Notice2024-21764
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
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
September 24, 2024
Issuing agencies
Securities and Exchange Commission
Full Text
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<title>Federal Register, Volume 89 Issue 185 (Tuesday, September 24, 2024)</title>
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[Federal Register Volume 89, Number 185 (Tuesday, September 24, 2024)]
[Notices]
[Pages 77943-77945]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2024-21764]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-101093; File No. SR-NYSE-2024-57]
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
September 18, 2024.
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 September 10, 2024, New York Stock Exchange LLC (``NYSE'' or the
``Exchange'') filed with the Securities and Exchange Commission
(``SEC'' or ``Commission'') the proposed rule change as described in
Items I, II, and III below, which Items have been prepared by the
Exchange. The Commission is publishing this notice to solicit comments
on the proposed rule change from interested persons.
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\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Exchange proposes to amend Section 902.02 of the NYSE Listed
Company Manual (the ``Manual'') to clarify that for purposes of
qualifying for the Investment Management Entity Group Fee Discount, an
Investment Management Entity is a company that is listed on the
Exchange or another national securities 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
Statutory Basis for, the Proposed Rule Change
1. Purpose
The Exchange presently offers a discount on annual fees to
Investment Management Entities and their Eligible Portfolio
Companies.\3\ The discount equals a 50% reduction 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. Under Section 902.02 of the
Manual, an ``Investment Management Entity'' is defined as ``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 defined as ``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.''
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\3\ See Section 902.02 of the Manual.
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The Exchange proposes to amend the definition of Investment
Management Entity contained in Section 902.02 to specify that it is a
company listed on the Exchange or another national securities exchange
that manages private investment vehicles not registered under the
Investment Company Act. As amended, the definition would not limit
qualification as an Investment Management Entity to only those
companies listed on the Exchange. Instead, a company meeting the
remaining requirements of the definition could qualify as long as it is
listed on the Exchange or another national securities exchange.
When the Exchange adopted the Investment Management Entity Group
Fee Discount in 2016, it noted that the fee reduction was appropriate
because it (i) benefits from its ongoing relationships with Investment
Management Entities and (ii) experiences efficiencies when dealing with
portfolio companies that are guided by Investment Management Entities.
This is, in part, attributable to the fact that Investment Management
Companies typically have prior experience with the Exchange and thus
the Exchange incurs lower costs in pitching for the listings of their
portfolio companies. In addition, because Investment Management
Companies generally install experienced management teams at portfolio
companies and offer ongoing support after listing, the Exchange's
business and Regulation staff generally have to devote fewer resources
to servicing these listings.\4\
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\4\ See Securities Exchange Act Release No. 79582 (December 16,
2016), 81 FR 93976 (December 22, 2016) (concerning SR-NYSE-2016-70).
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The Exchange now believes that many of the efficiencies that
warranted the fee discount in the first place, are applicable
regardless of whether the Investment Management Entity is listed on the
Exchange or another national securities exchange. For example, the
Exchange and Nasdaq have similar rules for listed companies, including
in the area of corporate governance. Therefore, an Investment
Management Entity with experience guiding companies to list on Nasdaq
is likely to provide similar levels of support to a portfolio company
listing on the Exchange. Therefore, the Exchange believes it is
appropriate to amend Section 902.02 of the Manual to
[[Page 77944]]
specify that in order to benefit from the annual fee discount, a
qualifying Investment Management Entity can be listed on the Exchange
or another national securities exchange.
The Exchange notes that Nasdaq offers a comparable 50% discount on
annual fees to investment management entities and eligible portfolio
companies and, for purposes of qualifying for this discount, Nasdaq
rules expressly permit the investment management company to be listed
on Nasdaq or another national securities exchange.\5\ The Exchange's
proposed amendment, therefore, simply conforms its fee discount to the
comparable discount offered by Nasdaq.
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\5\ See Nasdaq Rule 5910(b)(2)(E).
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2. Statutory Basis
The Exchange believes that the proposed rule change is consistent
with Section 6(b) of the Act,\6\ in general, and furthers the
objectives of Section 6(b)(4) \7\ 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,\8\ in that
it is designed to promote just and equitable principles of trade, to
foster cooperation and coordination with persons engaged in regulating,
clearing, settling, processing information with respect to, and
facilitating transactions in securities, to remove impediments to and
perfect the mechanism of a free and open market and a national market
system, and, in general, to protect investors and the public interest
and is not designed to permit unfair discrimination between customers,
issuers, brokers, or dealers.
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\6\ 15 U.S.C. 78f(b).
\7\ 15 U.S.C. 78f(b)(4).
\8\ 15 U.S.C. 78f(b)(5).
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The Exchange believes that it is not unfairly discriminatory and
represents an equitable allocation of reasonable fees to amend Section
902.02 of the Manual to clarify that for purposes of qualifying for the
Investment Management Entity Group Fee Discount, an Investment
Management Entity is a company that is listed on the Exchange or
another national securities exchange.
The Proposed Change Is Reasonable
The Exchange believes that the proposed change to its Investment
Management Entity fee discount is reasonable. In that regard, the
Exchange notes that the efficiencies that warranted the fee discount in
the first place, are largely applicable regardless of whether the
Investment Management Entity is listed on the Exchange or another
national securities exchange. For example, the Exchange and Nasdaq have
similar rules for listed companies, including in the area of corporate
governance. Therefore, an Investment Management Entity with experience
guiding companies to list on Nasdaq is likely to provide similar levels
of support to a portfolio company listing on the Exchange. Therefore,
the Exchange anticipates that it will experience cost efficiencies from
servicing the listing of an Eligible Portfolio Company even when the
related Investment Management Entity is listed on another national
securities exchange.
The Proposal Is an Equitable Allocation of Fees
The Exchange believes its proposal equitably allocates its fees
among its market participants.
The Exchange believes that the proposed amendment to the Investment
Management Entity fee discount is equitable because it does not change
the existing framework for such discount, but instead represents a
reasonable extension of the discount. As amended, the proposed rule
would state that, for eligibility purposes, an Investment Management
Entity can be listed on the Exchange or another national securities
exchange. The Exchange believes that the proposed rule change
represents an equitable allocation of fees because the Exchange
experiences similar cost efficiencies in servicing Eligible Portfolio
Companies regardless of whether the related Investment Management
Entity is listed on the Exchange or another national securities
exchange.
The Proposal Is Not Unfairly Discriminatory
The Exchange believes that the proposal is not unfairly
discriminatory. The proposed fee changes are not unfairly
discriminatory among issuers because, as discussed above, the Exchange
experiences cost efficiencies in servicing Eligible Portfolio Companies
that it does not experience with other operating companies listed on
the Exchange. Therefore, the Exchange believes it is not unfairly
discriminatory to provide a fee discount to such companies.
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 proposal will not impose any burden
on competition that is not necessary or appropriate in furtherance of
the purposes of Section 6(b)(8) of the Act.\9\
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\9\ 15 U.S.C. 78f(b)(8).
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The proposed rule change simply aligns the provisions of the
existing fee discount that the Exchange provides to Investment
Management Companies and their Eligible Portfolio Companies with the
comparable fee discount offered by Nasdaq. As such, the Exchange
believes that the proposed rule change will enhance competition for
listings by enabling the Exchange and Nasdaq to vie for listings on
equivalent terms.
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) \10\ 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.
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\10\ 15 U.S.C. 78s(b)(3)(A).
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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#394b4c555c145a5654545c574d4a794a5c5a175e564f"><span class="__cf_email__" data-cfemail="93e1e6fff6bef0fcfefef6fde7e0d3e0f6f0bdf4fce5">[email protected]</span></a>. Please include
file number SR-NYSE-2024-57 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-2024-57. 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
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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-NYSE-2024-57, and should be submitted on or
before October 15, 2024.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\11\
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\11\ 17 CFR 200.30-3(a)(12).
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Vanessa A. Countryman,
Secretary.
[FR Doc. 2024-21764 Filed 9-23-24; 8:45 am]
BILLING CODE 8011-01-P
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