Notice2022-25237
Self-Regulatory Organizations; New York Stock Exchange LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Establish Initial and Annual Fees for Exchange Traded Products
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
November 18, 2022
Issuing agencies
Securities and Exchange Commission
Full Text
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<title>Federal Register, Volume 87 Issue 222 (Friday, November 18, 2022)</title>
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[Federal Register Volume 87, Number 222 (Friday, November 18, 2022)]
[Notices]
[Pages 69368-69371]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2022-25237]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-96321; File No. SR-NYSE-2022-51]
Self-Regulatory Organizations; New York Stock Exchange LLC;
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To
Establish Initial and Annual Fees for Exchange Traded Products
November 15, 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 November 7, 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
[[Page 69369]]
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 establish initial and annual fees for the
listing of Exchange Traded Products on the Exchange. 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 establish initial and annual fees for the
listing of Exchange Traded Products (``ETPs'') \4\ on the Exchange by
adopting a new Section 902.12 to the NYSE Listed Company Manual (the
``Manual'').
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\4\ See NYSE Rule 1.1(l). As discussed below, proposed Section
902.12 would incorporate the definition of ETP so issuers can easily
identify the class of securities that would be subject to the
initial and annual listing fees.
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The proposed changes respond to the current extremely competitive
environment for ETP listings in which issuers can readily favor
competing venues or transfer their listings if they deem fee levels at
a particular venue to be excessive, or discount opportunities available
at other venues to be more favorable. The proposed changes are designed
to establish a fee structure for the listing of ETPs on the Exchange
that would incentivize issuers to list new products and transfer
existing products as well as to maintain listings on the Exchange,
which the Exchange believes will enhance competition both among issuers
and listing venues, to the benefit of investors.
Proposed Rule Change
As proposed, new Section 902.12 of the Manual would set forth
initial listing and annual listing fees for listed ETPs. Proposed
Section 902.12 would be titled ``Listing Fees for Exchange Traded
Products.'' \5\ Under the proposed heading, the Exchange would include
the following text (new text italicized):
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\5\ The Exchange also proposes a conforming change to Section
902.02 (General Information on Fees) to add ETPs to the list of
securities therein.
The Listing Fees and Annual Fees set out in this section apply
to Exchange Traded Products as defined in NYSE Rule 1.1(l), which
defines an ``Exchange Traded Product'' as a security that meets the
definition of ``derivative securities product'' in Rule 19b-4(e)
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under the Securities and Exchange Act of 1934 (the ``Act'').
Below this proposed text, a new heading titled ``Initial Listing
Fees'' would be followed by a chart beneath setting forth proposed
initial listing fees of $20,000 (for up to and including 10 million
shares), $30,000 (for over 10 million up to and including 20 million
shares) or $40,000 (for over 20 million shares). As set forth in
proposed footnote *, the Exchange would waive the initial listing fees
for issuers that transfer their listings from any other national
securities exchange. The proposed listing fee waiver would apply to all
class of securities of an ETP.
Further, the Exchange proposes a technical original listing fee of
$2,500 per application fixed charge, which may include multiple issues
of securities. As explained in proposed footnote **, a Technical
Original Listing would occur as a result of a change in state of
incorporation, reincorporation under the laws of same state, reverse
stock split, recapitalization, creation of a holding company or new
company by operation of law or through an exchange offer, or similar
events affecting the nature of a listed security. As further explained,
the proposed fee would apply if the change in the company's status is
technical in nature and the shareholders of the original company
receive or retain a share-for-share interest in the new company without
any change in their equity position or rights. The proposed fee and
text is based on the technical original listing fee applicable to ETPs
listed on the Exchange's affiliate NYSE Arca, Inc. (``NYSE Arca'').\6\
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\6\ See NYSE Arca Schedule of Fees and Charges for Exchange
Services, available at <a href="https://www.nyse.com/publicdocs/nyse/markets/nyse-arca/NYSE_Arca_Listing_Fee_Schedule.pdf">https://www.nyse.com/publicdocs/nyse/markets/nyse-arca/NYSE_Arca_Listing_Fee_Schedule.pdf</a>.
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Finally, under a second new heading titled ``Annual Listing Fees,''
the Exchange proposes that ETPs would be charged annual listing fees at
a rate of $0.001025 per share, with a minimum fee of $25,000. As set
forth in proposed footnote ***, issuers transferring their listings
from another national securities exchange would not be required to pay
Annual Fees for the remainder of the calendar year in which the
transfer occurs. The proposed waiver of Annual Fees would apply to all
classes of securities.
The proposed fees for listed ETPs are the same as the fees
currently applicable to listed Closed-End Funds set forth in Section
902.04 of the Manual.\7\ Given the structural similarities between
Closed-End Funds and ETPs, the Exchange believes that the anticipated
costs associated with the listing and regulating ETPs, including costs
related to issuer services, listing administration, product development
and regulatory oversight, would be similar to Closed-End Funds. Given
this correlation, the Exchange believes that applying the same fees to
listed ETPs would be reasonable.
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\7\ Under Section 902.04, a Closed-End Fund is charged initial
listing fees when it first lists a class of common stock according
to a tiered schedule. Under this tiered schedule, a Closed-End Fund
pays $20,000 (for up to and including 10 million shares), $30,000
(for over 10 million up to and including 20 million shares) or
$40,000 (for over 20 million shares). Additionally, under Section
902.04, Closed-End Funds are subject to annual fees at a rate of
$0.001025 per share, subject to a $25,000 minimum fee. In addition,
a $2,500 fee applies to applications for changes that involve
modifications to Exchange records, for example, changes of name, par
value, title of security or designation.
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Each of the proposed changes described above are not otherwise
intended to address other issues, and the Exchange is not aware of any
significant problems that market participants would have in complying
with the proposed changes
2. Statutory Basis
The Exchange believes that the proposed rule change is consistent
with section 6(b) of the Act,\8\ in general, and furthers the
objectives of section 6(b)(4) \9\ 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,\10\ 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
[[Page 69370]]
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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\8\ 15 U.S.C. 78f(b).
\9\ 15 U.S.C. 78f(b)(4).
\10\ 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, including the ETPs
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,\11\ 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.'' \12\
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\11\ See Securities Exchange Act Release No. 51808 (June 9,
2005), 70 FR 37495, 37499 (June 29, 2005) (S7-10-04) (Final Rule)
(``Regulation NMS Adopting Release'').
\12\ See Regulation NMS Adopting Release, 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 proposal represents a
reasonable attempt to establish pricing for ETPs on the Exchange. As
noted, ETPs are structurally similar to Closed-End Funds and the
Exchange anticipates devoting substantially similar resources to the
listing and regulation of ETPs. Therefore, the Exchange believes that
it is reasonable and represents an equitable allocation of its fees
among market participants to apply the same initial and annual fees to
issuers of listed ETPs as the Exchange currently charges issuers of
Closed-End Funds.
Further, the Exchange believes it is reasonable to not charge a
listing fee upon listing and to not charge an annual fee for the
remainder of the calendar year after an ETP transfers to the Exchange
because such a transferring ETP would have already paid listing and/or
annual listing fees to the predecessor national securities exchange and
may incur multiple listing and/or annual fees in the same year in
connection with a listing transfer, which may operate as a disincentive
to transferring a listing to the Exchange that the issuer has
determined is preferable based on the issuer's assessment of the
Exchange's services, value and market quality. Due to the very limited
anticipated loss of revenue associated with the proposed waiver, the
Exchange does not expect the proposed fee waiver to affect its ability
to devote the same level of resources to its oversight of its listed
issuers that benefit from the waiver as it does for other issuers or,
more generally, impact its resource commitment to its regulatory
oversight of the listing process or its regulatory programs.
The Proposal is an Equitable Allocation of Fees
The Exchange believes its proposal equitably allocates its fees
among its market participants. In the prevailing competitive
environment, issuers can readily favor competing venues or transfer
listings if they deem fee levels at a particular venue to be excessive,
or discount opportunities available at other venues to be more
favorable.
The proposed listing and annual fees for ETPs are equitable because
the proposed increased annual fees would apply uniformly to all
issuers. Moreover, the proposed fees would be equitably allocated among
issuers because issuers would qualify for the listed fee based on
issuing ETPs and for the annual fee based on the number of shares
outstanding and under criteria applied uniformly to all such issuers.
The proposal neither targets nor will it have a disparate impact on any
particular category of market participant. The proposed annual fees
would be applicable to all existing and potential ETP issuers uniformly
and in equal measure.
In addition, the Exchange believes the proposed waiver of listing
and annual fees for ETPs transferring from another national securities
exchange represents an equitable allocation of fees because the
proposed waivers would apply to all issuers that transfer ETP listings
to the Exchange on an equal basis and would enable all issuers
transferring ETPs from any other national securities exchange to
benefit from the same waivers with respect to listing and/or annual
fees for the specified time period. The Exchange believes that the
proposed waivers would therefore equitably allocate fees among issuers
transferring ETP listings to the Exchange.
The Proposal Is Not Unfairly Discriminatory
The Exchange believes that the proposal is not unfairly
discriminatory. In the prevailing competitive environment, issuers are
free to list elsewhere if they believe that alternative venues offer
them better value.
The Exchange believes that the proposal is not unfairly
discriminatory because the same fee schedule will apply to all issuers
of ETPs listed on the Exchange.
In addition, Exchange Listed Products have substantial structural
similarities to Closed-End Funds and the Exchange believes it is
therefore it is not unfairly discriminatory to offer the same listing
fees for ETPs as are currently applicable to Closed-End Fund products.
Conversely, ETPs are not similar 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 ETPs than it
does for any other class of listed securities other than Closed-End
Funds.
In addition, the Exchange believes that the proposed waiver of
listing and annual fees for ETPs transferring from another national
securities exchange is not unfairly discriminatory because the proposed
amendment would enable all issuers transferring ETPs from any other
national securities exchange to benefit from the same waivers with
respect to fees for the specified time period. The proposed waivers
would apply to all issuers of securities that transfer ETP listings to
the Exchange. Therefore, the Exchange believes there would be no unfair
discrimination against issuers of securities transferring ETP listings
to the Exchange. Further, the Exchange believes that the proposed
waivers are not unfairly discriminatory with respect to issuers that
are already listed on the Exchange because, as noted above, issuers
transferring ETPs from other markets may already have paid listing and/
or annual fees at their predecessor exchange and may incur multiple
listing and/or annual fees in the same year in connection with a
listing transfer, which may operate as a disincentive to transferring
an ETP listing to the Exchange. As also noted, due to the very limited
anticipated loss of revenue associated with the proposed waiver, the
Exchange does not expect the proposed fee waiver to affect its ability
to devote the same level of resources to its oversight of its listed
issues that benefit from the waiver as it does for other issuers or,
more generally, impact its resource commitment to its regulatory
oversight of the listing process or its regulatory programs.
[[Page 69371]]
Finally, the Exchange believes that it is subject to significant
competitive forces, as described below in the Exchange's statement
regarding the burden on competition.
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
In accordance with Section 6(b)(8) of the Act,\13\ the Exchange
believes that the proposed rule change would not 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.
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\13\ See 15 U.S.C. 78f(b)(8).
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Intramarket Competition
The proposed changes are designed to attract listings to the
Exchange by establishing listing and annual fees for an ETPs listed
under a new rule. The Exchange believes that the proposed changes would
incentivize issuers to develop and list new products, transfer existing
products to the Exchange, and maintain listings on the Exchange. The
proposed fees would be available to all issuers, and, as such, the
proposed change would not impose a disparate burden on competition
among market participants 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. As such,
the proposal is a competitive proposal designed to enhance pricing
competition among listing venues and implement pricing for ETPs to
reflect the revenue and expenses associated with listing on the
Exchange.
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) \14\ of the Act and subparagraph (f)(2) of Rule
19b-4 \15\ thereunder, because it establishes a due, fee, or other
charge imposed by the Exchange.
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\14\ 15 U.S.C. 78s(b)(3)(A).
\15\ 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) \16\ of the Act to determine whether the proposed
rule change should be approved or disapproved.
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\16\ 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#146661787139777b7979717a6067546771773a737b62"><span class="__cf_email__" data-cfemail="7d0f081118501e1210101813090e3d0e181e531a120b">[email protected]</span></a>. Please include
File Number SR-NYSE-2022-51 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-2022-51. 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-2022-51 and should be submitted on
or before December 9, 2022.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\17\
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\17\ 17 CFR 200.30-3(a)(12).
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Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2022-25237 Filed 11-17-22; 8:45 am]
BILLING CODE 8011-01-P
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