Notice2023-08828
Self-Regulatory Organizations; Long-Term Stock Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Extend the Term That Newly and Currently Listed Companies May Receive Capital Markets Solutions on a Complimentary Basis Under LTSE Rule 14.602
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Published
April 27, 2023
Issuing agencies
Securities and Exchange Commission
Full Text
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<title>Federal Register, Volume 88 Issue 81 (Thursday, April 27, 2023)</title>
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[Federal Register Volume 88, Number 81 (Thursday, April 27, 2023)]
[Notices]
[Pages 25718-25721]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2023-08828]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-97346; File No. SR-LTSE-2023-02]
Self-Regulatory Organizations; Long-Term Stock Exchange, Inc.;
Notice of Filing and Immediate Effectiveness of a Proposed Rule Change
To Extend the Term That Newly and Currently Listed Companies May
Receive Capital Markets Solutions on a Complimentary Basis Under LTSE
Rule 14.602
April 21, 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 April 12, 2023, Long-Term Stock Exchange, Inc. (``LTSE'' or the
``Exchange'') filed with the Securities and Exchange Commission
(``Commission'') the proposed rule change as described in Items I and
II 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\ 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
LTSE proposes to extend from one year, to three-years, the term
that newly and currently listed Companies may receive Capital Markets
Solutions on a complimentary basis under LTSE Rule 14.602.
The text of the proposed rule change is available at the Exchange's
website at <a href="https://longtermstockexchange.com/">https://longtermstockexchange.com/</a>, at the principal office
of the Exchange, and at the Commission's Public Reference Room.
II. Self-Regulatory Organization's Statement on 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 these statements may be examined at
the places specified in Item IV below. The self-regulatory organization
has prepared summaries, set forth in Sections A, B, and C below, of the
most significant aspects of such statements.
A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
1. Purpose
In March 2022, LTSE began offering complimentary Capital Markets
Solutions to newly listed and currently listed Companies following the
Commission's approval of relevant amendments to Rule 14.602.\3\ Based
on LTSE's experience with offering Capital Markets Solutions, as well
as in response to changes in the competitive landscape and market
conditions, the Exchange proposes to extend from one year, to a three-
year term, the period that newly listed Companies and currently listed
Companies may receive the complimentary Capital Markets Solutions under
LTSE Rule 14.602. This proposed change impacts the duration for which
Capital Markets Solutions are to be provided and does not otherwise
impact the nature or substance of the offerings under LTSE Rule 14.602.
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\3\ See Securities Exchange Act Release No. 94465 (March 18,
2022), 87 FR 16800 (March 24, 2022) File No. SR-LTSE-2021-08.
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As described in the prior approval order by the Commission,\4\ the
Capital Markets Solutions has two components: (i) an Investor Alignment
Solution, and (ii) the Long-Term Investor Platform (``LTIP''). The
Investor Alignment Solution provides Companies with detailed
institutional investor analytics and insights into investor behavior to
enable them to evaluate the behaviors of select investors and provide
them with a deeper understanding of the ESG landscape and their
positioning. For each receiving Company, the Exchange's affiliate
company, LTSE Services, Inc. (``LTSE Services'') \5\ analyzes the ESG
profile of institutional investors in order to understand and identify
relevant sources of capital to aid the Company in honing and achieving
strategic priorities. A highly-experienced, multi-disciplinary team is
deployed to support this long-term governance and capital markets
strategy. The Exchange believes that the Investor Alignment Solution
furthers the Exchange's goal of facilitating long-term focus and value
creation for companies and investors. The nature or substance of this
offering under LTSE Rule 14.602 is not impacted by the proposed rule
change.
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\4\ Id.
\5\ As noted in the Commission's order approving LTSE as a
national securities exchange, LTSE maintains a commercial
relationship with LTSE Services to leverage the company's
technological expertise to support the Exchange's software needs.
See In the Matter of the Application of Long Term Stock Exchange,
Inc.; for Registration as a National Securities Exchange; Findings,
Opinion, and Order of the Commission, Securities Exchange Act
Release No. 85828 (May 10, 2019), 84 FR 21841, 21842 (May 15, 2019).
LTSE Services also provides communications and marketing services to
the Exchange.
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The LTIP is a platform that provides listed Companies with a means
to upload and effectively manage and utilize their registered
shareholder data received from their transfer agent. For example, the
LTIP allows Companies to more easily track, analyze and utilize
registered shareholder data in support of their investor relations,
strategic initiatives, board review and governance functions.
Additionally, as part of the LTIP, LTSE Services will assist \6\
Companies with methods of outreach to and education of existing or
potential investors regarding the process for becoming a registered
shareholder, including the need for investors to work with their
broker-dealer to complete a submission to the DRS Profile System
maintained by the DTC.\7\
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\6\ The registered shareholder information in LTIP is
proprietary to the Company and viewable only by the Company and its
authorized agent.
\7\ Any outreach to existing or potential investors is entirely
at the discretion of the Company and will be conducted exclusively
by the Company; no personnel from LTSE Services or LTSE will have
any role in communicating with investors on behalf of the Company.
The LTIP also will, based on customer demand, provide a means for
the Company to communicate with registered shareholders who choose
to participate on the Company's LTIP account.
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Proposed Rule 14.602(b)(2)(A) would provide that within 90 days of
listing on the Exchange, a Company has the option to request and
commence receiving the Capital Markets Solutions on a complimentary
basis for a three-year term. As is the case in the current rule text,
the three-year term will begin from the date of first use of the
Capital Markets Solutions by the newly-listed Company, subject to the
90-day period from the date of listing to request and begin receiving
the service. The only
[[Page 25719]]
proposed change in Rule 14.602(b)(2)(A) is changing the duration of the
period during which a Company may receive the Capital Markets Solutions
on a complimentary basis from one year to three years.
The Exchange is proposing an amendment to Rule 14.602(b)(2)(B),
providing a currently listed Company that has already commenced
receiving the services as of the effective date of this filing SR-LTSE-
2023-02 the option to request to continue receiving such services on a
complimentary basis for an additional two-year term. This two-year term
will begin from the one-year anniversary of the date the Company
initially commenced receiving the Capital Markets Solutions. The
Exchange is also proposing to delete the following language: ``Within
90 days of the effectiveness of this rule,'' because it is no longer
applicable. The Exchange is proposing no other substantive changes to
Rule 14.602(b)(2)(B).
The Exchange believes extending the period for Companies to receive
Capital Markets Solutions on a complimentary basis aligns with LTSE's
objective of supporting long-term value creation for listed Companies
and their investors. Additionally, by offering such services on a
complimentary basis for a longer term--i.e., three years--LTSE is able
to enhance the value Companies receive by listing on the Exchange.
However, no Company is required to use these services as a condition of
initial or continued listing. All such services are optional for listed
Companies and they may choose to cease receiving services at any point
during the proposed three-year period. At the end of the proposed
three-year term, Companies may choose to renew these services on a
contractual basis with LTSE Services and pay for them in regular
course, or discontinue them. If a Company chooses to discontinue the
services, there would be no effect on the Company's continued listing
on the Exchange. LTSE notes that no other Company will be required to
pay higher fees as a result of the proposed amendments and represents
that extending the term of these complimentary services will have no
impact on the resources available for its regulatory programs. LTSE
also represents that no confidential trading or regulatory information
generated or received by the Exchange will be shared with LTSE Services
or leveraged for the provision of its products and services.
2. Statutory Basis
The Exchange believes that the proposed rule change is consistent
with the provisions of Section 6 of the Act,\8\ in general, and
furthers the objectives of Section 6(b)(4) of the Act,\9\ in
particular, in that it is designed to provide for the equitable
allocation of reasonable dues, fees, and other charges among the
Exchange's members and issuers and other persons using its facilities.
The Exchange also believes that the proposed rule change is consistent
with Section 6(b)(5) of the Act \10\ in that it is not designed to
permit unfair discrimination between customers, issuers, brokers, or
dealers.
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\8\ 15 U.S.C. 78f.
\9\ 15 U.S.C. 78f(b)(4).
\10\ 15 U.S.C. 78f(b)(5).
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The Exchange believes that it is fair and reasonable to offer
products and services to companies. The Exchange believes that the
existing U.S. exchange listing market for operating companies is
essentially a duopoly with the vast majority of operating companies
listed on U.S. securities exchanges listing on the New York Stock
Exchange (``NYSE'') or Nasdaq Stock Market LLC (``Nasdaq''). The
Exchange faces competition from NYSE and Nasdaq as a new entrant into
the exchange listing market as both offer complimentary services to
newly and currently listed companies in order to attract and retain
listings.\11\ Similarly, the Exchange believes that offering such
products and services to newly and currently listed Companies would
enhance the value proposition for listing, allow the Exchange to more
effectively attract companies to list on the Exchange and retain its
current listings. Equally important, LTSE believes that the Capital
Markets Services will support Companies in identifying investors who
are aligned with their long-term business, vision and policies.
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\11\ See, Securities Exchange Act Release No. 90955 (January 19,
2021), 86 FR 7155, 7157 (January 26, 2021) (noting that ``Nasdaq
faces competition in the market for listing services, and competes,
in part, by offering valuable services to companies. Nasdaq believes
that it is reasonable to offer complimentary services to attract and
retain listings as part of this competition''). See also, Securities
Exchange Act Release No. 93865 (December 23, 2021), 86 FR 74115,
74118 (December 29, 2021) (noting that, ``The NYSE faces competition
in the market for listing services, and competes, in part, by
offering valuable services to companies. The Exchange believes that
it is reasonable to offer complimentary services to attract and
retain listings as part of this competition.'').
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The Exchange also believes that to the extent the Exchange's
listing program is successful, it will provide a competitive
alternative, which will thereby benefit companies and investors, and
remove impediments to and perfect the mechanism of a free and open
market and a national market system, consistent with the protection of
investors and the public interest. Other exchanges also acknowledge the
competition in the market for listing services and they compete, in
part, by offering products and services to companies. Like other
exchanges, LTSE also believes that it is fair and reasonable to offer
complimentary services to attract new listings and retain current
listings as part of this competition.\12\ For example, Nasdaq, through
its affiliate Nasdaq Corporate Solutions, LLC, or a selected third-
party, offers an ``Eligible New Listing'' or ``Eligible Switch'' access
to complimentary services for at least three years.\13\ Similarly, NYSE
offers complimentary services to ``Eligible New Listings'' and
``Eligible Transfer Companies'' for a period of 48 calendar months.\14\
As noted above, the proposed rule change would provide all current and
newly LTSE-listed Companies the Capital Markets Solutions for three
years.
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\12\ Id.
\13\ See Nasdaq Listing Rule IM-5900-7(c) and (d). See also
Securities Exchange Act Release No. 91318 (March 12, 2021), 86 FR
14774 (March 18, 2021) (order approving proposed Nasdaq rule change
to modify and expand the package of complimentary services provided
to Eligible Companies under IM-5900-7).
\14\ See NYSE Listed Company Manual Section 907; see also
Securities Exchange Act Release No. 94222 (February 10, 2022), 87 FR
8886 (February 16, 2022) (order approving proposed rule change to
amend Section 907 of the Listed Company Manual regarding products
and services being offered to eligible companies).
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LTSE believes extending the term that all newly listed and
currently listed Companies receive Capital Markets Solutions on a
complimentary basis is consistent with just and equitable principles of
trade and the protection of investors and the public interest because
it has the potential to enhance current and newly listed companies'
engagement and alignment with shareholders for the purpose of long-term
value creation. These services are also a reflection of the Exchange's
differentiated listing standards, which are explicitly designed to
promote long-term focus and value creation,\15\ and are central to
LTSE's mission of reducing short-termism in the capital markets.\16\
Additionally, LTSE is not differentiating the complimentary services
offered among listed Companies based on the number of shares
outstanding or market capitalization; the Capital Markets Solutions are
made available to all listed Companies for the same period of time.
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\15\ See Policies and Principles noted in LTSE Rule 14.425.
\16\ See Securities Exchange Act Release No. 86327 (July 8,
2019), 84 FR 33293 (July 12, 2019) File No. SR-LTSE-2019-01 (notice
of filing of proposed rule change to adopt LTSE Rule 14.425).
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Finally, the Exchange believes it is reasonable to balance its need
to remain competitive with other listing venues, while at the same time
ensuring adequate revenue to meet its regulatory responsibilities. The
Exchange notes that no Company will be required to pay higher fees
because of this proposal, and it represents that providing the proposed
services will have no impact on the resources available for its
regulatory programs.
B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange does not believe that the proposed rule change will
result in any burden on competition that is not necessary or
appropriate in furtherance of the purposes of the Act. To the contrary,
and as discussed in the Statutory Basis section, LTSE believes that the
proposed rule change will enhance competition by facilitating LTSE's
listing program which will allow the Exchange to provide companies with
another listing option, thereby promoting intermarket competition
between exchanges in furtherance of the principles of Section 11A(a)(1)
of the Act \17\ in that it is designed to promote fair competition
between exchange markets by offering a new listing market. As noted
above, LTSE faces competition in the market for listing services, and
aims to compete by offering valuable services to listed Companies. The
proposed rule change reflects that competition, but does not impose any
burden on the competition with other exchanges. Other exchanges also
offer similar services to companies for similar time frames as this
proposed rule change,\18\ thereby increasing competition to the benefit
of those companies and their stakeholders. Moreover, as a dual listing
venue, LTSE expects to face competition from existing exchanges because
companies have a choice to list their securities solely on a primary
listing venue. Consequently, the degree to which LTSE's products and
services could impose any burden on intermarket competition is
extremely limited, and LTSE does not believe that such offerings would
impose any burden on competing venues that is not necessary or
appropriate in furtherance of the purposes of the Act.
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\17\ 15 U.S.C. 78k-1(a)(1).
\18\ See Nasdaq Listing Rule IM-5900-7 and NYSE Listed Company
Manual Section 907. See also supra notes 11 and 12.
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LTSE also does not believe that the proposed rule change will
result in any burden on intramarket competition since all currently
listed Companies will be able to receive the Capital Markets Services
for the proposed three-year term. Moreover, the extension of these
complimentary services to three years does not remove the requirement
under the existing rule that a Company requesting such services must do
so within 90 days of listing on the Exchange. Consequently, LTSE does
not believe that the proposal will impose any burden on intramarket
competition that is not necessary or appropriate in furtherance of the
purposes of the Act.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others
The Exchange has neither solicited nor received written comments on
the proposed rule change.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
Because the foregoing proposed rule change does not: (i)
significantly affect the protection of investors or the public
interest; (ii) impose any significant burden on competition; and (iii)
become operative for 30 days from the date on which it was filed, or
such shorter time as the Commission may designate, it has become
effective pursuant to Section 19(b)(3)(A)(iii) of the Act \19\ and
subparagraph (f)(6) of Rule 19b-4 thereunder.\20\
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\19\ 15 U.S.C. 78s(b)(3)(A)(iii).
\20\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)
requires a self-regulatory organization to give the Commission
written notice of its intent to file the proposed rule change at
least five business days prior to the date of filing of the proposed
rule change, or such shorter time as designated by the Commission.
The Exchange has satisfied this requirement.
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A proposed rule change filed pursuant to Rule 19b-4(f)(6) under the
Act normally does not become operative for 30 days after the date of
its filing. However, Rule 19b-4(f)(6)(iii) \21\ permits the Commission
to designate a shorter time if such action is consistent with the
protection of investors and the public interest. The Exchange has
requested that the Commission waive the 30-day operative delay so that
the proposal may become operative immediately upon filing. The Exchange
asserts that waiver of the operative delay would be consistent with the
protection of investors and the public interest because it would allow
the Exchange to immediately extend the term of services being provided
to currently listed Companies and permit uninterrupted continuation of
services. In addition, the Exchange states that extending the period
for Companies to receive Capital Markets Solutions on a complimentary
basis aligns with its objective of supporting long-term value creation
for listed Companies and their investors. For these reasons, and
because the proposal raises no novel legal or regulatory issues, the
Commission believes that waiver of the 30-day operative delay is
consistent with the protection of investors and the public interest.
Accordingly, the Commission hereby waives the 30-day operative delay
and designates the proposed rule change operative upon filing.\22\
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\21\ 17 CFR 240.19b-4(f)(6)(iii).
\22\ For purposes only of waiving the 30-day operative delay,
the Commission has also considered the proposed rule's impact on
efficiency, competition, and capital formation. See 15 U.S.C.
78c(f).
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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.
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="https://www.sec.gov/rules/sro.shtml">https://www.sec.gov/rules/sro.shtml</a>); or
<bullet> Send an email to <a href="/cdn-cgi/l/email-protection#4e3c3b222b632d2123232b203a3d0e3d2b2d60292138"><span class="__cf_email__" data-cfemail="ea989f868fc7898587878f849e99aa998f89c48d859c">[email protected]</span></a>. Please include
File Number SR-LTSE-2023-02 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-LTSE-2023-02. 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="https://www.sec.gov/rules/sro.shtml">https://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
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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. Do
not include personal identifiable information in submissions; you
should submit only information that you wish to make available
publicly. We may redact in part or withhold entirely from publication
submitted material that is obscene or subject to copyright protection.
All submissions should refer to File Number SR-LTSE-2023-02 and should
be submitted on or before May 18, 2023.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\23\
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\23\ 17 CFR 200.30-3(a)(12), (59).
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Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2023-08828 Filed 4-26-23; 8:45 am]
BILLING CODE 8011-01-P
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