Self-Regulatory Organizations; Long-Term Stock Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Extend the Term That Newly and Currently Listed Companies May Receive Capital Markets Solutions on a Complimentary Basis Under LTSE Rule 14.602, 25718-25721 [2023-08828]
Download as PDF
<![CDATA[
25718
Federal Register / Vol. 88, No. 81 / Thursday, April 27, 2023 / Notices
finds that it is appropriate to designate
a longer period within which to take
action on the Proposed Rule Change.
Accordingly, the Commission,
pursuant to Section 19(b)(2) of the
Exchange Act,6 designates June 13, 2023
as the date by which the Commission
shall either approve, disapprove, or
institute proceedings to determine
whether to disapprove proposed rule
change SR–ICC–2023–002.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.7
Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2023–08829 Filed 4–26–23; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–97346; File No. SR–LTSE–
2023–02]
Self-Regulatory Organizations; LongTerm Stock Exchange, Inc.; Notice of
Filing and Immediate Effectiveness of
a Proposed Rule Change To Extend
the Term That Newly and Currently
Listed Companies May Receive Capital
Markets Solutions on a Complimentary
Basis Under LTSE Rule 14.602
April 21, 2023.
lotter on DSK11XQN23PROD with NOTICES1
Pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934
(‘‘Act’’),1 and Rule 19b–4 thereunder,2
notice is hereby given that on April 12,
2023, Long-Term Stock Exchange, Inc.
(‘‘LTSE’’ 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 self-regulatory
organization. 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
LTSE proposes to extend from one
year, to three-years, the term that newly
and currently listed Companies may
receive Capital Markets Solutions on a
complimentary basis under LTSE Rule
14.602.
The text of the proposed rule change
is available at the Exchange’s website at
https://longtermstockexchange.com/, at
the principal office of the Exchange, and
6 Id.
7 17
CFR 200.30–3(a)(31).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
1 15
VerDate Sep<11>2014
17:49 Apr 26, 2023
Jkt 259001
at the Commission’s Public Reference
Room.
II. Self-Regulatory Organization’s
Statement on 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 these statements may be examined at
the places specified in Item IV below.
The self-regulatory organization has
prepared summaries, set forth in
Sections A, B, and C below, of the most
significant aspects of such statements.
A. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
1. Purpose
In March 2022, LTSE began offering
complimentary Capital Markets
Solutions to newly listed and currently
listed Companies following the
Commission’s approval of relevant
amendments to Rule 14.602.3 Based on
LTSE’s experience with offering Capital
Markets Solutions, as well as in
response to changes in the competitive
landscape and market conditions, the
Exchange proposes to extend from one
year, to a three-year term, the period
that newly listed Companies and
currently listed Companies may receive
the complimentary Capital Markets
Solutions under LTSE Rule 14.602. This
proposed change impacts the duration
for which Capital Markets Solutions are
to be provided and does not otherwise
impact the nature or substance of the
offerings under LTSE Rule 14.602.
As described in the prior approval
order by the Commission,4 the Capital
Markets Solutions has two components:
(i) an Investor Alignment Solution, and
(ii) the Long-Term Investor Platform
(‘‘LTIP’’). The Investor Alignment
Solution provides Companies with
detailed institutional investor analytics
and insights into investor behavior to
enable them to evaluate the behaviors of
select investors and provide them with
a deeper understanding of the ESG
landscape and their positioning. For
each receiving Company, the Exchange’s
affiliate company, LTSE Services, Inc.
(‘‘LTSE Services’’) 5 analyzes the ESG
3 See Securities Exchange Act Release No. 94465
(March 18, 2022), 87 FR 16800 (March 24, 2022)
File No. SR–LTSE–2021–08.
4 Id.
5 As noted in the Commission’s order approving
LTSE as a national securities exchange, LTSE
PO 00000
Frm 00102
Fmt 4703
Sfmt 4703
profile of institutional investors in order
to understand and identify relevant
sources of capital to aid the Company in
honing and achieving strategic
priorities. A highly-experienced, multidisciplinary team is deployed to support
this long-term governance and capital
markets strategy. The Exchange believes
that the Investor Alignment Solution
furthers the Exchange’s goal of
facilitating long-term focus and value
creation for companies and investors.
The nature or substance of this offering
under LTSE Rule 14.602 is not impacted
by the proposed rule change.
The LTIP is a platform that provides
listed Companies with a means to
upload and effectively manage and
utilize their registered shareholder data
received from their transfer agent. For
example, the LTIP allows Companies to
more easily track, analyze and utilize
registered shareholder data in support of
their investor relations, strategic
initiatives, board review and governance
functions. Additionally, as part of the
LTIP, LTSE Services will assist 6
Companies with methods of outreach to
and education of existing or potential
investors regarding the process for
becoming a registered shareholder,
including the need for investors to work
with their broker-dealer to complete a
submission to the DRS Profile System
maintained by the DTC.7
Proposed Rule 14.602(b)(2)(A) would
provide that within 90 days of listing on
the Exchange, a Company has the option
to request and commence receiving the
Capital Markets Solutions on a
complimentary basis for a three-year
term. As is the case in the current rule
text, the three-year term will begin from
the date of first use of the Capital
Markets Solutions by the newly-listed
Company, subject to the 90-day period
from the date of listing to request and
begin receiving the service. The only
maintains a commercial relationship with LTSE
Services to leverage the company’s technological
expertise to support the Exchange’s software needs.
See In the Matter of the Application of Long Term
Stock Exchange, Inc.; for Registration as a National
Securities Exchange; Findings, Opinion, and Order
of the Commission, Securities Exchange Act Release
No. 85828 (May 10, 2019), 84 FR 21841, 21842 (May
15, 2019). LTSE Services also provides
communications and marketing services to the
Exchange.
6 The registered shareholder information in LTIP
is proprietary to the Company and viewable only
by the Company and its authorized agent.
7 Any outreach to existing or potential investors
is entirely at the discretion of the Company and will
be conducted exclusively by the Company; no
personnel from LTSE Services or LTSE will have
any role in communicating with investors on behalf
of the Company. The LTIP also will, based on
customer demand, provide a means for the
Company to communicate with registered
shareholders who choose to participate on the
Company’s LTIP account.
E:\FR\FM\27APN1.SGM
27APN1
lotter on DSK11XQN23PROD with NOTICES1
Federal Register / Vol. 88, No. 81 / Thursday, April 27, 2023 / Notices
proposed change in Rule 14.602(b)(2)(A)
is changing the duration of the period
during which a Company may receive
the Capital Markets Solutions on a
complimentary basis from one year to
three years.
The Exchange is proposing an
amendment to Rule 14.602(b)(2)(B),
providing a currently listed Company
that has already commenced receiving
the services as of the effective date of
this filing SR–LTSE–2023–02 the option
to request to continue receiving such
services on a complimentary basis for an
additional two-year term. This two-year
term will begin from the one-year
anniversary of the date the Company
initially commenced receiving the
Capital Markets Solutions. The
Exchange is also proposing to delete the
following language: ‘‘Within 90 days of
the effectiveness of this rule,’’ because
it is no longer applicable. The Exchange
is proposing no other substantive
changes to Rule 14.602(b)(2)(B).
The Exchange believes extending the
period for Companies to receive Capital
Markets Solutions on a complimentary
basis aligns with LTSE’s objective of
supporting long-term value creation for
listed Companies and their investors.
Additionally, by offering such services
on a complimentary basis for a longer
term—i.e., three years—LTSE is able to
enhance the value Companies receive by
listing on the Exchange. However, no
Company is required to use these
services as a condition of initial or
continued listing. All such services are
optional for listed Companies and they
may choose to cease receiving services
at any point during the proposed threeyear period. At the end of the proposed
three-year term, Companies may choose
to renew these services on a contractual
basis with LTSE Services and pay for
them in regular course, or discontinue
them. If a Company chooses to
discontinue the services, there would be
no effect on the Company’s continued
listing on the Exchange. LTSE notes that
no other Company will be required to
pay higher fees as a result of the
proposed amendments and represents
that extending the term of these
complimentary services will have no
impact on the resources available for its
regulatory programs. LTSE also
represents that no confidential trading
or regulatory information generated or
received by the Exchange will be shared
with LTSE Services or leveraged for the
provision of its products and services.
2. Statutory Basis
The Exchange believes that the
proposed rule change is consistent with
VerDate Sep<11>2014
17:49 Apr 26, 2023
Jkt 259001
the provisions of Section 6 of the Act,8
in general, and furthers the objectives of
Section 6(b)(4) of the Act,9 in particular,
in that it is designed to provide for the
equitable allocation of reasonable dues,
fees, and other charges among the
Exchange’s members and issuers and
other persons using its facilities. The
Exchange also believes that the
proposed rule change is consistent with
Section 6(b)(5) of the Act 10 in that it is
not designed to permit unfair
discrimination between customers,
issuers, brokers, or dealers.
The Exchange believes that it is fair
and reasonable to offer products and
services to companies. The Exchange
believes that the existing U.S. exchange
listing market for operating companies
is essentially a duopoly with the vast
majority of operating companies listed
on U.S. securities exchanges listing on
the New York Stock Exchange (‘‘NYSE’’)
or Nasdaq Stock Market LLC
(‘‘Nasdaq’’). The Exchange faces
competition from NYSE and Nasdaq as
a new entrant into the exchange listing
market as both offer complimentary
services to newly and currently listed
companies in order to attract and retain
listings.11 Similarly, the Exchange
believes that offering such products and
services to newly and currently listed
Companies would enhance the value
proposition for listing, allow the
Exchange to more effectively attract
companies to list on the Exchange and
retain its current listings. Equally
important, LTSE believes that the
Capital Markets Services will support
Companies in identifying investors who
are aligned with their long-term
business, vision and policies.
The Exchange also believes that to the
extent the Exchange’s listing program is
successful, it will provide a competitive
alternative, which will thereby benefit
companies and investors, and remove
impediments to and perfect the
mechanism of a free and open market
and a national market system, consistent
with the protection of investors and the
8 15
U.S.C. 78f.
9 15 U.S.C. 78f(b)(4).
10 15 U.S.C. 78f(b)(5).
11 See, Securities Exchange Act Release No. 90955
(January 19, 2021), 86 FR 7155, 7157 (January 26,
2021) (noting that ‘‘Nasdaq faces competition in the
market for listing services, and competes, in part,
by offering valuable services to companies. Nasdaq
believes that it is reasonable to offer complimentary
services to attract and retain listings as part of this
competition’’). See also, Securities Exchange Act
Release No. 93865 (December 23, 2021), 86 FR
74115, 74118 (December 29, 2021) (noting that,
‘‘The NYSE faces competition in the market for
listing services, and competes, in part, by offering
valuable services to companies. The Exchange
believes that it is reasonable to offer complimentary
services to attract and retain listings as part of this
competition.’’).
PO 00000
Frm 00103
Fmt 4703
Sfmt 4703
25719
public interest. Other exchanges also
acknowledge the competition in the
market for listing services and they
compete, in part, by offering products
and services to companies. Like other
exchanges, LTSE also believes that it is
fair and reasonable to offer
complimentary services to attract new
listings and retain current listings as
part of this competition.12 For example,
Nasdaq, through its affiliate Nasdaq
Corporate Solutions, LLC, or a selected
third-party, offers an ‘‘Eligible New
Listing’’ or ‘‘Eligible Switch’’ access to
complimentary services for at least three
years.13 Similarly, NYSE offers
complimentary services to ‘‘Eligible
New Listings’’ and ‘‘Eligible Transfer
Companies’’ for a period of 48 calendar
months.14 As noted above, the proposed
rule change would provide all current
and newly LTSE-listed Companies the
Capital Markets Solutions for three
years.
LTSE believes extending the term that
all newly listed and currently listed
Companies receive Capital Markets
Solutions on a complimentary basis is
consistent with just and equitable
principles of trade and the protection of
investors and the public interest
because it has the potential to enhance
current and newly listed companies’
engagement and alignment with
shareholders for the purpose of longterm value creation. These services are
also a reflection of the Exchange’s
differentiated listing standards, which
are explicitly designed to promote longterm focus and value creation,15 and are
central to LTSE’s mission of reducing
short-termism in the capital markets.16
Additionally, LTSE is not differentiating
the complimentary services offered
among listed Companies based on the
number of shares outstanding or market
capitalization; the Capital Markets
Solutions are made available to all listed
Companies for the same period of time.
12 Id.
13 See Nasdaq Listing Rule IM–5900–7(c) and (d).
See also Securities Exchange Act Release No. 91318
(March 12, 2021), 86 FR 14774 (March 18, 2021)
(order approving proposed Nasdaq rule change to
modify and expand the package of complimentary
services provided to Eligible Companies under IM–
5900–7).
14 See NYSE Listed Company Manual Section
907; see also Securities Exchange Act Release No.
94222 (February 10, 2022), 87 FR 8886 (February
16, 2022) (order approving proposed rule change to
amend Section 907 of the Listed Company Manual
regarding products and services being offered to
eligible companies).
15 See Policies and Principles noted in LTSE Rule
14.425.
16 See Securities Exchange Act Release No. 86327
(July 8, 2019), 84 FR 33293 (July 12, 2019) File No.
SR–LTSE–2019–01 (notice of filing of proposed rule
change to adopt LTSE Rule 14.425).
E:\FR\FM\27APN1.SGM
27APN1
25720
Federal Register / Vol. 88, No. 81 / Thursday, April 27, 2023 / Notices
lotter on DSK11XQN23PROD with NOTICES1
Finally, the Exchange believes it is
reasonable to balance its need to remain
competitive with other listing venues,
while at the same time ensuring
adequate revenue to meet its regulatory
responsibilities. The Exchange notes
that no Company will be required to pay
higher fees because of this proposal, and
it represents that providing the
proposed services will have no impact
on the resources available for its
regulatory programs.
B. Self-Regulatory Organization’s
Statement on Burden on Competition
The Exchange does not believe that
the proposed rule change will result in
any burden on competition that is not
necessary or appropriate in furtherance
of the purposes of the Act. To the
contrary, and as discussed in the
Statutory Basis section, LTSE believes
that the proposed rule change will
enhance competition by facilitating
LTSE’s listing program which will allow
the Exchange to provide companies
with another listing option, thereby
promoting intermarket competition
between exchanges in furtherance of the
principles of Section 11A(a)(1) of the
Act 17 in that it is designed to promote
fair competition between exchange
markets by offering a new listing
market. As noted above, LTSE faces
competition in the market for listing
services, and aims to compete by
offering valuable services to listed
Companies. The proposed rule change
reflects that competition, but does not
impose any burden on the competition
with other exchanges. Other exchanges
also offer similar services to companies
for similar time frames as this proposed
rule change,18 thereby increasing
competition to the benefit of those
companies and their stakeholders.
Moreover, as a dual listing venue, LTSE
expects to face competition from
existing exchanges because companies
have a choice to list their securities
solely on a primary listing venue.
Consequently, the degree to which
LTSE’s products and services could
impose any burden on intermarket
competition is extremely limited, and
LTSE does not believe that such
offerings would impose any burden on
competing venues that is not necessary
or appropriate in furtherance of the
purposes of the Act.
LTSE also does not believe that the
proposed rule change will result in any
burden on intramarket competition
since all currently listed Companies will
17 15
U.S.C. 78k–1(a)(1).
18 See Nasdaq Listing Rule IM–5900–7 and NYSE
Listed Company Manual Section 907. See also
supra notes 11 and 12.
VerDate Sep<11>2014
17:49 Apr 26, 2023
Jkt 259001
be able to receive the Capital Markets
Services for the proposed three-year
term. Moreover, the extension of these
complimentary services to three years
does not remove the requirement under
the existing rule that a Company
requesting such services must do so
within 90 days of listing on the
Exchange. Consequently, LTSE does not
believe that the proposal will impose
any burden on intramarket 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 has neither solicited
nor received written comments on 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)(iii) of the Act 19 and
subparagraph (f)(6) of Rule 19b–4
thereunder.20
A proposed rule change filed
pursuant to Rule 19b–4(f)(6) under the
Act normally does not become operative
for 30 days after the date of its filing.
However, Rule 19b–4(f)(6)(iii) 21 permits
the Commission to 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 so that the proposal may
become operative immediately upon
filing. The Exchange asserts that waiver
of the operative delay would be
consistent with the protection of
investors and the public interest
because it would allow the Exchange to
immediately extend the term of services
being provided to currently listed
Companies and permit uninterrupted
continuation of services. In addition, the
Exchange states that extending the
period for Companies to receive Capital
19 15
U.S.C. 78s(b)(3)(A)(iii).
CFR 240.19b–4(f)(6). In addition, Rule 19b–
4(f)(6) requires a self-regulatory organization to give
the Commission written notice of its intent to file
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.
21 17 CFR 240.19b–4(f)(6)(iii).
20 17
PO 00000
Frm 00104
Fmt 4703
Sfmt 4703
Markets Solutions on a complimentary
basis aligns with its objective of
supporting long-term value creation for
listed Companies and their investors.
For these reasons, and because the
proposal raises no novel legal or
regulatory issues, the Commission
believes that waiver of the 30-day
operative delay is consistent with the
protection of investors and the public
interest. Accordingly, the Commission
hereby waives the 30-day operative
delay and designates the proposed rule
change operative upon filing.22
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.
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–
LTSE–2023–02 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–LTSE–2023–02. 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
22 For purposes only of waiving the 30-day
operative delay, the Commission has also
considered the proposed rule’s impact on
efficiency, competition, and capital formation. See
15 U.S.C. 78c(f).
E:\FR\FM\27APN1.SGM
27APN1
Federal Register / Vol. 88, No. 81 / Thursday, April 27, 2023 / Notices
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. Do not include
personal identifiable information in
submissions; you should submit only
information that you wish to make
available publicly. We may redact in
part or withhold entirely from
publication submitted material that is
obscene or subject to copyright
protection. All submissions should refer
to File Number SR–LTSE–2023–02 and
should be submitted on or before May
18, 2023.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.23
Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2023–08828 Filed 4–26–23; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–97342; File No. SR–FICC–
2023–003]
Self-Regulatory Organizations; Fixed
Income Clearing Corporation; Order
Granting Proposed Rule Change To
Revise the Description of the Stressed
Period Used To Calculate the Value-atRisk Charge and Make Other Changes
lotter on DSK11XQN23PROD with NOTICES1
April 21, 2023.
On February 17, 2023, the Fixed
Income Clearing Corporation (‘‘FICC’’)
filed with the Securities and Exchange
Commission (‘‘Commission’’) the
proposed rule change SR–FICC–2023–
003 pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934
(‘‘Act’’) 1 and Rule 19b–4 thereunder.2
The proposed rule change was
published for comment in the Federal
Register on March 7, 2023.3 The
Commission has received no comments
regarding the proposed rule change. For
the reasons discussed below, the
Commission is approving the proposed
rule change.
23 17
CFR 200.30–3(a)(12), (59).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
3 Securities Exchange Act Release No. 97001
(Mar. 1, 2023), 88 FR 14189 (Mar. 7, 2023) (File No.
SR–FICC–2023–003) (‘‘Notice’’).
1 15
VerDate Sep<11>2014
17:49 Apr 26, 2023
Jkt 259001
I. Description of the Proposed Rule
Change
FICC operates two divisions: the
Government Securities Division
(‘‘GSD’’) and the Mortgage Backed
Securities Division (‘‘MBSD’’). GSD
provides trade comparison, netting, risk
management, settlement, and central
counterparty services for the U.S.
Government securities market. MBSD
provides the same services for the U.S.
mortgage-backed securities market. GSD
and MBSD maintain separate sets of
rules, margin models, and clearing
funds.
A key tool that FICC uses to manage
its credit exposures to its members is
the daily collection of margin from each
member. A member’s margin is
designed to mitigate potential losses
associated with liquidation of the
member’s portfolio in the event of that
member’s default. The aggregated
amount of all GSD and MBSD members’
margin constitutes the GSD Clearing
Fund and MBSD Clearing Fund, which
FICC would be able to access should a
defaulted member’s own margin be
insufficient to satisfy losses to FICC
caused by the liquidation of that
member’s portfolio. Each member’s
margin consists of a number of
applicable components, including a the
value-at-risk (‘‘VaR’’) charge (‘‘VaR
Charge’’) designed to capture the
potential market price risk associated
with the securities in a member’s
portfolio. The VaR Charge is typically
the largest component of a member’s
margin requirement. The VaR Charge is
designed to cover FICC’s projected
liquidation losses with respect to a
defaulted member’s portfolio at a 99%
confidence level.
FICC states that it has observed
significant volatility in the U.S.
government securities market due to
tightening monetary policy, increasing
inflation, and recession fears, and that
this volatility has led to greater risk
exposures for FICC.4 FICC represents
that, in order to mitigate the increased
risk exposures, FICC has to quickly and
timely respond to rapidly changing
market conditions.5 For example, in
order to respond to rapidly changing
market conditions, FICC states that it
may need to quickly adjust the lookback period that FICC uses for purposes
of calculating the VaR Charge with an
appropriate stressed period, as needed,
to enable FICC to calculate and collect
adequate margin from members.6
Accordingly, FICC is proposing to
amend the GSD Quantitative Risk
4 See
Notice, supra note 3, 88 FR at 14189.
5 Id.
6 Id.
PO 00000
Frm 00105
Fmt 4703
Sfmt 4703
25721
Management (‘‘QRM’’) Methodology
Document—GSD Initial Market Risk
Margin Model (‘‘GSD QRM
Methodology Document’’) 7 and the
MBSD Methodology and Model
Operations Document—MBSD
Quantitative Risk Model (‘‘MBSD QRM
Methodology Document,’’ 8 and
collectively with the GSD QRM
Methodology Document, the ‘‘QRM
Methodology Documents’’) to revise the
description of the stressed period used
to calculate the VaR Charge in order to
help FICC quickly and timely adjust the
look-back period used for calculating
the VaR Charge with an appropriate
stressed period, as needed. FICC states
that adjustments to the look-back period
could affect the amount of the VaR
Charge that members are assessed by
either increasing or decreasing such
charge to reflect the level of risk the
activities of the members presented to
FICC.9 FICC is also proposing to amend
the GSD QRM Methodology Document
to clarify the language describing the
parameters used to calculate the VaR
Floor.10 Finally, FICC is proposing to
7 FICC filed an excerpt of the GSD QRM
Methodology Document showing the proposed
changes as a confidential exhibit to this proposed
rule change, pursuant to 17 CFR 240.24–b2. FICC
originally filed the GSD QRM Methodology
Document confidentially as part of a previous
proposed rule change and advance notice approved
by the Commission regarding FICC’s GSD
sensitivity VaR. See Securities Exchange Act
Release Nos. 83362 (Jun. 1, 2018), 83 FR 26514 (Jun.
7, 2018) (SR–FICC–2018–001) and 83223 (May 11,
2018), 83 FR 23020 (May 17, 2018) (SR–FICC–2018–
801). The GSD QRM Methodology Document has
been subsequently amended. See Securities
Exchange Act Release Nos. 85944 (May 24, 2019),
84 FR 25315 (May 31, 2019) (SR–FICC–2019–001),
90182 (Oct. 14, 2020), 85 FR 66630 (Oct. 20, 2020)
(SR–FICC–2020–009), 93234 (Oct. 1, 2021), 86 FR
55891 (Oct. 7, 2021) (SR–FICC–2021–007), and
95605 (Aug. 25, 2022), 87 FR 53522 (Aug. 31, 2022)
(SR–FICC–2022–005).
8 FICC filed an excerpt of the MBSD QRM
Methodology Document showing the proposed
changes as a confidential exhibit to this proposed
rule change, pursuant to 17 CFR 240.24–b2. FICC
originally filed the MBSD QRM Methodology
Document confidentially as part of a previous
proposed rule change and advance notice approved
by the Commission regarding FICC’s MBSD
sensitivity VaR. See Securities Exchange Act
Release Nos. 79868 (Jan. 24, 2017), 82 FR 8780 (Jan.
30, 2017) (SR–FICC–2016–007) and 79843 (Jan. 19,
2017), 82 FR 8555 (Jan. 26, 2017) (SR–FICC–2016–
801). The MBSD QRM Methodology Document has
been subsequently amended. See Securities
Exchange Act Release Nos. 85944 (May 24, 2019),
84 FR 25315 (May 31, 2019) (SR–FICC–2019–001),
90182 (Oct. 14, 2020), 85 FR 66630 (Oct. 20, 2020)
(SR–FICC–2020–009), 92303 (Jun. 30, 2021), 86 FR
35854 (Jul. 7, 2021) (SR–FICC–2020–017) and 95070
(Jun. 8, 2022), 87 FR 36014 (Jun. 14, 2022) (SR–
FICC–2022–002).
9 See Notice, supra note 3, 88 FR at 14189.
10 Capitalized terms used herein and not defined
shall have the meaning assigned to such terms in
the FICC’s GSD Rulebook (‘‘GSD Rules’’) and MBSD
Clearing Rules (‘‘MBSD Rules’’), available at https://
www.dtcc.com/legal/rules-and-procedures.aspx.
E:\FR\FM\27APN1.SGM
27APN1
]]>Agencies
[Federal Register Volume 88, Number 81 (Thursday, April 27, 2023)]
[Notices]
[Pages 25718-25721]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2023-08828]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-97346; File No. SR-LTSE-2023-02]
Self-Regulatory Organizations; Long-Term Stock Exchange, Inc.;
Notice of Filing and Immediate Effectiveness of a Proposed Rule Change
To Extend the Term That Newly and Currently Listed Companies May
Receive Capital Markets Solutions on a Complimentary Basis Under LTSE
Rule 14.602
April 21, 2023.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that
on April 12, 2023, Long-Term Stock Exchange, Inc. (``LTSE'' 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 self-regulatory
organization. The Commission is publishing this notice to solicit
comments on the proposed rule change from interested persons.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------
I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
LTSE proposes to extend from one year, to three-years, the term
that newly and currently listed Companies may receive Capital Markets
Solutions on a complimentary basis under LTSE Rule 14.602.
The text of the proposed rule change is available at the Exchange's
website at https://longtermstockexchange.com/, at the principal office
of the Exchange, and at the Commission's Public Reference Room.
II. Self-Regulatory Organization's Statement on 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 these statements may be examined at
the places specified in Item IV below. The self-regulatory organization
has prepared summaries, set forth in Sections A, B, and C below, of the
most significant aspects of such statements.
A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
1. Purpose
In March 2022, LTSE began offering complimentary Capital Markets
Solutions to newly listed and currently listed Companies following the
Commission's approval of relevant amendments to Rule 14.602.\3\ Based
on LTSE's experience with offering Capital Markets Solutions, as well
as in response to changes in the competitive landscape and market
conditions, the Exchange proposes to extend from one year, to a three-
year term, the period that newly listed Companies and currently listed
Companies may receive the complimentary Capital Markets Solutions under
LTSE Rule 14.602. This proposed change impacts the duration for which
Capital Markets Solutions are to be provided and does not otherwise
impact the nature or substance of the offerings under LTSE Rule 14.602.
---------------------------------------------------------------------------
\3\ See Securities Exchange Act Release No. 94465 (March 18,
2022), 87 FR 16800 (March 24, 2022) File No. SR-LTSE-2021-08.
---------------------------------------------------------------------------
As described in the prior approval order by the Commission,\4\ the
Capital Markets Solutions has two components: (i) an Investor Alignment
Solution, and (ii) the Long-Term Investor Platform (``LTIP''). The
Investor Alignment Solution provides Companies with detailed
institutional investor analytics and insights into investor behavior to
enable them to evaluate the behaviors of select investors and provide
them with a deeper understanding of the ESG landscape and their
positioning. For each receiving Company, the Exchange's affiliate
company, LTSE Services, Inc. (``LTSE Services'') \5\ analyzes the ESG
profile of institutional investors in order to understand and identify
relevant sources of capital to aid the Company in honing and achieving
strategic priorities. A highly-experienced, multi-disciplinary team is
deployed to support this long-term governance and capital markets
strategy. The Exchange believes that the Investor Alignment Solution
furthers the Exchange's goal of facilitating long-term focus and value
creation for companies and investors. The nature or substance of this
offering under LTSE Rule 14.602 is not impacted by the proposed rule
change.
---------------------------------------------------------------------------
\4\ Id.
\5\ As noted in the Commission's order approving LTSE as a
national securities exchange, LTSE maintains a commercial
relationship with LTSE Services to leverage the company's
technological expertise to support the Exchange's software needs.
See In the Matter of the Application of Long Term Stock Exchange,
Inc.; for Registration as a National Securities Exchange; Findings,
Opinion, and Order of the Commission, Securities Exchange Act
Release No. 85828 (May 10, 2019), 84 FR 21841, 21842 (May 15, 2019).
LTSE Services also provides communications and marketing services to
the Exchange.
---------------------------------------------------------------------------
The LTIP is a platform that provides listed Companies with a means
to upload and effectively manage and utilize their registered
shareholder data received from their transfer agent. For example, the
LTIP allows Companies to more easily track, analyze and utilize
registered shareholder data in support of their investor relations,
strategic initiatives, board review and governance functions.
Additionally, as part of the LTIP, LTSE Services will assist \6\
Companies with methods of outreach to and education of existing or
potential investors regarding the process for becoming a registered
shareholder, including the need for investors to work with their
broker-dealer to complete a submission to the DRS Profile System
maintained by the DTC.\7\
---------------------------------------------------------------------------
\6\ The registered shareholder information in LTIP is
proprietary to the Company and viewable only by the Company and its
authorized agent.
\7\ Any outreach to existing or potential investors is entirely
at the discretion of the Company and will be conducted exclusively
by the Company; no personnel from LTSE Services or LTSE will have
any role in communicating with investors on behalf of the Company.
The LTIP also will, based on customer demand, provide a means for
the Company to communicate with registered shareholders who choose
to participate on the Company's LTIP account.
---------------------------------------------------------------------------
Proposed Rule 14.602(b)(2)(A) would provide that within 90 days of
listing on the Exchange, a Company has the option to request and
commence receiving the Capital Markets Solutions on a complimentary
basis for a three-year term. As is the case in the current rule text,
the three-year term will begin from the date of first use of the
Capital Markets Solutions by the newly-listed Company, subject to the
90-day period from the date of listing to request and begin receiving
the service. The only
[[Page 25719]]
proposed change in Rule 14.602(b)(2)(A) is changing the duration of the
period during which a Company may receive the Capital Markets Solutions
on a complimentary basis from one year to three years.
The Exchange is proposing an amendment to Rule 14.602(b)(2)(B),
providing a currently listed Company that has already commenced
receiving the services as of the effective date of this filing SR-LTSE-
2023-02 the option to request to continue receiving such services on a
complimentary basis for an additional two-year term. This two-year term
will begin from the one-year anniversary of the date the Company
initially commenced receiving the Capital Markets Solutions. The
Exchange is also proposing to delete the following language: ``Within
90 days of the effectiveness of this rule,'' because it is no longer
applicable. The Exchange is proposing no other substantive changes to
Rule 14.602(b)(2)(B).
The Exchange believes extending the period for Companies to receive
Capital Markets Solutions on a complimentary basis aligns with LTSE's
objective of supporting long-term value creation for listed Companies
and their investors. Additionally, by offering such services on a
complimentary basis for a longer term--i.e., three years--LTSE is able
to enhance the value Companies receive by listing on the Exchange.
However, no Company is required to use these services as a condition of
initial or continued listing. All such services are optional for listed
Companies and they may choose to cease receiving services at any point
during the proposed three-year period. At the end of the proposed
three-year term, Companies may choose to renew these services on a
contractual basis with LTSE Services and pay for them in regular
course, or discontinue them. If a Company chooses to discontinue the
services, there would be no effect on the Company's continued listing
on the Exchange. LTSE notes that no other Company will be required to
pay higher fees as a result of the proposed amendments and represents
that extending the term of these complimentary services will have no
impact on the resources available for its regulatory programs. LTSE
also represents that no confidential trading or regulatory information
generated or received by the Exchange will be shared with LTSE Services
or leveraged for the provision of its products and services.
2. Statutory Basis
The Exchange believes that the proposed rule change is consistent
with the provisions of Section 6 of the Act,\8\ in general, and
furthers the objectives of Section 6(b)(4) of the Act,\9\ in
particular, in that it is designed to provide for the equitable
allocation of reasonable dues, fees, and other charges among the
Exchange's members and issuers and other persons using its facilities.
The Exchange also believes that the proposed rule change is consistent
with Section 6(b)(5) of the Act \10\ in that it is not designed to
permit unfair discrimination between customers, issuers, brokers, or
dealers.
---------------------------------------------------------------------------
\8\ 15 U.S.C. 78f.
\9\ 15 U.S.C. 78f(b)(4).
\10\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------
The Exchange believes that it is fair and reasonable to offer
products and services to companies. The Exchange believes that the
existing U.S. exchange listing market for operating companies is
essentially a duopoly with the vast majority of operating companies
listed on U.S. securities exchanges listing on the New York Stock
Exchange (``NYSE'') or Nasdaq Stock Market LLC (``Nasdaq''). The
Exchange faces competition from NYSE and Nasdaq as a new entrant into
the exchange listing market as both offer complimentary services to
newly and currently listed companies in order to attract and retain
listings.\11\ Similarly, the Exchange believes that offering such
products and services to newly and currently listed Companies would
enhance the value proposition for listing, allow the Exchange to more
effectively attract companies to list on the Exchange and retain its
current listings. Equally important, LTSE believes that the Capital
Markets Services will support Companies in identifying investors who
are aligned with their long-term business, vision and policies.
---------------------------------------------------------------------------
\11\ See, Securities Exchange Act Release No. 90955 (January 19,
2021), 86 FR 7155, 7157 (January 26, 2021) (noting that ``Nasdaq
faces competition in the market for listing services, and competes,
in part, by offering valuable services to companies. Nasdaq believes
that it is reasonable to offer complimentary services to attract and
retain listings as part of this competition''). See also, Securities
Exchange Act Release No. 93865 (December 23, 2021), 86 FR 74115,
74118 (December 29, 2021) (noting that, ``The NYSE faces competition
in the market for listing services, and competes, in part, by
offering valuable services to companies. The Exchange believes that
it is reasonable to offer complimentary services to attract and
retain listings as part of this competition.'').
---------------------------------------------------------------------------
The Exchange also believes that to the extent the Exchange's
listing program is successful, it will provide a competitive
alternative, which will thereby benefit companies and investors, and
remove impediments to and perfect the mechanism of a free and open
market and a national market system, consistent with the protection of
investors and the public interest. Other exchanges also acknowledge the
competition in the market for listing services and they compete, in
part, by offering products and services to companies. Like other
exchanges, LTSE also believes that it is fair and reasonable to offer
complimentary services to attract new listings and retain current
listings as part of this competition.\12\ For example, Nasdaq, through
its affiliate Nasdaq Corporate Solutions, LLC, or a selected third-
party, offers an ``Eligible New Listing'' or ``Eligible Switch'' access
to complimentary services for at least three years.\13\ Similarly, NYSE
offers complimentary services to ``Eligible New Listings'' and
``Eligible Transfer Companies'' for a period of 48 calendar months.\14\
As noted above, the proposed rule change would provide all current and
newly LTSE-listed Companies the Capital Markets Solutions for three
years.
---------------------------------------------------------------------------
\12\ Id.
\13\ See Nasdaq Listing Rule IM-5900-7(c) and (d). See also
Securities Exchange Act Release No. 91318 (March 12, 2021), 86 FR
14774 (March 18, 2021) (order approving proposed Nasdaq rule change
to modify and expand the package of complimentary services provided
to Eligible Companies under IM-5900-7).
\14\ See NYSE Listed Company Manual Section 907; see also
Securities Exchange Act Release No. 94222 (February 10, 2022), 87 FR
8886 (February 16, 2022) (order approving proposed rule change to
amend Section 907 of the Listed Company Manual regarding products
and services being offered to eligible companies).
---------------------------------------------------------------------------
LTSE believes extending the term that all newly listed and
currently listed Companies receive Capital Markets Solutions on a
complimentary basis is consistent with just and equitable principles of
trade and the protection of investors and the public interest because
it has the potential to enhance current and newly listed companies'
engagement and alignment with shareholders for the purpose of long-term
value creation. These services are also a reflection of the Exchange's
differentiated listing standards, which are explicitly designed to
promote long-term focus and value creation,\15\ and are central to
LTSE's mission of reducing short-termism in the capital markets.\16\
Additionally, LTSE is not differentiating the complimentary services
offered among listed Companies based on the number of shares
outstanding or market capitalization; the Capital Markets Solutions are
made available to all listed Companies for the same period of time.
---------------------------------------------------------------------------
\15\ See Policies and Principles noted in LTSE Rule 14.425.
\16\ See Securities Exchange Act Release No. 86327 (July 8,
2019), 84 FR 33293 (July 12, 2019) File No. SR-LTSE-2019-01 (notice
of filing of proposed rule change to adopt LTSE Rule 14.425).
---------------------------------------------------------------------------
[[Page 25720]]
Finally, the Exchange believes it is reasonable to balance its need
to remain competitive with other listing venues, while at the same time
ensuring adequate revenue to meet its regulatory responsibilities. The
Exchange notes that no Company will be required to pay higher fees
because of this proposal, and it represents that providing the proposed
services will have no impact on the resources available for its
regulatory programs.
B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange does not believe that the proposed rule change will
result in any burden on competition that is not necessary or
appropriate in furtherance of the purposes of the Act. To the contrary,
and as discussed in the Statutory Basis section, LTSE believes that the
proposed rule change will enhance competition by facilitating LTSE's
listing program which will allow the Exchange to provide companies with
another listing option, thereby promoting intermarket competition
between exchanges in furtherance of the principles of Section 11A(a)(1)
of the Act \17\ in that it is designed to promote fair competition
between exchange markets by offering a new listing market. As noted
above, LTSE faces competition in the market for listing services, and
aims to compete by offering valuable services to listed Companies. The
proposed rule change reflects that competition, but does not impose any
burden on the competition with other exchanges. Other exchanges also
offer similar services to companies for similar time frames as this
proposed rule change,\18\ thereby increasing competition to the benefit
of those companies and their stakeholders. Moreover, as a dual listing
venue, LTSE expects to face competition from existing exchanges because
companies have a choice to list their securities solely on a primary
listing venue. Consequently, the degree to which LTSE's products and
services could impose any burden on intermarket competition is
extremely limited, and LTSE does not believe that such offerings would
impose any burden on competing venues that is not necessary or
appropriate in furtherance of the purposes of the Act.
---------------------------------------------------------------------------
\17\ 15 U.S.C. 78k-1(a)(1).
\18\ See Nasdaq Listing Rule IM-5900-7 and NYSE Listed Company
Manual Section 907. See also supra notes 11 and 12.
---------------------------------------------------------------------------
LTSE also does not believe that the proposed rule change will
result in any burden on intramarket competition since all currently
listed Companies will be able to receive the Capital Markets Services
for the proposed three-year term. Moreover, the extension of these
complimentary services to three years does not remove the requirement
under the existing rule that a Company requesting such services must do
so within 90 days of listing on the Exchange. Consequently, LTSE does
not believe that the proposal will impose any burden on intramarket
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 has neither solicited nor received written comments on
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)(iii) of the Act \19\ and
subparagraph (f)(6) of Rule 19b-4 thereunder.\20\
---------------------------------------------------------------------------
\19\ 15 U.S.C. 78s(b)(3)(A)(iii).
\20\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)
requires a self-regulatory organization to give the Commission
written notice of its intent to file 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.
---------------------------------------------------------------------------
A proposed rule change filed pursuant to Rule 19b-4(f)(6) under the
Act normally does not become operative for 30 days after the date of
its filing. However, Rule 19b-4(f)(6)(iii) \21\ permits the Commission
to 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 so that
the proposal may become operative immediately upon filing. The Exchange
asserts that waiver of the operative delay would be consistent with the
protection of investors and the public interest because it would allow
the Exchange to immediately extend the term of services being provided
to currently listed Companies and permit uninterrupted continuation of
services. In addition, the Exchange states that extending the period
for Companies to receive Capital Markets Solutions on a complimentary
basis aligns with its objective of supporting long-term value creation
for listed Companies and their investors. For these reasons, and
because the proposal raises no novel legal or regulatory issues, the
Commission believes that waiver of the 30-day operative delay is
consistent with the protection of investors and the public interest.
Accordingly, the Commission hereby waives the 30-day operative delay
and designates the proposed rule change operative upon filing.\22\
---------------------------------------------------------------------------
\21\ 17 CFR 240.19b-4(f)(6)(iii).
\22\ For purposes only of waiving the 30-day operative delay,
the Commission has also considered the proposed rule's impact on
efficiency, competition, and capital formation. See 15 U.S.C.
78c(f).
---------------------------------------------------------------------------
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.
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-LTSE-2023-02 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-LTSE-2023-02. 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
[[Page 25721]]
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. Do
not include personal identifiable information in submissions; you
should submit only information that you wish to make available
publicly. We may redact in part or withhold entirely from publication
submitted material that is obscene or subject to copyright protection.
All submissions should refer to File Number SR-LTSE-2023-02 and should
be submitted on or before May 18, 2023.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\23\
---------------------------------------------------------------------------
\23\ 17 CFR 200.30-3(a)(12), (59).
---------------------------------------------------------------------------
Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2023-08828 Filed 4-26-23; 8:45 am]
BILLING CODE 8011-01-P
