[Federal Register Volume 72, Number 173 (Friday, September 7, 2007)]
[Notices]
[Pages 51485-51486]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E7-17669]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-56339; File No. SR--NASDAQ-2007-042]
Self-Regulatory Organizations; The NASDAQ Stock Market LLC; Order
Approving a Proposed Rule Change, as Modified by Amendment No. 1, To
Modify the Entry and Annual Fees Paid by a Company That Lists on Nasdaq
Upon Emerging From Bankruptcy
August 30, 2007.
I. Introduction
On April 13, 2007, The NASDAQ Stock Market LLC (``Nasdaq'' or
``Exchange'') filed with the Securities and Exchange Commission
(``Commission''), pursuant to Section 19(b)(1) of the Securities
Exchange Act of 1934 (``Act'' or ``Exchange Act'') \1\ and Rule 19b-4
thereunder,\2\ a proposal to modify the entry and annual fees paid by a
company that lists on Nasdaq upon emerging from bankruptcy. The
Exchange filed Amendment No. 1 to the proposed rule change on June 28,
2007. The proposal was published for comment in the Federal Register on
July 25, 2007.\3\ The Commission received no comments on the proposal.
This order approves the proposed rule change, as modified by Amendment
No. 1.
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\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
\3\ See Securities Exchange Act Release No. 56092 (June 18,
2007), 72 FR 40915.
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II. Description of the Proposal
The Exchange proposes to modify the fees charged to companies that
list upon emerging from bankruptcy. Specifically, Nasdaq proposes to
waive the entry fee (including the application fee) \4\ that such
companies would otherwise be required to pay. In addition, for
companies listing on the NASDAQ Global Market (including the NASDAQ
Global Select Market), Nasdaq proposes to charge the company the
minimum annual listing fee applicable to companies on that market
(currently $30,000) for the first (prorated) year that
[[Page 51486]]
such a company is listed \5\ and for each of the subsequent two full
calendar years.\6\ Finally, Nasdaq proposes that a company that emerges
from bankruptcy and relists during the same year that it has previously
paid an annual fee will not be required to pay a second annual fee for
that year.
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\4\ Nasdaq's entry fee includes a $5,000 non-refundable
application fee. The proposed waiver would also waive this part of
the fee.
\5\ Nasdaq prorates the annual fee for the year a company lists,
based on the month in which the company lists.
\6\ All domestic companies on the NASDAQ Capital Market pay the
same annual fee.
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The Exchange believes that the proposed fee waivers are justified
by the unique circumstances faced by companies emerging from
bankruptcy. According to the Exchange, these companies typically are
not raising any new capital at the time of listing, so the payment of
entry and listing fees is more burdensome than for companies that are
listing upon an initial public offering. Also, because of the desire in
bankruptcy proceedings to ensure that creditors are paid as much as
possible, the Exchange believes these companies are much more sensitive
to both the initial and continued costs associated with listing. As
such, the Exchange believes the proposed fees are reasonable and
equitably allocated.
The Exchange has represented that the proposed rule change would
not affect its commitment of resources to its regulatory oversight of
the listing process or its other regulatory programs. Nasdaq reports
that historically it has not listed a large number of companies
emerging from bankruptcy in any given year.\7\ Moreover, Nasdaq stated
that it would still conduct a complete review of these companies for
compliance with Nasdaq listing standards in the same manner as any
other company applying for listing on Nasdaq. The company must
successfully complete that review process and demonstrate compliance
with the initial listing requirements prior to being approved for
listing.
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\7\ Nasdaq listed four companies upon their emergence from
bankruptcy from January 1, 2006, through March 31, 2007.
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III. Discussion
After careful consideration, the Commission finds that the proposed
rule change, as amended, is consistent with the requirements of the Act
and the rules and regulations thereunder applicable to a national
securities exchange.\8\ In particular, the Commission finds that the
proposal is consistent with Section 6(b)(4) of the Act,\9\ which
requires that an exchange have rules that provide for the equitable
allocation of reasonable dues, fees, and other charges among its
members and other persons using its facilities. The Commission also
finds that the proposal is consistent with Section 6(b)(5) of the
Act,\10\ which requires, inter alia, that the rules of a national
securities exchange be designed to remove impediments to and perfect
the mechanism of a free and open market and a national market system,
and not designed to permit unfair discrimination between issuers. The
Commission has not received any comments on the proposal. This order
approves the proposed rule change, as modified by Amendment No 1.
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\8\ In approving this proposed rule change, the Commission has
considered the proposed rule's impact on efficiency, competition,
and capital formation. See 15 U.S.C. 78c(f).
\9\ 15 U.S.C. 78f(b)(4).
\10\ 15 U.S.C. 78f(b)(5).
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The Commission notes that a company who relists upon emerging from
bankruptcy has usually paid either an entry fee to the Exchange or a
similar initial listing fee to another national securities exchange at
the time of its initial listing. In addition, with respect to the
application of the minimum annual listing fee to a company which lists
upon emergence from bankruptcy and the waiver of the annual fee for a
company that emerges from bankruptcy and relists during the same year
that it has previously paid an annual fee, the Commission notes that
this fee reduction or waiver is a temporary one, designed to enable
recently bankrupt companies to manage the costs associated with
listing, consistent with the desire in bankruptcy proceeding to ensure
that creditors are paid as much as possible. For these reasons, the
Exchange believes that reduction or waiver of the Exchange's fees in
these cases is equitable.
The Commission also notes that the Exchange has represented that
the waiver of entry fees and the reduction or waiver of annual listing
fees in these limited circumstances should not affect its commitment of
resources to its regulatory oversight of the listing process or its
other regulatory programs.
Further, the proposed fee changes would not have any impact on
whether a company is actually eligible to list on the Exchange. The
Commission expects, and the Exchange has represented, that a full and
independent review of compliance with Nasdaq listing standards will be
conducted for any company seeking to take advantage of the proposed fee
changes, in the same manner as for any company that applies for listing
on the Exchange.
In light of these arguments, the Commission agrees that the
proposed waiver and fee cap, which are retroactively effective to April
13, 2007, the date of the filing of the proposed rule change, do not
constitute an inequitable allocation of reasonable dues, fees, and
other charges, do not permit unfair discrimination between issuers, and
are generally consistent with the Act.
IV. Conclusion
It is therefore ordered, pursuant to Section 19(b)(2) of the
Act,\11\ that the proposed rule change (File No. SR--NASDAQ-2007-042),
as modified by Amendment No. 1, be, and it hereby is, approved.
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\11\ Id.
For the Commission, by the Division of Market Regulation,
pursuant to delegated authority.\12\
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\12\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. E7-17669 Filed 9-6-07; 8:45 am]
BILLING CODE 8010-01-P