Notice2023-26007
Self-Regulatory Organizations; Cboe BZX Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Delineate the Application Fee From the Entry Fee, To Increase the Application Fee for Tier I and Tier II Securities Listed on the Exchange in Certain Circumstances, To Change the Assessment Date of the Entry Fee, and To Clarify That Both the Entry Fee and Application Fee Are Non-Refundable as Provided in Exchange Rule 14.13
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 27, 2023
Issuing agencies
Securities and Exchange Commission
Full Text
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<title>Federal Register, Volume 88 Issue 226 (Monday, November 27, 2023)</title>
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[Federal Register Volume 88, Number 226 (Monday, November 27, 2023)]
[Notices]
[Pages 82933-82936]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2023-26007]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-98991; File No. SR-CboeBZX-2023-092]
Self-Regulatory Organizations; Cboe BZX Exchange, Inc.; Notice of
Filing and Immediate Effectiveness of a Proposed Rule Change To
Delineate the Application Fee From the Entry Fee, To Increase the
Application Fee for Tier I and Tier II Securities Listed on the
Exchange in Certain Circumstances, To Change the Assessment Date of the
Entry Fee, and To Clarify That Both the Entry Fee and Application Fee
Are Non-Refundable as Provided in Exchange Rule 14.13
November 20, 2023.
Pursuant to Section 19(b)(1) \1\ of the Securities Exchange Act of
1934 (``Act'') and Rule 19b-4 thereunder,\2\ notice is hereby given
that on November 8, 2023, Cboe BZX Exchange, Inc. (the ``Exchange'' or
``BZX'') filed with the Securities and Exchange Commission
(``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\ 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
Cboe BZX Exchange, Inc. (``BZX'' or the ``Exchange'') is filing
with the Securities and Exchange Commission (``Commission'' or ``SEC'')
a proposed rule change to delineate the Application Fee from the Entry
Fee, to increase the Application Fee for Tier I and Tier II securities
listed on the Exchange in certain circumstances, to change the
assessment date of the Entry Fee, and to clarify that both the Entry
Fee and Application Fee are non-refundable as provided in Exchange Rule
14.13. The text of the proposed rule change is provided in Exhibit 5.
The text of the proposed rule change is also available on the
Exchange's website (<a href="http://markets.cboe.com/us/equities/regulation/rule_filings/bzx/">http://markets.cboe.com/us/equities/regulation/rule_filings/bzx/</a>), at the Exchange's Office of the Secretary, 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 Exchange 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 Exchange 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 the
Statutory Basis for, the Proposed Rule Change
1. Purpose
The Exchange is proposing to amend its rules related to an
application to list any class of securities (not otherwise identified
in Rule 14.13) on the Exchange as a Tier I or Tier II security to
specifically delineate the Application Fee \3\ from the Entry Fee,\4\
to increase the Application Fee for Tier I and Tier II Securities
applying to list on the Exchange in certain circumstances, and to
change the assessment date of the Entry Fee.\5\ The Exchange is also
proposing to clarify that both the Entry Fee and Application Fee are
non-refundable. The Exchange is not proposing to change the total
combined Entry Fee and Application Fee for either Tier I ($100,000) or
Tier II ($50,000) securities, but rather to increase the Application
Fee in situations that it's less likely that an applicant will list on
the Exchange (as further described below) and to assess the Entry Fee
at the point that the Exchange has completed the majority of the work
associated with a potential listing.\6\
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\3\ See proposed Rule 14.13(b)(1).
\4\ The Entry Fee is currently set forth in Exchange Rule
14.13(b)(1)(A) and (B) for Tier I and Tier II securities,
respectively. As described therein, the Entry Fee includes a non-
refundable Application Fee that must be submitted with the Company's
application to list on the Exchange.
\5\ The Exchange initially filed the proposed fee change on
September 29, 2023 (SR-CboeBZX-2023-077). On October 10, 2023, the
Exchange withdrew that filing and submitted another proposed fee
change (SR-CboeBZX-2023-082). On October 20, 2023, the Exchange
withdrew that filing and submitted another proposed fee change (SR-
CboeBZX-2023-086). On October 31, 2023, the Exchange withdrew that
filing and [sic] another proposed fee change (SR-CboeBZX-2023-088).
On November 8, 2023, the Exchange withdrew that filing and submitted
this proposal.
\6\ The Exchange notes that the proposed Fees will be applied
prospectively to all applications submitted after the date of this
proposal.
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Currently, under Exchange Rule 14.13(b)(1)(A) and (B), a Company
that submits an application to list a Tier I or Tier II security on the
Exchange is assessed an Entry Fee totaling $100,000 or $50,000,
respectively. The rules further stipulate that the Entry Fee will be
assessed on the date of listing on the Exchange, except for $25,000
which represents the Application Fee, and which must be submitted with
the Company's application.
The Exchange is now proposing to delineate the Application Fee from
the Entry Fee under proposed Rules 14.13(b)(1) and (2), respectively.
However, the Exchange is not proposing a change to the combined total
of the Entry Fee and Application Fee for either Tier I or Tier II
securities that list on the Exchange. The Application Fee would
continue to be $25,000 for both Tier I and Tier II securities unless
the Company is at any point during the Exchange's review of the
application simultaneously engaged in the application process to list
on another national securities exchange, in which case the application
fee will be $50,000. In such circumstances, there is a higher
likelihood that the Company may withdraw its application to list on the
Exchange prior to the issuance of conditional approval, and thus prior
to assessment of the remainder of the Entry Fee. Given this and because
of the significant resources necessary to review an application to list
on the Exchange, the Exchange believes that a higher Application Fee
will more
[[Page 82934]]
closely align with the time at which the Exchange incurs the cost of
reviewing an application and will ensure that the Exchange is
compensated for its time and resources even if an issuer withdraws its
application prior to receiving conditional approval.
The Exchange's listing application for Tier I or Tier II securities
requires a Company to disclose whether it is simultaneously engaged in
the application process to list on another national securities
exchange. If a Company were to indicate such, it would be assessed the
$50,000 Application Fee at the time of application. If a Company is not
simultaneously engaged in the application process to list on another
national securities exchange at the time of application, but later
submits such an application prior to receiving conditional approval to
list on the Exchange, the Company would be required to notify the
Exchange of such application and the additional $25,000 Application Fee
would be assessed at that time. The Exchange is not proposing
additional fees for Companies that decide not to list with the
Exchange. Where a Company that is already engaged in the application
process with another exchange, such a Company will be subject to the
higher Application Fee upon application with the Exchange. Where a
Company is already engaged in the listing process with the Exchange and
is considering listing with another exchange, such a Company can have
any level of engagement short of filing an application on that other
exchange without subjecting itself to any additional fees. Such a
Company could also terminate the application process with the Exchange
and begin the listing process with another exchange and not be subject
to any additional fees. As such, the Exchange believes this proposal is
not imposing any meaningful burden on competition. Rather, the Exchange
is merely trying to ensure that it is compensated for the resources
that it expends in a situation where it is less likely that the full
Entry Fee will be paid.
Based on the above proposed changes to Rule 14.13(b), the Exchange
also proposes to renumber and update rule references throughout Rule
14.13(b) to conform to those changes. Additionally, the Exchange
proposes to make conforming changes to proposed Rules 14.13(b)(2)(F)
and (G) to state that neither the Entry Fee or Application Fee provided
under proposed Rules 14.13(b)(1) and (2) will be applicable to certain
securities.
The Exchange is also proposing that the Entry Fee be assessed for
both Tier I and Tier II securities on the date the Exchange provides
conditional approval \7\ of the Company's application. The Exchange's
review of an application for listing a Tier I or Tier II security
requires significant Exchange resources, a majority of which are
required prior to the issuance of conditional approval. Therefore, the
Exchange believes the proposal to assess the Entry Fee (less the
Application Fee) at the time conditional approval is issued is
reasonable as it more closely aligns with the time that the largest
costs are incurred by the Exchange. Further, it ensures that the
Exchange is compensated for its time and resources even if an issuer
determines not to list with the Exchange after receiving conditional
approval.
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\7\ Conditional approval is approval issued by the Exchange for
a security to list on the Exchange subject to certain conditions
being met.
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Last, the Exchange proposes to delete the text of existing Rule
14.13(b)(1)(E), which provides that if the application is withdrawn or
is not approved, the Entry Fee (less the non-refundable Application
Fee) shall be refunded. As noted in current Exchange Rule 14.13(a), the
Application Fee is, and will continue to be, non-refundable. While Rule
14.13(b)(1)(E) implies that an Entry Fee (less the Application Fee) may
be refundable, it would not occur in practice as the Entry Fee is
currently charged on the date of initial listing. Therefore, the
Exchange proposes to delete the text of Rule 14.13(b)(1)(E) and to
modify Rule 14.13(a) to clarify that both the Application Fee and Entry
Fee are non-refundable.
2. Statutory Basis
The Exchange believes the proposed rule change is consistent with
the Securities Exchange Act of 1934 (the ``Act'') and the rules and
regulations thereunder applicable to the Exchange and, in particular,
the requirements of Section 6(b) of the Act.\8\ Specifically, the
Exchange believes the proposed rule change is consistent with the
Section 6(b)(5) \9\ requirements that the rules of an exchange be
designed to prevent fraudulent and manipulative acts and practices, 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. Additionally,
the Exchange believes the proposed rule change is consistent with the
Section 6(b)(5) \10\ requirement that the rules of an exchange not be
designed to permit unfair discrimination between customers, issuers,
brokers, or dealers as well as Section 6(b)(4) \11\ as it is designed
to provide for the equitable allocation of reasonable dues, fees and
other charges among its Members and other persons using its facilities.
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\8\ 15 U.S.C. 78f(b).
\9\ 15 U.S.C. 78f(b)(5).
\10\ Id.
\11\ 15 U.S.C. 78f(b)(4).
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The Exchange first notes that its corporate listing business
operates in a highly-competitive market in which Companies can readily
list on another national securities exchange if they deem fee levels or
any other factor at a particular venue to be insufficient or excessive.
Exchange Rule 14.13 reflects a competitive pricing structure designed
to incentivize Companies to list new Tier I or Tier II securities,
which the Exchange believes will enhance competition both among
Companies and listing venues, to the benefit of investors.
The Exchange believes it is reasonable to delineate between the
Application Fee and Entry Fee within the Exchange's rules. The
separation of the two fees will clarify when each of the fees are
assessed by the Exchange and the total amount that will be assessed.
Furthermore, the Exchange believes the corresponding changes throughout
Rule 14.13(b) to modify rule references and numbering will maintain a
clear and understandable rulebook, to the benefit of all investors.
The Exchange believes its proposal to charge a higher Application
Fee if the Company is at any point during the Exchange's review of the
application simultaneously engaged in the application process to list
on another national securities exchange, is reasonable. Specifically,
in such circumstances, there is a higher likelihood that the Company
will withdraw its application to list prior to the issuance of
conditional approval, and thus prior to assessment of Entry Fee (less
the Application Fee). Given this and because of the significant
resources necessary to review an application to list on the Exchange,
the Exchange believes that a higher Application Fee will more closely
align with the time at which the Exchange incurs the cost of reviewing
an application and will ensure that the Exchange is compensated for its
time and resources even if an issuer
[[Page 82935]]
withdraws its application prior to receiving conditional approval. The
Exchange is not proposing additional fees for Companies that decide not
to list with the Exchange. Where a Company that is already engaged in
the application process with another exchange, such a Company will be
subject to the higher Application Fee upon application with the
Exchange. Where a Company is already engaged in the listing process
with the Exchange and is considering listing with another exchange,
such a Company can have any level of engagement short of submitting an
application on that other exchange without subjecting itself to any
additional fees. Such a Company could also terminate the application
process with the Exchange and begin the listing process with another
exchange and not be subject to any additional fees. As such, the
Exchange believes this proposal is not imposing any meaningful burden
on competition. Rather, the Exchange is merely trying to ensure that it
is compensated for the resources that it expends in a situation where
it is less likely for the full Entry Fee to be paid. While such an
arrangement could result in Companies that do not list with the
Exchange paying a higher Application Fee, the Exchange does not believe
the proposal will disincentivize Companies to submit applications to
list on other national securities exchanges and thereby burden
competition. Rather, the Exchange believes the proposal will reasonably
compensate the Exchange for its review of the application and may
incentivize Companies to choose not to engage in or terminate the
application process on the Exchange when there is a higher likelihood
that the Company will list on another national securities exchange.
While the Exchange is only proposing to charge a higher Application
Fee in certain circumstances, the Exchange believes this is not
unfairly discriminatory because it more closely aligns the fee
assessment with the time at which Exchange costs are incurred for
limited circumstances where the Exchange believes there is a higher
likelihood that the application will be withdrawn prior to the issuance
of conditional approval. The Exchange further notes that should a
Company not withdraw its application and receive conditional approval
to list a Tier I or Tier II security on the Exchange, it will pay no
more than any other Company listing such a security.
The Exchange's proposal to assess the Entry Fee, less the
Application Fee on the date the Exchange provides conditional approval
is reasonable as it more closely aligns with the time that resource
costs are incurred by the Exchange and ensures the Exchange is
compensated for its costs incurred in reaching a conditional approval.
There are several reasons for which a Company may not list a Tier I or
Tier II that has already received conditional approval to list on the
Exchange. For example, as discussed above, a Company may choose to list
on another national securities exchange rather than the Exchange.
Alternatively, a Company may not meet other regulatory requirements or
the conditions provided in the conditional approval that would prevent
them from listing on any national securities exchange, including the
Exchange. While the Exchange recognizes that a Company may not list on
the Exchange after receiving conditional approval for reasons outside
of their control, the Exchange does not believe that the proposal is
discriminatory among issuers as it simply aligns with the time that
resource costs are incurred by the Exchange. The Exchange also believes
that this amendment is not unfairly discriminatory as it will apply to
all Companies that submit an application to list a Tier I or Tier II
security on the Exchange equally.
The Exchange notes that Rule 14.13(b)(2)(C) provides for the Entry
Fee of Exchange Traded Products (``ETPs'') listed on the Exchange.
Unlike Tier I and Tier II securities listed on the Exchange, the
Exchange only charges an Entry Fee to ETPs for which a proposed rule
change pursuant to Section 19(b) of the Exchange Act (an ``Exchange
Rule Filing'') is required to be filed with the Commission. Such fee is
assessed at the time the Exchange Rule Filing is filed with the
Commission. Similar to the proposed fee, the Entry Fee applicable to
ETPs is assessed in close proximity to the time the Exchange incurs the
cost to prepare and file an Exchange Rule Filing rather than on the
date of initial listing. Given this, the Exchange does not believe the
proposal unfairly discriminates issuers of Tier I or Tier II securities
from issuers of ETPs on the Exchange.
Lastly, the Exchange's proposal to delete the text of Rule
14.13(b)(1)(E) and modify Rule 14.13(a) is reasonable because it will
clarify that both the Application Fee and Entry Fee are non-refundable.
Exchange Rule 14.13(a) currently provides that the Application Fee is
non-refundable. While the Rule 14.13(b)(1)(E) implies that the Entry
Fee may be refundable, it is never refundable in practice as it is
currently assessed on the date of initial listing on the Exchange.
Furthermore, the Exchange believes that the Application Fee and Entry
Fee are reasonably designed to compensate the Exchange for the cost
incurred by reviewing an application to list on the Exchange.
Therefore, as such review is nearly complete at the time conditional
approval is provided by the Exchange, it is reasonable that Entry Fee
is non-refundable.
Given the foregoing, the Exchange believes the proposed fee
amendments are 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 that is not necessary or appropriate
in furtherance of the purposes of the Act. The market for listing
services is extremely competitive and listed companies may freely
choose alternative venues based on the aggregate fees assessed, and the
value provided by each listing.
While the proposal does not change the combined amount of the Entry
Fee and Application Fee for both Tier I and Tier II securities that
list on the Exchange, certain Companies may pay a higher Application
Fee. Nonetheless, the Exchange does not believe that the proposal will
impose any burden on competition that is not necessary or appropriate
in furtherance of the purposes of the Act. Specifically, the proposal
to assess a higher Application Fee in certain circumstances as
described herein is reasonable because it more closely aligns the fee
assessment with the time at which the Exchange incurs costs in only
limited circumstances where the Exchange believes there is a higher
likelihood that the application will be withdrawn prior to the issuance
of conditional approval. As discussed above, the Exchange is not
proposing additional fees for Companies that decide not to list with
the Exchange. Where a Company that is already engaged in the
application process with another exchange, such a Company will be
subject to the higher Application Fee upon application with the
Exchange. Where a Company is already engaged in the listing process
with the Exchange and is considering listing with another exchange,
such a Company can have any level of engagement short of filing an
application on that other exchange without subjecting itself to any
additional fees. Such a Company could also terminate the application
process with the Exchange and begin the listing process with another
exchange and not be subject to any additional fees. As such, this
proposal is not imposing any meaningful burden on competition.
[[Page 82936]]
Rather, the Exchange is merely trying to ensure that it is compensated
for the resources that it expends in a situation where it is less
likely for the full Entry Fee to be paid. While such an arrangement
could result in Companies that do not list with the Exchange paying a
higher Application Fee, the Exchange does not believe the proposal will
disincentivize Companies to submit applications to list on other
national securities exchanges and thereby burden competition. Rather,
the Exchange believes the proposal will reasonably compensate the
Exchange for its review of the application and may incentivize
Companies to choose not to engage in or terminate the application
process on the Exchange when there is a higher likelihood that the
Company will list on another national securities exchange.
In addition, as proposed Companies that don't list on the Exchange,
either by choice or because it failed to meet the conditions set forth
in the conditional approval or some other regulatory requirement, will
be assessed the Entry Fee less the Application Fee at the time of
conditional approval. Therefore, Companies that receive conditional
approval, but do not list on the Exchange will pay a fee they would not
be subject to under the current rule. The Exchange does not believe
that this fee assessment will impose any burden on competition that is
not necessary or appropriate in furtherance of the purposes of the Act
because it simply aligns the fee with the time that resource costs are
incurred by the Exchange. Therefore, the Exchange believes the proposal
is consistent with Section 6(b)(8) of the Act.
The Exchange believes that the proposed amendments do not encumber
competition for listings with other listing venues, which are similarly
free to set their fees. Rather, it reflects competition among listing
venues and will further enhance competition.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others
The Exchange neither solicited nor received comments on 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 pursuant to Section
19(b)(3)(A) of the Act \12\ and paragraph (f) of Rule 19b-4 \13\
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. If the Commission
takes such action, the Commission will institute proceedings to
determine whether the proposed rule change should be approved or
disapproved.
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\12\ 15 U.S.C. 78s(b)(3)(A).
\13\ 17 CFR 240.19b-4(f).
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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="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#4a383f262f67292527272f243e390a392f29642d253c"><span class="__cf_email__" data-cfemail="ccbeb9a0a9e1afa3a1a1a9a2b8bf8cbfa9afe2aba3ba">[email protected]</span></a>. Please include
file number SR-CboeBZX-2023-092 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-CboeBZX-2023-092. 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 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. 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-CboeBZX-2023-092 and should
be submitted on or before December 18, 2023.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\14\
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\14\ 17 CFR 200.30-3(a)(12).
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Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2023-26007 Filed 11-24-23; 8:45 am]
BILLING CODE 8011-01-P
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