[Federal Register Volume 78, Number 183 (Friday, September 20, 2013)]
[Notices]
[Pages 57909-57911]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2013-22882]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-70418; File No. SR-NASDAQ-2013-115]
Self-Regulatory Organizations; The NASDAQ Stock Market LLC;
Notice of Filing and Immediate Effectiveness of Proposed Rule Change to
Adopt Fees and Fee Waivers for Certain Exchange Traded Products
September 16, 2013.
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 September 3, 2013 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, 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 the
Substance of the Proposed Rule Change
The Exchange proposes to adopt fees for certain exchange traded
products and to expand existing fee waivers to include these
securities.
The text of the proposed rule change is available at the Exchange's
Web site
[[Page 57910]]
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 recently adopted rules to list a number of new types of
exchange traded products.\3\ However, at the time, NASDAQ did not
specify fees applicable to certain of these products. Specifically,
while Rule 5710(j) provides that Linked Securities, including the New
Linked Securities, are treated as ``Other Securities'' for fee
purposes, no fees were specified for the other products approved for
listing under those new standards (the ``Other New Products'').\4\ As
such, the Other New Products are subject to the fees set forth in Rule
5910, which describes the fees charged to securities listed on the
Global Market not otherwise identified in the Rule 5900 Series.
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\3\ Securities Exchange Act Release No. 66648 (March 23, 2012),
77 FR 19428 (March 30, 2012) (SR-NASDAQ-2012-013). In this filing,
NASDAQ adopted standards to list the following Exchange Traded
Products: Equity Index-Linked Securities, Commodity-Linked
Securities, Fixed Income Index-Linked Securities, Futures-Linked
Securities, and Multifactor Index-Linked Securities (collectively,
the ``New Linked Securities''); Index-Linked Exchangeable Notes;
Equity Gold Shares; Trust Certificates; Commodity-Based Trust
Shares; Currency Trust Shares; Commodity Index Trust Shares;
Commodity Futures Trust Shares; Partnership Units; Trust Units;
Managed Trust Securities; and Currency Warrants.
\4\ Fees for Other Securities are set forth in Rule 5930. The
proposed rule change would not change the treatment of Linked
Securities, although it would modify the title and text of Rule 5930
to provide additional transparency to the fact that Linked
Securities are subject to that Rule.
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NASDAQ now proposes to modify its fee schedule to provide that the
fees set forth in Rule 5940 \5\ are applicable to any security listed
under the Rule 5700 Series for which no other fee schedule is
specified.\6\ As such, the Other New Products, which qualify for
listing under Rules 5711 and 5720, would be subject to the fees
contained in Rule 5940, rather than the higher fees under Rule 5910.\7\
In addition, the proposed change would result in Trust Issued Receipts,
listed under Rule 5720, and Index Warrants, listed under Rule 5725,
also being subject to the lower fee schedule in Rule 5940. NASDAQ
believes that these lower fees are appropriate as the Other New
Products, Trust Issued Receipts and Index Warrants are generally
similar to the exchange traded funds currently charged fees under Rule
5940.\8\
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\5\ Rule 5940 sets forth the fees applicable to Portfolio
Depository Receipts, Index Fund Shares, and Managed Fund Shares.
\6\ NASDAQ also proposes to change the title of Rule 5940 to
reflect this broader applicability.
\7\ The entry fee under Rule 5940 is $5,000 and annual fees
range from $6,500 to $14,500. The entry fees under Rule 5910 ranges
[sic] from $125,000 to $225,000 and annual fees range from $35,000
to $99,500.
\8\ NASDAQ also notes that NYSE Arca charges the issuers of the
Other New Products and Trust Issued Receipts under its fee schedule
for Derivative Securities Products, which is the same fee schedule
applicable to exchange traded funds. See footnote 3 to NYSE Arca
Equities: Listing Fees. Index Warrants listed on NYSE Arca also are
not subject to the fee schedule applicable to common and preferred
stock, but are treated as Structured Products. See footnote 4 to
NYSE Arca Equities: Listing Fees. Similarly, BATS Exchange charges
all exchange traded products a different fee schedule than operating
companies. See BATS Rules 14.13(a)(A)(1)(C) and 14.13(a)(A)(2)(C).
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In addition, NASDAQ rules currently provide that the entry and
application fees payable under Rules 5910 and 5920 are not applicable
to a company with respect to any securities that are listed on another
national securities exchange if the company transfers its listing
exclusively to NASDAQ.\9\ Similarly, IM-5900-4 provides that NASDAQ
will waive a portion of the annual fees otherwise payable under Rules
5910 and 5920 for a company that is listed on another national
securities exchange if the company transfers its listing exclusively to
NASDAQ.\10\ These rules were adopted to encourage issuers to transfer
from another exchange (where they already paid listing fees) to NASDAQ
and thereby enhance competition among exchanges.\11\ NASDAQ believes
that this same rationale applies to exchange traded products and
therefore proposes to provide that an identical waiver applies to the
entry and application fees set forth in Rules 5930 and 5940, and to
expand the annual fee waiver in IM-5900-4 to also include annual fees
assessed under Rules 5930 and 5940.\12\
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\9\ Rules 5910(a)(7) and 5920(a)(7).
\10\ In the year a transfer is made, the company receives a
credit in the pro-rated amount of any annual listing fees paid to
the former exchange for the period of time after the transfer. This
credit offsets, and cannot exceed, the annual fee otherwise due to
NASDAQ for that period.
\11\ Securities Exchange Act Release No. 51004 (January 10,
2005), 70 FR 2917 (January 18, 2005) (SR-NASD-2004-140) (waiver of
initial listing fees); Securities Exchange Act Release No. 53696
(April 21, 2006), 71 FR 25273 (April 28, 2006) (SR-NASD-2006-047)
(waiver of annual fees).
\12\ NASDAQ notes that NYSE Arca and BATS each waive fees for
exchange traded products that switch from another exchange. See
commentary .04 to NYSE Arca Equities: Listing Fees and BATS Rules
14.13(a)(A)(1)(F).
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2. Statutory Basis
The Exchange believes that its proposal is consistent with Section
6(b) of the Act \13\ in general, and with Sections 6(b)(4), (5) and (8)
of the Act,\14\ in particular, in that it provides for the equitable
allocation of reasonable dues, fees and other charges among members and
issuers and other persons using any facility or system which the
Exchange operates or controls; is not designed to permit unfair
discrimination between customers, issuers, brokers, or dealers; and
does not impose any burden on competition not necessary or appropriate
in furtherance of the purposes of the Act.
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\13\ 15 U.S.C. 78f(b).
\14\ 15 U.S.C. 78f(b)(4), (5) and (8).
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The Exchange believes that the proposed fees are consistent with
Section 6(b)(4) of the Act for multiple reasons. First, NASDAQ notes
that it operates in a highly competitive market in which market
participants can choose not to list on NASDAQ, or readily switch
exchanges, if they deem listing fees excessive.\15\ In such an
environment NASDAQ must continually review the fees it charges to
assure that they are reasonable and equitably allocated to remain
competitive with other markets. The proposed waivers are also equitable
in that they recognize that a company switching from another exchange
has already paid fees to that exchange for similar services. Further,
it is NASDAQ's experience that less work is required on an application
for a security listed on another exchange, and the fee waiver reflects
that experience. NASDAQ also believes that the proposed fees and
waivers are equitable because they would apply equally to all companies
listing exchange traded
[[Page 57911]]
products under the applicable provisions of the Rule 5700 Series.
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\15\ 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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The Exchange also believes that the proposed fees and waivers are
consistent with Section 6(b)(5) of the Act in that the fees are non-
discriminatory. As noted, the proposed fees would apply equally to all
companies listing exchange traded products under the applicable
provisions of the Rule 5700 Series. In addition, applying the existing
fee schedule to all unspecified exchange traded products eliminates an
inconsistency in the fees currently charged by NASDAQ where some
similar products are charged lower fees, and is thereby designed to
equitably allocate fees and not permit unfair discrimination between
issuers of similar products.
Finally, the Exchange believes the proposed fees and waivers are
consistent with Section 6(b)(8) of the Act in that they do not impose a
burden on competition not necessary or appropriate in furtherance of
the purposes of the Act. Rather, the proposed rule change will adopt
lower fees for issuers of exchange traded products, thereby enhancing
competition among exchanges.
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. Rather, by adopting fees for
specific types of products similar to those fees in place at NYSE Arca
and BATS, and by waiving fees for transfers of exchange traded products
from other exchanges, the proposed rule change will promote competition
for the listing of these products.
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) of the Act \16\ and paragraph (f) of Rule 19b-4
thereunder.\17\
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\16\ 15 U.S.C. 78s(b)(3)(A).
\17\ 17 CFR 240.19b-4(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-2013-115 on the subject line.
Paper Comments
Send paper comments in triplicate to Elizabeth M. Murphy,
Secretary, Securities and Exchange Commission, 100 F Street NE.,
Washington, DC 20549-1090.
All submissions should refer to File Number SR-NASDAQ-2013-115. 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 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 Web site viewing and
printing in the Commission's Public Reference Room 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 offices of the Exchange. 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-NASDAQ-2013-115, and should be submitted on or before
October 11, 2013.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\18\
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\18\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2013-22882 Filed 9-19-13; 8:45 am]
BILLING CODE 8011-01-P