Notice2022-21335
Self-Regulatory Organizations; New York Stock Exchange LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend Fee Provisions of the Listed Company Manual Applicable to Companies Listing Upon Emergence From Bankruptcy
Primary source
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Published
October 3, 2022
Issuing agencies
Securities and Exchange Commission
Full Text
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<title>Federal Register, Volume 87 Issue 190 (Monday, October 3, 2022)</title>
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[Federal Register Volume 87, Number 190 (Monday, October 3, 2022)]
[Notices]
[Pages 59856-59859]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2022-21335]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-95930; File No. SR-NYSE-2022-39]
Self-Regulatory Organizations; New York Stock Exchange LLC;
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To
Amend Fee Provisions of the Listed Company Manual Applicable to
Companies Listing Upon Emergence From Bankruptcy
September 27, 2022.
Pursuant to Section 19(b)(1) \1\ of the Securities Exchange Act of
1934 (the
[[Page 59857]]
``Act'') \2\ and Rule 19b-4 thereunder,\3\ notice is hereby given that,
on September 14, 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 Section 902.02 of the NYSE Listed
Company Manual (the ``Manual'') to: (i) modify the conditions under
which a listed company can qualify for the reduced fees that are
provided to companies listing upon emergence from bankruptcy; (ii)
specify that any company listing in connection with an underwritten
public offering is not eligible for the reduction in annual fees or a
waiver of initial listing fees provided to companies emerging from
bankruptcy under that rule; and (iii) reset the annual fee reduction
rate for companies listing upon emergence from bankruptcy. 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
Annual Fees
Section 902.02 of the Manual includes a subsection entitled ``Total
Maximum Fee Payable in a Calendar Year by an Issuer Listing Upon
Emergence from Bankruptcy'' (the ``Bankruptcy Subsection''), which sets
forth a limitation on listing fees charged to companies that list upon
emergence from bankruptcy. If an issuer lists upon emergence from
bankruptcy, its annual fees will be calculated quarterly for the fiscal
quarter in which it lists and in each of the succeeding 12 full fiscal
quarters, at a rate of one-fourth of the applicable annual fee rate.
The total fees (including listing fees and annual fees) that may be
billed to such an issuer during this period will be subject to a
$25,000 cap in the fiscal quarter in which the issuer lists and in each
of the succeeding 12 full fiscal quarters. This fee cap is subject to
the same exclusions as apply in relation to the $500,000 per year fee
cap described in Section 902.02 under the subsection ``Total Maximum
Fee Payable in a Calendar Year.'' If there are one or more fiscal
quarters remaining in the year after the conclusion of the period
described in this paragraph, the issuer will, on a prorated basis, be
billed the regular annual fee subject to the $500,000 total fee cap for
the remainder of that year.
The Exchange now proposes to amend the Bankruptcy Subsection to
provide that an issuer will be entitled to the fee reductions and per
year fee cap if it lists within 12 months of emergence from bankruptcy
(rather than only if the issuer lists immediately upon emergence from
bankruptcy). The Exchange believes that it is reasonable to expand the
eligibility for the fee reductions set forth under the Bankruptcy
Subsection to companies listing within 12 months of emergence from
bankruptcy because these companies are subject to many of the same
challenges as companies that list immediately upon emergence from
bankruptcy. The Exchange notes that some companies choose not to list
immediately upon emergence from bankruptcy or are unable to do so as
they do not meet Exchange distribution standards until their post-
emergence equity has traded for some time. The Exchange believes making
the fee reduction available to companies within 12 months of emerging
from bankruptcy would incentivize issuers to list on the Exchange,
which should result in increased transparency and liquidity with
respect to the issuer's securities.
The Exchange also proposes to amend the Bankruptcy Subsection to
provide that the fee limitations thereunder will not be available for
any company listing in connection with an underwritten public offering.
The Exchange made the following statement in connection with its
original proposal of this fee provision:
Companies emerging from bankruptcy are typically not raising any
new capital at the time of listing, so the payment of initial
listing fees is more burdensome than for companies that are listing
upon an initial public offering. Also, because of the desire in
bankruptcy proceedings to ensure that creditors are paid as much as
possible, such companies are much more sensitive to both the initial
and continued costs associated with listing.\4\
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\4\ See Securities Exchange Act Release No. 55421 (March 8,
2007): 72 FR 11925 (March 14, 2007) (SR-NYSE-2007-19).
The Exchange notes that companies often plan to list immediately
upon emergence from bankruptcy and that the costs of the listing are
therefore considered in the context of the payments made to settle the
claims of creditors as part of the reorganization plan authorized by
the bankruptcy court. However, an underwritten public offering is by
its nature a transaction that is separate from and subsequent to the
bankruptcy reorganization process and typically does not happen
directly after emergence. As all of the claims of the issuer's
creditors in the bankruptcy process are settled at the time of the
issuer's emergence from bankruptcy, the focus on maximizing payments to
the creditors of the bankrupt company and the associated sensitivity to
the continued costs of listing cited at the time of adopting this fee
provision are no longer relevant in the case of a company listing in
connection with an underwritten public offering at some point after
emergence. Furthermore, the Exchange believes that the fact that such
companies are raising capital at the time of listing will generally
place them in a financially more secure position than other companies
listing after emergence from bankruptcy and will generally make them
more comparable to companies listing in connection with an initial
public offering.
The Exchange also proposes to amend the Bankruptcy Subsection by
resetting the fee reduction rate for qualified issuers listing on or
after September 15, 2022. Specifically, if an issuer lists upon
emergence from bankruptcy, its annual fees will be calculated quarterly
for the fiscal quarter in which it lists and in each of the succeeding
12 full fiscal quarters, at a rate of one-half of the applicable annual
fee rate, rather than at a rate of one-quarter of the applicable rate
as is the case under the rule as currently written. The Exchange
believes that this adjustment is reasonable in light of the significant
increase in the cost of services provided
[[Page 59858]]
to issuers since the adoption of the current fee discount provision in
2007. The Exchange further believes that the proposed amended
discounted fee structure will cause the affected issuers to pay fees
that are more closely aligned with the cost of servicing their
listings. This proposed amendment would not affect issuers that listed
before September 15, 2022. Issuers with securities listed before that
date would continue to pay the rate of one-fourth of the applicable
annual fee rate as set forth in the current rule. The Exchange believes
this is reasonable as these issuers made their decision to list on the
Exchange on the basis of their eligibility for this reduced fee rate
for the first 36 months of their listing and it would therefore be
unfair to raise their fee cap during that period.
Initial Listing Fees
Section 902.02 also contains a provision waiving initial listing
fees for certain categories of listings, including the listing of a
company within 36 months of emergence from bankruptcy that has not had
a security listed on a national securities exchange during such period.
The Exchange proposes to exclude from this waiver any company listing
in connection with an underwritten public offering. As is the case with
the annual fee reduction for companies emerging from bankruptcy, the
Exchange believes that the fact that such companies are raising capital
at the time of listing will generally place them in a financially more
secure position than other companies listing after emergence from
bankruptcy and will generally make them more comparable to companies
listing in connection with an initial public offering.
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 believes that it is reasonable to expand the
eligibility for the fee reductions set forth under the Bankruptcy
Subsection to companies listing within 12 months of emergence from
bankruptcy because those companies are subject to many of the same
challenges as companies that list immediately upon emergence from
bankruptcy. The Exchange notes that some companies choose not to list
immediately upon emergence from bankruptcy or are unable to do so as
they do not meet Exchange distribution standards until their post-
emergence equity has traded for some time. The Exchange believes the
proposed fee reduction would provide an incentive for those companies
to list on the Exchange.
In this regard, the Exchange notes that the issuers that would
benefit from the proposed expanded eligibility for the fee reduction,
like all other listing applicants, would be required to satisfy the
Exchange's listings standards as well as the other governance
requirements and standards that the Exchange requires of issuers listed
on the Exchange. Accordingly, the Exchange believes that it is in the
public's interest, and the interest of the issuer, to provide an
opportunity for the increased transparency and liquidity that is
attendant with listing on the Exchange and therefore that it is
reasonable to provide the applicable fee reduction for such issuers.
The Exchange believes that the number of additional issuers that will
qualify for this fee reduction, as proposed, will be limited. The
Exchange also believes that limiting the fee reduction to 12 months
following emergence from bankruptcy is reasonable because, in the
Exchange's opinion, it is a period of time that is sufficient for the
issuer to proceed with its reorganization and meet the Exchange's
qualifications for listing.
The Exchange believes that the proposed adjustment to the fee rate
for eligible issuers under the Bankruptcy Subsection from one-quarter
of the applicable annual fee rate to one-half of such rate is
reasonable in light of the significant increase in the cost of services
provided to issuers since the adoption of the current fee discount
provision in 2007. The Exchange believes that the proposed amended
discounted fee structure will cause the affected issuers to pay fees
that are more closely aligned with the cost of servicing their
listings. The Exchange further believes it is reasonable to continue to
apply the rate of one-fourth of the applicable annual fee rate set
forth in the current version of the Bankruptcy Subsection to issuers
that listed prior to the adoption of the proposed amendment, as these
issuers made their decision to list on the Exchange on the basis of
their eligibility for this reduced fee rate for the first 36 months of
their listing and it would therefore be unfair to raise their fee cap
during that period.
The Exchange also believes that it is reasonable to not provide the
initial fee waiver or the proposed annual fee reduction to companies
that have emerged from bankruptcy within the previous 36 or 12 months,
as applicable, but that are listing in connection with an underwritten
public offering. The Exchange notes that any company that is listing in
connection with an underwritten public offering after emergence from
bankruptcy will already have settled all claims of its creditors at the
time of emergence, so the focus on maximizing payments to the creditors
of the bankrupt company and the associated sensitivity to the continued
costs of listing cited at the time of adopting this fee provision are
not relevant to such companies. Furthermore, the fact that such
companies are raising capital at the time of listing will generally
place them in a financially more secure position than other companies
listing after emergence from bankruptcy and will generally make them
more comparable to companies listing in connection with an initial
public offering. For the foregoing reasons, the Exchange believes that
it does not constitute an inequitable allocation of fees and is not
unfairly discriminatory to treat companies differently for purposes of
these fee provisions if they are listing in connection with an
underwritten public offering.
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 conditions on fees
will be applicable to all similarly situated issuers on the same basis.
The Exchange does not believe that the proposed fee changes will
have any meaningful effect on the competition among issuers listed on
the Exchange.
[[Page 59859]]
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) \8\ of the Act and subparagraph (f)(2) of Rule 19b-
4 \9\ thereunder, because it establishes a due, fee, or other charge
imposed by the Exchange.
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\8\ 15 U.S.C. 78s(b)(3)(A).
\9\ 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) \10\ of the Act to determine whether the proposed
rule change should be approved or disapproved.
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\10\ 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#7301061f165e101c1e1e161d0700330016105d141c05"><span class="__cf_email__" data-cfemail="2d5f584148004e4240404843595e6d5e484e034a425b">[email protected]</span></a>. Please include
File Number SR-NYSE-2022-39 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-2022-39. 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 a.m. and 3 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-2022-39 and should be submitted on or before October 24, 2022.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\11\
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\11\ 17 CFR 200.30-3(a)(12).
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J. Matthew DeLesDernier,
Deputy Secretary.
[FR Doc. 2022-21335 Filed 9-30-22; 8:45 am]
BILLING CODE 8011-01-P
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