Notice2022-05248
Self-Regulatory Organizations; New York Stock Exchange LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend Sections 902.03 and 902.11 of the NYSE Listed Company Manual To Establish Fees for the Listing of Rights
Primary source
Metadata and text below are from the Federal Register, a public-domain U.S. government work. Always verify the official published version before relying on it for any legal matter.
Published
March 14, 2022
Issuing agencies
Securities and Exchange Commission
Full Text
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<title>Federal Register, Volume 87 Issue 49 (Monday, March 14, 2022)</title>
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[Federal Register Volume 87, Number 49 (Monday, March 14, 2022)]
[Notices]
[Pages 14312-14315]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2022-05248]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-94378; File No. SR-NYSE-2022-12]
Self-Regulatory Organizations; New York Stock Exchange LLC;
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To
Amend Sections 902.03 and 902.11 of the NYSE Listed Company Manual To
Establish Fees for the Listing of Rights
March 8, 2022.
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 February 25, 2022, 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 Exchange. 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 902.03 and 902.11 of the
NYSE Listed Company Manual (the ``Manual'') to establish fees for the
listing of rights and to remove rule text that is no longer applicable.
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.
[[Page 14313]]
A. Self-Regulatory Organization's Statement of the Purpose of, and the
Statutory Basis for, the Proposed Rule Change
1. Purpose
The Exchange recently adopted a new listing standard to provide for
the listing of rights (See Section 703.12(II) of the Manual).\4\ The
Exchange now proposes to adopt fees for listed rights.
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\4\ See Securities Exchange Act Release No. 94075 (January 27,
2022); 87 FR 5915 (February 2, 2022) (SR-NYSE-2022-03).
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The Exchange proposes to adopt a fee schedule for listed rights
equivalent to that currently applicable to listed warrants. Both types
of securities represent the right to acquire shares of a listed equity
security at a future time. The distinction is that, unlike warrants,
rights are generally distributed without charge to all of the holders
of a class of existing listed securities. Given the similarities, the
Exchange anticipates that the resources devoted to the listing and
regulation of rights will be substantially the same as is already the
case for listed warrants. As such, the Exchange proposes to apply the
same fee schedule to listed rights as it currently applies to warrants
under Section 902.03 of the Manual. In connection with the listing of a
class of warrants, Section 902.03 provides for a fee of $0.004 per
warrant. Section 902.03 provides that listed warrants are subject to
annual fees at a rate of $0.0017 per warrant, subject to a minimum
annual fee of $5,000 per series of warrants. While the aforementioned
fees currently apply to listed warrants, there are specific provisions
for warrants of two types of issuers--foreign issuers and Acquisition
Companies. As described below, the Exchange proposes to apply the same
fees for rights associated with those types of companies.
Section 902.03 includes text that describes fees for warrants
issued by foreign companies, where the common equity securities into
which the warrants are exercisable trade in the form of American
Depositary Receipts on the Exchange. Specifically, Section 902.03
provides that, where a listed company's primary listed security is an
ADR and it lists warrants that are exercisable into the equity
securities underlying such ADRs, it will be charged: (i) Initial
listing fees for the warrants adjusted to reflect the maximum number of
ADRs that could be created upon exercise of such warrants; and (ii)
annual fees for the outstanding warrants adjusted to reflect the
maximum number of ADRs that could be created upon exercise of such
warrants. The Exchange proposes to apply these same provisions to
rights issued by a foreign company where the company's primary listed
security is an ADR and it lists rights that are exercisable into the
equity securities underlying such ADRs.
Section 902.11 sets forth the fees applicable to Acquisition
Companies (i.e., Special Purpose Acquisition Companies or ``SPACs'')
listed under Section 102.06 of the Manual. SPACs typically sell units
in their initial public offering consisting of a common share and one
or more warrants (or a fraction of a warrant). Under Section 902.11, a
listed Acquisition Company is subject to a flat annual fee of $85,000,
covering both its common shares and its warrants. The Exchange proposes
to amend this provision to specify that the flat annual fee also covers
any rights issued by the Acquisition Company.
The Exchange also proposes to delete rule text from both Section
902.03 and Section 902.11 regarding fees that were in effect for
calendar years prior to 2022 but are no longer in effect, as this rule
text is now irrelevant.
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 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 Exchange operates in a highly competitive marketplace for the
listing of the various categories of securities, including the rights
affected by the proposed fees. 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.
As discussed above, rights are very similar in their structure to
warrants. And the Exchange anticipates devoting substantially the same
resources to the listing of a series of rights as it does to the
listing of a series of warrants. Therefore, the Exchange believes that
it is reasonable and represents an equitable allocation of its fees
among market participants to apply to listed rights the existing fees
currently charged to issuers of listed warrants.
The Exchange believes that the proposal is not unfairly
discriminatory because the same fee schedule will apply to all issuers
of listed rights. In addition, rights have substantial structural
similarities to warrants and the Exchange believes it is therefore
appropriate to apply the same fee schedule to the two classes of
securities. Conversely, rights are not similar in nature to any other
class of securities listed on the Exchange, so the Exchange does not
believe it is unfairly discriminatory to charge different fees for the
listed rights than for any other class of listed securities other than
warrants. Further, the Exchange operates in a competitive environment
and its fees are constrained by competition in the marketplace. Other
national securities exchanges currently list rights, and if a company
believes that the Exchange's fees are unreasonable it can decide either
not to list its rights or to list them on an alternative venue.
The Exchange believes that the proposal to charge listing fees for
rights on an ADR-equivalent basis is equitable and not unfairly
discriminatory because
[[Page 14314]]
it would remove the anomalous outcome that a company whose listed ADRs
represent multiple underlying common shares would otherwise be required
to pay higher fees for the listing of rights exercisable into its
listed equity securities than are paid by a company whose common stock
is listed directly or whose listed ADRs represent a single common
share.
The Exchange recognizes that the proposal would result in a
differential treatment of rights issued by companies with ADRs listed
on the Exchange from that of other issuers of rights, leading to lower
bills in many cases for the companies with listed ADRs. However, the
Exchange notes that companies with listed ADRs that represent multiple
underlying shares (or fractional shares) face unique circumstances when
deciding how to structure their rights. If those companies want to
market their rights in both their home market and the United States,
there are clear advantages to the company and its investors if the same
security is issued in both markets. In particular, issuing the same
security avoids pricing confusion and, by ensuring complete
fungibility, facilitates the movement of rights between the two markets
in aftermarket trading. As the ADRs would not be traded in the home
market and might not be properly understood by investors there, it is
clear why a company would make the decision to issue rights to purchase
a single common share in both markets rather than issuing rights to
purchase ADRs in the US market and rights to purchase a single share in
the home market. While other categories of listed companies may also
sometimes choose to issue rights that are exercisable for multiple
listed common shares or a fraction of a common share, their reasons for
doing so are not the same unique market structural reasons that cause
foreign companies to do so when their listed equity security is an ADR.
Consequently, while the proposal does result in a different treatment
of foreign companies with listed ADRs in a very limited circumstance,
the Exchange believes that this proposed difference in treatment is not
unfairly discriminatory. The Exchange also notes that foreign companies
with listed ADRs would not always pay lower fees on rights if this
proposal was adopted. Rather, the issuer would always pay fees on an
ADR-equivalent basis, which would result in lower fees if the listed
ADR represents multiple common shares and higher fees if it represents
a fractional common share.
The changes the Exchange proposes to make to Sections 902.02 and
902.11 to remove provisions that are no longer needed, as they do not
apply by their terms to any calendar year starting after January 1,
2022, are non-substantive in nature.
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 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 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
The foregoing rule change is effective upon filing pursuant to
Section 19(b)(3)(A) \10\ of the Act and subparagraph (f)(2) of Rule
19b-4 \11\ thereunder, because it establishes a due, fee, or other
charge imposed by the Exchange.
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\10\ 15 U.S.C. 78s(b)(3)(A).
\11\ 17 CFR 240.19b-4(f)(2).
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At any time within 60 days of the filing of such proposed rule
change, the Commission summarily may temporarily suspend such rule
change if it appears to the Commission that such action is necessary or
appropriate in the public interest, for the protection of investors, or
otherwise in furtherance of the purposes of the Act. If the Commission
takes such action, the Commission shall institute proceedings under
Section 19(b)(2)(B) \12\ of the Act to determine whether the proposed
rule change should be approved or disapproved.
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\12\ 15 U.S.C. 78s(b)(2)(B).
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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="http://www.sec.gov/rules/sro.shtml">http://www.sec.gov/rules/sro.shtml</a>); or
<bullet> Send an email to <a href="/cdn-cgi/l/email-protection#156760797038767a7878707b6166556670763b727a63"><span class="__cf_email__" data-cfemail="80f2f5ece5ade3efedede5eef4f3c0f3e5e3aee7eff6">[email protected]</span></a>. Please include
File Number SR-NYSE-2022-12 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-2022-12. 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="http://www.sec.gov/rules/sro.shtml">http://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
[[Page 14315]]
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-2022-12 and should be submitted on or before April 4, 2022.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\13\
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\13\ 17 CFR 200.30-3(a)(12).
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J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2022-05248 Filed 3-11-22; 8:45 am]
BILLING CODE 8011-01-P
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