Notice2022-18857
Self-Regulatory Organizations; New York Stock Exchange LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend Section 902.05 of the NYSE Listed Company Manual To Establish a Cap on Listing Fees Billed When a Structured Product Is Issued as a Dividend
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
September 1, 2022
Issuing agencies
Securities and Exchange Commission
Full Text
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<title>Federal Register, Volume 87 Issue 169 (Thursday, September 1, 2022)</title>
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[Federal Register Volume 87, Number 169 (Thursday, September 1, 2022)]
[Notices]
[Pages 53805-53807]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2022-18857]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-95613; No. SR-NYSE-2022-38]
Self-Regulatory Organizations; New York Stock Exchange LLC;
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To
Amend Section 902.05 of the NYSE Listed Company Manual To Establish a
Cap on Listing Fees Billed When a Structured Product Is Issued as a
Dividend
August 26, 2022.
Pursuant to Section 19(b)(1) \1\ of the Securities Exchange Act of
1934 (``Act'') \2\ and Rule 19b-4 thereunder,\3\ notice is hereby given
that, on August 22, 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 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 Section 902.05 of the NYSE Listed
Company Manual (the ``Manual'') to establish a cap on listing fees
billed when a structured product is issued as a dividend.\4\ 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.
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\4\ The Exchange originally filed to amend the Manual on August
16, 2022 (SR-NYSE-2022-33) and withdrew such filing on August 22,
2022.
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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
Section 902.05 of the Manual sets forth initial listing fees and
annual fees applicable to structured products listed under Section
703.18, the equity criteria set out in Section 703.19, and Section
703.21, and traded on the equity floor of the Exchange. The term
``retail debt securities'' refers to debt securities that are listed
under the equity criteria set out in Section 703.19 and traded on the
equity floor of the Exchange. Subject to certain limitations set forth
in the rule, issuers must pay listing fees for structured products at a
per share rate using the following tiered fee structure:
<bullet> For an issuance up to and including two million shares,
the rate is $0.01475 per share;
<bullet> For an issuance over two million shares and up to and
including four million shares, the rate is $0.0074 per share;
<bullet> For an issuance over four million shares and up to and
including 300 million shares, the rate is $0.0035 per share;
<bullet> For an issuance over 300 million shares, the rate is
$0.0019 per share.
The Exchange now proposes to adopt a cap on listing fees in
relation to structured products issued as a dividend. As proposed,
listing fees on structured products issued as a dividend would be
capped at $150,000 per issuance. The Exchange notes that the issuer in
such cases is not receiving any cash or other consideration and would
therefore not be generating any funds out of which it could pay the
listing fees, as would be the case if it sold the securities.
Therefore, the Exchange believes it is reasonable to apply a lower fee
cap than is applied when structured products are sold in a capital
raising transaction, as is more usually the case. The Exchange notes
that the Manual already contains a similar $150,000 cap on listing fees
for shares of common stock issued in
[[Page 53806]]
connection with a stock split or stock dividend.\5\
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\5\ See Securities Exchange Act Release No. 52463 (September 16,
2005); 70 FR 55933 (September 23, 2005) (SR-NYSE-2005-35) (notice of
the proposal to adopt this approach with respect to stock splits).
See also Securities Exchange Act Release No. 52696 (October 28,
2005); 70 FR 66881 (November 3, 2005) (SR-NYSE-2005-35) (approval of
the adoption of this approach with respect to stock splits).
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The Exchange proposes to remove from Section 902.05 the reference
to the fact that the fees set forth in that rule are applicable to
securities listed under Section 703.21. Section 703.21 formerly set
forth listing standards for the listing of equity-linked debt
securities. However, the Exchange has reorganized its rules, so that
its listing standards for equity-linked debt securities (now call
equity linked notes or ``ELNs'') are now set forth in Rule 5.2(j)(2)
rather than Section 703.21 and Section 703.21 is reserved.\6\ As such,
the reference to Section 703.21 in Section 902.05 is no longer relevant
and should be deleted. The Exchange notes that it does not currently
have any listed ELNs and that it would have to adopt fees prior to
listing any ELNs under Rule 5.2(j)(2). If the Exchange concludes that
the appropriate fees for ELNs under Rule 5.2(j)(2) would be different
from those provided for structured products under Section 902.05, the
filing proposing such fees would set forth the Exchange's reasons for
believing that this difference was not inequitable or unfairly
discriminatory.
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\6\ See Securities Exchange Act Release No. 84351 (October 3,
2018); 83 FR 50980 (October 10, 2018) (SR-NYSE-2018-30) (among other
things, deleting Section 703.21). See also Securities Exchange Act
Release No. 80214 (March 10, 2017); 82 FR 14050 (March 16, 2017)
(SR-NYSE-2016-44) (among other things, adopting Rule 5.2(j)(2) for
the listing of ELNs; Rule 5.2(j)(2) is substantially the same as the
listing standard for ELNs set forth in NYSE Arca Equities Rule
5.2(j)(2)).
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The Exchange also proposes to remove from Section 902.05 references
to the annual fees that were applicable prior to 2019, as that fee is
no longer relevant.
2. Statutory Basis
The Exchange believes that the proposed rule change is consistent
with Section 6(b) of the Act,\7\ in general, and furthers the
objectives of Section 6(b)(4) \8\ 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,\9\ 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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\7\ 15 U.S.C. 78f(b).
\8\ 15 U.S.C. 78f(b)(4).
\9\ 15 U.S.C. 78f(b)(5).
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The Exchange believes that the proposal to cap listing fees for
structure products issued as a dividend at $150,000 per issuance is
equitable and not unfairly discriminatory. The Exchange notes that the
issuer in such cases is not receiving any cash or other consideration
and would therefore not be generating any funds out of which it could
pay the listing fees, as would be the case if it sold the securities.
Therefore, the Exchange believes it is reasonable to apply a lower fee
cap than is applied when structured products are sold in a capital
raising transaction, as is more usually the case. The Exchange notes
that the Manual already contains a similar $150,000 cap on listing fees
for shares of common stock issued in connection with a stock split or
stock dividend.
The removal from Section 902.05 of the reference to the fact that
the fees set forth in that rule are applicable to securities listed
under Section 703.21 is not inequitable or unfairly discriminatory, as
it reflects the fact that ELNs are now listed under Rule 5.2(j)(2)
rather than Section 703.21. As such, the reference to Section 703.21 in
Section 902.05 is no longer relevant and should be deleted. The
Exchange notes that it does not currently have any listed ELNs and that
it would have to adopt fees prior to listing any ELNs under Rule
5.2(j)(2). If the Exchange concludes that the appropriate fees for ELNs
under Rule 5.2(j)(2) would be different from those provided for
structured products under Section 703.21 [sic], the filing proposing
such fees would set forth the Exchange's reasons for believing that
this difference was not inequitable or unfairly discriminatory.
The removal of the references to annual fees applied before 2019
has no substantive effect, as that fee is no longer applied by its
terms.
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 not necessary or appropriate in
furtherance of the purposes of the Act. The proposed fee cap will be
applicable to all similarly situated issuers on the same basis.
The Exchange does not believe that the proposed fee cap will have
any meaningful effect on the competition among issuers listed on the
Exchange. 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 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:
[[Page 53807]]
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#a5d7d0c9c088c6cac8c8c0cbd1d6e5d6c0c68bc2cad3"><span class="__cf_email__" data-cfemail="96e4e3faf3bbf5f9fbfbf3f8e2e5d6e5f3f5b8f1f9e0">[email protected]</span></a>. Please include
File Number SR-NYSE-2022-38 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-2022-38. 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 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-2022-38, and should be submitted on
or before September 22, 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,
Deputy Secretary.
[FR Doc. 2022-18857 Filed 8-31-22; 8:45 am]
BILLING CODE 8011-01-P
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