[Federal Register Volume 66, Number 231 (Friday, November 30, 2001)]
[Notices]
[Pages 59827-59830]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 01-29714]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-45101; File No. SR-NASD-2001-76]
Self-Regulatory Organizations; Notice of Filing of Proposed Rule
Change and Amendment No. 1 Thereto by the National Association of
Securities Dealers, Inc. Amending NASD Rules 4510, 4520 and 4530
Relating to Issuer Entry and Annual Fee Schedules
November 23, 2001.
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 31, 2001, the National Association of Securities Dealers,
Inc. (``NASD'' or ``Association'') through its subsidiary The Nasdaq
Stock Market, Inc. (``Nasdaq'') filed with the Securities and Exchange
Commission (``Commission'') the proposed rule change as described in
Items I, II, and III below, which Items have been prepared by the NASD.
Amendment No. 1 was filed on November 21, 2001.\3\ The Commission is
publishing this notice to solicit comments on the proposed rule change,
as amended, from interested persons.
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\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4
\3\ See letter from Sara Nelson Bloom, Associate General
Counsel, Nasdaq, to Katherine A. England, Assistant Director,
Division of Market Regulation (``Division''), Commission, dated
November 21, 2001 (``Amendment No. 1''). In Amendment No. 1, the
NASD made clarifying changes to the rule text, provided greater
detail as to the basis for the proposed rule change, deleted all
references to its request for accelerated approval, and requested
that the proposed fees apply as of January 1, 2002.
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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 the Commission a proposed rule change to
amend Association Rules 4510, 4520 and 4530 pertaining to Issuer Entry
and Annual Fee Schedules for the National and SmallCap Markets for both
domestic and non-U.S. listings and make conforming changes.
The text of the proposed rule change appears below. New text is in
italics. Deletions are in brackets.
* * * * *
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) 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 13 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 16 million shares $90,000]
(1) When a domestic Issuer, or foreign Issuer raising capital in
conjunction with its Nasdaq listing, 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 fee calculated on total
shares outstanding, which includes a one-time company listing fee of
$5,000 ($1,000 of which is a non-refundable processing fee), according
to the following schedule:
Up to 30 million shares $100,000
30+ to 50 million shares $125,000
Over 50 million shares $150,000
(2) When a foreign Issuer not raising capital in conjunction with
its Nasdaq listing, including American Depositary Receipts (ADRs),
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 fee calculated on total shares outstanding, which includes a
one-time company listing fee of $5,000 ($1.000 of which is a non-
refundable processing fee), according to the following schedule:
Up to 3 million shares $50,000
3+ to 5 million shares $75,000
5+ to 30 million shares $100,000
30+ to 50 million shares $125,000
Over 50 million shares $150,000
[(2)](3) Total shares outstanding means the aggregate of all
classes of equity securities to be included in [t]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)] (4) The Board of Directors of The Nasdaq Stock Market, Inc.
or its designee may, in its discretion, defer or waive all or any part
of the Entry fee prescribed herein.
[(4)] (5) If the application is withdrawn or is not approved, the
Entry fee (less the non-refundable processing fee) shall be refunded.
(b) Additional Shares
(1)-(4) No Change
(c) Annual Fee--Domestic and Foreign Issues
(1) [As of January 1, 1998, t]The Issuer of each class of
securities, other than an ADR, that is a domestic or foreign issue
listed in [t]The Nasdaq National Market shall pay to The Nasdaq Stock
Market, Inc. an Annual fee calculated on total shares outstanding
according to the following schedule:
[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]
Up to 10 million shares $21,225
10+ to 25 million shares $26,500
25+ to 50 million shares $29,820
50+ to 75 million shares $39,150
75+ to 100 million shares $51,750
Over 100 million shares $60,000
(2)-(3) No Change
(4) [The Annual fee shall be based on the total shares outstanding
of the class] Total shares outstanding means the aggregate of all
classes of equity securities included in [t]The Nasdaq National Market
as shown in the Issuer's most recent periodic report required to be
filed with the Issuer's appropriate
[[Page 59828]]
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 Depositary Receipts (ADRs)
(1) The Issuer of each class of securities that is an ADR listed in
[t]The Nasdaq National Market shall pay to The Nasdaq Stock Market,
Inc. an Annual fee [to be computed as follows with a maximum Annual fee
of $8,000 per Issuer] calculated on ADRs outstanding according to the
following schedule not to exceed $30,000 per Issuer:
Up to 10 million ADRs $10,000
10+ to 25 million ADRs $15,000
25+ to 50 million ADRs $20,000
50+ to 75 million ADRs $22,500
75+ to 100 million ADRs $25,000
Over 100 million ADRs $30,000
[(A) a $2,000 Nasdaq National Market participation fee; and (B) the
sum of $500 or $.0005 per share outstanding, whichever is higher, up to
a maximum of $6,000 for class of securities listed in the Nasdaq
National Market.]
(2) [The Annual fee shall be based on the total shares outstanding
of the class] ADRs outstanding means the aggregate of all classes of
ADRs included in [t]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.
(3)-(4) No change
4520. The Nasdaq SmallCap Market
(a) Entry Fee
(1) When an Issuer submits an application for inclusion of any
class of its securities, other than convertible debentures, in the
Nasdaq SmallCap Market, it shall pay to The Nasdaq Stock Market,
Inc.[:] a fee calculated on total shares outstanding, which includes a
one-time company listing fee of $5,000 ($1,000 of which is a non-
refundable processing fee), according to the following schedule:
Up to 1 million shares $9,500
1+ to 5 million shares $19,000
5+ to 10 million shares $30,875
10+ to 15 million shares $40,375
Over 15 million shares $47,500
[(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
securities listed, a fee to be computed as follows, with a maximum
Entry fee for all classes of securities listed, regardless of the dates
those securities are listed, of $10,000 per Issuer (inclusive of the
$5,000 company listing fee)
(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.*
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[* 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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(ii) Convertible Debentures
$1,000 or $50 per million dollars face amount of debentures
outstanding, whichever is higher.]
(2) When an Issuer submits an application for inclusion of any
class of convertible debentures in The Nasdaq SmallCap Market, it shall
pay to The Nasdaq Stock Market, Inc. a one-time company listing fee of
$5,000 (which shall include a $1,000 non-refundable processing fee) and
a fee of $1,000 or $50 per million dollars face amount of debentures
outstanding, whichever is higher.
[(2)] (3) The Board of Directors of The Nasdaq Stock Market, Inc.
or its designee may, in its discretion, defer or waive all or any part
of the Entry fee prescribed herein.
[(3) The Entry fee shall be based on the total shares outstanding
of the class] (4) Total shares outstanding means the aggregate of all
classes of equity securities to be included in The Nasdaq SmallCap
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.
[(4)] (5) If the application is withdrawn or is not approved, the
Entry fee (less the non-refundable processing fee) shall be refunded.
(b) Additional Shares
(1)-(4) No Change
(c) Annual Fee[--Domestic and Foreign Issues]
(1) [As of January 1, 1993, t]The Issuer of a class of securities
that is a domestic or foreign issue, including American Depositary
Receipts (ADRs), listed in The Nasdaq SmallCap Market shall pay to The
Nasdaq Stock Market, Inc. an Annual fee to be computed as follows:
(A) [$4,000] $8,000 for the first issue; plus
(B) [$1,000] $2,000 for each additional issue.
(2) Notwithstanding paragraph (1), the Issuer of each class of
convertible debentures listed in The Nasdaq SmallCap Market shall pay
to The Nasdaq Stock Market, Inc. an Annual fee of $500 or $25 per
million dollars face amount of debentures outstanding, whichever is
higher.
[(2)] (3) The Board of Directors of The Nasdaq Stock Market, Inc.
or its designee may, in its discretion, defer or waive all or any part
of the Annual fee prescribed herein.
[(3)] (4) If a class of securities is removed from The Nasdaq
SmallCap Market, that portion of the Annual fees for such class of
securities attributable to the months following the date of removal
shall not be refunded, except such portion shall be applied to Nasdaq
National Market fees for that calendar year.
[(d) Annual Fee--American Depositary Receipts (ADRs)
(1) The Issuer of each class of securities that is an ADR listed in
The Nasdaq SmallCap Market shall pay to The Nasdaq Stock Market, Inc.
an Annual fee to be computed as follows with a maximum Annual fee of
$6,000 per Issuer
(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 subparagraph (B) of this paragraph.\**\
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\\ [** See notes to Rule 4520(a)(1)(B)(i), above.]
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(B) Convertible Debentures
$500 or $25 per million dollars face amount of debentures
outstanding, whichever is higher.
(2) The Annual fee shall be based on the total amount of
outstanding securities of the class included in The Nasdaq SmallCap
Market as shown in the Issuer's most recent periodic report required to
be filed with the Issuer's appropriate regulatory authority and
received by The Nasdaq Stock Market, Inc.
(3) The Board of Governors of the Association, or its designee may,
in its discretion, defer or waive all or any part of the Annual fee
prescribed herein.
(4) If a class of securities is removed from The Nasdaq SmallCap
Market, that portion of the Annual fees for such class of securities
attributable to the months
[[Page 59829]]
following the date of removal shall not be refunded, except such
portion shall be applied to Nasdaq National Market fees for that
calendar year.]
4530. Other Securities
(a) Entry Fee
(1) When an Issuer submits an application for inclusion of any
Other Security in The Nasdaq National Market qualified for listing
under Rule 4420(f) it shall pay a fee ($1,000 of which is a non-
refundable processing fee) calculated on total shares outstanding
according to the following schedule:
Up to 1 million shares $5,000
1+ to 2 million shares $10,000
2+ to 3 million shares $15,000
3+ to 4 million shares $17,500
4+ to 5 million shares $20,000
5+ to 6 million shares $22,500
6+ to 7 million shares $25,000
7+ to 8 million shares $27,500
8+ to 9 million shares $30,000
9+ to 10 million shares $32,500
10+ to 15 million shares $37,500
Over 15 million shares $45,000
(2) Total shares outstanding means the aggregate of all classes of
Other 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.
(3) The Board of Directors of The Nasdaq Stock Market, Inc. or its
designee may, in its discretion, defer or waive all or any part of the
Entry fee prescribed herein.
(4) If the application is withdrawn or is not approved, the Entry
fee (less the non-refundable processing fee) shall be refunded.
(b) Annual Fee
(1) The Issuer of Other Securities qualified under Rule 4420(f) for
listing on The Nasdaq National Market shall pay to The Nasdaq Stock
Market, Inc. an Annual fee calculated on total shares outstanding
according to the following schedule:
Up to 1 million shares $6,500
1+ to 2 million shares $7,000
2+ to 3 million shares $7,500
3+ to 4 million shares $8,000
4+ to 5 million shares $8,500
5+ to 6 million shares $9,000
6+ to 7 million shares $9,500
7+ to 8 million shares $10,000
8+ to 9 million shares $10,500
9+ to 10 million shares $11,000
10+ to 11 million shares $11,500
11+ to 12 million shares $12,000
12+ to 13 million shares $12,500
13+ to 14 million shares $13,000
14+ to 15 million shares $13,500
15+ to 16 million shares $14,000
Over 16 million shares $14,500
(2) The Board of Directors of The Nasdaq Stock Market, Inc. or its
designee may, in its discretion, defer or waive all or any part of the
Annual fee prescribed herein.
(3) Total shares outstanding means the aggregate of all classes of
Other Securities 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.
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.
A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
(1) Purpose
The NASD \4\ proposes to amend the Association Rules 4510, 4520 and
4530 pertaining to Issuer Entry and Annual fees on The Nasdaq National
Market and SmallCap Market for both domestic and foreign listings. It
has been approximately ten years since the NASD amended the Entry and
Annual fees for SmallCap\5\ and ADR listings,\6\ and four years since
it amended the National Market Entry and Annual fees.\7\ During that
extended period, the NASD has committed increased resources to provide
regulatory oversight, client coverage, and professional services to
listed companies. For example, additional resources were committed to
fund regulatory costs associated with the institution of corporate
governance requirements on The SmallCap Market in 1997. Additionally,
Nasdaq has invested in many market improvements such as Nasdaq Online,
the Nasdaq Marketsite, and enhancements to Nasdaq.com, as well as
market quality improvements such as decimalization, SuperSoes, and the
development of SuperMontage. Nasdaq also plans to commit further
resources to fund service enhancements requested by Nasdaq companies.
In particular, Nasdaq proposes to create a telephone and technology
based corporate-client information center to provide Nasdaq companies
with a range of integrated products and services in a more centralized
and timely manner.\8\
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\4\ The proposed rule change and Amendment No. 1 thereto was
submitted by the NASD on behalf of its subsidiary, Nasdaq. Telephone
conversation between John Nachmann, Senior Attorney, Nasdaq, and
Terri Evans, Assistant Director, Division, Commission, on November
21, 2001.
\5\ Telephone conversation between John Nachmann, Senior
Attorney, Nasdaq, and Christopher Solgan, Law Clerk, Division,
Commission, on November 23, 2001 (clarifying the date of last
change). See Securities Exchange Act Release No. 30143 (January 2,
1992), 57 FR 726 (January 8, 1992).
\6\ Telephone conversation between John Nachmann, Senior
Attorney, Nasdaq, and Christopher Solgan, Law Clerk, Division,
Commission, on November 23, 2001 (clarifying the date of last
change). See Securities Exchange Act Release No. 28731 (January 2,
1991), 59 FR 906 (January 9, 1991).
\7\ See Securities Exchange Act Release No. 39613 (February 2,
1998), 63 FR 6789 (February 10, 1998).
\8\ See Amendment No. 1, supra note 3.
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The NASD proposes to increase Entry and Annual fees for The Nasdaq
National Market, including American depositary Receipts (``ADRs'').
Nasdaq National Market Entry fees would be split into two fee
schedules; one schedule for all U.S. Issuers and foreign Issuers
raising capital in conjunction with their listing on Nasdaq; and
another schedule for foreign Issuers that are not raising capital in
connection with their listing. This second schedule has somewhat lower
fees for foreign listings under 5 million shares, in recognition of the
fact that these listings are non-capital raising and generally
represent secondary market listings. The NASD will also increase its
existing National Market Annual fee structure.
The NASD proposes to increase Entry and Annual fees for The Nasdaq
SmallCap Market as well. ADRs on the SmallCap Market will follow the
same fee schedule as domestic and foreign issues. Finally, the NASD
intends to add a new fee schedule to the NASD Rule 4500 Series for
Other Securities qualified under NASD Rule 4420(f). Finally, the NASD
has requested that the new fees apply as of January 1, 2002 in order to
be consistent with the expectations of Nasdaq listed companies and to
ease administration of the fees.\9\
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\9\ See Amendment No. 1, supra note 3.
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(2) Statutory Basis
The NASD believes that the proposed rule change is consistent with
the provisions of sections 15A(b)(5) \10\ and
[[Page 59830]]
(6) \11\ of the Act. The proposed rule change is consistent with
section 15A(b)(5) \12\ in that it provides for the equitable allocation
of reasonable dues, fees, and other charges among Issuers using the
Nasdaq system. The proposed rule change is also consistent with section
15A(b)(6) \13\ in that 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.
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\10\ 15 U.S.C. 78o-3(b)(5).
\11\ 15 U.S.C. 78o-3(b)(6).
\12\ 15 U.S.C. 78o-3(b)(5).
\13\ 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
The NASD neither solicited nor received written comments.
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 Exchange 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, including whether the proposed rule
change, as amended, 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 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
filings will also be available for inspection and copying at the
principal office of the Association. All submissions should refer to
File No. SR-NASD-2001-76 and should be submitted by December 21, 2001.
For the Commission, by the Division of Market Regulation,
pursuant to delegated authority.\14\
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\14\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 01-29714 Filed 11-29-01; 8:45 am]
BILLING CODE 8010-01-M