NASDAQ Introduces New Market Structure
By: RYAN C. BRAUER
November 2006
On July 3, 2006, NASDAQ introduced its Global Select Market amidst a transition from an interdealer quotation system to a national securities exchange.
The new Global Select Market tier is open to public companies listed on NASDAQ that meet the highest listing standards in the world, based on measures of market value, liquidity, and earnings. At the same time, NASDAQ renamed the NASDAQ National Market the NASDAQ Global Market, and the NASDAQ SmallCap Market the NASDAQ Capital Market. This new market structure highlights the presence that NASDAQ-listed companies have in the international market. NASDAQ believes its Global Market more accurately reflects the international focus and leadership of NASDAQ and NASDAQ-listed companies, while the NASDAQ Capital Market reflects the core purpose of this market, raising capital.
For initial listing purposes, NASDAQ unilaterally designated and transferred companies that were listed on the NASDAQ National Market and met the initial listing standards for the new NASDAQ Global Select Market tier. NASDAQ will apply its corporate governance standards to companies in each of the new tiers.
The continued listing standards are the same for the NASDAQ Global Select Market tier and the NASDAQ Global Market tier. These are the same standards in place before the NASDAQ National Market was renamed. Beginning in October 2007, NASDAQ will conduct annual reviews of all NASDAQ-listed companies. Those companies meeting the listing standards may be placed on the NASDAQ Global Select Market the following January. While qualifying NASDAQ Global Market companies will be transferred automatically to the Global Select Market tier, NASDAQ Capital Market companies qualifying for the top tier will have the option to remain on the NASDAQ Capital Market or move to the NASDAQ Global Select Market. Outside of the annual review process, any NASDAQ-listed company may transfer into the NASDAQ Global Select Market, provided that it satisfies the initial listing standards and pays the applicable fees.
NASDAQ is providing Global Select Market companies with enhanced services in communications, visibility, management, and board support. To increase visibility, two new indexes have been created to track the Global Select Market and Global Market tiers. An index already exists for the Capital Market. Inclusion in these indexes generates direct and indirect visibility for NASDAQ-listed companies.
The introduction of the Global Select Market tier reflects NASDAQ’s goal to keep pace with other stock markets as it transitions from an interdealer quotation system to a national securities exchange. The change reflects the importance NASDAQ places on the global marketplace high initial listing standards. Because the continued listing standards remain the same, there are no additional fees for most companies, and because NASDAQ will be conducting an annual review to determine eligibility for its highest tier, the change is likely to have minimal impact on companies already listed on a NASDAQ market.