[Federal Register Volume 64, Number 124 (Tuesday, June 29, 1999)]
[Notices]
[Pages 34836-34838]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-16498]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-41547; File No. SR-NASD-99-30]
Self-Regulatory Organizations; Notice of Filing and Order
Granting Accelerated Approval of Proposed Rule Change by the National
Association of Securities Dealers, Inc. Relating to Entry Fees and
Annual Fees for Foreign Issuers Quoted on the Nasdaq National Market
June 22, 1999.
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 7, 1999, 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
[[Page 34837]]
rule change as described in Items I and II below, which Items have been
prepared by NASD. The Commission is publishing this notice to solicit
comments on the proposed rule change from interested persons and grant
accelerated approval to the proposed rule change.
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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
The NASD has filed with Commission a proposed rule change regarding
entry fees and annual fees for foreign issuers quoted on the Nasdaq
National Market. Below is the text of the proposed rule change. The
proposed new language is italicized.
* * * * *
4510. The Nasdaq National Market
(a) Entry Fee
(1) No change.
(2) Total shares outstanding means the aggregate of all classes of
equity securities 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. In the case of foreign issuers, total
shares outstanding shall include only those shares issued and
outstanding in the United States.
(3) No change.
(4) No change.
(b) Additional Shares
No change.
(c) Annual Fee--Domestic and Foreign Issues
(1)-(3) No change.
(4) The annual fee shall be based on the total shares outstanding
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. In the case of foreign issuers, total shares
outstanding shall include only those shares issued and outstanding in
the United States.
(d) Annual Fee--American Depository Receipts (ADRs)
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 Association 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 III below. The Association 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
Effective January 1, 1998, the NASD adjusted the Entry Fee and the
Annual Fee for Nasdaq National Market issuers (``the 1998 fee
change''),\3\ The 1998 fee change was justified, in part, by the
increased costs associated with efforts to communicate with investors
and to support the continued expansion and technological enhancements
of Nasdaq's qualification and market surveillance systems and programs.
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\3\ Securities Exchange Act Release No. 39613 (February 2,
1998); 63 FR 6789 (February 10, 1998).
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As a result of the 1998 fee change, the method for computing entry
fees and annual fees on the Nasdaq Stock Market was changed to rely
solely on the issuer's total shares outstanding. The NASD now believes
that with respect to foreign issuers whose shares are quoted on the
Nasdaq National Market, total shares outstanding is not the best
benchmark upon which to base listing fees. In particular, the NASD
notes that only those shares outstanding in the United States typically
trade on the Nasdaq Stock Market, and it is the holders of these shares
that primarily receive the benefits of a listing on the Nasdaq Stock
Market, including those benefits detailed when the 1998 fee change was
approved. Accordingly, the Association proposes to charge entry fees
and annual fees for such foreign issuers based on the total shares
outstanding in the United States.
In order to effectuate this change, the Association will request
that foreign issuers provide Nasdaq with the total number of shares
outstanding in the United States. In the event that a foreign issuer
does not provide that information, the NASD will assess fees for that
issuer based upon the total shares outstanding as shown in the 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.
The NASD requests that this proposal be made effective as of
January 1, 1999, with respect to annual fees. Accordingly, issuers will
be given a credit for the difference between the 1999 annual fee that
they have paid and the fee as computed for 1999 under this proposed
rule change. This credit can be used to offset future fees owed to
Nasdaq.
With respect to entry fees, the Association requests that this
proposal be effective immediately upon approval.
2. Basis
The Association believes that the proposed rule change is
consistent with the provisions of Section 15A(b)(5) \4\ and (6) \5\ of
the Act. The NASD believes the proposed rule change is consistent with
Section 15A(b)(5) because it provides for the equitable allocation of
reasonable dues, fees, and other charges among members and issuers
using the Nasdaq system. The NASD also believes the proposed rule
change is consistent with Section 15A(b)(6) because 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 proposed rule change allocates fees for foreign
issuers based on the number of shares that trade on the Nasdaq Stock
market and the shareholders that receive the benefit of the Nasdaq
listing.
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\4\ 15 U.S.C. 78o-3(b)(5).
\5\ 15 U.S.C. 78o-3(b)(6).
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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.
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. 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. Persons making written submissions
should file six copies thereof with the Secretary, Securities and
Exchange Commission, 450 Fifth Street, NW, Washington, DC 20549-0609.
Copies of the submission, all subsequent amendments, all written
statements
[[Page 34838]]
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-99-30 and should
be submitted by July 20, 1999.
IV. Commission's Findings and Order Granting Accelerated Approval
of the Proposed Rule Change
The Commission finds that the proposed rule change is consistent
with the Act and the rules and regulations thereunder applicable to a
registered securities association,\6\ and, in particular, the
requirements of Section 15A(b)(5) and Section 15A(b)(6) of the Act.
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\6\ In reviewing this proposal, the Commission has considered
its impact on efficiency, competition, and capital formation. 15
U.S.C. 78c(f).
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Section 15A(b)(5) requires that the rules of a registered
securities association provide for the equitable allocation of
reasonable dues, fees, and other charges among members and issuers
using any facility or system which the association operates or
controls. The proposal amends the entry fees and annual fees paid by
foreign issuers listed on the Nasdaq National Market. These fees are
proposed to be based on a foreign issuer's number of outstanding shares
trading in the United States \7\ The Commission finds that this number
is reasonable because it represents the number of shareholders that
receive the benefits of listing on Nasdaq Stock Market. The Commission
also finds that the new fees are equitably allocated among foreign
issuers because all foreign issuers are subject to the same fee
calculation. Moreover, the Commission finds that the fees are
reasonably allocated among all issuers, foreign and domestic, because
they are based upon the benefits derived by each issuer.
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\7\ The Commission notes that the New York Stock Exchange
(``NYSE'') employs the same calculation for determining initial fees
and annual fees for its foreign issuers. See NYSE Listed Company
Manual 902.04.
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Section 15A(b)(6) requires, among other things, that the rules of a
registered securities association be designed to promote just and
equitable principles of trade and not be designed to permit unfair
discrimination between customers, issuers, brokers, or dealers. The
proposal applies equally to all foreign issuers that trade in the
United States on the Nasdaq stock Market, thus it is not designed to
permit unfair discrimination among foreign issuers. In addition, as
discussed above, the proposal should not permit unfair discrimination
among all issuers because the fees are based upon an issuer's usage of
the Nasdaq Stock market.
Finally, the Commission notes that the proposed change to the
annual fees are to be made effective as of January 1, 1999. The
Commission finds that since the proposed change reduces the amount of
fees owed by foreign issuers and that as a result of this proposed
change foreign issuers will be given a credit for the higher fees paid
thus far in 1999 to be applied to future annual fees that it is
consistent with the Act to make these changes effective retroactively.
The Commission finds good cause to approve the proposal prior to
the thirtieth day after the date of publication of notice of the filing
in the Federal Register. The proposal reduces the amount of entry fees
and annual fees to be paid by foreign issuers. These reductions do not
raise any new or novel regulatory issues. Accordingly, the Commission
believes that it is consistent with Sections 15A(b)(5) and (6) to
approve the proposed rule change on an accelerated basis.
V. Conclusion
It is therefore ordered, pursuant to Section 19(b)(2) of the
Act,\8\ that the proposed rule change (File No. SR-NASD-99-30) is
hereby approved.
\8\ 15 U.S.C. 78s(b)(2).
For the Commission, by the Division of Market Regulation,
pursuant to delegated authority.\9\
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\9\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 99-16498 Filed 6-28-99; 8:45 am]
BILLING CODE 8010-01-M