Self-Regulatory Organizations; The Nasdaq Stock Market LLC; Notice of Filing of Proposed Rule Change To Adopt Listing Rule IM-5900-8 To Offer a Complimentary Global Targeting Tool to Acquisition Companies Listed Pursuant to Nasdaq IM-5101-2 that Have Publicly Announced Entering Into a Binding Agreement for a Business Combination, 46759-46762 [2020-16709]
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Federal Register / Vol. 85, No. 149 / Monday, August 3, 2020 / Notices
Follow-On Investments on a pro rata
basis (as described in greater detail in
the application). In all other cases, the
Adviser will provide its written
recommendation as to the Regulated
Fund’s participation to the Eligible
Trustees, and the Regulated Fund will
participate in such Follow-On
Investment solely to the extent that a
Required Majority determines that it is
in the Regulated Fund’s best interests.
(c) If, with respect to any Follow-On
Investment:
(i) The amount of the opportunity is
not based on the Regulated Funds’ and
the Affiliated Funds’ outstanding
investments immediately preceding the
Follow-On Investment; and
(ii) the aggregate amount
recommended by the applicable Adviser
to be invested by the applicable
Regulated Fund in the Follow-On
Investment, together with the amount
proposed to be invested by the other
participating Regulated Funds and
Affiliated Funds, collectively, in the
same transaction, exceeds the amount of
the investment opportunity, then the
investment opportunity will be
allocated among them pro rata based on
each participant’s Available Capital, up
to the maximum amount proposed to be
invested by each.
(d) The acquisition of Follow-On
Investments as permitted by this
Condition will be considered a CoInvestment Transaction for all purposes
and subject to the other Conditions set
forth in the application.
9. The Non-Interested Trustees of
each Regulated Fund will be provided
quarterly for review all information
concerning Potential Co-Investment
Transactions and Co-Investment
Transactions, including investments
made by other Regulated Funds or
Affiliated Funds that the Regulated
Fund considered but declined to
participate in, so that the Non-Interested
Trustees may determine whether all
investments made during the preceding
quarter, including those investments
that the Regulated Fund considered but
declined to participate in, comply with
the Conditions of the Order. In addition,
the Non-Interested Trustees will
consider at least annually the continued
appropriateness for the Regulated Fund
of participating in new and existing CoInvestment Transactions.
10. Each Regulated Fund will
maintain the records required by section
57(f)(3) of the Act as if each of the
Regulated Funds were a business
development company (as defined in
section 2(a)(48) of the Act) and each of
the investments permitted under these
Conditions were approved by the
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Required Majority under section 57(f) of
the Act.
11. No Non-Interested Trustee of a
Regulated Fund will also be a director,
general partner, managing member or
principal, or otherwise an ‘‘affiliated
person’’ (as defined in the Act) of an
Affiliated Fund.
12. The expenses, if any, associated
with acquiring, holding or disposing of
any securities acquired in a CoInvestment Transaction (including,
without limitation, the expenses of the
distribution of any such securities
registered for sale under the 1933 Act)
will, to the extent not payable by the
Advisers under their respective
investment advisory agreements with
the Affiliated Funds and the Regulated
Funds, be shared by the Regulated
Funds and the Affiliated Funds in
proportion to the relative amounts of the
securities held or to be acquired or
disposed of, as the case may be.
13. Any transaction fee 16 (including
break-up or commitment fees but
excluding broker’s fees contemplated by
section 17(e) of the Act, as applicable),
received in connection with a CoInvestment Transaction will be
distributed to the participating
Regulated Funds and Affiliated Funds
on a pro rata basis based on the amounts
they invested or committed, as the case
may be, in such Co-Investment
Transaction. If any transaction fee is to
be held by an Adviser pending
consummation of the transaction, the
fee will be deposited into an account
maintained by such Adviser at a bank or
banks having the qualifications
prescribed in section 26(a)(1) of the Act,
and the account will earn a competitive
rate of interest that will also be divided
pro rata among the participating
Regulated Funds and Affiliated Funds
based on the amounts they invest in
such Co-Investment Transaction. None
of the Affiliated Funds, the Advisers,
the other Regulated Funds or any
affiliated person of the Regulated Funds
or Affiliated Funds will receive
additional compensation or
remuneration of any kind as a result of
or in connection with a Co-Investment
Transaction (other than (a) in the case
of the Regulated Funds and the
Affiliated Funds, the pro rata
transaction fees described above and
fees or other compensation described in
Condition 2(c)(iii)(C); and (b) in the case
of an Adviser, investment advisory fees
paid in accordance with the agreement
16 Applicants are not requesting and the staff is
not providing any relief for transaction fees
received in connection with any Co-Investment
Transaction.
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46759
between the Adviser and the Regulated
Fund or Affiliated Fund.
14. If the Holders own in the aggregate
more than 25 percent of the Shares of
a Regulated Fund, then the Holders will
vote such Shares (i) as directed by an
independent third party, or (ii) in the
same percentages as the Regulated
Fund’s other shareholders (not
including the Holders) when voting on
(1) the election of directors; (2) the
removal of one or more directors; or (3)
any other matter under either the Act or
applicable state law affecting the
Board’s composition, size or manner of
election.
15. Each Regulated Fund’s chief
compliance officer, as defined in rule
38a-1(a)(4) under the Act, will prepare
an annual report for its Board that
evaluates (and documents the basis of
that evaluation) the Regulated Fund’s
compliance with the terms and
conditions of the application and the
procedures established to achieve such
compliance.
For the Commission, by the Division of
Investment Management, under delegated
authority.
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2020–16714 Filed 7–31–20; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–89413; File No. SR–
NASDAQ–2020–044]
Self-Regulatory Organizations; The
Nasdaq Stock Market LLC; Notice of
Filing of Proposed Rule Change To
Adopt Listing Rule IM–5900–8 To Offer
a Complimentary Global Targeting
Tool to Acquisition Companies Listed
Pursuant to Nasdaq IM–5101–2 that
Have Publicly Announced Entering
Into a Binding Agreement for a
Business Combination
July 28, 2020.
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 July 15,
2020, The Nasdaq Stock Market LLC
(‘‘Nasdaq’’ or ‘‘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 Exchange. The Commission is
publishing this notice to solicit
1 15
2 17
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U.S.C. 78s(b)(1).
CFR 240.19b–4.
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Federal Register / Vol. 85, No. 149 / Monday, August 3, 2020 / Notices
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 adopt
Listing Rule IM–5900–8 to offer a
complimentary global targeting tool to
an Acquisition Company that has
announced a business combination.
The text of the proposed rule change
is available on the Exchange’s website at
https://listingcenter.nasdaq.com/
rulebook/nasdaq/rules, 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. Purpose
In 2009 Nasdaq adopted a rule (IM–
5101–2) to impose additional listing
requirements on a company whose
business plan is to complete an initial
public offering and engage in a merger
or acquisition with one or more
unidentified companies within a
specific period of time (‘‘Acquisition
Companies’’).3 Based on experience
listing these companies, Nasdaq
proposes to adopt Listing Rule IM–
5900–8 to offer a complimentary global
targeting tool to an Acquisition
Company that has publicly announced a
business combination.
Generally, Nasdaq will not permit the
initial or continued listing of a company
that has no specific business plan or
that has indicated that its business plan
is to engage in a merger or acquisition
with an unidentified company or
companies. However, in the case of an
Acquisition Company, Nasdaq will
permit the listing if the company meets
all applicable initial listing
3 Securities Exchange Act Release No. 58228 (July
25, 2008), 73 FR 44794 (July 31, 2008) (adopting the
predecessor to IM–5101–2).
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requirements, as well as the additional
conditions described in IM–5101–2.
These additional conditions generally
require, among other things, that at least
90% of the gross proceeds from the
initial public offering must be deposited
in a ‘‘deposit account,’’ as that term is
defined in the rule, and that the
company complete within 36 months, or
a shorter period identified by the
company, one or more business
combinations having an aggregate fair
market value of at least 80% of the value
of the deposit account at the time of the
agreement to enter into the initial
combination.
Acquisition Companies do not have
operating businesses and tend to trade
infrequently and in a tight range until
the company completes an acquisition.
Therefore, these companies do not
generally need shareholder
communication services, market
analytic tools or market advisory tools
and, upon listing, these companies do
not receive complimentary services
from Nasdaq under IM–5900–7, even if
they list on the Nasdaq Global or Global
Select Markets.4
However, over time Nasdaq observed
that once an Acquisition Company
publicly announces a business
combination with an operating
company, the Acquisition Company
needs to identify and target investors
appropriate for the new business.
Specifically, once the Acquisition
Company identifies the operating
business it plans to acquire, the
Acquisition Company needs to focus on
targeting investors who are interested in
investing in the future business
operations or the industry of the
acquired business. Such investor
targeting may help the Acquisition
Company convey the long-term vision of
the acquired business to investors and
thus attract new investors and diminish
potential redemptions at the time of the
business combination with the
operating company.5
To that end, Nasdaq proposes to offer
Acquisition Companies listed on
Nasdaq a complimentary global
targeting tool,6 following the public
announcement that the company
4 See Securities Exchange Act Release No. 79366
(November 21, 2016), 81 FR 85663 (November 28,
2016). A former Acquisition Company is eligible to
receive services under IM–5900–7 when it lists on
the Nasdaq Global or Global Select Market in
conjunction with a business combination that
satisfies the conditions in IM–5101–2(b).
5 The Acquisition Company’s shareholders have
the right to redeem their shares for a pro rata share
of that trust in conjunction with the business
combination. See IM–5101–2(d) and (e).
6 The global targeting tool would be offered
through Nasdaq Corporate Solutions, LLC, an
affiliate of Nasdaq.
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entered into a binding agreement for the
business combination intended to
satisfy the conditions in Listing Rule
IM–5101–2(b) until 60 days following
the completion of the business
combination or such time that the
Acquisition Company publicly
announces that such agreement is
terminated.7
Through the global targeting tool,
Nasdaq investor targeting specialists
will help focus the Company’s investor
relations efforts on appropriate
investors, tailor messaging to their
interests and measure the Company’s
impact on their holdings. The analyst
team will help develop a detailed plan
aligning the targeting efforts with the
Company’s long-term ownership
strategy. Analysis includes addressable
risks and opportunities by region and
investor type, and recommendations for
where to focus time. This service has a
retail value of approximately $44,000
per year.
Nasdaq believes that the proposed
complimentary services would provide
an incentive to the Acquisition
Companies to list on Nasdaq. Nasdaq
also believes it is reasonable to balance
its need to remain competitive with
other listing venues, while at the same
time ensuring adequate revenue to meet
its regulatory responsibilities. Nasdaq
notes that no other company will be
required to pay higher fees as a result
of the proposed amendments and
represents that providing this service
will have no impact on the resources
available for its regulatory programs.
2. Statutory Basis
The Exchange believes that its
proposal is consistent with Section 6(b)
of the Exchange Act,8 in general, and
furthers the objectives of Section 6(b)(5)
of the Exchange Act,9 in particular, in
that it is designed to promote just and
equitable principles of trade, to remove
impediments to and perfect the
7 Nasdaq offers certain complimentary services
under IM–5900–7, based on market capitalization,
to companies listing on the Nasdaq Global and
Global Select Markets in connection with an initial
public offering (other than an Acquisition
Company), upon emerging from bankruptcy, in
connection with a spin-off or carve-out from
another company, or in conjunction with a business
combination that satisfies the conditions in Nasdaq
IM–5101–2(b) and to companies (other than an
Acquisition Company) switching their listing from
the New York Stock Exchange to the Global or
Global Select Markets. Nasdaq does not currently
offer complimentary services to companies listing
on the Nasdaq Capital Market or Acquisition
Companies listing on any market tier. See IM–5900–
7. Accordingly, in certain circumstances, for a short
period following the business combination, a
company may be eligible to receive services under
IM–5900–7 and proposed IM–5900–8.
8 15 U.S.C. 78f(b).
9 15 U.S.C. 78f(b)(5).
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Federal Register / Vol. 85, No. 149 / Monday, August 3, 2020 / Notices
mechanism of a free and open market
and a national market system, and, in
general to protect investors and the
public interest. Nasdaq also believes
that the proposed rule change is
consistent with the provisions of
Sections 6(b)(4),10 6(b)(5),11 and
6(b)(8),12 in that the proposal is
designed, among other things, to
provide for the equitable allocation of
reasonable dues, fees, and other charges
among Exchange members and issuers
and other persons using its facilities and
to promote just and equitable principles
of trade, and is not designed to permit
unfair discrimination between issuers,
and that the rules of the Exchange do
not impose any burden on competition
not necessary or appropriate in
furtherance of the purposes of the
Exchange Act.
Nasdaq faces competition in the
market for listing services,13 and
competes, in part, by offering valuable
services to companies. Nasdaq believes
that it is reasonable to offer
complimentary services to attract and
retain listings as part of this
competition. In particular, Nasdaq
believes that it is reasonable to enhance
its competitive offering by providing all
Acquisition Companies with a
complimentary global targeting tool,
following the public announcement of
the business combination intended to
satisfy the conditions in Listing Rule
IM–5101–2(b) until 60 days following
the completion the business
combination or such time that the
Acquisition Company publicly
announces that such agreement is
terminated.
Nasdaq believes it is reasonable, and
not unfairly discriminatory, to offer the
global targeting tool to Acquisition
Companies following the public
announcement of the business
combination that is intended to satisfy
the conditions in Listing Rule IM–5101–
2(b) because at such time Acquisition
Companies will have increased need to
focus on identifying and communicating
with its shareholders and prospective
investors. Once the Acquisition
Company identifies the operating
business it plans to acquire, the
Acquisition Company needs to focus on
targeting investors who are interested in
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10 15
U.S.C. 78f(4).
U.S.C. 78f(5).
12 15 U.S.C. 78f(8).
13 The Justice Department has noted the intense
competitive environment for exchange listings. See
‘‘NASDAQ OMX Group Inc. and
IntercontinentalExchange Inc. Abandon Their
Proposed Acquisition Of NYSE Euronext After
Justice Department Threatens Lawsuit’’ (May 16,
2011), available at https://www.justice.gov/atr/public
/press_releases/2011/271214.htm.
11 15
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investing in the acquired business. Such
investor targeting may help the
Acquisition Company convey the longterm vision of the acquired business to
the investors and thus diminish
potential redemptions at the time of the
business combination with the
operating company. Nasdaq also
believes that such diminished
redemptions may help Acquisition
Companies remain in compliance with
other listing requirements, including the
shareholder requirement for continued
listing.14
At this time in the Acquisition
Company’s lifecycle, the companies are
transitioning to the traditional operating
company model and the complimentary
global targeting tool will help ease that
transition. In addition, these companies
will be eligible to receive this service for
the first time, and offering the
complimentary global targeting tool will
provide Nasdaq Corporate Solutions
with the opportunity to demonstrate the
value of its services and forge a
relationship with the company at a time
when the new operating company is
choosing its service providers. For these
reasons, Nasdaq believes it is not an
inequitable allocation of fees nor
unfairly discriminatory to offer the
global targeting tool to Acquisition
Companies following the public
announcement of such business
combination. In addition, Nasdaq
believes it is not an inequitable
allocation of fees nor unfairly
discriminatory to offer Acquisition
Companies a complimentary global
targeting tool for 60 days following the
completion the business combination
because it would allow for a smooth
transition to the traditional operating
company model and avoid disruption of
the service during such transaction.
The Commission has previously
indicated pursuant to Section 19(b) of
the Exchange Act 15 that providing and
updating the values of the services
within the rule is necessary,16 and
Nasdaq does not believe this indication
of value has an effect on the allocation
of fees nor does it permit unfair
discrimination, as all Acquisition
14 Listing Rule 5450(a)(2) requires at least 400
Total Holders for continued listing on the Nasdaq
Global Market. Listing Rule 5550(a)(3) requires at
least 300 Public Holders for continued listing on the
Nasdaq Capital Market.
15 15 U.S.C. 78s(b).
16 See Exchange Act Release No. 72669 (July 24,
2014), 79 FR 44234 (July 30, 2014) (SR–NASDAQ–
2014–058) (footnote 39 and accompanying text:
‘‘We would expect Nasdaq, consistent with Section
19(b) of the Exchange Act, to periodically update
the retail values of services offered should they
change. This will help to provide transparency to
listed companies on the value of the free services
they receive and the actual costs associated with
listing on Nasdaq.’’)
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46761
Companies will receive the same
services. Further, this provision will
enhance the transparency of Nasdaq’s
rules and the value of the services it
offers Acquisition Companies, thus
promoting just and equitable principles
of trade. As such, the proposed rule
change is consistent with the
requirements of Section 6(b)(4) and (5)
of the Exchange Act.
Nasdaq represents, and this proposed
rule change will help ensure, that
individual listed companies are not
given specially negotiated packages of
products or services to list, or remain
listed, which the Commission has
previously stated would raise unfair
discrimination issues under the
Exchange Act.17
B. Self-Regulatory Organization’s
Statement on Burden on Competition
Nasdaq does not believe that the
proposed rule change will result in any
burden on competition that is not
necessary or appropriate in furtherance
of the purposes of the Act, as amended.
As noted above, Nasdaq faces
competition in the market for listing
services, and competes, in part, by
offering valuable services to companies.
The proposed rule change reflects that
competition, but does not impose any
burden on the competition with other
exchanges. Rather, Nasdaq believes the
proposed changes will result in
Acquisition Companies being eligible to
receive the global targeting tool and
therefore will enhance competition for
new listings of Acquisition Companies.
Other exchanges can also offer similar
services to companies, thereby
increasing competition to the benefit of
those companies and their shareholders.
Accordingly, Nasdaq does not believe
the proposed rule change will impose
any burden on competition that is not
necessary or appropriate in furtherance
of the purposes of the Exchange Act, as
amended.
Nasdaq also notes that Nasdaq
Corporate Solutions competes with
other service providers in providing
services like the global targeting tool. To
the extent that these other providers
believe that Nasdaq offering a
complimentary services for a limited
time creates a competitive burden on
their offerings, they are able to craft a
similar program to attract Acquisition
Companies to their services.
17 See Exchange Act Release No. 79366, 81 FR
85663 at 85665 (citing Securities Exchange Act
Release No. 65127 (August 12, 2011), 76 FR 51449,
51452 (August 18, 2011) (approving NYSE–2011–
20)).
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C. Self-Regulatory Organization’s
Statement on Comments on the
Proposed Rule Change Received From
Members, Participants, or Others
No written comments were either
solicited or received.
III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
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:
printing in the Commission’s Public
Reference Room, 100 F Street, NE,
Washington, DC 20549, on official
business days between the hours of
10:00 a.m. and 3:00 p.m. Copies of the
filing also will be available for
inspection and copying at the principal
office of the Exchange. 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–2020–044, and
should be submitted on or before
August 24, 2020.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.18
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2020–16709 Filed 7–31–20; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–89420; File No. 4–631]
khammond on DSKJM1Z7X2PROD with NOTICES
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–2020–044 on the subject line.
Joint Industry Plan; Notice of Filing
and Immediate Effectiveness of
Amendment to the Plan To Address
Extraordinary Market Volatility To Add
MEMX LLC as a Participant
Paper Comments
Pursuant to Section 11A(a)(3) of the
Securities Exchange Act of 1934
(‘‘Act’’) 1 and Rule 608 thereunder,2
notice is hereby given that on July 6,
2020, MEMX LLC (‘‘MEMX’’ or
‘‘Exchange’’) filed with the Securities
and Exchange Commission
(‘‘Commission’’) an amendment to the
Plan to Address Extraordinary Market
Volatility (‘‘LULD Plan’’ or ‘‘Plan’’) as a
Participant.3 The amendment adds
MEMX as a Participant 4 to the LULD
Plan. The Commission is publishing this
• 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–2020–044. 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
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July 29, 2020.
CFR 200.30–3(a)(12).
U.S.C. 78k-1(a)(3).
2 17 CFR 242.608.
3 See Letter from Anders Franzon, General
Counsel, MEMX, dated July 6, 2020, to Vanessa A.
Countryman, Secretary, Commission. On May 6,
2012, the Commission issued an order approving
the Plan on a pilot basis (the ‘‘Approval Order’’).
See Securities Exchange Act Release No. 67091
(May 31, 2012), 77 FR 33498 (June 6, 2012). The
Commission approved the LULD Plan on a
permanent basis on April 11, 2019. See Securities
Exchange Act Release No. 85623, 84 FR 16086
(April 17, 2019).
4 Defined in Section I(K) of the Plan as follows:
‘‘Participant’’ means a Party to the Plan.
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notice to solicit comments on the
amendment from interested persons.
I. Description and Purpose of the
Amendment
As noted above, the sole proposed
amendment to the LULD Plan is to add
the Exchange as a Participant. On May
4, 2020, the Commission issued an order
granting MEMX’s application for
registration as a national securities
exchange.5 A condition of the
Commission’s approval was the
requirement for MEMX to join the Plan.
Under Section II(C) of the LULD Plan,
any entity registered as a national
securities exchange or national
securities association under the Act may
become a Participant by: (1) Becoming
a participant in the applicable Market
Data Plans; (2) executing a copy of the
Plan, as then in effect; (3) providing
each then-current Participant with a
copy of such executed Plan; and (4)
effecting an amendment to the Plan as
specified in Section III (B) of the Plan.
Section III(B) of the LULD Plan sets
forth the process for a prospective new
Participant to effect an amendment of
the Plan. Specifically, the LULD Plan
provides that such an amendment to the
Plan may be effected by the new
national securities exchange or national
securities association by executing a
copy of the Plan as then in effect (with
the only changes being the addition of
the new Participant’s name in Section
II(A) of the Plan); and submitting such
executed Plan to the Commission. The
amendment will be effective when it is
approved by the Commission in
accordance with Rule 608 of Regulation
NMS, or otherwise becomes effective
pursuant to Rule 608 of Regulation
NMS.
MEMX has become a participant in
the applicable Market Data Plans,6
executed a copy of the Plan currently in
effect, with the only change being the
addition of its name in Section II(A) of
the Plan, and has provided a copy of the
Plan executed by MEMX to each of the
other Participants. MEMX has also
submitted the executed Plan to the
Commission. Accordingly, all of the
Plan requirements for effecting an
5 See Securities Exchange Act Release No. 88806,
85 FR 27451 (May 8, 2020).
6 See Letter from Robert Books, Chairman,
Operating Committee, CTA/CQ Plans, to Vanessa A.
Countryman, Secretary, Commission, dated June 29,
2020 to Vanessa A. Countryman, Secretary, SEC
(relating to Thirty-Fourth Substantive Amendment
to the Second Restatement of the CTA Plan and
Twenty-Fifth Substantive Amendment to the
Restated CQ Plan adding MEMX as a participant)
and letter from Robert Books, Chairman, Operating
Committee, UTP Plan, to Vanessa A. Countryman,
Secretary, Commission, dated June 29, 2020
(relating to Forty-Eighth Amendment to the UTP
Plan adding MEMX as a participant).
E:\FR\FM\03AUN1.SGM
03AUN1
]]>Agencies
[Federal Register Volume 85, Number 149 (Monday, August 3, 2020)]
[Notices]
[Pages 46759-46762]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-16709]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-89413; File No. SR-NASDAQ-2020-044]
Self-Regulatory Organizations; The Nasdaq Stock Market LLC;
Notice of Filing of Proposed Rule Change To Adopt Listing Rule IM-5900-
8 To Offer a Complimentary Global Targeting Tool to Acquisition
Companies Listed Pursuant to Nasdaq IM-5101-2 that Have Publicly
Announced Entering Into a Binding Agreement for a Business Combination
July 28, 2020.
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 July 15, 2020, The Nasdaq Stock Market LLC (``Nasdaq'' or
``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 Exchange. The
Commission is publishing this notice to solicit
[[Page 46760]]
comments on the proposed rule change from interested persons.
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\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Exchange proposes to adopt Listing Rule IM-5900-8 to offer a
complimentary global targeting tool to an Acquisition Company that has
announced a business combination.
The text of the proposed rule change is available on the Exchange's
website at https://listingcenter.nasdaq.com/rulebook/nasdaq/rules, 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
In 2009 Nasdaq adopted a rule (IM-5101-2) to impose additional
listing requirements on a company whose business plan is to complete an
initial public offering and engage in a merger or acquisition with one
or more unidentified companies within a specific period of time
(``Acquisition Companies'').\3\ Based on experience listing these
companies, Nasdaq proposes to adopt Listing Rule IM-5900-8 to offer a
complimentary global targeting tool to an Acquisition Company that has
publicly announced a business combination.
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\3\ Securities Exchange Act Release No. 58228 (July 25, 2008),
73 FR 44794 (July 31, 2008) (adopting the predecessor to IM-5101-2).
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Generally, Nasdaq will not permit the initial or continued listing
of a company that has no specific business plan or that has indicated
that its business plan is to engage in a merger or acquisition with an
unidentified company or companies. However, in the case of an
Acquisition Company, Nasdaq will permit the listing if the company
meets all applicable initial listing requirements, as well as the
additional conditions described in IM-5101-2. These additional
conditions generally require, among other things, that at least 90% of
the gross proceeds from the initial public offering must be deposited
in a ``deposit account,'' as that term is defined in the rule, and that
the company complete within 36 months, or a shorter period identified
by the company, one or more business combinations having an aggregate
fair market value of at least 80% of the value of the deposit account
at the time of the agreement to enter into the initial combination.
Acquisition Companies do not have operating businesses and tend to
trade infrequently and in a tight range until the company completes an
acquisition. Therefore, these companies do not generally need
shareholder communication services, market analytic tools or market
advisory tools and, upon listing, these companies do not receive
complimentary services from Nasdaq under IM-5900-7, even if they list
on the Nasdaq Global or Global Select Markets.\4\
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\4\ See Securities Exchange Act Release No. 79366 (November 21,
2016), 81 FR 85663 (November 28, 2016). A former Acquisition Company
is eligible to receive services under IM-5900-7 when it lists on the
Nasdaq Global or Global Select Market in conjunction with a business
combination that satisfies the conditions in IM-5101-2(b).
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However, over time Nasdaq observed that once an Acquisition Company
publicly announces a business combination with an operating company,
the Acquisition Company needs to identify and target investors
appropriate for the new business. Specifically, once the Acquisition
Company identifies the operating business it plans to acquire, the
Acquisition Company needs to focus on targeting investors who are
interested in investing in the future business operations or the
industry of the acquired business. Such investor targeting may help the
Acquisition Company convey the long-term vision of the acquired
business to investors and thus attract new investors and diminish
potential redemptions at the time of the business combination with the
operating company.\5\
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\5\ The Acquisition Company's shareholders have the right to
redeem their shares for a pro rata share of that trust in
conjunction with the business combination. See IM-5101-2(d) and (e).
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To that end, Nasdaq proposes to offer Acquisition Companies listed
on Nasdaq a complimentary global targeting tool,\6\ following the
public announcement that the company entered into a binding agreement
for the business combination intended to satisfy the conditions in
Listing Rule IM-5101-2(b) until 60 days following the completion of the
business combination or such time that the Acquisition Company publicly
announces that such agreement is terminated.\7\
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\6\ The global targeting tool would be offered through Nasdaq
Corporate Solutions, LLC, an affiliate of Nasdaq.
\7\ Nasdaq offers certain complimentary services under IM-5900-
7, based on market capitalization, to companies listing on the
Nasdaq Global and Global Select Markets in connection with an
initial public offering (other than an Acquisition Company), upon
emerging from bankruptcy, in connection with a spin-off or carve-out
from another company, or in conjunction with a business combination
that satisfies the conditions in Nasdaq IM-5101-2(b) and to
companies (other than an Acquisition Company) switching their
listing from the New York Stock Exchange to the Global or Global
Select Markets. Nasdaq does not currently offer complimentary
services to companies listing on the Nasdaq Capital Market or
Acquisition Companies listing on any market tier. See IM-5900-7.
Accordingly, in certain circumstances, for a short period following
the business combination, a company may be eligible to receive
services under IM-5900-7 and proposed IM-5900-8.
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Through the global targeting tool, Nasdaq investor targeting
specialists will help focus the Company's investor relations efforts on
appropriate investors, tailor messaging to their interests and measure
the Company's impact on their holdings. The analyst team will help
develop a detailed plan aligning the targeting efforts with the
Company's long-term ownership strategy. Analysis includes addressable
risks and opportunities by region and investor type, and
recommendations for where to focus time. This service has a retail
value of approximately $44,000 per year.
Nasdaq believes that the proposed complimentary services would
provide an incentive to the Acquisition Companies to list on Nasdaq.
Nasdaq also believes it is reasonable to balance its need to remain
competitive with other listing venues, while at the same time ensuring
adequate revenue to meet its regulatory responsibilities. Nasdaq notes
that no other company will be required to pay higher fees as a result
of the proposed amendments and represents that providing this service
will have no impact on the resources available for its regulatory
programs.
2. Statutory Basis
The Exchange believes that its proposal is consistent with Section
6(b) of the Exchange Act,\8\ in general, and furthers the objectives of
Section 6(b)(5) of the Exchange Act,\9\ in particular, in that it is
designed to promote just and equitable principles of trade, to remove
impediments to and perfect the
[[Page 46761]]
mechanism of a free and open market and a national market system, and,
in general to protect investors and the public interest. Nasdaq also
believes that the proposed rule change is consistent with the
provisions of Sections 6(b)(4),\10\ 6(b)(5),\11\ and 6(b)(8),\12\ in
that the proposal is designed, among other things, to provide for the
equitable allocation of reasonable dues, fees, and other charges among
Exchange members and issuers and other persons using its facilities and
to promote just and equitable principles of trade, and is not designed
to permit unfair discrimination between issuers, and that the rules of
the Exchange do not impose any burden on competition not necessary or
appropriate in furtherance of the purposes of the Exchange Act.
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\8\ 15 U.S.C. 78f(b).
\9\ 15 U.S.C. 78f(b)(5).
\10\ 15 U.S.C. 78f(4).
\11\ 15 U.S.C. 78f(5).
\12\ 15 U.S.C. 78f(8).
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Nasdaq faces competition in the market for listing services,\13\
and competes, in part, by offering valuable services to companies.
Nasdaq believes that it is reasonable to offer complimentary services
to attract and retain listings as part of this competition. In
particular, Nasdaq believes that it is reasonable to enhance its
competitive offering by providing all Acquisition Companies with a
complimentary global targeting tool, following the public announcement
of the business combination intended to satisfy the conditions in
Listing Rule IM-5101-2(b) until 60 days following the completion the
business combination or such time that the Acquisition Company publicly
announces that such agreement is terminated.
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\13\ The Justice Department has noted the intense competitive
environment for exchange listings. See ``NASDAQ OMX Group Inc. and
IntercontinentalExchange Inc. Abandon Their Proposed Acquisition Of
NYSE Euronext After Justice Department Threatens Lawsuit'' (May 16,
2011), available at https://www.justice.gov/atr/public/press_releases/2011/271214.htm.
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Nasdaq believes it is reasonable, and not unfairly discriminatory,
to offer the global targeting tool to Acquisition Companies following
the public announcement of the business combination that is intended to
satisfy the conditions in Listing Rule IM-5101-2(b) because at such
time Acquisition Companies will have increased need to focus on
identifying and communicating with its shareholders and prospective
investors. Once the Acquisition Company identifies the operating
business it plans to acquire, the Acquisition Company needs to focus on
targeting investors who are interested in investing in the acquired
business. Such investor targeting may help the Acquisition Company
convey the long-term vision of the acquired business to the investors
and thus diminish potential redemptions at the time of the business
combination with the operating company. Nasdaq also believes that such
diminished redemptions may help Acquisition Companies remain in
compliance with other listing requirements, including the shareholder
requirement for continued listing.\14\
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\14\ Listing Rule 5450(a)(2) requires at least 400 Total Holders
for continued listing on the Nasdaq Global Market. Listing Rule
5550(a)(3) requires at least 300 Public Holders for continued
listing on the Nasdaq Capital Market.
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At this time in the Acquisition Company's lifecycle, the companies
are transitioning to the traditional operating company model and the
complimentary global targeting tool will help ease that transition. In
addition, these companies will be eligible to receive this service for
the first time, and offering the complimentary global targeting tool
will provide Nasdaq Corporate Solutions with the opportunity to
demonstrate the value of its services and forge a relationship with the
company at a time when the new operating company is choosing its
service providers. For these reasons, Nasdaq believes it is not an
inequitable allocation of fees nor unfairly discriminatory to offer the
global targeting tool to Acquisition Companies following the public
announcement of such business combination. In addition, Nasdaq believes
it is not an inequitable allocation of fees nor unfairly discriminatory
to offer Acquisition Companies a complimentary global targeting tool
for 60 days following the completion the business combination because
it would allow for a smooth transition to the traditional operating
company model and avoid disruption of the service during such
transaction.
The Commission has previously indicated pursuant to Section 19(b)
of the Exchange Act \15\ that providing and updating the values of the
services within the rule is necessary,\16\ and Nasdaq does not believe
this indication of value has an effect on the allocation of fees nor
does it permit unfair discrimination, as all Acquisition Companies will
receive the same services. Further, this provision will enhance the
transparency of Nasdaq's rules and the value of the services it offers
Acquisition Companies, thus promoting just and equitable principles of
trade. As such, the proposed rule change is consistent with the
requirements of Section 6(b)(4) and (5) of the Exchange Act.
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\15\ 15 U.S.C. 78s(b).
\16\ See Exchange Act Release No. 72669 (July 24, 2014), 79 FR
44234 (July 30, 2014) (SR-NASDAQ-2014-058) (footnote 39 and
accompanying text: ``We would expect Nasdaq, consistent with Section
19(b) of the Exchange Act, to periodically update the retail values
of services offered should they change. This will help to provide
transparency to listed companies on the value of the free services
they receive and the actual costs associated with listing on
Nasdaq.'')
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Nasdaq represents, and this proposed rule change will help ensure,
that individual listed companies are not given specially negotiated
packages of products or services to list, or remain listed, which the
Commission has previously stated would raise unfair discrimination
issues under the Exchange Act.\17\
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\17\ See Exchange Act Release No. 79366, 81 FR 85663 at 85665
(citing Securities Exchange Act Release No. 65127 (August 12, 2011),
76 FR 51449, 51452 (August 18, 2011) (approving NYSE-2011-20)).
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B. Self-Regulatory Organization's Statement on Burden on Competition
Nasdaq does not believe that the proposed rule change will result
in any burden on competition that is not necessary or appropriate in
furtherance of the purposes of the Act, as amended. As noted above,
Nasdaq faces competition in the market for listing services, and
competes, in part, by offering valuable services to companies. The
proposed rule change reflects that competition, but does not impose any
burden on the competition with other exchanges. Rather, Nasdaq believes
the proposed changes will result in Acquisition Companies being
eligible to receive the global targeting tool and therefore will
enhance competition for new listings of Acquisition Companies.
Other exchanges can also offer similar services to companies,
thereby increasing competition to the benefit of those companies and
their shareholders. Accordingly, Nasdaq does not believe the proposed
rule change will impose any burden on competition that is not necessary
or appropriate in furtherance of the purposes of the Exchange Act, as
amended.
Nasdaq also notes that Nasdaq Corporate Solutions competes with
other service providers in providing services like the global targeting
tool. To the extent that these other providers believe that Nasdaq
offering a complimentary services for a limited time creates a
competitive burden on their offerings, they are able to craft a similar
program to attract Acquisition Companies to their services.
[[Page 46762]]
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others
No written comments were either solicited or received.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
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-2020-044 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-2020-044. 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 the 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-2020-044, and should be submitted
on or before August 24, 2020.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\18\
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\18\ 17 CFR 200.30-3(a)(12).
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J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2020-16709 Filed 7-31-20; 8:45 am]
BILLING CODE 8011-01-P
