Self-Regulatory Organizations; Cboe BZX Exchange, Inc.; Notice of Filing of a Proposed Rule Change To Adopt an Alternative to the Minimum $4 Price Requirement for Companies Seeking To List Tier II Securities on the Exchange, 67852-67855 [2023-21624]

Download as PDF 67852 Federal Register / Vol. 88, No. 189 / Monday, October 2, 2023 / Notices to consider the proposed rule change, as modified by Amendment No. 3, and the issues raised therein. Accordingly, the Commission, pursuant to Section 19(b)(2) of the Act,10 designates January 10, 2024, as the date by which the Commission shall either approve or disapprove the proposed rule change, as modified by Amendment No. 3 (File No. SR– CboeBZX–2023–028). For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.11 Sherry R. Haywood, Assistant Secretary. [FR Doc. 2023–21622 Filed 9–29–23; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION Self-Regulatory Organizations; Cboe BZX Exchange, Inc.; Notice of Filing of a Proposed Rule Change To Adopt an Alternative to the Minimum $4 Price Requirement for Companies Seeking To List Tier II Securities on the Exchange September 26, 2023. lotter on DSK11XQN23PROD with NOTICES1 Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (the ‘‘Act’’),1 and Rule 19b–4 thereunder,2 notice is hereby given that on September 19, 2023, Cboe BZX Exchange, Inc. (the ‘‘Exchange’’ or ‘‘BZX’’) 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 Cboe BZX Exchange, Inc. (‘‘BZX’’ or the ‘‘Exchange’’) is filing with the Securities and Exchange Commission (‘‘Commission’’ or ‘‘SEC’’) a proposed rule change to adopt an alternative to the minimum $4 price requirement for companies seeking to list Tier II securities on the Exchange. The text of the proposed rule change is also available on the Exchange’s website (https://markets.cboe.com/us/ equities/regulation/rule_filings/bzx/), at U.S.C. 78s(b)(2). CFR 200.30–3(a)(57). 1 15 U.S.C. 78s(b)(1). 2 17 CFR 240.19b–4. 11 17 VerDate Sep<11>2014 18:41 Sep 29, 2023 Jkt 262001 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 Exchange 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 Exchange 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 [Release No. 34–98532; File No. SR– CboeBZX–2023–063] 10 15 the Exchange’s Office of the Secretary, and at the Commission’s Public Reference Room. 1. Purpose The Exchange proposes to adopt an alternative to the minimum $4 price requirement for companies that seek to list Tier II securities on the Exchange which meet the express exclusion from the definition of a ‘‘penny stock’’ contained in Exchange Act Rule 3a51– 1(g) (the ‘‘Penny Stock Rules’’).3 Such an amendment would allow a Company to list a Tier II security on the Exchange if it satisfies all existing and proposed listing standards except for the $4 price requirement.4 As discussed below, the ‘‘net tangible assets and average revenue tests’’ proposed herein that satisfies the requirements of Exchange Act Rule 3a51–1(g) are substantively identical to the net tangible assets and average revenue tests proposed by Nasdaq Stock Market, LLC (‘‘Nasdaq’’) that received Commission approval.5 The Exchange is seeking to make this change to enhance competition among exchanges for companies with securities priced between $2 and $4. Rule 3a51– 1 6 defines a ‘‘penny stock’’ as any 3 17 CFR 240.3a51–1(g). Rule 14.9(b)(1)(A). 5 See Securities Exchange Act Nos. 66159 (January 13, 2012) 77 FR 3021 (January 20, 2012) (SR–NASDAQ–2012–002) (Notice of Filing of Proposed Rule Change To Adopt an Alternative to the $4 Initial Listing Bid Price Requirement for the Nasdaq Capital Market of Either $2 or $3, if Certain Other Listing Requirements Are Met); 66830 (April 18, 2012) 77 FR 24549 (April 24, 2012) (Notice of Filing of Amendment No. 1 and Order Granting Accelerated Approval to Proposed Rule Change, as Modified by Amendment No. 1, To Adopt an Alternative to the $4 Per Share Initial Listing Bid Price Requirement for the Nasdaq Capital Market of Either $2 Closing Price Per Share or $3 Closing Price Per Share, if Certain Other Listing Requirements are Met). 6 17 CFR 240.3a51–1. 4 See PO 00000 Frm 00126 Fmt 4703 Sfmt 4703 equity security that does not satisfy one of the exceptions enumerated in subparagraphs (a) through (g) under the Rule. If a security is a penny stock, Rules 15g–1 through 15g–9 under the Act 7 impose certain additional disclosure and other requirements on brokers and dealers when effecting transactions in such securities. Exchange-listed securities are not considered penny stocks because they comply with the requirements of Rule 3a51–1(a)(2) under the Act,8 which excepts from the definition of penny stock securities registered on national securities exchanges that have initial listing standards that meet certain requirements, including a $4 bid price at the time of listing. The Exchange’s listings standards currently include all the requirements to qualify for the penny stock exception under Exchange Act Rule 3a51–1(a)(2) so that today, once a security is initially listed on the Exchange, the Exchange will not be considered a penny stock for so long as it is listed on the Exchange. The penny stock rules also exclude from the definition of penny stock, under a ‘‘grandfather’’ provision, securities registered on a national securities exchange that has been continually registered as such since April 20, 1992, and has maintained quantitative listing standards that are substantially similar to or stricter than those listing standards that were in place on the exchange on January 8, 2004.9 NYSE American, LLC (‘‘NYSE American’’) meets this standard, but the Exchange, which was more recently registered as a national securities exchange, does not. Accordingly, NYSE American’s initial listing price requirements of either $2 or $3 are grandfathered under this provision. In 2012, Nasdaq received Commission approval for a proposed rule change that allowed it to adopt an alternative to the $4 bid price requirement (the ‘‘Nasdaq proposal’’).10 The Exchange is now proposing to similarly adopt an alternative to the minimum $4 price requirement for companies seeking to list Tier II securities on the Exchange that is substantively identical to the Nasdaq proposal at the time it was adopted.11 7 17 CFR 240.15g–1. CFR 240.3a51–1(a)(2). 9 See 17 CFR 240.3a51–1(a)(1). 10 Supra note 5. 11 The Exchange notes that since Nasdaq adopted the alternative minimum price requirement in 2012, it has adopted certain other initial listing requirements that differ from the Exchange’s current initial listing requirements. The Exchange is not proposing to amend its initial listing requirements except for the proposed alternative 8 17 E:\FR\FM\02OCN1.SGM 02OCN1 Federal Register / Vol. 88, No. 189 / Monday, October 2, 2023 / Notices lotter on DSK11XQN23PROD with NOTICES1 Under proposed Rule 14.9(b)(1)(A)(ii), companies that maintain a $2 or $3 closing price for at least five consecutive business days prior to approval would qualify for listing, if among other things, they meet the net tangible assets or average revenue tests of the alternative penny stock exclusion set forth in Exchange Act Rule 3a51–1(g) 12 and meet all existing listing standards except for the $4 price requirement. Such a company must instead have a minimum $3 price if it qualifies under the $5 million equity 13 or $750,000 net income alternatives 14 or a minimum $2 price if it qualifies under the $50 million market value of listed securities alternative.15 In addition, a company qualifying under the proposed standard must have either: (a) net tangible assets in excess of $2 million, if the issuer has been in continuous operation for at least three years; or (b) net tangible assets in excess of $5 million, if the issuer has been in continuous operation for less than three years; or (c) average revenue of at least $6 million for the last three years. For this purpose, net tangible assets or revenue must be demonstrated on the Company’s most recently filed audited financial statements, satisfying the requirements of the Commission, and which are dated less than 15 months prior to the date of listing.16 minimum price requirement at this time. Instead, the Exchange is proposing to adopt the proposed alternative minimum price requirement while its other initial listing standards are substantively identical to Nasdaq’s initial listing standards at the time the minimum price requirement was approved by the Commission in 2012. 12 See 17 CFR 240.3a51–1(g). A company seeking to qualify under only the Market Value of Listed Securities Standard would, among other things, also be required to maintain for 90 consecutive trading days the market value of their listed securities at $50 million and the $2 price requirement prior to applying to list under the alternative standard. See Exchange Rule 14.9(b)(2)(B). Under the Market Value of Listed Securities Standard, an issuer would need to meet, among other things: (A) Market value of listed securities of at least $50 million (current publicly traded issuers must meet this requirement and the price requirement for 90 consecutive trading days prior to applying for listing if qualifying to list only under the market value of listed securities standard); (B) stockholders’ equity of at least $4 million; and (C) market value of publicly held shares of at least $15 million. The Exchange proposes to revise Rule 14.9(b)(2)(B) in order to make it consistent with the proposal. In particular, Rule 14.9(b)(2)(B)(i) would be revised to delete the specific reference to $4 bid price requirement, since an issuer seeking to initially list its securities under the Market Value of Listed Securities Standard using the proposed alternative price requirement would have to maintain a closing price of at least $2 per share for 90 consecutive trading days. 13 See Exchange Rule 14.9(b)(2)(A). 14 See Exchange Rule 14.9(b)(2)(C). 15 See Exchange Rule 14.9(b)(2)(B). 16 The proposed rule adopts the 15-month requirement to assure consistency with the timing requirements contained in Exchange Act Rule 3a51–1(g). VerDate Sep<11>2014 18:41 Sep 29, 2023 Jkt 262001 As proposed under new interpretation and policy .01(a) to Rule 14.9, an Exchange-listed security could become subject to the penny stock rules following initial listing if it no longer meets the tangible assets or average revenue tests of the alternative exclusion, and does not qualify for another exclusion under the penny stock rules. Further, unlike securities listed under the Exchange’s existing standards, which have a blanket exclusion from the penny stock rules, broker-dealers that effect recommended transactions in securities that originally qualified for listing under the Exchange’s alternative price standard would, among other things, under Exchange Act Rule 3a51–1(g), need to review current financial statements of the issuer to verify that it meets the applicable net tangible assets or average revenue test, have a reasonable basis for believing they remain accurate, and preserve copies of those financial statements as part of its records. As provided in proposed Interpretation and Policy .01 to Rule 14.9, in order to assist brokers’ and dealers’ compliance with the requirements of the Penny Stock Rules, the Exchange will monitor companies listed under the proposed alternative and publish a list of any company that initially listed under that requirement, which does not then meet the requirements of Exchange Act Rule 3a51–1(g), described above, or any of the other exclusions from being a penny stock contained in Rule 3a51–1.17 Such list will be updated on a daily basis. If a company initially lists with a bid price below $4 under the alternative requirement contained in Rule 14.9(b)(1)(A)(ii), but subsequently achieves a $4 closing price for at least five consecutive business days and, at the same time, satisfies all other initial listing criteria, it will no longer be considered as having listed under the alternative requirement and the Exchange will notify the Company that it has qualified for listing under the price requirement contained in Rule 14.9(b)(1)(A)(i).18 If a security obtains a $4 closing price, the Exchange will determine whether it meets all other initial listing requirements for the Tier II securities, including both the 17 The Exchange believes that the other exclusion most likely to be implicated would be Rule 3a51– 1(d), 17 CFR 240.3a51–1(d), which provides an exclusion from the definition of a penny stock for a security with a minimum bid price of $5. Note, however, that if a Company obtains a $4 minimum bid price at a time when it meets all other initial listing requirements, the Exchange would no longer consider the company as having listed under the proposed alternative standard. 18 See proposed Interpretation and Policy .01(a) to Rule 14.9. PO 00000 Frm 00127 Fmt 4703 Sfmt 4703 67853 quantitative and qualitative requirements.19 If the security meets all initial listing requirements, it will satisfy the requirements for the exclusion contained in Rule 3a51– 1(a)(2) and no longer be monitored for compliance with the other exclusions from the definition of a penny stock. Brokers and dealers are reminded that the list published by the Exchange is only an aid and that the Penny Stock Rules impose specific obligations on brokers and dealers with respect to transactions in penny stocks. Proposed Interpretation and Policy .01(b) to Rule 14.9 provides that the proposed alternative price test will be based on the BZX Official Closing Price 20 in the security.21 The Exchange also proposes that the required closing price must be achieved for at least five consecutive business days before approval of the listing application.22 The Exchange may extend the minimum five-day compliance period required to satisfy these tests based on any fact or circumstance, including the margin of compliance, the trading volume, the trend of the security’s price, or information or concerns raised by other regulators concerning the trading of the security. The Exchange believes that requiring the minimum $2 or $3 closing price to be maintained for a period of five days (as opposed to one day) should reduce the risk that some might attempt to manipulate or otherwise artificially inflate the closing price in order to allow a security to qualify for listing. In 19 The security will have to meet the $4 bid price requirement contained in Rule 14.9(b)(1)(A)(i). In addition, Rule 14.9(b)(2)(B) requires a company qualifying only under the Market Value of Listed Securities requirement to satisfy that requirement and the price requirement for 90 consecutive trading days prior to applying for listing. Such a company will have to achieve a $4 bid price for 90 consecutive trading days and a $4 closing price for five days, although these periods may overlap. 20 See BZX Rule 11.23(a)(3). As provided in Exchange Rule 11.23(c)(2)(B), ‘‘[f]or a BZX-listed corporate security, the Closing Auction price will be the BZX Official Closing Price. In the event that there is no Closing Auction for a BZX-listed corporate security, the BZX Official Closing Price will be the price of the Final Last Sale Eligible Trade. See Exchange Rule 11.23(a)(9) for the definition of ‘‘Final Last Sale Eligible Trade’’. 21 The Exchange notes that the process for determining the BZX Official Closing Price is similar to the process on Nasdaq for determining the Nasdaq Official Closing Price. See Nasdaq Rule 4754. The Exchange notes that pursuant to Nasdaq Rule 4754(b)(5), Nasdaq may apply auxiliary procedures for the Closing Cross to ensure a fair and orderly market, where no such provision is available on BZX. 22 The Exchange, working with FINRA, will also adopt surveillance procedures to monitor securities listed under the proposed alternative as they approach $4. These procedures will be designed to identify anomalous trading that could be indicative of potential manipulation of the price. E:\FR\FM\02OCN1.SGM 02OCN1 67854 Federal Register / Vol. 88, No. 189 / Monday, October 2, 2023 / Notices lotter on DSK11XQN23PROD with NOTICES1 addition, the Exchange will exercise its discretionary authority to deny initial listing if there are particular concerns about an issuer, such as its ability to maintain compliance with continued listing standards or if there are other public interest concerns.23 2. Statutory Basis The Exchange believes the proposed rule change is consistent with the Act and the rules and regulations thereunder applicable to the Exchange and, in particular, the requirements of Section 6(b) of the Act.24 Specifically, the Exchange believes the proposed rule change is consistent with the Section 6(b)(5) 25 requirements that the rules of an exchange be designed to prevent fraudulent and manipulative acts and practices, to promote just and equitable principles of trade, to foster cooperation and coordination with persons engaged in 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. The proposed rule change would adopt a $2 and $3 initial listing price alternative for Tier II securities listed on the Exchange that is substantially similar to the requirements of NYSE American and Nasdaq. Particularly, the proposed rule change would require companies to satisfy an additional net tangible asset or revenue test, which is consistent with the requirements for a security to avoid being a penny stock as set forth in Exchange Act Rule 3a51– 1(g).26 The proposed additional net tangible asset or revenue test is also identical to the existing test on Nasdaq.27 As discussed above, broker-dealers that effect recommended transactions in securities that originally qualified for listing under the Exchange’s alternative standard would among other things, under Exchange Act Rule 3a51–1(g), need to review current financial statements of the issuer to verify that it meets the applicable net tangible assets or average revenue test, have a reasonable basis for believing they remain accurate, and preserve copies of those financial statements as part of its records. To facilitate compliance by broker-dealers, the Exchange has committed to monitor the companies 23 See Exchange Rule 14.2. U.S.C. 78f(b). 25 15 U.S.C. 78f(b)(5). 26 17 CFR 240.3a51–1(g). 27 See Nasdaq Rule 5505(a)(1). 24 15 VerDate Sep<11>2014 18:41 Sep 29, 2023 Jkt 262001 listed under the alternative price standard and to publish on its website, and update daily, a list of any such company that no longer meets the net tangible assets or average revenue tests of the penny stock exclusion, and which does not satisfy any other penny stock exclusion. The Exchange also specifically reminds broker-dealers of their obligations under the penny stock rules. The Exchange believes that, although the listing of securities that do not have a blanket exclusion from the penny stock rules and require ongoing monitoring may increase compliance burdens on broker-dealers, the additional steps proposed by the Exchange to facilitate compliance should reduce those burdens and that, on balance, the Exchange’s proposal is consistent with the requirement of Section 6(b)(5) of the Act that the rules of an exchange, among other things, be designed to prevent fraudulent and manipulative acts and practices, to promote just and equitable principles of trade and, in general, to protect investors and the public interest. Further, to address concerns about the potential manipulation of lower priced stocks to meet the initial listing requirements, the Exchange has proposed to require a company to maintain a $2 or $3 closing price for five consecutive business days prior to approval for listing, rather than on a single day. The Exchange believes that requiring the minimum $2 or $3 closing price to be maintained for a longer period should reduce the risk that some might attempt to manipulate or otherwise artificially inflate the closing price in order to allow a security to qualify for listing. In addition, the Exchange notes that it will exercise its discretionary authority to deny initial listing if there are particular concerns about an issuer, such as its ability to maintain compliance with continued listing standards or if there were other public interest concerns. The Exchange believes these additional measures, in conjunction with Exchange’s surveillance procedures and pre-listing qualification review, should help reduce the potential for price manipulation to meet the new initial listing standards, and in this respect are designed to prevent fraudulent and manipulative acts and practices consistent with Section 6(b)(5) of the Act. As proposed, if securities listed under the alternative price listing standard subsequently achieve a $4 closing price over at least five consecutive business days, and the issuer and the securities satisfy all other relevant initial listing criteria, then such securities would no longer be considered as having listed PO 00000 Frm 00128 Fmt 4703 Sfmt 4703 under the alternative price requirement. The Exchange notes that it has taken several steps to address whether this provision could provide an incentive for market participants to manipulate the price of the security in order to achieve the $4 closing price and no longer be considered as having listed under the alternative requirement. First, the Exchange represents that it will conduct a robust, wholesale review of the issuer’s compliance with all applicable initial listing criteria, including qualitative and quantitative standards, at the time the $4 closing price is achieved, and will have a reasonable basis to believe that that price was legitimately, and not manipulatively, achieved. Secondly, the Exchange represents that it is developing enhanced surveillance procedures to monitor securities listed under the alternative price requirement as they approach $4 to identify anomalous trading that would be indicative of potential price manipulation. Finally, the proposal requires the $4 closing price to be met over at least a five consecutive business day period in order to reduce the potential for price manipulation. The Exchange believes that these measures should help reduce the potential for price manipulation to achieve the $4 closing price, and in this respect are designed to prevent fraudulent and manipulative acts and practices consistent with Section 6(b)(5) of the Act. Section 6(b)(8) of the Act requires that the rules of an exchange not impose any burden on competition not necessary or appropriate in furtherance of the purposes of the Act. In addition, Section 11A of the Act 28 requires that there be fair competition among exchange markets to further the public interest and protection of investors. Currently, both Nasdaq and NYSE American rules allow for companies to list within a minimum price requirement of $2 or $3. The Exchange’s initial listing requirements are substantively identical to Nasdaq’s initial listing requirements at the time the Nasdaq proposal was approved by the Commission.29 Further, the net tangible assets and average revenue tests proposed herein are identical to those on Nasdaq. Moreover, the proposed net tangible assets and average revenue tests satisfy the requirements of Exchange Act Rule 3a51–1(g). The proposed rule change would enhance the competition between exchanges, and benefit companies and their investors, by providing companies with another 28 15 U.S.C. 78k–1. note 5. 29 Supra E:\FR\FM\02OCN1.SGM 02OCN1 Federal Register / Vol. 88, No. 189 / Monday, October 2, 2023 / Notices listing venue. As such, the proposed rule change is consistent with Sections 6(b)(8) and 11A. Finally, as noted above, the proposed rule change would adopt the identical initial listing price requirement contained in the NYSE American Company Guide as well as Nasdaq Listing Rules. While the Exchange acknowledges that Nasdaq has amended its initial listing requirements as it pertains to unrestricted publicly held shares since the Commission approved the alternative minimum price requirement, the Exchange notes that its initial listing standards are substantively identical to the Nasdaq Capital Market initial listing standards at the time the alternative minimum price requirement was approved by the Commission.30 As such, the Exchange believes that its listing requirements would remain substantially similar to those of ‘‘Designated Markets’’,31 as required for covered securities under Section 18 of the Securities Act.32 B. Self-Regulatory Organization’s Statement on Burden on Competition lotter on DSK11XQN23PROD with NOTICES1 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 Exchange believes the proposed rule change will not impose any unnecessary burden on intramarket competition as all companies seeking to list Tier II securities on the Exchange would be affected in the same manner by the proposed change. The proposed rule change will expand the competition for the listing of equity securities as they will enable the Exchange to compete for the listing of companies that are currently not qualified for listing on the Exchange but are qualified to list on other national securities exchanges. To the extent that companies prefer listing on a market with these proposed listing standards, other exchanges can choose to adopt similar enhancements to their requirements. As such, these changes are neither intended to, nor expected to, impose any burden on competition between exchanges. 30 Id. 31 Designated Markets refers to the national securities exchanges designated by the Commission to have substantially similar listing standards to those of the ‘‘named markets’’ (i.e., NYSE American and Nasdaq). 32 15 U.S.C. 77r. VerDate Sep<11>2014 18:41 Sep 29, 2023 Jkt 262001 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 Within 45 days of the date of publication of this notice in the Federal Register or within such longer period up to 90 days (i) as the Commission may designate if it finds such longer period to be appropriate and publishes its reasons for so finding or (ii) as to which the Exchange consents, the Commission will: A. by order approve or disapprove such proposed rule change, or B. institute proceedings to determine whether the proposed rule change should be 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 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–2023–063. 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 PO 00000 Frm 00129 Fmt 4703 provisions of 5 U.S.C. 552, will be available for website viewing and printing in the Commission’s Public Reference Room, 100 F Street NE, Washington, DC 20549, on official business days between the hours of 10 a.m. and 3 p.m. Copies of the filing also will be available for inspection and copying at the principal office of the Exchange. Do not include personal identifiable information in submissions; you should submit only information that you wish to make available publicly. We may redact in part or withhold entirely from publication submitted material that is obscene or subject to copyright protection. All submissions should refer to file number SR–CboeBZX–2023–063 and should be submitted on or before October 23, 2023. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.33 Sherry R. Haywood, Assistant Secretary. [FR Doc. 2023–21624 Filed 9–29–23; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION Sunshine Act Meetings 2:00 p.m. on Thursday, October 5, 2023. PLACE: The meeting will be held via remote means and/or at the Commission’s headquarters, 100 F Street NE, Washington, DC 20549. STATUS: This meeting will be closed to the public. MATTERS TO BE CONSIDERED: Commissioners, Counsel to the Commissioners, the Secretary to the Commission, and recording secretaries will attend the closed meeting. Certain staff members who have an interest in the matters also may be present. In the event that the time, date, or location of this meeting changes, an announcement of the change, along with the new time, date, and/or place of the meeting will be posted on the Commission’s website at https:// www.sec.gov. The General Counsel of the Commission, or her designee, has certified that, in her opinion, one or more of the exemptions set forth in 5 U.S.C. 552b(c)(3), (5), (6), (7), (8), 9(B) and (10) and 17 CFR 200.402(a)(3), (a)(5), (a)(6), (a)(7), (a)(8), (a)(9)(ii) and (a)(10), permit consideration of the scheduled matters at the closed meeting. TIME AND DATE: • 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–2023–063 on the subject line. Sfmt 4703 67855 33 17 E:\FR\FM\02OCN1.SGM CFR 200.30–3(a)(12). 02OCN1

Agencies

SECURITIES AND EXCHANGE COMMISSION

[Federal Register Volume 88, Number 189 (Monday, October 2, 2023)]
[Notices]
[Pages 67852-67855]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2023-21624]


-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-98532; File No. SR-CboeBZX-2023-063]


Self-Regulatory Organizations; Cboe BZX Exchange, Inc.; Notice of 
Filing of a Proposed Rule Change To Adopt an Alternative to the Minimum 
$4 Price Requirement for Companies Seeking To List Tier II Securities 
on the Exchange

September 26, 2023.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(the ``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given 
that on September 19, 2023, Cboe BZX Exchange, Inc. (the ``Exchange'' 
or ``BZX'') 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.
---------------------------------------------------------------------------

    \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

    Cboe BZX Exchange, Inc. (``BZX'' or the ``Exchange'') is filing 
with the Securities and Exchange Commission (``Commission'' or ``SEC'') 
a proposed rule change to adopt an alternative to the minimum $4 price 
requirement for companies seeking to list Tier II securities on the 
Exchange.
    The text of the proposed rule change is also available on the 
Exchange's website (https://markets.cboe.com/us/equities/regulation/rule_filings/bzx/), at the Exchange's Office of the Secretary, 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 Exchange 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 Exchange 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
    The Exchange proposes to adopt an alternative to the minimum $4 
price requirement for companies that seek to list Tier II securities on 
the Exchange which meet the express exclusion from the definition of a 
``penny stock'' contained in Exchange Act Rule 3a51-1(g) (the ``Penny 
Stock Rules'').\3\ Such an amendment would allow a Company to list a 
Tier II security on the Exchange if it satisfies all existing and 
proposed listing standards except for the $4 price requirement.\4\ As 
discussed below, the ``net tangible assets and average revenue tests'' 
proposed herein that satisfies the requirements of Exchange Act Rule 
3a51-1(g) are substantively identical to the net tangible assets and 
average revenue tests proposed by Nasdaq Stock Market, LLC (``Nasdaq'') 
that received Commission approval.\5\
---------------------------------------------------------------------------

    \3\ 17 CFR 240.3a51-1(g).
    \4\ See Rule 14.9(b)(1)(A).
    \5\ See Securities Exchange Act Nos. 66159 (January 13, 2012) 77 
FR 3021 (January 20, 2012) (SR-NASDAQ-2012-002) (Notice of Filing of 
Proposed Rule Change To Adopt an Alternative to the $4 Initial 
Listing Bid Price Requirement for the Nasdaq Capital Market of 
Either $2 or $3, if Certain Other Listing Requirements Are Met); 
66830 (April 18, 2012) 77 FR 24549 (April 24, 2012) (Notice of 
Filing of Amendment No. 1 and Order Granting Accelerated Approval to 
Proposed Rule Change, as Modified by Amendment No. 1, To Adopt an 
Alternative to the $4 Per Share Initial Listing Bid Price 
Requirement for the Nasdaq Capital Market of Either $2 Closing Price 
Per Share or $3 Closing Price Per Share, if Certain Other Listing 
Requirements are Met).
---------------------------------------------------------------------------

    The Exchange is seeking to make this change to enhance competition 
among exchanges for companies with securities priced between $2 and $4. 
Rule 3a51-1 \6\ defines a ``penny stock'' as any equity security that 
does not satisfy one of the exceptions enumerated in subparagraphs (a) 
through (g) under the Rule. If a security is a penny stock, Rules 15g-1 
through 15g-9 under the Act \7\ impose certain additional disclosure 
and other requirements on brokers and dealers when effecting 
transactions in such securities. Exchange-listed securities are not 
considered penny stocks because they comply with the requirements of 
Rule 3a51-1(a)(2) under the Act,\8\ which excepts from the definition 
of penny stock securities registered on national securities exchanges 
that have initial listing standards that meet certain requirements, 
including a $4 bid price at the time of listing. The Exchange's 
listings standards currently include all the requirements to qualify 
for the penny stock exception under Exchange Act Rule 3a51-1(a)(2) so 
that today, once a security is initially listed on the Exchange, the 
Exchange will not be considered a penny stock for so long as it is 
listed on the Exchange.
---------------------------------------------------------------------------

    \6\ 17 CFR 240.3a51-1.
    \7\ 17 CFR 240.15g-1.
    \8\ 17 CFR 240.3a51-1(a)(2).
---------------------------------------------------------------------------

    The penny stock rules also exclude from the definition of penny 
stock, under a ``grandfather'' provision, securities registered on a 
national securities exchange that has been continually registered as 
such since April 20, 1992, and has maintained quantitative listing 
standards that are substantially similar to or stricter than those 
listing standards that were in place on the exchange on January 8, 
2004.\9\ NYSE American, LLC (``NYSE American'') meets this standard, 
but the Exchange, which was more recently registered as a national 
securities exchange, does not. Accordingly, NYSE American's initial 
listing price requirements of either $2 or $3 are grandfathered under 
this provision.
---------------------------------------------------------------------------

    \9\ See 17 CFR 240.3a51-1(a)(1).
---------------------------------------------------------------------------

    In 2012, Nasdaq received Commission approval for a proposed rule 
change that allowed it to adopt an alternative to the $4 bid price 
requirement (the ``Nasdaq proposal'').\10\ The Exchange is now 
proposing to similarly adopt an alternative to the minimum $4 price 
requirement for companies seeking to list Tier II securities on the 
Exchange that is substantively identical to the Nasdaq proposal at the 
time it was adopted.\11\
---------------------------------------------------------------------------

    \10\ Supra note 5.
    \11\ The Exchange notes that since Nasdaq adopted the 
alternative minimum price requirement in 2012, it has adopted 
certain other initial listing requirements that differ from the 
Exchange's current initial listing requirements. The Exchange is not 
proposing to amend its initial listing requirements except for the 
proposed alternative minimum price requirement at this time. 
Instead, the Exchange is proposing to adopt the proposed alternative 
minimum price requirement while its other initial listing standards 
are substantively identical to Nasdaq's initial listing standards at 
the time the minimum price requirement was approved by the 
Commission in 2012.

---------------------------------------------------------------------------

[[Page 67853]]

    Under proposed Rule 14.9(b)(1)(A)(ii), companies that maintain a $2 
or $3 closing price for at least five consecutive business days prior 
to approval would qualify for listing, if among other things, they meet 
the net tangible assets or average revenue tests of the alternative 
penny stock exclusion set forth in Exchange Act Rule 3a51-1(g) \12\ and 
meet all existing listing standards except for the $4 price 
requirement. Such a company must instead have a minimum $3 price if it 
qualifies under the $5 million equity \13\ or $750,000 net income 
alternatives \14\ or a minimum $2 price if it qualifies under the $50 
million market value of listed securities alternative.\15\ In addition, 
a company qualifying under the proposed standard must have either: (a) 
net tangible assets in excess of $2 million, if the issuer has been in 
continuous operation for at least three years; or (b) net tangible 
assets in excess of $5 million, if the issuer has been in continuous 
operation for less than three years; or (c) average revenue of at least 
$6 million for the last three years. For this purpose, net tangible 
assets or revenue must be demonstrated on the Company's most recently 
filed audited financial statements, satisfying the requirements of the 
Commission, and which are dated less than 15 months prior to the date 
of listing.\16\
---------------------------------------------------------------------------

    \12\ See 17 CFR 240.3a51-1(g). A company seeking to qualify 
under only the Market Value of Listed Securities Standard would, 
among other things, also be required to maintain for 90 consecutive 
trading days the market value of their listed securities at $50 
million and the $2 price requirement prior to applying to list under 
the alternative standard. See Exchange Rule 14.9(b)(2)(B). Under the 
Market Value of Listed Securities Standard, an issuer would need to 
meet, among other things: (A) Market value of listed securities of 
at least $50 million (current publicly traded issuers must meet this 
requirement and the price requirement for 90 consecutive trading 
days prior to applying for listing if qualifying to list only under 
the market value of listed securities standard); (B) stockholders' 
equity of at least $4 million; and (C) market value of publicly held 
shares of at least $15 million. The Exchange proposes to revise Rule 
14.9(b)(2)(B) in order to make it consistent with the proposal. In 
particular, Rule 14.9(b)(2)(B)(i) would be revised to delete the 
specific reference to $4 bid price requirement, since an issuer 
seeking to initially list its securities under the Market Value of 
Listed Securities Standard using the proposed alternative price 
requirement would have to maintain a closing price of at least $2 
per share for 90 consecutive trading days.
    \13\ See Exchange Rule 14.9(b)(2)(A).
    \14\ See Exchange Rule 14.9(b)(2)(C).
    \15\ See Exchange Rule 14.9(b)(2)(B).
    \16\ The proposed rule adopts the 15-month requirement to assure 
consistency with the timing requirements contained in Exchange Act 
Rule 3a51-1(g).
---------------------------------------------------------------------------

    As proposed under new interpretation and policy .01(a) to Rule 
14.9, an Exchange-listed security could become subject to the penny 
stock rules following initial listing if it no longer meets the 
tangible assets or average revenue tests of the alternative exclusion, 
and does not qualify for another exclusion under the penny stock rules. 
Further, unlike securities listed under the Exchange's existing 
standards, which have a blanket exclusion from the penny stock rules, 
broker-dealers that effect recommended transactions in securities that 
originally qualified for listing under the Exchange's alternative price 
standard would, among other things, under Exchange Act Rule 3a51-1(g), 
need to review current financial statements of the issuer to verify 
that it meets the applicable net tangible assets or average revenue 
test, have a reasonable basis for believing they remain accurate, and 
preserve copies of those financial statements as part of its records. 
As provided in proposed Interpretation and Policy .01 to Rule 14.9, in 
order to assist brokers' and dealers' compliance with the requirements 
of the Penny Stock Rules, the Exchange will monitor companies listed 
under the proposed alternative and publish a list of any company that 
initially listed under that requirement, which does not then meet the 
requirements of Exchange Act Rule 3a51-1(g), described above, or any of 
the other exclusions from being a penny stock contained in Rule 3a51-
1.\17\ Such list will be updated on a daily basis.
---------------------------------------------------------------------------

    \17\ The Exchange believes that the other exclusion most likely 
to be implicated would be Rule 3a51-1(d), 17 CFR 240.3a51-1(d), 
which provides an exclusion from the definition of a penny stock for 
a security with a minimum bid price of $5. Note, however, that if a 
Company obtains a $4 minimum bid price at a time when it meets all 
other initial listing requirements, the Exchange would no longer 
consider the company as having listed under the proposed alternative 
standard.
---------------------------------------------------------------------------

    If a company initially lists with a bid price below $4 under the 
alternative requirement contained in Rule 14.9(b)(1)(A)(ii), but 
subsequently achieves a $4 closing price for at least five consecutive 
business days and, at the same time, satisfies all other initial 
listing criteria, it will no longer be considered as having listed 
under the alternative requirement and the Exchange will notify the 
Company that it has qualified for listing under the price requirement 
contained in Rule 14.9(b)(1)(A)(i).\18\ If a security obtains a $4 
closing price, the Exchange will determine whether it meets all other 
initial listing requirements for the Tier II securities, including both 
the quantitative and qualitative requirements.\19\ If the security 
meets all initial listing requirements, it will satisfy the 
requirements for the exclusion contained in Rule 3a51-1(a)(2) and no 
longer be monitored for compliance with the other exclusions from the 
definition of a penny stock. Brokers and dealers are reminded that the 
list published by the Exchange is only an aid and that the Penny Stock 
Rules impose specific obligations on brokers and dealers with respect 
to transactions in penny stocks.
---------------------------------------------------------------------------

    \18\ See proposed Interpretation and Policy .01(a) to Rule 14.9.
    \19\ The security will have to meet the $4 bid price requirement 
contained in Rule 14.9(b)(1)(A)(i). In addition, Rule 14.9(b)(2)(B) 
requires a company qualifying only under the Market Value of Listed 
Securities requirement to satisfy that requirement and the price 
requirement for 90 consecutive trading days prior to applying for 
listing. Such a company will have to achieve a $4 bid price for 90 
consecutive trading days and a $4 closing price for five days, 
although these periods may overlap.
---------------------------------------------------------------------------

    Proposed Interpretation and Policy .01(b) to Rule 14.9 provides 
that the proposed alternative price test will be based on the BZX 
Official Closing Price \20\ in the security.\21\
---------------------------------------------------------------------------

    \20\ See BZX Rule 11.23(a)(3). As provided in Exchange Rule 
11.23(c)(2)(B), ``[f]or a BZX-listed corporate security, the Closing 
Auction price will be the BZX Official Closing Price. In the event 
that there is no Closing Auction for a BZX-listed corporate 
security, the BZX Official Closing Price will be the price of the 
Final Last Sale Eligible Trade. See Exchange Rule 11.23(a)(9) for 
the definition of ``Final Last Sale Eligible Trade''.
    \21\ The Exchange notes that the process for determining the BZX 
Official Closing Price is similar to the process on Nasdaq for 
determining the Nasdaq Official Closing Price. See Nasdaq Rule 4754. 
The Exchange notes that pursuant to Nasdaq Rule 4754(b)(5), Nasdaq 
may apply auxiliary procedures for the Closing Cross to ensure a 
fair and orderly market, where no such provision is available on 
BZX.
---------------------------------------------------------------------------

    The Exchange also proposes that the required closing price must be 
achieved for at least five consecutive business days before approval of 
the listing application.\22\ The Exchange may extend the minimum five-
day compliance period required to satisfy these tests based on any fact 
or circumstance, including the margin of compliance, the trading 
volume, the trend of the security's price, or information or concerns 
raised by other regulators concerning the trading of the security. The 
Exchange believes that requiring the minimum $2 or $3 closing price to 
be maintained for a period of five days (as opposed to one day) should 
reduce the risk that some might attempt to manipulate or otherwise 
artificially inflate the closing price in order to allow a security to 
qualify for listing. In

[[Page 67854]]

addition, the Exchange will exercise its discretionary authority to 
deny initial listing if there are particular concerns about an issuer, 
such as its ability to maintain compliance with continued listing 
standards or if there are other public interest concerns.\23\
---------------------------------------------------------------------------

    \22\ The Exchange, working with FINRA, will also adopt 
surveillance procedures to monitor securities listed under the 
proposed alternative as they approach $4. These procedures will be 
designed to identify anomalous trading that could be indicative of 
potential manipulation of the price.
    \23\ See Exchange Rule 14.2.
---------------------------------------------------------------------------

2. Statutory Basis
    The Exchange believes the proposed rule change is consistent with 
the Act and the rules and regulations thereunder applicable to the 
Exchange and, in particular, the requirements of Section 6(b) of the 
Act.\24\ Specifically, the Exchange believes the proposed rule change 
is consistent with the Section 6(b)(5) \25\ requirements that the rules 
of an exchange be designed to prevent fraudulent and manipulative acts 
and practices, to promote just and equitable principles of trade, to 
foster cooperation and coordination with persons engaged in 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.
---------------------------------------------------------------------------

    \24\ 15 U.S.C. 78f(b).
    \25\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

    The proposed rule change would adopt a $2 and $3 initial listing 
price alternative for Tier II securities listed on the Exchange that is 
substantially similar to the requirements of NYSE American and Nasdaq. 
Particularly, the proposed rule change would require companies to 
satisfy an additional net tangible asset or revenue test, which is 
consistent with the requirements for a security to avoid being a penny 
stock as set forth in Exchange Act Rule 3a51-1(g).\26\ The proposed 
additional net tangible asset or revenue test is also identical to the 
existing test on Nasdaq.\27\
---------------------------------------------------------------------------

    \26\ 17 CFR 240.3a51-1(g).
    \27\ See Nasdaq Rule 5505(a)(1).
---------------------------------------------------------------------------

    As discussed above, broker-dealers that effect recommended 
transactions in securities that originally qualified for listing under 
the Exchange's alternative standard would among other things, under 
Exchange Act Rule 3a51-1(g), need to review current financial 
statements of the issuer to verify that it meets the applicable net 
tangible assets or average revenue test, have a reasonable basis for 
believing they remain accurate, and preserve copies of those financial 
statements as part of its records. To facilitate compliance by broker-
dealers, the Exchange has committed to monitor the companies listed 
under the alternative price standard and to publish on its website, and 
update daily, a list of any such company that no longer meets the net 
tangible assets or average revenue tests of the penny stock exclusion, 
and which does not satisfy any other penny stock exclusion. The 
Exchange also specifically reminds broker-dealers of their obligations 
under the penny stock rules. The Exchange believes that, although the 
listing of securities that do not have a blanket exclusion from the 
penny stock rules and require ongoing monitoring may increase 
compliance burdens on broker-dealers, the additional steps proposed by 
the Exchange to facilitate compliance should reduce those burdens and 
that, on balance, the Exchange's proposal is consistent with the 
requirement of Section 6(b)(5) of the Act that the rules of an 
exchange, among other things, be designed to prevent fraudulent and 
manipulative acts and practices, to promote just and equitable 
principles of trade and, in general, to protect investors and the 
public interest.
    Further, to address concerns about the potential manipulation of 
lower priced stocks to meet the initial listing requirements, the 
Exchange has proposed to require a company to maintain a $2 or $3 
closing price for five consecutive business days prior to approval for 
listing, rather than on a single day. The Exchange believes that 
requiring the minimum $2 or $3 closing price to be maintained for a 
longer period should reduce the risk that some might attempt to 
manipulate or otherwise artificially inflate the closing price in order 
to allow a security to qualify for listing. In addition, the Exchange 
notes that it will exercise its discretionary authority to deny initial 
listing if there are particular concerns about an issuer, such as its 
ability to maintain compliance with continued listing standards or if 
there were other public interest concerns. The Exchange believes these 
additional measures, in conjunction with Exchange's surveillance 
procedures and pre-listing qualification review, should help reduce the 
potential for price manipulation to meet the new initial listing 
standards, and in this respect are designed to prevent fraudulent and 
manipulative acts and practices consistent with Section 6(b)(5) of the 
Act.
    As proposed, if securities listed under the alternative price 
listing standard subsequently achieve a $4 closing price over at least 
five consecutive business days, and the issuer and the securities 
satisfy all other relevant initial listing criteria, then such 
securities would no longer be considered as having listed under the 
alternative price requirement. The Exchange notes that it has taken 
several steps to address whether this provision could provide an 
incentive for market participants to manipulate the price of the 
security in order to achieve the $4 closing price and no longer be 
considered as having listed under the alternative requirement. First, 
the Exchange represents that it will conduct a robust, wholesale review 
of the issuer's compliance with all applicable initial listing 
criteria, including qualitative and quantitative standards, at the time 
the $4 closing price is achieved, and will have a reasonable basis to 
believe that that price was legitimately, and not manipulatively, 
achieved. Secondly, the Exchange represents that it is developing 
enhanced surveillance procedures to monitor securities listed under the 
alternative price requirement as they approach $4 to identify anomalous 
trading that would be indicative of potential price manipulation. 
Finally, the proposal requires the $4 closing price to be met over at 
least a five consecutive business day period in order to reduce the 
potential for price manipulation. The Exchange believes that these 
measures should help reduce the potential for price manipulation to 
achieve the $4 closing price, and in this respect are designed to 
prevent fraudulent and manipulative acts and practices consistent with 
Section 6(b)(5) of the Act.
    Section 6(b)(8) of the Act requires that the rules of an exchange 
not impose any burden on competition not necessary or appropriate in 
furtherance of the purposes of the Act. In addition, Section 11A of the 
Act \28\ requires that there be fair competition among exchange markets 
to further the public interest and protection of investors. Currently, 
both Nasdaq and NYSE American rules allow for companies to list within 
a minimum price requirement of $2 or $3. The Exchange's initial listing 
requirements are substantively identical to Nasdaq's initial listing 
requirements at the time the Nasdaq proposal was approved by the 
Commission.\29\ Further, the net tangible assets and average revenue 
tests proposed herein are identical to those on Nasdaq. Moreover, the 
proposed net tangible assets and average revenue tests satisfy the 
requirements of Exchange Act Rule 3a51-1(g). The proposed rule change 
would enhance the competition between exchanges, and benefit companies 
and their investors, by providing companies with another

[[Page 67855]]

listing venue. As such, the proposed rule change is consistent with 
Sections 6(b)(8) and 11A.
---------------------------------------------------------------------------

    \28\ 15 U.S.C. 78k-1.
    \29\ Supra note 5.
---------------------------------------------------------------------------

    Finally, as noted above, the proposed rule change would adopt the 
identical initial listing price requirement contained in the NYSE 
American Company Guide as well as Nasdaq Listing Rules. While the 
Exchange acknowledges that Nasdaq has amended its initial listing 
requirements as it pertains to unrestricted publicly held shares since 
the Commission approved the alternative minimum price requirement, the 
Exchange notes that its initial listing standards are substantively 
identical to the Nasdaq Capital Market initial listing standards at the 
time the alternative minimum price requirement was approved by the 
Commission.\30\ As such, the Exchange believes that its listing 
requirements would remain substantially similar to those of 
``Designated Markets'',\31\ as required for covered securities under 
Section 18 of the Securities Act.\32\
---------------------------------------------------------------------------

    \30\ Id.
    \31\ Designated Markets refers to the national securities 
exchanges designated by the Commission to have substantially similar 
listing standards to those of the ``named markets'' (i.e., NYSE 
American and Nasdaq).
    \32\ 15 U.S.C. 77r.
---------------------------------------------------------------------------

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 Exchange believes the proposed rule change will not impose any 
unnecessary burden on intramarket competition as all companies seeking 
to list Tier II securities on the Exchange would be affected in the 
same manner by the proposed change.
    The proposed rule change will expand the competition for the 
listing of equity securities as they will enable the Exchange to 
compete for the listing of companies that are currently not qualified 
for listing on the Exchange but are qualified to list on other national 
securities exchanges. To the extent that companies prefer listing on a 
market with these proposed listing standards, other exchanges can 
choose to adopt similar enhancements to their requirements. As such, 
these changes are neither intended to, nor expected to, impose any 
burden on competition between exchanges.

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

    Within 45 days of the date of publication of this notice in the 
Federal Register or within such longer period up to 90 days (i) as the 
Commission may designate if it finds such longer period to be 
appropriate and publishes its reasons for so finding or (ii) as to 
which the Exchange consents, the Commission will:
    A. by order approve or disapprove such proposed rule change, or
    B. institute proceedings to determine whether the proposed rule 
change should be disapproved.

IV. Solicitation of Comments

    Interested persons are invited to submit written data, views and 
arguments concerning the foregoing, including whether the proposed rule 
change is consistent with the Act. Comments may be submitted by any of 
the following methods:

Electronic Comments

     Use the Commission's internet comment form (https://www.sec.gov/rules/sro.shtml); or
     Send an email to [email protected]. Please include 
file number SR-CboeBZX-2023-063 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-2023-063. 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 
a.m. and 3 p.m. Copies of the filing also will be available for 
inspection and copying at the principal office of the Exchange. Do not 
include personal identifiable information in submissions; you should 
submit only information that you wish to make available publicly. We 
may redact in part or withhold entirely from publication submitted 
material that is obscene or subject to copyright protection. All 
submissions should refer to file number SR-CboeBZX-2023-063 and should 
be submitted on or before October 23, 2023.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\33\
---------------------------------------------------------------------------

    \33\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2023-21624 Filed 9-29-23; 8:45 am]
BILLING CODE 8011-01-P

This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.