Self-Regulatory Organizations; The Nasdaq Stock Market LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change to Modify Entry and All-Inclusive Annual Fees for Certain Companies, 79028-79033 [2022-27911]
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79028
Federal Register / Vol. 87, No. 246 / Friday, December 23, 2022 / Notices
TKELLEY on DSK125TN23PROD with NOTICE
year,3 and that all of these funds will
adopt an audit committee charter in
order to rely on rule 32a–4. Thus,
Commission staff estimates that the
annual one-time hour burden associated
with adopting an audit committee
charter under rule 32a–4 is
approximately 330 hours.4
When funds adopt an audit committee
charter in order to rely on rule 32a–4,
they also may incur one-time costs
related to hiring outside counsel to
prepare the charter. Commission staff
estimates that those costs average
approximately $1500 per fund.5 As
noted above, Commission staff estimates
that approximately 120 new funds each
year will adopt an audit committee
charter in order to rely on rule 32a–4.
Thus, Commission staff estimates that
the ongoing annual cost burden
associated with rule 32a–4 in the future
will be approximately $180,000.6
These estimates of average costs are
made solely for the purposes of the
Paperwork Reduction Act. The
estimates are not derived from a
comprehensive or even a representative
survey or study of the costs of
Commission rules. The collections of
information required by rule 32a–4 are
necessary to obtain the benefits of the
rule. The Commission is seeking OMB
approval, because an agency may not
conduct or sponsor, and a person is not
required to respond to, a collection of
information unless it displays a
currently valid control number.
Written comments are invited on: (a)
whether the proposed collection of
information is necessary for the proper
performance of the functions of the
Commission, including whether the
information shall have practical utility;
(b) the accuracy of the Commission’s
estimate of the burden of the collection
of information; (c) ways to enhance the
quality, utility, and clarity of the
information collected; and (d) ways to
minimize the burden of the collection of
information on respondents, including
through the use of automated collection
techniques or other forms of information
3 This estimate is based on the average annual
number of notifications of registration on Form N–
8A filed from 2019 to 2021.
4 This estimate is based on the following
calculation: (2.75 burden hours for establishing
charter × 120 new funds = 330 burden hours).
5 Costs may vary based on the individual needs
of each fund. However, based on the staff’s
experience and conversations with outside counsel
that prepare these charters, legal fees related to the
preparation and adoption of an audit committee
charter usually average $1,500 or less. The
Commission also understands that model audit
committee charters are available, which reduces the
costs associated with drafting a charter.
6 This estimate is based on the following
calculations: ($1500 cost of adopting charter × 120
newly established funds = $180,000).
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technology. Consideration will be given
to comments and suggestions submitted
by February 21, 2023.
An agency may not conduct or
sponsor, and a person is not required to
respond to, a collection of information
under the PRA unless it displays a
currently valid OMB control number.
Please direct your written comments
to: David Bottom, Acting Director/Chief
Information Officer, Securities and
Exchange Commission, c/o John
Pezzullo, 100 F Street NE, Washington,
DC 20549 or send an email to: PRA_
Mailbox@sec.gov.
Dated: December 19, 2022.
Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2022–27907 Filed 12–22–22; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–96532; File No. SR–
NASDAQ–2022–068]
Self-Regulatory Organizations; The
Nasdaq Stock Market LLC; Notice of
Filing and Immediate Effectiveness of
Proposed Rule Change to Modify Entry
and All-Inclusive Annual Fees for
Certain Companies
December 19, 2022.
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 December
12, 2022, 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, II, and
III, below, which Items have been
prepared by the Exchange. The
Commission is publishing this notice to
solicit comments on the proposed rule
change from interested persons.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The Exchange proposes to modify
entry and all-inclusive annual fees for
certain companies, as described below.
While changes proposed herein are
effective upon filing, the Exchange has
designated the proposed amendments to
be operative on January 1, 2023.
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.
1 15
2 17
PO 00000
U.S.C. 78s(b)(1).
CFR 240.19b–4.
Frm 00116
Fmt 4703
Sfmt 4703
II. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
In its filing with the Commission, the
Exchange included statements
concerning the purpose of and basis for
the proposed rule change and discussed
any comments it received on the
proposed rule change. The text of these
statements may be examined at the
places specified in Item IV below. The
Exchange has prepared summaries, set
forth in sections A, B, and C below, of
the most significant aspects of such
statements.
A. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
1. Purpose
The purpose of the proposed rule
change is to (i) replace the tiered entry
fee structure with a flat fee of $270,000
when a Company first lists a class of
equity securities on the Nasdaq Global
or Global Select Market; (ii) modify the
Exchange’s all-inclusive annual listing
fees for all domestic and foreign
companies listing equity securities
covered by Listing Rules 5910 and 5920
on the Nasdaq Global Select, Global and
Capital Markets; (iii) replace the two-tier
entry fee structure with a flat fee of
$80,000 when an Acquisition Company,
as defined below, first lists a class of
equity securities on Nasdaq; (iv) to
adopt an all-inclusive annual listing fee
structure specific to Acquisition
Companies listing on the Nasdaq Capital
Market; and (v) to replace the current
three-tier all-inclusive annual listing fee
structure for all Acquisition Companies
with a two-tier structure, as described
below.
Entry Fees on the Nasdaq Global
Market 3
Currently, Nasdaq charges Companies
listing pursuant to Rule 5910(a)(1), other
than Acquisition Companies, entry fees
for the Nasdaq Global and Global Select
Market based on the number of shares
outstanding according to the following
tiers: 4
Up to 30 million shares $150,000
30+ to 40 million shares $170,000
40+ to 50 million shares $210,000
50+ to 60 million shares $250,000
3 Nasdaq is not proposing to amend the Entry
Fees on the Nasdaq Capital Market, except for the
Acquisition Companies, as explained below.
4 Companies must also submit a $25,000 initial
application fee, which is credited towards the entry
fee upon listing. The initial application fee for an
Acquisition Company is $5,000. See Rule
5910(a)(11).
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Federal Register / Vol. 87, No. 246 / Friday, December 23, 2022 / Notices
60+ to 70 million shares $290,000
Over 70 million shares $295,000
These fees are based on the aggregate
of all classes of equity securities to be
listed on the Nasdaq Global and Global
Select Market, as shown in the
company’s most recent periodic report
or in more recent information held by
Nasdaq or, in the case of new issues, as
shown in the offering circular or
registration statement. In the case of
foreign companies, total shares
outstanding includes only those shares
issued and outstanding in the United
States.
The entry fees for companies listing
on the Nasdaq Global and Global Select
Markets were last modified in 2018.5
Nasdaq now proposes to replace the
tiered structure with a flat fee of
$270,000 when a Company, other than
an Acquisition Company, first lists a
class of equity securities on the Nasdaq
Global or Global Select Market.
Nasdaq proposes to make this change
to better reflect the value of such listing
to companies. In particular, the
Exchange believes it is reasonable to
apply a flat entry fee when a Company
first lists a class of securities as the
value of the listing to a company is
substantially the same regardless of the
number of shares the company has
outstanding. While some companies
would pay a higher (or lower) initial
listing fee under the proposed flat fee
than under the current rate, Nasdaq
believes that this change is not unfairly
discriminatory because, similarly, the
value of the listing to a company is
substantially the same regardless of the
number of shares the company has
outstanding.
Nasdaq also proposes to provide that
any company, including an Acquisition
Company (until it has satisfied the
condition in Rule IM–5101–2(b)),6 that
lists an additional class of equity
securities (not otherwise identified in
Rule 5900 Series) is not subject to entry
fees but is charged a non-refundable
$25,000 initial application fee (except
for an Acquisition Company that is
charged a non-refundable $5,000 initial
application fee).7 Currently, Rule
5910(a)(1) provides that a company,
including an Acquisition Company, that
submits an application to list any class
of its securities (not otherwise identified
in Rule 5900 Series) on the Nasdaq
Global Market is subject to the entry
fees. Nasdaq proposes to make this
change to better reflect the value of
listing an additional class of securities
for already listed companies and to
better align such value with Nasdaq’s
regulatory resources expended in
connection with such applications. In
particular, the Exchange believes it is
reasonable to charge only a nonrefundable $25,000 initial application
fee (except for an Acquisition Company
that is charged a non-refundable $5,000
initial application fee) because the
company listing an additional class of
equity securities is already subject to
Nasdaq rules, including the applicable
corporate governance requirements.
Accordingly, Nasdaq, typically, expends
less regulatory resources qualifying an
additional class of equity securities for
listing.
All-Inclusive Annual Listing Fees
Currently, for companies listed on the
Capital Market, other than ADRs,
Closed-end Funds and Limited
Partnerships, the all-inclusive annual
fee ranges from $45,000 to $81,000; for
ADRs listed on the Capital Market the
all-inclusive annual fee ranges from
$45,000 to $54,500; and for Limited
Partnerships listed on the Capital
Market the all-inclusive annual fee
ranges from $33,000 to $40,500. On the
Global and Global Select Markets, the
all-inclusive annual fee for companies
other than, in part,8 ADRs, Closed-end
Funds and Limited Partnerships ranges
from $48,000 to $167,000; for ADRs the
all-inclusive annual fee ranges from
$48,000 to $86,000; and for Limited
Partnerships the all-inclusive annual fee
ranges from $40,500 to $83,500. The allinclusive annual fee for Closed-end
Funds listed on any market tier ranges
from $33,000 to $107,500. In each case,
a company’s all-inclusive annual fee is
based on its total shares outstanding.9
Nasdaq proposes to amend the allinclusive annual fee for all domestic
and foreign companies listing equity
securities on the Nasdaq Global Select,
Global and Capital Markets to the
following amounts,10 effective January
1, 2023:
Global/Global Select Markets
Total shares outstanding
Equity securities other than, in part, ADRs, Closed-end Funds and
Limited Partnerships.
TKELLEY on DSK125TN23PROD with NOTICE
ADRs ..................................................................................................
5 See Securities Exchange Act Release No. 84930
(December 21, 2018), 83 FR 67752 (December 31,
2018) (SR–NASDAQ–2018–105).
6 After an Acquisition Company completes a
business combination where all conditions in Rule
IM–5101–2(b) are met, the combined Company
must meet the requirements for initial listing, but
the company is not subject to Entry Fee because the
company is either already listed on Nasdaq or the
Entry Fees do not apply pursuant to Listing Rule
5910(a)(7)(v). After that, the combined Company is
no longer subject to the additional requirements of
Listing Rule IM–5101–2.
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Frm 00117
Annual Fee
effective
January 1, 2023
Up to 10 million shares ...............
$48,000
$50,000
10+ to 50 million shares ..............
50+ to 75 million shares ..............
75+ to 100 million shares ............
100+ to 125 million shares ..........
125+ to 150 million shares ..........
Over 150 million shares ..............
Up to 10 million ADRs and other
listed equity securities.
10+ to 50 million ADRs and other
listed equity securities.
59,500
81,000
107,500
134,500
145,500
167,000
48,000
62,000
84,000
112,000
140,000
151,500
173,500
50,000
54,500
56,500
7 Nasdaq is not proposing to change Rule
5910(a)(11), which provides that a company (except
for an Acquisition Company) subject to the Entry
Fee described in Rule 5910(a)(1) must submit a nonrefundable $25,000 initial application fee with its
application. An Acquisition Company must submit
a non-refundable $5,000 initial application fee with
its application.
8 Rule 5930 sets forth the all-inclusive annual
listing fees applicable to SEEDS and Other
Securities; and Rule 5940 sets forth the all-inclusive
annual listing fees applicable to Exchange Traded
Products that are listed on the Nasdaq Global
Market.
PO 00000
Annual fee
before the
proposed change
Fmt 4703
Sfmt 4703
9 REITs are subject to the same fee schedule as
other equity securities; however for the purpose of
determining the total shares outstanding, shares
outstanding of all members in a REIT Family listed
on the same Nasdaq market tier may be aggregated.
Similarly, for the purpose of determining the total
shares outstanding, fund sponsors may aggregate
shares outstanding of all Closed-End Funds in the
same fund family listed on the Nasdaq Global
Market or the Nasdaq Capital Market. See Listing
Rules 5910(b)(2) and 5920(b)(2).
10 The proposed fee change reflects about a 4.0%
increase rounded to the nearest $500.
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Federal Register / Vol. 87, No. 246 / Friday, December 23, 2022 / Notices
Total shares outstanding
Closed-end Funds .............................................................................
Limited Partnerships ..........................................................................
Annual fee
before the
proposed change
50+ to 75 million ADRs and other
listed equity securities.
Over 75 million ADRs and other
listed equity securities.
Up to 50 million shares ...............
50+ to 100 million shares ............
100+ to 250 million shares ..........
Over 250 million shares ..............
Up to 75 million shares ...............
75+ to 100 million shares ............
100+ to 125 million shares ..........
125+ to 150 million shares ..........
Over 150 million shares ..............
Annual Fee
effective
January 1, 2023
64,500
67,000
86,000
89,500
33,000
54,500
81,000
107,500
40,500
54,500
67,000
72,500
83,500
34,500
56,500
84,000
112,000
42,000
56,500
69,500
75,500
87,000
Capital Market
Total shares outstanding
Equity securities other than ADRs, Closed-end Funds and Limited
Partnerships.
ADRs ..................................................................................................
Closed-end Funds .............................................................................
TKELLEY on DSK125TN23PROD with NOTICE
Limited Partnerships ..........................................................................
Nasdaq also proposes to update the
maximum fee applicable to a ClosedEnd Fund family to $112,000 and the
maximum fee applicable to a REIT
Family listed on the Nasdaq Global
Market and the Nasdaq Capital Market
to $173,500 and $84,000, respectively,
to reflect the proposed fee change for
other equity securities, as described
above.11
Finally, Nasdaq proposes to update
amounts in examples in Listing Rules
5910(b)(3)(D) and 5920(b)(3)(D),
clarifying the application of the rules for
companies transferring between Nasdaq
tiers, to align the fee amounts with the
fees applicable in year 2023.
As described below, Nasdaq proposes
to make the aforementioned fee
increases to better reflect the Exchange’s
costs related to listing equity securities
and the corresponding value of such
listing to companies.
Nasdaq also proposes to remove
references to fees that are no longer
applicable because they were
superseded by new fee rates specified in
the rule text.
11 See
footnote 9 above.
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$45,000
$47,000
10+ to 50 million shares ..............
Over 50 million shares ................
Up to 10 million ADRs and other
listed equity securities.
Over10 million ADRs and other
listed equity securities.
Up to 50 million shares ...............
50+ to 100 million shares ............
100+ to 250 million shares ..........
Over 250 million shares ..............
Up to 75 million shares ...............
Over 75 million shares ................
59,500
81,000
45,000
62,000
84,000
47,000
54,500
56,500
33,000
54,500
81,000
107,500
33,000
40,500
34,500
56,500
84,000
112,000
34,500
42,000
Nasdaq proposes to modify the Entry
Fee for companies 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, as described in IM–5101–2,
(‘‘Acquisition Companies’’).
Nasdaq currently charges entry fees
for Acquisition Companies listing on the
Nasdaq Capital, Global and Global
Select Markets based on the number of
shares outstanding according to the
following tiers: 12
Up to 15 million shares $50,000
Over 15 million shares $75,000
These fees are based on the aggregate
of all classes of equity securities to be
listed on Nasdaq, as shown in the
company’s most recent periodic report
or in more recent information held by
Nasdaq or, in the case of new issues, as
12 Listing Rules 5910(a)(1)(B) and 5920(a)(1) for
the Nasdaq Global or Global Select Market and the
Nasdaq Capital Market, respectively. Companies
must also submit a $5,000 initial application fee,
which is credited towards the entry fee upon
listing. See Listing Rules 5910(a)(11) and
5920(a)(11).
Frm 00118
Annual Fee
effective
January 1, 2023
Up to 10 million shares ...............
Entry Fee for Acquisition Companies
PO 00000
Annual fee before
the proposed
change
Fmt 4703
Sfmt 4703
shown in the offering circular or
registration statement. In the case of
foreign companies, total shares
outstanding includes only those shares
issued and outstanding in the United
States.
Nasdaq now proposes to replace the
two-tier structure with a flat fee of
$80,000 when an Acquisition Company
first lists a class of equity securities on
Nasdaq. The flat entry fee would cover
both an Acquisition Company’s
common shares and also warrants and
rights, if any.
Nasdaq proposes to make these fee
increases to better reflect the value of
such listing to companies. In particular,
the Exchange believes it is reasonable to
apply a flat entry fee when an
Acquisition Company first lists a class
of securities as the value of the listing
to a company is substantially the same
regardless of the number of shares the
company has outstanding. While
companies would pay a higher initial
listing fee under the proposed flat fee
than under the current rate, Nasdaq
believes that this increase is not unfairly
discriminatory because, similarly, the
value of the listing to a company is
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Federal Register / Vol. 87, No. 246 / Friday, December 23, 2022 / Notices
substantially the same regardless of the
number of shares the company has
outstanding. Nasdaq also believes that
the fee increase is reasonable given the
substantial increase in new listings of
the Acquisition Companies in the last
few years, which caused Nasdaq to
dedicate additional resources to conduct
regulatory reviews of Acquisition
Companies’ IPOs and subsequent
business combination transactions with
operating companies.
In addition, the Exchange observes
that many companies may not know
their share structure or how many
shares will ultimately be outstanding at
the time they are considering whether to
list on the Exchange. Therefore, the
Exchange believes that adopting a flat
entry fee will provide prospective
Acquisition Companies listing on
Nasdaq with greater transparency on the
costs associated with initially listing on
the Exchange.
TKELLEY on DSK125TN23PROD with NOTICE
All-Inclusive Annual Listing Fee for
Acquisition Companies
Nasdaq currently charges an AllInclusive Annual Listing Fee for
Acquisition Companies listed on the
Nasdaq Capital, Global and Global
Select Markets based on the number of
shares outstanding according to the
following tiers:
Up to 10 million shares $45,000
10+ to 50 million shares $59,500
Over 50 million shares $81,000
Currently, the securities of an
Acquisition Company listing on the
Nasdaq Capital Market are subject to the
same all-inclusive annual fee schedule
as all domestic and foreign companies
listing equity securities on the Nasdaq
Capital Market. These fees were last
modified in 2021, effective for 2022, as
part of the Exchange’s modification of
all-inclusive annual listing fees for all
domestic and foreign companies listing
equity securities covered by Listing
Rules 5910 and 5920 on the Nasdaq
Global Select, Global and Capital
Markets.13 The securities of an
Acquisition Company listing on the
Nasdaq Global and Global Select
Markets are subject to the same allinclusive annual fee schedule as the
securities of an Acquisition Company
listing on the Nasdaq Capital Market as
provided in Listing Rule 5910(a)(1)(B)
[sic].14
13 See Securities Exchange Act Release No. 3493713 (December 3, 2021), 86 FR 70156 (December
9, 2021) (SR–NASDAQ–2021–091).
14 See Securities Exchange Act Release No. 92345
(July 7, 2021), 86 FR 36807 (July 13, 2021) (SR–
NASDAQ–2021–055). In this filing Nasdaq
explained its belief that Acquisition Companies
listed on the Nasdaq Global Market receive the
same services as Acquisition Companies listed on
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Nasdaq now proposes to adopt a fee
structure specifically for Acquisition
Companies listing on the Nasdaq Capital
Market and to replace the current threetier structure for Acquisition Companies
listing on the Nasdaq Capital, Global
and Global Select Markets with the
following two-tier structure:
Up to 50 million shares $70,000
Over 50 million shares $81,000
As described above, securities listed
on the Nasdaq Capital Market by an
Acquisition Company are, and have
been, subject to the same annual fee
schedule as all domestic and foreign
companies listing equity securities on
the Nasdaq Capital Market. This
structure was maintained since Nasdaq
first adopted a rule to impose additional
listing requirements on Acquisition
Companies, which allowed such
companies to list on Nasdaq.
In establishing the proposed AllInclusive Annual Fees for Acquisition
Companies across all tiers, including the
changes to the number and cut-off point
of pricing tiers, Nasdaq considered
various factors that distinguish
Acquisition Companies from other
issuers of primary equity securities on
Nasdaq, the use of various Nasdaq
regulatory and support services by
Acquisition Companies, as well as,
pricing for similar securities on other
national securities exchanges. Based on
this analysis, Nasdaq proposes to
modify the number of fee tiers within
the annual fee schedule to better align
fees with the size of the companies that
pay those fees and the use that
companies of various sizes typically
make of Nasdaq’s services. In setting the
proposed All-Inclusive Annual Fee,
Nasdaq reviewed the billing history of
more than 450 Acquisition Companies
that had been listed on Nasdaq to
determine the fees assessed these
companies. Nasdaq also reviewed
listing-related services provided to
Acquisition Companies, including
reviews of various regulatory forms, rule
interpretations requests, and
compliance plan reviews. Nasdaq
established the proposed two tier AllInclusive Annual Fee for Acquisition
Companies and shares outstanding tier
based on this analysis of historical fees
paid and regulatory services used.
Based on this analysis, Nasdaq
determined that only a small minority of
Acquisition companies were listed on
Nasdaq with less than 10 million of total
shares outstanding, but the services
provided to them and the Exchange’s
regulatory resources dedicated to such
listings are substantially the same
the Nasdaq Capital Market making it appropriate for
Nasdaq to charge such companies the same fees.
PO 00000
Frm 00119
Fmt 4703
Sfmt 4703
79031
regardless of the number of shares the
company has outstanding. The vast
majority of listed Acquisition
companies fall within the current
second tier. Accordingly, Nasdaq
believes that the new tier of up to 50
million shares better reflects both the
value of the listing to Acquisition
Companies and the expenditure of
regulatory resources by Nasdaq. Nasdaq
also believes that the all-inclusive fee
increase for this tier is reasonable given
the substantial increase in new listings
of the Acquisition Companies in the last
few years, which caused Nasdaq to
dedicate additional resources to conduct
regulatory reviews of Acquisition
Companies’ IPOs and subsequent
business combination transactions.
While there is a small minority of
Acquisition Companies that fall within
the current third tier (over 50 million
shares) and that will not be affected by
the proposed fee change, Nasdaq
believes that this is not unfairly
discriminatory because such large
Acquisition Companies tend to have
better known and more experienced
sponsors and advisors, and therefore
require fewer resources from Nasdaq. In
addition, Nasdaq obtains value from
being associated with these experienced
sponsors. Pricing for similar securities
on other national securities exchanges
was also considered, and Nasdaq
believes that maintaining this tier as is,
is reasonable given the competitive
landscape.
Nasdaq also proposes to renumber
certain rules to improve the clarity and
readability of these rules.
While these changes are effective
upon filing, Nasdaq has designated the
proposed amendments to be operative
on January 1, 2023.
2. Statutory Basis
The Exchange believes that its
proposal is consistent with section 6(b)
of the Act, 15 in general, and furthers the
objectives of sections 6(b)(4) and 6(b)(5)
of the Act, 16 in particular, in that it
provides for the equitable allocation of
reasonable dues, fees and other charges
among members and issuers and other
persons using any facility, and is not
designed to permit unfair
discrimination between customers,
issuers, brokers, or dealers.
Nasdaq believes that the adoption of
a flat entry fee on the Nasdaq Global and
Global Select Markets represents a
reasonable attempt to address the
Exchange’s increased costs in servicing
these listings while continuing to attract
and retain listings. Nasdaq proposes to
15 15
16 15
E:\FR\FM\23DEN1.SGM
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U.S.C. 78f(b)(4) and (5).
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79032
Federal Register / Vol. 87, No. 246 / Friday, December 23, 2022 / Notices
make the aforementioned fee structure
change to better reflect the value of such
listing to companies. In particular, the
Exchange believes it is reasonable to
apply a flat fee when a company first
lists a class of securities as the value to
the company is substantially the same
regardless of the number of shares the
company has outstanding. While some
companies would pay a higher initial
listing fee under the proposed flat fee
than under the current rate, the
Exchange believes that this increase is
not unfairly discriminatory, as the
resources the Exchange expends in
connection with the initial listing of
those companies are typically consistent
with the resources the Exchange
expends on many companies that are
already subject to the similar fees under
the current structure. This proposal is
consistent with the approach of other
exchanges.17
Nasdaq believes that it is not unfairly
discriminatory and represents an
equitable allocation of reasonable fees to
amend Listing Rule 5910(a)(1) to
provide that any company, including an
Acquisition Company (until it has
satisfied the condition in Rule IM–
5101–2(b)), that lists an additional class
of equity securities (not otherwise
identified in Rule 5900 Series) is not
subject to entry fees under this rule but
is charged a non-refundable $25,000
initial application fee (except for an
Acquisition Company that is charged a
non-refundable $5,000 initial
application fee) because this change
better reflects the value of listing an
additional class of securities for already
listed companies and better aligns such
value with Nasdaq’s regulatory
resources expended in connection with
such applications. In particular, the
Exchange believes it is reasonable to
charge only a non-refundable $25,000
initial application fee (except for an
Acquisition Company that is charged a
non-refundable $5,000 initial
application fee), because the company
listing an additional class of equity
securities is already subject to Nasdaq
rules, including the applicable corporate
governance requirements. Accordingly,
Nasdaq, typically, expends less
regulatory resources qualifying an
additional class of equity securities for
listing.
Nasdaq believes that it is not unfairly
discriminatory and represents an
equitable allocation of reasonable fees to
amend Listing Rules 5910(b)(2) and
5920(b)(2) to increase the all-inclusive
17 See Section 902.03 Fees for Listed Equity
Securities; of the NYSE Listed Company Manual.
VerDate Sep<11>2014
20:36 Dec 22, 2022
Jkt 259001
annual fees listing fees 18 as set forth
above because of the increased costs
incurred by Nasdaq since it established
the current rates. In that regard, the
Exchange notes that its general costs to
support our listed companies have
increased, including due to price
inflation. The Exchange also continues
to expand and improve the services it
provides to listed companies, the
technology to deliver those services and
the customer experience at the Nasdaq
MarketSite. These improvements
include, ESG services, governance
solutions and support, the remodeling
of a portion of the New York
Headquarters and the investment in
technology to support direct listings
with a capital raise, IPO innovations
and ongoing trading.
Nasdaq also believes that it is not
unfairly discriminatory and represents
an equitable allocation of reasonable
fees to amend Listing Rules 5910(b)(2)
and 5920(b)(2) to increase the allinclusive annual listing fees while
rounding the 4% increase to the nearest
$500 as set forth above because such
rounding represents de minimis
variation in fees for Nasdaq listed
companies. In addition, Nasdaq has
used the same methodology since the
adoption of the all-inclusive annual
listing fee schedule and all annual
listing fees under Listing Rules
5910(b)(2) and 5920(b)(2) are rounded to
$500.
The proposed change to update
amounts in examples clarifying the
application of the rules for companies
transferring between Nasdaq tiers and to
update the maximum fee applicable to
a Closed-End Fund family and the
maximum fee applicable to a REIT
Family to reflect the proposed fee
change for other equity securities, as
described above, is not unfairly
discriminatory because it merely
provides transparency to the application
of fees without changing the substance
of the rule.
Nasdaq believes that the Exchange
operates in a highly competitive
marketplace for the listing of
companies, including the Acquisition
Companies.19 The Commission has
18 Effective January 1, 2022, Nasdaq modified the
fee schedule for all domestic and foreign companies
listing equity securities covered by Listing Rules
5910 and 5920 on the Nasdaq Global Select, Global
and Capital Markets. Securities Exchange Act
Release No. 93713 (December 3, 2022), 86 FR 70156
(December 9, 2022) (SR–NASDAQ–2021–095).
19 The Justice Department has noted the intense
competitive environment for exchange listings. See
‘‘NASDAQ OMX Group Inc. and Intercontinental
Exchange 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.
PO 00000
Frm 00120
Fmt 4703
Sfmt 4703
repeatedly expressed its preference for
competition over regulatory
intervention in determining prices,
products, and services in the securities
markets. The Exchange believes that the
ever-shifting market share among the
exchanges with respect to new listings
and the transfer of existing listings
between competitor exchanges
demonstrates that issuers can choose
different listing markets in response to
fee changes. Accordingly, competitive
forces constrain exchange’s listing fees.
In other words, changes to exchange
listing fees can have a direct effect on
the ability of an exchange to compete for
new listings and retain existing listings.
Given this competitive environment,
Nasdaq believes that the adoption of a
flat Entry Fee and a modification to the
All-Inclusive Annual Fee schedule for
Acquisition Companies represent a
reasonable attempt to address the
Exchange’s increased costs in servicing
these listings while continuing to attract
and retain listings.
Nasdaq believes it is reasonable to
apply a flat Entry Fee when an
Acquisition Company lists a class of
securities as the value of the listing to
a company is substantially the same
regardless of the number of shares the
company has outstanding. While
Acquisition Companies would pay a
higher initial listing fee under the
proposed flat fee than under the current
rate, Nasdaq believes that this increase
is not unfairly discriminatory, similarly,
the value of the listing to a company is
substantially the same regardless of the
number of shares the company has
outstanding. Nasdaq also believes that
the fee increase is reasonable given the
substantial increase in new listings of
the Acquisition Companies in the last
few years, which caused Nasdaq to
dedicate additional resources to conduct
regulatory reviews of Acquisition
Companies’ IPOs and subsequent
business combination transactions.
Nasdaq believes it is reasonable to
transition from the current three-tier
structure for the All-Inclusive Annual
Fee for Acquisition Companies to the
proposed two-tier structure because
Nasdaq’s analysis, as described above,
indicates that the proposed structure
better reflects the value of services
Nasdaq provides to Acquisition
Companies. Nasdaq also believes that
the All-Inclusive Fee increase for the
proposed first tier is reasonable given
the substantial increase in new listings
of the Acquisition Companies in the last
few years, which caused Nasdaq to
dedicate additional resources to conduct
regulatory reviews of Acquisition
Companies’ IPOs and subsequent
business combination transactions.
E:\FR\FM\23DEN1.SGM
23DEN1
Federal Register / Vol. 87, No. 246 / Friday, December 23, 2022 / Notices
While there is a small minority of
Acquisition Companies that fall within
the proposed second tier (over 50
million shares) that will not be affected
by the proposed fee change, Nasdaq
believes that this is not unfairly
discriminatory because such large
Acquisition Companies tend to have
better known and more experienced
sponsors and advisors, and therefore
have more value to Nasdaq when they
list. Pricing for similar securities on
other national securities exchanges was
also considered, and Nasdaq believes
that maintaining this tier as is, is
reasonable given the competitive
landscape.
The proposed removal of text relating
to fees that are no longer applicable and
renumbering certain rules to improve
their clarity and readability is
ministerial in nature and has no
substantive effect.
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.
The market for listing services is
extremely competitive and listed
companies may freely choose alternative
venues, both within the U.S. and
internationally. For this reason, Nasdaq
does not believe that the proposed rule
change will result in any burden on
competition for listings.
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.
TKELLEY on DSK125TN23PROD with NOTICE
III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
The foregoing rule change has become
effective pursuant to section
19(b)(3)(A)(ii) of the Act.20
At any time within 60 days of the
filing of the proposed rule change, the
Commission summarily may
temporarily suspend such rule change if
it appears to the Commission that such
action is: (i) necessary or appropriate in
the public interest; (ii) for the protection
of investors; or (iii) otherwise in
furtherance of the purposes of the Act.
If the Commission takes such action, the
Commission shall institute proceedings
to determine whether the proposed rule
should be approved or disapproved.
20 15
U.S.C. 78s(b)(3)(A)(ii).
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20:36 Dec 22, 2022
Jkt 259001
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:
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.21
Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2022–27911 Filed 12–22–22; 8:45 am]
BILLING CODE 8011–01–P
Electronic Comments
DEPARTMENT OF STATE
• 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–2022–068 on the subject line.
[Public Notice: 11950]
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–2022–068. 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–2022–068 and
should be submitted on or before
January 13, 2023.
PO 00000
Frm 00121
Fmt 4703
Sfmt 4703
79033
Biodiversity Beyond National
Jurisdiction
ACTION:
Notice of public meeting.
The Department of State will
hold an information session regarding
upcoming United Nations negotiations
concerning marine biodiversity of areas
beyond national jurisdiction.
DATES: The public meeting will be held
via WebEx on January 24, 2023, 10:00–
11:00 a.m.
FOR FURTHER INFORMATION CONTACT: If
you would like to participate in this
meeting, please send your (1) name, (2)
organization/affiliation, and (3) email
address and phone number, to Meaghan
Cuddy at CuddyMR@state.gov or at
(202) 340–3272.
SUPPLEMENTARY INFORMATION: The
Department of State will hold a public
meeting at 10:00 a.m. on Tuesday,
January 24, 2023, to prepare for the
resumed fifth session of an
Intergovernmental Conference (IGC) on
the conservation and sustainable use of
marine biological diversity of areas
beyond national jurisdiction (BBNJ).
This public meeting will be held by way
of WebEx, with a capacity of up to 1000
members of the public to participate. To
RSVP, participants should contact the
meeting coordinator, Meaghan Cuddy,
by email at CuddyMR@state.gov for log
on and dial-in information, and to
request reasonable accommodation.
Requests for reasonable accommodation
received after January 17, 2023, will be
considered but might not be possible to
fulfill.
The United Nations will convene the
resumed fifth session of the BBNJ IGC
from February 20–March 3, 2023, in
New York City. The UN General
Assembly established the IGC to
consider the recommendations of a twoyear Preparatory Committee and to
elaborate the text of an international
legally binding instrument under the
United Nations Convention on the Law
of Sea on BBNJ. This resumed session
is a continuation of the session held
from August 15–26, 2022. It is
SUMMARY:
21 17
E:\FR\FM\23DEN1.SGM
CFR 200.30–3(a)(12).
23DEN1
]]>Agencies
[Federal Register Volume 87, Number 246 (Friday, December 23, 2022)]
[Notices]
[Pages 79028-79033]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2022-27911]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-96532; File No. SR-NASDAQ-2022-068]
Self-Regulatory Organizations; The Nasdaq Stock Market LLC;
Notice of Filing and Immediate Effectiveness of Proposed Rule Change to
Modify Entry and All-Inclusive Annual Fees for Certain Companies
December 19, 2022.
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 December 12, 2022, 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, II,
and III, below, which Items have been prepared by the Exchange. The
Commission is publishing this notice to solicit comments on the
proposed rule change from interested persons.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------
I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Exchange proposes to modify entry and all-inclusive annual fees
for certain companies, as described below. While changes proposed
herein are effective upon filing, the Exchange has designated the
proposed amendments to be operative on January 1, 2023.
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
The purpose of the proposed rule change is to (i) replace the
tiered entry fee structure with a flat fee of $270,000 when a Company
first lists a class of equity securities on the Nasdaq Global or Global
Select Market; (ii) modify the Exchange's all-inclusive annual listing
fees for all domestic and foreign companies listing equity securities
covered by Listing Rules 5910 and 5920 on the Nasdaq Global Select,
Global and Capital Markets; (iii) replace the two-tier entry fee
structure with a flat fee of $80,000 when an Acquisition Company, as
defined below, first lists a class of equity securities on Nasdaq; (iv)
to adopt an all-inclusive annual listing fee structure specific to
Acquisition Companies listing on the Nasdaq Capital Market; and (v) to
replace the current three-tier all-inclusive annual listing fee
structure for all Acquisition Companies with a two-tier structure, as
described below.
Entry Fees on the Nasdaq Global Market \3\
---------------------------------------------------------------------------
\3\ Nasdaq is not proposing to amend the Entry Fees on the
Nasdaq Capital Market, except for the Acquisition Companies, as
explained below.
---------------------------------------------------------------------------
Currently, Nasdaq charges Companies listing pursuant to Rule
5910(a)(1), other than Acquisition Companies, entry fees for the Nasdaq
Global and Global Select Market based on the number of shares
outstanding according to the following tiers: \4\
---------------------------------------------------------------------------
\4\ Companies must also submit a $25,000 initial application
fee, which is credited towards the entry fee upon listing. The
initial application fee for an Acquisition Company is $5,000. See
Rule 5910(a)(11).
---------------------------------------------------------------------------
Up to 30 million shares $150,000
30+ to 40 million shares $170,000
40+ to 50 million shares $210,000
50+ to 60 million shares $250,000
[[Page 79029]]
60+ to 70 million shares $290,000
Over 70 million shares $295,000
These fees are based on the aggregate of all classes of equity
securities to be listed on the Nasdaq Global and Global Select Market,
as shown in the company's most recent periodic report or in more recent
information held by Nasdaq or, in the case of new issues, as shown in
the offering circular or registration statement. In the case of foreign
companies, total shares outstanding includes only those shares issued
and outstanding in the United States.
The entry fees for companies listing on the Nasdaq Global and
Global Select Markets were last modified in 2018.\5\ Nasdaq now
proposes to replace the tiered structure with a flat fee of $270,000
when a Company, other than an Acquisition Company, first lists a class
of equity securities on the Nasdaq Global or Global Select Market.
---------------------------------------------------------------------------
\5\ See Securities Exchange Act Release No. 84930 (December 21,
2018), 83 FR 67752 (December 31, 2018) (SR-NASDAQ-2018-105).
---------------------------------------------------------------------------
Nasdaq proposes to make this change to better reflect the value of
such listing to companies. In particular, the Exchange believes it is
reasonable to apply a flat entry fee when a Company first lists a class
of securities as the value of the listing to a company is substantially
the same regardless of the number of shares the company has
outstanding. While some companies would pay a higher (or lower) initial
listing fee under the proposed flat fee than under the current rate,
Nasdaq believes that this change is not unfairly discriminatory
because, similarly, the value of the listing to a company is
substantially the same regardless of the number of shares the company
has outstanding.
Nasdaq also proposes to provide that any company, including an
Acquisition Company (until it has satisfied the condition in Rule IM-
5101-2(b)),\6\ that lists an additional class of equity securities (not
otherwise identified in Rule 5900 Series) is not subject to entry fees
but is charged a non-refundable $25,000 initial application fee (except
for an Acquisition Company that is charged a non-refundable $5,000
initial application fee).\7\ Currently, Rule 5910(a)(1) provides that a
company, including an Acquisition Company, that submits an application
to list any class of its securities (not otherwise identified in Rule
5900 Series) on the Nasdaq Global Market is subject to the entry fees.
Nasdaq proposes to make this change to better reflect the value of
listing an additional class of securities for already listed companies
and to better align such value with Nasdaq's regulatory resources
expended in connection with such applications. In particular, the
Exchange believes it is reasonable to charge only a non-refundable
$25,000 initial application fee (except for an Acquisition Company that
is charged a non-refundable $5,000 initial application fee) because the
company listing an additional class of equity securities is already
subject to Nasdaq rules, including the applicable corporate governance
requirements. Accordingly, Nasdaq, typically, expends less regulatory
resources qualifying an additional class of equity securities for
listing.
---------------------------------------------------------------------------
\6\ After an Acquisition Company completes a business
combination where all conditions in Rule IM-5101-2(b) are met, the
combined Company must meet the requirements for initial listing, but
the company is not subject to Entry Fee because the company is
either already listed on Nasdaq or the Entry Fees do not apply
pursuant to Listing Rule 5910(a)(7)(v). After that, the combined
Company is no longer subject to the additional requirements of
Listing Rule IM-5101-2.
\7\ Nasdaq is not proposing to change Rule 5910(a)(11), which
provides that a company (except for an Acquisition Company) subject
to the Entry Fee described in Rule 5910(a)(1) must submit a non-
refundable $25,000 initial application fee with its application. An
Acquisition Company must submit a non-refundable $5,000 initial
application fee with its application.
---------------------------------------------------------------------------
All-Inclusive Annual Listing Fees
Currently, for companies listed on the Capital Market, other than
ADRs, Closed-end Funds and Limited Partnerships, the all-inclusive
annual fee ranges from $45,000 to $81,000; for ADRs listed on the
Capital Market the all-inclusive annual fee ranges from $45,000 to
$54,500; and for Limited Partnerships listed on the Capital Market the
all-inclusive annual fee ranges from $33,000 to $40,500. On the Global
and Global Select Markets, the all-inclusive annual fee for companies
other than, in part,\8\ ADRs, Closed-end Funds and Limited Partnerships
ranges from $48,000 to $167,000; for ADRs the all-inclusive annual fee
ranges from $48,000 to $86,000; and for Limited Partnerships the all-
inclusive annual fee ranges from $40,500 to $83,500. The all-inclusive
annual fee for Closed-end Funds listed on any market tier ranges from
$33,000 to $107,500. In each case, a company's all-inclusive annual fee
is based on its total shares outstanding.\9\
---------------------------------------------------------------------------
\8\ Rule 5930 sets forth the all-inclusive annual listing fees
applicable to SEEDS and Other Securities; and Rule 5940 sets forth
the all-inclusive annual listing fees applicable to Exchange Traded
Products that are listed on the Nasdaq Global Market.
\9\ REITs are subject to the same fee schedule as other equity
securities; however for the purpose of determining the total shares
outstanding, shares outstanding of all members in a REIT Family
listed on the same Nasdaq market tier may be aggregated. Similarly,
for the purpose of determining the total shares outstanding, fund
sponsors may aggregate shares outstanding of all Closed-End Funds in
the same fund family listed on the Nasdaq Global Market or the
Nasdaq Capital Market. See Listing Rules 5910(b)(2) and 5920(b)(2).
---------------------------------------------------------------------------
Nasdaq proposes to amend the all-inclusive annual fee for all
domestic and foreign companies listing equity securities on the Nasdaq
Global Select, Global and Capital Markets to the following amounts,\10\
effective January 1, 2023:
---------------------------------------------------------------------------
\10\ The proposed fee change reflects about a 4.0% increase
rounded to the nearest $500.
---------------------------------------------------------------------------
Global/Global Select Markets
----------------------------------------------------------------------------------------------------------------
Annual fee Annual Fee
Total shares outstanding before the effective
proposed change January 1, 2023
----------------------------------------------------------------------------------------------------------------
Equity securities other than, in part, Up to 10 million shares...... $48,000 $50,000
ADRs, Closed-end Funds and Limited
Partnerships.
10+ to 50 million shares..... 59,500 62,000
50+ to 75 million shares..... 81,000 84,000
75+ to 100 million shares.... 107,500 112,000
100+ to 125 million shares... 134,500 140,000
125+ to 150 million shares... 145,500 151,500
Over 150 million shares...... 167,000 173,500
ADRs....................................... Up to 10 million ADRs and 48,000 50,000
other listed equity
securities.
10+ to 50 million ADRs and 54,500 56,500
other listed equity
securities.
[[Page 79030]]
50+ to 75 million ADRs and 64,500 67,000
other listed equity
securities.
Over 75 million ADRs and 86,000 89,500
other listed equity
securities.
Closed-end Funds........................... Up to 50 million shares...... 33,000 34,500
50+ to 100 million shares.... 54,500 56,500
100+ to 250 million shares... 81,000 84,000
Over 250 million shares...... 107,500 112,000
Limited Partnerships....................... Up to 75 million shares...... 40,500 42,000
75+ to 100 million shares.... 54,500 56,500
100+ to 125 million shares... 67,000 69,500
125+ to 150 million shares... 72,500 75,500
Over 150 million shares...... 83,500 87,000
----------------------------------------------------------------------------------------------------------------
Capital Market
----------------------------------------------------------------------------------------------------------------
Annual fee before Annual Fee
Total shares outstanding the proposed effective
change January 1, 2023
----------------------------------------------------------------------------------------------------------------
Equity securities other than ADRs, Closed- Up to 10 million shares...... $45,000 $47,000
end Funds and Limited Partnerships.
10+ to 50 million shares..... 59,500 62,000
Over 50 million shares....... 81,000 84,000
ADRs....................................... Up to 10 million ADRs and 45,000 47,000
other listed equity
securities.
Over10 million ADRs and other 54,500 56,500
listed equity securities.
Closed-end Funds........................... Up to 50 million shares...... 33,000 34,500
50+ to 100 million shares.... 54,500 56,500
100+ to 250 million shares... 81,000 84,000
Over 250 million shares...... 107,500 112,000
Limited Partnerships....................... Up to 75 million shares...... 33,000 34,500
Over 75 million shares....... 40,500 42,000
----------------------------------------------------------------------------------------------------------------
Nasdaq also proposes to update the maximum fee applicable to a
Closed-End Fund family to $112,000 and the maximum fee applicable to a
REIT Family listed on the Nasdaq Global Market and the Nasdaq Capital
Market to $173,500 and $84,000, respectively, to reflect the proposed
fee change for other equity securities, as described above.\11\
---------------------------------------------------------------------------
\11\ See footnote 9 above.
---------------------------------------------------------------------------
Finally, Nasdaq proposes to update amounts in examples in Listing
Rules 5910(b)(3)(D) and 5920(b)(3)(D), clarifying the application of
the rules for companies transferring between Nasdaq tiers, to align the
fee amounts with the fees applicable in year 2023.
As described below, Nasdaq proposes to make the aforementioned fee
increases to better reflect the Exchange's costs related to listing
equity securities and the corresponding value of such listing to
companies.
Nasdaq also proposes to remove references to fees that are no
longer applicable because they were superseded by new fee rates
specified in the rule text.
Entry Fee for Acquisition Companies
Nasdaq proposes to modify the Entry Fee for companies 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, as described in IM-5101-2, (``Acquisition
Companies'').
Nasdaq currently charges entry fees for Acquisition Companies
listing on the Nasdaq Capital, Global and Global Select Markets based
on the number of shares outstanding according to the following tiers:
\12\
---------------------------------------------------------------------------
\12\ Listing Rules 5910(a)(1)(B) and 5920(a)(1) for the Nasdaq
Global or Global Select Market and the Nasdaq Capital Market,
respectively. Companies must also submit a $5,000 initial
application fee, which is credited towards the entry fee upon
listing. See Listing Rules 5910(a)(11) and 5920(a)(11).
Up to 15 million shares $50,000
Over 15 million shares $75,000
These fees are based on the aggregate of all classes of equity
securities to be listed on Nasdaq, as shown in the company's most
recent periodic report or in more recent information held by Nasdaq or,
in the case of new issues, as shown in the offering circular or
registration statement. In the case of foreign companies, total shares
outstanding includes only those shares issued and outstanding in the
United States.
Nasdaq now proposes to replace the two-tier structure with a flat
fee of $80,000 when an Acquisition Company first lists a class of
equity securities on Nasdaq. The flat entry fee would cover both an
Acquisition Company's common shares and also warrants and rights, if
any.
Nasdaq proposes to make these fee increases to better reflect the
value of such listing to companies. In particular, the Exchange
believes it is reasonable to apply a flat entry fee when an Acquisition
Company first lists a class of securities as the value of the listing
to a company is substantially the same regardless of the number of
shares the company has outstanding. While companies would pay a higher
initial listing fee under the proposed flat fee than under the current
rate, Nasdaq believes that this increase is not unfairly discriminatory
because, similarly, the value of the listing to a company is
[[Page 79031]]
substantially the same regardless of the number of shares the company
has outstanding. Nasdaq also believes that the fee increase is
reasonable given the substantial increase in new listings of the
Acquisition Companies in the last few years, which caused Nasdaq to
dedicate additional resources to conduct regulatory reviews of
Acquisition Companies' IPOs and subsequent business combination
transactions with operating companies.
In addition, the Exchange observes that many companies may not know
their share structure or how many shares will ultimately be outstanding
at the time they are considering whether to list on the Exchange.
Therefore, the Exchange believes that adopting a flat entry fee will
provide prospective Acquisition Companies listing on Nasdaq with
greater transparency on the costs associated with initially listing on
the Exchange.
All-Inclusive Annual Listing Fee for Acquisition Companies
Nasdaq currently charges an All-Inclusive Annual Listing Fee for
Acquisition Companies listed on the Nasdaq Capital, Global and Global
Select Markets based on the number of shares outstanding according to
the following tiers:
Up to 10 million shares $45,000
10+ to 50 million shares $59,500
Over 50 million shares $81,000
Currently, the securities of an Acquisition Company listing on the
Nasdaq Capital Market are subject to the same all-inclusive annual fee
schedule as all domestic and foreign companies listing equity
securities on the Nasdaq Capital Market. These fees were last modified
in 2021, effective for 2022, as part of the Exchange's modification of
all-inclusive annual listing fees for all domestic and foreign
companies listing equity securities covered by Listing Rules 5910 and
5920 on the Nasdaq Global Select, Global and Capital Markets.\13\ The
securities of an Acquisition Company listing on the Nasdaq Global and
Global Select Markets are subject to the same all-inclusive annual fee
schedule as the securities of an Acquisition Company listing on the
Nasdaq Capital Market as provided in Listing Rule 5910(a)(1)(B)
[sic].\14\
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\13\ See Securities Exchange Act Release No. 34- 93713 (December
3, 2021), 86 FR 70156 (December 9, 2021) (SR-NASDAQ-2021-091).
\14\ See Securities Exchange Act Release No. 92345 (July 7,
2021), 86 FR 36807 (July 13, 2021) (SR-NASDAQ-2021-055). In this
filing Nasdaq explained its belief that Acquisition Companies listed
on the Nasdaq Global Market receive the same services as Acquisition
Companies listed on the Nasdaq Capital Market making it appropriate
for Nasdaq to charge such companies the same fees.
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Nasdaq now proposes to adopt a fee structure specifically for
Acquisition Companies listing on the Nasdaq Capital Market and to
replace the current three-tier structure for Acquisition Companies
listing on the Nasdaq Capital, Global and Global Select Markets with
the following two-tier structure:
Up to 50 million shares $70,000
Over 50 million shares $81,000
As described above, securities listed on the Nasdaq Capital Market
by an Acquisition Company are, and have been, subject to the same
annual fee schedule as all domestic and foreign companies listing
equity securities on the Nasdaq Capital Market. This structure was
maintained since Nasdaq first adopted a rule to impose additional
listing requirements on Acquisition Companies, which allowed such
companies to list on Nasdaq.
In establishing the proposed All-Inclusive Annual Fees for
Acquisition Companies across all tiers, including the changes to the
number and cut-off point of pricing tiers, Nasdaq considered various
factors that distinguish Acquisition Companies from other issuers of
primary equity securities on Nasdaq, the use of various Nasdaq
regulatory and support services by Acquisition Companies, as well as,
pricing for similar securities on other national securities exchanges.
Based on this analysis, Nasdaq proposes to modify the number of fee
tiers within the annual fee schedule to better align fees with the size
of the companies that pay those fees and the use that companies of
various sizes typically make of Nasdaq's services. In setting the
proposed All-Inclusive Annual Fee, Nasdaq reviewed the billing history
of more than 450 Acquisition Companies that had been listed on Nasdaq
to determine the fees assessed these companies. Nasdaq also reviewed
listing-related services provided to Acquisition Companies, including
reviews of various regulatory forms, rule interpretations requests, and
compliance plan reviews. Nasdaq established the proposed two tier All-
Inclusive Annual Fee for Acquisition Companies and shares outstanding
tier based on this analysis of historical fees paid and regulatory
services used.
Based on this analysis, Nasdaq determined that only a small
minority of Acquisition companies were listed on Nasdaq with less than
10 million of total shares outstanding, but the services provided to
them and the Exchange's regulatory resources dedicated to such listings
are substantially the same regardless of the number of shares the
company has outstanding. The vast majority of listed Acquisition
companies fall within the current second tier. Accordingly, Nasdaq
believes that the new tier of up to 50 million shares better reflects
both the value of the listing to Acquisition Companies and the
expenditure of regulatory resources by Nasdaq. Nasdaq also believes
that the all-inclusive fee increase for this tier is reasonable given
the substantial increase in new listings of the Acquisition Companies
in the last few years, which caused Nasdaq to dedicate additional
resources to conduct regulatory reviews of Acquisition Companies' IPOs
and subsequent business combination transactions.
While there is a small minority of Acquisition Companies that fall
within the current third tier (over 50 million shares) and that will
not be affected by the proposed fee change, Nasdaq believes that this
is not unfairly discriminatory because such large Acquisition Companies
tend to have better known and more experienced sponsors and advisors,
and therefore require fewer resources from Nasdaq. In addition, Nasdaq
obtains value from being associated with these experienced sponsors.
Pricing for similar securities on other national securities exchanges
was also considered, and Nasdaq believes that maintaining this tier as
is, is reasonable given the competitive landscape.
Nasdaq also proposes to renumber certain rules to improve the
clarity and readability of these rules.
While these changes are effective upon filing, Nasdaq has
designated the proposed amendments to be operative on January 1, 2023.
2. Statutory Basis
The Exchange believes that its proposal is consistent with section
6(b) of the Act,\15\ in general, and furthers the objectives of
sections 6(b)(4) and 6(b)(5) of the Act,\16\ in particular, in that it
provides for the equitable allocation of reasonable dues, fees and
other charges among members and issuers and other persons using any
facility, and is not designed to permit unfair discrimination between
customers, issuers, brokers, or dealers.
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\15\ 15 U.S.C. 78f(b).
\16\ 15 U.S.C. 78f(b)(4) and (5).
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Nasdaq believes that the adoption of a flat entry fee on the Nasdaq
Global and Global Select Markets represents a reasonable attempt to
address the Exchange's increased costs in servicing these listings
while continuing to attract and retain listings. Nasdaq proposes to
[[Page 79032]]
make the aforementioned fee structure change to better reflect the
value of such listing to companies. In particular, the Exchange
believes it is reasonable to apply a flat fee when a company first
lists a class of securities as the value to the company is
substantially the same regardless of the number of shares the company
has outstanding. While some companies would pay a higher initial
listing fee under the proposed flat fee than under the current rate,
the Exchange believes that this increase is not unfairly
discriminatory, as the resources the Exchange expends in connection
with the initial listing of those companies are typically consistent
with the resources the Exchange expends on many companies that are
already subject to the similar fees under the current structure. This
proposal is consistent with the approach of other exchanges.\17\
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\17\ See Section 902.03 Fees for Listed Equity Securities; of
the NYSE Listed Company Manual.
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Nasdaq believes that it is not unfairly discriminatory and
represents an equitable allocation of reasonable fees to amend Listing
Rule 5910(a)(1) to provide that any company, including an Acquisition
Company (until it has satisfied the condition in Rule IM-5101-2(b)),
that lists an additional class of equity securities (not otherwise
identified in Rule 5900 Series) is not subject to entry fees under this
rule but is charged a non-refundable $25,000 initial application fee
(except for an Acquisition Company that is charged a non-refundable
$5,000 initial application fee) because this change better reflects the
value of listing an additional class of securities for already listed
companies and better aligns such value with Nasdaq's regulatory
resources expended in connection with such applications. In particular,
the Exchange believes it is reasonable to charge only a non-refundable
$25,000 initial application fee (except for an Acquisition Company that
is charged a non-refundable $5,000 initial application fee), because
the company listing an additional class of equity securities is already
subject to Nasdaq rules, including the applicable corporate governance
requirements. Accordingly, Nasdaq, typically, expends less regulatory
resources qualifying an additional class of equity securities for
listing.
Nasdaq believes that it is not unfairly discriminatory and
represents an equitable allocation of reasonable fees to amend Listing
Rules 5910(b)(2) and 5920(b)(2) to increase the all-inclusive annual
fees listing fees \18\ as set forth above because of the increased
costs incurred by Nasdaq since it established the current rates. In
that regard, the Exchange notes that its general costs to support our
listed companies have increased, including due to price inflation. The
Exchange also continues to expand and improve the services it provides
to listed companies, the technology to deliver those services and the
customer experience at the Nasdaq MarketSite. These improvements
include, ESG services, governance solutions and support, the remodeling
of a portion of the New York Headquarters and the investment in
technology to support direct listings with a capital raise, IPO
innovations and ongoing trading.
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\18\ Effective January 1, 2022, Nasdaq modified the fee schedule
for all domestic and foreign companies listing equity securities
covered by Listing Rules 5910 and 5920 on the Nasdaq Global Select,
Global and Capital Markets. Securities Exchange Act Release No.
93713 (December 3, 2022), 86 FR 70156 (December 9, 2022) (SR-NASDAQ-
2021-095).
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Nasdaq also believes that it is not unfairly discriminatory and
represents an equitable allocation of reasonable fees to amend Listing
Rules 5910(b)(2) and 5920(b)(2) to increase the all-inclusive annual
listing fees while rounding the 4% increase to the nearest $500 as set
forth above because such rounding represents de minimis variation in
fees for Nasdaq listed companies. In addition, Nasdaq has used the same
methodology since the adoption of the all-inclusive annual listing fee
schedule and all annual listing fees under Listing Rules 5910(b)(2) and
5920(b)(2) are rounded to $500.
The proposed change to update amounts in examples clarifying the
application of the rules for companies transferring between Nasdaq
tiers and to update the maximum fee applicable to a Closed-End Fund
family and the maximum fee applicable to a REIT Family to reflect the
proposed fee change for other equity securities, as described above, is
not unfairly discriminatory because it merely provides transparency to
the application of fees without changing the substance of the rule.
Nasdaq believes that the Exchange operates in a highly competitive
marketplace for the listing of companies, including the Acquisition
Companies.\19\ The Commission has repeatedly expressed its preference
for competition over regulatory intervention in determining prices,
products, and services in the securities markets. The Exchange believes
that the ever-shifting market share among the exchanges with respect to
new listings and the transfer of existing listings between competitor
exchanges demonstrates that issuers can choose different listing
markets in response to fee changes. Accordingly, competitive forces
constrain exchange's listing fees. In other words, changes to exchange
listing fees can have a direct effect on the ability of an exchange to
compete for new listings and retain existing listings.
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\19\ The Justice Department has noted the intense competitive
environment for exchange listings. See ``NASDAQ OMX Group Inc. and
Intercontinental Exchange 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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Given this competitive environment, Nasdaq believes that the
adoption of a flat Entry Fee and a modification to the All-Inclusive
Annual Fee schedule for Acquisition Companies represent a reasonable
attempt to address the Exchange's increased costs in servicing these
listings while continuing to attract and retain listings.
Nasdaq believes it is reasonable to apply a flat Entry Fee when an
Acquisition Company lists a class of securities as the value of the
listing to a company is substantially the same regardless of the number
of shares the company has outstanding. While Acquisition Companies
would pay a higher initial listing fee under the proposed flat fee than
under the current rate, Nasdaq believes that this increase is not
unfairly discriminatory, similarly, the value of the listing to a
company is substantially the same regardless of the number of shares
the company has outstanding. Nasdaq also believes that the fee increase
is reasonable given the substantial increase in new listings of the
Acquisition Companies in the last few years, which caused Nasdaq to
dedicate additional resources to conduct regulatory reviews of
Acquisition Companies' IPOs and subsequent business combination
transactions.
Nasdaq believes it is reasonable to transition from the current
three-tier structure for the All-Inclusive Annual Fee for Acquisition
Companies to the proposed two-tier structure because Nasdaq's analysis,
as described above, indicates that the proposed structure better
reflects the value of services Nasdaq provides to Acquisition
Companies. Nasdaq also believes that the All-Inclusive Fee increase for
the proposed first tier is reasonable given the substantial increase in
new listings of the Acquisition Companies in the last few years, which
caused Nasdaq to dedicate additional resources to conduct regulatory
reviews of Acquisition Companies' IPOs and subsequent business
combination transactions.
[[Page 79033]]
While there is a small minority of Acquisition Companies that fall
within the proposed second tier (over 50 million shares) that will not
be affected by the proposed fee change, Nasdaq believes that this is
not unfairly discriminatory because such large Acquisition Companies
tend to have better known and more experienced sponsors and advisors,
and therefore have more value to Nasdaq when they list. Pricing for
similar securities on other national securities exchanges was also
considered, and Nasdaq believes that maintaining this tier as is, is
reasonable given the competitive landscape.
The proposed removal of text relating to fees that are no longer
applicable and renumbering certain rules to improve their clarity and
readability is ministerial in nature and has no substantive effect.
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. The market for
listing services is extremely competitive and listed companies may
freely choose alternative venues, both within the U.S. and
internationally. For this reason, Nasdaq does not believe that the
proposed rule change will result in any burden on competition for
listings.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others
No written comments were either solicited or received.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
The foregoing rule change has become effective pursuant to section
19(b)(3)(A)(ii) of the Act.\20\
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\20\ 15 U.S.C. 78s(b)(3)(A)(ii).
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At any time within 60 days of the filing of the proposed rule
change, the Commission summarily may temporarily suspend such rule
change if it appears to the Commission that such action is: (i)
necessary or appropriate in the public interest; (ii) for the
protection of investors; or (iii) otherwise in furtherance of the
purposes of the Act. If the Commission takes such action, the
Commission shall institute proceedings to determine whether the
proposed rule should be approved or disapproved.
IV. Solicitation of Comments
Interested persons are invited to submit written data, views, and
arguments concerning the foregoing, including whether the proposed rule
change is consistent with the Act. Comments may be submitted by any of
the following methods:
Electronic Comments
Use the Commission's internet comment form (https://www.sec.gov/rules/sro.shtml); or
Send an email to [email protected]. Please include
File Number SR-NASDAQ-2022-068 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-2022-068. 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-2022-068 and
should be submitted on or before January 13, 2023.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\21\
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\21\ 17 CFR 200.30-3(a)(12).
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Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2022-27911 Filed 12-22-22; 8:45 am]
BILLING CODE 8011-01-P
