
[Federal Register Volume 77, Number 216 (Wednesday, November 7, 2012)]
[Notices]
[Pages 66907-66908]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2012-27129]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-68129; File No. SR-NASDAQ-2012-120]


Self-Regulatory Organizations; The NASDAQ Stock Market LLC; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To 
Modify the Annual Fees for Companies Listed on the Nasdaq Capital 
Market

November 1, 2012.
    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 October 18, 2012, The NASDAQ Stock Market LLC (``NASDAQ'' or the 
``Exchange'') filed with the Securities and Exchange Commission 
(``Commission'') a 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.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    NASDAQ is proposing a change to modify the annual fees for 
companies listed on the Nasdaq Capital Market.
    The text of the proposed rule change is below. Proposed new 
language is in italics; proposed deletions are in [brackets].
5920. The Nasdaq Capital Market
    (a)-(b) No change.
    (c) Annual Fee
    (1)
    (A) The issuer of each class of securities that is a domestic or 
foreign issue, other than American Depositary Receipts (ADRs), listed 
on the Nasdaq Capital Market shall pay to Nasdaq an annual fee in the 
amount of [$27,500] $32,000.
    (B) [The] Effective January 1, 2013, the issuer of each class of 
securities that is an ADR listed on [The] the Nasdaq Capital Market 
shall pay to Nasdaq an annual fee in the amount of $25,000. Effective 
January 1, 2014, the issuer of each class of securities that is an ADR 
listed on the Nasdaq Capital Market shall pay to Nasdaq an annual fee 
in the amount of $32,000. [calculated on ADRs outstanding according to 
the following schedule:

Up to 10 million ADRs $17,500
Over 10 million ADRs $21,000]

    (2)-(8) No change.
    (d)-(e) No change.
* * * * *

II. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for the Proposed Rule Change

    In its filing with the Commission, the self-regulatory organization 
included statements concerning the purpose of, and basis for, the 
proposed rule change and discussed any comments it received on the 
proposed rule change. The text of those statements may be examined at 
the places specified in Item IV below. The Exchange has prepared 
summaries, set forth in sections A, B, and C below, of the most 
significant parts of such statements.

A. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    Nasdaq proposes to modify the annual fee charged to companies that 
list securities on the Nasdaq Capital Market (``Capital Market''), 
effective January 1, 2013. Currently, the annual fee for securities 
other than American Depositary Receipts (``ADRs'') is $27,500. Nasdaq 
proposes to increase this fee to $32,000. This fee was last changed in 
2007.
    In addition, the annual fee charged for ADRs is currently tiered, 
based on the number of ADRs outstanding. Issuers with 10 million or 
fewer ADRs outstanding pay an annual fee of $17,500, while issuers with 
more than 10 million ADRs outstanding pay an annual fee of $21,000. 
Nasdaq has determined that companies that list ADRs on the Capital 
Market should be charged the same fee as other companies. However, 
given that these companies currently pay lower annual fees than other 
companies, Nasdaq proposes to reduce the impact of this change by 
phasing in the increase over two years. Specifically, Nasdaq proposes 
that effective January 1, 2013, the annual fee for ADRs will be $25,000 
and effective January 1, 2014, the annual fee for ADRs will be $32,000.
    Companies currently listed on the Capital Market have already paid 
their 2012 annual fee. However, any company that lists prior to 
December 31, 2012 will owe a prorated annual fee based on the existing 
$27,500 fee schedule or the existing tiered structure applicable to 
ADRs. The new fees will become effective on January 1, 2013, and 
companies will be billed their 2013 annual fee based on the new fee 
schedule shortly thereafter.\3\
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    \3\ Until January 1, 2013, the online Nasdaq rule book will 
reflect the currently effective fees with a note indicating that 
this fee change is pending and will become effective on January 1, 
2013. The online Nasdaq rule book will also contain a link to the 
text of the revised rule.
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2. Statutory Basis
    Nasdaq believes that the proposed rule change is consistent with 
the provisions of Section 6 of the Act,\4\ in general and with Section 
6(b)(4) of the Act,\5\ in particular in that it provides for the 
equitable allocation of reasonable dues, fees, and other charges among 
its members, issuers and other persons using its facilities and does 
not unfairly discriminate between customers, issuers, brokers or 
dealers.\6\
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    \4\ 15 U.S.C. 78f.
    \5\ 15 U.S.C. 78f(b)(4).
    \6\ The Commission notes that Section 6(b)(5) of the Act 
contains the provision that states rules of an exchange ``are not 
designed to permit unfair discrimination between customers, issuers, 
brokers, or dealers.'' See 15 U.S.C. 78f(b)(5).
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    Nasdaq believes that the proposed increase in the annual fee for 
companies listing on the Capital Market is reasonable because the 
revised fee will better reflect Nasdaq's costs related to companies 
listed on the Capital Market and the value that such a listing provides 
to the company. In that regard, Nasdaq notes that it has not increased 
the annual fees for listing on the Capital Market since January 1, 
2007,\7\ but has

[[Page 66908]]

continued to enhance the listing experience and has invested in its 
regulatory and compliance program.\8\ These initiatives have been 
funded through listing fees, including the Capital Market annual fee.
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    \7\ Securities Exchange Act Release No. 55202 (January 30, 
2007), 72 FR 6017 (February 8, 2007) (approving SR-NASDAQ-2006-040). 
The annual fees for ADRs have not been changed since 2005. 
Securities Exchange Act Release No. 50838 (December 10, 2004), 69 FR 
75578 (December 17, 2004) (approving SR-NASD-2004-128).
    \8\ For example, Nasdaq now accepts many notifications from 
listed companies through a web-based interface and provides detailed 
compliance information to companies through the Nasdaq Listing 
Center's Reference Library. See https://listingcenter.nasdaqomx.com/Show_Doc.aspx?File=listing_information.html#forms and https://listingcenter.nasdaqomx.com/assets/Get_Started_Guide.pdf.
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    Nasdaq also believes that the proposed changes are equitable and 
not unfairly discriminatory because they would apply equally to all 
companies listed on the Capital Market. While the increase on ADRs 
would be implemented over two years, this is also equitable and not 
unfairly discriminatory because these companies currently pay lower 
fees based on a recognition that the U.S. listing is not typically 
their primary listing. While Nasdaq believes it is equitable to charge 
them the same fee as other companies because they receive the same 
benefits from their listing, the Exchange also believes that 
implementing the increase over two years will help reduce its impact 
and is appropriate given the currently reduced fees that they pay. 
Nasdaq also notes that other exchanges charge the same annual fee for 
ADRs as for other securities.\9\
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    \9\ See, e.g., NYSE MKT Listed Company Guide Section 220(b); 
NYSE Listed Company Manual Section 902.03.
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    Finally, NASDAQ notes that it operates in a highly competitive 
market in which market participants can readily switch exchanges if 
they deem the listing fees excessive.\10\ In such an environment, 
NASDAQ must continually review its fees to assure that they remain 
competitive. In that regard, Nasdaq notes that the proposed fees remain 
similar to the fees charged by NYSE MKT.\11\
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    \10\ The Justice Department recently noted the intense 
competitive environment for exchange listings. See ``NASDAQ OMX 
Group Inc. and IntercontinentalExchange Inc. Abandon Their Proposed 
Acquisition Of NYSE Euronext After Justice Department Threatens 
Lawsuit'' (May 16, 2011), available at http://www.justice.gov/atr/public/press_releases/2011/271214.htm.
    \11\ NYSE MKT has proposed to charge annual fees in 2013 that 
range from $30,000 to $45,000, based on a company's shares 
outstanding. See SR-NYSEMKT-2012-51 (filed September 28, 2012) 
[sic].
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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. The market for 
listing services is extremely competitive and listed companies may 
freely choose alternative venues. 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 for listings.

C. Self-Regulatory Organization's Statement on Comments on the Proposed 
Rule Change Received From Members, Participants or Others

    Written comments were neither solicited nor 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.\12\ 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 necessary or appropriate in the public interest, 
for the protection of investors, or 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.
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    \12\ 15 U.S.C. 78s(b)(3)(A)(ii).
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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 (http://www.sec.gov/rules/sro.shtml); or
     Send an email to rule-comments@sec.gov. Please include 
File Number SR-NASDAQ-2012-120 on the subject line.

Paper Comments

     Send paper comments in triplicate to Elizabeth M. Murphy, 
Secretary, Securities and Exchange Commission, 100 F Street NE., 
Washington, DC 20549-1090.

All submissions should refer to File Number SR-NASDAQ-2012-120. 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 Web site (http://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 Web site viewing and 
printing in the Commission's Public Reference Room, 100 F Street, NE., 
Washington, DC 20549-1090, on official business days between the hours 
of 10:00 a.m. and 3:00 p.m. Copies of such filing also will be 
available for inspection and copying at the principal offices of the 
Exchange. All comments received will be posted without change; the 
Commission does not edit personal identifying information from 
submissions. You should submit only information that you wish to make 
available publicly. All submissions should refer to File Number SR-
NASDAQ-2012-120, and should be submitted on or before November 28, 
2012.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\13\
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    \13\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2012-27129 Filed 11-6-12; 8:45 am]
BILLING CODE 8011-01-P


