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Frequently Asked Questions
  Enhancing Transparency in Regulation
Identification Number 1480
Enhancing Transparency in Regulation
Publication Date: January 10, 2018 

At Nasdaq, we believe transparency of our Listing Rules, policies and procedures results in fairer and more effective regulation. To this end, in 2012, Nasdaq created the Listing Center's Reference Library, which today houses more than 400 frequently asked questions about listing matters, 100 anonymized versions of appellate listing decisions and 350 written Staff interpretations of the Listing Rules. To reinforce the critical role transparency plays in our regulatory program, we continue to develop and enhance the utility of our Listing Center's Reference Library website and expand the information available through this free web portal.

It is with this in mind that Nasdaq Staff, in conjunction with the Nasdaq Listing Hearing and Review Council, developed the Listing Qualifications Transparency Report. This report includes anonymized information regarding the facts and circumstances that prompted Listing Qualifications Staff and Hearings Panels to exercise the discretion afforded by the Listing Rules to impose additional or more stringent criteria or to shorten time frames otherwise available to companies. It also describes instances when, following Listing Qualifications Staff review of certain share issuances, listed companies made significant changes to their transactions. We believe that sharing this information helps companies better understand how Nasdaq applies its listing rules, which helps companies and their advisors better comply with those rules. It is our expectation that we will prepare this report annually. We look forward to your comments, which can be emailed to us at

View the Transparency Report Here >>
Publication Date*: 1/10/2018 Mailto Link Identification Number: 1480
Frequently Asked Questions
  SEC Guidance on Pay Ratio Disclosure Rules
Identification Number 1273
SEC Guidance on Pay Ratio Disclosure Rules
Publication Date: October 26, 2016

The SEC recently released five Compliance & Disclosure Interpretations regarding the upcoming company pay ratio disclosure rules. These rules require companies to provide disclosure of their pay ratios for their first fiscal year beginning on or after Jan. 1, 2017. For most companies with a fiscal year that ends on December 31, the initial pay ratio disclosure must be included in the 2018 proxy statement using 2017 compensation.

Read more from the SEC >>
Publication Date*: 10/26/2016 Mailto Link Identification Number: 1273
Frequently Asked Questions
  Nasdaq MarketWatch: Making Market Surveillance SMARTer
Identification Number 1263
Nasdaq MarketWatch: Making Market Surveillance SMARTer
Publication Date: October 7, 2016

In order to keep pace with sophisticated trading technology and manipulation techniques being used to gain a trading advantage, trading venues need the same level of sophisticated tools as trading professionals. For exchanges, the ability to maintain a fair, transparent and safe market is critical to attracting liquidity. Proven at over 50 marketplaces and regulators, SMARTS Market Surveillance is an industry benchmark for real-time and T+1 solutions for market surveillance, supervision and compliance. Nasdaq MarketWatch leverages Nasdaq’s own SMARTS technology to power surveillance on multiple exchanges around the world. In addition to its exchange and regulator audience, SMARTS surveillance solutions also power surveillance for over 120 market participants and 139+ markets.

Q:  What is SMARTS? 

A: SMARTS Market Surveillance leverages 20+ years of expertise from working with a wide range of needs – from simple to complex – to provide organizations with a robust platform to manage cross-market, cross-asset, multi-venue surveillance. The technology has powerful visualization tools to simplify the monitoring process by distilling complex information into a single snapshot that provides clear guidance on where to focus an investigation. Additionally, the technology correlates real-time and historical data with detection patterns to ensure early detection of unusual trading patterns that could be potential breaches of exchange trading rules and practices.

Q:  How does SMARTS benefit investors?

A: The graphical visualization tools that SMARTS provides help market surveillance analysts monitor the market in order to detect and prevent market manipulation and keep the market fair for all investors. SMARTS technology allows analysts to investigate specific time periods when trading occurred by distilling thousands of data points into an intuitive visualization that can pinpoint trading activities down to the millisecond. This allows for making a fair and equal assessment of all trading made by market participants.

Tools available for a surveillance analyst include graphical displays of trading activity, order book replays, market maker monitoring, market overview and statistical evaluation, data mining etc.

Q:  What is the future of SMARTS and market surveillance?

A: The future in market surveillance lies within market intelligence and machine learning. Instead of an analyst working through piles of data and sorting out false positives versus real indicators of market manipulation, the solution infrastructure will contain an intelligent machine that has pre-sorted and added logic to the alerts and the data, based on historical observations and patterns. This will highly improve the effectiveness of market surveillance and introduce more opportunities to include profiling of behavior and market participants into surveillance patterns. The future of market surveillance is evolving to meet the ongoing change in investor behavior and to adapt to new attempts to manipulate the market.


Learn More about Nasdaq’s state-of-the art market surveillance in this Dow Jones story >>

Publication Date*: 10/10/2016 Mailto Link Identification Number: 1263
Frequently Asked Questions
  Nasdaq Petitions SEC for Short Position Disclosure
Identification Number 1211
Nasdaq Asks SEC for Short Position Disclosure
Publication Date: December 9, 2015

On December 7, 2015, Nasdaq filed a petition asking the SEC to adopt rules to require public disclosure by investors of short positions in exact parity with the disclosure requirements currently applicable to long investors, including the timing for such disclosure and when updates are required. In Nasdaq’s view, this is a much needed improvement to transparency around short positions.

Among other benefits, enhanced transparency will: (1) provide companies with insights into trading activity to help them engage with market participants and (2) give investors information to help them make meaningful investment decisions -- all of which enhance market efficiency and fairness.

Read the full petition >>

Publication Date*: 12/9/2015 Mailto Link Identification Number: 1211
Frequently Asked Questions
  How Exchanges Regulate Short Sales?
Identification Number 1191
How Exchanges Regulate Short Sales
Publication Date: November 18, 2015

While short selling is generally legal, abusive short sale practices, including short sales affected to manipulate the price of a stock, are prohibited. The Securities and Exchange Commission and the Listing Exchanges regulate short selling through Regulation SHO.

Rule 201 of Regulation SHO is designed to prevent short selling in a security that has already experienced a significant intra-day price decline. In this manner, Rule 201 prevents further downward pressure on the security from short selling and allows long holders to sell first in the event of such a decline. Listing Exchanges, including Nasdaq, implement Rule 201.

What does Rule 201 of Regulation SHO require?

Rule 201 generally prohibits a trading center from executing or displaying a short sale order of an Exchange-listed security at a price that is less than or equal to the current national best bid price, if the price of that security has decreased by 10% or more from the prior day’s closing price.

How does Rule 201 of Regulation SHO operate for Nasdaq-listed securities?

Nasdaq systems enforce Rule 201 for Nasdaq-listed securities. If a Nasdaq-listed security has decreased by 10% or more from the prior day’s closing price, Nasdaq systems prevent the security from being sold short for the reminder of that day and until the close of trading on the next trading day.

If Nasdaq determines that the prior day’s closing price for a listed security was incorrect in the system and resulted in an incorrect determination of the trigger price, Nasdaq may correct the prior day’s closing price and lift the short sale prohibition before the end of that time period.

Similarly, if Nasdaq determines that the short sale prohibition was triggered because of a clearly erroneous execution in the security, Nasdaq may also lift the prohibition before the end of that time period.

What reference price does Nasdaq use to calculate the short sale prohibition?

Nasdaq systems calculate the Short Sale prohibition based upon the prior day’s closing price. If a security did not trade on Nasdaq on the prior trading day (such as due to a trading halt, trading suspension or otherwise), the prohibition will be based on the last sale on Nasdaq for that security on the most recent day on which the security traded.

In the case of a new security offering, such as an IPO, there will not be a closing price for the prior day and, thus, the Short Sale prohibition will not apply until the second day of trading.

How Does Nasdaq monitor for short sale violations?

Nasdaq MarketWatch monitors all trading that takes place on the Nasdaq exchanges. MarketWatch reviews stocks that are subject to short sale restrictions to establish that the restriction was triggered correctly and to investigate the reason for the decline in the stock. MarketWatch may contact the company for assistance in this investigation. If a company receives a call from Nasdaq MarketWatch, the company can always call MarketWatch back at the published phone number available on to verify that the call came from Nasdaq.

Who can I talk to about short selling restrictions?

Companies with questions about short selling in their securities can contact Nasdaq MarketWatch at +1 800 537 3929 or at +1 301 978 8500. In appropriate situations, MarketWatch will work with FINRA to review short selling activity.

Where can I obtain more information about Regulation SHO?

More information about Regulation SHO is available at:

Publication Date*: 11/18/2015 Mailto Link Identification Number: 1191
material_search_footer*The Publication Date reflects the date of first inclusion in the Reference Library, which was launched on July 31, 2012, or a subsequent update to the material. Material may have been previously available on a different Nasdaq web site.
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