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Federal Register / Vol. 86, No. 19 / Monday, February 1, 2021 / Notices 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 Commissions 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 the filing also will be available for inspection and copying at the principal office of the Exchange. All comments received will be posted without change.
Persons submitting comments are cautioned that we do not redact or edit personal identifying information from comment submissions. You should submit only information that you wish to make available publicly. All submissions should refer to File Number SRNYSEArca202104 and should be submitted on or before February 22, 2021.
For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.13
J. Matthew DeLesDernier, Assistant Secretary.
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SECURITIES AND EXCHANGE
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Release No. 3490995; File No. SR
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Self-Regulatory Organizations; The Nasdaq Stock Market LLC; Order Approving a Proposed Rule Change, as Modified by Amendment No. 1, To Exclude Special Purpose Acquisition Companies From the Requirement That at Least 50% of a Companys Round Lot Holders Each Hold Unrestricted Securities With a Market Value of at Least $2,500
January 26, 2021.

I. Introduction On October 8, 2020, The Nasdaq Stock Market LLC Nasdaq or Exchange filed with the Securities and Exchange Commission Commission, pursuant to Section 19b1 of the Securities Exchange Act of 1934 Act 1 and Rule 19b4
thereunder,2 a proposed rule change to exclude special purpose acquisition companies from the requirement that at least 50% of a companys round lot holders each hold unrestricted securities with a market value of at least 13 17

CFR 200.303a12.
U.S.C. 78sb1.
2 17 CFR 240.19b4.
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$2,500. On October 21, 2020, the Exchange filed Amendment No. 1 to the proposed rule change, which amended and replaced the proposed rule change in its entirety. The proposed rule change, as modified by Amendment No.
1, was published for comment in the Federal Register on October 28, 2020.3
On December 11, 2020, pursuant to Section 19b2 of the Act,4 the Commission designated a longer period within which to approve or disapprove, or institute proceedings to determine whether to disapprove, the proposed rule change, as modified by Amendment No. 1.5 This order approves the proposed rule change, as modified by Amendment No. 1.
II. Description of the Proposed Rule Change, as Modified by Amendment No. 1
The Exchange has proposed to exclude companies listed pursuant to Nasdaq Rule IM51012 whose business plan is to engage in a merger or acquisition with one or more unidentified companies within a specified period of time SPACs, prior to the completion of any such merger or acquisition, from the requirement that at least 50% of the companys required minimum number of round lot holders must each hold unrestricted securities with a market value of at least $2,500 at the time of initial listing Required Minimum Amount.6
3 See Securities Exchange Act Release No. 90245
October 22, 2020, 85 FR 68400 Notice.
4 15 U.S.C. 78sb2.
5 See Securities Exchange Act Release No. 90644, 85 FR 82005 December 17, 2020. The Commission designated January 26, 2021, as the date by which the Commission shall either approve or disapprove, or institute proceedings to determine whether to disapprove, the proposed rule change, as modified by Amendment No. 1.
6 Nasdaq defines round lot holder as a holder of a normal unit of trading of unrestricted securities. The number of beneficial holders will be considered in addition to holders of record. See Nasdaq Rule 5005a40. Nasdaq defines normal unit of trading to mean 100 shares of a security unless, with respect to a particular security, Nasdaq determines that a normal unit of trading shall constitute other than 100 shares. See Nasdaq Rule 5005a39. Nasdaq defines unrestricted securities to mean securities that are not restricted securities. See Nasdaq Rule 5005a46. Nasdaq defines restricted securities to mean securities that are subject to resale restrictions for any reason, including, but not limited to, securities: 1
Acquired directly or indirectly from the issuer or an affiliate of the issuer in unregistered offerings such as private placements or Regulation D
offerings; 2 acquired through an employee stock benefit plan or as compensation for professional services; 3 acquired in reliance on Regulation S, which cannot be resold within the United States; 4
subject to a lockup agreement or a similar contractual restriction; or 5 considered restricted securities under Rule 144. See Nasdaq Rule 5005a37. The number of required minimum number of round lot holders is 450 holders for the
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The Exchange states in its proposal that it imposed the Required Minimum Amount to help ensure that at least 50%
of the required minimum number of shareholders hold a meaningful value of unrestricted securities and that a company has sufficient investor interest to support an exchange listing.7 The Exchange asserts that, prior to adopting the Required Minimum Amount, it had noticed problems with companies listing where a large number of round lot holders held exactly 100 shares, which would be worth only $400 in the case of a stock that is trading at the minimum bid price of $4 per share, or as little as $200 in the case of a stock listing under alternative price criteria.8
The Exchange further states that such holders held shares in the company prior to its IPO and that such amount was not a representation of genuine investor interest in the company sufficient to support an exchange listing.9 In proposing to adopt the standard, the Exchange stated that it believed the Required Minimum Amount was a more appropriate representation of genuine investor interest in the company and would make it more difficult to circumvent the round lot holder requirement through share transfers for no value.10
The Exchange states that it does not believe the Required Minimum Amount is as relevant to the listing of SPACs.11
Nasdaq Global Select Market; 400 holders for the Nasdaq Global Market; and 300 holders for the Nasdaq Capital Market. See Nasdaq Rules 5315f1C, 5405a3, and 5505a3. Nasdaq defines market value as the consolidated closing bid price multiplied by the measure to be valued.
See Nasdaq Rule 5005a23.
7 See Notice, supra note 3, at 68401; Securities Exchange Act Release No. 86314 July 5, 2019, 84
FR 33102, 33107 July 11, 2019 order approving SRNASDAQ2019009 Required Minimum Amount Approval Order. In the Required Minimum Amount Approval Order, the Commission also approved Nasdaqs proposal to exclude restricted securities see supra note 6 from the calculation of publicly held shares, market value of publicly held shares, and round lot holders for initial listing purposes. According to Nasdaq, these changes were designed to help ensure adequate distribution, shareholder interest, and a liquid trading market for a security. See Notice, supra note 3, at 68401; Required Minimum Amount Approval Order, supra, at 33103, 3310809.
8 See Notice, supra note 3, at 68401. See also Required Minimum Amount Approval Order, supra note 7, at 33109.
9 See Notice, supra note 3, at 6840102.
10 See id. at 68401; Required Minimum Amount Approval Order, supra note 7, at 33109.
11 See Notice, supra note 3, at 68401. Nasdaq Rule IM51012 sets forth requirements applicable to SPACs and requires, among other things, that at least 90% of the gross proceeds raised in the IPO
and any concurrent sale by the SPAC of equity securities must be deposited in a trust account. See Nasdaq Rule IM51012a. Until a SPAC has completed business combinations meeting the requirements of IM51012b, each shareholder
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