Self-Regulatory Organizations; The Nasdaq Stock Market LLC; Notice of Filing of Amendment No. 1 and Order Granting Accelerated Approval of a Proposed Rule Change, as Modified by Amendment No. 1, To Modify and Expand the Package of Complimentary Services Provided to Eligible Companies and To Update the Values of Certain Complimentary Services, 14774-14778 [2021-05562]
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Federal Register / Vol. 86, No. 51 / Thursday, March 18, 2021 / Notices
submissions should refer to File
Number SR–MIAX–2021–03 and should
be submitted on or before April 8, 2021.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.19
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2021–05557 Filed 3–17–21; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–91318; File No. SR–
NASDAQ–2021–002]
Self-Regulatory Organizations; The
Nasdaq Stock Market LLC; Notice of
Filing of Amendment No. 1 and Order
Granting Accelerated Approval of a
Proposed Rule Change, as Modified by
Amendment No. 1, To Modify and
Expand the Package of Complimentary
Services Provided to Eligible
Companies and To Update the Values
of Certain Complimentary Services
March 12, 2021.
I. Introduction
On January 8, 2021, The Nasdaq Stock
Market LLC (‘‘Nasdaq’’ 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 modify and expand the
package of complimentary services
provided to eligible companies and to
update the values of certain
complimentary services. The proposed
rule change was published in the
Federal Register on January 26, 2021.3
On February 17, 2021, the Exchange
filed Amendment No. 1 to the proposed
rule change, which amended and
replaced the proposed rule change in its
entirety.4 The Commission is publishing
19 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. 90955
(January 19, 2021), 86 FR 7155 (‘‘Notice’’). No
comments were received on the proposal, other
than Nasdaq’s amendment to the proposed rule
change. See infra note 4.
4 Amendment No. 1 to the proposed rule change
revised the proposal to (i) extend the
complimentary services period for Eligible Switches
(as defined below) that have a market capitalization
of less than $750 million from two to three years,
thereby eliminating a distinction in the length of
the complimentary services period between Eligible
New Listings (as defined below) and Eligible
Switches with a market capitalization of under $750
million; and (ii) make minor technical changes.
Amendment No. 1 to the proposed rule change is
available on the Commission’s website at https://
www.sec.gov/comments/sr-nasdaq-2021-002/
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this notice to solicit comments on the
proposed rule change, as modified by
Amendment No. 1, from interested
persons and is approving the proposed
rule change, as modified by Amendment
No. 1, on an accelerated basis.
II. Description of the Proposal, as
Modified by Amendment No. 1
Nasdaq proposes to modify IM–5900–
7 regarding the package of
complimentary services that it offers to
eligible listed companies to: (i)
Eliminate the tier that provides a higher
level of services to Eligible New
Listings 5 that have a market
capitalization of $5 billion or more; 6 (ii)
extend the complimentary services
period for all Eligible New Listings and
Eligible Switches 7 that have a market
capitalization of less than $750 million
from two to three years; (iii) include a
Media Monitoring/Social Listening
service, Virtual Event service, and
certain Environmental, Social and
Governance (‘‘ESG’’) services in the
complimentary service package for
Eligible New Listings and Eligible
Switches; and (iv) update the values of
certain complimentary services and the
approximate retail values of the
complimentary service package offered
to each tier of Eligible New Listings and
Eligible Switches.
Currently, Nasdaq offers
complimentary services under IM–
5900–7 to a company listing on the
Nasdaq Global or Global Select Market
(i) in connection with an initial public
offering in the United States, including
American Depository Receipts (other
than a company listed under IM–5101–
2); (ii) upon emerging from bankruptcy;
(iii) in connection with a spin-off or
carve-out from another company; (iv) in
connection with a direct listing as
defined in IM–5315–1 (including the
listing of American Depository
Receipts); or (v) in conjunction with a
business combination that satisfies the
conditions in Nasdaq IM–5101–2(b)
(‘‘Eligible New Listing’’).8 Under IM–
5900–7, Nasdaq also offers
complimentary services to a company (i)
switching its listing from the New York
Stock Exchange (‘‘NYSE’’) to the Global
or Global Select Markets (other than a
company listed under IM–5101–2), or
(ii) that has switched its listing from the
srnasdaq2021002-8382244-229339.pdf
(‘‘Amendment No. 1’’).
5 See infra note 8 and accompanying text.
6 Under the proposal, Eligible New Listings with
a market capitalization of $5 billion or more will
receive the same complimentary services as Eligible
New Listings with a market capitalization of $750
million or more.
7 See infra note 9 and accompanying text.
8 See IM–5900–7(a)(1).
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NYSE and listed on Nasdaq under IM–
5101–2 after the company publicly
announced that it entered into a binding
agreement for a business combination
and that subsequently satisfies the
conditions in IM–5101–2(b) and lists on
the Global or Global Select Market in
conjunction with that business
combination (‘‘Eligible Switch’’).9
The complimentary services that
Nasdaq offers currently include a
whistleblower hotline, investor relations
website, disclosure services, audio
webcasting, market analytic tools, and
market advisory tools, which may
include stock surveillance, global
targeting, or an annual perception
study.10 For Eligible New Listings and
Eligible Switches, Nasdaq offers
different tiers of complimentary services
packages based upon whether the
company has a market capitalization of
(i) less than $750 million; (ii) $750
million or more but less than $5 billion;
or (iii) $5 billion or more.11 Nasdaq
states that it believes that the
complimentary service program offers
valuable services to newly listing
companies, is designed to help ease the
transition of becoming a public
company or switching markets, and
makes listing on Nasdaq more attractive
to these companies.12 Nasdaq states that
it faces competition in the market for
listing services and that it believes it is
reasonable to offer complimentary
services to attract and retain listings as
part of this competition.13
Pursuant to the proposed rule change,
Nasdaq proposes to eliminate the third
tier of complimentary services offered to
Eligible New Listings, such that all
Eligible New Listings with market
capitalization of $750 million or more
would be offered the same
complimentary services package.14
9 See IM–5900–7(a)(2). Nasdaq states that
companies switching from a national securities
exchange other than the NYSE are not eligible to
receive complimentary services under IM–5900–7.
See Notice, supra note 3, at 7155 n.3.
10 See IM–5900–7(b). According to Nasdaq, in
addition, all companies listed on Nasdaq receive
other standard services from Nasdaq, including
Nasdaq Online and the Market Intelligence Desk.
See Notice, supra note 3, at 7155 n.4.
11 See IM–5900–7(c) and (d) for additional detail
about the types of complimentary services and
length of the complimentary services period offered
to each tier of Eligible New Listings and Eligible
Switches, respectively. Nasdaq states that it
believes that it is appropriate to offer different
services based on a company’s market capitalization
given that larger companies generally will need
more and different governance, communication,
and intelligence services. See Notice, supra note 3,
at 7157.
12 See Notice, supra note 3, at 7155.
13 See id. at 7157. Nasdaq further states that all
similarly situated companies are eligible for the
same package of services. See id.
14 See proposed IM–5900–7(c)(2).
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Nasdaq states that this change would
simplify the structure of the
complimentary services package by
removing one level of discrimination
among Eligible New Listings.15 Nasdaq
states that it does not propose to change
the tier structure for Eligible Switches
because a typical Eligible Switch has
been an operating entity for a longer
period of time than a typical Eligible
New Listing.16 As such, according to
Nasdaq, Eligible Switches tend to have
larger market capitalization, larger
companies generally will need more
services, and accordingly, the third tier
for the Eligible Switches, which
provides more services than the second
tier, remains appropriate.17 Further,
Nasdaq proposes to extend the
complimentary services period for all
tiers of Eligible New Listings and for
Eligible Switches that have a market
capitalization less than $750 million
from two to three years.18
Moreover, Nasdaq proposes to offer a
Media Monitoring/Social Listening
service and a Virtual Event service to
Eligible New Listings and Eligible
Switches.19 The Media Monitoring/
Social Listening service would track
coverage of company mentions, news,
and events across online and social
media and, according to Nasdaq, has a
retail value of approximately $12,000
per year.20 Through the Virtual Event
service, a company would receive
access to a virtual event platform for use
during one investor or capital market
day presentation event, which may
occur once in the period during which
the company is eligible to receive
services from the complimentary
services package.21 The proposal states
that the Virtual Event service has a retail
value of approximately $20,400.22
Nasdaq states that, given the
increased attention from shareholders
and other stakeholders to ESG
disclosure, it proposes to offer Eligible
New Listings and Eligible Switches an
ESG Core service.23 The ESG Core
service would provide companies with
access to a software solution that would
simplify the gathering, tracking,
approving, managing and disclosing of
15 See
Notice, supra note 3, at 7157.
Amendment No. 1, supra note 4, at 13 n.30.
17 See id.
18 See id. at 8; proposed IM–5900–7(c)(1) and (2)
and (d)(1). Eligible Switches that have a market
capitalization of $750 million or more or $5 billion
or more would continue to receive complimentary
services for four years. See proposed IM–5900–
7(d)(2) and (3).
19 See proposed IM–5900–7(b).
20 See proposed IM–5900–7(b).
21 See Notice, supra note 3, at 7156; proposed IM–
5900–7(b).
22 See proposed IM–5900–7(b).
23 See Notice, supra note 3, at 7156.
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ESG data, including the most universal
and useful ESG metrics to provide
insight into the sustainability
performance of the company.24
According to the proposal, ESG Core
service has a retail value of
approximately $20,000 per year.25
Nasdaq states that, in addition, one-time
development fees of approximately
$1,000 to establish the ESG Core
product in the first year would be
waived.26
Nasdaq also proposes to offer Eligible
New Listings and Eligible Switches that
have a market capitalization of $750
million or more an ESG Education and
Sector Benchmarking service, whereby
companies will receive access to ESG
education, insight, and sector
benchmarks to help them understand
the ESG landscape.27 According to
Nasdaq, the service would provide
insight into capital invested in ESG
strategies, an overview of ESG
frameworks, insight into ESG rating
providers, and other ESG information,
and the sector benchmarks would
provide transparency into aggregated
ESG disclosure practices for the
company’s specified sector.28 The
proposal states that the ESG Education
and Sector Benchmarking service has a
retail value of approximately $30,000
per year.29
Nasdaq states that Eligible New
Listings and Eligible Switches that have
a market capitalization less than $750
million would be eligible to receive the
ESG Core service, while Eligible New
Listings and Eligible Switches that have
a market capitalization of $750 million
or more would be eligible to receive the
ESG Core service and the ESG
Education and Sector Benchmarking
service.30 According to Nasdaq, it
believes that offering different ESG
services based on a company’s market
capitalization is not unfairly
discriminatory because larger
companies generally will need more and
different ESG services, and the
24 See
proposed IM–5900–7(b)(ii).
id.
26 See Notice, supra note 3, at 7156. Nasdaq states
that, currently, the complimentary service package
waives one-time development fees of approximately
$5,000 to establish the complimentary services in
the first year for Eligible New Listings and Eligible
Switches. See id. at 7156 n.11; IM–5900–7(c) and
(d). According to Nasdaq, with the additional
waiver of one-time development fees of $1,000 in
connection with the ESG Core service, the new
complimentary service package would provide that
one-time development fees of approximately $6,000
will be waived. See Notice, supra note 3, at 7156
n.11; proposed IM–5900–7(c) and (d).
27 See proposed IM–5900–7(b)(i).
28 See Notice, supra note 3, at 7156.
29 See proposed IM–5900–7(b)(i).
30 See Notice, supra note 3, at 7156.
25 See
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14775
distinction based on market
capitalization is clear and transparent.31
Nasdaq states that it believes that
offering the Media Monitoring/Social
Listening service, the Virtual Event
service, and the ESG services to public
companies would help them fulfill their
responsibilities as public companies
and provide information important for
communicating with their investors.32
Nasdaq states that no company is
required to use these services as a
condition of listing.33
Nasdaq states that proposed IM–
5900–7 would describe the
complimentary service package
applicable to eligible companies listing
on or after the effective date of this
proposed rule change.34 Nasdaq also
states that to improve transparency and
ease the application of the rules, it
proposes to adopt IM–5900–7A to
describe the current complimentary
service package applicable to eligible
companies that list before the effective
date of the proposed rule change.35
Nasdaq represents that proposed IM–
5900–7 is intended to be substantively
identical to proposed IM–5900–7A,
except as modified by this proposal.36
Nasdaq states, with respect to the
proposal to extend the complimentary
services period for Eligible New Listings
and for Eligible Switches that have a
market capitalization of less than $750
million, that it believes that it is
appropriate to offer complimentary
services for a longer period to those
Eligible New Listings and Eligible
Switches that list after approval of this
proposal than would be provided to
those companies already listed on
Nasdaq, because the purpose of the
proposal is to attract future listings and
this competitive purpose would not be
served by providing the complimentary
services for an extended period to
companies that are already listed.37
Nasdaq also states that it expects that
31 See
id. at 7157.
Amendment No. 1, supra note 4, at 10.
33 See Notice, supra note 3, at 7156–57. If a
company chooses to discontinue the services, there
would be no effect on the company’s continued
listing on the Exchange. See id.
34 See id. at 7156. Nasdaq proposes to revise the
title of IM–5900–7 to specify that the rule would
apply to eligible companies listing on or after the
effective date of the proposed rule change. See
proposed IM–5900–7.
35 See Notice, supra note 3, at 7156. The
Commission notes that, although proposed IM–
5900–7A is substantively identical to current IM–
5900–7, Nasdaq proposes to update the values of
certain complimentary services and the total retail
values of the complimentary service package
offered to each tier of Eligible New Listings and
Eligible Switches in IM–5900–7A. See infra note 39
and accompanying text.
36 See Notice, supra note 3, at 7156.
37 See Amendment No. 1, supra note 4, at 13–14.
32 See
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companies that consider listing on
Nasdaq after the proposal is approved
will take the enhanced offering into
account when choosing their listing
market and budgeting for their needs
that are met by the complimentary
services, whereas existing listed
companies will have made their market
choice and undertaken their financial
planning on the basis of the current
services offering and therefore will not
be harmed by the proposed change.38
Finally, Nasdaq proposes to update
the stated values of the services
described in proposed IM–5900–7, IM–
5900–8, and IM–5900–7A to reflect their
current values.39 Nasdaq represents that
no other company would be required to
pay higher fees as a result of the
proposed amendments and that
providing this service will have no
impact on the resources available for its
regulatory programs.40
III. Discussion and Commission’s
Findings
The Commission has carefully
reviewed the proposed rule change, as
modified by Amendment No. 1, and
finds that it is consistent with the
requirements of Section 6 of the Act.41
Specifically, the Commission believes
the proposed rule change, as modified
by Amendment No. 1, is consistent with
the provisions of Sections 6(b)(4) and (5)
of the Act,42 in particular, in that it is
designed to provide for the equitable
allocation of reasonable dues, fees, and
other charges among Exchange
members, issuers, and other persons
using the Exchange’s facilities, and, in
general to protect investors and the
public interest and is not designed to
permit unfair discrimination between
customers, issuers, brokers, or dealers.
Moreover, the Commission believes that
the proposed rule change, as modified
by Amendment No. 1, is consistent with
38 See
Notice, supra note 3, at 7157.
id. at 7157. Specifically, Nasdaq proposes
to update the stated retail values of services
described in proposed IM–5900–7 and IM–5900–7A
as follows: Investor Relations website service from
$17,000 to $17,600 per year; Audio Webcasting
service from $7,000 to $7,800 per year; and Global
Targeting service from $44,000 to $48,000 per year.
See proposed IM–5900–7, IM–5900–7A, and IM–
5900–8. Nasdaq also proposes to make
corresponding revisions to the stated total retail
value of services per year that is provided to each
tier of Eligible New Listings and Eligible Switches.
See proposed IM 5900–7 and IM–5900–7A.
40 See Notice, supra note 3, at 7157. Nasdaq also
represents that the 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. See id. at 7158.
41 15 U.S.C. 78f. In approving this proposed rule
change, the Commission has considered the
proposed rule’s impact on efficiency, competition,
and capital formation. See 15 U.S.C. 78c(f).
42 15 U.S.C. 78f(b)(4) and (5).
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Section 6(b)(8) of the Act 43 in that it
does not impose any burden on
competition not necessary or
appropriate in furtherance of the
purposes of the Act.
The Commission believes that it is
consistent with the Act for Nasdaq to
eliminate the third tier of
complimentary services offered to
Eligible New Listings. Under the
proposal, all Eligible New Listings with
a market capitalization of $750 million
or more would be offered the same
complimentary services package for
three years. Therefore, this change
would have the effect of treating any
company with a market capitalization at
or above $750 million the same in terms
of the complimentary services provided
upon listing, whereas under the current
rule Eligible New Listings with a market
capitalization of $5 billion or more
received more complimentary services
than other Eligible New Listings. The
Commission notes that the stated total
retail value of the complimentary
services packages offered to Eligible
New Listings with a market
capitalization of $5 billion or more
would increase under the proposal
when such companies are included in
the revised market capitalization tier of
$750 million or more, notwithstanding
the elimination of the third tier.44
Eligible Switches under the proposal
will still maintain their existing three
tier structure, which includes the
highest tier applicable to Eligible
Switches with market capitalizations of
$5 billion or more. Nasdaq states that
Eligible Switches tend to have a larger
market capitalization than Eligible New
Listings and these larger companies
generally will need more services, and
therefore it believes that retaining the
third tier for Eligible Switches remains
appropriate.45
The Commission believes that it is
consistent with the Act for Nasdaq to
extend the complimentary services
period offered to all Eligible New
43 15
U.S.C. 78f(b)(8).
to Nasdaq, the total retail value of
the complimentary services package that would be
made available to Eligible New Listings with a
market capitalization of $5 billion or more that list
before the effective date of the proposed rule change
is up to approximately $186,400 per year, and the
complimentary services would be offered for two
years. See proposed IM–5900–7A(c)(3). Also
according to Nasdaq, the total retail value of the
complimentary services package that would be
made available to Eligible New Listings with a
market capitalization of $750 million or more that
list on or after the effective date of the proposed
rule change is up to approximately $200,400 per
year, with respect to complimentary services that
would be offered for three years, and the company
would receive one Virtual Event during that period
with a retail value of approximately $20,400. See
proposed IM–5900–7(c)(2).
45 See supra notes 16–17 and accompanying text.
44 According
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Listings and for Eligible Switches that
have a market capitalization of less than
$750 million from the current two years
to three years. Under the proposal, the
complimentary services period offered
to Eligible Switches that have a market
capitalization of $750 million or more
but less than $5 billion, or that have a
market capitalization of $5 billion or
more, will remain at four years.
Therefore, under the proposal, Eligible
New Listings and Eligible Switches that
have a market capitalization of less than
$750 million would continue to have a
complimentary services period of the
same length. In addition, the proposal
would reduce the discrepancy between
the length of the complimentary
services period offered to these
companies and the length of the
complimentary services period offered
to Eligible Switches with a market
capitalization of $750 million or more.
The Commission also believes that it
is consistent with the Act for Nasdaq to
offer Media Monitoring/Social
Listening, Virtual Event, and ESG
services to Eligible New Listings and
Eligible Switches. Nasdaq states that it
believes that offering the Media
Monitoring/Social Listening service and
Virtual Event service to public
companies promotes just and equitable
principles of trade and protects
investors and the public interest by
helping Eligible New Listings and
Eligible Switches fulfill their
responsibilities as public companies
through enhanced stakeholder
engagement.46 Further, Nasdaq states
that offering the ESG Core service and
the ESG Education and Sector
Benchmarking service similarly
promotes just and equitable principles
of trade and protects investors and the
public interest by allowing Nasdaqlisted companies to enhance ESG
disclosure relevant to shareholders
investment decisions.47 In addition,
Nasdaq states that no company is
required to use these complimentary
services.48 Further, Nasdaq states that
offering different ESG services based on
a company’s market capitalization is not
unfairly discriminatory because larger
companies generally will need more and
different ESG services, and that the
distinction based on market
capitalization is clear and transparent.49
The Commission believes that Nasdaq
is responding to competitive pressures
in the market for listings in making this
proposal. Nasdaq states in its proposal
that it faces competition in the market
46 See
Notice, supra note 3, at 7157.
id.
48 See id.
49 See supra note 31 and accompanying text.
47 See
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for listing services and that it competes,
in part, by offering complimentary
services to companies.50 Specifically,
Nasdaq is increasing the types of
complimentary services offered and, in
certain instances, expanding the
complimentary services period for
Eligible New Listings and Eligible
Switches that list on or after the
effective date of the proposed rule
change. Nasdaq states that it believes
that it is appropriate to offer
complimentary services for a longer
period for Eligible New Listings and
certain Eligible Switches that list after
this date because the competitive
purpose of the proposal, to attract future
listings, would not be served by
extending the period of complimentary
services for companies that are already
listed.51 Nasdaq also states that existing
listed companies would not be harmed
by the proposal because they have
already made their market choice and
planned their budget on the basis of the
current services offering.52 The
Commission believes that it is
reasonable and consistent with Sections
6(b)(4) and 6(b)(5) of the Act 53 for the
Exchange to expand the types of
complimentary services and the length
of the complimentary services period
offered to Eligible New Listings and
Eligible Switches that list on or after the
effective date of the proposed rule
change. In addition, the Commission
believes that the proposed rule reflects
the current competitive environment for
exchange listings among national
securities exchanges, and is appropriate
and consistent with Section 6(b)(8) of
the Act.54
As noted in the Commission’s
previous order approving IM–5900–7,
Section 6(b)(5) of the Act does not
require that all issuers be treated the
same; rather, the Act requires that the
rules of an exchange not unfairly
discriminate between issuers.55 In
addition, the Commission believes that
describing in the Exchange’s rules the
products and services available to listed
companies and their associated values,
as well as the length of time companies
50 See
supra note 13 and accompanying text.
supra note 37 and accompanying text.
52 See supra note 38 and accompanying text.
53 15 U.S.C. 78f(b)(4) and (5).
54 15 U.S.C. 78f(b)(8).
55 15 U.S.C. 78f(b)(5); see also Securities
Exchange Act Release No. 65963 (December 15,
2011), 76 FR 79262, 79266 (December 21, 2011)
(approving NASDAQ–2011–122) (‘‘2011 Approval
Order’’) (‘‘The Commission believes that NASDAQ
has provided a sufficient basis for its different
treatment of Eligible Switches and that this portion
of NASDAQ’s proposal meets the requirements of
the Act in that it reflects competition between
exchanges, with NASDAQ offering discounts for
transfers of listings from a competing exchange.’’).
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are entitled to receive such services,
will ensure that individual listed
companies are not given specially
negotiated packages of products or
services to list, or remain listed, that
would raise unfair discrimination issues
under the Act.56 The Commission has
previously found that the package of
complimentary services offered to
Eligible New Listings and Eligible
Switches is equitably allocated among
issuers consistent with Section 6(b)(4) of
the Act and that describing the values
of the services adds greater transparency
to the Exchange’s rules and to the fees
applicable to such companies.57 Based
on the foregoing, the Commission
believes that Nasdaq has provided a
sufficient basis for (i) eliminating the
third tier based on market capitalization
for complimentary services offered to
Eligible New Listings; (ii) extending the
complimentary services time period for
Eligible New Listings and for Eligible
Switches with a market capitalization of
less than $750 million from two to three
years; (iii) adding the Media
Monitoring/Social Listing service,
Virtual Event service, and certain ESG
services to the complimentary services
package offered to Eligible New Listings
and Eligible Switches; and (iv)
implementing these changes for
companies listing on or after the
effective date of the proposed rule
change. The Commission believes that
the proposal does not unfairly
discriminate among issuers and is
therefore consistent with Section 6(b)(5)
of the Act. For similar reasons, the
Commission believes that the packages
of complimentary services to be offered
pursuant to Nasdaq’s proposal are
equitably allocated among issuers
consistent with Section 6(b)(4) of the
Act.
The Commission also believes that it
is reasonable, and in fact required by
Section 19(b) of the Act, that Nasdaq
amend its rules to update the products
and services it offers to Eligible New
Listings, Eligible Switches, and other
56 See Securities Exchange Act Release No. 79366
(November 21, 2016), 81 FR 85663, 85665
(November 28, 2016) (approving NASDAQ–2016–
106) (‘‘2016 Approval Order’’) (citing Securities
Exchange Act Release No. 65127 (August 12, 2011),
76 FR 51449, 51452 (August 18, 2011) (approving
NYSE–2011–20)). The Commission notes that
Nasdaq represents that no other company will be
required to pay higher fees as a result of the
proposal, that the proposal will have no impact on
the resources available for its regulatory programs,
and that the proposal will help to ensure that
individual listed companies are not given specially
negotiated packages of products or services to list,
or remain listed. See supra note 40 and
accompanying text.
57 See 2016 Approval Order, supra note 56, at
85665; 2011 Approval Order, supra note 55, at
79266.
PO 00000
Frm 00058
Fmt 4703
Sfmt 4703
14777
Acquisition Companies listed under
IM–5101–2, including the time periods
for which such products and services
are offered and the commercial value of
such products and services. This
provides greater transparency to the
Exchange’s rules and the fees, and the
value of free products and services,
applicable to listed companies.
Finally, the Commission finds that it
is consistent with Section 6(b)(5) of the
Act 58 for Nasdaq to make various
technical and conforming revisions to
facilitate clarity of its rules.
IV. Solicitation of Comments on
Amendment No. 1 to the Proposed Rule
Change
Interested persons are invited to
submit written data, views, and
arguments concerning the foregoing,
including whether Amendment No. 1 is
consistent with the Act. Comments may
be submitted by any of the following
methods:
Electronic Comments
• Use the Commission’s internet
comment form (https://www.sec.gov/
rules/sro.shtml); or
• Send an email to rule-comments@
sec.gov. Please include File Number SR–
NASDAQ–2021–002 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–2021–002. 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
58 15
E:\FR\FM\18MRN1.SGM
U.S.C. 78f(b)(5).
18MRN1
14778
Federal Register / Vol. 86, No. 51 / Thursday, March 18, 2021 / Notices
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–2021–002 and
should be submitted on or before April
8, 2021.
jbell on DSKJLSW7X2PROD with NOTICES
V. Accelerated Approval of the
Proposed Rule Change, as Modified by
Amendment No. 1
The Commission finds good cause to
approve the proposed rule change, as
modified by Amendment No. 1, prior to
the thirtieth day after the date of
publication of notice of the filing of
Amendment No. 1 in the Federal
Register. The Commission notes that the
original proposal was published for
comment in the Federal Register,59 and
the Commission did not receive any
comments other than Nasdaq’s
amendment to the proposed rule
change. The Commission also notes that
while in the current rule, the
complimentary services period for
Eligible New Listings and for Eligible
Switches with a market capitalization of
less than $750 million is two years, the
original proposal would have extended
this period to three years for Eligible
New Listings only. By amending the
proposal to extend the complimentary
services period for Eligible Switches
with a market capitalization of less than
$750 million from two to three years,
Amendment No. 1 eliminates what
would have been a new difference
between the length of the
complimentary services period offered
to Eligible Switches with a market
capitalization of less than $750 million
and the length of the complimentary
services period offered to Eligible New
Listings. This change, and the other
minor clarifying changes in Amendment
No. 1, assist the Commission in
evaluating the Exchange’s proposal and
in determining that it is consistent with
the Act. Accordingly, the Commission
finds good cause, pursuant to Section
19(b)(2) of the Act,60 to approve the
proposed rule change, as modified by
Amendment No. 1, on an accelerated
basis.
VI. Conclusion
It is therefore ordered, pursuant to
Section 19(b)(2) of the Act,61 that the
59 See
60 15
Notice, supra note 3.
U.S.C. 78s(b)(2).
61 Id.
VerDate Sep<11>2014
16:49 Mar 17, 2021
Jkt 253001
proposed rule change (SR–NASDAQ–
2021–002), as modified by Amendment
No. 1, be, and it hereby is, approved on
an accelerated basis.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.62
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2021–05562 Filed 3–17–21; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–91309; File No. SR–
NYSEArca–2020–54]
Self-Regulatory Organizations; NYSE
Arca, Inc.; Notice of Designation of a
Longer Period for Commission Action
on Proceedings To Determine Whether
To Approve or Disapprove a Proposed
Rule Change, as Modified by
Amendment No. 1, To Amend NYSE
Arca Rule 5.3–E To Exempt Registered
Investment Companies That List
Certain Categories of the Securities
Defined as Derivative and Special
Purpose Securities Under NYSE Arca
Rules From Having To Obtain
Shareholder Approval Prior to the
Issuance of Securities in Connection
With Certain Acquisitions of the Stock
or Assets of an Affiliated Company
March 12, 2021.
On August 28, 2020, NYSE Arca, Inc.
(‘‘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
amend NYSE Arca Rule 5.3–E
(Corporate Governance and Disclosure
Policies) to exempt certain categories of
derivative and special purpose
securities from the requirement to
obtain shareholder approval prior to the
issuance of securities in connection
with certain acquisitions of the stock or
assets of another company. The
proposed rule change was published in
the Federal Register on September 17,
2020.3 On October 30, 2020, pursuant to
Section 19(b)(2) of the Act,4 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
62 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. 89834
(September 11, 2020), 85 FR 58090.
4 15 U.S.C. 78s(b)(2).
1 15
PO 00000
Frm 00059
Fmt 4703
Sfmt 4703
proposed rule change.5 On December 1,
2020, the Exchange filed Amendment
No. 1 to the proposed rule change,
which superseded the proposed rule
change as originally filed.6 On
December 15, 2020, the Commission
published notice of Amendment No. 1
and instituted proceedings under
Section 19(b)(2)(B) of the Act 7 to
determine whether to approve or
disapprove the proposed rule change, as
modified by Amendment No. 1.8 The
Commission has received no comments
on the proposed rule change.
Section 19(b)(2) of the Act 9 provides
that, after initiating proceedings, the
Commission shall issue an order
approving or disapproving the proposed
rule change not later than 180 days after
the date of publication of notice of filing
of the proposed rule change. The
Commission may extend the period for
issuing an order approving or
disapproving the proposed rule change,
however, by not more than 60 days if
the Commission determines that a
longer period is appropriate and
publishes the reasons for such
determination. The proposed rule
change was published for comment in
the Federal Register on September 17,
2020.10 The 180th day after publication
of the Notice is March 16, 2021. The
Commission is extending the time
period for approving or disapproving
the proposal for an additional 60 days.
The Commission finds that it is
appropriate to designate a longer period
within which to issue an order
approving or disapproving the proposed
rule change so that it has sufficient time
to consider the proposed rule change, as
modified by Amendment No. 1.
Accordingly, the Commission, pursuant
to Section 19(b)(2) of the Act,11
designates May 15, 2021, as the date by
which the Commission shall either
approve or disapprove or the proposed
rule change (File Number SR–
NYSEArca–2020–54), as modified by
Amendment No. 1.
5 See Securities Exchange Act Release No. 90297,
85 FR 70701 (November 5, 2020).
6 Amendment No. 1 is available on the
Commission’s website at https://www.sec.gov/rules/
sro/nysearca.htm.
7 15 U.S.C. 78s(b)(2)(B).
8 See Securities Exchange Act Release No. 90675,
85 FR 83121 (Dec. 21, 2020).
9 15 U.S.C. 78s(b)(2).
10 See supra note 3.
11 15 U.S.C. 78s(b)(2).
E:\FR\FM\18MRN1.SGM
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]]>Agencies
[Federal Register Volume 86, Number 51 (Thursday, March 18, 2021)]
[Notices]
[Pages 14774-14778]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2021-05562]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-91318; File No. SR-NASDAQ-2021-002]
Self-Regulatory Organizations; The Nasdaq Stock Market LLC;
Notice of Filing of Amendment No. 1 and Order Granting Accelerated
Approval of a Proposed Rule Change, as Modified by Amendment No. 1, To
Modify and Expand the Package of Complimentary Services Provided to
Eligible Companies and To Update the Values of Certain Complimentary
Services
March 12, 2021.
I. Introduction
On January 8, 2021, The Nasdaq Stock Market LLC (``Nasdaq'' 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 modify and expand the package of complimentary
services provided to eligible companies and to update the values of
certain complimentary services. The proposed rule change was published
in the Federal Register on January 26, 2021.\3\ On February 17, 2021,
the Exchange filed Amendment No. 1 to the proposed rule change, which
amended and replaced the proposed rule change in its entirety.\4\ The
Commission is publishing this notice to solicit comments on the
proposed rule change, as modified by Amendment No. 1, from interested
persons and is approving the proposed rule change, as modified by
Amendment No. 1, on an accelerated basis.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
\3\ See Securities Exchange Act Release No. 90955 (January 19,
2021), 86 FR 7155 (``Notice''). No comments were received on the
proposal, other than Nasdaq's amendment to the proposed rule change.
See infra note 4.
\4\ Amendment No. 1 to the proposed rule change revised the
proposal to (i) extend the complimentary services period for
Eligible Switches (as defined below) that have a market
capitalization of less than $750 million from two to three years,
thereby eliminating a distinction in the length of the complimentary
services period between Eligible New Listings (as defined below) and
Eligible Switches with a market capitalization of under $750
million; and (ii) make minor technical changes. Amendment No. 1 to
the proposed rule change is available on the Commission's website at
https://www.sec.gov/comments/sr-nasdaq-2021-002/srnasdaq2021002-8382244-229339.pdf (``Amendment No. 1'').
---------------------------------------------------------------------------
II. Description of the Proposal, as Modified by Amendment No. 1
Nasdaq proposes to modify IM-5900-7 regarding the package of
complimentary services that it offers to eligible listed companies to:
(i) Eliminate the tier that provides a higher level of services to
Eligible New Listings \5\ that have a market capitalization of $5
billion or more; \6\ (ii) extend the complimentary services period for
all Eligible New Listings and Eligible Switches \7\ that have a market
capitalization of less than $750 million from two to three years; (iii)
include a Media Monitoring/Social Listening service, Virtual Event
service, and certain Environmental, Social and Governance (``ESG'')
services in the complimentary service package for Eligible New Listings
and Eligible Switches; and (iv) update the values of certain
complimentary services and the approximate retail values of the
complimentary service package offered to each tier of Eligible New
Listings and Eligible Switches.
---------------------------------------------------------------------------
\5\ See infra note 8 and accompanying text.
\6\ Under the proposal, Eligible New Listings with a market
capitalization of $5 billion or more will receive the same
complimentary services as Eligible New Listings with a market
capitalization of $750 million or more.
\7\ See infra note 9 and accompanying text.
---------------------------------------------------------------------------
Currently, Nasdaq offers complimentary services under IM-5900-7 to
a company listing on the Nasdaq Global or Global Select Market (i) in
connection with an initial public offering in the United States,
including American Depository Receipts (other than a company listed
under IM-5101-2); (ii) upon emerging from bankruptcy; (iii) in
connection with a spin-off or carve-out from another company; (iv) in
connection with a direct listing as defined in IM-5315-1 (including the
listing of American Depository Receipts); or (v) in conjunction with a
business combination that satisfies the conditions in Nasdaq IM-5101-
2(b) (``Eligible New Listing'').\8\ Under IM-5900-7, Nasdaq also offers
complimentary services to a company (i) switching its listing from the
New York Stock Exchange (``NYSE'') to the Global or Global Select
Markets (other than a company listed under IM-5101-2), or (ii) that has
switched its listing from the NYSE and listed on Nasdaq under IM-5101-2
after the company publicly announced that it entered into a binding
agreement for a business combination and that subsequently satisfies
the conditions in IM-5101-2(b) and lists on the Global or Global Select
Market in conjunction with that business combination (``Eligible
Switch'').\9\
---------------------------------------------------------------------------
\8\ See IM-5900-7(a)(1).
\9\ See IM-5900-7(a)(2). Nasdaq states that companies switching
from a national securities exchange other than the NYSE are not
eligible to receive complimentary services under IM-5900-7. See
Notice, supra note 3, at 7155 n.3.
---------------------------------------------------------------------------
The complimentary services that Nasdaq offers currently include a
whistleblower hotline, investor relations website, disclosure services,
audio webcasting, market analytic tools, and market advisory tools,
which may include stock surveillance, global targeting, or an annual
perception study.\10\ For Eligible New Listings and Eligible Switches,
Nasdaq offers different tiers of complimentary services packages based
upon whether the company has a market capitalization of (i) less than
$750 million; (ii) $750 million or more but less than $5 billion; or
(iii) $5 billion or more.\11\ Nasdaq states that it believes that the
complimentary service program offers valuable services to newly listing
companies, is designed to help ease the transition of becoming a public
company or switching markets, and makes listing on Nasdaq more
attractive to these companies.\12\ Nasdaq states that it faces
competition in the market for listing services and that it believes it
is reasonable to offer complimentary services to attract and retain
listings as part of this competition.\13\
---------------------------------------------------------------------------
\10\ See IM-5900-7(b). According to Nasdaq, in addition, all
companies listed on Nasdaq receive other standard services from
Nasdaq, including Nasdaq Online and the Market Intelligence Desk.
See Notice, supra note 3, at 7155 n.4.
\11\ See IM-5900-7(c) and (d) for additional detail about the
types of complimentary services and length of the complimentary
services period offered to each tier of Eligible New Listings and
Eligible Switches, respectively. Nasdaq states that it believes that
it is appropriate to offer different services based on a company's
market capitalization given that larger companies generally will
need more and different governance, communication, and intelligence
services. See Notice, supra note 3, at 7157.
\12\ See Notice, supra note 3, at 7155.
\13\ See id. at 7157. Nasdaq further states that all similarly
situated companies are eligible for the same package of services.
See id.
---------------------------------------------------------------------------
Pursuant to the proposed rule change, Nasdaq proposes to eliminate
the third tier of complimentary services offered to Eligible New
Listings, such that all Eligible New Listings with market
capitalization of $750 million or more would be offered the same
complimentary services package.\14\
[[Page 14775]]
Nasdaq states that this change would simplify the structure of the
complimentary services package by removing one level of discrimination
among Eligible New Listings.\15\ Nasdaq states that it does not propose
to change the tier structure for Eligible Switches because a typical
Eligible Switch has been an operating entity for a longer period of
time than a typical Eligible New Listing.\16\ As such, according to
Nasdaq, Eligible Switches tend to have larger market capitalization,
larger companies generally will need more services, and accordingly,
the third tier for the Eligible Switches, which provides more services
than the second tier, remains appropriate.\17\ Further, Nasdaq proposes
to extend the complimentary services period for all tiers of Eligible
New Listings and for Eligible Switches that have a market
capitalization less than $750 million from two to three years.\18\
---------------------------------------------------------------------------
\14\ See proposed IM-5900-7(c)(2).
\15\ See Notice, supra note 3, at 7157.
\16\ See Amendment No. 1, supra note 4, at 13 n.30.
\17\ See id.
\18\ See id. at 8; proposed IM-5900-7(c)(1) and (2) and (d)(1).
Eligible Switches that have a market capitalization of $750 million
or more or $5 billion or more would continue to receive
complimentary services for four years. See proposed IM-5900-7(d)(2)
and (3).
---------------------------------------------------------------------------
Moreover, Nasdaq proposes to offer a Media Monitoring/Social
Listening service and a Virtual Event service to Eligible New Listings
and Eligible Switches.\19\ The Media Monitoring/Social Listening
service would track coverage of company mentions, news, and events
across online and social media and, according to Nasdaq, has a retail
value of approximately $12,000 per year.\20\ Through the Virtual Event
service, a company would receive access to a virtual event platform for
use during one investor or capital market day presentation event, which
may occur once in the period during which the company is eligible to
receive services from the complimentary services package.\21\ The
proposal states that the Virtual Event service has a retail value of
approximately $20,400.\22\
---------------------------------------------------------------------------
\19\ See proposed IM-5900-7(b).
\20\ See proposed IM-5900-7(b).
\21\ See Notice, supra note 3, at 7156; proposed IM-5900-7(b).
\22\ See proposed IM-5900-7(b).
---------------------------------------------------------------------------
Nasdaq states that, given the increased attention from shareholders
and other stakeholders to ESG disclosure, it proposes to offer Eligible
New Listings and Eligible Switches an ESG Core service.\23\ The ESG
Core service would provide companies with access to a software solution
that would simplify the gathering, tracking, approving, managing and
disclosing of ESG data, including the most universal and useful ESG
metrics to provide insight into the sustainability performance of the
company.\24\ According to the proposal, ESG Core service has a retail
value of approximately $20,000 per year.\25\ Nasdaq states that, in
addition, one-time development fees of approximately $1,000 to
establish the ESG Core product in the first year would be waived.\26\
---------------------------------------------------------------------------
\23\ See Notice, supra note 3, at 7156.
\24\ See proposed IM-5900-7(b)(ii).
\25\ See id.
\26\ See Notice, supra note 3, at 7156. Nasdaq states that,
currently, the complimentary service package waives one-time
development fees of approximately $5,000 to establish the
complimentary services in the first year for Eligible New Listings
and Eligible Switches. See id. at 7156 n.11; IM-5900-7(c) and (d).
According to Nasdaq, with the additional waiver of one-time
development fees of $1,000 in connection with the ESG Core service,
the new complimentary service package would provide that one-time
development fees of approximately $6,000 will be waived. See Notice,
supra note 3, at 7156 n.11; proposed IM-5900-7(c) and (d).
---------------------------------------------------------------------------
Nasdaq also proposes to offer Eligible New Listings and Eligible
Switches that have a market capitalization of $750 million or more an
ESG Education and Sector Benchmarking service, whereby companies will
receive access to ESG education, insight, and sector benchmarks to help
them understand the ESG landscape.\27\ According to Nasdaq, the service
would provide insight into capital invested in ESG strategies, an
overview of ESG frameworks, insight into ESG rating providers, and
other ESG information, and the sector benchmarks would provide
transparency into aggregated ESG disclosure practices for the company's
specified sector.\28\ The proposal states that the ESG Education and
Sector Benchmarking service has a retail value of approximately $30,000
per year.\29\
---------------------------------------------------------------------------
\27\ See proposed IM-5900-7(b)(i).
\28\ See Notice, supra note 3, at 7156.
\29\ See proposed IM-5900-7(b)(i).
---------------------------------------------------------------------------
Nasdaq states that Eligible New Listings and Eligible Switches that
have a market capitalization less than $750 million would be eligible
to receive the ESG Core service, while Eligible New Listings and
Eligible Switches that have a market capitalization of $750 million or
more would be eligible to receive the ESG Core service and the ESG
Education and Sector Benchmarking service.\30\ According to Nasdaq, it
believes that offering different ESG services based on a company's
market capitalization is not unfairly discriminatory because larger
companies generally will need more and different ESG services, and the
distinction based on market capitalization is clear and
transparent.\31\
---------------------------------------------------------------------------
\30\ See Notice, supra note 3, at 7156.
\31\ See id. at 7157.
---------------------------------------------------------------------------
Nasdaq states that it believes that offering the Media Monitoring/
Social Listening service, the Virtual Event service, and the ESG
services to public companies would help them fulfill their
responsibilities as public companies and provide information important
for communicating with their investors.\32\ Nasdaq states that no
company is required to use these services as a condition of
listing.\33\
---------------------------------------------------------------------------
\32\ See Amendment No. 1, supra note 4, at 10.
\33\ See Notice, supra note 3, at 7156-57. If a company chooses
to discontinue the services, there would be no effect on the
company's continued listing on the Exchange. See id.
---------------------------------------------------------------------------
Nasdaq states that proposed IM-5900-7 would describe the
complimentary service package applicable to eligible companies listing
on or after the effective date of this proposed rule change.\34\ Nasdaq
also states that to improve transparency and ease the application of
the rules, it proposes to adopt IM-5900-7A to describe the current
complimentary service package applicable to eligible companies that
list before the effective date of the proposed rule change.\35\ Nasdaq
represents that proposed IM-5900-7 is intended to be substantively
identical to proposed IM-5900-7A, except as modified by this
proposal.\36\
---------------------------------------------------------------------------
\34\ See id. at 7156. Nasdaq proposes to revise the title of IM-
5900-7 to specify that the rule would apply to eligible companies
listing on or after the effective date of the proposed rule change.
See proposed IM-5900-7.
\35\ See Notice, supra note 3, at 7156. The Commission notes
that, although proposed IM-5900-7A is substantively identical to
current IM-5900-7, Nasdaq proposes to update the values of certain
complimentary services and the total retail values of the
complimentary service package offered to each tier of Eligible New
Listings and Eligible Switches in IM-5900-7A. See infra note 39 and
accompanying text.
\36\ See Notice, supra note 3, at 7156.
---------------------------------------------------------------------------
Nasdaq states, with respect to the proposal to extend the
complimentary services period for Eligible New Listings and for
Eligible Switches that have a market capitalization of less than $750
million, that it believes that it is appropriate to offer complimentary
services for a longer period to those Eligible New Listings and
Eligible Switches that list after approval of this proposal than would
be provided to those companies already listed on Nasdaq, because the
purpose of the proposal is to attract future listings and this
competitive purpose would not be served by providing the complimentary
services for an extended period to companies that are already
listed.\37\ Nasdaq also states that it expects that
[[Page 14776]]
companies that consider listing on Nasdaq after the proposal is
approved will take the enhanced offering into account when choosing
their listing market and budgeting for their needs that are met by the
complimentary services, whereas existing listed companies will have
made their market choice and undertaken their financial planning on the
basis of the current services offering and therefore will not be harmed
by the proposed change.\38\
---------------------------------------------------------------------------
\37\ See Amendment No. 1, supra note 4, at 13-14.
\38\ See Notice, supra note 3, at 7157.
---------------------------------------------------------------------------
Finally, Nasdaq proposes to update the stated values of the
services described in proposed IM-5900-7, IM-5900-8, and IM-5900-7A to
reflect their current values.\39\ Nasdaq represents that no other
company would be required to pay higher fees as a result of the
proposed amendments and that providing this service will have no impact
on the resources available for its regulatory programs.\40\
---------------------------------------------------------------------------
\39\ See id. at 7157. Specifically, Nasdaq proposes to update
the stated retail values of services described in proposed IM-5900-7
and IM-5900-7A as follows: Investor Relations website service from
$17,000 to $17,600 per year; Audio Webcasting service from $7,000 to
$7,800 per year; and Global Targeting service from $44,000 to
$48,000 per year. See proposed IM-5900-7, IM-5900-7A, and IM-5900-8.
Nasdaq also proposes to make corresponding revisions to the stated
total retail value of services per year that is provided to each
tier of Eligible New Listings and Eligible Switches. See proposed IM
5900-7 and IM-5900-7A.
\40\ See Notice, supra note 3, at 7157. Nasdaq also represents
that the 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. See id. at 7158.
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III. Discussion and Commission's Findings
The Commission has carefully reviewed the proposed rule change, as
modified by Amendment No. 1, and finds that it is consistent with the
requirements of Section 6 of the Act.\41\ Specifically, the Commission
believes the proposed rule change, as modified by Amendment No. 1, is
consistent with the provisions of Sections 6(b)(4) and (5) of the
Act,\42\ in particular, in that it is designed to provide for the
equitable allocation of reasonable dues, fees, and other charges among
Exchange members, issuers, and other persons using the Exchange's
facilities, and, in general to protect investors and the public
interest and is not designed to permit unfair discrimination between
customers, issuers, brokers, or dealers. Moreover, the Commission
believes that the proposed rule change, as modified by Amendment No. 1,
is consistent with Section 6(b)(8) of the Act \43\ in that it does not
impose any burden on competition not necessary or appropriate in
furtherance of the purposes of the Act.
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\41\ 15 U.S.C. 78f. In approving this proposed rule change, the
Commission has considered the proposed rule's impact on efficiency,
competition, and capital formation. See 15 U.S.C. 78c(f).
\42\ 15 U.S.C. 78f(b)(4) and (5).
\43\ 15 U.S.C. 78f(b)(8).
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The Commission believes that it is consistent with the Act for
Nasdaq to eliminate the third tier of complimentary services offered to
Eligible New Listings. Under the proposal, all Eligible New Listings
with a market capitalization of $750 million or more would be offered
the same complimentary services package for three years. Therefore,
this change would have the effect of treating any company with a market
capitalization at or above $750 million the same in terms of the
complimentary services provided upon listing, whereas under the current
rule Eligible New Listings with a market capitalization of $5 billion
or more received more complimentary services than other Eligible New
Listings. The Commission notes that the stated total retail value of
the complimentary services packages offered to Eligible New Listings
with a market capitalization of $5 billion or more would increase under
the proposal when such companies are included in the revised market
capitalization tier of $750 million or more, notwithstanding the
elimination of the third tier.\44\ Eligible Switches under the proposal
will still maintain their existing three tier structure, which includes
the highest tier applicable to Eligible Switches with market
capitalizations of $5 billion or more. Nasdaq states that Eligible
Switches tend to have a larger market capitalization than Eligible New
Listings and these larger companies generally will need more services,
and therefore it believes that retaining the third tier for Eligible
Switches remains appropriate.\45\
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\44\ According to Nasdaq, the total retail value of the
complimentary services package that would be made available to
Eligible New Listings with a market capitalization of $5 billion or
more that list before the effective date of the proposed rule change
is up to approximately $186,400 per year, and the complimentary
services would be offered for two years. See proposed IM-5900-
7A(c)(3). Also according to Nasdaq, the total retail value of the
complimentary services package that would be made available to
Eligible New Listings with a market capitalization of $750 million
or more that list on or after the effective date of the proposed
rule change is up to approximately $200,400 per year, with respect
to complimentary services that would be offered for three years, and
the company would receive one Virtual Event during that period with
a retail value of approximately $20,400. See proposed IM-5900-
7(c)(2).
\45\ See supra notes 16-17 and accompanying text.
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The Commission believes that it is consistent with the Act for
Nasdaq to extend the complimentary services period offered to all
Eligible New Listings and for Eligible Switches that have a market
capitalization of less than $750 million from the current two years to
three years. Under the proposal, the complimentary services period
offered to Eligible Switches that have a market capitalization of $750
million or more but less than $5 billion, or that have a market
capitalization of $5 billion or more, will remain at four years.
Therefore, under the proposal, Eligible New Listings and Eligible
Switches that have a market capitalization of less than $750 million
would continue to have a complimentary services period of the same
length. In addition, the proposal would reduce the discrepancy between
the length of the complimentary services period offered to these
companies and the length of the complimentary services period offered
to Eligible Switches with a market capitalization of $750 million or
more.
The Commission also believes that it is consistent with the Act for
Nasdaq to offer Media Monitoring/Social Listening, Virtual Event, and
ESG services to Eligible New Listings and Eligible Switches. Nasdaq
states that it believes that offering the Media Monitoring/Social
Listening service and Virtual Event service to public companies
promotes just and equitable principles of trade and protects investors
and the public interest by helping Eligible New Listings and Eligible
Switches fulfill their responsibilities as public companies through
enhanced stakeholder engagement.\46\ Further, Nasdaq states that
offering the ESG Core service and the ESG Education and Sector
Benchmarking service similarly promotes just and equitable principles
of trade and protects investors and the public interest by allowing
Nasdaq-listed companies to enhance ESG disclosure relevant to
shareholders investment decisions.\47\ In addition, Nasdaq states that
no company is required to use these complimentary services.\48\
Further, Nasdaq states that offering different ESG services based on a
company's market capitalization is not unfairly discriminatory because
larger companies generally will need more and different ESG services,
and that the distinction based on market capitalization is clear and
transparent.\49\
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\46\ See Notice, supra note 3, at 7157.
\47\ See id.
\48\ See id.
\49\ See supra note 31 and accompanying text.
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The Commission believes that Nasdaq is responding to competitive
pressures in the market for listings in making this proposal. Nasdaq
states in its proposal that it faces competition in the market
[[Page 14777]]
for listing services and that it competes, in part, by offering
complimentary services to companies.\50\ Specifically, Nasdaq is
increasing the types of complimentary services offered and, in certain
instances, expanding the complimentary services period for Eligible New
Listings and Eligible Switches that list on or after the effective date
of the proposed rule change. Nasdaq states that it believes that it is
appropriate to offer complimentary services for a longer period for
Eligible New Listings and certain Eligible Switches that list after
this date because the competitive purpose of the proposal, to attract
future listings, would not be served by extending the period of
complimentary services for companies that are already listed.\51\
Nasdaq also states that existing listed companies would not be harmed
by the proposal because they have already made their market choice and
planned their budget on the basis of the current services offering.\52\
The Commission believes that it is reasonable and consistent with
Sections 6(b)(4) and 6(b)(5) of the Act \53\ for the Exchange to expand
the types of complimentary services and the length of the complimentary
services period offered to Eligible New Listings and Eligible Switches
that list on or after the effective date of the proposed rule change.
In addition, the Commission believes that the proposed rule reflects
the current competitive environment for exchange listings among
national securities exchanges, and is appropriate and consistent with
Section 6(b)(8) of the Act.\54\
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\50\ See supra note 13 and accompanying text.
\51\ See supra note 37 and accompanying text.
\52\ See supra note 38 and accompanying text.
\53\ 15 U.S.C. 78f(b)(4) and (5).
\54\ 15 U.S.C. 78f(b)(8).
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As noted in the Commission's previous order approving IM-5900-7,
Section 6(b)(5) of the Act does not require that all issuers be treated
the same; rather, the Act requires that the rules of an exchange not
unfairly discriminate between issuers.\55\ In addition, the Commission
believes that describing in the Exchange's rules the products and
services available to listed companies and their associated values, as
well as the length of time companies are entitled to receive such
services, will ensure that individual listed companies are not given
specially negotiated packages of products or services to list, or
remain listed, that would raise unfair discrimination issues under the
Act.\56\ The Commission has previously found that the package of
complimentary services offered to Eligible New Listings and Eligible
Switches is equitably allocated among issuers consistent with Section
6(b)(4) of the Act and that describing the values of the services adds
greater transparency to the Exchange's rules and to the fees applicable
to such companies.\57\ Based on the foregoing, the Commission believes
that Nasdaq has provided a sufficient basis for (i) eliminating the
third tier based on market capitalization for complimentary services
offered to Eligible New Listings; (ii) extending the complimentary
services time period for Eligible New Listings and for Eligible
Switches with a market capitalization of less than $750 million from
two to three years; (iii) adding the Media Monitoring/Social Listing
service, Virtual Event service, and certain ESG services to the
complimentary services package offered to Eligible New Listings and
Eligible Switches; and (iv) implementing these changes for companies
listing on or after the effective date of the proposed rule change. The
Commission believes that the proposal does not unfairly discriminate
among issuers and is therefore consistent with Section 6(b)(5) of the
Act. For similar reasons, the Commission believes that the packages of
complimentary services to be offered pursuant to Nasdaq's proposal are
equitably allocated among issuers consistent with Section 6(b)(4) of
the Act.
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\55\ 15 U.S.C. 78f(b)(5); see also Securities Exchange Act
Release No. 65963 (December 15, 2011), 76 FR 79262, 79266 (December
21, 2011) (approving NASDAQ-2011-122) (``2011 Approval Order'')
(``The Commission believes that NASDAQ has provided a sufficient
basis for its different treatment of Eligible Switches and that this
portion of NASDAQ's proposal meets the requirements of the Act in
that it reflects competition between exchanges, with NASDAQ offering
discounts for transfers of listings from a competing exchange.'').
\56\ See Securities Exchange Act Release No. 79366 (November 21,
2016), 81 FR 85663, 85665 (November 28, 2016) (approving NASDAQ-
2016-106) (``2016 Approval Order'') (citing Securities Exchange Act
Release No. 65127 (August 12, 2011), 76 FR 51449, 51452 (August 18,
2011) (approving NYSE-2011-20)). The Commission notes that Nasdaq
represents that no other company will be required to pay higher fees
as a result of the proposal, that the proposal will have no impact
on the resources available for its regulatory programs, and that the
proposal will help to ensure that individual listed companies are
not given specially negotiated packages of products or services to
list, or remain listed. See supra note 40 and accompanying text.
\57\ See 2016 Approval Order, supra note 56, at 85665; 2011
Approval Order, supra note 55, at 79266.
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The Commission also believes that it is reasonable, and in fact
required by Section 19(b) of the Act, that Nasdaq amend its rules to
update the products and services it offers to Eligible New Listings,
Eligible Switches, and other Acquisition Companies listed under IM-
5101-2, including the time periods for which such products and services
are offered and the commercial value of such products and services.
This provides greater transparency to the Exchange's rules and the
fees, and the value of free products and services, applicable to listed
companies.
Finally, the Commission finds that it is consistent with Section
6(b)(5) of the Act \58\ for Nasdaq to make various technical and
conforming revisions to facilitate clarity of its rules.
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\58\ 15 U.S.C. 78f(b)(5).
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IV. Solicitation of Comments on Amendment No. 1 to the Proposed Rule
Change
Interested persons are invited to submit written data, views, and
arguments concerning the foregoing, including whether Amendment No. 1
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-2021-002 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-2021-002. 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
[[Page 14778]]
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-2021-002 and should
be submitted on or before April 8, 2021.
V. Accelerated Approval of the Proposed Rule Change, as Modified by
Amendment No. 1
The Commission finds good cause to approve the proposed rule
change, as modified by Amendment No. 1, prior to the thirtieth day
after the date of publication of notice of the filing of Amendment No.
1 in the Federal Register. The Commission notes that the original
proposal was published for comment in the Federal Register,\59\ and the
Commission did not receive any comments other than Nasdaq's amendment
to the proposed rule change. The Commission also notes that while in
the current rule, the complimentary services period for Eligible New
Listings and for Eligible Switches with a market capitalization of less
than $750 million is two years, the original proposal would have
extended this period to three years for Eligible New Listings only. By
amending the proposal to extend the complimentary services period for
Eligible Switches with a market capitalization of less than $750
million from two to three years, Amendment No. 1 eliminates what would
have been a new difference between the length of the complimentary
services period offered to Eligible Switches with a market
capitalization of less than $750 million and the length of the
complimentary services period offered to Eligible New Listings. This
change, and the other minor clarifying changes in Amendment No. 1,
assist the Commission in evaluating the Exchange's proposal and in
determining that it is consistent with the Act. Accordingly, the
Commission finds good cause, pursuant to Section 19(b)(2) of the
Act,\60\ to approve the proposed rule change, as modified by Amendment
No. 1, on an accelerated basis.
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\59\ See Notice, supra note 3.
\60\ 15 U.S.C. 78s(b)(2).
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VI. Conclusion
It is therefore ordered, pursuant to Section 19(b)(2) of the
Act,\61\ that the proposed rule change (SR-NASDAQ-2021-002), as
modified by Amendment No. 1, be, and it hereby is, approved on an
accelerated basis.
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\61\ Id.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\62\
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\62\ 17 CFR 200.30-3(a)(12).
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J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2021-05562 Filed 3-17-21; 8:45 am]
BILLING CODE 8011-01-P
