Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend Its Schedule of Fees and Charges To Adopt Listing and Annual Fees for Actively Managed Proxy Shares Listed Under Rule 8.601-E and Managed Portfolio Shares Listed Under Rule 8.900-E, 42922-42925 [2020-15211]
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Federal Register / Vol. 85, No. 136 / Wednesday, July 15, 2020 / Notices
39 CFR part 3040, subpart B. Comment
deadline(s) for each request appear in
section II.
II. Docketed Proceeding(s)
1. Docket No(s).: MC2020–197 and
CP2020–222; Filing Title: USPS Request
to Add Priority Mail Contract 638 to
Competitive Product List and Notice of
Filing Materials Under Seal; Filing
Acceptance Date: July 9, 2020; Filing
Authority: 39 U.S.C. 3642, 39 CFR
3040.130 through 3040.135, and 39 CFR
3035.105; Public Representative:
Christopher C. Mohr; Comments Due:
July 17, 2020.
2. Docket No(s).: MC2020–198 and
CP2020–223; Filing Title: USPS Request
to Add Priority Mail Express & Priority
Mail Contract 115 to Competitive
Product List and Notice of Filing
Materials Under Seal; Filing Acceptance
Date: July 9, 2020; Filing Authority: 39
U.S.C. 3642, 39 CFR 3040.130 through
3040.135, and 39 CFR 3035.105; Public
Representative: Christopher C. Mohr;
Comments Due: July 17, 2020.
This Notice will be published in the
Federal Register.
Erica A. Barker,
Secretary.
[FR Doc. 2020–15267 Filed 7–14–20; 8:45 am]
BILLING CODE 7710–FW–P
POSTAL SERVICE
Product Change—Priority Mail and
Parcel Select Negotiated Service
Agreement
AGENCY:
ACTION:
Postal ServiceTM.
Notice.
The Postal Service gives
notice of filing a request with the Postal
Regulatory Commission to add a
domestic shipping services contract to
the list of Negotiated Service
Agreements in the Mail Classification
Schedule’s Competitive Products List.
Date of required notice: July 15,
FOR FURTHER INFORMATION CONTACT:
Sean C. Robinson, 202–268–8405.
The
United States Postal
hereby
gives notice that, pursuant to 39 U.S.C.
3642 and 3632(b)(3), on June 24, 2020,
it filed with the Postal Regulatory
Commission a Request of the United
States Postal Service to Add Priority
Mail & Parcel Select Contract 3 to
Competitive Product List. Documents
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Service®
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[FR Doc. 2020–14732 Filed 7–14–20; 8:45 am]
BILLING CODE 7710–12–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–89274; File No. SR–
NYSEArca–2020–62]
Self-Regulatory Organizations; NYSE
Arca, Inc.; Notice of Filing and
Immediate Effectiveness of Proposed
Rule Change To Amend Its Schedule of
Fees and Charges To Adopt Listing
and Annual Fees for Actively Managed
Proxy Shares Listed Under Rule 8.601–
E and Managed Portfolio Shares Listed
Under Rule 8.900–E
July 9, 2020.
Pursuant to Section 19(b)(1) 1 of the
Securities Exchange Act of 1934 (the
‘‘Act’’) 2 and Rule 19b–4 thereunder,3
notice is hereby given that, on June 30,
2020, NYSE Arca, Inc. (‘‘NYSE Arca’’ 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
comments on the proposed rule change
from interested persons.
The Exchange proposes to amend its
Schedule of Fees and Charges to adopt
listing and annual fees for Actively
Managed Proxy Shares listed under Rule
8.601–E and Managed Portfolio Shares
listed under Rule 8.900–E. The
proposed rule change is available on the
Exchange’s website at www.nyse.com, 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
2020.
SUPPLEMENTARY INFORMATION:
Sean Robinson,
Attorney, Corporate and Postal Business Law.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
SUMMARY:
DATES:
are available at www.prc.gov, Docket
Nos. MC2020–185, CP2020–209.
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
PO 00000
1 15
U.S.C. 78s(b)(1).
U.S.C. 78a.
3 17 CFR 240.19b–4.
2 15
Frm 00104
Fmt 4703
Sfmt 4703
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 amend its
Schedule of Fees and Charges to adopt
listing and annual fees for Actively
Managed Proxy Shares listed under
recently adopted Rule 8.601–E and
Managed Portfolio Shares listed under
Rule 8.900–E (collectively, ‘‘Fund
Shares’’).
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. As described below, the
Exchange does not propose different
pricing for Fund Shares. Rather, the
Exchange proposes to incorporate Fund
Shares into the existing listing and
annual fees charged by the Exchange for
Exchange Traded Products (‘‘ETPs’’).4
The proposed changes are designed to
incentivize issuers to list new Fund
Shares, transfer existing products to the
Exchange, and maintain listings on the
Exchange, which the Exchange believes
will enhance competition both among
issuers and listing venues, to the benefit
of investors.
The Exchange proposes to implement
the fee changes effective June 30, 2020.
Proposed Rule Change
On June 29, 2020, the Commission
approved Rule 8.601–E regarding
Exchange listing and trading of Active
Proxy Portfolio Shares.5 On April 15,
2020, the Commission issued a notice of
filing and immediate effectiveness of the
Exchange’s proposed rule change to
adopt NYSE Arca Rule 8.900–E
regarding Exchange listing and trading
of Managed Portfolio Shares.6 In order
4 ‘‘Exchange Traded Products’’ are defined in
footnote 3 of the current Schedule of Fees and
Charges. The Exchange proposes to modify the
definition to include Actively Managed Proxy
Shares listed under Rule 8.601–E and Managed
Portfolio Shares listed under Rule 8.900–E.
5 See Securities Exchange Act Release No. 89185
(June 29, 2020) (SR–NYSEArca–2019–95).
6 See Securities Exchange Act Release No. 88648
(April 15, 2020), 85 FR 22200 (April 21, 2020) (SR–
NYSEArca–2020–32).
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to specify pricing for Fund Shares, the
Exchange proposes the following
changes to the Schedule of Fees and
Charges.
Listing Fees
Listing fees for ETPs are set forth in
section 5.a of the Schedule of Fees and
Charges. Currently, with the exception
of various products defined as
‘‘Generically-Listed Exchange Traded
Products,’’ the Exchange charges a
$7,500 listing fee. The Exchange
currently does not charge a listing fee
for listing products pursuant to Rule
19b–4(e) under the Act if they satisfy all
criteria—referred to as ‘‘generic’’ listing
criteria—in the applicable Exchange
ETP rule.7
The Exchange proposes to include
Fund Shares in the definition of
‘‘Exchange Traded Products’’ in footnote
3 of the Schedule of Fees and Charges
and as referenced in section 5.a thereto.
Accordingly, because Fund Shares are
not subject to Exchange listing pursuant
to Rule 19b–4(e) under the Act and are
not Generically-Listed Exchange Traded
Products, Fund Shares will be subject to
a listing fee of $7,500.
The Exchange believes that, for
purposes of listing fees, it would be
appropriate to treat Fund Shares like
other Exchange Traded Products that are
not ‘‘Generically-Listed Exchange
Traded Products’’ and charge a listing
fee of $7,500 because doing so would
correlate the listing fee applicable to an
issuer of ETPs to the resources required
to list and maintain those ETPs on the
Exchange. Specifically, Commentary .01
to Rule 8.601–E and Rule 8.900–E(b)(1)
require that the Exchange file separate
proposals under Section 19(b) of the Act
before listing and trading a series of
Active Proxy Portfolio Shares or
Managed Portfolio Shares, respectively.
As such, Fund Shares will require
additional time and resources by
Exchange staff to prepare and review
rule filings and to communicate with
issuers and Commission staff in
connection therewith necessary for
ETPs listed and traded pursuant to a
rule change.
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Annual Fees
Annual fees for ETPs are based on the
number of shares outstanding per
7 The Schedule of Fees and Charges refers to these
as ‘‘Generically-Listed Exchange Traded Products.’’
‘‘Generically-Listed Exchange Traded Products’’
currently include Investment Company Units,
Portfolio Depositary Receipts, Managed Fund
Shares, Exchange-Traded Fund Shares listed under
Rule 5.2–E(j)(8), and Currency Trust Shares that are
listed on the Exchange pursuant to Rule 19b–4(e)
under the Act, and for which a proposed rule
change pursuant to Section 19(b) of the Act is not
required to be filed with the Commission.
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issuer.8 Currently, as set forth in section
6.a of the Schedule of Fees and Charges,
the Exchange charges the following
annual fees for listed ETPs (including
Exchange-Traded Fund Shares listed
under Rule 5.2–E(j)(8) that track an
Index), with the exception of Managed
Fund Shares and Managed Trust
Securities:
Number of shares outstanding
(each issue)
Annual fee
Less than 25 million ..............................
25 million up to 49,999,999 ..................
50 million up to 99,999,999 ..................
100 million up to 249,999,999 ..............
250 million up to 499,999,999 ..............
500 million and over ..............................
$7,500
10,000
15,000
20,000
25,000
30,000
As set forth in section 6.b. of the
Schedule of Fees and Charges, the
Exchange charges the following annual
fees for Managed Fund Shares, Managed
Trust Securities and Exchange-Traded
Fund Shares listed under Rule 5.2–
E(j)(8) that do not track an Index:
Number of shares outstanding
(each issue)
Annual fee
Less than 25 million ..............................
25 million up to 49,999,999 ..................
50 million up to 99,999,999 ..................
100 million up to 249,999,999 ..............
250 million and over ..............................
$10,000
12,500
20,000
25,000
30,000
The Exchange proposes to charge
annual fees for Fund Shares that track
how the Exchange currently charges
annual fees for Managed Fund Shares,
Managed Trust Securities and
Exchange-Traded Fund Shares listed
under Rule 5.2–E(j)(8) that do not track
an Index. Accordingly, because Fund
Shares, under the current Exchange
listing rules, are more akin to Managed
Fund Shares and Exchange-Traded
Fund Shares that do not track an Index,
the Exchange proposes to charge the
annual fees set forth in section 6.b of the
Schedule of Fees and Charges.
The Exchange believes that charging
Fund Shares the same current annual
fees applicable to Managed Fund
Shares, Managed Trust Securities and
Exchange-Traded Fund Shares that do
not track an Index would be appropriate
because those relatively higher annual
fees (compared to ‘‘Generically-Listed
Exchange Traded Products’’) better
correlate with higher Exchange costs
associated with similar actively
managed products such as Managed
Fund Shares, Managed Trust Securities,
8 Annual fees are assessed each January in the
first full calendar year following the year of listing.
The aggregate total shares outstanding is calculated
based on the total shares outstanding as reported by
the fund issuer or fund ‘‘family’’ in its most recent
periodic filing with the Commission or other
publicly available information. Annual fees apply
regardless of whether any of these funds are listed
elsewhere.
PO 00000
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42923
and Exchange-Traded Fund Shares that
do not track an Index, including costs
related to issuer services, listing
administration, product development
and regulatory oversight.
Finally, as noted above, the Exchange
proposes to add Fund Shares to current
footnote 3 which defines the term
‘‘Exchange Traded Products’’ for
purposes of the Schedule of Fees and
Charges.
Each of the proposed changes
described above is 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,9 in general, and
furthers the objectives of Sections
6(b)(4) and (5) of the Act,10 in particular,
because it provides for the equitable
allocation of reasonable dues, fees, and
other charges among its members,
issuers and other persons using its
facilities and does not unfairly
discriminate between customers,
issuers, brokers or dealers.
The Proposed Change Is Reasonable
As discussed above, the Exchange
operates in a highly competitive market
for the listing of ETPs. Specifically, ETP
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 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, 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.’’ 11
The Exchange believes that the
ongoing competition among the
exchanges with respect to new listings
and the transfer of existing listings
among competitor exchanges
demonstrates that issuers can choose
different listing markets in response to
fee changes. Accordingly, competitive
9 15
U.S.C. 78f(b).
U.S.C. 78f(b)(4) & (5).
11 See Regulation NMS, 70 FR at 37499.
10 15
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Federal Register / Vol. 85, No. 136 / Wednesday, July 15, 2020 / Notices
forces constrain exchange listing and
annual fees. Stated otherwise, changes
to exchange listing and annual fees can
have a direct effect on the ability of an
exchange to compete for new listings.
Given this competitive environment,
the proposal represents a reasonable
attempt to establish pricing for ETPs
listed under Rule 8.601–E and Rule
8.900–E.
The Exchange currently does not
charge listing fees for ETPs that satisfy
generic listing criteria set forth in its
rules. Products that list without a rule
filing do not entail the additional time
and resources required for ETPs that
require a rule filing. However, as noted
above, Commentary .01 to Rule 8.601–
E and Rule 8.900–E (b)(1) require that
the Exchange file separate proposals
under Section 19(b) of the Act before
listing and trading a series of Active
Proxy Portfolio Shares or Managed
Portfolio Shares, respectively. As such,
in contrast to ETPs for which the
Exchange is not required to file a
proposal under Section 19(b) of the Act,
the listing and trading of Fund Shares
will require additional time and
resources by Exchange staff to prepare
and review rule filings and to
communicate with issuers and
Commission staff in connection
therewith necessary for Fund Shares
listed and traded pursuant to a rule
change. Accordingly, the Exchange
believes the $7,500 listing fee proposed
for Fund Shares is reasonable in that it
is the same as the listing fee for other
ETPs that are not ‘‘Generically-Listed
Exchange Traded Products.’’
Annual fees for ETPs are based on the
number of shares outstanding per issuer,
and then are further differentiated based
on whether the ETP is index based or
not, with higher annual fees for ETPs
that are not based on an index. The
Exchange believes that it is reasonable
to charge annual fees for Fund Shares
based on that same differentiation. The
Exchange believes that charging Fund
Shares the current annual fees
applicable to Managed Fund Shares and
Managed Trust Securities, which are
also actively managed products, as well
as Exchange-Traded Fund Shares that
do not track an index, would be
reasonable because those annual fees
better correlate with the higher
Exchange costs for listing and trading
Fund Shares, including costs related to
issuer services, listing administration,
product development and regulatory
oversight.
The Proposal Is an Equitable Allocation
of Fees
The Exchange believes its proposal
equitably allocates its fees among its
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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 Exchange believes that, for
purposes of listing fees, it would be
appropriate to treat Fund Shares like
other Exchange Traded Products that are
not ‘‘Generically-Listed Exchange
Traded Products’’ and charge a listing
fee of $7,500 because doing so would
correlate the listing fee applicable to an
issuer of ETPs to the resources required
to list and maintain those ETPs on the
Exchange. Fund Shares will incur
additional time and resources required
by Exchange staff to prepare and review
rule filings and to communicate with
issuers and Commission staff in
connection therewith necessary for
ETPs listed and traded pursuant to a
rule change.
The proposed annual fees for Fund
Shares 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 continue to
qualify 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 listing and
annual fees would be applicable to all
existing and potential issuers of Fund
Shares uniformly and in equal measure.
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 it is not
unfairly discriminatory to apply to Fund
Shares the same fees applicable to
Managed Fund Shares, Managed Trust
Securities and Exchange-Traded Fund
Shares that do not track an index
because the proposed fees would be
offered on an equal basis to all issuers
listing Fund Shares on the Exchange.
Moreover, the proposed listing and
annual fees for Fund Shares would
apply to issuers in the same manner as
the current listing and annual fees for
ETPs, including Managed Fund Shares,
Managed Trust Securities and
Exchange-Traded Fund Shares that do
not track an index.
PO 00000
Frm 00106
Fmt 4703
Sfmt 4703
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,12 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. Instead, as
discussed above, the Exchange believes
that the proposed changes would
encourage competition because it would
establish listing and annual fees for
Fund Shares, thereby encouraging
issuers to develop and list additional
products on the Exchange that the
Exchange believes will enhance
competition both among issuers and
listing venues, to the benefit of
investors. The proposal also ensures
that the fees charged by the Exchange
accurately reflect the services provided
and benefits realized by listed issuers.
The market for listing services is
extremely competitive. Issuers have the
option to list their securities on these
alternative venues based on the fees
charged and the value provided by each
listing exchange. 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.
Intramarket Competition. The
proposed changes are designed to attract
additional listings to the Exchange by
establishing listing and annual fees for
ETPs listed under new rules. The
Exchange believes that the proposed
changes would continue to incentivize
issuers to develop and list new
products, transfer existing products to
the Exchange, and maintain listings on
the Exchange. The proposed fees would
apply to all issuers equally, 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 listings market in which
issuers can readily choose alternative
listing venues. In such an environment,
the Exchange must adjust its fees and
discounts to remain competitive with
other exchanges competing for the same
listings. Because competitors are free to
12 15
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U.S.C. 78f(b)(8).
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Federal Register / Vol. 85, No. 136 / Wednesday, July 15, 2020 / Notices
modify their own fees and discounts in
response, and because issuers may
readily adjust their listing decisions and
practices, 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 Fund Shares 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) 13 of the Act and
subparagraph (f)(2) of Rule 19b–4 14
thereunder, because it establishes a due,
fee, or other charge imposed by the
Exchange.
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) 15 of the Act to
determine whether the proposed rule
change should be approved or
disapproved.
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:
• 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–NYSEArca–2020–62. 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 (https://www.sec.gov/
rules/sro.shtml). 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–NYSEArca–2020–62 and
should be submitted on or before
August 5, 2020.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.16
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2020–15211 Filed 7–14–20; 8:45 am]
BILLING CODE 8011–01–P
Electronic Comments
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Paper Comments
• Use the Commission’s internet
comment form (https://www.sec.gov/
rules/sro.shtml); or
• Send an email to rule-comments@
sec.gov. Please include File Number SR–
NYSEArca–2020–62 on the subject line.
U.S.C. 78s(b)(3)(A).
CFR 240.19b–4(f)(2).
15 15 U.S.C. 78s(b)(2)(B).
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16 17
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PO 00000
[Release No. 34–89279; File No. SR–
NYSEArca–2020–48]
Self-Regulatory Organizations; NYSE
Arca, Inc.; Notice of Designation of a
Longer Period for Commission Action
on a Proposed Rule Change To List
and Trade Shares of Gabelli ETFs
Under Rule 8.900–E, Managed Portfolio
Shares
July 9, 2020.
On May 15, 2020, NYSE Arca, Inc.
filed with the Securities and Exchange
Commission (‘‘Commission’’), pursuant
to Section 19(b)(1) of the Securities
Exchange Act of 1934 (‘‘Act’’) 1 and Rule
19b–4 thereunder,2 a proposed rule
change to list and trade shares of the
following under Rule 8.900–E (Managed
Portfolio Shares): Gabelli Growth
Innovators ETF, Gabelli Financial
Services ETF, Gabelli Small Cap Growth
ETF, Gabelli Small & Mid Cap ETF,
Gabelli Micro Cap ETF, Gabelli ESG
ETF, Gabelli Asset ETF, Gabelli Equity
Income ETF, and Gabelli Green Energy
ETF. The proposed rule change was
published for comment in the Federal
Register on June 3, 2020.3 The
Commission has received no comment
letters on the proposed rule change.
Section 19(b)(2) of the Act 4 provides
that within 45 days of the publication of
notice of the filing of a proposed rule
change, or within such longer period up
to 90 days as the Commission may
designate if it finds such longer period
to be appropriate and publishes its
reasons for so finding, or as to which the
self-regulatory organization consents,
the Commission shall either approve the
proposed rule change, disapprove the
proposed rule change, or institute
proceedings to determine whether the
proposed rule change should be
disapproved. The 45th day after
publication of the notice for this
proposed rule change is July 18, 2020.
The Commission is extending this 45day time period.
The Commission finds it appropriate
to designate a longer period within
which to take action on the proposed
rule change so that it has sufficient time
to consider the proposed rule change.
Accordingly, the Commission, pursuant
to Section 19(b)(2) of the Act,5
designates September 1, 2020 as the
date by which the Commission shall
U.S.C. 78s(b)(1).
CFR 240.19b–4.
3 See Securities Exchange Act Release No. 88970
(May 28, 2020), 85 FR 34262.
4 15 U.S.C. 78s(b)(2).
5 Id.
2 17
14 17
VerDate Sep<11>2014
SECURITIES AND EXCHANGE
COMMISSION
1 15
13 15
CFR 200.30–3(a)(12).
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[Federal Register Volume 85, Number 136 (Wednesday, July 15, 2020)]
[Notices]
[Pages 42922-42925]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-15211]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-89274; File No. SR-NYSEArca-2020-62]
Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing
and Immediate Effectiveness of Proposed Rule Change To Amend Its
Schedule of Fees and Charges To Adopt Listing and Annual Fees for
Actively Managed Proxy Shares Listed Under Rule 8.601-E and Managed
Portfolio Shares Listed Under Rule 8.900-E
July 9, 2020.
Pursuant to Section 19(b)(1) \1\ of the Securities Exchange Act of
1934 (the ``Act'') \2\ and Rule 19b-4 thereunder,\3\ notice is hereby
given that, on June 30, 2020, NYSE Arca, Inc. (``NYSE Arca'' 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
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 amend its Schedule of Fees and Charges to
adopt listing and annual fees for Actively Managed Proxy Shares listed
under Rule 8.601-E and Managed Portfolio Shares listed under Rule
8.900-E. The proposed rule change is available on the Exchange's
website at www.nyse.com, 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 amend its Schedule of Fees and Charges to
adopt listing and annual fees for Actively Managed Proxy Shares listed
under recently adopted Rule 8.601-E and Managed Portfolio Shares listed
under Rule 8.900-E (collectively, ``Fund Shares'').
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. As described below, the Exchange
does not propose different pricing for Fund Shares. Rather, the
Exchange proposes to incorporate Fund Shares into the existing listing
and annual fees charged by the Exchange for Exchange Traded Products
(``ETPs'').\4\
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\4\ ``Exchange Traded Products'' are defined in footnote 3 of
the current Schedule of Fees and Charges. The Exchange proposes to
modify the definition to include Actively Managed Proxy Shares
listed under Rule 8.601-E and Managed Portfolio Shares listed under
Rule 8.900-E.
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The proposed changes are designed to incentivize issuers to list
new Fund Shares, transfer existing products to the Exchange, and
maintain listings on the Exchange, which the Exchange believes will
enhance competition both among issuers and listing venues, to the
benefit of investors.
The Exchange proposes to implement the fee changes effective June
30, 2020.
Proposed Rule Change
On June 29, 2020, the Commission approved Rule 8.601-E regarding
Exchange listing and trading of Active Proxy Portfolio Shares.\5\ On
April 15, 2020, the Commission issued a notice of filing and immediate
effectiveness of the Exchange's proposed rule change to adopt NYSE Arca
Rule 8.900-E regarding Exchange listing and trading of Managed
Portfolio Shares.\6\ In order
[[Page 42923]]
to specify pricing for Fund Shares, the Exchange proposes the following
changes to the Schedule of Fees and Charges.
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\5\ See Securities Exchange Act Release No. 89185 (June 29,
2020) (SR-NYSEArca-2019-95).
\6\ See Securities Exchange Act Release No. 88648 (April 15,
2020), 85 FR 22200 (April 21, 2020) (SR-NYSEArca-2020-32).
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Listing Fees
Listing fees for ETPs are set forth in section 5.a of the Schedule
of Fees and Charges. Currently, with the exception of various products
defined as ``Generically-Listed Exchange Traded Products,'' the
Exchange charges a $7,500 listing fee. The Exchange currently does not
charge a listing fee for listing products pursuant to Rule 19b-4(e)
under the Act if they satisfy all criteria--referred to as ``generic''
listing criteria--in the applicable Exchange ETP rule.\7\
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\7\ The Schedule of Fees and Charges refers to these as
``Generically-Listed Exchange Traded Products.'' ``Generically-
Listed Exchange Traded Products'' currently include Investment
Company Units, Portfolio Depositary Receipts, Managed Fund Shares,
Exchange-Traded Fund Shares listed under Rule 5.2-E(j)(8), and
Currency Trust Shares that are listed on the Exchange pursuant to
Rule 19b-4(e) under the Act, and for which a proposed rule change
pursuant to Section 19(b) of the Act is not required to be filed
with the Commission.
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The Exchange proposes to include Fund Shares in the definition of
``Exchange Traded Products'' in footnote 3 of the Schedule of Fees and
Charges and as referenced in section 5.a thereto. Accordingly, because
Fund Shares are not subject to Exchange listing pursuant to Rule 19b-
4(e) under the Act and are not Generically-Listed Exchange Traded
Products, Fund Shares will be subject to a listing fee of $7,500.
The Exchange believes that, for purposes of listing fees, it would
be appropriate to treat Fund Shares like other Exchange Traded Products
that are not ``Generically-Listed Exchange Traded Products'' and charge
a listing fee of $7,500 because doing so would correlate the listing
fee applicable to an issuer of ETPs to the resources required to list
and maintain those ETPs on the Exchange. Specifically, Commentary .01
to Rule 8.601-E and Rule 8.900-E(b)(1) require that the Exchange file
separate proposals under Section 19(b) of the Act before listing and
trading a series of Active Proxy Portfolio Shares or Managed Portfolio
Shares, respectively. As such, Fund Shares will require additional time
and resources by Exchange staff to prepare and review rule filings and
to communicate with issuers and Commission staff in connection
therewith necessary for ETPs listed and traded pursuant to a rule
change.
Annual Fees
Annual fees for ETPs are based on the number of shares outstanding
per issuer.\8\ Currently, as set forth in section 6.a of the Schedule
of Fees and Charges, the Exchange charges the following annual fees for
listed ETPs (including Exchange-Traded Fund Shares listed under Rule
5.2-E(j)(8) that track an Index), with the exception of Managed Fund
Shares and Managed Trust Securities:
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\8\ Annual fees are assessed each January in the first full
calendar year following the year of listing. The aggregate total
shares outstanding is calculated based on the total shares
outstanding as reported by the fund issuer or fund ``family'' in its
most recent periodic filing with the Commission or other publicly
available information. Annual fees apply regardless of whether any
of these funds are listed elsewhere.
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Number of shares outstanding (each issue) Annual fee
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Less than 25 million........................................ $7,500
25 million up to 49,999,999................................. 10,000
50 million up to 99,999,999................................. 15,000
100 million up to 249,999,999............................... 20,000
250 million up to 499,999,999............................... 25,000
500 million and over........................................ 30,000
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As set forth in section 6.b. of the Schedule of Fees and Charges,
the Exchange charges the following annual fees for Managed Fund Shares,
Managed Trust Securities and Exchange-Traded Fund Shares listed under
Rule 5.2-E(j)(8) that do not track an Index:
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Number of shares outstanding (each issue) Annual fee
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Less than 25 million........................................ $10,000
25 million up to 49,999,999................................. 12,500
50 million up to 99,999,999................................. 20,000
100 million up to 249,999,999............................... 25,000
250 million and over........................................ 30,000
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The Exchange proposes to charge annual fees for Fund Shares that
track how the Exchange currently charges annual fees for Managed Fund
Shares, Managed Trust Securities and Exchange-Traded Fund Shares listed
under Rule 5.2-E(j)(8) that do not track an Index. Accordingly, because
Fund Shares, under the current Exchange listing rules, are more akin to
Managed Fund Shares and Exchange-Traded Fund Shares that do not track
an Index, the Exchange proposes to charge the annual fees set forth in
section 6.b of the Schedule of Fees and Charges.
The Exchange believes that charging Fund Shares the same current
annual fees applicable to Managed Fund Shares, Managed Trust Securities
and Exchange-Traded Fund Shares that do not track an Index would be
appropriate because those relatively higher annual fees (compared to
``Generically-Listed Exchange Traded Products'') better correlate with
higher Exchange costs associated with similar actively managed products
such as Managed Fund Shares, Managed Trust Securities, and Exchange-
Traded Fund Shares that do not track an Index, including costs related
to issuer services, listing administration, product development and
regulatory oversight.
Finally, as noted above, the Exchange proposes to add Fund Shares
to current footnote 3 which defines the term ``Exchange Traded
Products'' for purposes of the Schedule of Fees and Charges.
Each of the proposed changes described above is 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,\9\ in general, and furthers the
objectives of Sections 6(b)(4) and (5) of the Act,\10\ in particular,
because it provides for the equitable allocation of reasonable dues,
fees, and other charges among its members, issuers and other persons
using its facilities and does not unfairly discriminate between
customers, issuers, brokers or dealers.
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\9\ 15 U.S.C. 78f(b).
\10\ 15 U.S.C. 78f(b)(4) & (5).
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The Proposed Change Is Reasonable
As discussed above, the Exchange operates in a highly competitive
market for the listing of ETPs. Specifically, ETP 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 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, 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.'' \11\
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\11\ See Regulation NMS, 70 FR at 37499.
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The Exchange believes that the ongoing competition among the
exchanges with respect to new listings and the transfer of existing
listings among competitor exchanges demonstrates that issuers can
choose different listing markets in response to fee changes.
Accordingly, competitive
[[Page 42924]]
forces constrain exchange listing and annual fees. Stated otherwise,
changes to exchange listing and annual fees can have a direct effect on
the ability of an exchange to compete for new listings.
Given this competitive environment, the proposal represents a
reasonable attempt to establish pricing for ETPs listed under Rule
8.601-E and Rule 8.900-E.
The Exchange currently does not charge listing fees for ETPs that
satisfy generic listing criteria set forth in its rules. Products that
list without a rule filing do not entail the additional time and
resources required for ETPs that require a rule filing. However, as
noted above, Commentary .01 to Rule 8.601-E and Rule 8.900-E (b)(1)
require that the Exchange file separate proposals under Section 19(b)
of the Act before listing and trading a series of Active Proxy
Portfolio Shares or Managed Portfolio Shares, respectively. As such, in
contrast to ETPs for which the Exchange is not required to file a
proposal under Section 19(b) of the Act, the listing and trading of
Fund Shares will require additional time and resources by Exchange
staff to prepare and review rule filings and to communicate with
issuers and Commission staff in connection therewith necessary for Fund
Shares listed and traded pursuant to a rule change. Accordingly, the
Exchange believes the $7,500 listing fee proposed for Fund Shares is
reasonable in that it is the same as the listing fee for other ETPs
that are not ``Generically-Listed Exchange Traded Products.''
Annual fees for ETPs are based on the number of shares outstanding
per issuer, and then are further differentiated based on whether the
ETP is index based or not, with higher annual fees for ETPs that are
not based on an index. The Exchange believes that it is reasonable to
charge annual fees for Fund Shares based on that same differentiation.
The Exchange believes that charging Fund Shares the current annual fees
applicable to Managed Fund Shares and Managed Trust Securities, which
are also actively managed products, as well as Exchange-Traded Fund
Shares that do not track an index, would be reasonable because those
annual fees better correlate with the higher Exchange costs for listing
and trading Fund Shares, including costs related to issuer services,
listing administration, product development and regulatory oversight.
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 Exchange believes that, for purposes of listing fees, it would
be appropriate to treat Fund Shares like other Exchange Traded Products
that are not ``Generically-Listed Exchange Traded Products'' and charge
a listing fee of $7,500 because doing so would correlate the listing
fee applicable to an issuer of ETPs to the resources required to list
and maintain those ETPs on the Exchange. Fund Shares will incur
additional time and resources required by Exchange staff to prepare and
review rule filings and to communicate with issuers and Commission
staff in connection therewith necessary for ETPs listed and traded
pursuant to a rule change.
The proposed annual fees for Fund Shares 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 continue to qualify 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 listing and
annual fees would be applicable to all existing and potential issuers
of Fund Shares uniformly and in equal measure.
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 it is not unfairly discriminatory to apply to
Fund Shares the same fees applicable to Managed Fund Shares, Managed
Trust Securities and Exchange-Traded Fund Shares that do not track an
index because the proposed fees would be offered on an equal basis to
all issuers listing Fund Shares on the Exchange. Moreover, the proposed
listing and annual fees for Fund Shares would apply to issuers in the
same manner as the current listing and annual fees for ETPs, including
Managed Fund Shares, Managed Trust Securities and Exchange-Traded Fund
Shares that do not track an index.
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,\12\ 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. Instead, as discussed above, the Exchange believes
that the proposed changes would encourage competition because it would
establish listing and annual fees for Fund Shares, thereby encouraging
issuers to develop and list additional products on the Exchange that
the Exchange believes will enhance competition both among issuers and
listing venues, to the benefit of investors. The proposal also ensures
that the fees charged by the Exchange accurately reflect the services
provided and benefits realized by listed issuers. The market for
listing services is extremely competitive. Issuers have the option to
list their securities on these alternative venues based on the fees
charged and the value provided by each listing exchange. 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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\12\ 15 U.S.C. 78f(b)(8).
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Intramarket Competition. The proposed changes are designed to
attract additional listings to the Exchange by establishing listing and
annual fees for ETPs listed under new rules. The Exchange believes that
the proposed changes would continue to incentivize issuers to develop
and list new products, transfer existing products to the Exchange, and
maintain listings on the Exchange. The proposed fees would apply to all
issuers equally, 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 listings market in which issuers can readily choose
alternative listing venues. In such an environment, the Exchange must
adjust its fees and discounts to remain competitive with other
exchanges competing for the same listings. Because competitors are free
to
[[Page 42925]]
modify their own fees and discounts in response, and because issuers
may readily adjust their listing decisions and practices, 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 Fund Shares 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) \13\ of the Act and subparagraph (f)(2) of Rule
19b-4 \14\ thereunder, because it establishes a due, fee, or other
charge imposed by the Exchange.
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\13\ 15 U.S.C. 78s(b)(3)(A).
\14\ 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) \15\ of the Act to determine whether the proposed
rule change should be approved or disapproved.
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\15\ 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
Use the Commission's internet comment form (https://www.sec.gov/rules/sro.shtml); or
Send an email to [email protected]. Please include
File Number SR-NYSEArca-2020-62 on the subject line.
Paper Comments
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-NYSEArca-2020-62. 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 (https://www.sec.gov/rules/sro.shtml).
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-NYSEArca-2020-62 and should be submitted
on or before August 5, 2020.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\16\
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\16\ 17 CFR 200.30-3(a)(12).
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J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2020-15211 Filed 7-14-20; 8:45 am]
BILLING CODE 8011-01-P
