Notice2021-28252
Self-Regulatory Organizations; New York Stock Exchange LLC; Notice of Filing of Proposed Rule Change To Amend the NYSE Listed Company Manual To Amend Certain of Its Listing and Annual Fees
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Published
December 29, 2021
Issuing agencies
Securities and Exchange Commission
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<title>Federal Register, Volume 86 Issue 247 (Wednesday, December 29, 2021)</title>
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[Federal Register Volume 86, Number 247 (Wednesday, December 29, 2021)]
[Notices]
[Pages 74198-74201]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2021-28252]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-93862; File No. SR-NYSE-2021-76]
Self-Regulatory Organizations; New York Stock Exchange LLC;
Notice of Filing of Proposed Rule Change To Amend the NYSE Listed
Company Manual To Amend Certain of Its Listing and Annual Fees
December 22, 2021.
Pursuant to Section 19(b)(1) \1\ of the Securities Exchange Act of
1934 (the ``Act'') \2\ and Rule 19b-4 thereunder,\3\ notice is hereby
given that, on December 20, 2021, New York Stock Exchange LLC (``NYSE''
or the ``Exchange'') filed with the Securities and Exchange Commission
(the ``Commission'') the proposed rule change as described in Items I,
II, and III below, which Items have been prepared by the self-
regulatory organization. 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\ 15 U.S.C. 78a.
\3\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Exchange proposes to amend Sections 902.02, 902.03 and 902.11
of the NYSE Listed Company Manual (the ``Manual'') to amend certain of
its listing fees. The proposed rule change is available on the
Exchange's website at <a href="http://www.nyse.com">www.nyse.com</a>, at the principal office of the
Exchange, and at the Commission's Public Reference Room.
II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
In its filing with the Commission, the self-regulatory organization
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 those statements may be examined at
the places specified in Item IV below. The Exchange has prepared
summaries, set forth in sections A, B, and C below, of the most
significant parts of such statements.
A. Self-Regulatory Organization's Statement of the Purpose of, and the
Statutory Basis for, the Proposed Rule Change
1. Purpose
The Exchange proposes to amend certain of its listing fees set
forth in Chapter 9 of the Manual. Changes to initial listing fees will
take effect immediately and changes to annual fees will take effect
from the beginning of the calendar year commencing on January 1, 2022.
The proposed amendments only reflect changes in the amounts charged for
the initial listing of securities and on an annual basis thereafter and
do not reflect any change in the services provided to the issuer in
connection with such listing.
Currently, when an issuer first lists a class of common shares
(i.e., when an issuer lists a class of common shares and has no other
class of common shares listed on the Exchange at the time of such
listing), the Exchange charges listing fees for such class at a rate of
$0.004 per share, subject to a minimum and maximum fee of $150,000 and
$295,000, respectively. The Exchange also charges a one-time special
fee of $50,000 which is included in the minimum and maximum fee. The
Exchange proposes to replace the per share fee with a flat fee of
$295,000 when an issuer first lists a class of common shares and
eliminate the special one-time charge and minimum and maximum fee
levels. The Exchange proposes to make conforming changes throughout
Sections 902.02 and 902.03 of the Manual to eliminate references to the
special one-time charge and the minimum and maximum listing fees. As
the one-time charge is currently included in the maximum initial
listing fee of $295,000 and all companies will be paying the maximum
fee as a flat fee going forward, the Exchange is proposing to eliminate
the one-time charge.\4\ The Exchange also proposes to: (i) Revise the
rules in several places to
[[Page 74199]]
make clear that the $295,000 flat fee is applicable only when an issuer
lists a class of common shares and has no other class of common shares
listed on the Exchange at the time of such listing and (ii) modify
examples of how to calculate listing fees which are included in Section
902.03 to reflect the effect on those examples of the proposed flat
initial listing fee. The Exchange also proposes to add text to Section
902.03 to note that the fees for Investment Company Units,
streetTRACKS[supreg] Gold Shares, Currency Trust Shares, and Commodity
Trust Shares are set forth in Section 902.07.
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\4\ The first time an issuer lists an Equity Investment Tracking
Stock (as defined in Section 102.07) that is the issuer's only class
of common equity securities listed on the Exchange, the fee is a
fixed amount of $100,000, which amount includes the special charge
of $50,000. The proposed amendment would remove the reference to the
inclusion of the $50,000 special charge from the fee provision in
relation to Equity Investment Tracking Stocks, as a separate fee for
those securities and the concept will no longer exist elsewhere in
the rules.
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In addition, the Exchange proposes to change the annual fee set
forth in Section 902.03 of the Manual from $0.00113 per share to
$0.00117 per share for each of the following: A primary class of common
shares (including Equity Investment Tracking Stocks); each additional
class of common shares (including tracking stock); a primary class of
preferred stock (if no class of common shares is listed); each
additional class of preferred stock (whether primary class is common or
preferred shares); and each class of warrants. In addition, the minimum
annual fee will be increased from $71,000 to $74,000 for each of (i) a
primary class of common shares (including Equity Investment Tracking
Stocks) and (ii) a primary class of preferred stock (if no class of
common shares is listed). The proposed increase in the per share rates
and the minimum fees reflect increases in the costs the Exchange incurs
in providing services to listed companies on an ongoing basis, as well
as increases in the costs of conducting its related regulatory
activities. The Exchange does not propose to increase the minimum
annual fees charged for additional classes of common shares (including
tracking stocks), preferred stocks that are not the primary listed
equity security, or warrants. The Exchange believes that the benefits
issuers receive in connection with those listings are consistent with
the current minimum fee levels, as those types of listings do not
generally entitle issuers to the types of services provided in
connection with a primary common stock listing or primary preferred
stock listing and the Exchange has therefore not incurred the same
level of cost increase associated with them.
Section 902.03 includes a paragraph describing the application of
the initial listing fee as currently in effect in the situation where a
listed real estate investment trust (``REIT'') is structured as an
umbrella partnership real estate investment trust (``UPREIT'') and the
operating partnership through which the REIT holds its assets is also
listed on the Exchange. In such cases, the initial listing fees are
applied to those two issuers on a combined basis at the time of initial
listing and the bill is divided between the two issuers so that the
REIT will be billed an amount equal to the same percentage of the
minimum or maximum fee amount as the REIT's ownership interest in the
operating partnership represents of the total equity of the operating
partnership. Consistent with the adoption of a flat initial listing fee
of $295,000, the Exchange proposes to provide that the REIT will be
billed an amount equal to the same percentage of the $295,000 flat fee
as the REIT's ownership interest in the operating partnership
represents of the total equity of the operating partnership.
Section 902.11 of the Manual currently provides for the application
to an Acquisition Company's common shares and warrants of annual fees
that are the same as fees for common shares set forth in Section 902.03
(with an aggregate annual limit of $85,000) and the fees set forth in
Section 902.06 applicable to the warrants. The Exchange proposes to
replace these fees for Acquisition Companies with a flat annual fee of
$85,000 for calendar years starting on or after January 1, 2022. The
flat annual fee would cover both an Acquisition Company's common shares
and warrants, if any. Accordingly, an Acquisition Company's common
shares and warrants will no longer be subject to the separate annual
fee schedules applicable to those classes of securities in Sections
902.03 and 902.06 of the Manual, respectively.
The Exchange proposes to make the aforementioned fee increases in
Section 902.03 to better reflect the value of such listing to issuers.
In particular, the Exchange believes it is reasonable to apply a flat
fee when an issuer first lists a class of common shares as the value to
the issuer to listing are the same regardless of the number of shares
the issuer has outstanding. The Exchange notes that the substantial
majority of issuers that have recently listed on the Exchange paid the
$295,000 maximum fee under the Exchange's current fee structure.
Therefore, the adoption of a $295,000 flat initial listing fee will not
result in an initial fee increase for most issuers. While some issuers
would pay a higher initial listing fee under the proposed flat fee than
under the current rate, the Exchange believes that this increase is not
unfairly discriminatory, as the resources the Exchange expends in
connection with the initial listing of those companies are typically
consistent with the resources the Exchange expends on many companies
that are already subject to the $295,000 maximum fee.
In addition, the Exchange observes that many issuers may not know
their share structure or how many shares will ultimately be outstanding
at the time they are considering whether to list on the Exchange.
Therefore, the Exchange believes that adopting a flat initial fee and
eliminating the special one-time charge will provide prospective
issuers with greater transparency on the costs associated with
initially listing on the Exchange.
The revised annual fees will be applied in the same manner to all
issuers with listed securities in the affected categories and the
changes will not disproportionately affect any specific category of
issuers.
The proposed adoption of a flat annual fee for Acquisition
Companies is in response to issuer feedback. Most Acquisition Companies
issue a unit that contains a common share and fraction of a warrant. In
most cases, the current fee schedules result in Acquisition Companies
paying an annual fee equal to the existing $85,000 maximum. Adoption of
a flat $85,000 annual fee for an Acquisition Company's common shares
and warrants, if any, will therefore not result in an annual fee
increase for most Acquisition Companies and will have the benefit of
making the fee level easier to implement.
The proposed rule changes would not affect the Exchange's
commitment of resources to its regulatory oversight of the listing
process, or its regulatory programs.
2. Statutory Basis
The Exchange believes that the proposed rule change is consistent
with Section 6(b) of the Act,\5\ in general, and furthers the
objectives of Section 6(b)(4) \6\ of the Act, in particular, in that it
is designed to provide for the equitable allocation of reasonable dues,
fees, and other charges. The Exchange also believes that the proposed
rule change is consistent with Section 6(b)(5) of the Act,\7\ in that
it is designed 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
[[Page 74200]]
and a national market system, and, in general, to protect investors and
the public interest and is not designed to permit unfair discrimination
between customers, issuers, brokers, or dealers.
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\5\ 15 U.S.C. 78f(b).
\6\ 15 U.S.C. 78f(b)(4).
\7\ 15 U.S.C. 78f(b)(5).
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The Proposed Change Is Reasonable
The Exchange operates in a highly competitive marketplace for the
listing of the various categories of securities affected by the
proposed initial and annual fee adjustments. The Commission has
repeatedly expressed its preference for competition over regulatory
intervention in determining prices, products, and services in the
securities markets. Specifically, in Regulation NMS,\8\ the Commission
highlighted the importance of market forces in determining prices and
SRO revenues and, also, recognized that current regulation of the
market system ``has been remarkably successful in promoting market
competition in its broader forms that are most important to investors
and listed companies.'' \9\
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\8\ Release No. 34-51808 (June 9, 2005); 70 FR 37496 (June 29,
2005).
\9\ See Regulation NMS, 70 FR at 37499.
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The Exchange believes that the ever-shifting market share among the
exchanges with respect to new listings and the transfer of existing
listings between competitor exchanges demonstrates that issuers can
choose different listing markets in response to fee changes.
Accordingly, competitive forces constrain exchange listing fees. Stated
otherwise, changes to exchange listing fees can have a direct effect on
the ability of an exchange to compete for new listings and retain
existing listings.
Given this competitive environment, the adoption of a flat initial
listing fee and small increase to the annual fees for various
categories of equity securities represent a reasonable attempt to
address the Exchange's increased costs in servicing these listings
while continuing to attract and retain listings.
The Exchange proposes to make the aforementioned fee increases in
Section 902.03 to better reflect the value of such listing to issuers.
In particular, the Exchange believes it is reasonable to apply a flat
fee when an issuer first lists a class of common shares as the value to
the issuer to listing are the same regardless of the number of shares
the issuer has outstanding. The Exchange notes that the substantial
majority of issuers that have recently listed on the Exchange paid the
$295,000 maximum fee under the Exchange's current fee structure.
Therefore, the adoption of a $295,000 flat initial listing fee will not
result in an initial fee increase for most issuers. While some issuers
would pay a higher initial listing fee under the proposed flat fee than
under the current rate, the Exchange believes that this increase is not
unfairly discriminatory, as the resources the Exchange expends in
connection with the initial listing of those companies are typically
consistent with the resources the Exchange expends on many companies
that are already subject to the $295,000 maximum fee. As the one-time
charge is currently included in the maximum initial listing fee of
$295,000 and all companies will be paying the current maximum fee as a
flat fee going forward, the Exchange proposes to eliminate the one-time
charge.
The Exchange does not propose to increase the minimum annual fees
charged for additional classes of common shares (including tracking
stocks), preferred stocks that are not the primary listed equity
security, or warrants. The Exchange believes that the benefits issuers
receive in connection with those listings are consistent with the
current minimum fee levels, as those types of listings do not generally
entitle issuers to the types of services provided in connection with a
primary common stock listing or primary preferred stock listing.
The proposed adoption of a flat annual fee for Acquisition
Companies is in response to issuer feedback. Most Acquisition Companies
issue a unit that contains a common share and fraction of a warrant. In
most cases, the current fee schedules result in Acquisition Companies
paying an annual fee equal to the existing $85,000 maximum. Adoption of
a flat $85,000 annual fee for an Acquisition Company's common shares
and warrants, if any, will therefore not result in an annual fee
increase for most Acquisition Companies and will have the benefit of
making the fee level easier to implement. The Exchange does not provide
Acquisition Companies with many of the services provided to listed
companies that are operating companies until after their business
combination is completed. Accordingly, the Exchange does not believe it
is appropriate to increase annual fees for Acquisition Companies at
this time.
The Proposal Is an Equitable Allocation of Fees
The Exchange believes its proposal equitably allocates its fees
among its market participants.
The Exchange believes it is equitable to apply a flat fee when an
issuer first lists a class of common shares. Under current rules,
because of the existing minimum and maximum initial listing fees, the
effective per-share initial listing fee is different for almost every
issuer. Applying a flat initial listing fee to each issuer, therefore,
equitably allocates fees among issuers.
The Exchange believes that the proposed amendments to the annual
fees for equity securities are equitable because they do not change the
existing framework for such fees, but simply increase certain of the
minimum fees and per unit rates by a small amount to reflect increased
operating costs. Similarly, as the fee structure remains effectively
unchanged apart from small increases in the rates paid by all issuers,
the changes to annual fees for equity securities neither target nor
will they have a disparate impact on any particular category of issuer.
The Exchange believes it is equitable to apply a flat initial
listing fee to all Acquisition Companies. In most cases, the current
fee schedules result in Acquisition Companies paying an annual fee
equal to the existing $85,000 maximum. Adoption of a flat $85,000
annual fee for an Acquisition Company's common shares and warrants, if
any, will therefore not result in an annual fee increase for most
Acquisition Companies and will have the benefit of making the fee level
easier to implement.
The Proposal Is Not Unfairly Discriminatory
The Exchange believes that the proposal is not unfairly
discriminatory. The proposed fee changes are not unfairly
discriminatory because the same fee schedule will apply to all listed
issuers. Further, the Exchange operates in a competitive environment
and its fees are constrained by competition in the marketplace. Other
venues currently list all of the categories of securities covered by
the proposed fees and if a company believes that the Exchange's fees
are unreasonable it can decide either not to list its securities or to
list them on an alternative venue.
For the foregoing reasons, the Exchange believes that the proposal
is consistent with the Act.
B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange does not believe that the proposed rule change will
impose any burden on competition that is not necessary or appropriate
in furtherance of the purposes of the Act. The proposed rule change is
designed to ensure that the fees charged by the Exchange accurately
reflect the services provided and benefits realized by listed
companies. The market for listing services is extremely competitive.
Each listing exchange has a different fee
[[Page 74201]]
schedule that applies to issuers seeking to list securities on its
exchange. Issuers have the option to list their securities on these
alternative venues based on the fees charged and the value provided by
each listing. Because issuers have a choice to list their securities on
a different national securities exchange, the Exchange does not believe
that the proposed fee changes impose a burden on competition.
Intramarket Competition
The proposed amended fees will be charged to all listed issuers on
the same basis. The Exchange does not believe that the proposed amended
fees will have any meaningful effect on the competition among issuers
listed on the Exchange.
Intermarket Competition
The Exchange operates in a highly competitive market in which
issuers can readily choose to list new securities on other exchanges
and transfer listings to other exchanges if they deem fee levels at
those other venues to be more favorable. Because competitors are free
to modify their own fees in response, and because issuers may change
their chosen listing venue, the Exchange does not believe its proposed
fee change can impose any burden on intermarket competition.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others
No written comments were solicited or received with respect to the
proposed rule change.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
Within 45 days of the date of publication of this notice in the
Federal Register or up to 90 days (i) as the Commission may designate
if it finds such longer period to be appropriate and publishes its
reasons for so finding or (ii) as to which the self-regulatory
organization consents, the Commission will:
(A) By order approve or disapprove the proposed rule change, or
(B) institute proceedings to determine whether the proposed rule
change should be disapproved.
IV. Solicitation of Comments
Interested persons are invited to submit written data, views, and
arguments concerning the foregoing, including whether the proposed rule
change is consistent with the Act. Comments may be submitted by any of
the following methods:
Electronic Comments
<bullet> Use the Commission's internet comment form (<a href="https://www.sec.gov/rules/sro.shtml">https://www.sec.gov/rules/sro.shtml</a>); or
<bullet> Send an email to <a href="/cdn-cgi/l/email-protection#f381869f96de909c9e9e969d8780b3809690dd949c85"><span class="__cf_email__" data-cfemail="9ae8eff6ffb7f9f5f7f7fff4eee9dae9fff9b4fdf5ec">[email protected]</span></a>. Please include
File Number SR-NYSE-2021-76 on the subject line.
Paper Comments
<bullet> Send paper comments in triplicate to Secretary, Securities
and Exchange Commission, 100 F Street NE, Washington, DC 20549-1090.
All submissions should refer to File Number SR-NYSE-2021-76. This file
number should be included on the subject line if email 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 website (<a href="https://www.sec.gov/rules/sro.shtml">https://www.sec.gov/rules/sro.shtml</a>). 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 website 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
10:00 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 SR-NYSE-2021-76 and should be
submitted on or before January 19, 2022.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\10\
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\10\ 17 CFR 200.30-3(a)(12).
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J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2021-28252 Filed 12-28-21; 8:45 am]
BILLING CODE 8011-01-P
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