Self-Regulatory Organizations; New York Stock Exchange LLC; Notice of Filing of Amendment No. 1 and Order Instituting Proceedings To Determine Whether To Approve or Disapprove a Proposed Rule Change, as Modified by Amendment No. 1, To Amend Section 102.01 of the NYSE Listed Company Manual To Provide That the Stockholder Requirements Set Forth Therein Will Be Calculated on a Worldwide Basis When Listing a Company From Outside North America That Is Listing in Connection With Its Initial Public Offering and Is Not Listed on Any Other Regulated Stock Exchange, 101064-101069 [2024-29334]
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101064
Federal Register / Vol. 89, No. 240 / Friday, December 13, 2024 / Notices
firms. As described above, the
connectivity services purchased by
market participants typically increase
based on their additional message traffic
and/or the complexity of their
operations. The market participants that
utilize more connectivity services
typically utilize the most bandwidth,
and those are the participants that
consume the most resources from the
network. Accordingly, the proposed fees
for connectivity services do not favor
certain categories of market participants
in a manner that would impose a
burden on competition; rather, the
allocation of the proposed fees for
connectivity reflects the network
resources consumed by the various size
of market participants and the costs to
the Exchange of providing such
connectivity services.
Intermarket Competition
The Exchange does not believe the
proposed fees for connectivity to LTSE
places an undue burden on competition
on other SROs that is not necessary or
appropriate. Additionally, another
exchange has similar connectivity
alternatives for their participants, but
with higher rates to connect.31 The
Exchange is also unaware of any
assertion that the proposed fees for
connectivity services would somehow
unduly impair its competition with
other exchanges. In sum, LTSE’s
proposed fees for connectivity for
Members and Non-Members are
comparable to and generally lower than
fees charged by another exchange for the
same or similar services.
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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
This proposed rule change establishes
dues, fees or other charges among its
members and, as such, may take effect
upon filing with the Commission
pursuant to Section 19(b)(3)(A)(ii) of the
Act 32 and paragraph (f)(2) of Rule 19b–
4 thereunder.33 Accordingly, the
proposed rule change would take effect
upon filing with the Commission.
At any time within 60 days of the
filing of the proposed rule change, the
Commission summarily may
See supra notes 28–29 [sic].
15 U.S.C. 78s(b)(3)(A)(ii).
33 17 CFR 240.19b–4(f)(2).
31
32
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temporarily suspend the rule change if
it appears to the Commission that the
action is necessary or appropriate in the
public interest, for the protection of
investors, or would otherwise further
the purposes of the Act. If the
Commission takes such action, the
Commission shall institute proceedings
to determine whether the proposed rule
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–
LTSE–2024–09 on the subject line.
Paper Comments
• Send paper comments in triplicate
to Secretary, Securities and Exchange
Commission, 100 F Street NE,
Washington, DC 20549–1090.
All submissions should refer to file
number SR–LTSE–2024–09. 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
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subject to copyright protection. All
submissions should refer to file number
SR–LTSE–2024–09 and should be
submitted on or before January 3, 2025.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.34
Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2024–29336 Filed 12–12–24; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–101844; File No. SR–NYSE–
2024–47]
Self-Regulatory Organizations; New
York Stock Exchange LLC; Notice of
Filing of Amendment No. 1 and Order
Instituting Proceedings To Determine
Whether To Approve or Disapprove a
Proposed Rule Change, as Modified by
Amendment No. 1, To Amend Section
102.01 of the NYSE Listed Company
Manual To Provide That the
Stockholder Requirements Set Forth
Therein Will Be Calculated on a
Worldwide Basis When Listing a
Company From Outside North America
That Is Listing in Connection With Its
Initial Public Offering and Is Not Listed
on Any Other Regulated Stock
Exchange
December 9, 2024.
On August 22, 2024, New York Stock
Exchange LLC (‘‘NYSE’’ or ‘‘Exchange’’)
filed with the Securities and Exchange
Commission (‘‘Commission’’), pursuant
to Section 19(b)(1) of the Securities
Exchange Act of 1934 (‘‘Exchange
Act’’) 1 and Rule 19b–4 thereunder,2 a
proposed rule change to amend Section
102.01 of the NYSE Listed Company
Manual (‘‘Manual’’) to provide that the
distribution standard therein would be
calculated on a worldwide basis. The
proposed rule change was published for
comment in the Federal Register on
September 10, 2024.3 The Commission
has received no comment letters on the
proposed rule change.
On October 22, 2024, pursuant to
Section 19(b)(2) of the Exchange Act,4
the Commission designated a longer
period within which to approve the
proposed rule change, disapprove the
proposed rule change, or institute
proceedings to determine whether to
17 CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
3 See Securities Exchange Act Release No. 100918
(September 4, 2024), 89 FR 73463 (September 10,
2024) (SR–NYSE–2024–47) (‘‘Notice’’).
4 15 U.S.C. 78s(b)(2).
34
1 15
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Federal Register / Vol. 89, No. 240 / Friday, December 13, 2024 / Notices
disapprove the proposed rule change.5
On November 18, 2024, the Exchange
filed Amendment No. 1 to the proposed
rule change as described in Items I and
II below, which Items have been
prepared by the Exchange. Amendment
No. 1 amended and replaced the
proposed rule change as originally filed
and superseded such filing in its
entirety. The Commission is publishing
this notice and order to solicit
comments on the proposed rule change,
as modified by Amendment No. 1, from
interested persons and to institute
proceedings under Section 19(b)(2)(B) of
the Exchange Act 6 to determine
whether to approve or disapprove the
proposed rule change, as modified by
Amendment No. 1.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The Exchange proposes to amend
Section 102.01 of the NYSE Listed
Company Manual to provide that the
distribution standards therein will be
calculated on a worldwide basis when
listing a company from outside North
America and such company (i) is listing
in connection with its initial public
offering, and (ii) is not listed on any
other regulated stock exchange. This
Amendment No. 1 supersedes the
original filing in its entirety. The
changes to the original filing made in
Amendment No. 1 are described in the
Purpose section below. The proposed
rule change is available on the
Exchange’s website at www.nyse.com, at
the principal office of the Exchange, and
at the Commission’s Public Reference
Room.
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II. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
In its filing with the Commission, the
self-regulatory organization included
statements concerning the purpose of,
and basis for, the proposed rule change
and discussed any comments it received
on the proposed rule change. The text
of those statements may be examined at
the places specified in Item IV below.
The Exchange has prepared summaries,
set forth in sections A, B, and C below,
of the most significant parts of such
statements.
5 See Securities Exchange Act Release No.
101402, 89 FR 85574 (Oct. 18, 2024). The
Commission designated December 9, 2024, as the
date by which the Commission shall approve or
disapprove, or institute proceedings to determine
whether to disapprove, the proposed rule change.
6 15 U.S.C. 78s(b)(2)(B).
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A. Self-Regulatory Organization’s
Statement of the Purpose of, and the
Statutory Basis for, the Proposed Rule
Change
1. Purpose
The NYSE previously submitted a
rule filing proposing to amend Section
102.01B to provide that the distribution
standards in Section 102.01A will be
calculated on a worldwide basis when
listing a company on the Exchange.7
The proposed rule change was
published for comment in the Federal
Register on September 10, 2024.8 This
Amendment No. 1 supersedes the
original filing in its entirety.
Amendment No. 1 modifies the
original proposal by providing that the
proposed amendment to Section
102.01B would solely provide that the
stockholder requirements set forth in
Section 102.01A will be calculated on a
worldwide basis when listing a
company from outside North America
and such company (i) is listing in
connection with its initial public
offering and, (ii) is not listed on any
other regulated stock exchange. In
addition, Amendment No. 1 proposes to
amend Section 102.01B to clarify that
the discretion to include stockholders
and trading volume from a company’s
home country or primary trading market
outside North America in applying the
applicable requirements of Section
102.01A is applicable only when the
applicant issuer is listed on another
regulated stock exchange. This
Amendment No. 1 supersedes the
original filing in its entirety.
Section 102.01A of the Manual sets
forth the Exchange’s minimum initial
listing requirements with respect to
distribution for companies seeking to
list under the Exchange’s ‘‘domestic’’
initial listing standards. A note included
in Section 102.01B (under the heading
‘‘Calculations under the Distribution
Criteria’’) provides that, when
considering a listing application from a
company organized under the laws of
Canada, Mexico or the United States
(‘‘North America’’), the Exchange will
include all North American holders and
North American trading volume in
applying the minimum stockholder and
trading volume requirements of Section
102.01A.
Notwithstanding the foregoing, the
note included in Section 102.01B also
provides that, in connection with the
listing of any issuer from outside North
America, the Exchange will have the
7 See
SR–NYSE–2024–47 (August 22, 2024).
Securities Exchange Act Release No. 100918
(September 4, 2024), 89 FR 73463 (September 10,
2024) (SR–NYSE–2024–47).
8 See
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101065
discretion, but will not be required, to
consider holders and trading volume in
the company’s home country market or
primary trading market outside the
United States in determining whether a
company is qualified for listing under
Section 102.01, provided such market is
a regulated stock exchange. The note
specifies that, in exercising this
discretion, the Exchange would
consider all relevant factors including:
(i) whether the information was derived
from a reliable source, preferably either
a regulated securities market or a
transfer agent that was subject to
governmental regulation; (ii) whether
there existed efficient mechanisms for
the transfer of securities between the
company’s non-U.S. trading market and
the United States; and (iii) the number
of stockholders and the extent of trading
in the company’s securities in the
United States prior to the listing.
The Exchange proposes to amend the
note in Section 102.01B under the
heading ‘‘Calculations under the
Distribution Criteria’’ to provide that,
when considering a listing application
from a company from outside North
America when such company is listing
in connection with its initial public
offering and is not listed on any other
regulated stock exchange, the Exchange
will include all holders on a global basis
in applying the minimum stockholder
requirements of Section 102.01A. The
Exchange notes that the trading volume
provisions of Section 102.01A are not
relevant to the listing of a company from
outside North America when such
company is listing in connection with
its initial public offering and is not
listed on any other regulated stock
exchange, as the trading volume
requirements are only applicable in the
case of a quotation listing or transfer or
upon exchange of a common equity
security for a listed Equity Investment
Tracking Stock and not in the case of an
initial public offering. In addition, the
Exchange proposes to amend the
existing text of Section 102.01B to
clarify that the discretion to include
stockholders and trading volume from a
company’s home country or primary
trading market outside North America
in applying the applicable requirements
of Section 102.01A is applicable only
when the applicant issuer is listed on
another regulated stock exchange.
It has been the Exchange’s experience
in recent years that non-U.S. companies
conducting their initial public offerings
in the United States will often seek to
sell a significant portion of the offering
in the company’s home market rather
than in the United States. Such
companies and their underwriters have
sometimes had difficulty placing shares
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101066
Federal Register / Vol. 89, No. 240 / Friday, December 13, 2024 / Notices
with a sufficient number of investors in
North America to meet the Exchange’s
domestic distribution standards and, in
some instances, companies have been
unable to list on the Exchange because
of the restrictions imposed by the
current NYSE rule. In some cases, this
means that these companies are lost to
the U.S. capital markets, but in other
cases these companies are able to list on
the Nasdaq Stock Market (‘‘Nasdaq’’), as
the text of Nasdaq’s distribution
requirements (as set forth in Nasdaq
Stock Market Rule 5315(f)) do not
include the type of restriction to North
America set forth in Section 102.01. The
Exchange believes that the proposed
rule change will enable it to compete
more effectively for the listing of nonU.S. companies, as the rule change
would remove a significant competitive
disadvantage faced by the Exchange in
competing with Nasdaq for the listing of
companies from outside North America
that are listing in connection with an
initial public offering and are not listed
on any other regulated stock exchange.
In addition to the competitive benefits
described above, the Exchange believes
that the current rule reflects an
understanding of the functioning of the
trading market for non-U.S. companies
that is inconsistent with the current
reality. The current restrictions have
been in place for many years and do not
reflect the speed and reliability of links
that enable investors who hold
securities in brokerage accounts in
countries outside North America to
trade in the U.S. listing markets. Given
the ease of transfer of securities between
different countries in the contemporary
securities markets, there is no reason
why the holders of a listed company’s
securities outside of North America
cannot be active real time participants
in the trading market in the United
States and that foreign holders should
be viewed as less valuable as a source
of liquidity in that market. The
Exchange notes that this is particularly
relevant to the listing of a foreign
company listed on the NYSE when it
does not have an exchange listing in its
home market, as the NYSE will be the
only exchange trading market for such
companies and any investor wishing to
trade in such company’s securities in a
regulated exchange market will have to
do so on the NYSE.
The Exchange notes that a large
majority of the companies from outside
North America that list on the NYSE do
so in the form of American Depositary
Receipts (‘‘ADRs’’). Section 102.01B
currently includes a statement that, for
securities that trade in the format of
ADRs, volume in the ordinary shares
will be adjusted to be on an ADR-
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equivalent basis. It has also long been
the practice of the Exchange to adopt
this same approach to include holders
of ordinary shares on an ADRequivalent basis in calculating the
compliance of companies with the
stockholder requirements of Section
102.01A. The Exchange intends to
continue that practice in applying the
proposed amended form of Section
102.01B. The Exchange believes that
this approach is appropriate in light of
the speed and ease with which shares
can be deposited into an ADR facility to
create new ADRs (and withdrawn from
such ADR facility), which makes an
issuer’s ordinary shares essentially
fungible with its ADRs for trading
purposes. The Exchange notes that the
fact that some investors may hold shares
directly rather than in the form of ADRs
is especially unlikely to reduce liquidity
in the ADR market on the NYSE in cases
where there is no regulated exchange
market in the company’s home
jurisdiction to compete for liquidity and
trading volume.
2. Statutory Basis
The Exchange believes that the
proposed rule change is consistent with
Section 6(b) of the Act,9 in general, and
furthers the objectives of Section 6(b)(5)
of the Act,10 in particular, because it is
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 and because it is not
designed to permit unfair
discrimination between customers,
issuers, brokers, or dealers.
The Exchange believes that the
proposed rule change furthers the
objectives of Section 6(b)(5) in that it
will promote competition for the listing
of non-U.S. companies by ensuring that
the listing rules of the major listing
exchanges will function the same in
their consideration of stockholders
outside of North America for purposes
of initial listing requirements with
respect to the listing of companies from
outside North America when such
companies are listing in connection
with an initial public offering and are
not listed on any other regulated stock
exchange. In addition to these
9 15
U.S.C. 78f(b).
U.S.C. 78f(b)(5).
10 15
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competitive benefits, the Exchange
believes that the current rule reflects an
understanding of how the trading
market for non-U.S. companies
functions that is inconsistent with the
current reality. The current restrictions
have been in place for many years and
do not reflect the speed and reliability
of links that enable investors who hold
securities in brokerage accounts in
countries outside North America to
trade in the U.S. listing markets. Given
the ease of transfer of securities between
different countries in the contemporary
securities markets, there is no reason
why, in the case of a company from
outside North America that lists on the
NYSE in connection with an initial
public offering and that does not have
any other regulated exchange market,
the holders of such company’s securities
outside of North America cannot be
active real time participants in the
trading market in the United States and
that foreign holders should be viewed as
less valuable as a source of liquidity in
that market. As such, the Exchange
believes that the proposal is consistent
with the protection of investors as it
reflects appropriately the role played by
stockholders and trading activity by
stockholders located outside North
America in the development of a liquid
trading market in the United States in
the securities of non-U.S. listed
companies that do not have any
regulated exchange market other than
the NYSE.
The Exchange believes it is
appropriate to limit its proposed
amendment to companies from outside
North America listing in connection
with an initial public offering that do
not have any other regulated listing
market other than the NYSE, as the
absence of any alternative regulated
exchange market for investors in those
companies ensures that trading liquidity
in their securities is concentrated on the
NYSE market. The current rule does not
allow the Exchange to include
stockholders outside of North America
in determining compliance with the
stockholder distribution requirements of
Section 102.01A by a company from
outside North America that does not
have a regulated listing exchange market
outside North America, which makes it
more difficult for those companies to
meet the distribution requirements. By
contrast, the current rule text already
provides a more flexible approach to
meeting the stockholder distribution
requirements for companies that have a
regulated listing exchange in their home
markets, so the difficulty in meeting the
current requirements addressed by this
proposal is specific to companies where
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the NYSE is the company’s sole
regulated exchange market.
Consequently, the Exchange believes it
is not discriminatory to limit the scope
of the current proposal to companies
from outside North America that do not
have another regulated exchange
market, as the current rule already
provides a means for those companies
from outside North America that do
have another regulated exchange market
to include stockholders outside North
America when meeting the stockholder
distribution requirements.
B. Self-Regulatory Organization’s
Statement on Burden on Competition
The Exchange believes that the
proposal will not impose any burden on
competition that is not necessary or
appropriate in furtherance of the
purposes of Section 6(b)(8) of the Act.11
The Exchange believes that the
proposal will not impose a burden on
intermarket competition that is not
necessary or appropriate in furtherance
of the purposes of the Act because the
proposed rule change is designed to
increase the competition for listing of
non-U.S. companies by enabling the
Exchange to compete more effectively
with Nasdaq for the listing of companies
outside North America that are not
listed on any other regulated stock
exchange. The proposal ensures that the
Exchange’s treatment of stockholders
outside North America for purposes of
its stockholder requirements will be
substantively the same as Nasdaq’s
treatment of comparable issuers.
The Exchange believes it is
appropriate to limit its proposed
amendment to companies from outside
North America listing in connection
with an initial public offering that do
not have any other regulated listing
market other than the NYSE, as the
absence of any alternative regulated
exchange market for investors in those
companies ensures that trading liquidity
in their securities is concentrated on the
NYSE market. The current rule does not
allow the Exchange to include
stockholders outside of North America
in determining compliance with the
stockholder distribution requirements of
Section 102.01A by a company from
outside North America that does not
have a regulated listing exchange market
outside North America, which makes it
more difficult for those companies to
meet the distribution requirements. By
contrast, the current rule text already
provides a more flexible approach to
meeting the stockholder distribution
requirements for companies that have a
regulated listing exchange in their home
markets, so the difficulty in meeting the
current requirements addressed by this
proposal is specific to companies where
the NYSE is the company’s sole
regulated exchange market.
Consequently, the Exchange does not
believe that the proposed rule change
imposes a burden on intra-market
competition.
C. Self-Regulatory Organization’s
Statement on Comments on the
Proposed Rule Change Received From
Members, Participants, or Others
No written comments were solicited
or received with respect to the proposed
rule change.
III. Proceedings To Determine Whether
To Approve or Disapprove SR–NYSE–
2024–47, as Modified by Amendment
No. 1, and Grounds for Disapproval
Under Consideration
The Commission is instituting
proceedings pursuant to Section
19(b)(2)(B) of the Exchange Act 12 to
determine whether the proposed rule
change, as modified by Amendment No.
1, should be approved or disapproved.
Institution of proceedings is appropriate
at this time in view of the legal and
policy issues raised by the proposed
rule change, as discussed below.
Institution of proceedings does not
indicate that the Commission has
reached any conclusions with respect to
any of the issues involved.
Pursuant to Section 19(b)(2)(B) of the
Exchange Act,13 the Commission is
providing notice of the grounds for
disapproval under consideration. The
Commission is instituting proceedings
to allow for additional analysis of the
proposed rule change’s consistency with
the Exchange Act and, in particular,
with Section 6(b)(5) of the Exchange
Act, which requires, among other
things, that the rules of a national
securities exchange be designed to
prevent fraudulent and manipulative
acts and practices, to promote just and
equitable principles of trade, to remove
impediments to and perfect the
mechanism of a free and open market
and a national market system, and, in
general, to protect investors and the
public interest, and not be designed to
permit unfair discrimination between
customers, issuers, brokers, or dealers.14
The development and enforcement of
meaningful exchange listing standards
is of critical importance to financial
markets and the investing public.
Among other things, such listing
standards help ensure that exchange12 15
U.S.C. 78s(b)(2)(B).
13 Id.
11 15
U.S.C. 78f(b)(8).
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14 15
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101067
listed companies will have sufficient
public float, investor base, and trading
interest to provide the depth and
liquidity to promote fair and orderly
markets. Meaningful listing standards
also are important given investor
expectations regarding the nature of
securities that have achieved an
exchange listing, and the role of an
exchange in overseeing its market and
assuring compliance with its listing
standards.15
As discussed above, Section 102.01A
of the Manual sets forth the Exchange’s
distribution criteria for issuers seeking
to list under the Exchange’s initial
listing standards for the common equity
securities of domestic companies.16 The
Exchange also lists applicants that are
foreign private issuers 17 under Section
102.01 of the Manual where such
applicants are qualified to list
thereunder.18
Pursuant to Section 102.01A of the
Manual, an issuer (other than a
company listing in connection with a
transfer or quotation or upon exchange
of a common equity security for a listed
15 See, e.g., Securities Exchange Act Release Nos.
88716 (Apr. 21, 2020), 85 FR 23393 (Apr. 27, 2020)
(SR–NASDAQ–2020–001) (Order Approving a
Proposed Rule Change To Modify the Delisting
Process for Securities With a Bid Price at or Below
$0.10 and for Securities That Have Had One or
More Reverse Stock Splits With a Cumulative Ratio
of 250 Shares or More to One Over the Prior TwoYear Period); 88389 (Mar. 16, 2020), 85 FR 16163
(Mar. 20, 2020) (SR–NASDAQ–2019–089) (Notice of
Filing of Amendment No. 1 and Order Granting
Accelerated Approval of a Proposed Rule Change,
as Modified by Amendment No. 1, To Amend Rule
5815 To Preclude Stay During Hearing Panel
Review of Staff Delisting Determinations in Certain
Circumstances). See also Securities Exchange Act
Release No. 81856 (Oct. 11, 2017), 82 FR 48296,
48298 (Oct. 17, 2017) (SR–NYSE–2017–31) (Notice
of Filing of Amendment No. 1 and Order Granting
Accelerated Approval of a Proposed Rule Change,
as Modified by Amendment No. 1, To Amend the
Listed Company Manual To Adopt Initial and
Continued Listing Standards for Subscription
Receipts).
16 A company seeking to list under the Exchange’s
domestic company equity listing standards would
be required to meet additional minimum initial
listing requirements, including minimum aggregate
market value of publicly-held shares, minimum
closing price (or offering price) per share, and
minimum financial standards as set forth in Section
102.01 of the Manual.
17 ‘‘Foreign private issuer’’ and ‘‘non-U.S.
company’’ have the same meaning and are defined
in accordance with the Commission’s definition of
foreign private issuer set out in Rule 3b–4(c) of the
Exchange Act. See Section 103.00 of the Manual.
18 See Section 101.01 of the Manual. If a foreign
private issuer applicant does not meet all of the
requirements for the listing of common equity
securities applicable to domestic issuers under
Section 102.01 of the Manual, the Exchange will
consider whether the applicant qualifies for listing
under the quantitative listing standards for the
listing of equity securities of non-U.S. companies
set forth in Section 103.01 of the Manual. See id.
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Equity Investment Tracking Stock 19)
wishing to list an equity security must
have, among other things, at least 400
holders 20 of 100 shares or more (or of
a unit of trading if less than 100 shares)
and a minimum of 1,100,000 publicly
held shares.21 Section 102.01B of the
Manual includes an explanation of how
the distribution criteria set forth in
Section 102.01A of the Manual are
applied. Among other things, Section
102.01B of the Manual currently
provides that when listing a company
from outside North America (i.e.,
Canada, Mexico or the United States),
the Exchange may, in its discretion,
consider holders and trading volume in
the company’s home country or primary
trading market outside the United States
in applying the applicable distribution
listing standards under Section 102.01A
of the Manual, provided that such
market is a regulated stock exchange.
Section 102.01B of the Manual further
specifies that, in exercising this
discretion, the Exchange will consider
all relevant factors including: (i)
whether the information is derived from
a reliable source, preferably either a
government-regulated securities market
or a transfer agent that is subject to
governmental regulation; (ii) whether
there exist efficient mechanisms for the
transfer of securities between the
company’s non-U.S. trading market and
the United States; and (iii) the number
of shareholders and the extent of trading
in the company’s securities in the
United States prior to the listing.22
The Exchange proposes to amend its
domestic company equity listing
standards as set forth in Section 102.01B
19 An ‘‘Equity Investment Tracking Stock’’ is
defined in Section 102.07 of the Manual. The initial
listing requirements relating to a company listing in
connection with a transfer or quotation or upon
exchange of a common equity security for a listed
Equity Investment Tracking Stock remain
unchanged by the Exchange’s proposed rule change
because such companies would not be listing in
connection with an initial public offering. See
supra Section II.A.
20 The number of beneficial holders of stock held
in the name of Exchange member organizations will
be considered in addition to holders of record. The
Exchange will make any necessary check of such
holdings. See Section 102.01A(A) of the Manual.
21 If the unit of trading is less than 100 shares,
the requirements relating to number of publiclyheld shares shall be reduced proportionately.
Shares held by directors, officers, or their
immediate families and other concentrated holdings
of 10 percent or more are excluded in calculating
the number of publicly-held shares. See Section
102.01A(B) of the Manual.
22 Section 102.01B of the Manual provides that,
when considering a listing application from a
company organized under the laws of North
America, the Exchange will include all North
American holders and North American trading
volume in applying the minimum stockholder and
trading volume requirements of Section 102.01A.
The Exchange does not propose to amend this
provision.
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18:12 Dec 12, 2024
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to provide that when listing a company
from outside North America that is
listing in connection with its initial
public offering and is not listed on
another regulated stock exchange, the
Exchange will include all holders on a
global basis in applying the minimum
stockholder requirements set forth in
Section 102.01A. In connection with
this proposed change, the Exchange also
proposes to amend Section 102.01B to
add language to clarify that the current
rule text describing how the distribution
criteria set forth in Section 102.01A are
applied to companies from outside
North America would apply when
listing a company from outside North
America that is already listed on
another regulated stock exchange.23
The Commission has concerns about
whether the Exchange’s proposal is
designed to protect investors and the
public interest, as required by Section
6(b)(5) of the Exchange Act. The
Exchange’s proposal would loosen the
application of the minimum stockholder
requirements for the initial listing of
companies from outside North America
that are listing in connection with an
initial public offering and are not listed
on another regulated stock exchange,
where these companies are listing
pursuant to the listing standards
applicable to domestic companies’
equity securities. The Commission has
concerns about whether such
companies, if they qualify for initial
listing based on distribution criteria that
includes a significant number of holders
located outside of the United States,
would have sufficient public float,
investor base, and trading interest to
provide the depth and liquidity to
promote fair and orderly markets on the
Exchange.
The Exchange states that the current
rule ‘‘do[es] not reflect the speed and
reliability of links that enable investors
who hold securities in brokerage
accounts in countries outside North
America to trade in the U.S. listing
markets.’’ The Exchange further states
that ‘‘[g]iven the ease of transfer of
securities between countries in the
contemporary securities markets, there
is no reason why the holders of a listed
company’s securities outside of North
America cannot be active real time
23 Section 102.01B of the Manual provides that for
securities that trade in the form of ADRs, volume
in the ordinary shares will be adjusted to be on an
ADR-equivalent basis. The Exchange represents that
it has also long been the practice of the Exchange
to adopt this same approach to include holders of
ordinary shares on an ADR-equivalent basis in
calculating the compliance of companies with the
stockholder requirements of Section 102.01A and
that the Exchange intends to continue that practice
in applying the proposed amended form of Section
102.01B.
PO 00000
Frm 00120
Fmt 4703
Sfmt 4703
participants in the trading market in the
United States.’’ However, the Exchange
does not clearly explain or provide
evidence as to what efficient
mechanisms exist for the transfer of
securities held in brokerage accounts
outside of North America and whether
and how securities held in such
brokerage accounts would contribute to
the depth and liquidity of the domestic
market for a company’s shares.
As a result, the Commission believes
there are questions as to whether the
proposal, as modified by Amendment
No. 1, is consistent with Section 6(b)(5)
of the Exchange Act 24 and its
requirement, among other things, that
the rules of a national securities
exchange be designed to protect
investors and the public interest. For
this reason, it is appropriate to institute
proceedings pursuant to Section
19(b)(2)(B) of the Exchange Act 25 to
determine whether the proposal, as
modified by Amendment No. 1, should
be approved or disapproved.
IV. Procedure: Request for Written
Comments
The Commission requests that
interested persons provide written
submissions of their data, views, and
arguments with respect to the issues
identified above, as well as any other
concerns they may have with the
proposal, as modified by Amendment
No. 1. In particular, the Commission
invites the written views of interested
persons concerning whether the
proposed rule change is consistent with
Section 6(b)(5) of the Exchange Act 26 or
any other provision of the Exchange
Act, or the rules and regulations
thereunder. Although there do not
appear to be any issues relevant to
approval or disapproval that would be
facilitated by an oral presentation of
data, views, and arguments, the
Commission will consider, pursuant to
Rule 19b-4 under the Exchange Act,27
any request for an opportunity to make
an oral presentation.28
Interested persons are invited to
submit written data, views, and
arguments regarding whether the
24 15
U.S.C. 78f(b)(5).
U.S.C. 78s(b)(2)(B).
26 15 U.S.C. 78f(b)(5).
27 17 CFR 240.19b–4.
28 Section 19(b)(2) of the Exchange Act, as
amended by the Securities Acts Amendments of
1975, Public Law 94–29 (June 4, 1975), grants to the
Commission flexibility to determine what type of
proceeding—either oral or notice and opportunity
for written comments—is appropriate for
consideration of a particular proposal by a selfregulatory organization. See Securities Acts
Amendments of 1975, Senate Comm. on Banking,
Housing & Urban Affairs, S. Rep. No. 75, 94th
Cong., 1st Sess. 30 (1975).
25 15
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Federal Register / Vol. 89, No. 240 / Friday, December 13, 2024 / Notices
proposed rule change, as modified by
Amendment No. 1, should be approved
or disapproved by January 3, 2025. Any
person who wishes to file a rebuttal to
any other person’s submission must file
that rebuttal by January 17, 2025. The
Commission asks that commenters
address the sufficiency of the
Exchange’s statements in support of the
proposal, in addition to any other
comments they may wish to submit
about the proposed rule change.
Comments may be submitted by any of
the following methods:
Electronic Comments
• Use the Commission’s internet
comment form (https://www.sec.gov/
rules/sro.shtml); or
• Send an email to rule-comments@
sec.gov. Please include file number SR–
NYSE–2024–47 on the subject line.
khammond on DSK9W7S144PROD with 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–NYSE–2024–47. 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–NYSE–2024–47 and should be
submitted on or before January 3, 2025.
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18:12 Dec 12, 2024
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Rebuttal comments should be submitted
by January 17, 2025.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.29
Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2024–29334 Filed 12–12–24; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–101843; File No. SR–
SAPPHIRE–2024–39]
Self-Regulatory Organizations; MIAX
Sapphire, LLC; Notice of Filing and
Immediate Effectiveness of a Proposed
Rule Change To Establish Fees for the
Exchange’s Proprietary Market Data
Feeds: (i) MIAX Sapphire Top of Market
Data Feed; (ii) MIAX Sapphire Complex
Top of Market Data Feed; and (iii) MIAX
Sapphire Liquidity Feed
December 9, 2024.
Pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934
(‘‘Act’’),1 and Rule 19b–4 thereunder,2
notice is hereby given that on November
25, 2024, MIAX Sapphire, LLC (‘‘MIAX
Sapphire’’ or ‘‘Exchange’’) filed with the
Securities and Exchange Commission
(‘‘Commission’’) a proposed rule change
as described in Items I, II, and III below,
which Items have been prepared by the
Exchange. The Commission is
publishing this notice to solicit
comments on the proposed rule change
from interested persons.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The Exchange is filing a proposal to
amend the MIAX Sapphire Options
Exchange Fee Schedule (the ‘‘Fee
Schedule’’) to establish fees for the
Exchange’s proprietary market data
feeds: (i) MIAX Sapphire Top of Market
(‘‘ToM’’) data feed; (ii) MIAX Sapphire
Complex Top of Market (‘‘cToM’’) data
feed; and (iii) MIAX Sapphire Liquidity
Feed (‘‘SLF’’).
The text of the proposed rule change
is available on the Exchange’s website at
https://www.miaxglobal.com/markets/
us-options/all-options-exchanges/rulefilings, at MIAX Sapphire’s principal
office, and at the Commission’s Public
Reference Room.
29 17 CFR 200.30–3(a)(12); 17 CFR 200.30–
3(a)(57).
1 15 U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
PO 00000
Frm 00121
Fmt 4703
Sfmt 4703
101069
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
On July 19, 2024, the Exchange filed
a proposal to establish the ToM, cToM
and SLF data feeds (collectively, the
‘‘market data feeds’’) 3 for MIAX
Sapphire. The Exchange now proposes
to amend the Fee Schedule to establish
fees for each of these market data feeds.4
The Exchange also proposes to waive
such fees during an Initial Waiver
Period,5 which would run for six full
calendar months from the initial
effective date (August 12, 2024) of the
proposed fees to incentivize market
participants to subscribe and make the
Exchange’s proprietary market data
more widely available. The Exchange
initially filed this proposal on August 8,
2024 (SR–SAPPHIRE–2024–18).6 The
Exchange withdrew the Initial Proposal
on October 3, 2024 and resubmitted its
proposal (SR–SAPPHIRE–2024–31).7
The Exchange withdrew the Second
Proposal on November 25, 2024, and
resubmitted this proposal (SR–
SAPPHIRE–2024–39).
The ToM data feed contains top of
book quotations based on options
3 See Securities Exchange Act Release No. 100588
(July 25, 2024), 89 FR 61554 (July 31, 2024) (SR–
SAPPHIRE–2024–01).
4 The Exchange established the Definitions
section of the Fee Schedule in a separate rule filing.
See Securities Exchange Act Release No. 100683
(August 9, 2024), 89 FR 66467 (August 15, 2024)
(SR–SAPPHIRE–2024–13).
5 The term ‘‘Initial Waiver Period’’ means, for
each applicable fee, the period of time from the
initial effective date of the MIAX Sapphire Fee
Schedule plus an additional six (6) full calendar
months after the completion of the partial month of
the Exchange launch. See the Definitions section of
the Fee Schedule.
6 See Securities Exchange Act Release No. 100806
(August 22, 2024), 89 FR 68964 (August 28, 2024)
(SR–SAPPHIRE–2024–18) (the ‘‘Initial Proposal’’).
7 See Securities Exchange Act Release No. 101368
(October 17, 2024), 89 FR 84646 (October 23, 2024)
(SR–SAPPHIRE–2024–31) (the ‘‘Second Proposal’’).
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]]>Agencies
[Federal Register Volume 89, Number 240 (Friday, December 13, 2024)]
[Notices]
[Pages 101064-101069]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-29334]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-101844; File No. SR-NYSE-2024-47]
Self-Regulatory Organizations; New York Stock Exchange LLC;
Notice of Filing of Amendment No. 1 and Order Instituting Proceedings
To Determine Whether To Approve or Disapprove a Proposed Rule Change,
as Modified by Amendment No. 1, To Amend Section 102.01 of the NYSE
Listed Company Manual To Provide That the Stockholder Requirements Set
Forth Therein Will Be Calculated on a Worldwide Basis When Listing a
Company From Outside North America That Is Listing in Connection With
Its Initial Public Offering and Is Not Listed on Any Other Regulated
Stock Exchange
December 9, 2024.
On August 22, 2024, New York Stock Exchange LLC (``NYSE'' or
``Exchange'') filed with the Securities and Exchange Commission
(``Commission''), pursuant to Section 19(b)(1) of the Securities
Exchange Act of 1934 (``Exchange Act'') \1\ and Rule 19b-4
thereunder,\2\ a proposed rule change to amend Section 102.01 of the
NYSE Listed Company Manual (``Manual'') to provide that the
distribution standard therein would be calculated on a worldwide basis.
The proposed rule change was published for comment in the Federal
Register on September 10, 2024.\3\ The Commission has received no
comment letters on the proposed rule change.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
\3\ See Securities Exchange Act Release No. 100918 (September 4,
2024), 89 FR 73463 (September 10, 2024) (SR-NYSE-2024-47)
(``Notice'').
---------------------------------------------------------------------------
On October 22, 2024, pursuant to Section 19(b)(2) of the Exchange
Act,\4\ the Commission designated a longer period within which to
approve the proposed rule change, disapprove the proposed rule change,
or institute proceedings to determine whether to
[[Page 101065]]
disapprove the proposed rule change.\5\ On November 18, 2024, the
Exchange filed Amendment No. 1 to the proposed rule change as described
in Items I and II below, which Items have been prepared by the
Exchange. Amendment No. 1 amended and replaced the proposed rule change
as originally filed and superseded such filing in its entirety. The
Commission is publishing this notice and order to solicit comments on
the proposed rule change, as modified by Amendment No. 1, from
interested persons and to institute proceedings under Section
19(b)(2)(B) of the Exchange Act \6\ to determine whether to approve or
disapprove the proposed rule change, as modified by Amendment No. 1.
---------------------------------------------------------------------------
\4\ 15 U.S.C. 78s(b)(2).
\5\ See Securities Exchange Act Release No. 101402, 89 FR 85574
(Oct. 18, 2024). The Commission designated December 9, 2024, as the
date by which the Commission shall approve or disapprove, or
institute proceedings to determine whether to disapprove, the
proposed rule change.
\6\ 15 U.S.C. 78s(b)(2)(B).
---------------------------------------------------------------------------
I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Exchange proposes to amend Section 102.01 of the NYSE Listed
Company Manual to provide that the distribution standards therein will
be calculated on a worldwide basis when listing a company from outside
North America and such company (i) is listing in connection with its
initial public offering, and (ii) is not listed on any other regulated
stock exchange. This Amendment No. 1 supersedes the original filing in
its entirety. The changes to the original filing made in Amendment No.
1 are described in the Purpose section below. The proposed rule change
is available on the Exchange's website at www.nyse.com, at the
principal office of the Exchange, and at the Commission's Public
Reference Room.
II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
In its filing with the Commission, the self-regulatory organization
included statements concerning the purpose of, and basis for, the
proposed rule change and discussed any comments it received on the
proposed rule change. The text of those statements may be examined at
the places specified in Item IV below. The Exchange has prepared
summaries, set forth in sections A, B, and C below, of the most
significant parts of such statements.
A. Self-Regulatory Organization's Statement of the Purpose of, and the
Statutory Basis for, the Proposed Rule Change
1. Purpose
The NYSE previously submitted a rule filing proposing to amend
Section 102.01B to provide that the distribution standards in Section
102.01A will be calculated on a worldwide basis when listing a company
on the Exchange.\7\ The proposed rule change was published for comment
in the Federal Register on September 10, 2024.\8\ This Amendment No. 1
supersedes the original filing in its entirety.
---------------------------------------------------------------------------
\7\ See SR-NYSE-2024-47 (August 22, 2024).
\8\ See Securities Exchange Act Release No. 100918 (September 4,
2024), 89 FR 73463 (September 10, 2024) (SR-NYSE-2024-47).
---------------------------------------------------------------------------
Amendment No. 1 modifies the original proposal by providing that
the proposed amendment to Section 102.01B would solely provide that the
stockholder requirements set forth in Section 102.01A will be
calculated on a worldwide basis when listing a company from outside
North America and such company (i) is listing in connection with its
initial public offering and, (ii) is not listed on any other regulated
stock exchange. In addition, Amendment No. 1 proposes to amend Section
102.01B to clarify that the discretion to include stockholders and
trading volume from a company's home country or primary trading market
outside North America in applying the applicable requirements of
Section 102.01A is applicable only when the applicant issuer is listed
on another regulated stock exchange. This Amendment No. 1 supersedes
the original filing in its entirety.
Section 102.01A of the Manual sets forth the Exchange's minimum
initial listing requirements with respect to distribution for companies
seeking to list under the Exchange's ``domestic'' initial listing
standards. A note included in Section 102.01B (under the heading
``Calculations under the Distribution Criteria'') provides that, when
considering a listing application from a company organized under the
laws of Canada, Mexico or the United States (``North America''), the
Exchange will include all North American holders and North American
trading volume in applying the minimum stockholder and trading volume
requirements of Section 102.01A.
Notwithstanding the foregoing, the note included in Section 102.01B
also provides that, in connection with the listing of any issuer from
outside North America, the Exchange will have the discretion, but will
not be required, to consider holders and trading volume in the
company's home country market or primary trading market outside the
United States in determining whether a company is qualified for listing
under Section 102.01, provided such market is a regulated stock
exchange. The note specifies that, in exercising this discretion, the
Exchange would consider all relevant factors including: (i) whether the
information was derived from a reliable source, preferably either a
regulated securities market or a transfer agent that was subject to
governmental regulation; (ii) whether there existed efficient
mechanisms for the transfer of securities between the company's non-
U.S. trading market and the United States; and (iii) the number of
stockholders and the extent of trading in the company's securities in
the United States prior to the listing.
The Exchange proposes to amend the note in Section 102.01B under
the heading ``Calculations under the Distribution Criteria'' to provide
that, when considering a listing application from a company from
outside North America when such company is listing in connection with
its initial public offering and is not listed on any other regulated
stock exchange, the Exchange will include all holders on a global basis
in applying the minimum stockholder requirements of Section 102.01A.
The Exchange notes that the trading volume provisions of Section
102.01A are not relevant to the listing of a company from outside North
America when such company is listing in connection with its initial
public offering and is not listed on any other regulated stock
exchange, as the trading volume requirements are only applicable in the
case of a quotation listing or transfer or upon exchange of a common
equity security for a listed Equity Investment Tracking Stock and not
in the case of an initial public offering. In addition, the Exchange
proposes to amend the existing text of Section 102.01B to clarify that
the discretion to include stockholders and trading volume from a
company's home country or primary trading market outside North America
in applying the applicable requirements of Section 102.01A is
applicable only when the applicant issuer is listed on another
regulated stock exchange.
It has been the Exchange's experience in recent years that non-U.S.
companies conducting their initial public offerings in the United
States will often seek to sell a significant portion of the offering in
the company's home market rather than in the United States. Such
companies and their underwriters have sometimes had difficulty placing
shares
[[Page 101066]]
with a sufficient number of investors in North America to meet the
Exchange's domestic distribution standards and, in some instances,
companies have been unable to list on the Exchange because of the
restrictions imposed by the current NYSE rule. In some cases, this
means that these companies are lost to the U.S. capital markets, but in
other cases these companies are able to list on the Nasdaq Stock Market
(``Nasdaq''), as the text of Nasdaq's distribution requirements (as set
forth in Nasdaq Stock Market Rule 5315(f)) do not include the type of
restriction to North America set forth in Section 102.01. The Exchange
believes that the proposed rule change will enable it to compete more
effectively for the listing of non-U.S. companies, as the rule change
would remove a significant competitive disadvantage faced by the
Exchange in competing with Nasdaq for the listing of companies from
outside North America that are listing in connection with an initial
public offering and are not listed on any other regulated stock
exchange.
In addition to the competitive benefits described above, the
Exchange believes that the current rule reflects an understanding of
the functioning of the trading market for non-U.S. companies that is
inconsistent with the current reality. The current restrictions have
been in place for many years and do not reflect the speed and
reliability of links that enable investors who hold securities in
brokerage accounts in countries outside North America to trade in the
U.S. listing markets. Given the ease of transfer of securities between
different countries in the contemporary securities markets, there is no
reason why the holders of a listed company's securities outside of
North America cannot be active real time participants in the trading
market in the United States and that foreign holders should be viewed
as less valuable as a source of liquidity in that market. The Exchange
notes that this is particularly relevant to the listing of a foreign
company listed on the NYSE when it does not have an exchange listing in
its home market, as the NYSE will be the only exchange trading market
for such companies and any investor wishing to trade in such company's
securities in a regulated exchange market will have to do so on the
NYSE.
The Exchange notes that a large majority of the companies from
outside North America that list on the NYSE do so in the form of
American Depositary Receipts (``ADRs''). Section 102.01B currently
includes a statement that, for securities that trade in the format of
ADRs, volume in the ordinary shares will be adjusted to be on an ADR-
equivalent basis. It has also long been the practice of the Exchange to
adopt this same approach to include holders of ordinary shares on an
ADR-equivalent basis in calculating the compliance of companies with
the stockholder requirements of Section 102.01A. The Exchange intends
to continue that practice in applying the proposed amended form of
Section 102.01B. The Exchange believes that this approach is
appropriate in light of the speed and ease with which shares can be
deposited into an ADR facility to create new ADRs (and withdrawn from
such ADR facility), which makes an issuer's ordinary shares essentially
fungible with its ADRs for trading purposes. The Exchange notes that
the fact that some investors may hold shares directly rather than in
the form of ADRs is especially unlikely to reduce liquidity in the ADR
market on the NYSE in cases where there is no regulated exchange market
in the company's home jurisdiction to compete for liquidity and trading
volume.
2. Statutory Basis
The Exchange believes that the proposed rule change is consistent
with Section 6(b) of the Act,\9\ in general, and furthers the
objectives of Section 6(b)(5) of the Act,\10\ in particular, because it
is 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
and because it is not designed to permit unfair discrimination between
customers, issuers, brokers, or dealers.
---------------------------------------------------------------------------
\9\ 15 U.S.C. 78f(b).
\10\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------
The Exchange believes that the proposed rule change furthers the
objectives of Section 6(b)(5) in that it will promote competition for
the listing of non-U.S. companies by ensuring that the listing rules of
the major listing exchanges will function the same in their
consideration of stockholders outside of North America for purposes of
initial listing requirements with respect to the listing of companies
from outside North America when such companies are listing in
connection with an initial public offering and are not listed on any
other regulated stock exchange. In addition to these competitive
benefits, the Exchange believes that the current rule reflects an
understanding of how the trading market for non-U.S. companies
functions that is inconsistent with the current reality. The current
restrictions have been in place for many years and do not reflect the
speed and reliability of links that enable investors who hold
securities in brokerage accounts in countries outside North America to
trade in the U.S. listing markets. Given the ease of transfer of
securities between different countries in the contemporary securities
markets, there is no reason why, in the case of a company from outside
North America that lists on the NYSE in connection with an initial
public offering and that does not have any other regulated exchange
market, the holders of such company's securities outside of North
America cannot be active real time participants in the trading market
in the United States and that foreign holders should be viewed as less
valuable as a source of liquidity in that market. As such, the Exchange
believes that the proposal is consistent with the protection of
investors as it reflects appropriately the role played by stockholders
and trading activity by stockholders located outside North America in
the development of a liquid trading market in the United States in the
securities of non-U.S. listed companies that do not have any regulated
exchange market other than the NYSE.
The Exchange believes it is appropriate to limit its proposed
amendment to companies from outside North America listing in connection
with an initial public offering that do not have any other regulated
listing market other than the NYSE, as the absence of any alternative
regulated exchange market for investors in those companies ensures that
trading liquidity in their securities is concentrated on the NYSE
market. The current rule does not allow the Exchange to include
stockholders outside of North America in determining compliance with
the stockholder distribution requirements of Section 102.01A by a
company from outside North America that does not have a regulated
listing exchange market outside North America, which makes it more
difficult for those companies to meet the distribution requirements. By
contrast, the current rule text already provides a more flexible
approach to meeting the stockholder distribution requirements for
companies that have a regulated listing exchange in their home markets,
so the difficulty in meeting the current requirements addressed by this
proposal is specific to companies where
[[Page 101067]]
the NYSE is the company's sole regulated exchange market. Consequently,
the Exchange believes it is not discriminatory to limit the scope of
the current proposal to companies from outside North America that do
not have another regulated exchange market, as the current rule already
provides a means for those companies from outside North America that do
have another regulated exchange market to include stockholders outside
North America when meeting the stockholder distribution requirements.
B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange believes that the proposal will not impose any burden
on competition that is not necessary or appropriate in furtherance of
the purposes of Section 6(b)(8) of the Act.\11\
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\11\ 15 U.S.C. 78f(b)(8).
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The Exchange believes that the proposal will not impose a burden on
intermarket competition that is not necessary or appropriate in
furtherance of the purposes of the Act because the proposed rule change
is designed to increase the competition for listing of non-U.S.
companies by enabling the Exchange to compete more effectively with
Nasdaq for the listing of companies outside North America that are not
listed on any other regulated stock exchange. The proposal ensures that
the Exchange's treatment of stockholders outside North America for
purposes of its stockholder requirements will be substantively the same
as Nasdaq's treatment of comparable issuers.
The Exchange believes it is appropriate to limit its proposed
amendment to companies from outside North America listing in connection
with an initial public offering that do not have any other regulated
listing market other than the NYSE, as the absence of any alternative
regulated exchange market for investors in those companies ensures that
trading liquidity in their securities is concentrated on the NYSE
market. The current rule does not allow the Exchange to include
stockholders outside of North America in determining compliance with
the stockholder distribution requirements of Section 102.01A by a
company from outside North America that does not have a regulated
listing exchange market outside North America, which makes it more
difficult for those companies to meet the distribution requirements. By
contrast, the current rule text already provides a more flexible
approach to meeting the stockholder distribution requirements for
companies that have a regulated listing exchange in their home markets,
so the difficulty in meeting the current requirements addressed by this
proposal is specific to companies where the NYSE is the company's sole
regulated exchange market. Consequently, the Exchange does not believe
that the proposed rule change imposes a burden on intra-market
competition.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others
No written comments were solicited or received with respect to the
proposed rule change.
III. Proceedings To Determine Whether To Approve or Disapprove SR-NYSE-
2024-47, as Modified by Amendment No. 1, and Grounds for Disapproval
Under Consideration
The Commission is instituting proceedings pursuant to Section
19(b)(2)(B) of the Exchange Act \12\ to determine whether the proposed
rule change, as modified by Amendment No. 1, should be approved or
disapproved. Institution of proceedings is appropriate at this time in
view of the legal and policy issues raised by the proposed rule change,
as discussed below. Institution of proceedings does not indicate that
the Commission has reached any conclusions with respect to any of the
issues involved.
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\12\ 15 U.S.C. 78s(b)(2)(B).
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Pursuant to Section 19(b)(2)(B) of the Exchange Act,\13\ the
Commission is providing notice of the grounds for disapproval under
consideration. The Commission is instituting proceedings to allow for
additional analysis of the proposed rule change's consistency with the
Exchange Act and, in particular, with Section 6(b)(5) of the Exchange
Act, which requires, among other things, that the rules of a national
securities exchange be designed to prevent fraudulent and manipulative
acts and practices, to promote just and equitable principles of trade,
to remove impediments to and perfect the mechanism of a free and open
market and a national market system, and, in general, to protect
investors and the public interest, and not be designed to permit unfair
discrimination between customers, issuers, brokers, or dealers.\14\
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\13\ Id.
\14\ 15 U.S.C. 78f(b)(5).
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The development and enforcement of meaningful exchange listing
standards is of critical importance to financial markets and the
investing public. Among other things, such listing standards help
ensure that exchange-listed companies will have sufficient public
float, investor base, and trading interest to provide the depth and
liquidity to promote fair and orderly markets. Meaningful listing
standards also are important given investor expectations regarding the
nature of securities that have achieved an exchange listing, and the
role of an exchange in overseeing its market and assuring compliance
with its listing standards.\15\
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\15\ See, e.g., Securities Exchange Act Release Nos. 88716 (Apr.
21, 2020), 85 FR 23393 (Apr. 27, 2020) (SR-NASDAQ-2020-001) (Order
Approving a Proposed Rule Change To Modify the Delisting Process for
Securities With a Bid Price at or Below $0.10 and for Securities
That Have Had One or More Reverse Stock Splits With a Cumulative
Ratio of 250 Shares or More to One Over the Prior Two-Year Period);
88389 (Mar. 16, 2020), 85 FR 16163 (Mar. 20, 2020) (SR-NASDAQ-2019-
089) (Notice of Filing of Amendment No. 1 and Order Granting
Accelerated Approval of a Proposed Rule Change, as Modified by
Amendment No. 1, To Amend Rule 5815 To Preclude Stay During Hearing
Panel Review of Staff Delisting Determinations in Certain
Circumstances). See also Securities Exchange Act Release No. 81856
(Oct. 11, 2017), 82 FR 48296, 48298 (Oct. 17, 2017) (SR-NYSE-2017-
31) (Notice of Filing of Amendment No. 1 and Order Granting
Accelerated Approval of a Proposed Rule Change, as Modified by
Amendment No. 1, To Amend the Listed Company Manual To Adopt Initial
and Continued Listing Standards for Subscription Receipts).
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As discussed above, Section 102.01A of the Manual sets forth the
Exchange's distribution criteria for issuers seeking to list under the
Exchange's initial listing standards for the common equity securities
of domestic companies.\16\ The Exchange also lists applicants that are
foreign private issuers \17\ under Section 102.01 of the Manual where
such applicants are qualified to list thereunder.\18\
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\16\ A company seeking to list under the Exchange's domestic
company equity listing standards would be required to meet
additional minimum initial listing requirements, including minimum
aggregate market value of publicly-held shares, minimum closing
price (or offering price) per share, and minimum financial standards
as set forth in Section 102.01 of the Manual.
\17\ ``Foreign private issuer'' and ``non-U.S. company'' have
the same meaning and are defined in accordance with the Commission's
definition of foreign private issuer set out in Rule 3b-4(c) of the
Exchange Act. See Section 103.00 of the Manual.
\18\ See Section 101.01 of the Manual. If a foreign private
issuer applicant does not meet all of the requirements for the
listing of common equity securities applicable to domestic issuers
under Section 102.01 of the Manual, the Exchange will consider
whether the applicant qualifies for listing under the quantitative
listing standards for the listing of equity securities of non-U.S.
companies set forth in Section 103.01 of the Manual. See id.
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Pursuant to Section 102.01A of the Manual, an issuer (other than a
company listing in connection with a transfer or quotation or upon
exchange of a common equity security for a listed
[[Page 101068]]
Equity Investment Tracking Stock \19\) wishing to list an equity
security must have, among other things, at least 400 holders \20\ of
100 shares or more (or of a unit of trading if less than 100 shares)
and a minimum of 1,100,000 publicly held shares.\21\ Section 102.01B of
the Manual includes an explanation of how the distribution criteria set
forth in Section 102.01A of the Manual are applied. Among other things,
Section 102.01B of the Manual currently provides that when listing a
company from outside North America (i.e., Canada, Mexico or the United
States), the Exchange may, in its discretion, consider holders and
trading volume in the company's home country or primary trading market
outside the United States in applying the applicable distribution
listing standards under Section 102.01A of the Manual, provided that
such market is a regulated stock exchange. Section 102.01B of the
Manual further specifies that, in exercising this discretion, the
Exchange will consider all relevant factors including: (i) whether the
information is derived from a reliable source, preferably either a
government-regulated securities market or a transfer agent that is
subject to governmental regulation; (ii) whether there exist efficient
mechanisms for the transfer of securities between the company's non-
U.S. trading market and the United States; and (iii) the number of
shareholders and the extent of trading in the company's securities in
the United States prior to the listing.\22\
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\19\ An ``Equity Investment Tracking Stock'' is defined in
Section 102.07 of the Manual. The initial listing requirements
relating to a company listing in connection with a transfer or
quotation or upon exchange of a common equity security for a listed
Equity Investment Tracking Stock remain unchanged by the Exchange's
proposed rule change because such companies would not be listing in
connection with an initial public offering. See supra Section II.A.
\20\ The number of beneficial holders of stock held in the name
of Exchange member organizations will be considered in addition to
holders of record. The Exchange will make any necessary check of
such holdings. See Section 102.01A(A) of the Manual.
\21\ If the unit of trading is less than 100 shares, the
requirements relating to number of publicly-held shares shall be
reduced proportionately. Shares held by directors, officers, or
their immediate families and other concentrated holdings of 10
percent or more are excluded in calculating the number of publicly-
held shares. See Section 102.01A(B) of the Manual.
\22\ Section 102.01B of the Manual provides that, when
considering a listing application from a company organized under the
laws of North America, the Exchange will include all North American
holders and North American trading volume in applying the minimum
stockholder and trading volume requirements of Section 102.01A. The
Exchange does not propose to amend this provision.
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The Exchange proposes to amend its domestic company equity listing
standards as set forth in Section 102.01B to provide that when listing
a company from outside North America that is listing in connection with
its initial public offering and is not listed on another regulated
stock exchange, the Exchange will include all holders on a global basis
in applying the minimum stockholder requirements set forth in Section
102.01A. In connection with this proposed change, the Exchange also
proposes to amend Section 102.01B to add language to clarify that the
current rule text describing how the distribution criteria set forth in
Section 102.01A are applied to companies from outside North America
would apply when listing a company from outside North America that is
already listed on another regulated stock exchange.\23\
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\23\ Section 102.01B of the Manual provides that for securities
that trade in the form of ADRs, volume in the ordinary shares will
be adjusted to be on an ADR-equivalent basis. The Exchange
represents that it has also long been the practice of the Exchange
to adopt this same approach to include holders of ordinary shares on
an ADR-equivalent basis in calculating the compliance of companies
with the stockholder requirements of Section 102.01A and that the
Exchange intends to continue that practice in applying the proposed
amended form of Section 102.01B.
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The Commission has concerns about whether the Exchange's proposal
is designed to protect investors and the public interest, as required
by Section 6(b)(5) of the Exchange Act. The Exchange's proposal would
loosen the application of the minimum stockholder requirements for the
initial listing of companies from outside North America that are
listing in connection with an initial public offering and are not
listed on another regulated stock exchange, where these companies are
listing pursuant to the listing standards applicable to domestic
companies' equity securities. The Commission has concerns about whether
such companies, if they qualify for initial listing based on
distribution criteria that includes a significant number of holders
located outside of the United States, would have sufficient public
float, investor base, and trading interest to provide the depth and
liquidity to promote fair and orderly markets on the Exchange.
The Exchange states that the current rule ``do[es] not reflect the
speed and reliability of links that enable investors who hold
securities in brokerage accounts in countries outside North America to
trade in the U.S. listing markets.'' The Exchange further states that
``[g]iven the ease of transfer of securities between countries in the
contemporary securities markets, there is no reason why the holders of
a listed company's securities outside of North America cannot be active
real time participants in the trading market in the United States.''
However, the Exchange does not clearly explain or provide evidence as
to what efficient mechanisms exist for the transfer of securities held
in brokerage accounts outside of North America and whether and how
securities held in such brokerage accounts would contribute to the
depth and liquidity of the domestic market for a company's shares.
As a result, the Commission believes there are questions as to
whether the proposal, as modified by Amendment No. 1, is consistent
with Section 6(b)(5) of the Exchange Act \24\ and its requirement,
among other things, that the rules of a national securities exchange be
designed to protect investors and the public interest. For this reason,
it is appropriate to institute proceedings pursuant to Section
19(b)(2)(B) of the Exchange Act \25\ to determine whether the proposal,
as modified by Amendment No. 1, should be approved or disapproved.
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\24\ 15 U.S.C. 78f(b)(5).
\25\ 15 U.S.C. 78s(b)(2)(B).
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IV. Procedure: Request for Written Comments
The Commission requests that interested persons provide written
submissions of their data, views, and arguments with respect to the
issues identified above, as well as any other concerns they may have
with the proposal, as modified by Amendment No. 1. In particular, the
Commission invites the written views of interested persons concerning
whether the proposed rule change is consistent with Section 6(b)(5) of
the Exchange Act \26\ or any other provision of the Exchange Act, or
the rules and regulations thereunder. Although there do not appear to
be any issues relevant to approval or disapproval that would be
facilitated by an oral presentation of data, views, and arguments, the
Commission will consider, pursuant to Rule 19b-4 under the Exchange
Act,\27\ any request for an opportunity to make an oral
presentation.\28\
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\26\ 15 U.S.C. 78f(b)(5).
\27\ 17 CFR 240.19b-4.
\28\ Section 19(b)(2) of the Exchange Act, as amended by the
Securities Acts Amendments of 1975, Public Law 94-29 (June 4, 1975),
grants to the Commission flexibility to determine what type of
proceeding--either oral or notice and opportunity for written
comments--is appropriate for consideration of a particular proposal
by a self-regulatory organization. See Securities Acts Amendments of
1975, Senate Comm. on Banking, Housing & Urban Affairs, S. Rep. No.
75, 94th Cong., 1st Sess. 30 (1975).
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Interested persons are invited to submit written data, views, and
arguments regarding whether the
[[Page 101069]]
proposed rule change, as modified by Amendment No. 1, should be
approved or disapproved by January 3, 2025. Any person who wishes to
file a rebuttal to any other person's submission must file that
rebuttal by January 17, 2025. The Commission asks that commenters
address the sufficiency of the Exchange's statements in support of the
proposal, in addition to any other comments they may wish to submit
about the proposed rule change. Comments may be submitted by any of the
following methods:
Electronic Comments
Use the Commission's internet comment form (https://www.sec.gov/rules/sro.shtml); or
Send an email to [email protected]. Please include
file number SR-NYSE-2024-47 on the subject line.
Paper Comments
Send paper comments in triplicate to Secretary, Securities
and Exchange Commission, 100 F Street NE, Washington, DC 20549-1090.
All submissions should refer to file number SR-NYSE-2024-47. 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-NYSE-2024-47 and should be
submitted on or before January 3, 2025. Rebuttal comments should be
submitted by January 17, 2025.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\29\
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\29\ 17 CFR 200.30-3(a)(12); 17 CFR 200.30-3(a)(57).
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Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2024-29334 Filed 12-12-24; 8:45 am]
BILLING CODE 8011-01-P
