[Federal Register Volume 83, Number 248 (Friday, December 28, 2018)]
[Notices]
[Pages 67374-67376]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-28181]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-84880; File No. SR-NASDAQ-2018-103]
Self-Regulatory Organizations; The Nasdaq Stock Market LLC;
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To
Amend the Exchange's All-Inclusive Annual Listing Fees for American
Depositary Receipts
December 20, 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 December 11, 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, II, and III 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 amend the Exchange's all-inclusive annual
listing fees for American Depositary Receipts.
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
The purpose of the proposed rule change is to modify the Exchange's
all-
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inclusive annual listing fees for American Depositary Receipts.
Currently, ADRs listed on Nasdaq pay an all-inclusive annual fee
based on the number of shares they have outstanding, which ranges from
$37,000 to $45,000 on the Capital Market and from $45,000 to $75,000 on
the Global and Global Select Markets.\3\ Nasdaq proposes to amend the
all-inclusive annual fee for ADRs in Listing Rules 5910(b)(2)(B) and
5290(b)(2)(B) to the following amounts, effective January 1, 2019:
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\3\ See Listing Rules 5910(b)(2)(B) and 5920(b)(2)(B).
Specifically, on the Capital Market, the all-inclusive annual fee
for companies listing ADRs with up to 10 million ADRs and other
listed equity securities outstanding (collectively ``Securities
Outstanding'') is $37,000 and for companies with over 10 million
Securities Outstanding it is $45,000. On the Global Market and
Global Select Market, the all-inclusive annual fee for companies
listing ADRs with up to 50 million Securities Outstanding is
$45,000, for companies with 50+ to 75 million Securities Outstanding
it is $52,500, and for companies with over 75 million Securities
Outstanding it is $75,000.
Global/Global Select Markets:
Up to 10 million ADRs and other listed equity securities.. $45,000
10+ to 50 million ADRs and other listed equity securities. $50,000
50+ to 75 million ADRs and other listed equity securities. $60,000
Over 75 million ADRs and other listed equity securities... $80,000
Capital Market:
Up to 10 million ADRs and other listed equity securities.. $42,000
Over 10 million ADRs and other listed equity securities... $50,000
Under the revised fee schedule, companies that list ADRs will pay
the same minimum fee as other companies listing equity securities on
the same tier of Nasdaq. Nasdaq believes that it is appropriate to
charge ADRs the same minimum fees as other companies because these
minimum fees reflect the minimum value of a Nasdaq listing and Nasdaq
does not believe that this minimum value differs for companies listing
ADRs: They trade on the same trading platform, are subject to the
substantially the same regulatory oversight, and receive the same
listing services as other companies. To effect this change, Nasdaq will
create a new fee tier on the Global and Global Select Markets for
companies with more than 10 million but not more than 50 million ADRs
and other listed equity securities outstanding. The all-inclusive
annual fee for companies on the Global and Global Select Markets with
10 million or fewer ADRs and other listed equity securities will remain
at $45,000, which is the same as the minimum all-inclusive annual fee
for other companies listing up to 10 million equity securities on the
Global and Global Select Markets.\4\ On the Capital Market, the all-
inclusive annual fee for companies with 10 million or fewer ADRs and
other listed equity securities will be increased to $45,000 [sic],\5\
which is the same as the minimum all-inclusive annual fee for other
companies listing up to 10 million equity securities on the Capital
Market.\6\
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\4\ See Listing Rule 5910(b)(2)(A).
\5\ The Commission notes that this reference to $45,000 is an
error in Nasdaq's description of its proposed rule change and, in
accordance with the proposed rule text and as described correctly
above, the all-inclusive annual fee for companies on the Capital
Market with 10 million or fewer ADRs and other listed equity
securities will be increased to $42,000.
\6\ See Listing Rule 5920(b)(2)(A).
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The all-inclusive annual fees for all other companies listing ADRs
on Nasdaq will also increase to reflect the value of the listing,
although such fees will remain lower than the fees paid by other
domestic and foreign companies listing equity securities.\7\ Nasdaq
believes it is appropriate to charge companies that list ADRs lower
fees than companies that list common stock or ordinary shares, once
they have reached the minimum fee. For many companies that list ADRs
Nasdaq is not the primary listing and therefore the lower fee serves as
an incentive to list or maintain their listing. In addition, issuers of
ADRs are not subject to all of the same regulatory requirements as
other companies and therefore Nasdaq's regulatory costs to list these
companies is lower.\8\
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\7\ The all-inclusive annual fee for common stock and ordinary
shares ranges from $42,000 to $75,000 on the Capital Market and from
$45,000 to $155,000 on the Global and Global Select Markets. See
Listing Rules 5910(b)(2)(A) and 5920(b)(2)(A).
\8\ Because ADRs can only be issued by foreign private issuers,
their issuers may rely on exemptions to certain corporate governance
rules. See Listing Rule 5615(a)(3) and IM-5615-3. In addition, ADRs
are not subject to the requirement to notify Nasdaq prior to certain
share issuances. See Listing Rule 5250(e)(2).
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While these changes are effective upon filing, Nasdaq has
designated the proposed amendments to be operative on January 1, 2019.
2. Statutory Basis
Nasdaq believes that the proposed rule change is consistent with
the provisions of Section 6 of the Act,\9\ in general and with Section
6(b)(4) and (5) of the Act,\10\ in particular in that it provides for
the equitable allocation of reasonable dues, fees, and other charges
among its members, issuers and other persons using its facilities and
does not unfairly discriminate between customers, issuers, brokers or
dealers.
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\9\ 15 U.S.C. 78f.
\10\ 15 U.S.C. 78f(b)(4) and (5).
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The proposed fee change is an equitable allocation of reasonable
fees because it will better align the all-inclusive annual fees paid by
companies listing ADRs with the fees paid by other Nasdaq-listed
companies and with the value that such a listing provides to the
company. Specifically, under the proposed rule change, the minimum all-
inclusive annual fee for companies that list ADRs would be the same
minimum fees as are paid by other companies, which Nasdaq believes is
reasonable and an equitable allocation of fees because companies that
list ADRs receive the same services and trade on the same trading
platform as other companies. For the same reason, Nasdaq also believes
that it is an equitable allocation of reasonable fees to raise the fees
paid by companies that list more ADRs than are included in the minimum
fee tier because that change will result in fees that are closer to the
fees paid by other companies listing the same number of securities.
Under the proposed fee schedule, the all-inclusive annual fee for
companies that list more ADRs than the minimum fee tier will be lower
than the fee charged to other companies. Further, the difference
between the fees charged a company that lists ADRs and a company that
lists other equity securities increases when there are more shares
outstanding. Because companies that list ADRs also typically have
primary trading on another market, and because companies that list ADRs
are not subject to all of Nasdaq's governance and notification
requirements and therefore Nasdaq's regulatory costs for such companies
can be lower,\11\ Nasdaq believes that it is an equitable allocation of
reasonable fees, and not unfairly discriminatory to charge lower fees
beyond the minimum fee tier and to have a lower maximum fee for ADRs
than for other companies listing equity securities.
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\11\ See footnote 8, supra.
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Finally, NASDAQ notes that it operates in a highly competitive
market in which market participants can readily switch exchanges if
they deem the listing fees excessive.\12\ In such an environment,
NASDAQ must
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continually review its fees to assure that they remain competitive.
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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.
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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. The market for
listing services is extremely competitive and listed companies may
freely choose alternative venues, both within the U.S. and
internationally. For this reason, Nasdaq does not believe that the
proposed rule change will result in any burden on competition for
listings.
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
The foregoing rule change has become effective pursuant to Section
19(b)(3)(A)(ii) of the Act.\13\
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\13\ 15 U.S.C. 78s(b)(3)(A)(ii).
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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: (i)
Necessary or appropriate in the public interest; (ii) for the
protection of investors; or (iii) otherwise in furtherance of the
purposes of the Act. If the Commission takes such action, the
Commission shall institute proceedings to determine whether the
proposed rule should be approved or 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 email to [email protected]. Please include
File Number SR-NASDAQ-2018-103 on the subject line.
Paper Comments
Send paper comments in triplicate to Brent J. Fields,
Secretary, Securities and Exchange Commission, 100 F Street NE,
Washington, DC 20549-1090.
All submissions should refer to File Number SR-NASDAQ-2018-103. 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-2018-103, and should be submitted
on or before January 18, 2019.
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\14\ 17 CFR 200.30-3(a)(12).
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\14\
Brent J. Fields,
Secretary.
[FR Doc. 2018-28181 Filed 12-27-18; 8:45 am]
BILLING CODE 8011-01-P