[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