[Federal Register Volume 77, Number 247 (Wednesday, December 26, 2012)]
[Notices]
[Pages 76116-76119]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2012-30979]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-68470; File No. SR-NYSE-2012-68]
Self-Regulatory Organizations; New York Stock Exchange LLC;
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To
Amend Sections 902.02 and 902.03 of the New York Stock Exchange LLC
Listed Company Manual To Introduce an Initial Application Fee
December 19, 2012.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(the ``Act'') \1\ and Rule 19b-4 thereunder,2 notice is hereby given
that on December 6, 2012, New York Stock Exchange LLC (``NYSE'' or
``Exchange'') filed with the Securities and Exchange Commission
(``Commission'') the proposed rule change as described in Items I, II,
and III below, which Items have been prepared by the self-regulatory
organization. The Commission is publishing this notice to solicit
comments on the proposed rule change from interested persons.
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\1\ 15 U.S.C.78s(b)(1).
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Exchange proposes to amend Sections 902.02 and 902.03 of its
Listed Company Manual to introduce an Initial Application Fee. The
Exchange proposes to immediately reflect the proposed changes in the
Listed Company Manual, but not to implement the proposed changes until
January 1, 2013. The text of the proposed rule change is available on
the Exchange's Web site 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
Statutory Basis for, the Proposed Rule Change
1. Purpose
The Exchange proposes to amend Sections 902.02 and 902.03 of its
Listed Company Manual to introduce an Initial Application Fee. The
Exchange proposes to immediately reflect the proposed changes in the
Listed Company Manual, but not to implement the proposed changes until
January 1, 2013.\3\
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\3\ The Exchange has proposed changes to the Listed Company
Manual, as reflected in the Exhibit 5 attached hereto, in a manner
that would permit readers of the Listed Company Manual to identify
the changes that would be implemented on January 1, 2013. The
Commission notes that the Exhibit 5 referenced in the previous
sentence is attached to the filing, not to this Notice.
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The Exchange proposes to introduce an Initial Application Fee of
$25,000 within Section 902.03 of the Listed Company Manual, which would
be effective January 1, 2013.\4\ An issuer would be required to pay an
Initial Application Fee if it applied to list an equity security on the
Exchange, except that an issuer:
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\4\ The Exchange also proposes to include references to the
Initial Application Fee in Section 902.02, where necessary and
appropriate. Additionally, the Exchange proposes to amend certain
text of Section 902.03 to account for the proposed inclusion of the
Initial Application Fee therein. The Exchange also proposes to amend
the text describing the implementation of Section 902.03 to reflect
that the reference to the proposed rule change that implemented the
text therein added the original text, not the text in its current
form.
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(i) Applying to list within 36 months following emergence from
bankruptcy and that has not had a security listed on a national
securities exchange during such period;
(ii) relisting a class of stock that is registered under the
Securities Exchange Act of 1934 (the ``Act'') that was delisted from a
national securities exchange and only if such delisting was:
(a) Within the previous 12 calendar months; and
(b) due to the issuer's failure to file a required periodic
financial report with the Commission or other appropriate regulatory
authority; or
(iii) transferring the listing of any class of equity securities
from any other national securities exchange
would not be required to pay an Initial Application Fee in connection
with its application for listing such equity security.
Accordingly, issuers for whom the Initial Application Fee waivers
would be applicable would generally be the same as the issuers for whom
Listing Fees would be waived, as provided in Section 902.02 of the
Listed Company Manual.\5\
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\5\ See Securities Exchange Act Release No. 68017 (October 9,
2012), 77 FR 63404 (October 16, 2012) (SR-NYSE-2012-47). The Initial
Application fee would only apply with respect to the listing of
equity securities. Listing Fees are not limited in this respect.
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As with the Listing Fee waivers, none of the Initial Application
Fee waivers would be applicable to the listing of any class of
securities if the issuer's primary class of common stock remains listed
on another national securities exchange. The Initial Application Fee
would be non-refundable.
An issuer applying to list an equity security on the Exchange is
subject to a preliminary confidential review by NYSE Regulation, Inc.
(``NYSER'') in which NYSER determines the issuer's qualification for
listing. As set forth in Section 702.02 of the Listed Company Manual,
if NYSER determines in connection with this preliminary confidential
review that the issuer is qualified for listing, the issuer is informed
that it has been cleared as eligible to list and that the Exchange will
accept a formal Original Listing Application from the Issuer. It is the
Exchange's practice to notify the issuer of its eligibility clearance
and the conditions to its listing by means of a letter (the ``pre-
clearance'' letter).
For an issuer subject to the Initial Application Fee, its payment
would be a prior condition to eligibility clearance being granted. As a
practical matter, the Exchange anticipates that an issuer would pay the
Initial Application Fee after NYSER has completed its preliminary
confidential review and has determined that the issuer is eligible to
submit a formal Original Listing Application, but before the ``pre-
clearance'' letter has been issued. Typically, the Exchange is in
contact with an issuer prior to the issuance of a ``pre-clearance''
letter and provides oral confirmation of the issuer's
[[Page 76117]]
eligibility clearance prior to the issuance of the ``pre-clearance''
letter.
The Initial Application Fee would be applied towards the applicable
Listing Fees for an issuer that lists on the Exchange. If an issuer
paid an Initial Application Fee in connection with the application to
list an equity security but did not immediately list such security, the
Issuer would not be required to pay a subsequent Initial Application
Fee if it later listed such security so long as (i) the issuer had a
registration statement regarding such security on file with the
Commission, or, (ii) if the issuer withdrew its registration statement,
the issuer refiled a registration statement regarding such security
within 12 months of the date of such withdrawal. The Exchange is
proposing the Initial Application Fee because it would allow the
Exchange to recover, in part, the costs associated with processing and
evaluating an issuer's application, irrespective of whether the
relevant issuance qualifies for listing or whether such issuer decides
to list on the Exchange. In addition, the Initial Application Fee would
provide a disincentive for impractical applications by issuers. The
proposed change is not otherwise intended to address any other matter,
and the Exchange is not aware of any significant problem that issuers
would have in complying with the proposed change.
2. Statutory Basis
The Exchange believes that the proposed rule change is consistent
with Section 6(b) of the Act,\6\ in general, and furthers the
objectives of Section 6(b)(4) and Section 6(b)(5) of the Act,\7\ in
particular, because it provides for the equitable allocation of
reasonable dues, fees, and other charges among its members, issuers and
other persons using its facilities and does not unfairly discriminate
between customers, issuers, brokers, or dealers.
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\6\ 15 U.S.C. 78f(b).
\7\ 15 U.S.C. 78f(b)(4) and 15 U.S.C. 78f(b)(5).
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The Exchange believes that the proposed Initial Application Fee of
$25,000 is reasonable because it would allow the Exchange to recover,
in part, the costs associated with processing and evaluating an
issuer's application, irrespective of whether the relevant issuance
qualifies for listing or whether such issuer decides to list on the
Exchange. In this regard, the Exchange believes that the Initial
Application Fee of $25,000 is reasonably related to the amount of time,
resources and cost associated with the Exchange's review of an initial
application for listing an equity security.\8\ Furthermore, the
Exchange believes that the Initial Application Fee is reasonable
because it would provide a disincentive for impractical applications by
issuers.
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\8\ The Exchange notes that NASDAQ also charges a non-refundable
$25,000 application fee to issuers on The NASDAQ Global Market. See
NASDAQ Rule 5910. See also Securities Exchange Act Release No. 61669
(March 5, 2010), 75 FR 11958 (March 12, 2010) (SR-NASDAQ-2009-081).
NASDAQ also charges a non-refundable $5,000 application fee to
issuers on The NASDAQ Capital Market. See NASDAQ Rule 5920. See also
Securities Exchange Act Release No. 59663 (March 31, 2009), 74 FR
15552 (April 6, 2009) (SR-NASDAQ-2009-018).
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The Exchange believes that the Initial Application Fee is equitable
and not unfairly discriminatory because it would be charged to all
issuers that apply for listing an equity security on the Exchange,
except, as proposed, those issuers that qualify for a waiver. In this
regard, the Exchange believes that it is equitable and not unfairly
discriminatory to charge an Initial Application Fee to issuers that
apply to list an equity security, but not to issuers of other types of
securities (e.g., closed-end funds or structured products).
Specifically, while the Exchange conducts a comprehensive and thorough
review of every listing application it receives, regardless of security
type or issuer, the Exchange believes that its costs associated with
processing and evaluating an issuer's application to list an equity
security on the Exchange are generally significantly higher than the
costs associated with other types of securities, such that it is
equitable and not unfairly discriminatory to charge the Initial
Application Fee only to issuers of equity securities. In this regard,
the Exchange notes that the review that is required to be performed
with respect to an issuer of an equity security is more extensive than
that required for the review of, for example, an issuer of a closed-end
fund.
The Exchange believes that it is reasonable to waive the Initial
Application Fee for an issuer that applies to list within 36 months
following emergence from bankruptcy, so long as such issuer has not had
a security listed on a national securities exchange during such period,
because this will incentivize such issuer to list its security on the
Exchange, which will result in increased transparency and liquidity
with respect to the issuer's security, thereby benefiting investors. In
this regard, the Exchange notes that the issuer, like all other listing
applicants, would be required to satisfy the Exchange's listings
standards as well as the other governance requirements and standards
that the Exchange requires of issuers listed on the Exchange.
Accordingly, the Exchange believes that it is in the public's interest,
and the interest of the issuer, to provide an opportunity for the
increased transparency and liquidity that is attendant with listing on
the Exchange, and therefore that it is reasonable to waive the Initial
Application Fees for such issuers. The Exchange believes that the
number of additional issuers that will qualify for this waiver, as
proposed, will be limited. The Exchange also believes that limiting the
waiver period to 36 months following emergence from bankruptcy is
reasonable because, in the Exchange's opinion, it is a period of time
that is sufficient for the issuer to meet the Exchange's qualifications
for listing.
The Exchange also believes that it is reasonable to limit the
waiver to issuers that have emerged from bankruptcy but have not yet
had a security listed on a national securities exchange during such
period because if an issuer has already listed its security post-
emergence, it has already exposed itself to the requirements and
transparency associated with listing on a national securities exchange,
which is what the Exchange is incentivizing by waiving the Initial
Application Fees. The Exchange also believes that this is equitable and
not unfairly discriminatory because the goal of the waiver is to
incentivize listing, and the transparency and public benefits (e.g.,
increased liquidity) that are attendant therewith. Accordingly, these
goals would already be achieved for an issuer that has already listed
on another national securities exchange post-emergence, and to waive
the Initial Application Fee would therefore be inconsistent with the
waiver's purpose.
The Exchange also believes that it is reasonable to provide a
waiver of the Initial Application Fee to an issuer listing a class of
stock that is registered under the Act that was delisted from a
national securities exchange if such delisting was (a) within the
previous 12 calendar months, and (b) due to the issuer's failure to
file a required periodic financial report with the Commission or other
appropriate regulatory authority. The Exchange anticipates that these
will be companies that were otherwise in compliance with the
quantitative listing standards of the Exchange or another national
securities exchange, but that fell behind on their Act reporting
because their auditors or the Commission required restatements of their
financial statements and that these companies will relist on the
Exchange (or another national securities exchange) as soon as their
filings are up to date. The Exchange believes that it
[[Page 76118]]
would be appropriate to waive Initial Application Fees for these
companies and that such a waiver does not constitute an inequitable or
unfairly discriminatory allocation of fees because such companies would
have previously paid an initial listing fee to another national
securities exchange, and that to make them pay the Initial Application
Fee, which would be applied towards the applicable Listing Fee for an
issuer that lists on the Exchange, would further penalize them
unnecessarily. The Exchange also believes that limiting the waiver
period to 12 months after delisting is reasonable because the waiver
would apply to issuers that were delisted within a relatively recent
time frame.
The Exchange believes that it is equitable and not unfairly
discriminatory to charge Initial Application Fees to issuers that were
delisted for reasons other than financial reporting because these other
issuers would not have been in compliance with the quantitative listing
standards of the Exchange at the time of delisting from a listing
standards perspective, and such lack of compliance would be due to
reasons other than financial reporting. In this regard, the Exchange
believes that these issuers differ from other delisted issuers because
such delisting was not due to a quantitative listing standard of the
Exchange, but instead was because of a financial reporting requirement
under the Act. Similarly, the Exchange believes that it is equitable
and not unfairly discriminatory to charge Initial Application Fees to
issuers that are registered under the Act but not previously listed on
a national securities exchange because such issuers would not have
previously paid an Initial Application Fee to the Exchange or,
presumably, a similar fee to another national securities exchange.
The Exchange also believes that this aspect of the proposed change
is equitable and not unfairly discriminatory because, in addition to
applying equally to all issuers that are applying to list equity
securities on the Exchange, it would differentiate between those
issuers whose securities are delisted solely for financial reporting
reasons and those issuers whose securities were delisted for other
reasons or were not previously listed on a national securities
exchange. In this regard, the Exchange believes that these issuers
would not be unfairly penalized if they are required to pay Initial
Application Fees.
The Exchange also believes that it is reasonable to provide a
waiver of the Initial Application Fee to an issuer transferring the
listing of any class of equity securities to list on the Exchange
because such an issuer would have been free to continue to list on the
other national securities exchange on which it was previously listed.
In this regard, the issuer would have already paid a listing fee and
may have already paid an application fee to the other exchange for the
initial application to list on that market.\9\ Accordingly, it is
reasonable to not charge the Initial Application Fee so as to avoid
double-charging issuers for the listing of their equity securities. It
is also equitable and not unfairly discriminatory to waive the Initial
Application Fee to an issuer transferring the listing of any class of
equity securities to list on the Exchange because all issuers
transferring the listing of their equity securities in this manner
would be eligible for the waiver of the Initial Application Fee. It is
also equitable and not unfairly discriminatory because such issuers
would be under no obligation to transfer their listing to the Exchange
and would be disincentivized to do so if they were subject to the
Initial Application Fee. In this regard, the waiver would contribute to
providing issuers with the ability to choose the listing market that
best suits their needs and that is the ideal market for listing their
equity securities.
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\9\ See e.g., Id. [sic]
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Overall, the Exchange believes that instances of the Initial
Application Fee waiver being granted to issuers that apply to list on
the Exchange will be relatively rare. Accordingly, the Exchange does
not anticipate that it will experience any meaningful diminution in
revenue as a result of the proposed waiver and therefore does not
believe that the proposed waiver would in any way negatively affect its
ability to continue to adequately fund its regulatory program or the
services that the Exchange provides to issuers.
Additionally, the Exchange believes that the non-substantive
changes that are proposed, which are technical and conforming changes,
are reasonable because they will ensure that the proposed substantive
changes are incorporated in a clear and accurate manner. These changes
are also equitable and not unfairly discriminatory because they will
benefit all issuers and all other readers of the Listed Company Manual.
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.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received from Members, Participants, or Others
No written comments were solicited or received with respect to the
proposed rule change.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
The foregoing rule change is effective upon filing pursuant to
Section 19(b)(3)(A) \10\ of the Act and subparagraph (f)(2) of Rule
19b-4 \11\ thereunder, because it establishes a due, fee, or other
charge imposed by the NYSE.
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\10\ 15 U.S.C. 78s(b)(3)(A).
\11\ 17 CFR 240.19b 4(f)(2).
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At any time within 60 days of the filing of such proposed rule
change, the Commission summarily may temporarily suspend such rule
change if it appears to the Commission that such action is necessary or
appropriate in the public interest, for the protection of investors, or
otherwise in furtherance of the purposes of the Act.
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 (http://www.sec.gov/rules/sro.shtml); or
Send an email to [email protected]. Please include
File Number SR-NYSE-2012-68 on the subject line.
Paper Comments
Send paper comments in triplicate to Elizabeth M. Murphy,
Secretary, Securities and Exchange Commission, 100 F Street NE.,
Washington, DC 20549-1090.
All submissions should refer to File Number SR- NYSE-2012-68. 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 Web site (http://www.sec.gov/rules/sro.shtml). Copies of the submission, all subsequent
[[Page 76119]]
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 Web site viewing and printing in the Commission's Public
Reference Room, 100 F Street NE., Washington, DC 20549, on official
business days between the hours of 10:00 a.m. and 3:00 p.m. Copies of
such filing also will be available for inspection and copying at the
principal office of the Exchange. All comments received will be posted
without change; the Commission does not edit personal identifying
information from submissions. You should submit only information that
you wish to make publicly available. All submissions should refer to
File Number SR-NYSE-2012-68 and should be submitted on or before
January 16, 2013.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\12\
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\12\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2012-30979 Filed 12-21-12; 4:15 pm]
BILLING CODE 8011-01-P