[Federal Register Volume 81, Number 101 (Wednesday, May 25, 2016)]
[Notices]
[Pages 33275-33278]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-12237]
=======================================================================
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-77855; File No. SR-NASDAQ-2016-057]
Self-Regulatory Organizations; The NASDAQ Stock Market LLC;
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To
Amend and Clarify Closed-End Funds Annual Fees
May 19, 2016.
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 May 12, 2016, The NASDAQ Stock Market LLC (``Exchange'') filed with
the Securities
[[Page 33276]]
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.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------
I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Exchange proposes to clarify and conform the amount of annual
fees charged to individual closed-end management investment companies
registered under the Investment Company Act of 1940, as amended
(``Closed-End Funds'') and two or more Closed-End Funds that have a
common investment adviser or have investment advisers who are
``affiliated persons'' as defined in Section 2(a)(3) of the Investment
Company Act of 1940, as amended (``fund family''). These amendments are
effective upon filing. The text of the proposed rule change is set
forth below. Proposed new language is in italics; deleted text is in
brackets.
* * * * *
5910. The Nasdaq Global Market (Including the Nasdaq Global Select
Market)
(a)-(c) No change.
(d) Standard Annual Fee--American Depositary Receipts (ADRs) and
Closed-End Funds
(1)-(3) No change.
(4) For the purpose of determining the total shares outstanding,
fund sponsors may aggregate shares outstanding of all Closed-End Funds
in the same fund family listed on the Nasdaq Global Market or the
Nasdaq Capital Market, as shown in the Company's most recent periodic
reports required to be filed with the appropriate regulatory authority
or in more recent information held by Nasdaq. The maximum annual fee
applicable to a fund family shall not exceed [$75,000 ]$80,000. For
purposes of this rule, a ``fund family'' is defined as two or more
Closed-End Funds that have a common investment adviser or have
investment advisers who are ``affiliated persons'' as defined in
Section 2(a)(3) of the Investment Company Act of 1940, as amended.
(5)-(6) No change.
(e)-(f) No change.
IM-5910-1. All-Inclusive Annual Listing Fee
(a)-(c) No change.
(d) The All-Inclusive Annual Listing Fee will be calculated on
total shares outstanding according to the following schedules:
(1)-(2) No change.
(3) Closed-end Funds:
Up to 50 million shares--$30,000
50+ to 100 million shares--$50,000
100+ to 250 million shares--$75,000
Over 250 million shares--$100,000
For the purpose of determining the total shares outstanding, fund
sponsors may aggregate shares outstanding of all Closed-End Funds in
the same fund family listed on the Nasdaq Global Market or the Nasdaq
Capital Market, as shown in the Company's most recent periodic reports
required to be filed with the appropriate regulatory authority or in
more recent information held by Nasdaq. A fund family is subject to the
same fee schedule as a single Closed-End Fund and the maximum All-
Inclusive Annual Listing Fee applicable to a fund family shall not
exceed $100,000. For purposes of this rule, a ``fund family'' is
defined as two or more Closed-End Funds that have a common investment
adviser or have investment advisers who are ``affiliated persons'' as
defined in Section 2(a)(3) of the Investment Company Act of 1940, as
amended.
(e) No change.
5920. The Nasdaq Capital Market
(a)-(b) No change.
(c) Standard Annual Fee
(1)-(6) No change.
(7) Notwithstanding paragraph (6), for the purpose of determining
the total shares outstanding, fund sponsors may aggregate shares
outstanding of all Closed-End Funds in the same fund family listed on
the Nasdaq Global Market and the Nasdaq Capital Market, as shown in the
Company's most recent periodic reports required to be filed with the
appropriate regulatory authority or in more recent information held by
Nasdaq. The maximum annual fee applicable to a fund family shall not
exceed [$75,000 ]$80,000. For purposes of this rule, a ``fund family''
is defined as two or more Closed-End Funds that have a common
investment adviser or have investment advisers who are ``affiliated
persons'' as defined in Section 2(a)(3) of the Investment Company Act
of 1940, as amended.
(8) No change.
(d)-(e) No change.
IM-5920-1. All-Inclusive Annual Listing Fee
(a)-(c) No change.
(d) The All-Inclusive Annual Listing Fee will be calculated on
total shares outstanding according to the following schedules:
(1)-(2) No change.
(3) Closed-end Funds:
Up to 50 million shares--$30,000
50+ to 100 million shares--$50,000
100+ to 250 million shares--$75,000
Over 250 million shares--$100,000
For the purpose of determining the total shares outstanding, fund
sponsors may aggregate shares outstanding of all Closed-End Funds in
the same fund family listed on the Nasdaq Global Market or the Nasdaq
Capital Market, as shown in the Company's most recent periodic reports
required to be filed with the appropriate regulatory authority or in
more recent information held by Nasdaq. A fund family is subject to the
same fee schedule as a single Closed-End Fund and the maximum All-
Inclusive Annual Listing Fee applicable to a fund family shall not
exceed $100,000. For purposes of this rule, a ``fund family'' is
defined as two or more Closed-End Funds that have a common investment
adviser or have investment advisers who are ``affiliated persons'' as
defined in Section 2(a)(3) of the Investment Company Act of 1940, as
amended.
(e) No change.
* * * * *
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 clarify and conform
the amount of annual fees charged to a single Closed-End Fund and a
fund family.
In 2005, Nasdaq adopted a fee schedule applicable specifically to
Closed-End Funds and permitted a fund sponsor to aggregate the shares
outstanding of all Closed-End Funds listed on Nasdaq that are part of
the
[[Page 33277]]
fund family.\3\ The maximum annual fee payable by a fund family was set
to $75,000, equal to the maximum annual fee payable by a single Closed-
End Fund.
---------------------------------------------------------------------------
\3\ Securities Exchange Act Release No. 52277 (August 17, 2005),
70 FR 49347 (August 22, 2005) (approving SR-NASD-2005-96).
---------------------------------------------------------------------------
In 2014, Nasdaq adopted a new All-Inclusive Annual Listing Fee
schedule and increased the maximum annual fee payable by a single
Closed-End Fund.\4\ At that time, Nasdaq inadvertently created a
disparity between the maximum annual fees payable by a single Closed-
End Fund and by a fund family. While Nasdaq increased the maximum
annual fee payable by a single Closed-End Fund from $75,000 to $80,000
and introduced a new All-Inclusive Annual Listing Fee schedule with the
maximum annual fee payable by a single Closed-End Fund equal to
$100,000,\5\ the maximum annual fee payable by a fund family under the
standard annual fee was not changed and remained at $75,000. In
addition, rules specifically allowing for the aggregation of shares in
a fund family were not included in the new All-Inclusive Annual Fee.
---------------------------------------------------------------------------
\4\ Securities Exchange Act Release No. 73647 (November 19,
2014), 79 FR 70232 (November 25, 2014) (approving SR-NASDAQ-2014-
87).
\5\ Id.
---------------------------------------------------------------------------
Nasdaq proposes to amend Listing Rules 5910(d)(4) and 5920(c)(7) to
increase the maximum annual fee payable by a fund family to $80,000 to
conform such fee to the maximum annual fee payable by a single Closed
End Fund. The creation of this disparity between the fees was
inadvertent and Nasdaq believes that it is reasonable for a fund family
to be subject to the same maximum fee schedule than a single Closed-End
Fund.
In addition, Nasdaq proposes to amend Listing Rules IM-5910-1 and
IM-5920-1 to clarify that a fund family subject to the All-Inclusive
Annual Fee can aggregate shares in the same manner as a fund family
subject to Nasdaq's standard annual fee. Nasdaq also proposes to
clarify that the All-Inclusive Annual Listing Fee is calculated on
total shares outstanding.
2. Statutory Basis
The Exchange believes that its proposal is consistent with Section
6(b) of the Act,\6\ in general, and furthers the objectives of Sections
6(b)(4) and 6(b)(5) of the Act,\7\ 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, and is not designed
to permit unfair discrimination between customers, issuers, brokers, or
dealers.
---------------------------------------------------------------------------
\6\ 15 U.S.C. 78f(b).
\7\ 15 U.S.C. 78f(b)(4) and (5).
---------------------------------------------------------------------------
As a preliminary matter, Nasdaq competes for listings with other
national securities exchanges and companies can easily choose to list
on, or transfer to, those alternative venues. As a result, the fees
Nasdaq can charge listed companies are constrained by the fees charged
by its competitors and Nasdaq cannot charge prices in a manner that
would be unreasonable, inequitable, or unfairly discriminatory.
Nasdaq believes that the proposed increase in the annual maximum
fee payable by a fund family is reasonable and not unfairly
discriminatory because such fee is not greater than the fee payable by
a single Closed-End Fund that could be a part of the same fund family.
The parity in such fees had previously been approved by the
Commission.\8\ The proposed rule change makes no adjustments to the fee
schedule applicable to the Closed-End Funds.
---------------------------------------------------------------------------
\8\ See footnote 3, supra.
---------------------------------------------------------------------------
Nasdaq also believes that the proposed additional interpretive
material merely clarifies, without changing the substance of the rules,
Nasdaq's current position that a fund family subject to the All-
Inclusive Annual Listing Fee schedule is subject to the same fee
schedule as a single Closed-End Fund. These companies are particularly
sensitive to the expenses they incur, given that they compete for
investment dollars based on return. In addition, Closed-End Funds need
to issue shares as a primary means to expand their businesses and raise
additional money to invest. As such, Nasdaq believes that allowing a
fund family to aggregate the shares outstanding of all Closed-End Funds
listed on Nasdaq that are part of the fund family is reasonable and not
inequitable or unfairly discriminatory.
Finally, Nasdaq believes that the proposed fees are consistent with
the investor protection objectives of Section 6(b)(5) of the Act \9\ in
that they are designed to promote just and equitable principles of
trade, to remove impediments to a free and open market and national
market system, and in general to protect investors and the public
interest. Specifically, the fees are designed, in part, to ensure that
there are adequate resources for Nasdaq's listing compliance program,
which helps to assure that listing standards are properly enforced and
investors are protected.
---------------------------------------------------------------------------
\9\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------
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 based on the aggregate fees assessed,
and the value provided by each listing. This rule proposal does not
burden competition with other listing venues, which are similarly free
to set their fees. Moreover, the proposed rule merely conforms fees
charged to similarly situated Nasdaq listed Closed-End Funds and fund
families. For these reasons, 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.\10\
---------------------------------------------------------------------------
\10\ 15 U.S.C. 78s(b)(3)(A)(ii).
---------------------------------------------------------------------------
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
[[Page 33278]]
Send an e-mail to [email protected]. Please include
File Number SR-NASDAQ-2016-057 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-2016-057. 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 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 will also be
available for inspection and copying at the principal office 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-2016-057 and should be submitted on or before June 15, 2016.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\11\
---------------------------------------------------------------------------
\11\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------
Robert W. Errett,
Deputy Secretary.
[FR Doc. 2016-12237 Filed 5-24-16; 8:45 am]
BILLING CODE 8011-01-P