Self-Regulatory Organizations; The Nasdaq Stock Market LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Establish a Fee for Requests for Review of Membership Decisions and Decisions Related to Changes in Ownership, Control, or Material Business Operations, 58445-58447 [2024-15767]
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Federal Register / Vol. 89, No. 138 / Thursday, July 18, 2024 / Notices
A. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–100518; File No. SR–
NASDAQ–2024–031]
Self-Regulatory Organizations; The
Nasdaq Stock Market LLC; Notice of
Filing and Immediate Effectiveness of
Proposed Rule Change To Establish a
Fee for Requests for Review of
Membership Decisions and Decisions
Related to Changes in Ownership,
Control, or Material Business
Operations
July 12, 2024.
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 June 28,
2024, The Nasdaq Stock Market LLC
(‘‘Nasdaq’’ or ‘‘Exchange’’) filed with the
Securities and Exchange Commission
(‘‘SEC’’ or ‘‘Commission’’) the proposed
rule change as described in Items I, II,
and III, below, which Items have been
prepared by the Exchange. The
Commission is publishing this notice to
solicit comments on the proposed rule
change from interested persons.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The Exchange proposes to establish a
fee for requests for review of
membership decisions and decisions
related to changes in ownership,
control, or material business operations,
as described further below.
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.
khammond on DSKJM1Z7X2PROD with NOTICES
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.
1 15
2 17
U.S.C. 78s(b)(1).
CFR 240.19b–4.
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16:47 Jul 17, 2024
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1. Purpose
Pursuant to General 3, Rule 1015,
Applicants 3 may seek review of a
decision by the Exchange’s Membership
Department regarding an application for
membership under General 3, Rule 1014
(‘‘Membership Decisions’’). In addition,
pursuant to Rule 1015, Members may
seek review of a decision by the
Exchange’s Membership Department
(‘‘Department’’) regarding changes to its
ownership, control, or business
operations under Rule 1017 (‘‘Change
Decisions’’). Rule 1015(a) provides that,
to initiate a review, an Applicant must,
within 25 days after service of a
decision under Rule 1014 or 1017, file
a written request for review with the
Exchange Review Council.4 Rule
1015(a) specifies that a request for
review shall state with specificity why
the Applicant believes that the
Department’s decision is inconsistent
with the bases for denial set forth in
Rule 1014, or otherwise should be set
aside, and state whether a hearing is
requested. Rule 1015(a) also specifies
that the Applicant must simultaneously
file a copy of the request with the
Department.
Nasdaq proposes to establish a fee of
$15,000 for review of Membership
Decisions and Change Decisions by the
Exchange Review Council (‘‘ERC’’).
Nasdaq proposes to establish a fee for
review by the ERC to offset some of the
costs that the Exchange incurs in
preparing for and conducting reviews of
Membership Decisions and Change
Decisions, as described further below.
The costs of the review process
include significant time and resources
to maintain the infrastructure for the
processes and to prepare for and
conduct hearings (if requested). For
example, with respect to review by the
ERC, Nasdaq incurs expenses related to
the Nasdaq staff that facilitates the
hearings and provides support to the
ERC members, expenses related to
regulatory services provided by FINRA,
the honorarium paid to the ERC
3 The term ‘‘Applicant’’ means a person that
applies for membership in the Exchange under Rule
1013 or a Member that files an application for
approval of a change in ownership, control, or
business operations under Rule 1017. See General
3, Rule 1011(a).
4 The Exchange Review Council serves as the
appellate body for disciplinary actions appealed
from FINRA Hearings Panels, Nasdaq Membership
Department determinations, decisions made by the
Exchange relating to market maker withdrawal/
reinstatement and obvious error and catastrophic
error petitions, and Nasdaq Phlx floor-based rules.
PO 00000
Frm 00119
Fmt 4703
Sfmt 4703
58445
members, and the cost of maintaining a
transcript of the hearing. Nasdaq staff
and FINRA are involved in reviewing
Applicant submissions, requesting and
reviewing additional documents and
information provided by Applicants,
preparing and reviewing briefs, and
preparing exhibits and evidence for
hearings. In addition, Nasdaq staff may
attend hearings and other meetings
related to these reviews. Where hearings
are held in person, Nasdaq also incurs
expenses related to securing and
maintaining a location for the hearings
and travel expenses for ERC members.
Nasdaq staff must manage and
coordinate the membership application
dockets, maintain the systems that track
membership matters, and draft initial
decisions for review by the ERC
members.
The Exchange Board has authority to
call the ERC decision for review. There
are related costs associated with the
Exchange Board review of every ERC
decision in determining whether to call
a decision for review as described in
General 3, Rule 1016. In that regard,
Nasdaq incurs expenses related to the
Nasdaq staff that facilitates the call for
review process and that provides legal
counsel and support to the Exchange
Board members, as well as the
honorarium paid to the Exchange Board.
In addition, to the extent a decision is
appealed to the SEC, the Exchange
would incur additional costs in
connection with such an appeal.
The Exchange estimates that the
expenses incurred in such reviews are
comparable to or greater than the
expenses incurred during reviews before
a Hearings Panel 5 or appeals to the
Nasdaq Listing and Hearing Review
Council (‘‘NLHRC’’).6 Nasdaq charges a
fee of $20,000 for review by a Hearings
Panel 7 and a fee of $15,000 to appeal a
Hearings Panel decision to the NLHRC.8
Accordingly, Nasdaq proposes to
establish a fee of $15,000 for reviews of
Membership Decisions and Change
Decisions by the ERC to offset expenses
associated with such reviews. The new
fee will allow Nasdaq to recoup a
portion of the expenses it incurs in the
review process. The Exchange has
reviewed all costs associated with ERC
reviews and does not expect or intend
5 When a Company receives a Staff Delisting
Determination or a Public Reprimand Letter issued
by the Listing Qualifications Department, or when
its application for initial listing is denied, it may
request in writing that the Hearings Panel review
the matter in a written or an oral hearing. See Rule
5815.
6 A Company may appeal a Hearings Panel
Decision to the NLHRC. See Rule 5820.
7 See Rule 5815(a)(3).
8 See Rule 5820(a).
E:\FR\FM\18JYN1.SGM
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58446
Federal Register / Vol. 89, No. 138 / Thursday, July 18, 2024 / Notices
that the proposed fee will exceed the
costs.9
khammond on DSKJM1Z7X2PROD with NOTICES
2. Statutory Basis
The Exchange believes that its
proposal is consistent with Section 6(b)
of the Act,10 in general, and furthers the
objectives of Sections 6(b)(4) and 6(b)(5)
of the Act,11 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.
Specifically, establishing the
proposed fee is reasonable because it
will help offset Nasdaq’s costs related to
reviews of Membership Decisions and
Change Decisions, which serve to
ensure that Nasdaq’s membership
standards are properly enforced for the
protection of investors. The proposed
changes are equitable and not unfairly
discriminatory because they would
apply equally to all Applicants that
choose to request a review of a
Membership Decision or Change
Decision. In addition, aligning the fee
for reviews with the underlying costs of
the review process is equitable because
doing so will help minimize the extent
that Applicants that meet all
membership standards may subsidize
the costs of review for Applicants that
fail to meet the membership standards.
Nasdaq also believes that the
proposed fee is consistent with the
investor protection objectives of Section
6(b)(5) of the Act 12 in that it is designed
to promote just and equitable principles
of trade, to remove impediments to a
free and open market and national
market systems, and in general to
protect investors and the public interest.
Specifically, the fee is designed to
provide adequate resources for
appropriate preparation to conduct
reviews of Membership Decisions and
Change Decisions, which help to assure
that the Exchanges’ membership
standards are properly enforced and
investors are protected.
Nasdaq also believes that the
proposed fee is consistent with Section
6(b)(7) of the Act,13 in that the proposed
fee is consistent with the provision by
the Exchange of fair procedures for the
prohibition or limitation by the
9 A precise cost-per-appeal analysis is not
possible given the need to maintain an
infrastructure for which the Exchange incurs
expenses irrespective of the number of reviews
requested in a given year.
10 15 U.S.C. 78f(b).
11 15 U.S.C. 78f(b)(4) and (5).
12 15 U.S.C. 78f(b)(5).
13 15. U.S.C. 78f(b)(7).
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16:47 Jul 17, 2024
Jkt 262001
Exchange of any person with respect to
access to services offered by the
Exchange. In particular, the Exchange
believes that the new fee should not
deter Applicants from availing
themselves of the right to appeal
because the fee will still be set at a level
that will be affordable for Applicants.
Nasdaq does not believe that the
proposed fee is unduly burdensome or
would discourage any Applicant from
seeking a review.
B. Self-Regulatory Organization’s
Statement on Burden on Competition
Nasdaq does not believe that the
proposed rule change will result in any
burden on competition that is not
necessary or appropriate in furtherance
of the purposes of the Act, as amended.
As discussed above, this proposed fee is
based on the costs to the Exchange to
provide a review process for
Membership Decisions and Change
Decisions, which is in turn necessary to
ensure investor protection as well as a
transparent process for Applicants. The
Exchange notes that it operates in a
highly competitive market in which
market participants can readily favor
competing venues if they deem fees at
a particular venue to be excessive or
opportunities available at other venues
to be more favorable. Applicants may
freely choose alternative venues based
on the aggregate fees assessed. This rule
proposal does not burden competition
with other venues, which are similarly
free to align their fees based on the costs
incurred by the process they offer. For
this reason, and the reasons discussed
in connection with the statutory basis
for the proposed rule change, Nasdaq
does not believe that the proposed rule
change will result in any burden on
competition.
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.14
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
14 15
PO 00000
U.S.C. 78s(b)(3)(A)(ii).
Frm 00120
Fmt 4703
Sfmt 4703
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 rule-comments@
sec.gov. Please include file number SR–
NASDAQ–2024–031 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–2024–031. 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
a.m. and 3 p.m. Copies of the filing also
will be available for inspection and
copying at the principal office of the
Exchange. Do not include personal
identifiable information in submissions;
you should submit only information
that you wish to make available
publicly. We may redact in part or
withhold entirely from publication
submitted material that is obscene or
subject to copyright protection. All
submissions should refer to file number
SR–NASDAQ–2024–031 and should be
submitted on or before August 8, 2024.
E:\FR\FM\18JYN1.SGM
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Federal Register / Vol. 89, No. 138 / Thursday, July 18, 2024 / Notices
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.15
J. Matthew DeLesDernier,
Deputy Secretary.
[FR Doc. 2024–15767 Filed 7–17–24; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–100521; File No. SR–
CboeBZX–2024–064]
Self-Regulatory Organizations; Cboe
BZX Exchange, Inc.; Notice of Filing
and Immediate Effectiveness of a
Proposed Rule Change To Amend the
Strike Interval for Options on SPDR®
Gold Shares
July 12, 2024.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
Cboe BZX Exchange, Inc. (the
‘‘Exchange’’ or ‘‘BZX’’) proposes to
amend the strike interval for options on
SPDR® Gold Shares (‘‘GLD’’). The text of
the proposed rule change is provided
below.
(additions are italicized; deletions are
[bracketed])
*
*
*
*
*
Rules of Cboe BZX Exchange, Inc.
khammond on DSKJM1Z7X2PROD with NOTICES
*
*
*
*
Rule 19.6. Series of Options Contracts
Open for Trading
*
*
*
*
*
15 17
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
3 15 U.S.C. 78s(b)(3)(A)(iii).
4 17 CFR 240.19b–4(f)(6).
1 15
VerDate Sep<11>2014
(4) The interval between strike prices of
series of options on Fund Shares approved
for options trading pursuant to Rule 19.3(i)
shall be fixed at a price per share which is
reasonably close to the price per share at
which the underlying security is traded in
the primary market at or about the same time
such series of options is first open for trading
on BZX Options, or at such intervals as may
have been established on another options
exchange prior to the initiation of trading on
BZX Options. Notwithstanding any other
provision regarding the interval between
strike prices of series of options on Fund
Shares in this Rule, the interval between
strike prices of series of options on Standard
& Poor’s Depository Receipts Trust (‘‘SPY’’),
iShares S&P 500 Index ETF (‘‘IVV’’), [and
]the DIAMONDS Trust (‘‘DIA’’), and SPDR®
Gold Shares (‘‘GLD’’) will be $1 or greater.
*
Pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934 (the
‘‘Act’’),1 and Rule 19b–4 thereunder,2
notice is hereby given that on July 2,
2024, Cboe BZX Exchange, Inc. (the
‘‘Exchange’’ or ‘‘BZX’’) filed with the
Securities and Exchange Commission
(the ‘‘Commission’’) the proposed rule
change as described in Items I and II
below, which Items have been prepared
by the Exchange. The Exchange filed the
proposal as a ‘‘non-controversial’’
proposed rule change pursuant to
Section 19(b)(3)(A)(iii) of the Act 3 and
Rule 19b–4(f)(6) thereunder.4 The
Commission is publishing this notice to
solicit comments on the proposed rule
change from interested persons.
*
(d) The interval between strike prices
of series of options on individual stocks
will be:
*
*
*
*
*
16:47 Jul 17, 2024
Jkt 262001
*
*
*
*
The text of the proposed rule change
is also available on the Exchange’s
website (https://markets.cboe.com/us/
equities/regulation/rule_filings/bzx/), at
the Exchange’s Office of the Secretary,
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 Exchange proposes to amend
Rule 19.6, ‘‘Series of Options Contracts
Open for Trading.’’ Specifically, the
Exchange proposes to amend Rule
19.6(d)(4) to allow for the interval
between strike prices of series of options
on Fund Shares of SPDR® Gold Shares
or ‘‘GLD’’ to be $1 or greater, including
where the strike price is greater than
$200.
Currently Rule 19.6, Interpretation
and Policy .01 provides, in relevant
part, that for series of options on
Exchange-Traded Fund Shares that
satisfy the criteria set forth in Rule
PO 00000
Frm 00121
Fmt 4703
Sfmt 4703
58447
19.3(i), the interval of strike prices may
be $1 or greater where the strike price
is $200 or less or $5 or greater where the
strike price is over $200, subject to
certain exceptions set forth in Rule 19.3
[sic], Interpretations and Policies .02
and .03.
Further, current Rule 19.6(d)(4)
provides that notwithstanding any other
provision regarding the interval between
strike prices of series of options on
Fund Shares in Rule 19.6, the interval
between strike prices of series of options
on Standard & Poor’s Depository
Receipts Trust (‘‘SPY’’), iShares S&P 500
Index ETF (‘‘IVV’’), and the DIAMONDS
Trust (‘‘DIA’’) will be $1 or greater. At
this time, the Exchange proposes to
modify the interval setting regime to be
$1 or greater for GLD options, similar to
SPY, IVV, and DIA. The Exchange
believes that the proposed rule change
would make GLD options easier for
investors and traders to use and more
tailored to their investment needs. GLD
is an Exchange-Traded Fund Share
designed to closely track the price and
performance of the price of gold bullion.
GLD is widely quoted as an indicator of
gold stock prices and is a significant
indicator of overall economic health.
Investors use GLD to diversify their
portfolios and benefit from market
trends. Additionally, GLD is a leading
product in its asset class that trades
within a ‘‘complex’’ where, in addition
to the underlying security, there are
multiple instruments available for
hedging such as, COMEX Gold Futures;
Gold Daily Futures; iShares GOLD
Trust; SPDR GOLD Minishares Trust;
Aberdeen Physical Gold Trust; and
GraniteShares Gold Shares.
Accordingly, the Exchange believes that
offering a wider base of GLD options
affords traders and investors important
hedging and trading opportunities,
particularly in the midst of current price
trends. The Exchange believes that not
having the proposed $1 strike price
intervals above $200 in GLD
significantly constricts investors’
hedging and trading possibilities. The
Exchange therefore believes that by
having smaller strike intervals in GLD,
investors would have more efficient
hedging and trading opportunities due
to the lower $1 interval ascension. The
proposed $1 interval above the $200
strike price, will result in having at-themoney series based upon the underlying
ETF moving less than 1%. The
Exchange believes that the proposed
strike setting regime is in line with the
slower movements of broad-based
indices. Considering the fact that $1
intervals already exist below the $200
price point and that GLD have
E:\FR\FM\18JYN1.SGM
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]]>Agencies
[Federal Register Volume 89, Number 138 (Thursday, July 18, 2024)]
[Notices]
[Pages 58445-58447]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-15767]
[[Page 58445]]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-100518; File No. SR-NASDAQ-2024-031]
Self-Regulatory Organizations; The Nasdaq Stock Market LLC;
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To
Establish a Fee for Requests for Review of Membership Decisions and
Decisions Related to Changes in Ownership, Control, or Material
Business Operations
July 12, 2024.
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 June 28, 2024, The Nasdaq Stock Market LLC (``Nasdaq'' or
``Exchange'') filed with the Securities and Exchange Commission
(``SEC'' or ``Commission'') the proposed rule change as described in
Items I, II, and III, below, which Items have been prepared by the
Exchange. The Commission is publishing this notice to solicit comments
on the proposed rule change from interested persons.
---------------------------------------------------------------------------
\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 establish a fee for requests for review of
membership decisions and decisions related to changes in ownership,
control, or material business operations, as described further below.
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
Pursuant to General 3, Rule 1015, Applicants \3\ may seek review of
a decision by the Exchange's Membership Department regarding an
application for membership under General 3, Rule 1014 (``Membership
Decisions''). In addition, pursuant to Rule 1015, Members may seek
review of a decision by the Exchange's Membership Department
(``Department'') regarding changes to its ownership, control, or
business operations under Rule 1017 (``Change Decisions''). Rule
1015(a) provides that, to initiate a review, an Applicant must, within
25 days after service of a decision under Rule 1014 or 1017, file a
written request for review with the Exchange Review Council.\4\ Rule
1015(a) specifies that a request for review shall state with
specificity why the Applicant believes that the Department's decision
is inconsistent with the bases for denial set forth in Rule 1014, or
otherwise should be set aside, and state whether a hearing is
requested. Rule 1015(a) also specifies that the Applicant must
simultaneously file a copy of the request with the Department.
---------------------------------------------------------------------------
\3\ The term ``Applicant'' means a person that applies for
membership in the Exchange under Rule 1013 or a Member that files an
application for approval of a change in ownership, control, or
business operations under Rule 1017. See General 3, Rule 1011(a).
\4\ The Exchange Review Council serves as the appellate body for
disciplinary actions appealed from FINRA Hearings Panels, Nasdaq
Membership Department determinations, decisions made by the Exchange
relating to market maker withdrawal/reinstatement and obvious error
and catastrophic error petitions, and Nasdaq Phlx floor-based rules.
---------------------------------------------------------------------------
Nasdaq proposes to establish a fee of $15,000 for review of
Membership Decisions and Change Decisions by the Exchange Review
Council (``ERC''). Nasdaq proposes to establish a fee for review by the
ERC to offset some of the costs that the Exchange incurs in preparing
for and conducting reviews of Membership Decisions and Change
Decisions, as described further below.
The costs of the review process include significant time and
resources to maintain the infrastructure for the processes and to
prepare for and conduct hearings (if requested). For example, with
respect to review by the ERC, Nasdaq incurs expenses related to the
Nasdaq staff that facilitates the hearings and provides support to the
ERC members, expenses related to regulatory services provided by FINRA,
the honorarium paid to the ERC members, and the cost of maintaining a
transcript of the hearing. Nasdaq staff and FINRA are involved in
reviewing Applicant submissions, requesting and reviewing additional
documents and information provided by Applicants, preparing and
reviewing briefs, and preparing exhibits and evidence for hearings. In
addition, Nasdaq staff may attend hearings and other meetings related
to these reviews. Where hearings are held in person, Nasdaq also incurs
expenses related to securing and maintaining a location for the
hearings and travel expenses for ERC members. Nasdaq staff must manage
and coordinate the membership application dockets, maintain the systems
that track membership matters, and draft initial decisions for review
by the ERC members.
The Exchange Board has authority to call the ERC decision for
review. There are related costs associated with the Exchange Board
review of every ERC decision in determining whether to call a decision
for review as described in General 3, Rule 1016. In that regard, Nasdaq
incurs expenses related to the Nasdaq staff that facilitates the call
for review process and that provides legal counsel and support to the
Exchange Board members, as well as the honorarium paid to the Exchange
Board. In addition, to the extent a decision is appealed to the SEC,
the Exchange would incur additional costs in connection with such an
appeal.
The Exchange estimates that the expenses incurred in such reviews
are comparable to or greater than the expenses incurred during reviews
before a Hearings Panel \5\ or appeals to the Nasdaq Listing and
Hearing Review Council (``NLHRC'').\6\ Nasdaq charges a fee of $20,000
for review by a Hearings Panel \7\ and a fee of $15,000 to appeal a
Hearings Panel decision to the NLHRC.\8\ Accordingly, Nasdaq proposes
to establish a fee of $15,000 for reviews of Membership Decisions and
Change Decisions by the ERC to offset expenses associated with such
reviews. The new fee will allow Nasdaq to recoup a portion of the
expenses it incurs in the review process. The Exchange has reviewed all
costs associated with ERC reviews and does not expect or intend
[[Page 58446]]
that the proposed fee will exceed the costs.\9\
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\5\ When a Company receives a Staff Delisting Determination or a
Public Reprimand Letter issued by the Listing Qualifications
Department, or when its application for initial listing is denied,
it may request in writing that the Hearings Panel review the matter
in a written or an oral hearing. See Rule 5815.
\6\ A Company may appeal a Hearings Panel Decision to the NLHRC.
See Rule 5820.
\7\ See Rule 5815(a)(3).
\8\ See Rule 5820(a).
\9\ A precise cost-per-appeal analysis is not possible given the
need to maintain an infrastructure for which the Exchange incurs
expenses irrespective of the number of reviews requested in a given
year.
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2. Statutory Basis
The Exchange believes that its proposal is consistent with Section
6(b) of the Act,\10\ in general, and furthers the objectives of
Sections 6(b)(4) and 6(b)(5) of the Act,\11\ 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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\10\ 15 U.S.C. 78f(b).
\11\ 15 U.S.C. 78f(b)(4) and (5).
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Specifically, establishing the proposed fee is reasonable because
it will help offset Nasdaq's costs related to reviews of Membership
Decisions and Change Decisions, which serve to ensure that Nasdaq's
membership standards are properly enforced for the protection of
investors. The proposed changes are equitable and not unfairly
discriminatory because they would apply equally to all Applicants that
choose to request a review of a Membership Decision or Change Decision.
In addition, aligning the fee for reviews with the underlying costs of
the review process is equitable because doing so will help minimize the
extent that Applicants that meet all membership standards may subsidize
the costs of review for Applicants that fail to meet the membership
standards.
Nasdaq also believes that the proposed fee is consistent with the
investor protection objectives of Section 6(b)(5) of the Act \12\ in
that it is designed to promote just and equitable principles of trade,
to remove impediments to a free and open market and national market
systems, and in general to protect investors and the public interest.
Specifically, the fee is designed to provide adequate resources for
appropriate preparation to conduct reviews of Membership Decisions and
Change Decisions, which help to assure that the Exchanges' membership
standards are properly enforced and investors are protected.
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\12\ 15 U.S.C. 78f(b)(5).
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Nasdaq also believes that the proposed fee is consistent with
Section 6(b)(7) of the Act,\13\ in that the proposed fee is consistent
with the provision by the Exchange of fair procedures for the
prohibition or limitation by the Exchange of any person with respect to
access to services offered by the Exchange. In particular, the Exchange
believes that the new fee should not deter Applicants from availing
themselves of the right to appeal because the fee will still be set at
a level that will be affordable for Applicants. Nasdaq does not believe
that the proposed fee is unduly burdensome or would discourage any
Applicant from seeking a review.
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\13\ 15. U.S.C. 78f(b)(7).
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B. Self-Regulatory Organization's Statement on Burden on Competition
Nasdaq does not believe that the proposed rule change will result
in any burden on competition that is not necessary or appropriate in
furtherance of the purposes of the Act, as amended. As discussed above,
this proposed fee is based on the costs to the Exchange to provide a
review process for Membership Decisions and Change Decisions, which is
in turn necessary to ensure investor protection as well as a
transparent process for Applicants. The Exchange notes that it operates
in a highly competitive market in which market participants can readily
favor competing venues if they deem fees at a particular venue to be
excessive or opportunities available at other venues to be more
favorable. Applicants may freely choose alternative venues based on the
aggregate fees assessed. This rule proposal does not burden competition
with other venues, which are similarly free to align their fees based
on the costs incurred by the process they offer. For this reason, and
the reasons discussed in connection with the statutory basis for the
proposed rule change, Nasdaq does not believe that the proposed rule
change will result in any burden on competition.
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.\14\
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\14\ 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-2024-031 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-2024-031. 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
a.m. and 3 p.m. Copies of the filing also will be available for
inspection and copying at the principal office of the Exchange. Do not
include personal identifiable information in submissions; you should
submit only information that you wish to make available publicly. We
may redact in part or withhold entirely from publication submitted
material that is obscene or subject to copyright protection. All
submissions should refer to file number SR-NASDAQ-2024-031 and should
be submitted on or before August 8, 2024.
[[Page 58447]]
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\15\
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\15\ 17 CFR 200.30-3(a)(12).
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J. Matthew DeLesDernier,
Deputy Secretary.
[FR Doc. 2024-15767 Filed 7-17-24; 8:45 am]
BILLING CODE 8011-01-P
