Self-Regulatory Organizations; New York Stock Exchange LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Amend Sections 902.03 and 902.11 of the NYSE Listed Company Manual To Establish Fees for the Listing of Rights, 14312-14315 [2022-05248]
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investors and listed companies.’’ 16 The
fact that this market is competitive has
also long been recognized by the courts.
In NetCoalition v. Securities and
Exchange Commission, the D.C. Circuit
stated as follows: ‘‘[n]o one disputes
that competition for order flow is
‘fierce.’ . . . As the SEC explained, ‘[i]n
the U.S. national market system, buyers
and sellers of securities, and the brokerdealers that act as their order-routing
agents, have a wide range of choices of
where to route orders for execution’;
[and] ‘no exchange can afford to take its
market share percentages for granted’
because ‘no exchange possesses a
monopoly, regulatory or otherwise, in
the execution of order flow from broker
dealers’. . . .’’.17 Accordingly, the
Exchange does not believe its proposed
fee changes imposes any burden on
competition that is not necessary or
appropriate in furtherance of the
purposes of the Act.
C. Self-Regulatory Organization’s
Statement on Comments on the
Proposed Rule Change Received From
Members, Participants, or Others
The Exchange neither solicited nor
received comments on the proposed
rule change.
III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
The foregoing rule change has become
effective pursuant to Section 19(b)(3)(A)
of the Act 18 and paragraph (f) of Rule
19b–4 19 thereunder. At any time within
60 days of the filing of the proposed rule
change, the Commission summarily may
temporarily suspend such rule change if
it appears to the Commission that such
action is necessary or appropriate in the
public interest, for the protection of
investors, or otherwise in furtherance of
the purposes of the Act. If the
Commission takes such action, the
Commission will institute proceedings
to determine whether the proposed rule
change should be approved or
disapproved.
IV. Solicitation of Comments
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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.
16 See Securities Exchange Act Release No. 51808
(June 9, 2005), 70 FR 37496, 37499 (June 29, 2005).
17 NetCoalition v. SEC, 615 F.3d 525, 539 (D.C.
Cir. 2010) (quoting Securities Exchange Act Release
No. 59039 (December 2, 2008), 73 FR 74770, 74782–
83 (December 9, 2008) (SR–NYSEArca-2006–21)).
18 15 U.S.C. 78s(b)(3)(A).
19 17 CFR 240.19b–4(f).
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Comments may be submitted by any of
the following methods:
SECURITIES AND EXCHANGE
COMMISSION
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–
CboeBZX–2022–011 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–CboeBZX–2022–011. 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–CboeBZX–2022–011 and
should be submitted on or before April
4, 2022.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.20
J. Matthew DeLesDernier,
Assistant Secretary.
[Release No. 34–94378; File No. SR–NYSE–
2022–12]
Self-Regulatory Organizations; New
York Stock Exchange LLC; Notice of
Filing and Immediate Effectiveness of
Proposed Rule Change To Amend
Sections 902.03 and 902.11 of the
NYSE Listed Company Manual To
Establish Fees for the Listing of Rights
March 8, 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 February
25, 2022, New York Stock Exchange
LLC (‘‘NYSE’’ 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 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 amend
Sections 902.03 and 902.11 of the NYSE
Listed Company Manual (the ‘‘Manual’’)
to establish fees for the listing of rights
and to remove rule text that is no longer
applicable. 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.
[FR Doc. 2022–05246 Filed 3–11–22; 8:45 am]
BILLING CODE 8011–01–P
1 15
U.S.C. 78s(b)(1).
U.S.C. 78a.
3 17 CFR 240.19b–4.
2 15
20 17
PO 00000
CFR 200.30–3(a)(12).
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A. Self-Regulatory Organization’s
Statement of the Purpose of, and the
Statutory Basis for, the Proposed Rule
Change
1. Purpose
The Exchange recently adopted a new
listing standard to provide for the listing
of rights (See Section 703.12(II) of the
Manual).4 The Exchange now proposes
to adopt fees for listed rights.
The Exchange proposes to adopt a fee
schedule for listed rights equivalent to
that currently applicable to listed
warrants. Both types of securities
represent the right to acquire shares of
a listed equity security at a future time.
The distinction is that, unlike warrants,
rights are generally distributed without
charge to all of the holders of a class of
existing listed securities. Given the
similarities, the Exchange anticipates
that the resources devoted to the listing
and regulation of rights will be
substantially the same as is already the
case for listed warrants. As such, the
Exchange proposes to apply the same
fee schedule to listed rights as it
currently applies to warrants under
Section 902.03 of the Manual. In
connection with the listing of a class of
warrants, Section 902.03 provides for a
fee of $0.004 per warrant. Section
902.03 provides that listed warrants are
subject to annual fees at a rate of
$0.0017 per warrant, subject to a
minimum annual fee of $5,000 per
series of warrants. While the
aforementioned fees currently apply to
listed warrants, there are specific
provisions for warrants of two types of
issuers—foreign issuers and Acquisition
Companies. As described below, the
Exchange proposes to apply the same
fees for rights associated with those
types of companies.
Section 902.03 includes text that
describes fees for warrants issued by
foreign companies, where the common
equity securities into which the
warrants are exercisable trade in the
form of American Depositary Receipts
on the Exchange. Specifically, Section
902.03 provides that, where a listed
company’s primary listed security is an
ADR and it lists warrants that are
exercisable into the equity securities
underlying such ADRs, it will be
charged: (i) Initial listing fees for the
warrants adjusted to reflect the
maximum number of ADRs that could
be created upon exercise of such
warrants; and (ii) annual fees for the
outstanding warrants adjusted to reflect
the maximum number of ADRs that
4 See Securities Exchange Act Release No. 94075
(January 27, 2022); 87 FR 5915 (February 2, 2022)
(SR–NYSE–2022–03).
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could be created upon exercise of such
warrants. The Exchange proposes to
apply these same provisions to rights
issued by a foreign company where the
company’s primary listed security is an
ADR and it lists rights that are
exercisable into the equity securities
underlying such ADRs.
Section 902.11 sets forth the fees
applicable to Acquisition Companies
(i.e., Special Purpose Acquisition
Companies or ‘‘SPACs’’) listed under
Section 102.06 of the Manual. SPACs
typically sell units in their initial public
offering consisting of a common share
and one or more warrants (or a fraction
of a warrant). Under Section 902.11, a
listed Acquisition Company is subject to
a flat annual fee of $85,000, covering
both its common shares and its
warrants. The Exchange proposes to
amend this provision to specify that the
flat annual fee also covers any rights
issued by the Acquisition Company.
The Exchange also proposes to delete
rule text from both Section 902.03 and
Section 902.11 regarding fees that were
in effect for calendar years prior to 2022
but are no longer in effect, as this rule
text is now irrelevant.
2. Statutory Basis
The Exchange believes that the
proposed rule change is consistent with
Section 6(b) of the Act,5 in general, and
furthers the objectives of Section
6(b)(4) 6 of the Act, in particular, in that
it is designed to provide for the
equitable allocation of reasonable dues,
fees, and other charges. The Exchange
also believes that the proposed rule
change is consistent with Section 6(b)(5)
of the Act,7 in that it is designed to
promote just and equitable principles of
trade, to foster cooperation and
coordination with persons engaged in
regulating, clearing, settling, processing
information with respect to, and
facilitating transactions in securities, to
remove impediments to and perfect the
mechanism of a free and open market
and a national market system, and, in
general, to protect investors and the
public interest and is not designed to
permit unfair discrimination between
customers, issuers, brokers, or dealers.
The Exchange operates in a highly
competitive marketplace for the listing
of the various categories of securities,
including the rights affected by the
proposed fees. The Commission has
repeatedly expressed its preference for
competition over regulatory
intervention in determining prices,
products, and services in the securities
5 15
U.S.C. 78f(b).
U.S.C. 78f(b)(4).
7 15 U.S.C. 78f(b)(5).
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markets. Specifically, in Regulation
NMS,8 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.’’ 9
The Exchange believes that the evershifting market share among the
exchanges with respect to new listings
and the transfer of existing listings
between competitor exchanges
demonstrates that issuers can choose
different listing markets in response to
fee changes. Accordingly, competitive
forces constrain exchange listing fees.
Stated otherwise, changes to exchange
listing fees can have a direct effect on
the ability of an exchange to compete for
new listings and retain existing listings.
As discussed above, rights are very
similar in their structure to warrants.
And the Exchange anticipates devoting
substantially the same resources to the
listing of a series of rights as it does to
the listing of a series of warrants.
Therefore, the Exchange believes that it
is reasonable and represents an
equitable allocation of its fees among
market participants to apply to listed
rights the existing fees currently charged
to issuers of listed warrants.
The Exchange believes that the
proposal is not unfairly discriminatory
because the same fee schedule will
apply to all issuers of listed rights. In
addition, rights have substantial
structural similarities to warrants and
the Exchange believes it is therefore
appropriate to apply the same fee
schedule to the two classes of securities.
Conversely, rights are not similar in
nature to any other class of securities
listed on the Exchange, so the Exchange
does not believe it is unfairly
discriminatory to charge different fees
for the listed rights than for any other
class of listed securities other than
warrants. Further, the Exchange
operates in a competitive environment
and its fees are constrained by
competition in the marketplace. Other
national securities exchanges currently
list rights, and if a company believes
that the Exchange’s fees are
unreasonable it can decide either not to
list its rights or to list them on an
alternative venue.
The Exchange believes that the
proposal to charge listing fees for rights
on an ADR-equivalent basis is equitable
and not unfairly discriminatory because
8 Release No. 34–51808 (June 9, 2005); 70 FR
37496 (June 29, 2005).
9 See Regulation NMS, 70 FR at 37499.
6 15
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it would remove the anomalous
outcome that a company whose listed
ADRs represent multiple underlying
common shares would otherwise be
required to pay higher fees for the
listing of rights exercisable into its listed
equity securities than are paid by a
company whose common stock is listed
directly or whose listed ADRs represent
a single common share.
The Exchange recognizes that the
proposal would result in a differential
treatment of rights issued by companies
with ADRs listed on the Exchange from
that of other issuers of rights, leading to
lower bills in many cases for the
companies with listed ADRs. However,
the Exchange notes that companies with
listed ADRs that represent multiple
underlying shares (or fractional shares)
face unique circumstances when
deciding how to structure their rights. If
those companies want to market their
rights in both their home market and the
United States, there are clear advantages
to the company and its investors if the
same security is issued in both markets.
In particular, issuing the same security
avoids pricing confusion and, by
ensuring complete fungibility, facilitates
the movement of rights between the two
markets in aftermarket trading. As the
ADRs would not be traded in the home
market and might not be properly
understood by investors there, it is clear
why a company would make the
decision to issue rights to purchase a
single common share in both markets
rather than issuing rights to purchase
ADRs in the US market and rights to
purchase a single share in the home
market. While other categories of listed
companies may also sometimes choose
to issue rights that are exercisable for
multiple listed common shares or a
fraction of a common share, their
reasons for doing so are not the same
unique market structural reasons that
cause foreign companies to do so when
their listed equity security is an ADR.
Consequently, while the proposal does
result in a different treatment of foreign
companies with listed ADRs in a very
limited circumstance, the Exchange
believes that this proposed difference in
treatment is not unfairly discriminatory.
The Exchange also notes that foreign
companies with listed ADRs would not
always pay lower fees on rights if this
proposal was adopted. Rather, the issuer
would always pay fees on an ADRequivalent basis, which would result in
lower fees if the listed ADR represents
multiple common shares and higher fees
if it represents a fractional common
share.
The changes the Exchange proposes to
make to Sections 902.02 and 902.11 to
remove provisions that are no longer
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needed, as they do not apply by their
terms to any calendar year starting after
January 1, 2022, are non-substantive in
nature.
For the foregoing reasons, the
Exchange believes that the proposal is
consistent with the Act.
B. Self-Regulatory Organization’s
Statement on Burden on Competition
The Exchange does not believe that
the proposed rule change will impose
any burden on competition that is not
necessary or appropriate in furtherance
of the purposes of the Act. The
proposed rule change is designed to
ensure that the fees charged by the
Exchange accurately reflect the services
provided and benefits realized by listed
companies. The market for listing
services is extremely competitive. Each
listing exchange has a different fee
schedule that applies to issuers seeking
to list securities on its exchange. Issuers
have the option to list their securities on
these alternative venues based on the
fees charged and the value provided by
each listing. 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 amended fees will be
charged to all listed issuers on the same
basis. The Exchange does not believe
that the proposed fees will have any
meaningful effect on the competition
among issuers listed on the Exchange.
Intermarket Competition
The Exchange operates in a highly
competitive market in which issuers can
readily choose to list new securities on
other exchanges and transfer listings to
other exchanges if they deem fee levels
at those other venues to be more
favorable. Because competitors are free
to modify their own fees in response,
and because issuers may change their
chosen listing venue, the Exchange does
not believe its proposed fee change can
impose any burden on intermarket
competition.
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.
PO 00000
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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) 10 of the Act and
subparagraph (f)(2) of Rule 19b–4 11
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) 12 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:
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–2022–12 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–2022–12. 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
10 15
U.S.C. 78s(b)(3)(A).
CFR 240.19b–4(f)(2).
12 15 U.S.C. 78s(b)(2)(B).
11 17
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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–2022–12 and should
be submitted on or before April 4, 2022.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.13
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2022–05248 Filed 3–11–22; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[SEC File No. 270–188, OMB Control No.
3235–0212]
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Proposed Collection; Comment
Request; Extension: Rule 12b–1
Upon Written Request, Copies Available
From: Securities and Exchange
Commission, Office of FOIA Services,
100 F Street NE, Washington, DC
20549–2736.
Notice is hereby given that, pursuant
to the Paperwork Reduction Act of 1995
(44 U.S.C. 3501 et seq.), the Securities
and Exchange Commission (the
‘‘Commission’’) is soliciting comments
on the collection of information
summarized below. The Commission
plans to submit this existing collection
of information to the Office of
Management and Budget (‘‘OMB’’) for
extension and approval.
Rule 12b–1 under the Investment
Company Act of 1940 (17 CFR 270.12b–
1) permits a registered open-end
investment company (‘‘fund’’) to bear
expenses associated with the
distribution of its shares, provided that
the fund complies with certain
requirements, including, among other
things, that it adopt a written plan
(‘‘rule 12b–1 plan’’) and that it preserves
13 17
CFR 200.30–3(a)(12).
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in writing any agreements relating to the
rule 12b–1 plan. The rule in part
requires that (i) the adoption or material
amendment of a rule 12b–1 plan be
approved by the fund’s directors,
including its independent directors,
and, in certain circumstances, its
shareholders; (ii) the board review
quarterly reports of amounts spent
under the rule 12b–1 plan; and (iii) the
board, including the independent
directors, consider continuation of the
rule 12b–1 plan and any related
agreements at least annually. Rule 12b–
1 also requires funds relying on the rule
to preserve for six years, the first two
years in an easily accessible place,
copies of the rule 12b–1 plan and any
related agreements and reports, as well
as minutes of board meetings that
describe the factors considered and the
basis for adopting or continuing a rule
12b–1 plan.
Rule 12b–1 also prohibits funds from
paying for distribution of fund shares
with brokerage commissions on their
portfolio transactions. The rule requires
funds that use broker-dealers that sell
their shares to also execute their
portfolio securities transactions, to
implement policies and procedures
reasonably designed to prevent: (i) The
persons responsible for selecting brokerdealers to effect transactions in fund
portfolio securities from taking into
account broker-dealers’ promotional or
sales efforts when making those
decisions; and (ii) a fund, its adviser, or
its principal underwriter, from entering
into any agreement under which the
fund directs brokerage transactions or
revenue generated by those transactions
to a broker-dealer to pay for distribution
of the fund’s (or any other fund’s)
shares.
The board and shareholder approval
requirements of rule 12b–1 are designed
to ensure that fund shareholders and
directors receive adequate information
to evaluate and approve a rule 12b–1
plan and, thus, are necessary for
investor protection. The requirement of
quarterly reporting to the board is
designed to ensure that the rule 12b–1
plan continues to benefit the fund and
its shareholders. The recordkeeping
requirements of the rule are necessary to
enable Commission staff to oversee
compliance with the rule. The
requirement that funds or their advisers
implement, and fund boards approve,
policies and procedures in order to
prevent persons charged with allocating
fund brokerage from taking distribution
efforts into account is designed to
ensure that funds’ selection of brokers to
effect portfolio securities transactions is
not influenced by considerations about
the sale of fund shares.
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Commission staff estimates that there
are approximately 6,358 funds (for
purposes of this estimate, registered
open-end investment companies or
series thereof) that have at least one
share class subject to a rule 12b–1 plan
and approximately 454 fund families
with common boards of directors that
have at least one fund with a 12b–1
plan. The Commission further estimates
that the annual hour burden for
complying with the rule is 425 hours for
each fund family with a portfolio that
has a rule 12b–1 plan. We therefore
estimate that the total hourly burden per
year for all funds to comply with
current information collection
requirements under rule 12b–1 is
192,950 hours. Commission staff
estimates that approximately three
funds per year prepare a proxy in
connection with the adoption or
material amendment of a rule 12b–1
plan. The staff further estimates that the
cost of each fund’s proxy is $30,000.
Thus, the total annual cost burden of
rule 12b–1 to the fund industry is
$90,000.
Estimates of average burden hours
and costs are made solely for purposes
of the Paperwork Reduction Act and are
not derived from a comprehensive or
even representative survey or study of
the costs of Commission rules and
forms. The collections of information
required by rule 12b–1 are necessary to
obtain the benefits of the rule. Notices
to the Commission will not be kept
confidential. An agency may not
conduct or sponsor, and a person is not
required to respond to a collection of
information unless it displays a
currently valid OMB control number.
Written comments are invited on: (a)
Whether the proposed collection of
information is necessary for the proper
performance of the functions of the
Commission, including whether the
information shall have practical utility;
(b) the accuracy of the Commission’s
estimates of the burden of the proposed
collection of information; (c) ways to
enhance the quality, utility, and clarity
of the information collected; and (d)
ways to minimize the burden of the
collection of information on
respondents, including through the use
of automated collection techniques or
other forms of information technology.
Consideration will be given to
comments and suggestions submitted in
writing within 60 days of this
publication by May 13, 2022.
Please direct your written comments
to David Bottom, Director/Chief
Information Officer, Securities and
Exchange Commission, C/O John
Pezzullo, 100 F Street NE, Washington,
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[Federal Register Volume 87, Number 49 (Monday, March 14, 2022)]
[Notices]
[Pages 14312-14315]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2022-05248]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-94378; File No. SR-NYSE-2022-12]
Self-Regulatory Organizations; New York Stock Exchange LLC;
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To
Amend Sections 902.03 and 902.11 of the NYSE Listed Company Manual To
Establish Fees for the Listing of Rights
March 8, 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 February 25, 2022, New York Stock Exchange LLC (``NYSE''
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 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 amend Sections 902.03 and 902.11 of the
NYSE Listed Company Manual (the ``Manual'') to establish fees for the
listing of rights and to remove rule text that is no longer applicable.
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.
[[Page 14313]]
A. Self-Regulatory Organization's Statement of the Purpose of, and the
Statutory Basis for, the Proposed Rule Change
1. Purpose
The Exchange recently adopted a new listing standard to provide for
the listing of rights (See Section 703.12(II) of the Manual).\4\ The
Exchange now proposes to adopt fees for listed rights.
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\4\ See Securities Exchange Act Release No. 94075 (January 27,
2022); 87 FR 5915 (February 2, 2022) (SR-NYSE-2022-03).
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The Exchange proposes to adopt a fee schedule for listed rights
equivalent to that currently applicable to listed warrants. Both types
of securities represent the right to acquire shares of a listed equity
security at a future time. The distinction is that, unlike warrants,
rights are generally distributed without charge to all of the holders
of a class of existing listed securities. Given the similarities, the
Exchange anticipates that the resources devoted to the listing and
regulation of rights will be substantially the same as is already the
case for listed warrants. As such, the Exchange proposes to apply the
same fee schedule to listed rights as it currently applies to warrants
under Section 902.03 of the Manual. In connection with the listing of a
class of warrants, Section 902.03 provides for a fee of $0.004 per
warrant. Section 902.03 provides that listed warrants are subject to
annual fees at a rate of $0.0017 per warrant, subject to a minimum
annual fee of $5,000 per series of warrants. While the aforementioned
fees currently apply to listed warrants, there are specific provisions
for warrants of two types of issuers--foreign issuers and Acquisition
Companies. As described below, the Exchange proposes to apply the same
fees for rights associated with those types of companies.
Section 902.03 includes text that describes fees for warrants
issued by foreign companies, where the common equity securities into
which the warrants are exercisable trade in the form of American
Depositary Receipts on the Exchange. Specifically, Section 902.03
provides that, where a listed company's primary listed security is an
ADR and it lists warrants that are exercisable into the equity
securities underlying such ADRs, it will be charged: (i) Initial
listing fees for the warrants adjusted to reflect the maximum number of
ADRs that could be created upon exercise of such warrants; and (ii)
annual fees for the outstanding warrants adjusted to reflect the
maximum number of ADRs that could be created upon exercise of such
warrants. The Exchange proposes to apply these same provisions to
rights issued by a foreign company where the company's primary listed
security is an ADR and it lists rights that are exercisable into the
equity securities underlying such ADRs.
Section 902.11 sets forth the fees applicable to Acquisition
Companies (i.e., Special Purpose Acquisition Companies or ``SPACs'')
listed under Section 102.06 of the Manual. SPACs typically sell units
in their initial public offering consisting of a common share and one
or more warrants (or a fraction of a warrant). Under Section 902.11, a
listed Acquisition Company is subject to a flat annual fee of $85,000,
covering both its common shares and its warrants. The Exchange proposes
to amend this provision to specify that the flat annual fee also covers
any rights issued by the Acquisition Company.
The Exchange also proposes to delete rule text from both Section
902.03 and Section 902.11 regarding fees that were in effect for
calendar years prior to 2022 but are no longer in effect, as this rule
text is now irrelevant.
2. Statutory Basis
The Exchange believes that the proposed rule change is consistent
with Section 6(b) of the Act,\5\ in general, and furthers the
objectives of Section 6(b)(4) \6\ of the Act, in particular, in that it
is designed to provide for the equitable allocation of reasonable dues,
fees, and other charges. The Exchange also believes that the proposed
rule change is consistent with Section 6(b)(5) of the Act,\7\ in that
it is designed to promote just and equitable principles of trade, to
foster cooperation and coordination with persons engaged in regulating,
clearing, settling, processing information with respect to, and
facilitating transactions in securities, to remove impediments to and
perfect the mechanism of a free and open market and a national market
system, and, in general, to protect investors and the public interest
and is not designed to permit unfair discrimination between customers,
issuers, brokers, or dealers.
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\5\ 15 U.S.C. 78f(b).
\6\ 15 U.S.C. 78f(b)(4).
\7\ 15 U.S.C. 78f(b)(5).
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The Exchange operates in a highly competitive marketplace for the
listing of the various categories of securities, including the rights
affected by the proposed fees. 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,\8\ 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.'' \9\
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\8\ Release No. 34-51808 (June 9, 2005); 70 FR 37496 (June 29,
2005).
\9\ See Regulation NMS, 70 FR at 37499.
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The Exchange believes that the ever-shifting market share among the
exchanges with respect to new listings and the transfer of existing
listings between competitor exchanges demonstrates that issuers can
choose different listing markets in response to fee changes.
Accordingly, competitive forces constrain exchange listing fees. Stated
otherwise, changes to exchange listing fees can have a direct effect on
the ability of an exchange to compete for new listings and retain
existing listings.
As discussed above, rights are very similar in their structure to
warrants. And the Exchange anticipates devoting substantially the same
resources to the listing of a series of rights as it does to the
listing of a series of warrants. Therefore, the Exchange believes that
it is reasonable and represents an equitable allocation of its fees
among market participants to apply to listed rights the existing fees
currently charged to issuers of listed warrants.
The Exchange believes that the proposal is not unfairly
discriminatory because the same fee schedule will apply to all issuers
of listed rights. In addition, rights have substantial structural
similarities to warrants and the Exchange believes it is therefore
appropriate to apply the same fee schedule to the two classes of
securities. Conversely, rights are not similar in nature to any other
class of securities listed on the Exchange, so the Exchange does not
believe it is unfairly discriminatory to charge different fees for the
listed rights than for any other class of listed securities other than
warrants. Further, the Exchange operates in a competitive environment
and its fees are constrained by competition in the marketplace. Other
national securities exchanges currently list rights, and if a company
believes that the Exchange's fees are unreasonable it can decide either
not to list its rights or to list them on an alternative venue.
The Exchange believes that the proposal to charge listing fees for
rights on an ADR-equivalent basis is equitable and not unfairly
discriminatory because
[[Page 14314]]
it would remove the anomalous outcome that a company whose listed ADRs
represent multiple underlying common shares would otherwise be required
to pay higher fees for the listing of rights exercisable into its
listed equity securities than are paid by a company whose common stock
is listed directly or whose listed ADRs represent a single common
share.
The Exchange recognizes that the proposal would result in a
differential treatment of rights issued by companies with ADRs listed
on the Exchange from that of other issuers of rights, leading to lower
bills in many cases for the companies with listed ADRs. However, the
Exchange notes that companies with listed ADRs that represent multiple
underlying shares (or fractional shares) face unique circumstances when
deciding how to structure their rights. If those companies want to
market their rights in both their home market and the United States,
there are clear advantages to the company and its investors if the same
security is issued in both markets. In particular, issuing the same
security avoids pricing confusion and, by ensuring complete
fungibility, facilitates the movement of rights between the two markets
in aftermarket trading. As the ADRs would not be traded in the home
market and might not be properly understood by investors there, it is
clear why a company would make the decision to issue rights to purchase
a single common share in both markets rather than issuing rights to
purchase ADRs in the US market and rights to purchase a single share in
the home market. While other categories of listed companies may also
sometimes choose to issue rights that are exercisable for multiple
listed common shares or a fraction of a common share, their reasons for
doing so are not the same unique market structural reasons that cause
foreign companies to do so when their listed equity security is an ADR.
Consequently, while the proposal does result in a different treatment
of foreign companies with listed ADRs in a very limited circumstance,
the Exchange believes that this proposed difference in treatment is not
unfairly discriminatory. The Exchange also notes that foreign companies
with listed ADRs would not always pay lower fees on rights if this
proposal was adopted. Rather, the issuer would always pay fees on an
ADR-equivalent basis, which would result in lower fees if the listed
ADR represents multiple common shares and higher fees if it represents
a fractional common share.
The changes the Exchange proposes to make to Sections 902.02 and
902.11 to remove provisions that are no longer needed, as they do not
apply by their terms to any calendar year starting after January 1,
2022, are non-substantive in nature.
For the foregoing reasons, the Exchange believes that the proposal
is consistent with the Act.
B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange does not believe that the proposed rule change will
impose any burden on competition that is not necessary or appropriate
in furtherance of the purposes of the Act. The proposed rule change is
designed to ensure that the fees charged by the Exchange accurately
reflect the services provided and benefits realized by listed
companies. The market for listing services is extremely competitive.
Each listing exchange has a different fee schedule that applies to
issuers seeking to list securities on its exchange. Issuers have the
option to list their securities on these alternative venues based on
the fees charged and the value provided by each listing. 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 amended fees will be charged to all listed issuers on
the same basis. The Exchange does not believe that the proposed fees
will have any meaningful effect on the competition among issuers listed
on the Exchange.
Intermarket Competition
The Exchange operates in a highly competitive market in which
issuers can readily choose to list new securities on other exchanges
and transfer listings to other exchanges if they deem fee levels at
those other venues to be more favorable. Because competitors are free
to modify their own fees in response, and because issuers may change
their chosen listing venue, the Exchange does not believe its proposed
fee change can impose any burden on intermarket competition.
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) \10\ of the Act and subparagraph (f)(2) of Rule
19b-4 \11\ thereunder, because it establishes a due, fee, or other
charge imposed by the Exchange.
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\10\ 15 U.S.C. 78s(b)(3)(A).
\11\ 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) \12\ of the Act to determine whether the proposed
rule change should be approved or disapproved.
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\12\ 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-NYSE-2022-12 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-2022-12. 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
[[Page 14315]]
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-2022-12 and should be submitted on or before April 4, 2022.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\13\
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\13\ 17 CFR 200.30-3(a)(12).
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J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2022-05248 Filed 3-11-22; 8:45 am]
BILLING CODE 8011-01-P
