[Federal Register Volume 83, Number 43 (Monday, March 5, 2018)]
[Notices]
[Pages 9354-9357]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-04419]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-82791; File No. SR-NASDAQ-2018-015]


Self-Regulatory Organizations; The Nasdaq Stock Market LLC; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To 
Modify IM-5900-7 To Update the Values of, and Permit a Third-Party 
Provider Selected by Nasdaq to Offer, Certain Complimentary Services 
Provided to Certain Newly Listing Companies Pursuant to the Rule

February 28, 2018.
    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 February 15, 2018, The Nasdaq Stock Market LLC (``Nasdaq'' or 
``Exchange'') filed with the Securities and Exchange Commission 
(``SEC'' or ``Commission'') the proposed rule change as described in 
Items I and II below, which Items have been prepared by the Exchange. 
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 Substance 
of the Proposed Rule Change

    The Exchange proposes to modify IM-5900-7, which describes the 
package of complimentary services provided to certain new listings, to 
update the value of the services and allow services to be provided 
either by Nasdaq Corporate Solutions or a third-party service provider 
selected by Nasdaq.
    The text of the proposed rule change is available on the Exchange's 
website at http://nasdaq.cchwallstreet.com, at the principal office of 
the Exchange, and at the Commission's Public Reference Room.

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 Exchange 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 Exchange 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 offers complimentary services under IM-5900-7 to companies 
listing on the Nasdaq Global and Global Select Markets in connection 
with an initial public offering (other than a company listed under IM-
5101-2), upon emerging from bankruptcy, in connection with a spin-off 
or carve-out from another company, or in conjunction with a business 
combination that satisfies the conditions in Nasdaq IM-5101-2(b) 
(``Eligible New Listings'') and to companies (other than a company 
listed under IM-5101-2) switching their listing from the New York Stock 
Exchange (``NYSE'') to the Global or Global Select Markets (``Eligible 
Switches'').\3\ Nasdaq believes that the complimentary service program 
offers valuable services to newly listing companies, designed to help 
ease the transition of becoming a public company or switching markets, 
makes listing on Nasdaq more attractive to these companies, and also 
provides Nasdaq Corporate Solutions the opportunity to demonstrate the 
value of its services and forge a relationship with the company. The 
services offered include a whistleblower hotline, investor relations 
website, disclosure services for earnings or other press releases, 
webcasting, market analytic tools, and may include market advisory 
tools such as stock surveillance.\4\
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    \3\ See Exchange Act Release No. 65963 (December 15, 2011), 76 
FR 79262 (December 21, 2011) (SR-NASDAQ-2011-122) (adopting IM-5900-
7); Exchange Act Release No. 72669 (July 24, 2014), 79 FR 44234 
(July 30, 2014) (SR-NASDAQ-2014-058) (adopting changes to IM-5900-
7); Exchange Act Release No. 78806 (September 9, 2016), 81 FR 63523 
(September 15, 2016) (SR-NASDAQ-2016-098); Exchange Act Release No. 
79366 (November 21, 2016), 81 FR 85663 (November 28, 2016) (SR-
NASDAQ-2016-106).
    \4\ In addition, all companies listed on Nasdaq receive services 
from Nasdaq, including Nasdaq Online and the Market Intelligence 
Desk.
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    Nasdaq proposes to update the values of the services contained in 
IM-5900-7 to their current values. Depending on a company's market 
capitalization and whether it is an Eligible New Listing or an Eligible 
Switch, the total revised value of the services provided ranges from 
$150,000 to $824,000, and one-time development fees of approximately 
$5,000 are waived.\5\
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    \5\ The exact values are set forth in proposed IM-5900-7. Under 
the current rule the stated value of the services provided ranges 
from $141,000 to $754,000, and one-time development fees of 
approximately $3,500 are waived. In describing the total value of 
the services for companies that can select more than one market 
advisory tool, Nasdaq presumes that a company would use stock 
surveillance, which has an approximate retail value of $56,000 as 
revised ($51,000 previously), and global targeting, which has an 
approximate retail value of $44,000 as revised ($40,000 previously). 
A company using the stock surveillance tool would be unlikely also 
to use the monthly ownership analytics and event driven targeting 
because there is considerable overlap between these services. 
Companies could, of course, select different combinations of the 
four offered services that do not overlap, but these other 
combinations would have lower total approximate retail values. See 
Exchange Act Release No. 78392 (July 22, 2016), 81 FR 49705, 49706 
n.10 (July 28, 2016) (Notice of Filing for SR-NASDAQ-2016-098).

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[[Page 9355]]

    In addition, on January 29, 2018, Nasdaq, Inc., the parent of 
Nasdaq, announced that it had entered into a definitive agreement to 
sell the Public Relations Solutions and Digital Media Services units 
within its Corporate Solutions business.\6\ Given that these units 
include the investor relations website, disclosure services, audio 
webcasting and whistleblower hotline services offered under Nasdaq Rule 
IM-5900-7, Nasdaq proposes to modify IM-5900-7 to state that the 
services will be provided either by Nasdaq Corporate Solutions or a 
third-party service provider selected by Nasdaq. In the event that 
Nasdaq Corporate Solutions no longer offers the services, this change 
will allow Nasdaq to arrange for an alternate provider, such as the 
purchaser of these units.\7\
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    \6\ See http://www.globenewswire.com/news-release/2018/01/29/1313528/0/en/West-Corporation-Agrees-to-Acquire-Nasdaq-s-Public-Relations-Solutions-and-Digital-Media-Services-Businesses.html. This 
transaction is expected to close in the second quarter of 2018.
    \7\ Upon completion of the announced transaction, the purchaser 
of the whistleblower hotline, investor relations website, disclosure 
and audio webcasting services will be expected to provide those 
services under IM-5900-7 pursuant to an exclusive agreement, subject 
to meeting specific service level commitments. Nasdaq Corporate 
Solutions is expected to continue to provide the market analytic and 
market advisory tools, although under the proposed rule change 
Nasdaq could instead select a third party provider for these 
services in the future.
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    Finally, Nasdaq proposes to: (i) Update the preamble of IM-5900-7 
to reflect the expiration of a transitional period that previously 
allowed companies listed at the time of changes to the complimentary 
services package in 2016 to choose to receive the package in effect at 
the time of their listing or the revised package; and (ii) clarify that 
the services described in IM-5900-7(a) are the only corporate solutions 
services offered to companies, to the extent they qualify pursuant to 
the rule. All companies will continue to receive additional services, 
such as Nasdaq Online and the Market Intelligence Desk, on an equal 
basis.
2. Statutory Basis
    Nasdaq believes that the proposed rule change is consistent with 
the provisions of Section 6 of the Act,\8\ in general, and Sections 
6(b)(4),\9\ 6(b)(5),\10\ and 6(b)(8),\11\ in particular, in that the 
proposal is designed, among other things, to provide for the equitable 
allocation of reasonable dues, fees, and other charges among Exchange 
members and issuers and other persons using its facilities and to 
promote just and equitable principles of trade, and is not designed to 
permit unfair discrimination between issuers, and that the rules of the 
Exchange do not impose any burden on competition not necessary or 
appropriate in furtherance of the purposes of the Act.
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    \8\ 15 U.S.C. 78f.
    \9\ 15 U.S.C. 78f(4).
    \10\ 15 U.S.C. 78f(5).
    \11\ 15 U.S.C. 78f(8).
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    Nasdaq faces competition in the market for listing services,\12\ 
and competes, in part, by offering valuable services to companies. 
Nasdaq believes that it is reasonable to offer complimentary services 
to attract and retain listings as part of this competition. All 
similarly situated companies are eligible for the same package of 
services and the eligibility of companies for services is not changing 
under this proposed rule change. The Commission has previously 
indicated pursuant to Section 19(b) of the Act \13\ that updating the 
values of the services within the rule is necessary,\14\ and Nasdaq 
does not believe this update has an effect on the allocation of fees 
nor does it permit unfair discrimination, as issuers will continue to 
receive the same services. Further, this update will enhance the 
transparency of Nasdaq's rules and the value of the services it offers 
companies, thus promoting just and equitable principles of trade. As 
such, the proposed rule change is consistent with the requirements of 
Section 6(b)(4) and (5) of the Act.
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    \12\ The Justice Department has noted the intense competitive 
environment for exchange listings. See ``NASDAQ OMX Group Inc. and 
IntercontinentalExchange Inc. Abandon Their Proposed Acquisition Of 
NYSE Euronext After Justice Department Threatens Lawsuit'' (May 16, 
2011), available at http://www.justice.gov/atr/public/press_releases/2011/271214.htm.
    \13\ 15 U.S.C. 78s(b).
    \14\ See Exchange Act Release No. 72669 (July 24, 2014), 79 FR 
44234 (July 30, 2014) (SR-NASDAQ-2014-058) (footnote 39 and 
accompanying text: ``We would expect Nasdaq, consistent with Section 
19(b) of the Act, to periodically update the retail values of 
services offered should they change. This will help to provide 
transparency to listed companies on the value of the free services 
they receive and the actual costs associated with listing on 
Nasdaq.'')
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    Nasdaq believes that the proposed change to allow services to be 
provided by third-party providers, instead of an affiliated service 
provider, reflects the current competitive environment for exchange 
listings among national securities exchanges, and is appropriate and 
consistent with Section 6(b)(8) in furtherance of the purposes of the 
Act. Specifically, Nasdaq believes that the current competitive 
environment for listings necessitates that it continue to offer 
services described in IM-5900-7 through a third-party service provider 
if its affiliate no longer offers those services. Further, Nasdaq 
believes that the ability to select the third-party providers of these 
services will enable it to select partners Nasdaq believes will provide 
quality service to listed companies and make adjustments if that 
quality is not maintained.\15\ While this may disadvantage third-party 
providers that are not selected, the impact on competition among 
service providers is expected to remain small, as it is today where 
Nasdaq Corporate Solutions provides the services directly,\16\ and does 
not impose an inappropriate burden on competition because issuers are 
not forced or required to utilize the complimentary products and 
services and other service providers can choose to offer their own 
complimentary services to issuers.
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    \15\ Nasdaq expects that following the announced transaction it 
will initially rely on the purchaser of the whistleblower hotline, 
investor relations website, disclosure and audio webcasting services 
as its selected third-party provider, subject to that provider 
meeting specific service level commitments.
    \16\ See Exchange Act Release No. 65963, 76 FR at 79266-67.
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    Nasdaq notes that the proposed change to allow third-party service 
providers does not affect the Commission's prior conclusion that 
offering these services is an equitable allocation of reasonable dues, 
fees, and other charges among exchange members and issuers and other 
persons using its facilities and that the rule is designed to promote 
just and equitable principles of trade, and is not designed to permit 
unfair discrimination between issuers, consistent with Sections 6(b)(4) 
and 6(b)(5) of the Act because the underlying services will not change 
and all eligible companies will be given the identical choice of 
service providers.
    Nasdaq believes that clarifying that the services described in IM-
5900-7(a) are the only corporate solutions services offered to 
companies to the extent they qualify pursuant to the rule \17\ is

[[Page 9356]]

consistent with Section 6(b)(5) of the Act. Nasdaq represents, and this 
proposed rule change will help ensure, that individual listed companies 
are not given specially negotiated packages of products or services to 
list, or remain listed, which the Commission has previously stated 
would raise unfair discrimination issues under the Act.\18\
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    \17\ All companies listed on Nasdaq receive certain services 
from Nasdaq on an equal basis, including Nasdaq Online and the 
Market Intelligence Desk.
    \18\ See Exchange Act Release No. 79366, 81 FR 85663 at 85665 
(citing Securities Exchange Act Release No. 65127 (August 12, 2011), 
76 FR 51449, 51452 (August 18, 2011) (approving NYSE-2011-20)).
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    Finally, Nasdaq notes that the proposed update to the preamble of 
IM-5900-7 to reflect the expiration of old transitional periods is 
consistent with Section 6(b)(5) of the Act because it will clarify the 
rule without making any substantive change.

B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange does not believe that the proposed rule change will 
impose any burden on competition not necessary or appropriate in 
furtherance of the purposes of the Act. As noted above, Nasdaq faces 
competition in the market for listing services, and competes, in part, 
by offering valuable services to companies. The proposed rule changes 
reflect that competition, but do not impose any burden on the 
competition with other exchanges.
    Nasdaq also does not believe that allowing a third-party selected 
by Nasdaq to provide certain services will impose any burden on 
competition not necessary or appropriate in furtherance of the Act. 
Such selection will allow Nasdaq to select third-party service 
providers that it believes will provide quality service to listed 
companies and make adjustments if that quality is not maintained. 
Multiple third-party vendors offer similar services and listed 
companies are not required to accept any discounted products and 
services as a condition to listing. Nasdaq-listed companies are free to 
purchase similar products and services from other vendors, or not to 
use any such products and services, instead of accepting the products 
and services offered by the Exchange. Other vendors can also choose to 
offer their own complimentary packages to compete with Nasdaq's 
offering. Further, complimentary services are only available to a 
company for either two or four years. Thus, Nasdaq does not believe 
that the proposed rule change will adversely impact competition for 
such products and services in a manner 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

    No written comments were either solicited or received.

III. Date of Effectiveness of the Proposed Rule Change and Timing for 
Commission Action

    Because the proposed rule change does not (i) significantly affect 
the protection of investors or the public interest; (ii) impose any 
significant burden on competition; and (iii) become operative for 30 
days from the date on which it was filed, or such shorter time as the 
Commission may designate, it has become effective pursuant to Section 
19(b)(3)(A) of the Act \19\ and Rule 19b-4(f)(6) thereunder.\20\
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    \19\ 15 U.S.C. 78s(b)(3)(A).
    \20\ 17 CFR 240.19b-4(f)(6). As required under Rule 19b-
4(f)(6)(iii), the Exchange provided the Commission with written 
notice of its intent to file the proposed rule change, along with a 
brief description and the text of the proposed rule change, at least 
five business days prior to the date of filing of the proposed rule 
change, or such shorter time as designated by the Commission.
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    A proposed rule change filed pursuant to Rule 19b-4(f)(6) under the 
Act \21\ normally does not become operative for 30 days after the date 
of its filing. However, Rule 19b-4(f)(6)(iii) \22\ permits the 
Commission to designate a shorter time if such action is consistent 
with the protection of investors and the public interest. The Exchange 
has asked the Commission to waive the 30-day operative delay so that 
the accurate values of the complimentary services can immediately be 
reflected in Nasdaq's rules and so that Nasdaq can rely upon a third-
party service provider if it chooses to do so. Because waiver of the 
operative delay would increase transparency in the Exchange's rules by 
allowing the Exchange to immediately update the current market values 
of the complimentary services it provides to certain newly listing 
companies, the Commission believes that waiver of the operative delay 
is consistent with the protection of investors and the public interest. 
Accordingly, the Commission hereby waives the operative delay and 
designates the proposal as operative upon filing.\23\
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    \21\ 17 CFR 240.19b-4(f)(6).
    \22\ 17 CFR 240.19b-4(f)(6)(iii).
    \23\ For purposes only of waiving the 30-day operative delay, 
the Commission has also considered the proposed rule's impact on 
efficiency, competition, and capital formation. See 15 U.S.C. 
78c(f).
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    At any time within 60 days of the filing of the proposed rule 
change, the Commission summarily may temporarily suspend such rule 
change if it appears to the Commission that such action is necessary or 
appropriate in the public interest, for the protection of investors, or 
otherwise in furtherance of the purposes of the Act.

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 email to [email protected]. Please include 
File Number SR-NASDAQ-2018-015 on the subject line.

Paper Comments

     Send paper comments in triplicate to Secretary, Securities 
and Exchange Commission, 100 F Street NE, Washington, DC 20549-1090.

All submissions should refer to File Number SR-NASDAQ-2018-015. This 
file number should be included on the subject line if email 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 website (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 website viewing and printing in 
the Commission's Public Reference Room, 100 F Street NE, Washington, DC 
20549 on official business days between the hours of 10:00 a.m. and 
3:00 p.m. Copies of such filing also will be available for inspection 
and copying at the principal office of the Exchange. All comments 
received will be posted without change. Persons submitting comments are 
cautioned that we do not redact or edit personal identifying 
information from comment submissions. You should submit only 
information that you wish to make available publicly. All submissions 
should refer to File Number SR-NASDAQ-2018-015, and should be submitted 
on or before March 26, 2018.


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    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\24\
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    \24\ 17 CFR 200.30-3(a)(12).
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Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2018-04419 Filed 3-2-18; 8:45 am]
 BILLING CODE 8011-01-P