[Federal Register Volume 67, Number 241 (Monday, December 16, 2002)]
[Notices]
[Pages 77124-77126]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 02-31553]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-46960; File No. SR-NYSE-2002-62]


Self-Regulatory Organizations; Notice of Filing of Proposed Rule 
Change by the New York Stock Exchange, Inc. Relating to Continuing 
Annual Fees for Domestic and Non-U.S. Issuers, Technical Original 
Listing Fees, and Supplemental Listing Applications Fees (Sections 
902.02, 902.03, and 902.04 of the NYSE Listed Company Manual)

December 6, 2002.
    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 20, 2002, the New York Stock Exchange, Inc. (``NYSE'') 
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 NYSE. The Commission is publishing this 
notice to solicit comments on the proposed rule change from interested 
persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The NYSE is proposing to amend Sections 902.02, 902.03, and 902.04 
of the NYSE's Listed Company Manual (the ``Manual'') to increase and 
simplify the continuing annual listing fee pricing for all listed 
companies (excluding closed-end funds), and to increase the fee for 
technical original listings and supplemental listing applications. The 
NYSE is also proposing to make permanent an overall $1 million per 
issuer fee cap that has been in effect on a pilot basis, scheduled to 
expire on December 31, 2002.\3\ The text of the proposed rule change is 
available at the Office of the Secretary, the NYSE, and at the 
Commission.
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    \3\ See Securities Exchange Act Release No. 43163 (August 16, 
2000), 65 FR 51389 (August 23, 2000) (SR-NYSE-00-16).
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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 NYSE 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 NYSE has prepared summaries, set forth in Sections 
A, B, and C below, of the most significant aspects of such statements.

A. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The NYSE is proposing changes to certain of its original and 
continuing annual listing fees, all of which it proposes will become 
effective on January 1, 2003.
    The NYSE in recent years has reduced or capped listing fees in 
several respects.\4\ However, the NYSE has determined that certain 
listing fee increases have now become necessary to ensure that revenue 
is adequate to satisfy increasing costs for operations, technology, 
regulation and infrastructure. The proposed revisions to listing fees 
are intended to increase revenue, simplify the continuing annual fee 
structure and change a historical policy that has kept the continuing 
fees of certain companies at unusually low levels. While the NYSE 
believes these proposed fee increases will impact listed companies, it 
should be noted that the NYSE is also increasing fees applicable to 
members and member organizations. Such member fee increases are being 
filed in a separate rule proposal.
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    \4\ For example, see Securities Exchange Act Release No. 42270 
(December 22, 1999), 65 FR 312 (January 4, 2000) (SR-NYSE-99-41), 
(capping original listing fees at $500,000); Securities Exchange Act 
Release No. 43164 (August 16, 2000), 65 FR 51387 (August 23, 2000) 
(SR-NYSE-00-15), (implementing a flat initial listing fee for 
tracking stocks, later modified to cover all additional classes of 
common stock); Securities Exchange Act Release No. 45995 (May 29, 
2002), 67 FR 39089 (June 6, 2002) (SR-NYSE-2002-20) (implementing a 
flat initial listing fee for tracking stocks to cover all additional 
classes of common stock); Securities Exchange Act Release No. 43163, 
65 FR 51389 (August 23, 2000) (SR-NYSE-00-16), (capping total 
listing fees per issuer in any given calendar year at $1 million); 
and Securities Exchange Act Release No. 43700 (December 11, 2002), 
65 FR 79147 (December 18, 2000) (SR-NYSE-00-48), (reducing the 
original listing fee cap to $250,000 and imposed a new allocation 
fee on NYSE specialists).
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    The NYSE believes the simplest of the changes proposed herein are 
increases to the ``technical original'' listing fee and the minimum fee 
charged for consideration of a listing application. Section 902.02B of 
the NYSE Listed Company Manual provides for a ``reduced initial fee'' 
of $5,300 when a company makes a technical change in the nature of the 
company without substantively affecting the equity position or rights 
of its common shareholders. This fee, often referred to as a 
``technical original'' listing fee, applies when, for example, a 
company changes its state of incorporation or reincorporates, forms a 
holding company which replaces the listed company, or does a reverse 
split. The NYSE is proposing to increase this fee from $5,300 to 
$15,000.
    Section 902.02B of the NYSE Listed Company Manual also specifies 
that the minimum fee for the consideration of any listing application 
is $1,500. When shares are being issued concurrently with the 
application, the company is charged the greater of the per share rate 
or this minimum fee. (Similarly, the minimum fee would not be payable 
when the company pays the higher ``technical original'' listing fee 
described in the immediately preceding paragraph.) However, this $1,500 
fee is

[[Page 77125]]

payable either when shares are listed as part of a reserve for future 
issuances (since the per share fee is not applied until that future 
date), or when the company makes a technical supplemental application 
that does not involve the listing of additional shares, such as an 
application to record a change of corporate name, or a change to the 
par value or title of a security. The NYSE is proposing to increase 
this fee from $1,500 to $2,500.
    The NYSE proposes to amend Section 902.02 of the NYSE Listed 
Company Manual, which relates to the continuing annual listing fee.\5\ 
This fee is payable annually on each security listed on the NYSE and 
traded as an equity on the NYSE's trading floor. The NYSE believes that 
the changes being proposed will represent an overall increase in 
continuing annual fee revenue to the NYSE, but will also significantly 
simplify the fee schedule, making the NYSE's fees more easily 
understandable to listed companies and others.
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    \5\ At this time, the NYSE is not making any change to the 
continuing annual fees as applied to closed end funds listed on the 
NYSE, which continue to be subject to the fee schedule currently in 
effect. The Commission notes, however, that the NYSE is in the 
process of developing a revised fee schedule for closed-end fund 
issuers.Telephone conversation between Annmarie Tierny, Senior 
Counsel, Office of General Counsel, NYSE and Tim Fox, Law Clerk, 
Division of Market Regulation, December 5, 2002. In addition, no 
changes are being proposed to the several specific pricing 
provisions provided in Section 902.02C for ``fund families'' with a 
number of funds listed on the NYSE.
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    It should first be noted that the NYSE considers it appropriate to 
ameliorate the immediate impact of these changes on any particular 
company. Accordingly, the impact of these proposed changes to the 
continuing annual fee as described below will be capped for each issuer 
at $75,000 for calendar 2003, and at $150,000 for calendar 2004.\6\ For 
a company hitting both those caps, the full impact of these price 
changes would not be borne until calendar 2005.
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    \6\ The Commission notes that the NYSE represented that it 
communicated these fee caps to issuers in a letter sent to the 
issuers during calendar year 2002. Telephone conversation between 
Annmarie Tierny, Senior Counsel, Office of General Counsel, NYSE and 
Tim Fox, Law Clerk, Division of Market Regulation, Commission, 
December 5, 2002.
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    Continuing annual fees for each issuer are based on the number of 
its securities listed (including American Depositary Securities 
represented by American Depositary Receipts), and there is a schedule 
of per share rates set forth in Section 902.02C (Section 902.04C for 
non-U.S. companies) of the NYSE Listed Company Manual. Currently that 
schedule is tiered, with a per share rate of $1,650 per million shares 
for the first and second million shares, and a per share rate of $830 
per million shares for additional shares beyond two million. The NYSE 
is proposing to eliminate the tiers, so that the per share rate will 
simply be $930 per million shares subject to a minimum continuing 
annual fee of $35,000, as provided for in Section 902.04C of the 
proposed rule change to the NYSE Listed Company Manual.
    The NYSE's current price schedule, as set forth in Section 902.02C 
of the NYSE Listed Company Manual, includes a concept informally 
referred to as ``range minima,'' in which issuers with up to 50 million 
shares listed pay a minimum continuing annual fee of $35,000, those 
with up to 100 million shares listed pay a minimum continuing annual 
fee of $48,410, those with up to 200 million shares listed pay a 
minimum of $64,580, and those with more than 200 million shares listed 
pay a minimum of $80,440. In a further effort to simplify our pricing 
structure, the NYSE is proposing to eliminate these ``ranges,'' leaving 
only the basic minimum fee of $35,000 referred to above.
    Continuing annual fees, which are set forth in Section 902.02C and 
Section 902.04C of the NYSE Listed Company Manual, are assessed 
separately on each class of security issued. Because some companies 
have more than one class of common stock listed on the NYSE, the NYSE 
currently provides that if one class pays the $35,000 minimum fee, the 
other class(es) are subject to lower minima (ranging from $16,170 to 
$32,320) depending on the number of shares listed. To simplify this 
structure, the NYSE is proposing that when a company has multiple 
classes of common stock listed on the NYSE, the class with the greatest 
number of shares outstanding will be subject to the $35,000 minimum, 
and each additional class of common stock will be subject to a minimum 
fee of $20,000 per class.
    Under Section 902.02C of the NYSE Listing Standards, classes of 
securities other than common stock are currently subject to the same 
continuing annual fee rate schedule as common stock, but with a lower 
minimum fee of $3,600, rather than $35,000. Accordingly, the NYSE 
proposes that the new rate schedule of $930 per million shares will 
apply to these securities, and the applicable minimum will be raised 
from $3,600 to $5,000. Also, the NYSE notes that in the case of 
companies with listed preferred stock that do not have common stock 
listed here, the original listed preferred issue will be subject to the 
$35,000 minimum annual fee, although other classes listed will be 
subject to the $5,000 minimum.
    ``Short-term securities'' are those securities having a term of 
seven years or less (e.g., index warrants, foreign currency warrants, 
contingent value rights, etc.). Section 902.03B of the NYSE Listed 
Company Manual currently provides for a special set of ``range minima'' 
applicable to such securities, that actually subjects such issues to 
higher minimum continuing annual fees than are otherwise applied to 
non-common stock securities as described in the preceding paragraph. To 
eliminate this anomaly, the NYSE proposes to amend Section 902.03B of 
the NYSE Listed Company Manual to apply to such ``short term 
securities'' the new rate schedule of $930 per million shares, and to 
also apply the same $5,000 annual minimum as is applicable to other 
non-common securities.
    Finally, Section 902.02C of the NYSE Listed Company Manual 
currently removes from the calculation of continuing annual fees any 
shares which have been listed for a period of 15 years or more. This 
policy results in companies having disparate continuing annual fees 
despite having similar amounts of stock listed on the NYSE. The NYSE 
proposes to eliminate this policy for all listed companies with the 
exception of closed-end funds.
    Separate and distinct from the foregoing price changes, the NYSE 
also proposes to make permanent a per issuer overall $1 million fee cap 
that was implemented starting with the 2000 calendar year.\7\ That cap, 
codified in Section 902.02, by its terms was put into effect on a pilot 
basis for three years, through calendar 2002. The NYSE's experience 
with this rule has demonstrated that it is an appropriate limitation to 
avoid overburdening any particular company in an unusual year, and the 
NYSE proposes to make the pilot permanent.
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    \7\ See Securities Exchange Act Release No. 43163 (August 16, 
2000), 65 FR 51389 (August 23, 2000) (SR-NYSE-00-16).
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2. Statutory Basis
    The NYSE believes that the proposed rule change is consistent with 
Section 6(b)(4) of the Act \8\ which provides that an exchange have 
rules that provide for the equitable allocation of reasonable dues, 
fees and other charges among its members and issuers and other persons 
using its facilities.
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    \8\ 15 U.S.C. 78f(b)(4).

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[[Page 77126]]

B. Self-Regulatory Organization's Statement on Burden on Competition

    The NYSE does not believe that the proposed rule change would 
result in 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

    The NYSE has neither solicited nor received written comments on the 
proposed rule change.

III. Date of Effectiveness of the Proposed Rule Change and Timing for 
Commission Action

    Within 35 days of the date of publication of this notice in the 
Federal Register or within such longer period (i) as the Commission may 
designate up to 90 days of such date if it finds such longer period to 
be appropriate and publishes its reasons for so finding, or (ii) as to 
which the self-regulatory organization consents, the Commission will:
    (A) By order approve such proposed rule change; or
    (B) institute proceedings to determine whether the proposed rule 
change should be disapproved.

IV. Solicitation of Comments

    Interested persons are invited to submit written data, views, and 
arguments concerning the foregoing, including whether the proposed rule 
change is consistent with the Act. Persons making written submissions 
should file six copies thereof with the Secretary, Securities and 
Exchange Commission, 450 Fifth Street, NW., Washington, DC 20549-0609. 
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 inspection and copying in the 
Commission's Public Reference Room. Copies of such filings will also be 
available for inspection and copying at the principal office of the 
NYSE. All submissions should refer to File No. SR-NYSE-2002-62 and 
should be submitted by December 31, 2002.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\9\
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    \9\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 02-31553 Filed 12-13-02; 8:45 am]
BILLING CODE 8010-01-P