A. Aleman,
Deputy Secretary.
[FR Doc. 2019–06935 Filed 4–8–19; 8:45 am]
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.8
Eduardo A. Aleman,
Deputy Secretary.
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[FR Doc. 2019–06924 Filed 4–8–19; 8:45 am]
[Release No. 34–85500; File No. SR–BX–
2018–025]
BILLING CODE 8011–01–P
Self-Regulatory Organizations; Nasdaq
BX, Inc.; Notice of Withdrawal of
Proposed Rule Change, As Modified
By Amendment No. 1, To Make
Permanent the Retail Price
Improvement Program Pilot, Which Is
Set To Expire on June 30, 2019
April 3, 2019.
On July 9, 2018, Nasdaq BX, Inc.
(‘‘BX’’ or ‘‘Exchange’’) filed with the
Securities and Exchange Commission
(‘‘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
make permanent the pilot program for
the Exchange’s Retail Price
Improvement program, which is set to
expire on June 30, 2019. The proposed
rule change was published for comment
in the Federal Register on July 26,
2018.3 On August 31, 2018, the
Commission designated a longer period
within which to approve the proposed
rule change, disapprove the proposed
rule change, or institute proceedings to
determine whether to disapprove the
proposed rule change, to October 24,
2018.4 On October 11, 2018, the
Exchange filed Amendment No. 1 to the
proposed rule change, which replaced
and superseded the proposed rule
change as originally filed.
On October 23, 2018, the Commission
instituted proceedings under Section
19(b)(2)(B) of the Act 5 to determine
whether to approve or disapprove the
proposed rule change and published
Amendment No. 1 in the Federal
Register.6 On December 26, 2018, the
Commission designated a longer period
for the Commission to issue an order
approving or disapproving the proposed
34 17
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
3 See Securities Exchange Act Release No. 83681
(July 20, 2018), 83 FR 35516 (July 26, 2018).
4 See Securities Exchange Act Release No. 84013
(August 31, 2018), 83 FR 45479 (September 7,
2018).
5 15 U.S.C. 78s(b)(2)(B).
6 See Securities Exchange Act Release No. 84472
(October 23, 2018), 83 FR 54401 (October 29, 2018).
amozie on DSK9F9SC42PROD with NOTICES
1 15
VerDate Sep<11>2014
18:15 Apr 08, 2019
Jkt 247001
rule change, to March 23, 2019.7 The
Commission received no comments on
the proposal. On March 20, 2019, the
Exchange withdrew the proposed rule
change (SR–BX–2018–025).
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–85497; File No. SR–
NYSEAMER–2019–08]
Self-Regulatory Organizations; NYSE
American LLC; Notice of Filing and
Immediate Effectiveness of Proposed
Rule Change To Amend Rule 928NY To
Reduce the Minimum Allowable
Parameter for the Percentage-Based
Risk Limitation Mechanism
April 3, 2019.
Pursuant to Section 19(b)(1) 1 of the
Securities Exchange Act of 1934
(‘‘Act’’) 2 and Rule 19b–4 thereunder,3
notice is hereby given that on March 22,
2019, NYSE American LLC (‘‘NYSE
American’’ or the ‘‘Exchange’’) filed
with the Securities and Exchange
Commission (‘‘Commission’’) the
proposed rule change as described in
Items I and II below, which Items have
been prepared by the self-regulatory
organization. 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
Rule 928NY (Risk Limitation
Mechanism) to reduce the minimum
allowable parameter for the percentagebased Risk Limitation Mechanism. The
proposed rule change is available on the
Exchange’s website at www.nyse.com, at
the principal office of the Exchange, and
at the Commission’s Public Reference
Room.
7 See Securities Exchange Act Release No. 84974
(December 26, 2018), 84 FR 0870 (January 31, 2019).
8 17 CFR 200.30–3(a)(12).
1 15 U.S.C. 78s(b)(1).
2 15 U.S.C. 78a.
3 17 CFR 240.19b–4.
PO 00000
Frm 00098
Fmt 4703
Sfmt 4703
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
self-regulatory organization 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 those 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 parts of such
statements.
A. Self-Regulatory Organization’s
Statement of the Purpose of, and the
Statutory Basis for, the Proposed Rule
Change
1. Purpose
The Exchange proposes to amend
Rule 928NY (Risk Limitation
Mechanism) to reduce the minimum
allowable parameter for the percentagebased Risk Limitation Mechanism.
Risk Limitation Mechanisms
Rule 928NY sets forth the risklimitation system, which is designed to
help Market Makers, as well as ATP
Holders, better manage risk related to
quoting and submitting orders,
respectively, during periods of
increased and significant trading
activity.4 The Exchange requires Market
Makers to utilize a risk limitation
mechanism for quotes, which
automatically removes a Market Maker’s
quotes in all series of an options class
when certain parameter settings are
breached.5 The Exchange permits, but
does not require, ATP Holders to utilize
its risk limitation mechanism for orders,
which automatically cancels such
orders when certain parameter settings
are breached.6
4 Market Makers are included in the definition of
ATP Holders and therefore, unless the Exchange is
discussing the quoting activity of Market Makers,
the Exchange does not distinguish Market Markers
from ATP Holders when discussing the risk
limitation mechanisms. See Rule 900.2NY(5)
(defining ATP Holder as ‘‘a natural person, sole
proprietorship, partnership, corporation, limited
liability company or other organization, in good
standing, that has been issued an ATP,’’ and
requires that ‘‘[a]n ATP Holder must be a registered
broker or dealer pursuant to Section 15 of the
Securities Exchange Act of 1934’’). See also Rule
900.2NY(38) (providing that a Market Maker is ‘‘an
ATP Holder that acts as a Market Maker pursuant
to Rule 920NY’’).
5 See Rule 928NY, Commentary .04(a) (providing
that Market Makers are required to utilize one of the
three risk settings for their quotes); and
Commentary .01 (regarding the cancellation of
quotes once the risk settings have been breached).
6 See Rule 928NY, Commentary .04(b) (providing
that ATP Holders may avail themselves of one of
E:\FR\FM\09APN1.SGM
09APN1
]]>Agencies
[Federal Register Volume 84, Number 68 (Tuesday, April 9, 2019)]
[Notices]
[Pages 14172-14180]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-06935]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-85503; File No. SR-NASDAQ-2019-009]
Self-Regulatory Organizations; The Nasdaq Stock Market LLC;
Notice of Filing of Proposed Rule Change To Revise the Exchange's
Initial Listing Standards Related to Liquidity
April 3, 2019.
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 March 21, 2019, 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 revise the Exchange's initial listing
standards related to liquidity.
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
Nasdaq proposes several amendments in this rule change to increase
Nasdaq's requirements for initial listing and help assure adequate
liquidity for listed securities. First, Nasdaq proposes to revise its
initial listing criteria to exclude restricted securities from the
Exchange's calculations of a company's publicly held shares, market
value of publicly held shares and round lot holders (``Initial
Liquidity Calculations''). To do so, Nasdaq proposes to add three new
definitions to define ``restricted securities'', ``unrestricted
publicly held shares'' and ``unrestricted securities'' and proposes to
amend the definition of ``round lot holder''. Second, Nasdaq proposes
to impose a new requirement that at least 50% of a company's round lot
holders must each hold shares with a market value of at least $2,500.
Third, Nasdaq proposes to adopt a new listing rule requiring a minimum
average daily trading volume for securities trading over-the-counter
(``OTC'') at the time of their listing. Nasdaq is not proposing to
change the requirements for continued listing purposes at this time,
but believes that these heightened initial listing requirements will
result in enhanced liquidity for the companies that satisfy them on an
ongoing basis.\3\ Each amendment is described in more detail below.
---------------------------------------------------------------------------
\3\ Nasdaq staff may apply additional and more stringent
criteria to a listed company that satisfies all of the continued
listing requirements but where there are indications that there is
insufficient liquidity in the security to support fair and orderly
trading. In such circumstances, Nasdaq would typically first allow
the company to provide and implement a plan to increase its
liquidity in the near term.
---------------------------------------------------------------------------
I. Restricted Securities
Nasdaq is proposing to modify its initial listing standards to
exclude securities subject to resale restrictions from its Initial
Liquidity Calculations. Currently, securities subject to resale
restrictions are included in the Exchange's Initial Liquidity
Calculations, however, such securities are not freely transferrable or
available for outside investors to purchase and therefore do not truly
contribute to a security's liquidity upon listing. Because the current
Initial Liquidity Calculations include restricted securities, a
security with a substantial number of restricted securities could
satisfy the Exchange's initial listing requirements related to
liquidity and list on the Exchange, even though there could be few
freely tradable shares, resulting in a security listing on the Exchange
that is illiquid. Nasdaq is concerned because illiquid securities may
trade infrequently, in a more volatile manner and with a wider bid-ask
spread, all of which may result in
[[Page 14173]]
trading at a price that may not reflect their true market value. Less
liquid securities also may be more susceptible to price manipulation,
as a relatively small amount of trading activity can have an inordinate
effect on market prices.
To address this concern, Nasdaq is proposing to adopt a new
definition of ``restricted securities'' at Nasdaq Rule 5005(a)(37),
which includes any securities subject to resale restrictions for any
reason, including restricted securities (1) acquired directly or
indirectly from the issuer or an affiliate of the issuer in
unregistered offerings such as private placements or Regulation D
offerings; \4\ (2) acquired through an employee stock benefit plan or
as compensation for professional services; \5\ (3) acquired in reliance
on Regulation S, which cannot be resold within the United States; \6\
(4) subject to a lockup agreement or a similar contractual restriction;
\7\ or (5) considered ``restricted securities'' under Rule 144.\8\
Nasdaq is also proposing to adopt a new definition of ``unrestricted
securities'' at Nasdaq Rule 5005(a)(46), which includes securities of a
company that are not restricted securities. In connection with these
amendments, Nasdaq is proposing to renumber the remaining provisions of
Rule 5005 to maintain an organized rule structure.
---------------------------------------------------------------------------
\4\ See, e.g., 17 CFR 230.144(a)(3)(i) and (ii), which states
that securities issued in transactions that are not a public
offering or under Regulation D are considered restricted securities.
\5\ See, e.g., 17 CFR 230.701(g), which states that securities
issued pursuant to certain compensatory benefit plans and contracts
relating to compensation are considered restricted securities.
\6\ See 17 CFR 230.144(a)(3)(v), which states that securities of
domestic issuers acquired in a transaction in reliance on Regulation
S are considered restricted securities.
\7\ Securities issued in such transactions would typically
include a ``restrictive'' legend stating that the securities cannot
be freely resold unless they are registered with the SEC or in a
transaction exempt from the registration requirements, such as the
exemption available under Rule 144.
\8\ See generally Securities and Exchange Commission Investor
Publications, Rule 144: Selling Restricted and Control Securities
(January 16, 2013), available at: https://www.sec.gov/reportspubs/investor-publications/investorpubsrule144htm.html.
---------------------------------------------------------------------------
The Exchange believes that these proposed amendments to the listing
rules will enhance its listing criteria and better protect investors by
helping to ensure that securities listed on Nasdaq are liquid and have
sufficient investor interest to support an exchange listing. Nasdaq
notes that in developing their index methodologies the FTSE Russell and
S&P indices take a similar approach. As disclosed by FTSE Russell,
``All FTSE Russell equity index constituents are free float adjusted in
accordance with the index rules, to reflect the actual availability of
stock in the market for public investment.'' \9\ FTSE Russell excludes
shares held within employee share plans, shares subject to a ``lock-
in'' clause, and shares subject to contractual restrictions.\10\ S&P
Dow Jones adjusts its indices to ``reflect only those shares available
to investors rather than all of a company's outstanding shares.'' \11\
---------------------------------------------------------------------------
\9\ See FTSE Russell, ``Free-Float'', available at: https://www.ftse.com/products/indices/free-float.
\10\ See FTSE Russell, ``Free Float Restrictions v2.0'', May
2018, available at: https://www.ftse.com/products/downloads/Free_Float_Restrictions.pdf.
\11\ See S&P Dow Jones Indices, ``Float Adjustment
Methodology'', April 2018, available at: https://us.spindices.com/documents/index-policies/methodology-sp-float-adjustment.pdf.
---------------------------------------------------------------------------
A. Publicly Held Shares
Nasdaq is proposing to modify its initial listing requirements
related to publicly held shares so that they are based only on
unrestricted shares. A company is required to have a minimum number of
publicly held shares in order to list its primary equity securities
(including American Depositary Receipts or ``ADRs'') \12\ on all tiers
of the Exchange. A company is also required to have a minimum number of
publicly held shares in order to list its preferred stock or secondary
classes of common stock on Nasdaq's Global and Capital Market tiers;
\13\ subscription receipts on Nasdaq's Capital Market tier; or paired
share units on Nasdaq's Global Select Market tier. Currently, Nasdaq
Rule 5005(a)(35) defines ``publicly held shares'' as ``shares not held
directly or indirectly by an officer, director or any person who is the
beneficial owner of more than 10 percent of the total shares
outstanding. Determinations of beneficial ownership in calculating
publicly held shares shall be made in accordance with Rule 13d-3 under
the Act.'' As discussed above, the current definition of publicly held
shares does not exclude securities subject to resale restrictions,
which may result in a security with limited liquidity satisfying the
Exchange's initial listing requirements related to publicly held shares
and qualifying to list on the Exchange.
---------------------------------------------------------------------------
\12\ Rule 5005(a)(33) defines ``Primary Equity Security'' as ``a
Company's first class of Common Stock, Ordinary Shares, Shares or
Certificates of Beneficial Interest of Trust, Limited Partnership
Interests or American Depositary Receipts (ADR) or Shares (ADS).''
\13\ There are no separate listing requirements on the Nasdaq
Global Select Market for classes of securities other than primary
equity securities. Instead, pursuant to Rule 5320, if the primary
equity security is listed on the Nasdaq Global Select Market,
generally any other security of that same company that qualifies for
listing on the Nasdaq Global Market is also included in the Nasdaq
Global Select Market.
---------------------------------------------------------------------------
Nasdaq proposes adding a new definition of ``unrestricted publicly
held shares'' at Nasdaq Rule 5005(a)(45), which would be defined as
publicly held shares excluding the newly defined ``unrestricted
securities.'' Nasdaq proposes to revise references to ``publicly held
shares'' to ``unrestricted publicly held shares'' in the following
rules:
------------------------------------------------------------------------
Current
Nasdaq Market required number
Rule No. tier Security type of publicly
held shares
------------------------------------------------------------------------
5315(e)(2)........... Global Select.. Primary Equity At least
Security. 1,250,000.
5405(a)(2)........... Global......... Primary Equity At least
Security. 1,100,000.
5415(a)(1)........... Global......... Preferred Stock At least
or Secondary 200,000.
Class of
Common Stock.
5505(a)(2)........... Capital........ Primary Equity At least
Security. 1,000,000.
5510(a)(3)........... Capital........ Preferred Stock At least
or Secondary 200,000.
Class of
Common Stock.
5520(g)(3)........... Capital........ Subscription At least
Receipts. 1,100,000.
------------------------------------------------------------------------
As a result, only securities that are freely transferrable will be
included in the calculation of publicly held shares to determine
whether a company satisfies the Exchange's initial listing criteria
under these rules. Nasdaq believes that excluding restricted securities
will better reflect the liquidity of, and investor interest in, a
security and therefore will better protect investors.
In addition to the above, Nasdaq proposes revising references to
``publicly held shares'' to ``unrestricted publicly held shares'' in
Rule 5310(d), which states that ``in computing the number of publicly
held shares for
[[Page 14174]]
Global Select purposes, Nasdaq will not consider shares held by an
officer, director or 10% or greater Shareholder \14\ of the Company,''
and Rule 5226(b) which requires a paired share unit to satisfy the
security-level requirements of Rule 5315 or 5405, including the number
of publicly held shares. Nasdaq also proposes to revise Rule 5205(g) to
reflect the change to ``unrestricted publicly held shares.'' \15\
Nasdaq also proposes revising Rule 5215(b) to state that in considering
whether an ADR satisfies the initial listing requirements, Nasdaq will
consider the unrestricted publicly held shares of the underlying
security, and that in determining whether shares of the underlying
security are restricted for this purpose, Nasdaq will only consider
restrictions that prohibit the resale or trading of the underlying
security on the company's home country market, as discussed below.
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\14\ Rule 5005(a)(40) defines ``Shareholder'' as ``a record or
beneficial owner of a security listed or applying to list. For
purposes of the Rule 5000 Series, the term ``Shareholder'' includes,
for example, a limited partner, the owner of a depository receipt,
or unit.''
\15\ Rule 5205(g) currently states that ``The computation of
Publicly Held Shares and Market Value of Publicly Held Shares shall
be as of the date of application of the Company.''
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B. Market Value of Publicly Held Shares
Nasdaq is proposing to modify its initial listing requirements
related to market value of publicly held shares so that they are based
only on unrestricted shares. A company is required to have a minimum
market value of publicly held shares in order to list its primary
equity securities (including ADRs) on all tiers of the Exchange. A
company is also required to have a minimum market value of publicly
held shares in order to list its preferred stock or secondary classes
of common stock on Nasdaq's Global and Capital Market tiers;
subscription receipts on Nasdaq's Capital Market tier; or paired share
units on Nasdaq's Global Select Market tier. The calculation of
``market value of publicly held shares'' does not exclude stock subject
to resale restrictions. As discussed above, restricted securities may
not contribute to liquidity and therefore the current calculation of
market value of publicly held shares may result in a security with
limited true liquidity satisfying the listing requirements related to
the market value of publicly held shares and qualifying to list.
Nasdaq proposes revising its initial listing requirements so that
they are based on the market value of unrestricted publicly held
shares, and therefore exclude restricted securities, in the following
rules:
----------------------------------------------------------------------------------------------------------------
Current required market
Rule No. Nasdaq Market tier Security type value
----------------------------------------------------------------------------------------------------------------
5315(c)(1)-(3)............... Global Select................ Primary Equity Security (i) a total market value
of a Closed End of the fund family of
Management Investment at least $220 million;
Company Listed with a (ii) an average market
Fund Family. value of all funds in
the fund family of at
least $50 million; and
(iii) a market of each
fund in the fund family
of at least $35
million.
5315(f)(2)(A)-(D)............ Global Select................ Primary Equity (i) at least $110
Securities. million; (ii) at least
$100 million, if the
company has
stockholders' equity of
at least $110 million;
(iii) at least $45
million in the case of
an initial public
offering or spin-off;
or (iv) at least $70
million in the case of
a closed end management
investment company
registered under the
Investment Company Act
of 1940.
IM-5315-1.................... Global Select................ Direct Listing of (a) If the Company's
Primary Equity security has had
Securities. sustained recent
trading in a Private
Placement Market, the
lesser of (i) the value
calculable based on an
independent third-party
valuation and (ii) the
value calculable based
on the most recent
trading price in a
Private Placement
Market; or (b)
$250,000,000 for a
security that has not
had sustained recent
trading in a Private
Placement Market prior
to listing.
5405(b)(1)(C)................ Global....................... Primary Equity At least $8 million
Securities. (Income Standard).
5405(b)(2)(C)................ Global....................... Primary Equity At least $18 million
Securities. (Equity Standard).
5405(b)(3)(B)................ Global....................... Primary Equity At least $20 million
Securities. (Market Value
Standard).
5405(b)(4)(B)................ Global....................... Primary Equity At least $20 million
Securities. (Total Assets/Total
Revenue Standard).
5415(a)(2)................... Global....................... Preferred Stock or At least $4 million.
Secondary Classes of
Common Stock.
5505(b)(1)(B)................ Capital...................... Primary Equity At least $15 million
Securities. (Equity Standard).
5505(b)(2)(C)................ Capital...................... Primary Equity At least $15 million
Securities. (Market Value
Standard).
5505(b)(3)(C)................ Capital...................... Primary Equity At least $5 million (Net
Securities. Income Standard).
5510(a)(4)................... Capital...................... Preferred Stock or At least $3.5 million.
Secondary Classes of
Common Stock.
5520(g)(2)................... Capital...................... Subscription Receipts... At least $100 million.
----------------------------------------------------------------------------------------------------------------
As discussed above, Nasdaq believes that excluding restricted
securities from the calculation of market value of publicly held shares
will better reflect the liquidity of, and investor interest in, a
security and therefore will better protect investors. Specifically,
market value of publicly held shares is an indication of the size and
investor interest in a company. When restricted securities are included
in that calculation, a company could technically meet Nasdaq's
requirement without actually having sufficient investor interest,
resulting in a security that is illiquid. Less liquid securities may be
more susceptible to price manipulation, as a relatively small
[[Page 14175]]
amount of trading activity can have an inordinate effect on market
prices and a company's market value of publicly held shares.
In addition to the above, Nasdaq proposes revising references to
``market value of publicly held shares'' to ``market value of
unrestricted publicly held shares'' in Rule 5226(b), which requires a
paired share unit listing on Nasdaq's Global Select or Global Select
Market tiers to satisfy the security-level requirements of Rule 5315 or
5405, including the market value of publicly held shares.\16\ Nasdaq
also proposes to revise Rule 5205(g) to reflect that the computation
for market value of unrestricted publicly held shares shall be as of
the date of the application of the company for all market tiers.\17\
Nasdaq also proposes revising Rule 5215(b) to state that in considering
whether an ADR satisfies the initial listing requirements, Nasdaq will
consider the market value of unrestricted publicly held shares of the
underlying security, and that in determining whether shares of the
underlying security are restricted for this purpose, Nasdaq will only
consider restrictions that prohibit the resale or trading of the
underlying security on the company's home country market, as discussed
below.
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\16\ Nasdaq is also proposing to capitalize defined terms in
Rule 5226(b) that were previously not capitalized for consistency
and in order to maintain an organized rule book structure.
\17\ Rule 5205(g) currently states that ``The computation of
Publicly Held Shares and Market Value of Publicly Held Shares shall
be as of the date of application of the Company.''
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C. Round Lot Holders
Nasdaq is proposing to revise the listing criteria related to the
minimum number of round lot holders for companies seeking to initially
list primary equity securities (including ADRs), preferred stock,
secondary classes of common stock and warrants on the Exchange so that
they are based on holders of unrestricted securities. Currently, Nasdaq
defines a ``round lot holder'' as ``a holder of a Normal Unit of
Trading'' and notes that ``beneficial holders will be considered in
addition to holders of record.'' \18\ Nasdaq defines a ``round lot or
normal unit of trading'' as ``100 shares of a security unless, with
respect to a particular security, Nasdaq determines that a normal unit
of trading shall constitute other than 100 shares.'' \19\ A company is
required to have a minimum number of round lot holders in order to list
securities on the Exchange. While this is another measure of liquidity
designed to help assure that there will be sufficient investor interest
and trading to support price discovery once a security is listed, as
noted above, under the existing rule, all the shares held by a holder
could be restricted securities that do not contribute to liquidity.
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\18\ Currently, this is Nasdaq Rule 5005(a)(39) but will be
converted to Nasdaq Rule 5005(a)(40).
\19\ Currently, this is Nasdaq Rule 5005(a)(38) but will be
converted to Nasdaq Rule 5005(a)(39).
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To address this concern, Nasdaq is proposing to revise the
definition of ``round lot holder'' to mean a holder of a normal unit of
trading of unrestricted securities. This change will impact the
following rules:
----------------------------------------------------------------------------------------------------------------
Current required number
Rule No. Nasdaq Market tier Security type of round lot holders
----------------------------------------------------------------------------------------------------------------
5315(f)(1)(C)................ Global Select................ Primary Equity Security. At least 450 round lot
holders or a minimum
number of total
holders.
5405(a)(3)................... Global....................... Primary Equity Security. At least 400.
5410(d)...................... Global....................... Warrants................ At least 400 unless such
warrants are listed in
connection with an
initial firm commitment
underwritten public
offering.
5415(a)(4)................... Global....................... Preferred Stock or At least 100.
Secondary Class of
Common Stock.
5505(a)(3)................... Capital...................... Primary Equity At least 300.
Securities.
5510(a)(2)................... Capital...................... Preferred Stock or At least 100.
Secondary Class of
Common Stock.
5515(a)(4)................... Capital...................... Warrants................ At least 400 unless such
warrants are listed in
connection with an
initial firm commitment
underwritten public
offering.
5520(g)(4)................... Capital...................... Subscription Receipts... At least 400.
----------------------------------------------------------------------------------------------------------------
As a result of these changes, a holder of only restricted
securities would not be considered in the round lot holder count.
Nasdaq believes that these amendments will help ensure adequate
distribution and investor interest in a listed security, which will
result in a more liquid trading market and which will better protect
investors. Illiquid securities may trade infrequently, in a more
volatile manner and with a wider bid-ask spread, all of which may
result in trading at a price that may not reflect their true market
value. Less liquid securities also may be more susceptible to price
manipulation, as a relatively small amount of trading activity can have
an inordinate effect on market prices.
In addition to the above, Nasdaq proposes revising references to
``holder'' to ``round lot holders'' in Rule 5226(b), which requires a
paired share unit applying to list on the Nasdaq Global Select or
Global Market tiers to meet the security-level requirements of Rule
5315 or 5405, which includes the number of round lot holders. Nasdaq
also proposes revising Rule 5215(b) to state that in considering
whether an ADR satisfies this proposed change that determination of
round lot holders be based on holders of unrestricted securities,
Nasdaq will consider whether round lot holders of the underlying
security hold unrestricted shares of that underlying security, and that
in determining whether shares of the underlying security are restricted
for this purpose, Nasdaq will only consider restrictions that prohibit
the resale or trading of the underlying security on the company's home
country market, as discussed below. Nasdaq will also apply the new
minimum value requirement for round lot holders to the underlying
security, as proposed below, in addition to the minimum number of round
lot holders required by the applicable tier that the company is seeking
to list on.
D. American Depositary Receipts
Lastly, Nasdaq proposes to revise Rule 5215(b) to specify how these
new requirements apply to ADRs. Specifically, as under the current rule
for calculating publicly held shares, market value of publicly held
shares, and round lot holders, Nasdaq will
[[Page 14176]]
continue to consider the underlying security in calculating the
unrestricted publicly held shares and market value of unrestricted
publicly held shares and in calculating the new definition of a round
lot holder. In determining whether shares of the underlying security
are ``restricted'' for these purposes, only restrictions that prohibit
the resale or trading of the underlying security on the company's home
country market would result in those securities being considered
restricted for purposes of the proposed rules. Thus, if the
restrictions provided as examples in the new definition of ``restricted
securities'' would restrict the underlying security from being freely
sold or tradable on its home country market, Nasdaq would also consider
such restrictions when calculating ``unrestricted publicly held
shares.'' Nasdaq believes that this is appropriate because the purpose
of the Initial Liquidity Calculations, and the proposed changes
described herein, is to establish investor interest in the company and
ensure adequate liquidity and distribution of the company's underlying
security on its home country market, which is held by the depositary
bank and represented by the ADR. For this reason, existing Rule 5215(b)
currently looks to the underlying security when calculating publicly
held shares, market value of publicly held shares, round lot and public
holders and it is similarly appropriate to consider whether or not the
underlying security is freely tradable in its home country market when
determining unrestricted publicly held shares, market value of
unrestricted publicly held shares, and round lot holders. Excluding
securities that are only restricted from resale or trading in the
United States would be not be an appropriate measure of investor
interest in or liquidity of the underlying security because the
underlying security will not be listed or trading in the U.S.\20\
Moreover, applying the new definition of restricted securities to
securities trading on a foreign market, if the securities trading on
the home country market are not already restricted by the examples set
forth in the new definition of restricted securities, would unduly
impose the requirements of a U.S. national securities exchange on those
securities, which will not be listed in the U.S.
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\20\ For example, the underlying security may not be eligible to
trade in the U.S., but that would not cause all shares of that
security to be considered restricted if they are freely tradable on
the company's home country market.
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In addition, Nasdaq proposes to revise the reference to Form S-12
in Rule 5215(b) to Form F-6 in order to refer to the current form
required by the Commission to register ADRs under the Securities Act of
1933.\21\
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\21\ Securities Exchange Act Release No. 34-19612 (March 18,
1983), 48 FR 12346 (March 24, 1983).
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II. Minimum Value Requirement for Holders
Nasdaq is also proposing to revise the listing rules related to
round lot holders listed in Part I.C, above, except for those
applicable to listing warrants, to impose a new requirement related to
the minimum investment amount held by shareholders. Under the current
definition of a round lot, a shareholder may be considered a round lot
holder by holding exactly 100 shares, which would be worth only $400 in
the case of a stock that is trading at the minimum bid price of $4 per
share.\22\ Nasdaq believes that this minimal investment is not an
appropriate representation of investor interest to support a listing on
a national securities exchange. To address this concern, Nasdaq
proposes to require that for initial listing at least 50% of a
company's required round lot holders must each hold shares with a
market value of at least $2,500. Nasdaq does not propose to impose this
requirement on initial listings of warrants, however, because warrants
do not have a minimum price requirement and may have little value at
the time of issuance.\23\ Nonetheless, warrants are often issued as
part of a unit and the common stock component of the unit would be
required to satisfy the minimum value requirement. Further, in all
cases, the security underlying a warrant must be listed on Nasdaq or be
a covered security, as defined in Section 18(b) of the Securities Act
of 1933.\24\ Nasdaq has not observed problems with the trading of
warrants.
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\22\ On the Nasdaq Capital Market, certain companies are also
eligible to list at $2 or $3 and the minimum value held by such a
holder would be only $200 or $300, respectively. See Listing Rule
5505(a)(1)(B).
\23\ Warrants issued as part of a unit must satisfy the initial
listing requirements for warrants applying to list on the applicable
market tier in accordance with Rule 5225.
\24\ 15 U.S.C. 77r(b).
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Nasdaq believes that adopting this amendment will help ensure that
a majority of the required minimum number of shareholders hold a
meaningful value of stock and that a company has sufficient investor
interest to support an exchange listing.
III. Average Daily Trading Volume
Nasdaq is proposing to adopt an additional initial listing criteria
for primary equity securities (including ADRs), preferred stock,
secondary classes of common stock and paired share units, previously
trading OTC. The new rules will require such securities to have a
minimum average daily trading volume over the 30 trading days prior to
listing of at least 2,000 shares a day (including on the primary market
with respect to an ADR), with trading occurring on more than half of
those 30 days (i.e., at least 16 days). Nasdaq believes that this will
help ensure a liquid trading market, promote price discovery and
establish an appropriate market price for the listed securities.
Nasdaq is proposing to implement this new requirement by making
identical amendments to Rule 5315(e) to add a new Rule 5315(e)(4); Rule
5405(a) to add a new Rule 5404(a)(4); Rule 5415(a) to add a new Rule
5415(a)(6); Rule 5505(a) to add a new Rule 5505(a)(5); and Rule 5510(a)
to add a new Rule 5510(a)(6). In connection with the foregoing
amendments, Nasdaq is proposing to revise the cross-references in Rules
5415(a) and 5510(a) to add new Rules 5415(a)(6) and 5510(a)(6),
respectively, and renumber the remaining provisions of Rule 5505(a) to
maintain an organized rule structure. In addition, Nasdaq is proposing
to revise Rule 5226(b) to clarify that the average daily trading volume
requirement would apply to companies seeking to list paired share units
on the Exchange.
As noted above, the average daily trading volume requirement will
also apply to ADRs. Currently, Nasdaq considers the underlying security
of an ADR when determining annual income from continuing operations,
publicly held shares, market value of publicly held shares,
stockholders' equity, round lot or public holders, operating history,
market value of listed securities, total assets and total revenue.
Nasdaq is proposing [sic] amend Rule 5215(b) to state that the average
daily trading volume of the underlying security of an ADR will be
considered in the Exchange's computations for this new requirement too.
Nasdaq believes that this will help demonstrate adequate investor
interest in the company and the underlying security, which will help
promote price discovery and establish an appropriate market price for
the ADR.\25\
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\25\ ADR shares trade separately from the underlying securities,
and often have slightly different values. However, ADR share values
usually track closely with the value of the underlying security.
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Nasdaq is proposing to adopt an exemption from the proposed average
daily trading volume requirement for securities (including ADRs) listed
in connection with a firm commitment
[[Page 14177]]
underwritten public offering of at least $4 million. Nasdaq believes
that the sale of securities in an underwritten public offering provides
an additional basis for believing that a liquid trading market will
likely develop for such securities after listing, since the offering
process is designed to promote appropriate price discovery. Moreover,
the underwriters in a firm commitment underwritten public offering will
also generally make a market in the securities for a period of time
after the offering, assisting in the creation of a liquid trading
market. For these reasons, in part, Nasdaq's rules already provide
similar exemptions in other situations involving a firm commitment
underwritten offering.\26\ Nasdaq believes that the process of a firm
commitment underwritten offering similarly supports an exception from
the proposed average daily trading volume requirement. Nasdaq also
notes that the same volume requirement is being proposed for each of
Nasdaq's Global Select, Global and Capital Market tiers, and that it is
therefore appropriate to base the exemption on the same minimum $4
million offering in each case, notwithstanding the different listing
criteria generally applicable to companies seeking to list on each
tier. Finally, Nasdaq believes that the proposed minimum $4 million
firm commitment underwritten public offering is large enough to
represent a fundamental change in how the company will trade following
the offering, such that the prior trading volume will not be
representative of the volume following the offering. In that regard,
Nasdaq notes that the minimum $4 million offering would be sufficient
to satisfy Nasdaq's one million share public float requirement at the
minimum $4 price for listing on Capital Market. This exemption will be
included in new Rules 5315(e)(4), 5404(a)(4), 5415(a)(6), 5505(a)(5),
and 5510(a)(6).
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\26\ For example, Rules 5410(d) and 5515(a)(4) provide an
exemption from the minimum round lot holder requirement for warrants
listed in connection with an initial firm commitment underwritten
public offering. Rule 5110(c)(3) provides an exemption from the
requirements applicable to a company that was formed by a reverse
merger if the company completes a firm commitment underwritten
public offering where the gross proceeds to the company will be at
least $40 million.
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Nasdaq proposes that this change be effective 30 days after
approval by the SEC. Nasdaq notes that it had originally solicited
comment on a similar proposal in October 2018,\27\ which provided
companies with notice that Nasdaq was considering adopting the proposed
changes to the Exchange's Initial Liquidity Calculations. The proposed
30-day delay from approval until operation of the proposed rule will
allow companies a short opportunity to complete an offering or
transaction before the new rules become effective if they have
substantially completed the Nasdaq review process or are near
completion of an offering or transaction, and have relied on the
existing rules.
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\27\ See https://listingcenter.nasdaq.com/assets/Liquidity_Measures_Comment_Solicitation.pdf.
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2. Statutory Basis
The Exchange believes that its proposal is consistent with Section
6(b) of the Act,\28\ in general, and furthers the objectives of Section
6(b)(5) of the Act,\29\ in particular, in that it is designed to
promote just and equitable principles of trade, 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 set forth below. Further, the Exchange believes that this
proposal is not designed to permit unfair discrimination between
customers, issuers, brokers, or dealers.
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\28\ 15 U.S.C. 78f(b).
\29\ 15 U.S.C. 78f(b)(5).
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The Commission has previously opined on the importance of
meaningful listing standards for the protection of investors and the
public interest.\30\ In particular, the Commission stated:
\30\ Securities Exchange Act Release No. 65708 (November 8,
2011), 76 FR 70799 (November 15, 2011) (approving SR-Nasdaq-2011-073
adopting additional listing requirements for companies applying to
list after consummation of a ``reverse merger'' with a shell
company).
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Among other things, listing standards provide the means for an
exchange to screen issuers that seek to become listed, and to
provide listed status only to those that are bona fide companies
with sufficient public float, investor base, and trading interest
likely to generate depth and liquidity sufficient to promote fair
and orderly markets. Meaningful listing standards also are important
given investor expectations regarding the nature of securities that
have achieved an exchange listing, and the role of an exchange in
overseeing its market and assuring compliance with its listing
standards.\31\
\31\ Id. at 70802.
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As described below, Nasdaq believes that the proposed rule changes
in this filing are consistent with the investor protection requirement
of Section 6(b)(5) of the Act because they each will enable Nasdaq to
help ensure that issuers seeking to list on the Exchange have
sufficient public float, investor base, and trading interest likely to
generate depth and liquidity. Illiquid securities may trade
infrequently, in a more volatile manner and with a wider bid-ask
spread, all of which may result in trading at a price that may not
reflect their true market value. Less liquid securities also may be
more susceptible to price manipulation, as a relatively small amount of
trading activity can have an inordinate effect on market prices.
I. Restricted Securities
The proposed amendments will adopt new definitions of ``restricted
securities'' and ``unrestricted securities'' in order to exclude
securities that are subject to resale restrictions from the Exchange's
Initial Liquidity Calculations. The Exchange believes that these
amendments will bolster the Exchange's quantitative shareholder
requirements, and as a result, better reflect and safeguard the
liquidity of a security. The Commission has previously noted the
importance of adequate liquidity in a security and the consequences for
investors when a security is thinly traded. In In the Matter of the
Application of Rocky Mountain Power Company, the Commission observed:
We note that the requirement concerning the number of
shareholders is not only an important listing criterion but is also
a standard used in conjunction with other standards to ensure that a
stock has the investor following and liquid market necessary for
trading. In response to the Panel's questions, the Company's
president acknowledged that the market for Rocky Mountain's shares
would be initially ``very, very small,'' and that fewer than 20,000
of the Company's over 700,000 shares outstanding were freely
tradeable. While Rocky Mountain, as a technical matter, complied
with the shareholder requirement, it failed to demonstrate an
adequate market for its shares, which is at the heart of this and
other [Nasdaq] inclusion requirements.\32\
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\32\ See Rocky Mountain Power Co., Securities Exchange Act
Release No. 40648, 1998 SEC LEXIS 2422; 53 SEC. 979 (November 9,
1998).
Nasdaq believes that adopting the new definitions of restricted
securities and unrestricted securities will promote just and equitable
principles of trade, remove impediments to and perfect the mechanism of
a free and open market and a national market system, and protect
investors and the public interest because securities subject to resale
restrictions are not freely transferrable and therefore excluding
restricted securities from the Exchange's Initial Liquidity
Calculations will help ensure that Nasdaq lists only companies with
liquid securities and sufficient investor interest to support an
exchange listing meeting the Exchange's listing criteria, which will
better protect investors.
[[Page 14178]]
A. Publicly Held Shares
The proposed amendments will adopt a new definition of
``unrestricted publicly held shares'' which excludes restricted
securities and revise Nasdaq's initial listing standards to conform the
minimum number of publicly held shares to the new definition. Nasdaq
believes that these changes will promote just and equitable principles
of trade, remove impediments to and perfect the mechanism of a free and
open market and a national market system, and protect investors and the
public interest because it will help ensure that a security to be
listed has adequate liquidity and is thus suitable for listing and
trading on an exchange, which will reduce trading volatility and price
manipulation, thereby protecting investors and the public interest.
B. Market Value of Publicly Held Shares
The proposed amendments will revise the definition of ``market
value'' to exclude restricted securities from the calculation of
``market value of unrestricted publicly held shares'' and revise
Nasdaq's initial listing standards to conform the minimum market value
to the new definition. Nasdaq believes that these changes will promote
just and equitable principles of trade, remove impediments to and
perfect the mechanism of a free and open market and a national market
system, and protect investors and the public interest because it will
help ensure that a security to be listed has adequate liquidity and
investor interest and is thus suitable for listing and trading on an
exchange, which will reduce trading volatility and price manipulation,
thereby protecting investors and the public interest.
C. Round Lot Holders
The proposed amendments will exclude restricted securities from the
calculation of the number of round lot holders required to meet the
Exchange's initial listing criteria by revising the definition of
``round lot holder'' to exclude restricted securities. Nasdaq believes
that this amendment will promote just and equitable principles of
trade, remove impediments to and perfect the mechanism of a free and
open market and a national market system, and protect investors and the
public interest by helping ensure adequate distribution, shareholder
interest and a liquid trading market of a security.
D. American Depositary Receipts
The proposed amendments will modify Nasdaq's rules to state that
when considering the security underlying an ADR, Nasdaq will only
consider restrictions that prohibit the resale or trading of the
underlying security on the company's home country market. However, any
restrictions, including those provided as examples in the new
definition of ``restricted securities,'' which would restrict the
underlying security from being freely sold or tradable on its home
country market would be considered by Nasdaq when calculating
``unrestricted publicly held shares.'' Nasdaq believes that this is
appropriate because the purpose of the Initial Liquidity Calculations,
and the proposed changes described herein, is to establish investor
interest in the company and ensure adequate liquidity and distribution
of the company's underlying security on its home country market, which
is held by the depositary bank and represented by the ADR. For this
reason, existing Rule 5215(b) currently looks to the underlying
security when calculating publicly held shares, market value of
publicly held shares, round lot and public holders and it is similarly
appropriate to consider whether or not the underlying security is
freely tradable in its home country market when determining
unrestricted publicly held shares, market value of unrestricted
publicly held shares, and round lot holders. Excluding securities that
are only restricted from resale or trading in the United States would
be not be an appropriate measure of investor interest in or liquidity
of the underlying security because the underlying security will not be
listed or trading in the U.S. Moreover, applying the new definition of
restricted securities to securities trading on a foreign market, if the
securities trading on the home country market are not already
restricted by the examples set forth in the new definition of
restricted securities, would unduly impose the requirements of a U.S.
national securities exchange on those securities, which will not be
listed in the U.S. For the foregoing reasons, Nasdaq believes that this
provision will promote just and equitable principles of trade, remove
impediments to and perfect the mechanism of a free and open market and
a national market system, and protect investors and the public
interest.
Further, the Exchange believes that this provision is not designed
to permit unfair discrimination between customers, issuers, brokers, or
dealers. While the Exchange's Initial Liquidity Calculations for ADRs
would be calculated differently than other securities, these
differences are not unfair because they recognize the unique structure
of ADRs, as already reflected in the existing treatment of ADRs under
Nasdaq's rules, where Nasdaq looks to the underlying security in order
to ensure sufficient investor interest and adequate liquidity and
distribution of the company's underlying security, which is represented
by the ADR.
II. Minimum Value Requirement for Holders
The Exchange proposes adopting a new requirement that at least 50%
of a company's round lot holders hold securities with a market value of
at least $2,500. Nasdaq believes that the proposed $2,500 minimum value
is reasonable because the Exchange has noticed problems with companies
listing where a large number of round lot holders hold exactly 100
shares, which would be worth only $400 in the case of a stock that is
trading at the minimum bid price of $4 per share, or as little as $200
in the case of a stock listing under the alternative price criteria.
Nasdaq notes that the proposed $2,500 threshold is from 6.5 times to
12.5 times larger than the existing minimum investment, and Nasdaq
believes that this increased amount is a more appropriate
representation of genuine investor interest in the company and will
make it more difficult to circumvent the requirement through share
transfers for no value. As such, Nasdaq believes that these amendments
will promote just and equitable principles of trade, remove impediments
to and perfect the mechanism of a free and open market and a national
market system, and protect investors and the public interest by
requiring more than half of the required number of shareholders hold a
more significant investment in the company, and that the company will
therefore have an adequate distribution, shareholder interest and a
liquid trading market of a security.
Nasdaq does not propose to impose this requirement on the initial
listings of warrants because warrants do not have a minimum price
requirement and may have little value at the time of issuance. The
value of warrants is derived from the value of the underlying security,
which must be listed on Nasdaq or be a covered security and Nasdaq has
not observed problems with the trading of warrants. As such, Nasdaq
believes that it is not unfairly discriminatory to treat warrants
differently under this proposal and that excluding warrants avoids
imposing an unnecessary impediment to the mechanism of a free and open
market.
[[Page 14179]]
III. Average Daily Trading Volume
The proposed amendments will generally impose a minimum average
daily trading volume over the 30 trading days prior to listing of at
least 2,000 shares a day (including on the primary market with respect
to an ADR), with trading occurring on more than half of those 30 days
(i.e., at least 16 days). This will apply to primary equity securities,
preferred stock, secondary classes of common stock and ADRs previously
trading OTC that apply to list on the Exchange. Nasdaq believes this
proposed change will promote just and equitable principles of trade,
remove impediments to and perfect the mechanism of a free and open
market and a national market system, and protect investors and the
public interest by helping to assure adequate liquidity and price
discovery of a security. The Exchange believes that companies trading
at least 2,000 shares a day over a period of 30 trading days prior to
listing, with trading occurring on more than half of those 30 days, can
demonstrate sufficient investor interest to support sustained trading
activity when listed on a national stock exchange.
The proposed rule change will provide a limited exemption to this
requirement for securities (including ADRs) listed in connection with a
firm commitment underwritten public offering of at least $4 million.
Nasdaq believes that it is consistent with the protection of investors
and the public interest, and not unfairly discriminatory, to exempt
from the proposed average daily trading volume requirement securities
satisfying this exemption because underwriters facilitate appropriate
price discovery and will generally make a market in the securities for
a period of time after the offering, assisting in the creation of a
liquid trading market. Further, Nasdaq believes that this exemption is
consistent with the protection of investors and the public interest,
and not unfairly discriminatory, because the proposed minimum $4
million firm commitment underwritten public offering is large enough to
represent a fundamental change in how the company will trade following
the offering, such that the prior trading volume will not be
representative of the volume following the offering.
Under the proposed rule, Nasdaq would consider trading in the
security underlying an ADR in determining whether a foreign company
seeking to list ADRs satisfies the requirement. Nasdaq believes that
this distinction is not unfairly discriminatory because the trading
volume in the underlying security represents interest in the company's
security and that interest is reasonably likely to be indicative of
investor interest in the ADR.
B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange does not believe that the proposed rule change will
impose any burden on competition not necessary or appropriate in
furtherance of the purposes of the Act. All domestic and foreign
companies seeking to list primary equity securities, preferred stock,
secondary classes of common stock or subscription receipts would be
affected in the same manner by these changes, across all market tiers.
As discussed above, companies listing ADRs would be treated differently
in some respects than companies listing other primary equity
securities, but those differences reflect the unique characteristics of
ADRs and does [sic] not impose an unnecessary burden on competition.
To the extent that companies prefer listing on a market with these
proposed listing standards, other exchanges can choose to adopt similar
enhancements to their requirements. As such, these changes are neither
intended to, nor expected to, impose any burden on competition between
exchanges.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others
On October 5, 2018, Nasdaq launched a formal comment solicitation
on proposals to exclude restricted securities from the Exchange's
Initial Liquidity Calculations and adopt a new initial listing criteria
related to prior trading volume for securities that are currently
trading OTC (``2018 Solicitation''), a copy of which is attached hereto
as Exhibit 2.\33\ No comments were received in response to the comment
solicitation.
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\33\ The Commission notes that Exhibit 2 is attached to the
Exchange's Form 19b-4 relating to the proposed rule change and not
to this notice.
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III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
Within 45 days of the date of publication of this notice in the
Federal Register or within such longer period up to 90 days (i) as the
Commission may designate if it finds such longer period to be
appropriate and publishes its reasons for so finding or (ii) as to
which the Exchange consents, the Commission shall: (a) By order approve
or disapprove such proposed rule change, or (b) institute proceedings
to determine whether the proposed rule change should be 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 [email protected]. Please include
File Number SR-NASDAQ-2019-009 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-2019-009. 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-2019-009, and should be submitted
on or before April 30, 2019.
[[Page 14180]]
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\34\
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\34\ 17 CFR 200.30-3(a)(12).
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Eduardo A. Aleman,
Deputy Secretary.
[FR Doc. 2019-06935 Filed 4-8-19; 8:45 am]
BILLING CODE 8011-01-P
