Notice2023-07414
Self-Regulatory Organizations; New York Stock Exchange LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend Section 902.02 of the NYSE Listed Company Manual With Respect to the Qualification of Eligible Portfolio Companies of an Investment Management Entity for the Investment Management Entity Group Fee Discount
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
April 10, 2023
Issuing agencies
Securities and Exchange Commission
Full Text
<html>
<head>
<title>Federal Register, Volume 88 Issue 68 (Monday, April 10, 2023)</title>
</head>
<body><pre>
[Federal Register Volume 88, Number 68 (Monday, April 10, 2023)]
[Notices]
[Pages 21223-21225]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2023-07414]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-97251; File No. SR-NYSE-2023-17]
Self-Regulatory Organizations; New York Stock Exchange LLC;
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To
Amend Section 902.02 of the NYSE Listed Company Manual With Respect to
the Qualification of Eligible Portfolio Companies of an Investment
Management Entity for the Investment Management Entity Group Fee
Discount
April 4, 2023.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that
on March 29, 2023, 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.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------
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 amend the provisions with respect to
the qualification of Eligible Portfolio Companies of an Investment
Management Entity for the Investment Management Entity Group Fee
Discount. In order to qualify for the Investment Management Entity
Group Fee Discount in any calendar year, an issuer must submit
satisfactory proof to the Exchange no later than the first trading day
of such calendar year that it meets the ownership requirements
specified above. The Exchange proposes to extend the application of the
Investment Management Entity Group Discount to the annual fees payable
with respect to the first partial year of listing by any newly-listed
company that is able to demonstrate at the time of listing that it
qualifies as an Eligible Portfolio Company of an Investment Management
Entity. 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
Section 902.02 of the Manual includes a subsection entitled
``Investment Management Entity Group Fee Discount.'' For purposes of
this
[[Page 21224]]
subsection, an Investment Management Entity is a listed company that
manages private investment vehicles not registered under the Investment
Company Act. An ``Eligible Portfolio Company'' of an Investment
Management Entity is a company in which the Investment Management
Entity has owned at least 20% of the common stock on a continuous basis
since prior to that company's initial listing. The Exchange applies a
fee discount applicable only to an Investment Management Entity and its
Eligible Portfolio Companies (the ``Investment Management Entity Group
Fee Discount''). In addition to benefiting from the Investment
Management Entity Group Fee Discount, the Investment Management Entity
and each of the Eligible Portfolio Companies continue to have its fees
capped by the applicable company's individual Total Maximum Fee of
$500,000. The Investment Management Entity Group Fee Discount (i) is
limited to annual fees and (ii) represents a 50% discount on all annual
fees of an Investment Management Entity and each of its Eligible
Portfolio Companies in any year in which the Investment Management
Entity has one or more Eligible Portfolio Companies. In order to
qualify for the Investment Management Entity Group Fee Discount in any
calendar year, an issuer must submit satisfactory proof to the Exchange
no later than the first trading day of such calendar year that it meets
the ownership requirements specified above.
For the reasons set forth below under ``Statutory Basis,'' the
Exchange proposes to extend the application of the Investment
Management Entity Group Discount to the annual fees payable with
respect to the first partial year of listing by any newly-listed
company that is able to demonstrate at the time of listing that it
qualifies as an Eligible Portfolio Company of an Investment Management
Entity.
The Exchange also proposes to make some non-substantive changes to
Section 902.02 to remove provisions that are no longer needed, as they
do not apply by their terms to any calendar year starting on or after
January 1, 2021.
2. Statutory Basis
The Exchange believes that the proposed rule change is consistent
with Section 6(b) of the Act,\3\ in general, and furthers the
objectives of Section 6(b)(4) \4\ 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,\5\ 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.
---------------------------------------------------------------------------
\3\ 15 U.S.C. 78f(b).
\4\ 15 U.S.C. 78f(b)(4).
\5\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------
The Exchange established the Investment Management Entity Group Fee
Discount \6\ because, among other reasons, in the Exchange's
experience, an Investment Management Entity puts high-quality and
experienced management teams in place at its portfolio companies prior
to listing and the Investment Management Entity continues to provide
significant support to those companies after listing. Consequently,
those companies require lower levels of support from the NYSE's
business and Regulation groups to assist them in navigating the initial
and continued listing process. By comparison, the Exchange devotes
significantly smaller staff resources to those companies on average
than to the typical newly-listed company that is not controlled prior
to listing by an Investment Management Entity. The Exchange believes it
is reasonable to share some of the cost savings derived from its
relationship with an Investment Management Entity with the Investment
Management Entity and its listed portfolio companies. Because these
cost savings also exist in the first partial year of listing of an
Eligible Portfolio Company, the Exchange proposes to extend the
application of the Investment Management Entity Group Fee Discount to
the annual fees such companies are billed in their first partial year
of listing, provided that the newly-listed company is able to
demonstrate at the time of listing that it qualifies as an Eligible
Portfolio Company of an Investment Management Entity.
---------------------------------------------------------------------------
\6\ See Securities Exchange Act Release No. 79582 (December 16,
2016), 81 FR 93976 (December 22, 2016) (SR-NYSE-2016-70).
---------------------------------------------------------------------------
The Exchange also proposes to make non-substantive changes to
Section 902.02 to remove provisions that are no longer needed, as they
do not apply by their terms to any calendar year starting on or after
January 1, 2021.
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 believes that the proposed rule change will not impose
any burden on competition not necessary or appropriate in furtherance
of the purposes of the Act. The proposed fee reduction will be
applicable to all similarly situated issuers on the same basis.
The Exchange believes that the proposed fee limitation will not
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 has become effective upon filing pursuant
to Section 19(b)(3)(A) \7\ of the Act and paragraph (f) thereunder. At
any time within 60 days of the filing of the 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.
---------------------------------------------------------------------------
\7\ 15 U.S.C. 78s(b)(3)(A).
---------------------------------------------------------------------------
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 21225]]
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#0f7d7a636a226c6062626a617b7c4f7c6a6c21686079"><span class="__cf_email__" data-cfemail="681a1d040d450b0705050d061c1b281b0d0b460f071e">[email protected]</span></a>. Please include
File Number SR-NYSE-2023-17 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-2023-17. 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 such 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-2023-17 and should be submitted on
or before May 1, 2023.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\8\
---------------------------------------------------------------------------
\8\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------
Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2023-07414 Filed 4-7-23; 8:45 am]
BILLING CODE 8011-01-P
</pre><script data-cfasync="false" src="/cdn-cgi/scripts/5c5dd728/cloudflare-static/email-decode.min.js"></script></body>
</html>Indexed from Federal Register on April 10, 2023.
This is legal information, not legal advice. Laws vary by jurisdiction and change frequently. Always verify current law with official sources and consult a licensed attorney in your jurisdiction for advice on your specific situation.