Self-Regulatory Organizations; New York Stock Exchange LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change to Adopt a Listing Standard for Rights, 5915-5918 [2022-02076]
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Federal Register / Vol. 87, No. 22 / Wednesday, February 2, 2022 / Notices
business needs and its impact on the
Exchange resources?’’ 53
Under the Commission’s Rules of
Practice, the ‘‘burden to demonstrate
that a proposed rule change is
consistent with the Exchange Act and
the rules and regulations issued
thereunder . . . is on the [SRO] that
proposed the rule change.’’ 54 The
description of a proposed rule change,
its purpose and operation, its effect, and
a legal analysis of its consistency with
applicable requirements must all be
sufficiently detailed and specific to
support an affirmative Commission
finding,55 and any failure of an SRO to
provide this information may result in
the Commission not having a sufficient
basis to make an affirmative finding that
a proposed rule change is consistent
with the Act and the applicable rules
and regulations.56 Moreover,
‘‘unquestioning reliance’’ on an SRO’s
representations in a proposed rule
change would not be sufficient to justify
Commission approval of a proposed rule
change.57
The Commission believes it is
appropriate to institute proceedings to
allow for additional consideration and
comment on the issues raised herein,
including as to whether the proposals
are consistent with the Act, any
potential comments or supplemental
information provided by the Exchange,
and any additional independent
analysis by the Commission.
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V. Request for Written Comments
The Commission requests written
views, data, and arguments with respect
to the concerns identified above as well
as any other relevant concerns. In
particular, the Commission invites the
written views of interested persons
concerning whether the proposal is
consistent with Sections 6(b)(4), 6(b)(5),
and 6(b)(8), or any other provision of the
Act, or the rules and regulations
thereunder. The Commission asks that
commenters address the sufficiency and
merit of the Exchange’s statements in
support of the proposal, in addition to
any other comments they may wish to
submit about the proposed rule change.
Although there do not appear to be any
issues relevant to approval or
disapproval that would be facilitated by
an oral presentation of views, data, and
arguments, the Commission will
53 See
id.
CFR 201.700(b)(3).
55 See id.
56 See id.
57 See Susquehanna Int’l Group, LLP v. Securities
and Exchange Commission, 866 F.3d 442, 446–47
(D.C. Cir. 2017) (rejecting the Commission’s reliance
on an SRO’s own determinations without sufficient
evidence of the basis for such determinations).
54 17
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consider, pursuant to Rule 19b–4, any
request for an opportunity to make an
oral presentation.58
Interested persons are invited to
submit written data, views, and
arguments regarding whether the
proposal should be approved or
disapproved by February 23, 2022. Any
person who wishes to file a rebuttal to
any other person’s submission must file
that rebuttal by March 9, 2022.
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 rule-comments@
sec.gov. Please include File No. SR–
EMERALD–2021–42 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–EMERALD–2021–42. 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
changes that are filed with the
Commission, and all written
communications relating to the
proposed rule changes 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
filings also will be available for
inspection and copying at the principal
office of each Exchange. All comments
received will be posted without change.
Persons submitting comments are
cautioned that we do not redact or edit
58 15 U.S.C. 78s(b)(2). Section 19(b)(2) of the Act
grants the Commission flexibility to determine what
type of proceeding—either oral or notice and
opportunity for written comments—is appropriate
for consideration of a particular proposal by an
SRO. See Securities Acts Amendments of 1975,
Report of the Senate Committee on Banking,
Housing and Urban Affairs to Accompany S. 249,
S. Rep. No. 75, 94th Cong., 1st Sess. 30 (1975).
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5915
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–EMERALD–2021–42 and
should be submitted on or before
February 23, 2022. Rebuttal comments
should be submitted by March 9, 2022.
VI. Conclusion
It is therefore ordered, pursuant to
Section 19(b)(3)(C) of the Act,59 that File
Number SR–EMERALD–2021–42 be,
and hereby is, temporarily suspended.
In addition, the Commission is
instituting proceedings to determine
whether the proposed rule change
should be approved or disapproved.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.60
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2022–02084 Filed 2–1–22; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–94075; File No. SR–NYSE–
2022–03]
Self-Regulatory Organizations; New
York Stock Exchange LLC; Notice of
Filing and Immediate Effectiveness of
Proposed Rule Change to Adopt a
Listing Standard for Rights
January 27, 2022.
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 January
13, 2022, New York Stock Exchange
LLC (‘‘NYSE’’ or the ‘‘Exchange’’) filed
with the Securities and Exchange
Commission (‘‘Commission’’) the
proposed rule change as described in
Items I and II below, which Items have
been prepared by the Exchange. The
Commission is publishing this notice to
solicit comments on the proposed rule
change from interested persons.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The Exchange proposes to adopt a
listing standard for rights. The proposed
rule change is available on the
Exchange’s website at www.nyse.com, at
the principal office of the Exchange, and
59 15
U.S.C. 78s(b)(3)(C).
CFR 200.30–3(a)(57) and (58).
1 15 U.S.C. 78s(b)(1).
2 15 U.S.C. 78a.
3 17 CFR 240.19b–4.
60 17
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Federal Register / Vol. 87, No. 22 / Wednesday, February 2, 2022 / Notices
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
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1. Purpose
Listed companies sometimes seek to
raise capital from their existing
shareholders by granting rights to
subscribe for additional shares of the
issuer’s listed securities to all
shareholders of record. The issuer may
elect to make its rights either
transferrable or non-transferable and
may wish to have transferrable rights
traded on the Exchange. Historically,
the Exchange has traded short-term
rights (i.e., rights with a subscription
period of less than 90 days) pursuant to
Section 703.03 of the NYSE Listed
Company Manual (‘‘Manual’’) on an
unlisted basis.4
While Section 703.03 provides for the
unlisted trading of short-term rights, it
does not enable the issuer to list such
rights on the Exchange. Nor does the
Manual currently provide any
mechanism for the trading or listing of
rights with a life of 90 days or longer.
The Exchange proposes to amend
Section 703.12 of the Manual, which
currently provides for the listing of
warrants, to create a proposed Part (II)
of that rule. Part (I) of Section 703.12,
as amended, would consist of the
current warrant listing provisions, while
proposed Part (II) would set forth new
listing requirements for rights.5
For purposes of proposed Section
703.12(II), the term ‘‘rights’’ refers to the
privilege offered to holders of record of
4 When trading unlisted short-term rights under
Section 703.03 of the Manual, the Exchange relies
on the exemption from Exchange Act Section 12(a)
registration requirements provided under Exchange
Act Rule 12a–4.
5 The Exchange proposes to change a reference in
Part (I) of Section 703.12 from ‘‘Para. 312.00’’ to
‘‘Section 312.00’’ to conform to references
elsewhere within the rule.
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issued equity securities to subscribe
(usually on a pro rata basis) for
additional securities of the same class.
Under proposed Section 703.12(II), to
be listed on the Exchange, rights must
be issued to purchase or receive a
security that is already listed on the
Exchange or that will be listed
concurrent with the rights. The rights
holders would not be entitled to any
privileges of the holders of common
stock (e.g., dividends, preemptive rights,
or voting rights). If the rights are
exercisable into listed common stock,
the listing of the rights and the
underlying common stock would be
subject to the NYSE shareholder
approval policy as set forth in Section
312.00 of the Manual.
For initial listing, rights would need
to meet the following requirements
under proposed Section 703.12(II):
(1) At least 400,000 issued;
(2) The underlying security must be
listed on the Exchange; and
(3) At least 100 public holders of
round lots.
The proposed rule would state that,
for purposes of such rule, ‘‘public
holders’’ excludes holders that are
directors, officers, or their immediate
families and holders of other
concentrated holdings of 10 percent or
more of the company’s total outstanding
shares.
The Exchange notes that the
numerical requirements set forth above
are identical to those included in
Nasdaq’s rule for the listing of rights on
Nasdaq Capital Market.6 The Exchange
also notes that the Nasdaq listing
provisions for rights would currently
enable an NYSE-listed company to list
its rights on Nasdaq, while such a
company would not currently be able to
list its rights on the NYSE.
Proposed Section 703.12(II) would
provide that the continued listing of
rights is contingent on the underlying
security remaining listed on the
Exchange. If the security underlying a
listed right ceased to be listed on the
Exchange, the Exchange would
promptly initiate suspension and
delisting procedures with respect to the
listed rights.7 In such case, the issuer of
the listed rights would not be eligible to
avail itself of the provisions of Sections
802.02 and 802.03, and any such listed
rights would be subject to delisting
procedures as set forth in Section
804.00.
The proposed listing standard would
note that the general instructions for
6 See
Nasdaq Marketplace Rule 5515.
the Exchange would immediately
suspend trading in the rights upon delisting of the
underlying security and would not trade the rights
pending completion of any appeal by the issuer.
7 Specifically,
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preparation and filing of a listing
application are described in Section
703.01. The proposed listing standard
would also note that the form of listing
application and information regarding
supporting documents required in
connection with the listing of rights are
available on the Exchange’s website or
from the Exchange upon request.
The Exchange notes that its proposed
listing standards for rights differ from
the those of Nasdaq Capital Market in
two respects:
First, Nasdaq Marketplace Rules 5515
and 5560 require, respectively, a listed
right to have at least three registered and
active market makers at the time of
initial listing and a continued listing
requirement to have at least two
registered and active market makers,
one of which may be a market maker
entering a stabilizing bid. The Exchange
has not included these requirements, as
they are not applicable to our market
model, in which the rights would be
allocated to a Designated Market Maker
for trading.
Second, the applicable Nasdaq Capital
Market rules provide that a right may be
listed if the underlying security is listed
on Nasdaq or is a Covered Security and
will be subject to delisting if that ceases
to be the case. The Exchange’s proposal
provides that rights may only be listed
as an initial matter (and remain listed)
if the underlying security is listed on
the NYSE and not if it is a Covered
Security. The Exchange has taken this
approach to be consistent with its
existing requirements for the listing of
warrants and also because Covered
Securities listed on other exchanges are
subject to lower initial and continued
listing standards than are applicable to
NYSE listed securities.
2. Statutory Basis
The Exchange believes that its
proposal is consistent with Section 6(b)
of the Securities Exchange Act of 1934
(the ‘‘Act’’) generally.8 Section 6(b)(5) 9
requires, among other things, that
exchange rules are 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 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 the public
interest and the interests of investors,
promote just and equitable principles of
trade and that they are not designed to
8 15
9 15
E:\FR\FM\02FEN1.SGM
U.S.C. 78f(b).
U.S.C. 78f(b)(5).
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permit unfair discrimination between
issuers, brokers or dealers.
The Exchange believes that the
proposal is designed to protect the
public interest and the interests of
investors, by providing a listed trading
market for the shareholders of NYSE
listed companies who receive
transferable rights from the issuer and
who would otherwise not have the
ability to list the rights on the same
exchange as the underlying securities.
The Exchange notes that the
requirements of the proposed rule are
identical to those for the listing of rights
on Nasdaq Capital Market as set forth in
Sections 5515 and 5560 of the Nasdaq
Marketplace rules, with the exception of
the provisions described above with
respect to market makers and the ability
to list rights where the underlying
security is a Covered Security not listed
on the exchange listing the rights. The
Exchange believes that these differences
are consistent with the protection of
investors and the public interest
because: (i) The market maker
requirement is irrelevant to the NYSE
market model, in which the rights will
be allocated to a Designated Market
Maker for trading; and (ii) as other
exchanges have continued listing
standards for equity securities that are
less stringent than those of the NYSE,
the approach of excluding rights with
respect to Covered Securities listed on
other markets ensures that rights can
only be listed with respect to underlying
securities that are qualified for listing on
the NYSE. Furthermore, the Exchange
believes that it is not unfairly
discriminatory to limit the listing of
rights to those with respect to NYSE
listed equities, as the purpose is not to
discriminate among issuers, but rather
to enhance investor protection by
ensuring that rights can only be listed if
the underlying security meets the more
stringent continued listing standards
applied by the NYSE.
B. Self-Regulatory Organization’s
Statement on Burden on Competition
The Exchange does not believe that
the proposal would impose any burden
on competition not necessary or
appropriate in furtherance of the
purposes of the Act. There would be no
burden on competition among
companies listed on the NYSE, as all
NYSE-listed companies would be able
to list their rights under the same rule
provisions. Similarly, the proposed rule
would not impose any burden on
intermarket competition, as any rights
that could be listed under the proposed
rule would also be eligible for listing on
Nasdaq. The Exchange believes the
proposal enhances competition for
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listing by providing issuers with a
choice of listing venues between the
NYSE and Nasdaq when they list their
rights. The Exchange believes that
limiting the listing of rights to those
with respect to NYSE listed equities
does not impose a burden on
competition not necessary or
appropriate in furtherance of the
purposes of the Act, as the purpose is
not to discriminate among issuers, but
rather to enhance investor protection by
ensuring that rights can only be listed if
the underlying security meets the more
stringent continued listing standards
applied by the NYSE.
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
Because the foregoing proposed rule
change does not: (i) Significantly affect
the protection of investors or the public
interest; (ii) impose any significant
burden on competition; and (iii) become
operative for 30 days from the date on
which it was filed, or such shorter time
as the Commission may designate, it has
become effective pursuant to Section
19(b)(3)(A) of the Act 10 and Rule 19b–
4(f)(6) thereunder.11
A proposed rule change filed
pursuant to Rule 19b–4(f)(6) under the
Act 12 normally does not become
operative for 30 days after the date of its
filing. However, pursuant to Rule 19b–
4(f)(6)(iii),13 the Commission may
designate a shorter time if such action
is consistent with the protection of
investors and the public interest. The
Exchange has requested that the
Commission waive the 30-day operative
delay to allow the Exchange to list rights
that would qualify for listing under the
proposed rule prior to the expiration of
the 30-day operative delay. The
Exchange states that such waiver would
be consistent with the protection of
investors and the public interest
because the proposed rule change is
10 15
U.S.C. 78s(b)(3)(A).
CFR 240.19b–4(f)(6). In addition, Rule 19b–
4(f)(6)(iii) requires a self-regulatory organization to
give the Commission written notice of its intent to
file the proposed rule change, along with a brief
description and text of the proposed rule change,
at least five business days prior to the date of filing
of the proposed rule change, or such shorter time
as designated by the Commission. The Exchange
has satisfied this requirement.
12 17 CFR 240.19b–4(f)(6).
13 17 CFR 240.19b–4(f)(6)(iii).
11 17
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5917
substantially similar to the rules of
another national securities exchange.14
For this reason, the Commission
believes that waiver of the 30-day
operative delay is consistent with the
protection of investors and the public
interest. Therefore, the Commission
hereby waives the operative delay and
designates the proposed rule change
operative upon filing.15
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 shall institute proceedings
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:
Electronic 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–
NYSE–2022–03 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–NYSE–2022–03. 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
14 See
supra note 6, and accompanying text.
purposes only of waiving the 30-day
operative delay, the Commission also has
considered the proposed rule’s impact on
efficiency, competition, and capital formation. See
15 U.S.C. 78c(f).
15 For
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Federal Register / Vol. 87, No. 22 / Wednesday, February 2, 2022 / Notices
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–NYSE–2022–03, and
should be submitted on or before
February 23, 2022.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.16
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2022–02076 Filed 2–1–22; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–94087; File Nos. SR–MIAX–
2021–60, SR–EMERALD–2021–43]
Self-Regulatory Organizations; Miami
International Securities Exchange,
LLC, MIAX Emerald, LLC; Suspension
of and Order Instituting Proceedings
To Determine Whether To Approve or
Disapprove Proposed Rule Changes
To Amend Fee Schedules To Adopt
Tiered-Pricing Structures for
Additional Limited Service MIAX and
MIAX Emerald Express Interface Ports
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January 27, 2022.
I. Introduction
On December 1, 2021, Miami
International Securities Exchange, LLC
(‘‘MIAX’’) and MIAX Emerald, LLC
(‘‘MIAX Emerald’’) (each an
‘‘Exchange’’; collectively, the
‘‘Exchanges’’) each 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
(File Numbers SR–MIAX–2021–60 and
16 17
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
1 15
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SR–EMERALD–2021–43) to amend the
MIAX Options Fee Schedule and MIAX
Emerald Fee Schedule (collectively, the
‘‘Fee Schedules’’) to adopt a tieredpricing structure for additional limited
service express interface ports. Each
proposed rule change was immediately
effective upon filing with the
Commission pursuant to Section
19(b)(3)(A) of the Act.3 The proposed
rule changes were published for
comment in the Federal Register on
December 20, 2021.4 Under Section
19(b)(3)(C) of the Act,5 the Commission
is hereby: (i) Temporarily suspending
File Numbers SR–MIAX–2021–60 and
SR–EMERALD–2021–43; and (ii)
instituting proceedings to determine
whether to approve or disapprove File
Numbers SR–MIAX–2021–60 and SR–
EMERALD–2021–43.
II. Background and Description of the
Proposed Rule Changes
Limited Service MIAX Express
Interface Ports and Limited Service
MIAX Emerald Express Interface Ports
(collectively, ‘‘Limited Service MEI
Ports’’) provide Market Makers 6 with
the ability to send eQuotes and quote
purge messages, and are also capable of
receiving administrative information.7
Currently, each Exchange allocates two
Limited Service MEI Ports, free of
charge, per matching engine to which a
Market Maker connects. Market Makers
may request additional Limited Service
MEI Ports for each matching engine to
which they connect for an additional
monthly fee for each such additional
port. Prior to the proposed rule changes,
each Exchange charged a flat $100
monthly fee for each such additional
port. Each Exchange has proposed to
adopt a tiered-pricing structure.8 For
3 15 U.S.C. 78s(b)(3)(A). A proposed rule change
may take effect upon filing with the Commission if
it is designated by the exchange as ‘‘establishing or
changing a due, fee, or other charge imposed by the
self-regulatory organization on any person, whether
or not the person is a member of the self-regulatory
organization.’’ 15 U.S.C. 78s(b)(3)(A)(ii).
4 See Securities Exchange Act Release Nos. 93771
(December 14, 2021), 86 FR 71940 (December 20,
2021) (SR–MIAX–2021–60) (‘‘MIAX Notice’’); 93772
(December 14, 2021), 86 FR 71965 (December 20,
2021) (SR–EMERALD–2021–43) (‘‘MIAX Emerald
Notice’’). For ease of reference, citations to
statements generally applicable to both notices are
to the MIAX Notice.
5 15 U.S.C. 78s(b)(3)(C).
6 Defined at MIAX Rule 100 and MIAX Emerald
Rule 100.
7 See, e.g., MIAX Notice, supra note 4, at 71941
n.15.
8 The Exchanges initially filed the proposed fee
changes on August 2, 2021. See Securities Exchange
Act Release Nos. 92661 (August 13, 2021), 86 FR
46737 (August 19, 2021) (SR–MIAX–2021–37);
92662 (August 13, 2021), 86 FR 46726 (August 19,
2021) (SR–EMERALD–2021–25). These filings were
withdrawn by the Exchanges. The Exchanges filed
new proposed fee changes with additional
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both MIAX and MIAX Emerald, the first
and second Limited Service MEI Ports
for each matching engine would remain
free of charge. For MIAX, the additional
Limited Service MEI Port fees for each
matching engine would increase from
$100 to: (i) $150 for the third and fourth
Limited Service MEI Ports; (ii) $200 for
the fifth and sixth Limited Service MEI
Ports; and (iii) $250 for the seventh or
more Limited Service MEI Ports.9 For
MIAX Emerald, the additional Limited
Service MEI Port fees for each matching
engine would increase from $100 to: (i)
$200 for the third and fourth Limited
Service MEI Ports; (ii) $300 for the fifth
and sixth Limited Service MEI Ports;
and (iii) $400 for the seventh to
fourteenth Limited Service MEI Ports.10
III. Suspension of the Proposed Rule
Changes
Pursuant to Section 19(b)(3)(C) of the
Act,11 at any time within 60 days of the
date of filing of an immediately effective
proposed rule change pursuant to
Section 19(b)(1) of the Act,12 the
Commission summarily may
temporarily suspend the change in the
rules of a self-regulatory organization
(‘‘SRO’’) 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. As discussed below, the
Commission believes a temporary
suspension of the proposed rule changes
is necessary and appropriate to allow for
additional analysis of the proposed rule
changes’ consistency with the Act and
the rules thereunder.
In support of the proposed tieredpricing structures and associated fee
increases, the Exchanges state that such
fees (which they refer to as ‘‘Proposed
Access Fees’’) are reasonable because
justification (SR–MIAX–2021–43 and SR–
EMERALD–2021–31, which were the subject of a
Suspension of and Order Instituting Proceedings.
See Securities Exchange Act Release No. 93640
(November 22, 2021), 86 FR 67745 (November 29,
2021). The Exchanges subsequently withdrew those
filings and replaced them with the instant filings to
provide additional information and a revised
justification for the proposals, which are discussed
herein. See also Securities Exchange Act Release
No. 91857 (May 12, 2021), 86 FR 26973 (May 18,
2021) (MIAX–2021–19) (allowing purchase of any
number of additional Limited Service MEI Ports
and stating that, at a continued monthly fee of $100
for each additional port, the Exchange anticipates
generating an annual loss from the provision).
9 See MIAX Notice, supra note 4, at 71941.
10 See MIAX Emerald Notice, supra note 4, at
71966–67. The MIAX Emerald Fee Schedule states
that Market Makers are limited to twelve additional
Limited Service MEI Ports per matching engine, for
a total of fourteen per matching engine. See MIAX
Emerald Fee Schedule 5.d.ii.
11 15 U.S.C. 78s(b)(3)(C).
12 15 U.S.C. 78s(b)(1).
E:\FR\FM\02FEN1.SGM
02FEN1
Agencies
[Federal Register Volume 87, Number 22 (Wednesday, February 2, 2022)]
[Notices]
[Pages 5915-5918]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2022-02076]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-94075; File No. SR-NYSE-2022-03]
Self-Regulatory Organizations; New York Stock Exchange LLC;
Notice of Filing and Immediate Effectiveness of Proposed Rule Change to
Adopt a Listing Standard for Rights
January 27, 2022.
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 January 13, 2022, New York Stock Exchange LLC (``NYSE''
or the ``Exchange'') filed with the Securities and Exchange Commission
(``Commission'') the proposed rule change as described in Items I and
II below, which Items have been prepared by the 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\ 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 adopt a listing standard for rights. The
proposed rule change is available on the Exchange's website at
www.nyse.com, at the principal office of the Exchange, and
[[Page 5916]]
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
Listed companies sometimes seek to raise capital from their
existing shareholders by granting rights to subscribe for additional
shares of the issuer's listed securities to all shareholders of record.
The issuer may elect to make its rights either transferrable or non-
transferable and may wish to have transferrable rights traded on the
Exchange. Historically, the Exchange has traded short-term rights
(i.e., rights with a subscription period of less than 90 days) pursuant
to Section 703.03 of the NYSE Listed Company Manual (``Manual'') on an
unlisted basis.\4\
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\4\ When trading unlisted short-term rights under Section 703.03
of the Manual, the Exchange relies on the exemption from Exchange
Act Section 12(a) registration requirements provided under Exchange
Act Rule 12a-4.
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While Section 703.03 provides for the unlisted trading of short-
term rights, it does not enable the issuer to list such rights on the
Exchange. Nor does the Manual currently provide any mechanism for the
trading or listing of rights with a life of 90 days or longer. The
Exchange proposes to amend Section 703.12 of the Manual, which
currently provides for the listing of warrants, to create a proposed
Part (II) of that rule. Part (I) of Section 703.12, as amended, would
consist of the current warrant listing provisions, while proposed Part
(II) would set forth new listing requirements for rights.\5\
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\5\ The Exchange proposes to change a reference in Part (I) of
Section 703.12 from ``Para. 312.00'' to ``Section 312.00'' to
conform to references elsewhere within the rule.
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For purposes of proposed Section 703.12(II), the term ``rights''
refers to the privilege offered to holders of record of issued equity
securities to subscribe (usually on a pro rata basis) for additional
securities of the same class.
Under proposed Section 703.12(II), to be listed on the Exchange,
rights must be issued to purchase or receive a security that is already
listed on the Exchange or that will be listed concurrent with the
rights. The rights holders would not be entitled to any privileges of
the holders of common stock (e.g., dividends, preemptive rights, or
voting rights). If the rights are exercisable into listed common stock,
the listing of the rights and the underlying common stock would be
subject to the NYSE shareholder approval policy as set forth in Section
312.00 of the Manual.
For initial listing, rights would need to meet the following
requirements under proposed Section 703.12(II):
(1) At least 400,000 issued;
(2) The underlying security must be listed on the Exchange; and
(3) At least 100 public holders of round lots.
The proposed rule would state that, for purposes of such rule,
``public holders'' excludes holders that are directors, officers, or
their immediate families and holders of other concentrated holdings of
10 percent or more of the company's total outstanding shares.
The Exchange notes that the numerical requirements set forth above
are identical to those included in Nasdaq's rule for the listing of
rights on Nasdaq Capital Market.\6\ The Exchange also notes that the
Nasdaq listing provisions for rights would currently enable an NYSE-
listed company to list its rights on Nasdaq, while such a company would
not currently be able to list its rights on the NYSE.
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\6\ See Nasdaq Marketplace Rule 5515.
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Proposed Section 703.12(II) would provide that the continued
listing of rights is contingent on the underlying security remaining
listed on the Exchange. If the security underlying a listed right
ceased to be listed on the Exchange, the Exchange would promptly
initiate suspension and delisting procedures with respect to the listed
rights.\7\ In such case, the issuer of the listed rights would not be
eligible to avail itself of the provisions of Sections 802.02 and
802.03, and any such listed rights would be subject to delisting
procedures as set forth in Section 804.00.
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\7\ Specifically, the Exchange would immediately suspend trading
in the rights upon delisting of the underlying security and would
not trade the rights pending completion of any appeal by the issuer.
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The proposed listing standard would note that the general
instructions for preparation and filing of a listing application are
described in Section 703.01. The proposed listing standard would also
note that the form of listing application and information regarding
supporting documents required in connection with the listing of rights
are available on the Exchange's website or from the Exchange upon
request.
The Exchange notes that its proposed listing standards for rights
differ from the those of Nasdaq Capital Market in two respects:
First, Nasdaq Marketplace Rules 5515 and 5560 require,
respectively, a listed right to have at least three registered and
active market makers at the time of initial listing and a continued
listing requirement to have at least two registered and active market
makers, one of which may be a market maker entering a stabilizing bid.
The Exchange has not included these requirements, as they are not
applicable to our market model, in which the rights would be allocated
to a Designated Market Maker for trading.
Second, the applicable Nasdaq Capital Market rules provide that a
right may be listed if the underlying security is listed on Nasdaq or
is a Covered Security and will be subject to delisting if that ceases
to be the case. The Exchange's proposal provides that rights may only
be listed as an initial matter (and remain listed) if the underlying
security is listed on the NYSE and not if it is a Covered Security. The
Exchange has taken this approach to be consistent with its existing
requirements for the listing of warrants and also because Covered
Securities listed on other exchanges are subject to lower initial and
continued listing standards than are applicable to NYSE listed
securities.
2. Statutory Basis
The Exchange believes that its proposal is consistent with Section
6(b) of the Securities Exchange Act of 1934 (the ``Act'') generally.\8\
Section 6(b)(5) \9\ requires, among other things, that exchange rules
are 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 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 the public interest and the interests of
investors, promote just and equitable principles of trade and that they
are not designed to
[[Page 5917]]
permit unfair discrimination between issuers, brokers or dealers.
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\8\ 15 U.S.C. 78f(b).
\9\ 15 U.S.C. 78f(b)(5).
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The Exchange believes that the proposal is designed to protect the
public interest and the interests of investors, by providing a listed
trading market for the shareholders of NYSE listed companies who
receive transferable rights from the issuer and who would otherwise not
have the ability to list the rights on the same exchange as the
underlying securities.
The Exchange notes that the requirements of the proposed rule are
identical to those for the listing of rights on Nasdaq Capital Market
as set forth in Sections 5515 and 5560 of the Nasdaq Marketplace rules,
with the exception of the provisions described above with respect to
market makers and the ability to list rights where the underlying
security is a Covered Security not listed on the exchange listing the
rights. The Exchange believes that these differences are consistent
with the protection of investors and the public interest because: (i)
The market maker requirement is irrelevant to the NYSE market model, in
which the rights will be allocated to a Designated Market Maker for
trading; and (ii) as other exchanges have continued listing standards
for equity securities that are less stringent than those of the NYSE,
the approach of excluding rights with respect to Covered Securities
listed on other markets ensures that rights can only be listed with
respect to underlying securities that are qualified for listing on the
NYSE. Furthermore, the Exchange believes that it is not unfairly
discriminatory to limit the listing of rights to those with respect to
NYSE listed equities, as the purpose is not to discriminate among
issuers, but rather to enhance investor protection by ensuring that
rights can only be listed if the underlying security meets the more
stringent continued listing standards applied by the NYSE.
B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange does not believe that the proposal would impose any
burden on competition not necessary or appropriate in furtherance of
the purposes of the Act. There would be no burden on competition among
companies listed on the NYSE, as all NYSE-listed companies would be
able to list their rights under the same rule provisions. Similarly,
the proposed rule would not impose any burden on intermarket
competition, as any rights that could be listed under the proposed rule
would also be eligible for listing on Nasdaq. The Exchange believes the
proposal enhances competition for listing by providing issuers with a
choice of listing venues between the NYSE and Nasdaq when they list
their rights. The Exchange believes that limiting the listing of rights
to those with respect to NYSE listed equities does not impose a burden
on competition not necessary or appropriate in furtherance of the
purposes of the Act, as the purpose is not to discriminate among
issuers, but rather to enhance investor protection by ensuring that
rights can only be listed if the underlying security meets the more
stringent continued listing standards applied by the NYSE.
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
Because the foregoing proposed rule change does not: (i)
Significantly affect the protection of investors or the public
interest; (ii) impose any significant burden on competition; and (iii)
become operative for 30 days from the date on which it was filed, or
such shorter time as the Commission may designate, it has become
effective pursuant to Section 19(b)(3)(A) of the Act \10\ and Rule 19b-
4(f)(6) thereunder.\11\
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\10\ 15 U.S.C. 78s(b)(3)(A).
\11\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)(iii)
requires a self-regulatory organization to give the Commission
written notice of its intent to file the proposed rule change, along
with a brief description and text of the proposed rule change, at
least five business days prior to the date of filing of the proposed
rule change, or such shorter time as designated by the Commission.
The Exchange has satisfied this requirement.
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A proposed rule change filed pursuant to Rule 19b-4(f)(6) under the
Act \12\ normally does not become operative for 30 days after the date
of its filing. However, pursuant to Rule 19b-4(f)(6)(iii),\13\ the
Commission may designate a shorter time if such action is consistent
with the protection of investors and the public interest. The Exchange
has requested that the Commission waive the 30-day operative delay to
allow the Exchange to list rights that would qualify for listing under
the proposed rule prior to the expiration of the 30-day operative
delay. The Exchange states that such waiver would be consistent with
the protection of investors and the public interest because the
proposed rule change is substantially similar to the rules of another
national securities exchange.\14\ For this reason, the Commission
believes that waiver of the 30-day operative delay is consistent with
the protection of investors and the public interest. Therefore, the
Commission hereby waives the operative delay and designates the
proposed rule change operative upon filing.\15\
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\12\ 17 CFR 240.19b-4(f)(6).
\13\ 17 CFR 240.19b-4(f)(6)(iii).
\14\ See supra note 6, and accompanying text.
\15\ For purposes only of waiving the 30-day operative delay,
the Commission also has considered the proposed rule's impact on
efficiency, competition, and capital formation. See 15 U.S.C.
78c(f).
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At any time within 60 days of the filing of the proposed rule
change, the Commission summarily may temporarily suspend such rule
change if it appears to the Commission that such action is necessary or
appropriate in the public interest, for the protection of investors, or
otherwise in furtherance of the purposes of the Act. If the Commission
takes such action, the Commission shall institute proceedings 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:
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-NYSE-2022-03 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-NYSE-2022-03. 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
[[Page 5918]]
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-NYSE-2022-03, and should be
submitted on or before February 23, 2022.
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. 2022-02076 Filed 2-1-22; 8:45 am]
BILLING CODE 8011-01-P