[Federal Register Volume 67, Number 3 (Friday, January 4, 2002)]
[Notices]
[Pages 621-622]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 02-178]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-45206; File No. SR-NASD-2001-76]


Self-Regulatory Organizations; Order Granting Accelerated 
Approval to a 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

December 28, 2001.

I. Introduction

    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''), pursuant to section 19(b)(1) 
of the Securities Exchange Act of 1934 (``Act''),\1\ and Rule 19b-4 
thereunder,\2\ a proposed rule change to amend Association Rules 4510, 
4520, and 4530 pertaining to issuer entry and annual fee schedules for 
The Nasdaq National and The Nasdaq SmallCap Markets for both domestic 
and non-U.S. listings as well as additional conforming changes. On 
November 21, 2001, Nasdaq filed Amendment No. 1 to the proposed rule 
change.\3\ The proposed rule change and Amendment No. 1 were published 
for comment in the Federal Register on November 30, 2001.\4\ No 
comments were received regarding the proposed rule change, as amended. 
This order approves the proposed rule change, as amended, on an 
accelerated basis.
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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'').
    \4\ See Securities Exchange Act Release No. 45101 (November 23, 
2001), 66 FR 59827.
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II. Description of the Proposed Rule Change

    The NASD proposed to amend the Association Rules 4510, 4520, 4530 
pertaining to issuer entry and annual fees on The Nasdaq National 
Market and The Nasdaq 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 American Depository 
Receipts (``ADR'') listings,\6\ and four years since it amended The 
Nasdaq National Market entry and annual fees.\7\
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    \5\ See Securities Exchange Act Release No. 30143 (January 2, 
1992), 57 FR 726 (January 8, 1992).
    \6\ 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).
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    The NASD proposed to increase entry and annual fees for The Nasdaq 
National Market, including ADRs. The 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 annual fee structure for The Nasdaq 
National Market.
    The NASD proposed to increase entry and annual fees for The Nasdaq 
SmallCap Market as well. ADRs on The Nasdaq SmallCap Market will follow 
the same annual 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 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.\8\
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    \8\ See Amendment No. 1, supra note 3.
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III. Discussion

    After careful review, the Commission finds that the proposed rule 
change is consistent with the requirements of the Act and the rules and 
regulations thereunder applicable to a national securities 
association.\9\ In particular, the Commission finds that the proposed 
rule change, as amended, is consistent with section 15A(b)(6) of the 
Act \10\ because it is designed to promote just and equitable 
principles of trade. In addition, the Commission finds that the 
proposed rule change, as amended, is consistent with section 15A(b)(5) 
of the Act \11\ because it provides for the equitable allocation of 
reasonable dues, fees, and other charges among members, issuers, and 
other persons using any facility or systems which the association 
operates. Specifically, the increase reflects additional costs that 
Nasdaq has represented it incurs for services provided to issuers. As 
represented by the NASD, it has committed increased resources to 
provide regulatory oversight, client coverage, and professional 
services to listed companies. The Nasdaq represents that additional 
resources were committed to fund regulatory costs associated with the 
institution of corporate governance requirements on The Nasdaq SmallCap 
Market in 1997. Furthermore, Nasdaq represents that it has made several 
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. In 
addition, Nasdaq has represented that it also intends to allocate 
resources to fund service enhancements requested by Nasdaq companies, 
such as creating 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.\12\
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    \9\ In approving this proposal, the Commission has considered 
the proposed rule's impact on efficiency, competition, and capital 
formation. 15 U.S.C. 78c(f).
    \10\ 15 U.S.C. 78o-3(b)(6).
    \11\ 15 U.S.C. 78o-3(b)(5).
    \12\ See Amendment No. 1, supra note 3.
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    Nasdaq seeks to implement the proposed fees on January 1, 2002. In 
order to be consistent with the expectations of Nasdaq listed companies 
and to ease administration of the fees, Nasdaq has requested that the 
Commission find good cause for approving the proposed rule change, as 
amended, prior to the thirtieth day after the date of publication of 
notice of filing thereof in the Federal Register.
    The Commission finds good cause for approving the proposed rule 
change, as amended, prior to the thirtieth day after publication in the 
Federal Register. The Commission notes that the proposed rule change 
and Amendment No. 1 were noticed for the full 21-day comment period and 
the Commission received no comments regarding the proposed rule change, 
as amended. The Commission believes that granting accelerated approval 
to the proposed rule change will allow Nasdaq to implement the new fees 
by January 1, 2002, and will provide issuers with notice and an 
opportunity to budget for the additional costs. Accordingly, the 
Commission finds good cause, consistent with

[[Page 622]]

section 15A(b) \13\ and section 19(b)(2) of the Act \14\ to approve the 
proposed rule change, as amended, on an accelerated basis.
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    \13\ 15 U.S.C. 78o-3(b).
    \14\ 15 U.S.C. 78s(b)(2).
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IV. Conclusion

    For the foregoing reasons, the Commission finds that the proposal, 
as amended, is consistent with the requirements of the Act and rules 
and regulations thereunder.
    It Is Therefore Ordered, pursuant to section 19(b)(2) of the 
Act,\15\ that the proposed rule change (SR-NASDA-2001-76), as amended, 
is approved on an accelerated basis.
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    \15\ Id.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\16\
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    \16\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 02-178 Filed 1-3-02; 8:45 am]
BILLING CODE