[Federal Register Volume 64, Number 218 (Friday, November 12, 1999)]
[Notices]
[Pages 61678-61680]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-29601]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-42108; File No. SR-NASD-99-40]
Self-Regulatory Organizations; Notice of Filing of Proposed Rule
Change by the National Association of Securities Dealers, Inc.,
Revising Its Fees for Additional Shares
November 4, 1999.
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 August 20, 1999, the National Association of Securities Dealers,
Inc. (``NASD''), through its wholly owned subsidiary the Nasdaq Stock
Market, Inc. (``Nasdaq''), filed with the Securities and Exchange
Commission (``Commission'') the proposed rule change as described in
Items I, II, and III below, which Items have been prepared by the NASD.
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 NASD proposes to revise the fees it charges Nasdaq National
Market and Nasdaq SmallCap Market issuers for listing Additional
Shares. Set forth below is the text affected by the proposed rule
change. Proposed new language is in italic; proposed deletions are in
brackets.
* * * * *
4510. The Nasdaq National Market
(a) Entry Fee
No change
(b) Additional Shares
(1) The issuer of each class of security[, other than the
American Depositary Receipts,] that is a domestic issue which is
listed in the Nasdaq National Market shall pay to The Nasdaq Stock
Market, Inc. the fee set forth in subparagraph (2) below in
connection with the issuance of additional shares of each class of
listed security [set forth in subparagraph (3) below].
(2) The fee in connection with additional shares shall be $2,000
or [$.02] $.01 per additional share, whichever is higher, up to a
maximum of $17,500 per [issuance] notification and an annual maximum
of $35,000 per issuer.
(3) [The fee in connection with additional shares is applicable
to the following issuances of securities:
(A) Acquisitions, mergers or consolidations;
(B) Public offerings;
(C) Rights and subscription offerings;
[[Page 61679]]
(D) Exchange offers; and
(E) Private placements.
(4) Payment of the fee to The Nasdaq Stock Market, Inc. shall be
included with] Calculation of the fee will be based on the issuer
notification to Nasdaq of the issuance of additional shares of
securities as required under provisions of Rule 4310(c)(17) [and
Rule 4320(e)(15)].
(c)-(d) No change
4520. The Nasdaq SmallCap Market
(a) Entry Fee
No change
(b) Additional Shares
(1) The issuer of each class of security [other than American
Depositary Receipts] that is a domestic issue which is listed in The
Nasdaq SmallCap Market shall pay to The Nasdaq Stock Market, Inc.
the fee set forth in subparagraph (2) below in connection with the
issuance of additional shares of each class of listed security [set
forth in subparagraph (3) below].
(2) The fee in connection with additional shares shall be
[$1,000] $2,000 or $.01 per additional share, whichever is higher,
up to a maximum of [$7,500] $17,500 per [issuance] notification and
an annual maximum of $35,000 per issuer.
(3) [The fee in connection with additional shares is applicable
to the following issuances of securities:
(A) Acquisitions, mergers or consolidations;
(B) Public offerings;
(C) Rights and subscription offerings;
(D) Exchange offers; and
(E) Private placements.
(4) Payment of the fee to The Nasdaq Stock Market, Inc. shall be
included with] Calculation of the fee will be based on issuer
notification to the Association of the issuance of additional shares
of securities as required under provisions of Rule 4310(c)(17) [and
Rule 4320(e)(16)].
(c)-(d) No change
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 NASD 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 NASD 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 NASD proposes to revise the current fee schedule for
``Additional Shares.'' Under the revised fee schedule, issuers would
pay a flat fee of $0.01 per share for all issuances of Additional
Share, subject to a cap of $17,500 per notification and $35,000 per
year. Currently, Nasdaq National Market issuers pay a fee of $0.02 per
share for all issuances, subject to a cap of $17,500 per issuance, and
Nasdaq SmallCap Market issuers pay a fee of $0.01 per share for all
issuances, subject to a cap of $7,500 per issuance. The current fees
are charged only for the issuance of shares in certain transactions and
are not subject to annual maximum caps. Under the proposal, the minimum
fee per notification will be $2,000; Nasdaq SmallCap Market Issuers are
currently subject to a minimum fee of $1,000 per issuance and Nasdaq
National Market issuers to a minimum fee of $2,000 per issuance.
The NASD believes that this revision of the fee schedule will
better spread the costs of issuer-related initiatives across the base
of issuers benefiting from such initiatives. Specifically, the revised
fee structure recognizes that Nasdaq does not distinguish between
National Market issuers and SmallCap Market issuers in providing
educational initiatives, issuer service initiatives, or surveillance
measures. Accordingly, the per-share fee for National market issuers
has been reduced to that of SmallCap Market issuers and the minimum and
maximum fees payable by Small Cap Market issuers have been increased to
the levels paid by National Market issuers. Furthermore, the revised
fee structure eliminate the old fee structure's artificial distinction
between transactions eligible to be assessed fees. This distinction
caused confusion for issuers and created difficulty for the NASD in its
administration of the program for listing Additional Shares.
The proposed fee structure also will allow issuers to file
notifications of several issuances with the NASD on a single form and
aggregate the fees assessed on those issuances toward the $17,500
maximum fee per notification.\3\ Previously, issuers were required to
file a separate notification with respect to every transaction that
qualified as a fee-assessable listing of Additional Shares and each
such transaction was subject to the maximum fee per issuance. Finally,
the $35,000 annual cap limits the maximum fee an issuer would be
subject to and ensures that no individual issuer would pay, as a result
of frequent stock splits or capital raising transactions, a
disproportionate share of the costs of initiatives provided by the
Nasdaq to all National Market and SmallCap Market issuers.
---------------------------------------------------------------------------
\3\ Each issuance must still be filed no later than 15 days
prior to issuance of the underlying shares, as required by NASD Rule
4310(c)(17).
---------------------------------------------------------------------------
2. Statutory Basis
The Nasdaq believes that the proposed rule change is consistent
with the provisions of Sections 15A(b)(5) and (6) \4\ of the Act. The
proposed rule change is consistent with Section 15A(b)(5) as it
provides for the equitable allocation of reasonable dues, fees, and
other charges among members and issuers using the Nasdaq system. Fees
for listing Additional Shares were first put in place at the Nasdaq in
1993.\5\ At the time, the NASD indicated that the fees would be used to
fund issuer-related operations, including educational initiatives,
issuer service initiatives, and NASD surveillance measures to enhance
the quality of the Nasdaq Stock Market.\6\ Since 1993, expenditures for
these initiatives have increased substantially, but funding recouped
through the assessment of fees for listing Additional Shares has not
increased proportionately. The proposed rule change is consistent with
Section 15A(b)(6) as it is designed to promote just and equitable
principles of trade and does not permit unfair discrimination between
customers, issuers, brokers, or dealers. As noted above, the fee
revision reflects the increased costs incurred by Nasdaq with respect
to issuer-related initiatives.
---------------------------------------------------------------------------
\4\ 15 U.S.C. 78o-3(b) (5) and (6).
\5\ See Securities Exchange Act Release No. 31586 (December 11,
1992), 57 FR 60247 (December 18, 1992).
\6\ Id.
---------------------------------------------------------------------------
(B) Self-Regulatory Organization's Statement on Burden on Competition
The 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.
(C) Self-Regulatory Organization's Statement on Comments on the
Proposed Rule Change Received From Members, Participants, or Others
Written comments were neither solicited nor received.
III. Date of Effectiveness of the Proposed Rule Change and Timing
for Commission Action
Within 35 days of the date of publication of this notice in the
Federal Register or within such longer period (i) as the Commission may
designate up to 90 days of such date if it finds such longer period to
be appropriate and publishes its reasons for so finding or (ii) as to
which the self-regulatory
[[Page 61680]]
organization consents, the Commission will:
A. By order approve such proposed rule change, or
B. Institute proceedings to determine whether the proposed rule
change should be 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. Persons making written submissions
should file six copies thereof with the Secretary, Securities and
Exchange Commission, 450 Fifth Street, NW., Washington, DC 20549-0609.
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 inspection and copying in the
Commission's Public Reference Room. Copies of such filing will also be
available for inspection and copying at the principal office of the
NASD. All submissions should refer to the file number in the caption
above and should be submitted by December 3, 1999.
For the Commission, by the Division of Market Regulation,
pursuant to delegated authority.\7\
---------------------------------------------------------------------------
\7\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------
Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 99-29601 Filed 11-10-99; 8:45 am]
BILLING CODE 8010-01-M
