[Federal Register Volume 62, Number 244 (Friday, December 19, 1997)]
[Notices]
[Pages 66707-66709]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-33193]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-39441; File No. SR-NASD-97-83]


Self-Regulatory Organizations; Notice of Filing of Proposed Rule 
Change by National Association of Securities Dealers, Inc. Relating to 
Listing Fees for Nasdaq National Market Issuers

December 11, 1997.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act''), 15 U.S.C. 78s(b)(1), notice is hereby given that on November 
13, 1997, the National Association of Securities Dealers, Inc. 
(``NASD'' or ``Association''), through its wholly owned subsidiary, the 
Nasdaq Stock Market, Inc. (``Nasdaq''), 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 NASD.\1\ The Commission is publishing this notice 
to solicit comments on the proposed rule change from interested 
persons.
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    \1\ On December 3, 1997, the NASD, through Nasdaq, submitted 
Amendment No. 1 to the filing. See letter from Robert E. Aber, Vice 
President and General Counsel, Nasdaq, to Katherine A. England, 
Assistant Director, Division of Market Regulation, Commission, dated 
December 3, 1997.
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1. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The NASD is proposing to amend NASD Rule 4510 to revise the annual 
fees for Nasdaq National Market issuers and to make conforming changes 
to Rule 4520. Below is the text of the proposed rule change. Proposed 
new language is in italics; proposed deletions are in brackets.

Rule 4510. The Nasdaq National Market

(a) Entry Fee
    (1) When an issuer submits an application for inclusion of any 
class of its securities in the Nasdaq National Market, it shall pay to 
The Nasdaq Stock Market, Inc.:
    (A) a one-time company listing fee of $5,000 (which shall include a 
$1,000 non-refundable processing fee); and
    [(B) for each class of security listed, a fee calculated on a 
graduated rate of $.005 per share for the first 5 million shares, 
$.0025 per share for each share between 5,000,001 and 15 million, 
inclusive, and $.001 per share for each share over 15 million, based on 
the total number of shares outstanding. Entry fees paid by a company 
for all classes of securities listed on the Nasdaq National Market, 
regardless of the date those securities are listed, shall not exceed 
$50,000 (inclusive of the $5,000 company listing fee).\2\]
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    \2\ [For purposes of the Rule 4500 Series, the term ``shares'' 
shall include common and preferred stock, American Depositary 
Receipts (ADRs), warrants, partnership interests, or any other 
security listed on the Nasdaq National Market.]
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    (B) a fee calculated on total shares outstanding according to the 
following schedule:

Up to 1 million shares--$29,525
1+ to 2 million shares--$33,750
2+ to 3 million shares--$43,750
3+ to 4 million shares--$48,750
4+ to 5 million shares--$55,000
5+ to 6 million shares--$58,725
6+ to 7 million shares--$61,875
7+ to 8 million shares--$64,375
8+ to 9 million shares--$67,875
9+ to 10 million shares--$70,625
10+ to 11 million shares--$73,875
11+ to 12 million shares--$76,625
12+ to 13 million shares--$79,875
13+ to 14 million shares--$82,000
14+ to 15 million shares--$83,500
15+ to 16 million shares--$85,500
Over to 16 million shares--$90,000

    [The entry fee shall be based on the total number of] Total shares 
outstanding means the aggregate of all classes of equity securities [of 
the class] to be included in the Nasdaq National Market as shown in the 
issuer'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, required to be filed with the issuer's appropriate regulatory 
authority. [and received by The Nasdaq Stock Market, Inc.]
    (3) no change
    (4) no change
(b) Additional Shares
    (1) The issuer of each class of security, other than the American 
Depositary Receipts, which is listed in the Nasdaq National Market 
shall pay to The Nasdaq [National] Stock Market, Inc. the fee set forth 
in subparagraph (2) below in connection with the issuance of additional 
shares of each class of listed security set forth In subparagraph (3) 
below.
    (2) no change
    (3) no change
    (4) Payment of the fee to The Nasdaq Stock Market, Inc. shall be 
included with the issuer notification to [the Association] Nasdaq of 
the issuance of additional shares of securities as required under 
provisions of Rule 4310(c)(17) and Rule [4320(e)(16)] 4320(e)(15).
(c) Annual Fee--Domestic and Foreign Issues
    (1) As of January 1, [1993] 1998, the issuer of each class of 
securities that is a domestic or foreign issue listed in the Nasdaq 
National Market shall pay to The Nasdaq Stock Market, Inc. an annual 
fee [(comprised of a base annual fee and a variable annual fee) to be 
computed as follows:] calculated on total shares outstanding according 
to the following schedule:
    [(A) The base annual fee shall be calculated on total shares 
outstanding 3 according to the following schedule:

    \3\ Total shares outstanding shall be the aggregate of all 
classes of securities listed on the NNM calculated at year end.
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Up to 1 million shares--$5,250

[[Page 66708]]

1+ to 2 million shares--$5,750
2+ to 3 million shares--$6,250
3+ to 4 million shares--$6,750
4+ to 5 million shares--$7,250
5+ to 6 million shares--$7,750
6+ to 7 million shares--$8,250
7+ to 8 million shares--$8,750
8+ to 9 million shares--$9,250
9+ to 10 million shares--$9,750
10+ to 11 million shares--$10,250
11+ to 12 million shares--$10,750
12+ to 13 million shares--$11,250
13+ to 14 million shares--$11,750
14+ to 15 million shares--$12,250
15+ to 16 million shares--$12,750
Over 16 million shares--$13,250]
Up to 1 million shares--$10,710
1+ to 2 million shares--$10,960
2+ to 3 million shares--$11,210
3+ to 4 million shares--$11,460
4+ to 5 million shares--$11,710
5+ to 6 million shares--$11,960
6+ to 7 million shares--$12,210
7+ to 8 million shares--$12,460
8+ to 9 million shares--$12,710
9+ to 10 million shares--$12,960
10+ to 11 million shares--$17,255
11+ to 12 million shares--$17,505
12+ to 13 million shares--$17,755
13+ to 14 million shares--$18,005
14+ to 15 million shares--$18,255
15+ to 16 million shares--$18,505
16+ to 20 million shares--$18,755
20+ to 25 million shares--$22,795
25+ to 50 million shares--$26,625
50+ to 75 million shares--$32,625
75+ to 100 million shares--$43,125
Over 100 million shares--$50,000


    [(B) The variable annual fee shall be calculated at the rate of 
$.025 per $1,000 of market capitalization,4 but only for 
market capitalization above $100 million.
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    \4\ Market capitalization is calculated by multiplying total 
shares outstanding at year end (except that convertible bonds, 
rights and warrants are not included) times the price at year end.
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    (C) The annual fee (comprised of the base and variable fee) shall 
be capped as follows:

For companies with 10 million shares or less--$10,000
For companies with 10+ to 20 million shares--$15,000
For companies with more than 20 million shares--$20,000

    (2) no change
    (3) no change.
(d) Annual Fee--American Depositary Receipts (ADRs)
    (1) no change
    (A) no change
    (B) the sum of $500 or $.0005 per share outstanding, whichever is 
higher, up to a maximum of $6,000 of each class of securities listed in 
the Nasdaq National Market.
    (2) The annual fee shall be based on the total [amount of] shares 
outstanding [securities] of the class included in the Nasdaq National 
Market as shown in the issuer's most recent periodic report required to 
be filed with the issuer's appropriate regulatory authority or in more 
recent information held by Nasdaq. [and received by the Nasdaq Stock 
Market, Inc.]
    (3) no change
    (4) no change

Rule 5420. The Nasdaq SmallCap Market

(a) Entry Fee
    (1) no change
    (A) no change
    (B) no change
    (i) Equity Securities
    $1,000 or $.001 per share outstanding, whichever is higher. For 
purposes of this subparagraph, the term ``equity securities'' includes 
all securities eligible for inclusion in the Nasdaq SmallCap Market not 
covered by subparagraph (ii) hereof \5\
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    \5\ [See footnote to Rule 4510(a)(1(B) defining ``shares.''] The 
term ``shares'' shall include common and preferred stock, American 
Depositary Receipts (ADRs), warrants, partnership interests, or any 
other security listed on the Nasdaq SmallCap Market. In the case of 
units, each component, but not the unit itself, shall be considered 
separately as an ``equity security'' for fee purposes.
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    (2) no change
    (3) The entry fee shall be based on the total shares [number of] 
outstanding [securities] of the class to be included in the Nasdaq 
SmallCap Market as shown in the issuer's most recent period report or 
in more recent information held by Nasdaq or, in the case of new 
issues, as shown in the offering circular, required to be filed with 
the issuer's appropriate regulatory [and received by The Nasdaq Stock 
Market, Inc].
    (b) no change
    (c) no change
    (d) no change
    (1) no change

    (A) Equity Securities
    $500 or $.0005 per share outstanding, whichever is higher. For 
purposes of this subparagraph, the term ``equity securities'' includes 
all securities eligible for inclusion in the Nasdaq SmallCap Market not 
covered by paragraph [(ii)] (B) of this section.\6\
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    \6\ See notes to Rule [4510(a)(1)(B) and] 4520(a)(1)(B)(i), 
above.
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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 NASD 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 NASD has prepared summaries, set forth in Sections 
(A), (B), and (C) below, of the most significant aspects of such 
statements.

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

    The proposed rule change will adjust both the Entry Fee and the 
Annual Fee for Nasdaq National Market issuers, effective January 1, 
1998. Nasdaq has determined that an increase in the Entry Fee and the 
Annual Fee for issuers included on the Nasdaq National Market is 
necessary. Nasdaq has not filed an adjustment to its fee rates since 
the fall of 1991. Since that time, Nasdaq has committed increased 
resources in efforts to strengthen market qualifications, to 
communicate with investors, and to prepare for closer integration of 
the world's equity markets. In particular, during the last eighteen 
months, substantial incremental annual expenses have been incurred in 
the development and operation of new information services for issuers 
and investors. These new information services include nasdaq.com and 
Nasdaq Online. Such additional services, while adding considerable 
value to a Nasdaq listing, were not envisioned when the 1991 fee filing 
was put in effect.
    Through nasdaq.com, the market provides valuable information for 
investors and prospective investors at all levels. The Nasdaq website 
provides internet access to pricing from all markets. It also includes 
news, analyst information, tear sheets, hot links to EDGAR and other 
information which is important to all investors. With Nasdaq Online, 
companies now have access to the information they need to better serve 
their shareholders. Nasdaq Online provides companies with market and 
transaction data, analyst estimates, institutional ownership data, and 
fundamental financial information in an integrated system accessible 
through the internet. This service is important in helping issuers 
fulfill their responsibilities to shareholders.
    The proposed fee increase will also be used to support the 
continued expansion and technological enhancements of Nasdaq's 
qualification and market surveillance systems and programs. Initiatives 
include the development of an automated issuer risk assessment system 
and an automated

[[Page 66709]]

Internet surveillance system. Additional resources will be committed to 
additional listing qualifications staff to insure compliance with the 
recently approved increase in Nasdaq's listing requirements.\7\ These 
initiatives, in concert with the additional services provided to 
companies and investors, will enhance the overall quality of companies 
listed on Nasdaq, foster the protection of investors and promote the 
integrity of The Nasdaq Stock Market.
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    \7\ See Securities Exchange Act Release No. 38961 (Aug. 22, 
1997), 62 FR 45895 (Aug. 29, 1997).
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    The Nasdaq Stock Market expects to witness the continuing rapid 
growth and integration of the world's equity capital markets in the 
next few years. Nasdaq plans to be in the position to meet the growing 
demand of global investors for ownership of U.S. securities. This will 
require refinements to the market and further development of the global 
positioning of U.S. companies. The proposed fee increase will be used 
to cover costs that Nasdaq is incurring by providing these extra 
services to Nasdaq issuers, their shareholders and potential investors.
    The proposed rule change also deletes references to filings 
received by Nasdaq because the receipt by Nasdaq is not the 
determinative test for which periodic report is most recent. 
Furthermore, it makes other conforming changes to clarify the text of 
the applicable rules.
    The NASD believes that the proposed rule change is consistent with 
the provisions of Section 15A(b)(5) and (6) of the Act. The proposed 
rule change is consistent with Section 15A(b)(5) as it provides for the 
equitable allocation of reasonable dues, fees, and other charges among 
members and issuers using the Nasdaq system. The proposed rule change 
is consistent with section 15A(b)(6) as it is designed to promote just 
and equitable principles of trade and does not permit unfair 
discrimination between customers, issuers, brokers or dealers. As noted 
above, the fee increase reflects additional costs that Nasdaq incurs 
for services provided to issuers.

(B) Self-Regulatory Organization's Statement on Burden on Competition

    The NASD 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.

(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

    Within 35 days of the date of publication of this notice in the 
Federal Register or within such longer period (i) as the Commission may 
designate up to 90 days of such date if it finds such longer period to 
be appropriate and publishes its reasons for so finding or (ii) as to 
which the self-regulatory organization consents, the Commission will:
    A. By order approve such proposed rule change, or
    B. Institute proceedings to determine whether the proposed rule 
change should be disapproved.

IV. Solicitation of Comments

    Interested persons are invited to submit written data, views, and 
arguments concerning the foregoing. Persons making written submissions 
should file six copies thereof with the Secretary, Securities and 
Exchange Commission, 450 Fifth Street NW., Washington, DC 20549. 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 inspection and copying in the 
Commission's Public Reference Room. Copies of such filing will also be 
available for inspection and copying at the principal office of the 
NASD. All submissions should refer to File No. SR-NASD-97-83 and should 
be submitted by January 9, 1998.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\8\
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    \8\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 97-33193 Filed 12-18-97; 8:45 am]
BILLING CODE 8010-01-M