[Federal Register Volume 69, Number 208 (Thursday, October 28, 2004)]
[Notices]
[Pages 62926-62928]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E4-2876]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-50577; File No. SR-NASD-2004-128]


Self-Regulatory Organizations; National Association of Securities 
Dealers, Inc.; Notice of Filing of Proposed Rule Change To Modify the 
Annual Fee for Certain Issuers Listed on the Nasdaq Stock Market, Inc.

October 21, 2004.
    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 August 25, 2004, the National Association of Securities Dealers, 
Inc. (``NASD''), through its subsidiary, The Nasdaq Stock Market, Inc. 
(``Nasdaq''), filed with the Securities and Exchange Commission 
(``Commission'' or ``SEC'') the proposed rule change as described in 
Items I, II, and III below, which Items have been prepared by Nasdaq. 
The Commission is publishing this notice to solicit comments on the 
proposed rule change from interested persons.
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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 the 
Substance of the Proposed Rule Change

    Nasdaq proposes to amend NASD Rules 4510(c) and 4520(c) to modify 
the annual fee for domestic and foreign issuers (other than American 
Depositary Receipts (``ADRs'')) listed on the Nasdaq National Market 
and for all issuers listed on The Nasdaq SmallCap Market. Nasdaq will 
implement the proposed rule change on January 1, 2005, for issuers 
listed on Nasdaq as of the date of approval of this rule filing, and 
upon approval for all new listings after the date of approval of this 
rule filing. In addition, Nasdaq proposes to adopt new IM-4520-1 to 
clarify that no fees are due from issuers described in Rule 4320(c).
    The text of the proposed rule change is below. Proposed new 
language is in italics; proposed deletions are in brackets.\3\
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    \3\ Changes are marked to the rule text that appears in the 
electronic NASD Manual found at www.nasd.com, which was current as 
of the date of this filing. No pending rule filings would affect 
Rule 4510(c) and 4520(c). Telephone conversation between Arnold 
Golub, Office of General Counsel, Amex, and Richard Holley, 
Attorney, Division of Market Regulation, Commission, dated October 
14, 2004.
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* * * * *

4510. The Nasdaq National Market

    (a)-(b) No change.
    (c) Annual Fee--Domestic and Foreign Issues.
    (1) The issuer of each class of securities, other than an ADR, that 
is a domestic or foreign issue listed in 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 10 million shares [$21,225] $24,500
10+ to 25 million shares [$26,500] $30,500
25+ to 50 million shares [$29,820] $34,500
50+ to 75 million shares [$39,150] $44,500
75+ to 100 million shares [$51,750] $61,750
Over 100 million shares [$60,000] $75,000

    (2)-(4) No change.
    (d)-(e) No change.
* * * * *

4520. The Nasdaq SmallCap Market

    (a)-(b) No change.
    (c) Annual Fee
    (1) The issuer of [a] each 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:] calculated on total 
shares outstanding according to the following schedule:

Up to 10 million shares $17,500
Over 10 million shares $21,000

    [(A) 15,000 for the first issue if it has total shares outstanding 
of up to 10 million shares; or
    (B) $16,000 for the first issue if it has total shares outstanding 
of 10 million or more shares; plus
    (C) $2,000 for each additional issue.
    (D) For companies with more than one issue, the first issue is the 
company's common stock or common stock equivalent with the highest 
total shares outstanding. For companies with no common stock or common 
stock equivalent, the first issue is the issue with the highest total 
shares outstanding.]
    (2)-(4) No change.
    (5) Total shares outstanding means the aggregate of all classes of 
equity securities 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 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.

[[Page 62927]]

    (d) No change.
* * * * *

IM-4520-1. Foreign Exempt Securities

    Rules 4520(b)(4) and 4520(c)(3) provide Nasdaq with the discretion 
to waive all or part of the additional share and annual listing fees 
otherwise due. Pursuant to that authority, Nasdaq has determined to 
waive any additional share or annual fee that otherwise would be due 
from any issuer described in Rule 4320(c).
* * * * *

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

    In its filing with the Commission, Nasdaq 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. Nasdaq 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
    Nasdaq is proposing to modify the annual fees for domestic and 
foreign issuers (other than ADRs) listed on the Nasdaq National Market 
and for all issuers listed on The Nasdaq SmallCap Market. Pursuant to 
the rule change, annual fees on the Nasdaq National Market would 
increase from a minimum of $21,225 and a maximum of $60,000 to a 
minimum of $24,500 and a maximum of $75,000. Annual fees on The Nasdaq 
SmallCap Market would increase from a minimum of $15,000 and a maximum 
of $16,000 to a minimum of $17,500 and a maximum of $21,000. In 
addition, Nasdaq is proposing to eliminate the separate $2,000 charge 
to SmallCap Market issuers that list additional classes of stock. 
Instead of this separate charge, Nasdaq will aggregate shares 
outstanding for all issues of stock in determining the annual fee, as 
is currently done on the Nasdaq National Market.
    These fee increases are necessary to support the ongoing cost of 
issuer services and to fund future product and service investments. 
Nasdaq annual fees were last increased in 2001 for National Market 
issuers and in 2003 for SmallCap Market issuers. The services added 
since the prior increase include enhancements to the trading systems 
such as the Closing Cross, a centralized order facility that brings 
together the buy and sell interest in specific NASDAQ stocks and 
executes all shares for each stock at a single price, and continued 
improvements to Nasdaq Online, the Market Intelligence Desk, the Nasdaq 
Corporate Services Network, and NASDAQ.com. In addition, the cost of 
monitoring issuers for ongoing compliance with Nasdaq's listing 
standards has increased, in part as a result of Nasdaq's enhanced 
corporate governance requirements, which were approved in November 
2003.
    The new annual fee schedule would be effective January 1, 2005 for 
all issuers listed on The Nasdaq Stock Market at the time of approval 
of this rule filing. For newly listing issuers, the new annual fee 
schedule would be effective once approved.
    In addition, Nasdaq is proposing to adopt new Interpretive Material 
that clarifies that issuers exempt from registration with the 
Commission pursuant to SEC Rule 12g3-2(b), which are eligible to be 
quoted on Nasdaq pursuant to Rule 4320(c), are exempt from annual fees 
and additional share fees. These companies are not listed on Nasdaq at 
their own initiative, and have not signed an application or listing 
agreement. As such, Nasdaq believes it would be inequitable to assess 
fees against this small group of uniquely situated issuers.
2. Statutory Basis
    Nasdaq believes that the proposed rule change is consistent with 
the provisions of Section 15A of the Act,\4\ in general, and with 
Section 15A(b)(5) of the Act,\5\ in particular, in that it is designed 
to provide an equitable allocation of reasonable fees and charges among 
issuers listed on Nasdaq.
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    \4\ 15 U.S.C. 78o-3.
    \5\ 15 U.S.C. 78o-3(b)(5).
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B. Self-Regulatory Organization's Statement on Burden on Competition

    Nasdaq 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 by Nasdaq.

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, including whether the proposed rule 
change is consistent with the Act. Comments may be submitted by any of 
the following methods:

Electronic Comments

     Use the Commission's Internet comment form (http://www.sec.gov/rules/sro.shtml); or
     Send an e-mail to [email protected]. Please include 
File Number SR-NASD-2004-128 on the subject line.

Paper Comments

     Send paper comments in triplicate to Jonathan G. Katz, 
Secretary, Securities and Exchange Commission, 450 Fifth Street, NW., 
Washington, DC 20549-0609.
    All submissions should refer to File Number SR-NASD-2004-128. This 
file number should be included on the subject line if e-mail is used. 
To help the Commission process and review your comments more 
efficiently, please use only one method. The Commission will post all 
comments on the Commission's Internet Web site (http://www.sec.gov/rules/sro.shtml). 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, 450 Fifth 
Street, NW., Washington, DC 20549. Copies of such filing also will be 
available for

[[Page 62928]]

inspection and copying at the principal office of the NASD. All 
comments received will be posted without change; the Commission does 
not edit personal identifying information from submissions. You should 
submit only information that you wish to make available publicly. All 
submissions should refer to File Number SR-NASD-2004-128 and should be 
submitted on or before November 18, 2004.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\6\
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    \6\ 17 CFR 200.30-3(a)(12).

J. Lynn Taylor,
Assistant Secretary.
 [FR Doc. E4-2876 Filed 10-27-04; 8:45 am]
BILLING CODE 8010-01-P