Self-Regulatory Organizations; Cboe BZX Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Modify the Fees the Exchange Charges Companies Seeking a Review of a Delisting Determination, Public Reprimand Letter, or Written Denial of an Initial Listing Application, 59941-59944 [2024-16222]
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Federal Register / Vol. 89, No. 142 / Wednesday, July 24, 2024 / Notices
information so that employers can make
fully informed employment decisions;
and (iii) deter persons with criminal
records from seeking employment or
association with covered entities. The
rule enables the Commission or other
examining authority to ascertain
whether all required persons are being
fingerprinted and whether proper
procedures regarding fingerprinting are
being followed. Retention of these
records for a period of not less than
three years after termination of a
covered person’s employment or
relationship with a covered entity
ensures that law enforcement officials
will have easy access to fingerprint
cards on a timely basis. This in turn acts
as an effective deterrent to employee
misconduct.
Approximately 3,800 respondents are
subject to the recordkeeping
requirements of the rule. Each
respondent maintains approximately 68
new records per year, each of which
takes approximately 2 minutes per
record to maintain, for an annual
burden of approximately 2.2666667
hours (68 records times 2 minutes). The
total annual time burden for all
respondents is approximately 8,613
hours (3,800 respondents times
2.2666667 hours). As noted above, all
records maintained subject to the rule
must be retained for a period of not less
than three years after termination of a
covered person’s employment or
relationship with a covered entity. In
addition, we estimate the total annual
cost burden to respondents is
approximately $38,000 in third party
storage costs.
Written comments are invited on: (a)
whether the proposed collection of
information is necessary for the proper
performance of the functions of the
Commission, including whether the
information shall have practical utility;
(b) the accuracy of the Commission’s
estimates of the burden of the proposed
collection of information; (c) ways to
enhance the quality, utility, and clarity
of the information collected; and (d)
ways to minimize the burden of the
collection of information on
respondents, including through the use
of automated collection techniques or
other forms of information technology.
Consideration will be given to
comments and suggestions submitted by
September 23, 2024.
An agency may not conduct or
sponsor, and a person is not required to
respond to, a collection of information
under the PRA unless it displays a
currently valid OMB control number.
Please direct your written comments
to: Austin Gerig, Director/Chief Data
Officer, Securities and Exchange
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Commission, c/o Oluwaseun Ajayi, 100
F Street NE, Washington, DC 20549, or
send an email to: PRA_Mailbox@
sec.gov.
Dated: July 18, 2024.
J. Matthew DeLesDernier,
Deputy Secretary.
[FR Doc. 2024–16231 Filed 7–23–24; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–100551; File No. SR–
CboeBZX–2024–065]
Self-Regulatory Organizations; Cboe
BZX Exchange, Inc.; Notice of Filing
and Immediate Effectiveness of a
Proposed Rule Change To Modify the
Fees the Exchange Charges
Companies Seeking a Review of a
Delisting Determination, Public
Reprimand Letter, or Written Denial of
an Initial Listing Application
July 18, 2024.
Pursuant to Section 19(b)(1) 1 of the
Securities Exchange Act of 1934 (‘‘Act’’)
and Rule 19b–4 thereunder,2 notice is
hereby given that on July 3, 2024, 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 modify the fees the
Exchange charges Companies seeking a
review of a Delisting Determination,
public reprimand letter, or written
denial of an initial listing application.
The text of the proposed rule change is
provided in Exhibit 5.
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.
PO 00000
1 15
2 17
U.S.C. 78s(b)(1).
CFR 240.19b–4.
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59941
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
Pursuant to Exchange Rule 14.12(h),
Companies 3 may seek review of a
determination by the Exchange’s Listing
Qualifications Department 4 to deny
initial or delisting a Company’s
securities or to issue a Public
Reprimand Letter,5 by requesting a
hearing before an independent Hearings
Panel (the ‘‘Hearings Panel’’).6 Exchange
Rule 14.12(h)(1)(C) provides that a
Company requesting a hearing must,
within 15 calendar days of the Staff
Delisting Determination,7 must submit a
hearing fee. Hearing fees are currently
charged as follows: (i) when the
Company has requested a written
hearing, $1,000; or (ii) when the
Company has requested an oral hearing,
whether in person or by telephone,
$5,000. Companies may also appeal a
Hearings Panel decision to the Exchange
Listing Council.8 Exchange Rule
14.12(i)(1) requires a Company seeking
such an appeal to submit a fee of $4,000.
The Exchange has not amended these
fees since the Exchange listing rules
were originally adopted in 2011.9 The
Exchange now proposes to (i) increase
the hearing fee for both written and oral
hearings to $20,000; and (ii) increase the
fee to appeal a Hearings Panel decision
3 See
Exchange Rule 14.1(a)(3).
Exchange Rule 14.12(b)(7).
5 See Exchange Rule 14.12(b)(9).
6 See Exchange Rule 14.12(b)(5).
7 See Exchange Rule 14.12(b)(11).
8 See Exchange Rule 14.12(b)(6).
9 See Securities Exchange Act Release Nos. 64546
(May 25, 2011) 76 FR 31660 (June 1, 2011) (SR–
BATS–2011–018) (Notice of Filing of Proposed Rule
Change To Adopt Rules for the Qualification,
Listing and Delisting of Companies on the
Exchange); 65225 (August 30, 2011) 76 FR 55148
(September 6, 2011) (Order Approving Proposed
Rule Change To Adopt Rules for the Qualification,
Listing and Delisting of Companies on the
Exchange).
4 See
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to the Exchange Listing Council to
$15,000. The Exchange is increasing the
fees because the anticipated costs
incurred in preparing for and
conducting hearings and appeals have
increased since the fees were originally
adopted.10
The Exchange recognizes that in the
past, fees for a written hearing have
been lower than fees for an oral one.
The Exchange believes that the basis for
this historical distinction is unclear, and
upon review, found to be unwarranted.
The cost to a company that elects a
written hearing may be lower because
the company’s related expenses, such as
travel and legal representation, may be
avoided. However, the anticipated costs
to the Exchange associated with a
written hearing are similar to those
associated with an oral hearing. The
Exchange believes that the fees should
reflect that Staff and Panels expend
similar resources, time, and effort in
ensuring a full and fair hearing for all
hearing participants, and both processes
afford the same benefit to the issuer.
Therefore, while the proposed
amendment preserves the availability of
a written hearing to any company that
requests one, the Exchange proposes to
charge the same fee for a written hearing
as for an oral one.11
While the Exchange has had no
Company request a hearing by the
Hearings Panel for Tier I or Tier II
securities listed on the Exchange, the
Exchange expects that the costs of the
review process would include
significant time and resources to
maintain the infrastructure for the
processes and to prepare for and
conduct individual hearings and
appeals.12 For example, with respect to
review by the Hearings Panels, the
Exchange expects to incur expenses
related to the Exchange staff that
facilitates the hearings and provides
legal counsel and support to the
10 The Exchange initially filed the proposed fee
changes on June 13, 2024 (SR–CboeBZX–2024–056).
On June 25, 2024, the Exchange withdrew that
filing and submitted SR–CboeBZX–2024–060. On
July 3, 2024, the Exchange withdrew that filing and
submitted this filing.
11 The Exchange notes that Nasdaq similarly
eliminated the distinction in fees between a written
and an oral hearing. See Securities Exchange Act
Release No. 68676 (January 16, 2013) 78 FR 4914
(January 23, 2013) (SR–Nasdaq–2013–004) (Notice
of Filing and Immediate Effectiveness of a Proposed
Rule Change To Modify Fees for Review of Delisting
Determinations and Appeal of Panel Decisions).
12 The Exchange notes that issuers of two
exchange-traded products (‘‘ETPs’’) listed on the
Exchange have requested a hearing by the Hearings
Panel under Rule 14.12(h) in prior years, which are
listed under Exchange Rule 14.11 rather than Rules
14.8 or 14.9. The Exchange anticipates the costs for
a Hearings Panel would generally be the same for
ETPs as they would for Tier I or Tier II securities
listed on the Exchange.
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independent Hearings Panel members,
the honorarium paid to the Hearings
Panel members, the cost of maintaining
a transcript of the hearing, and the cost
of obtaining an advisor to the Hearing
Panel. Listings Qualification Staff
reviews each Company’s submissions to
the Hearings Panel and provides the
Hearings Panel with its analysis of the
Company’s plans; Listings Qualification
Staff also provides written submissions
in support of the delisting, listing
denial, or Public Reprimand
determination. In addition, in some
matters Listings Qualification Staff is
expected to attend hearings to respond
to presentations by the Company and
answer questions from the Hearings
Panel members. Listings Qualification
Staff also must manage and coordinate
the Hearings Panel dockets, maintain
the systems that track hearing matters,
draft initial decisions for review by the
Hearings Panel members, and monitor
post-hearing compliance efforts in
matters where the Hearings Panel has
granted the Company a period of time
to cure a deficiency.13
The Exchange also expects additional
costs associated with the Exchange
Listing Council’s review of every
Hearings Panel decision, in determining
whether to call that decision for review
as described in Rule 14.12(j)(2). In that
regard, the Exchange expects to incur
expenses related to the Exchange staff
that facilitates the call for review
process and that provides legal counsel
and support to the Exchange’s Listing
Council members, the cost of obtaining
an advisor to the Listing Council, as
well as the honorarium paid to the
Exchange’s Listing Council members.
When a matter is called for review, the
Exchange expects to incur costs related
to the staff in the Listing Qualifications
Department, which reviews the
Company’s submissions to the
Exchange’s Listing Council and
provides the Exchange’s Listing Council
with Listing Qualification Staff’s
analysis of the Company’s plans and
any issues identified by the Exchange’s
Listing Council in its call for review.
The Exchange staff also must manage
and coordinate the Exchange’s Listing
Council docket, maintain the systems
that track call for review matters, and
13 The Exchange notes that Nasdaq similarly
increased its fees to request review by a Hearings
Panel to $20,000 and the fee for an appeal to the
Exchange’s Listing Council to $15,000. See
Securities Exchange Act Release No. 96966
(February 22, 2023) 88 FR 12710 (February 28,
2023) (SR–Nasdaq–2023–004) (Notice of Filing and
Immediate Effectiveness of Proposed Rule Change
To Modify the Fees the Exchange Charges
Companies Seeking Review of a Delisting
Determination, Public Reprimand Letter, or Written
Denial of an Initial Listing Application).
PO 00000
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draft initial decisions for review by
Exchange’s Listing Council members.
The Exchange believes that these
additional costs for the call for review
process are appropriately considered as
part of the cost of the Hearings Panel
review, since every Hearings Panel
decision is subject to review by the
Exchange’s Listing Council and the
decision as to whether to call a matter
for review rests with the Exchange’s
Listing Council.14
Where a Company appeals a matter to
the Exchange’s Listing Council, the
Exchange expects similar additional
costs as well, which the Exchange
believes should be borne by the
Company through the appeal fee.
Specifically, like where a decision is
called for review, when a Company
appeals a decision the Exchange would
incur expenses related to the Exchange
staff that facilitates the process and that
provides legal counsel and support to
the Exchange’s Listing Council
members, the honorarium paid to the
Exchange’s Listing Council members,
Listings Qualification Staff review and
analysis of the Company’s submissions
to the Exchange’s Listing Council,
management of the docket, maintaining
the systems that track Exchange’s
Listing Council appellate matters and
drafting the initial decisions for review
by Exchange’s Listing Council members.
Throughout the hearing and
Exchange’s Listing Council process, the
Exchange expects to incur costs to
maintain and upgrade its electronic
systems for tracking Companies and
maintaining a clear record, as required
by Exchange and SEC rules.15 The
Exchange will also maintain lists on its
website,16 updated every business day,
that reflect the status of all Companies
in the deficiency process.17
All of these expenses have
presumably increased in the 13 years
since the fees were adopted in 2011.
Accordingly, the Exchange proposes to
increase the fee to request review by a
Hearings Panel to $20,000 and the fee
for an appeal to the Exchange’s Listing
Council to $15,000, which the Exchange
believes will accurately reflect the
Exchange’s anticipated costs. The
Exchange believes that this is an
equitable allocation based on the
expenses incurred in connection with
14 Id.
15 See Exchange Rule 14.12(m)(1). See also Rule
420(e) of the SEC Rules of Practice, 17 CFR
201.420(e) which requires the Exchange to certify
and file a copy of the record upon which a delisting
or denial was based where the Company requests
Commission review of the Exchange’s action.
16 See https://www.cboe.com/us/equities/listings/
listed_products/below_standard/.
17 Supra note 13.
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each portion of the overall appellate
process. The revised fees will allow the
Exchange to recoup a portion of the
expected expenses it incurs in the
review and appeal processes that will
more closely approximate its actual
costs associated with those processes.18
The proposed fee would be effective to
any Company that was issued a Staff
Delisting Determination with an
issuance date on or after the date of this
filing.19
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.20 Specifically,
the Exchange believes the proposed rule
change is consistent with the Section
6(b)(5) 21 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.
Additionally, the Exchange believes the
proposed rule change is consistent with
the Section 6(b)(5) 22 requirement that
the rules of an exchange not be designed
to permit unfair discrimination between
customers, issuers, brokers, or dealers as
well as Section 6(b)(4) 23 as it is
designed to provide for the equitable
allocation of reasonable dues, fees and
other charges among its Members and
other persons using its facilities.
Specifically, the proposed fee increase
is reasonable because it will better
reflect the Exchange’s expected costs
related to hearings and appeals. The
Exchange has not increased these fees
since adopted in 2011, but the expected
costs have increased since that time.24
The fees will help offset the anticipated
costs of conducting hearings and
appeals, which serve to ensure that the
Exchange’s listing standards are
properly enforced for the protection of
investors. The proposed changes are
equitable and not unfairly
18 Supra
note 13.
noted above, this filing was originally filed
June 13, 2024.
20 15 U.S.C. 78f(b).
21 15 U.S.C. 78f(b)(5).
22 Id.
23 15 U.S.C. 78f(b)(4).
24 Supra note 13.
19 As
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discriminatory because they would
apply equally to all Companies that
choose to request a hearing for review
of a Delisting Determination. In
addition, aligning the fees for hearings
with the underlying costs of the review
process is equitable because doing so
will help minimize the extent that
Companies that are compliant with all
listing standards may subsidize the
costs of review for Companies that are
non-compliant.
The Exchange also believes that the
proposed fees are consistent with the
investor protection objectives of Section
6(b)(5) of the Act 25 in that they are
designed to promote just and equitable
principles of trade, to remove
impediments to a free and open market
and national market systems, and in
general to protect investors and the
public interest. Specifically, the fees are
designed to provide adequate resources
for appropriate preparation to conduct
reviews of the Exchange’s Listing
Qualifications’ Staff determinations and
appeals of Hearings Panel decisions,
which help to assure that the
Exchange’s listing standards are
properly enforced and investors are
protected.
The Exchange also believes that the
proposed changes are consistent with
Section 6(b)(7) of the Act,26 in that the
proposed fees are consistent with the
provision by the Exchange of a fair
procedures for the prohibition or
limitation by the Exchange of any
person with respect to access to services
offered by the Exchange. In particular,
the Exchange believes that the proposed
amended fees should not deter listed
issuers from availing themselves of the
right to appeal because the fees will still
be set at a level that will be affordable
for listed Companies. The Exchange
does not believe that the proposed fee
is unduly burdensome or would
discourage any company from seeking a
hearing or appeal. Furthermore, the
proposed fees are in-line with similar
fees on Nasdaq.
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. As discussed
above, this proposed fee is based on the
anticipated increase in costs to the
Exchange to provide a delisting review
process, which is in turn necessary to
ensure investor protection as well as a
PO 00000
transparent process for issuers.27
Moreover, the market for listing services
is extremely competitive and listed
companies may freely choose alternative
venues based on the aggregate fees
assessed, and the value provided by
each listing. This rule proposal does not
burden competition with other listing
venues, which are similarly free to align
their fees on the costs incurred by the
process they offer. For this reason, and
the reasons discussed in connection
with the statutory basis for the proposed
rule change, the Exchange does not
believe that the proposed rule change
will result in any burden on
competition for listings.
C. Self-Regulatory Organization’s
Statement on Comments on the
Proposed Rule Change Received From
Members, Participants, or Others
The Exchange neither solicited nor
received comments on the proposed
rule change.
III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
The foregoing rule change has become
effective pursuant to Section 19(b)(3)(A)
of the Act 28 and paragraph (f) of Rule
19b–4 29 thereunder. At any time within
60 days of the filing of the proposed rule
change, the Commission summarily may
temporarily suspend such rule change if
it appears to the Commission that such
action is necessary or appropriate in the
public interest, for the protection of
investors, or otherwise in furtherance of
the purposes of the Act. If the
Commission takes such action, the
Commission will institute proceedings
to determine whether the proposed rule
change should be approved or
disapproved.
IV. Solicitation of Comments
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–
CboeBZX–2024–065 on the subject line.
27 Supra
note 13.
U.S.C. 78s(b)(3)(A).
29 17 CFR 240.19b–4(f).
25 15
U.S.C. 78f(b)(5).
26 15. U.S.C. 78f(b)(7).
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Federal Register / Vol. 89, No. 142 / Wednesday, July 24, 2024 / Notices
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–2024–065. 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–2024–065 and should be
submitted on or before August 14, 2024.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.30
J. Matthew DeLesDernier,
Deputy Secretary.
[FR Doc. 2024–16222 Filed 7–23–24; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
ddrumheller on DSK120RN23PROD with NOTICES1
[SEC File No. 270–562, OMB Control No.
3235–0624]
Proposed Collection; Comment
Request; Extension: Regulation R,
Rule 701
Upon Written Request, Copies Available
From: Securities and Exchange
Commission, Office of FOIA Services,
30 17
CFR 200.30–3(a)(12).
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17:57 Jul 23, 2024
Jkt 262001
100 F Street NE, Washington, DC
20549–2736
Notice is hereby given that, pursuant
to the Paperwork Reduction Act of 1995
(‘‘PRA’’) (44 U.S.C. 3501 et seq.), the
Securities and Exchange Commission
(‘‘Commission’’) is soliciting comments
on the existing collection of information
provided for in Regulation R, Rule 701
(17 CFR 247.701) under the Securities
Exchange Act of 1934 (15 U.S.C. 78a et
seq.). The Commission plans to submit
this existing collection of information to
the Office of Management and Budget
(‘‘OMB’’) for extension and approval.
Regulation R, Rule 701 requires a
broker or dealer (as part of a written
agreement between the bank and the
broker or dealer) to notify the bank if the
broker or dealer makes certain
determinations regarding the financial
status of the customer, a bank
employee’s statutory disqualification
status, and compliance with suitability
or sophistication standards.
The Commission estimates there are
3,402 registered brokers or dealers that
would, on average, notify 1,000 banks
approximately two times annually about
a determination regarding a customer’s
high net worth or institutional status or
suitability or sophistication standing as
well as a bank employee’s statutory
disqualification status. Based on these
estimates, the Commission anticipates
that Regulation R, Rule 701 would result
in brokers or dealers making
approximately 2,000 notifications to
banks per year. The Commission further
estimates (based on the level of
difficulty and complexity of the
applicable activities) that a broker or
dealer would spend approximately 15
minutes per notice to a bank. Therefore,
the estimated total annual third-party
disclosure burden for the requirements
in Regulation R, Rule 701 is 500 1 hours
for brokers or dealers.
Written comments are invited on: (a)
whether the proposed collection of
information is necessary for the proper
performance of the functions of the
Commission, including whether the
information shall have practical utility;
(b) the accuracy of the Commission’s
estimates of the burden of the proposed
collection of information; (c) ways to
enhance the quality, utility, and clarity
of the information collected; and (d)
ways to minimize the burden of the
collection of information on
respondents, including through the use
of automated collection techniques or
other forms of information technology.
Consideration will be given to
1 1,000 banks × 2 notices = 2,000 notices; (2,000
notices × 15 minutes) = 30,000 minutes/60 minutes
= 500 hours.
PO 00000
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comments and suggestions submitted by
September 23, 2024.
An agency may not conduct or
sponsor, and a person is not required to
respond to, a collection of information
under the PRA unless it displays a
currently valid OMB control number.
Please direct your written comments
to: Austin Gerig, Director/Chief Data
Officer, Securities and Exchange
Commission, c/o Oluwaseun Ajayi, 100
F Street NE, Washington, DC 20549, or
send an email to: PRA_Mailbox@
sec.gov.
Dated: July 18, 2024.
J. Matthew DeLesDernier,
Deputy Secretary.
[FR Doc. 2024–16234 Filed 7–23–24; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[SEC File No. 270–263, OMB Control No.
3235–0275]
Proposed Collection; Comment
Request; Extension: Rule 17Ad–13
Upon Written Request, Copies Available
From: Securities and Exchange
Commission, Office of FOIA Services,
100 F Street NE, Washington, DC
20549–2736.
Notice is hereby given that pursuant
to the Paperwork Reduction Act of 1995
(‘‘PRA’’) (44 U.S.C. 3501 et seq.), the
Securities and Exchange Commission
(‘‘Commission’’) is soliciting comments
on the existing collection of information
provided for in Rule 17Ad–13 (17 CFR
240.17Ad–13), under the Securities
Exchange Act of 1934 (15 U.S.C. 78a et
seq.). The Commission plans to submit
this existing collection of information to
the Office of Management and Budget
(‘‘OMB’’) for extension and approval.
Rule 17Ad–13 requires certain
registered transfer agents to file
annually with the Commission and the
transfer agent’s appropriate regulatory
authority a report prepared by an
independent accountant on the basis of
a study and evaluation of the transfer
agent’s system of internal accounting
controls for the transfer of record
ownership and the safeguarding of
related securities and funds. If the
independent accountant’s report
specifies any material inadequacy in a
transfer agent’s system, the rule requires
the transfer agent to notify the
Commission and its appropriate
regulatory agency in writing, within
sixty calendar days after the transfer
agent receives the independent
accountant’s report, of any corrective
action taken or proposed to be taken by
E:\FR\FM\24JYN1.SGM
24JYN1
]]>Agencies
[Federal Register Volume 89, Number 142 (Wednesday, July 24, 2024)]
[Notices]
[Pages 59941-59944]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-16222]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-100551; File No. SR-CboeBZX-2024-065]
Self-Regulatory Organizations; Cboe BZX Exchange, Inc.; Notice of
Filing and Immediate Effectiveness of a Proposed Rule Change To Modify
the Fees the Exchange Charges Companies Seeking a Review of a Delisting
Determination, Public Reprimand Letter, or Written Denial of an Initial
Listing Application
July 18, 2024.
Pursuant to Section 19(b)(1) \1\ of the Securities Exchange Act of
1934 (``Act'') and Rule 19b-4 thereunder,\2\ notice is hereby given
that on July 3, 2024, 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.
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\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
Cboe BZX Exchange, Inc. (``BZX'' or the ``Exchange'') is filing
with the Securities and Exchange Commission (``Commission'' or ``SEC'')
a proposed rule change to modify the fees the Exchange charges
Companies seeking a review of a Delisting Determination, public
reprimand letter, or written denial of an initial listing application.
The text of the proposed rule change is provided in Exhibit 5.
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
Pursuant to Exchange Rule 14.12(h), Companies \3\ may seek review
of a determination by the Exchange's Listing Qualifications Department
\4\ to deny initial or delisting a Company's securities or to issue a
Public Reprimand Letter,\5\ by requesting a hearing before an
independent Hearings Panel (the ``Hearings Panel'').\6\ Exchange Rule
14.12(h)(1)(C) provides that a Company requesting a hearing must,
within 15 calendar days of the Staff Delisting Determination,\7\ must
submit a hearing fee. Hearing fees are currently charged as follows:
(i) when the Company has requested a written hearing, $1,000; or (ii)
when the Company has requested an oral hearing, whether in person or by
telephone, $5,000. Companies may also appeal a Hearings Panel decision
to the Exchange Listing Council.\8\ Exchange Rule 14.12(i)(1) requires
a Company seeking such an appeal to submit a fee of $4,000. The
Exchange has not amended these fees since the Exchange listing rules
were originally adopted in 2011.\9\ The Exchange now proposes to (i)
increase the hearing fee for both written and oral hearings to $20,000;
and (ii) increase the fee to appeal a Hearings Panel decision
[[Page 59942]]
to the Exchange Listing Council to $15,000. The Exchange is increasing
the fees because the anticipated costs incurred in preparing for and
conducting hearings and appeals have increased since the fees were
originally adopted.\10\
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\3\ See Exchange Rule 14.1(a)(3).
\4\ See Exchange Rule 14.12(b)(7).
\5\ See Exchange Rule 14.12(b)(9).
\6\ See Exchange Rule 14.12(b)(5).
\7\ See Exchange Rule 14.12(b)(11).
\8\ See Exchange Rule 14.12(b)(6).
\9\ See Securities Exchange Act Release Nos. 64546 (May 25,
2011) 76 FR 31660 (June 1, 2011) (SR-BATS-2011-018) (Notice of
Filing of Proposed Rule Change To Adopt Rules for the Qualification,
Listing and Delisting of Companies on the Exchange); 65225 (August
30, 2011) 76 FR 55148 (September 6, 2011) (Order Approving Proposed
Rule Change To Adopt Rules for the Qualification, Listing and
Delisting of Companies on the Exchange).
\10\ The Exchange initially filed the proposed fee changes on
June 13, 2024 (SR-CboeBZX-2024-056). On June 25, 2024, the Exchange
withdrew that filing and submitted SR-CboeBZX-2024-060. On July 3,
2024, the Exchange withdrew that filing and submitted this filing.
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The Exchange recognizes that in the past, fees for a written
hearing have been lower than fees for an oral one. The Exchange
believes that the basis for this historical distinction is unclear, and
upon review, found to be unwarranted. The cost to a company that elects
a written hearing may be lower because the company's related expenses,
such as travel and legal representation, may be avoided. However, the
anticipated costs to the Exchange associated with a written hearing are
similar to those associated with an oral hearing. The Exchange believes
that the fees should reflect that Staff and Panels expend similar
resources, time, and effort in ensuring a full and fair hearing for all
hearing participants, and both processes afford the same benefit to the
issuer. Therefore, while the proposed amendment preserves the
availability of a written hearing to any company that requests one, the
Exchange proposes to charge the same fee for a written hearing as for
an oral one.\11\
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\11\ The Exchange notes that Nasdaq similarly eliminated the
distinction in fees between a written and an oral hearing. See
Securities Exchange Act Release No. 68676 (January 16, 2013) 78 FR
4914 (January 23, 2013) (SR-Nasdaq-2013-004) (Notice of Filing and
Immediate Effectiveness of a Proposed Rule Change To Modify Fees for
Review of Delisting Determinations and Appeal of Panel Decisions).
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While the Exchange has had no Company request a hearing by the
Hearings Panel for Tier I or Tier II securities listed on the Exchange,
the Exchange expects that the costs of the review process would include
significant time and resources to maintain the infrastructure for the
processes and to prepare for and conduct individual hearings and
appeals.\12\ For example, with respect to review by the Hearings
Panels, the Exchange expects to incur expenses related to the Exchange
staff that facilitates the hearings and provides legal counsel and
support to the independent Hearings Panel members, the honorarium paid
to the Hearings Panel members, the cost of maintaining a transcript of
the hearing, and the cost of obtaining an advisor to the Hearing Panel.
Listings Qualification Staff reviews each Company's submissions to the
Hearings Panel and provides the Hearings Panel with its analysis of the
Company's plans; Listings Qualification Staff also provides written
submissions in support of the delisting, listing denial, or Public
Reprimand determination. In addition, in some matters Listings
Qualification Staff is expected to attend hearings to respond to
presentations by the Company and answer questions from the Hearings
Panel members. Listings Qualification Staff also must manage and
coordinate the Hearings Panel dockets, maintain the systems that track
hearing matters, draft initial decisions for review by the Hearings
Panel members, and monitor post-hearing compliance efforts in matters
where the Hearings Panel has granted the Company a period of time to
cure a deficiency.\13\
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\12\ The Exchange notes that issuers of two exchange-traded
products (``ETPs'') listed on the Exchange have requested a hearing
by the Hearings Panel under Rule 14.12(h) in prior years, which are
listed under Exchange Rule 14.11 rather than Rules 14.8 or 14.9. The
Exchange anticipates the costs for a Hearings Panel would generally
be the same for ETPs as they would for Tier I or Tier II securities
listed on the Exchange.
\13\ The Exchange notes that Nasdaq similarly increased its fees
to request review by a Hearings Panel to $20,000 and the fee for an
appeal to the Exchange's Listing Council to $15,000. See Securities
Exchange Act Release No. 96966 (February 22, 2023) 88 FR 12710
(February 28, 2023) (SR-Nasdaq-2023-004) (Notice of Filing and
Immediate Effectiveness of Proposed Rule Change To Modify the Fees
the Exchange Charges Companies Seeking Review of a Delisting
Determination, Public Reprimand Letter, or Written Denial of an
Initial Listing Application).
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The Exchange also expects additional costs associated with the
Exchange Listing Council's review of every Hearings Panel decision, in
determining whether to call that decision for review as described in
Rule 14.12(j)(2). In that regard, the Exchange expects to incur
expenses related to the Exchange staff that facilitates the call for
review process and that provides legal counsel and support to the
Exchange's Listing Council members, the cost of obtaining an advisor to
the Listing Council, as well as the honorarium paid to the Exchange's
Listing Council members. When a matter is called for review, the
Exchange expects to incur costs related to the staff in the Listing
Qualifications Department, which reviews the Company's submissions to
the Exchange's Listing Council and provides the Exchange's Listing
Council with Listing Qualification Staff's analysis of the Company's
plans and any issues identified by the Exchange's Listing Council in
its call for review. The Exchange staff also must manage and coordinate
the Exchange's Listing Council docket, maintain the systems that track
call for review matters, and draft initial decisions for review by
Exchange's Listing Council members. The Exchange believes that these
additional costs for the call for review process are appropriately
considered as part of the cost of the Hearings Panel review, since
every Hearings Panel decision is subject to review by the Exchange's
Listing Council and the decision as to whether to call a matter for
review rests with the Exchange's Listing Council.\14\
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\14\ Id.
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Where a Company appeals a matter to the Exchange's Listing Council,
the Exchange expects similar additional costs as well, which the
Exchange believes should be borne by the Company through the appeal
fee. Specifically, like where a decision is called for review, when a
Company appeals a decision the Exchange would incur expenses related to
the Exchange staff that facilitates the process and that provides legal
counsel and support to the Exchange's Listing Council members, the
honorarium paid to the Exchange's Listing Council members, Listings
Qualification Staff review and analysis of the Company's submissions to
the Exchange's Listing Council, management of the docket, maintaining
the systems that track Exchange's Listing Council appellate matters and
drafting the initial decisions for review by Exchange's Listing Council
members.
Throughout the hearing and Exchange's Listing Council process, the
Exchange expects to incur costs to maintain and upgrade its electronic
systems for tracking Companies and maintaining a clear record, as
required by Exchange and SEC rules.\15\ The Exchange will also maintain
lists on its website,\16\ updated every business day, that reflect the
status of all Companies in the deficiency process.\17\
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\15\ See Exchange Rule 14.12(m)(1). See also Rule 420(e) of the
SEC Rules of Practice, 17 CFR 201.420(e) which requires the Exchange
to certify and file a copy of the record upon which a delisting or
denial was based where the Company requests Commission review of the
Exchange's action.
\16\ See https://www.cboe.com/us/equities/listings/listed_products/below_standard/.
\17\ Supra note 13.
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All of these expenses have presumably increased in the 13 years
since the fees were adopted in 2011. Accordingly, the Exchange proposes
to increase the fee to request review by a Hearings Panel to $20,000
and the fee for an appeal to the Exchange's Listing Council to $15,000,
which the Exchange believes will accurately reflect the Exchange's
anticipated costs. The Exchange believes that this is an equitable
allocation based on the expenses incurred in connection with
[[Page 59943]]
each portion of the overall appellate process. The revised fees will
allow the Exchange to recoup a portion of the expected expenses it
incurs in the review and appeal processes that will more closely
approximate its actual costs associated with those processes.\18\ The
proposed fee would be effective to any Company that was issued a Staff
Delisting Determination with an issuance date on or after the date of
this filing.\19\
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\18\ Supra note 13.
\19\ As noted above, this filing was originally filed June 13,
2024.
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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.\20\ Specifically, the Exchange believes the proposed rule change
is consistent with the Section 6(b)(5) \21\ 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.
Additionally, the Exchange believes the proposed rule change is
consistent with the Section 6(b)(5) \22\ requirement that the rules of
an exchange not be designed to permit unfair discrimination between
customers, issuers, brokers, or dealers as well as Section 6(b)(4) \23\
as it is designed to provide for the equitable allocation of reasonable
dues, fees and other charges among its Members and other persons using
its facilities.
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\20\ 15 U.S.C. 78f(b).
\21\ 15 U.S.C. 78f(b)(5).
\22\ Id.
\23\ 15 U.S.C. 78f(b)(4).
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Specifically, the proposed fee increase is reasonable because it
will better reflect the Exchange's expected costs related to hearings
and appeals. The Exchange has not increased these fees since adopted in
2011, but the expected costs have increased since that time.\24\ The
fees will help offset the anticipated costs of conducting hearings and
appeals, which serve to ensure that the Exchange's listing standards
are properly enforced for the protection of investors. The proposed
changes are equitable and not unfairly discriminatory because they
would apply equally to all Companies that choose to request a hearing
for review of a Delisting Determination. In addition, aligning the fees
for hearings with the underlying costs of the review process is
equitable because doing so will help minimize the extent that Companies
that are compliant with all listing standards may subsidize the costs
of review for Companies that are non-compliant.
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\24\ Supra note 13.
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The Exchange also believes that the proposed fees are consistent
with the investor protection objectives of Section 6(b)(5) of the Act
\25\ in that they are designed to promote just and equitable principles
of trade, to remove impediments to a free and open market and national
market systems, and in general to protect investors and the public
interest. Specifically, the fees are designed to provide adequate
resources for appropriate preparation to conduct reviews of the
Exchange's Listing Qualifications' Staff determinations and appeals of
Hearings Panel decisions, which help to assure that the Exchange's
listing standards are properly enforced and investors are protected.
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\25\ 15 U.S.C. 78f(b)(5).
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The Exchange also believes that the proposed changes are consistent
with Section 6(b)(7) of the Act,\26\ in that the proposed fees are
consistent with the provision by the Exchange of a fair procedures for
the prohibition or limitation by the Exchange of any person with
respect to access to services offered by the Exchange. In particular,
the Exchange believes that the proposed amended fees should not deter
listed issuers from availing themselves of the right to appeal because
the fees will still be set at a level that will be affordable for
listed Companies. The Exchange does not believe that the proposed fee
is unduly burdensome or would discourage any company from seeking a
hearing or appeal. Furthermore, the proposed fees are in-line with
similar fees on Nasdaq.
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\26\ 15. U.S.C. 78f(b)(7).
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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. As discussed above, this
proposed fee is based on the anticipated increase in costs to the
Exchange to provide a delisting review process, which is in turn
necessary to ensure investor protection as well as a transparent
process for issuers.\27\ Moreover, the market for listing services is
extremely competitive and listed companies may freely choose
alternative venues based on the aggregate fees assessed, and the value
provided by each listing. This rule proposal does not burden
competition with other listing venues, which are similarly free to
align their fees on the costs incurred by the process they offer. For
this reason, and the reasons discussed in connection with the statutory
basis for the proposed rule change, the Exchange does not believe that
the proposed rule change will result in any burden on competition for
listings.
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\27\ Supra note 13.
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C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others
The Exchange neither solicited nor received comments on the
proposed rule change.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
The foregoing rule change has become effective pursuant to Section
19(b)(3)(A) of the Act \28\ and paragraph (f) of Rule 19b-4 \29\
thereunder. At any time within 60 days of the filing of the proposed
rule change, the Commission summarily may temporarily suspend such rule
change if it appears to the Commission that such action is necessary or
appropriate in the public interest, for the protection of investors, or
otherwise in furtherance of the purposes of the Act. If the Commission
takes such action, the Commission will institute proceedings to
determine whether the proposed rule change should be approved or
disapproved.
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\28\ 15 U.S.C. 78s(b)(3)(A).
\29\ 17 CFR 240.19b-4(f).
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IV. Solicitation of Comments
Interested persons are invited to submit written data, views and
arguments concerning the foregoing, including whether the proposed rule
change is consistent with the Act. Comments may be submitted by any of
the following methods:
Electronic Comments
Use the Commission's internet comment form (https://www.sec.gov/rules/sro.shtml); or
Send an email to [email protected]. Please include
file number SR-CboeBZX-2024-065 on the subject line.
[[Page 59944]]
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-2024-065. 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-2024-065 and should
be submitted on or before August 14, 2024.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\30\
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\30\ 17 CFR 200.30-3(a)(12).
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J. Matthew DeLesDernier,
Deputy Secretary.
[FR Doc. 2024-16222 Filed 7-23-24; 8:45 am]
BILLING CODE 8011-01-P
