FR 2024-30524

Summary of the Document

The document discusses a proposed rule change by The Nasdaq Stock Market LLC, concerning an increase in all-inclusive annual listing fees for certain companies. These changes are set to begin on January 1, 2025, and they apply to both domestic and foreign companies that list equity securities on the Nasdaq Global Select, Global, and Capital Markets. The proposal aims to update fees to reflect the value that Nasdaq provides to these companies, considering both the increased operational costs of the Exchange and the competitive landscape of stock exchanges.

Significant Issues and Concerns

Several concerns arise from the proposed changes. Firstly, the document provides limited transparency regarding how the specific amounts of the fee increases were calculated. Stakeholders may worry about whether these increases are justified. Additionally, while it mentions Nasdaq's plans to remodel its New York headquarters and expand services, it does not detail the financial implications or cost justifications for these investments. This lack of detail could raise questions about the necessity and scale of the fee hikes.

Furthermore, the document refers to the pressure of competitiveness as a reason for raising fees, but it lacks specific comparisons to competitors' fee structures. This vagueness may leave stakeholders unclear about how Nasdaq's fees align within the industry. The proposal also hints at transitioning to a per-share fee structure in the future but does not elaborate on the potential impact or timeline, which could generate uncertainty among companies about upcoming financial obligations.

Impact on the Public

For the public, these changes may seem technical, but they hold broader implications for the financial market. Increased fees could affect the costs companies incur to list their equity on Nasdaq, potentially influencing the choices of where companies decide to list their stocks. This development could indirectly impact investors who may see changes in where they can trade or view company listings.

Impact on Specific Stakeholders

For the companies listed or wishing to be listed on Nasdaq, the proposed fee increases mean recalibrating their budgets to account for higher listing costs. This could disproportionately affect smaller companies or those new to the market, as they may have more constrained financial resources than large, established companies. Conversely, Nasdaq argues that these increases align with the benefits companies receive from listing, such as visibility, support services, and advocacy efforts. While this positioning could reinforce Nasdaq's value proposition, it risks alienating companies that feel the cost does not justify the benefit.

Moreover, investors may see changes in the stock exchange landscape as companies shift listings in response to fee changes, potentially influencing stock availability. Regulatory bodies might also be impacted as they may need to monitor these adjustments and ensure compliance with fair competition standards. As Nasdaq seeks to maintain its competitive edge, the realignment of these fees highlights ongoing adjustments exchanges must make in an evolving market landscape.

In reviewing the proposed changes by The Nasdaq Stock Market LLC concerning financial allocations, several points emerge regarding the modification of all-inclusive annual fees for companies listing their equity securities on various Nasdaq markets. This commentary focuses on understanding these financial references and their implications as detailed in the Federal Register document.

Nasdaq is proposing adjustments to the annual fees that companies must pay to list their equity securities across its different market tiers. The current fees for companies listed on the Capital Market range from $49,500 to $85,000. For Acquisition Companies listing on this market, the fee is a flat $81,000. Fees for ADRs (American Depositary Receipts) range between $49,500 to $59,500, and for Limited Partnerships, the fees vary from $34,500 to $42,000.

For companies listed on the Global and Global Select Markets — excluding certain exceptions like Acquisition Companies — the fees range from $52,500 to $182,500. Acquisition Companies on these markets also currently pay an annual fee of $81,000. ADRs on these markets incur fees ranging from $52,500 to $94,000, while Limited Partnerships pay between $42,000 to $87,000.

Additionally, on the Global Market, SEEDS and Other Securities have annual fees ranging from $15,000 to $30,000, and Closed-end Funds, irrespective of the market tier, pay between $34,500 to $112,000.

A significant proposed change is the increase in the flat annual fee for Acquisition Companies listed across all Nasdaq markets, from $81,000 to $85,000. This modification is part of an effort to better align the fees with the perceived value of the listings for these companies. However, the document does not delve into specific metrics or data that determine the necessity of these fee adjustments, which raises some concerns about transparency and justification for the increase.

Nasdaq cites increased costs, such as those related to remodeling and expanding a portion of its New York headquarters used for company events, as a rationale for the fee changes. However, there is no detailed breakdown of these costs, leaving room for questions about how these investments influence the specific fee increments.

Furthermore, Nasdaq indicates that this adjustment reflects ongoing improvements in the services provided to listed companies, along with the expansion in technology and facilities. Yet, the document lacks specific data showing how these service enhancements justify the proposed financial adjustments. This vagueness may lead to uncertainty regarding how the fee increases align with overall operational cost hikes, inflation rates, and competitive market pressure.

Overall, while Nasdaq's financial allocations are intended to balance operational costs against the value provided to companies, the document highlights several areas where additional clarity and specificity could enhance understanding and acceptance amongst stakeholders.