[Federal Register Volume 75, Number 75 (Tuesday, April 20, 2010)]
[Notices]
[Pages 20651-20653]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2010-9033]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-61904; File No. SR-NASDAQ-2010-047]
Self-Regulatory Organizations; The NASDAQ Stock Market LLC;
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To
Amend the Global Select Market Initial Listing Requirements
April 14, 2010.
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 April 6, 2010, The NASDAQ Stock Market LLC (``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 Nasdaq. Nasdaq has designated the proposed rule
change as constituting a non-controversial rule change under Rule 19b-
4(f)(6) under the Act,\3\ which renders the proposal effective upon
filing with the Commission. 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.
\3\ 17 CFR 240.19b-4(f)(6).
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I. Self-Regulatory Organization's Statement of the Terms of the
Substance of the Proposed Rule Change
Nasdaq is filing this proposed rule change to amend the Global
Select initial listing requirements and to make a technical conforming
correction to a rule cross reference. The text of the proposed rule
change is below. Proposed new language is in italics and proposed
deletions are in brackets.
* * * * *
5310. Definitions and Computations
(a)-(d) No change.
(e) In the case of a Company listing in connection with its initial
public offering, compliance with the market capitalization requirements
of Rules 5315(f)(3)(B), [and] (C) and (D) will be based on the
Company's market capitalization at the time of listing.
(f)-(h) No change.
(i) A Company whose business plan is to complete an initial public
offering and engage in a merger or acquisition with one or more
unidentified companies within a specific period of time, as described
in IM-5101-2, is not eligible to list on the Nasdaq Global Select
Market.
5315. Initial Listing Requirements for Primary Equity Securities
Rule 5310 provides guidance about computations made under this Rule
5315.
(a)-(e) No change.
(f)
(1) No change.
(2) Market Value Requirement
The Publicly Held Shares shall meet one of the following:
(A)-(B) No change.
(C) A Market Value of at least $45[70] million in the case of: (i)
A Company listing in connection with its initial public offering; and
(ii) a Company that is affiliated with, or a spin-off from, another
Company listed on the Global Select Market; or [and (iii)]
(D) A Market Value of at least $70 million in the case of a closed
end management investment company registered under the Investment
Company Act of 1940.
(3) Valuation Requirement
A Company, other than a closed end management investment company,
shall meet the requirements of sub-paragraph (A), (B), [or] (C), or (D)
below:
(A)-(B) No change.
(C)(i) Average market capitalization of at least $850 million over
the prior 12 months, and (ii) total revenue of at least $90 million in
the previous fiscal year[.]; or
(D)(i) Market capitalization of at least $160 million, (ii) total
assets of at least $80 million for the most recently completed fiscal
year, and (iii) stockholders' equity of at least $55 million.
* * * * *
II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
In its filing with the Commission, Nasdaq 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. Nasdaq 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 proposes to amend Rule 5315(f)(3) to adopt a fourth initial
listing standard for listing on the Nasdaq Global Select Market. This
standard would permit listing if the company has: (i) $80 million in
total assets, (ii) $55 million in stockholders' equity and (iii) $160
million of market capitalization. Companies qualifying under this
standard will also have to meet all other requirements of Rule 5315,
including the ownership and market value requirements contained in Rule
5315(f) and, upon listing, would be subject to the Global Market
continued listing standards.
Nasdaq believes that this new listing standard will continue to
ensure that only companies of a significant size and financial standing
will be able to list on the Global Select Market. In addition, the new
listing standard will permit certain companies that qualify for listing
today on other national securities exchanges to also qualify for the
Global Select Market. In that regard, Nasdaq notes that the Commission
recently approved a similar alternative standard for listing on the New
York Stock Exchange, Inc. (``NYSE'').\4\ This new NYSE alternative
allows a company to list if it has total assets of at least $75
million, stockholders' equity of at least $50 million, and a global
market capitalization of at least $150 million. The proposed
requirements for initial listing on the Nasdaq Global Select Market are
higher than those adopted by the NYSE.
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\4\ Securities Exchange Act Release No. 58934 (November 12,
2008), 73 FR 69708 (SR-NYSE-2008-098, modifying Section 102.01C of
the Listed Company Manual).
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Like companies listing under the current Global Select Market
initial listing standards, companies listing under the proposed new
standard must
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also comply with the continued listing standards of Nasdaq's Global
Market.\5\ While in some cases based on different criteria, these
continued listing standards are generally the same as or lower than
those of the NYSE. Nasdaq believes that its Global Market continued
listing standards, which Nasdaq strictly applies, are designed to
ensure that only companies of adequate size and stature remain listed
on Nasdaq.
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\5\ Under Rule 5450, a company's primary equity security must
qualify under at least one of three standards for continued listing:
Equity (Rule 5450(b)(1)); Market Value (Rule 5450(b)(2)); or Total
Assets/Total Revenue (Rule 5450(b)(3)).
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Nasdaq is also proposing to reduce the market value of publicly
held shares (``MVPHS'') requirement contained in Rule 5315(f)(2)(C)
from $70 million to $45 million for companies listing in connection
with an initial public offering or that are affiliated with, or a spin-
off from, another company listed on the Global Select Market.\6\ Nasdaq
believes that this proposed reduction in the market value of publicly
held shares requirement to $45 million for companies that are new to
the public markets will enable otherwise qualified companies to qualify
for the Global Select Market and is similar to a recent change by the
NYSE. In that regard, Nasdaq notes that the NYSE recently adopted a $40
million public float requirement applicable to initial public offerings
and spin-offs for listing on the NYSE.\7\ Nasdaq notes that the
proposed $45 million market value of publicly held shares requirement
is higher than the analogous NYSE requirement.\8\
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\6\ Closed-end funds will continue to be required to have a
minimum of $70 million of MVPHS. Nasdaq does not believe that it is
unfairly discriminatory to apply different public float requirements
to closed-end funds given that they are subject to their own
separate listing standards and have characteristics that make them
significantly different from operating companies.
\7\ Securities Exchange Act Release No. 60501 (August 13, 2009),
74 FR 42348 (August 21, 2009) (SR-NYSE-2009-080, approving changes
to Section 102.01B of the Listed Company Manual).
\8\ Id.
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In addition, Nasdaq proposes to add Rule 5310(i) to provide that a
company whose business plan is to complete an initial public offering
and engage in a merger or acquisition with one or more unidentified
companies within a specific period of time is not eligible to list on
the Global Select Market.\9\
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\9\ These companies are commonly referred to as special purpose
acquisition companies or SPACs. See IM-5101-2. SPACs cannot
currently list on the Global Select Market because they would not be
able to meet any of the existing Valuation Requirement alternatives
in Rule 5315(f)(3). The addition of proposed Rule 5310(i) will
clarify that they also cannot list under the proposed new standards.
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Nasdaq believes that the proposed Global Select Market listing
standards will continue to exceed the standards established by Rule
3a51-1 of the Exchange Act \10\ (the ``Penny Stock Rules''), and notes
that, in approving the NYSE's assets and equity test and reduced public
float requirement, the Commission found that the NYSE's rules exceeded
those standards.\11\
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\10\ 17 CFR 240.3a51-1.
\11\ Securities Exchange Act Release Nos. 58934 and 60501, supra
notes 4 and 7.
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The requirement in Rule 5315(f)(3)(A) for a minimum of $2.2 million
income from continuing operations exceeds the $750,000 income
requirement of SEC Rule 3a51-1(a)(2)(i)(A)(3). In addition, companies
qualifying under this Rule must have at least three years of positive
income, thus satisfying the requirement in SEC Rule 3a51-1(a)(2)(i)(B)
that a company have a minimum one year operating history. Rule
5315(f)(3)(B) requires an average market capitalization of at least
$550 million over the prior 12 months; Rule 5315(f)(3)(C) requires an
average market capitalization of at least $850 million over the prior
12 months; and proposed Rule 5315(f)(3)(D) would require a minimum
market capitalization of $160 million, as well as equity of at least
$55 million. Nasdaq believes that each of these requirements satisfy
the requirements of SEC Rules 3a51-1(a)(2)(i)(A)(2) and 3a51-
1(a)(2)(i)(B) that a company have a market value of listed securities
of at least $50 million. While SEC Rule 3a51-1(a)(2)(i)(A)(2) requires
a market value of listed securities of $50 million calculated over a 90
consecutive day period, the $50 million in market value of listed
securities requirement is far lower than the requirements of the Nasdaq
rule, including the $160 million of market capitalization required
under proposed Rule 5315(f)(3)(D). As such, Nasdaq believes that
proposed rule is comparable to, and arguably more stringent than, the
$50 million market value of listed securities requirement of SEC Rule
3a51-1(a)(2)(i)(A)(2) and (B).
Nasdaq believes that its Global Select Market's rules will also
exceed the Penny Stock Rules remaining stock price and distribution
requirements. Rule 5315(e)(1) requires companies initially listing on
Nasdaq to have a minimum bid price of $4 per share, thereby satisfying
the $4 requirement of SEC Rule 3a51-1(a)(2)(i)(C). Rule 5315(f)(1)
requires a company's securities to have either 450 round lot holders or
at least 2,200 total holders, although if a company is publicly traded
and has an average monthly trading volume over the prior 12 months of
at least 1.1 million shares per month, it can list with 550 total
holders. Nasdaq believes that these requirements are comparable to, or
more stringent than, the requirement of SEC Rule 3a51-1(a)(2)(i)(D)
that a security have at least 300 round lot holders, and satisfy the
same objective by assuring adequate liquidity in the security.\12\
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\12\ Nasdaq notes that each of these requirements exceed the
comparable requirements of the NYSE and that the Commission did not
raise concerns under the Penny Stock Rules in connection with the
NYSE adopting standards comparable to those proposed herein. See
Securities Exchange Act Release No. 60501, supra, note 7; Securities
Exchange Act Release No. 58934, supra, note 4.
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Last, SEC Rule 3a51-1(a)(2)(i)(E) requires at least 1 million
publicly held shares with a market value of at least $5 million. Rule
5315(e)(2) requires all securities listing on the Nasdaq Global Select
Market to have at least 1.25 million publicly held shares. In addition,
Rule 5215(f)(2), as proposed to be amended, would require a minimum $45
million market value of publicly held shares. As such, Nasdaq believes
its initial listing standards for the Global Select Market continue to
meet or exceed the requirements of the Penny Stock Rules.
Nasdaq also believes that, the addition of the new valuation
requirement does not change the fact that the Nasdaq Global Market
quantitative continued listing standards are reasonably related to the
quantitative initial listing standards of the Global Select Market, as
required by SEC Rule 3a51-1(a)(2)(ii). The quantitative continued
listing standards, which are not changing as a result of this proposed
rule change, require a company to maintain either $10 million in
stockholders' equity, $50 million in market value of listed securities,
or total assets and total revenue of at least $50 million each for the
most recently completed fiscal year or two of the three most recently
completed fiscal years, along with other requirements.\13\
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\13\ Rule 5450(b).
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Companies listing under the proposed Global Select Market listing
standards would have to comply with these requirements, as well as all
other applicable Nasdaq listing rules, including Nasdaq's corporate
governance requirements. As with all other listing applicants, Nasdaq
reserves the right to apply its discretionary authority to deny initial
or continued listing to any company seeking to list under the proposed
standards if Nasdaq determines that the listing of such
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company is contrary to the public interest.\14\
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\14\ See Rule 5101 and IM-5101-1.
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Nasdaq is also making a minor technical correction to Rule
5315(f)(3)(C)(i) to insert an omitted word.
2. Statutory Basis
Nasdaq believes that the proposed rule change is consistent with
the provisions of Section 6 of the Act,\15\ in general and with
Sections 6(b)(5) of the Act,\16\ in particular in that it is designed
to prevent fraudulent and manipulative acts and practices, to promote
just and equitable principles of trade, to foster cooperation and
coordination with persons engaged in regulating, clearing, settling,
processing information with respect to, and facilitating transactions
in securities, to remove impediments to and perfect the mechanism of a
free and open market and a national market system, and, in general, to
protect investors and the public interest. The proposed rule change is
designed to provide an additional Global Select Market initial listing
standard under which a company may qualify and modify the market value
of publicly held shares requirement for certain companies. Nasdaq
believes that these changes are consistent with the investor protection
objectives of the Act in that the proposed requirements remain at a
level high enough so that only companies that are suitable for listing
on the Global Select Market will qualify to list.
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\15\ 15 U.S.C. 78f.
\16\ 15 U.S.C. 78f(b)(5).
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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.
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
Because the foregoing 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) \17\ of the Act and Rule 19b-
4(f)(6) thereunder.\18\
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\17\ 15 U.S.C. 78s(b)(3)(A).
\18\ 17 CFR 240.19b-4(f)(6).
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At any time within 60 days of the filing of the proposed rule
change, the Commission may summarily abrogate 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. Nasdaq has provided the
Commission written notice of its intent to file the proposed rule
change, along with a brief description and text of the proposed rule
change, at least five business days prior to the date of filing of the
proposed rule change.
Nasdaq believes that the proposed rule change does not
significantly affect the protection of investors or the public interest
because the changes proposed herein allow only companies of adequate
size and quality to list their shares on the Nasdaq Global Select
Market. Nasdaq notes that the proposed new listing requirements are
more stringent than recently-approved initial listing standards of the
NYSE and exceed the requirements of the Penny Stock Rules.
Consequently, Nasdaq believes the proposed rule change does not raise
any novel regulatory issues or significantly affect the protection of
investors or the public interest. Companies listing under the proposed
Global Select Market listing requirements would have to comply with all
other applicable Nasdaq listing rules, including Nasdaq's corporate
governance requirements.
IV. Solicitation of Comments
Interested persons are invited to submit written data, views, and
arguments concerning the foregoing, including whether the proposed rule
change, as amended, 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 e-mail to [email protected]. Please include
File Number SR-NASDAQ-2010-047 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-2010-047. 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 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, 100 F
Street, NE., Washington, DC 20549, on official business days between
the hours of 10 a.m. and 3 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; 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-2010-047, and should be submitted on or before May 11, 2010.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\19\
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\19\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. 2010-9033 Filed 4-19-10; 8:45 am]
BILLING CODE 8011-01-P