[Federal Register Volume 68, Number 164 (Monday, August 25, 2003)]
[Notices]
[Pages 51045-51047]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 03-21641]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-48360; File No. SR-NYSE-2003-22]


Self-Regulatory Organizations; Notice of Filing and Immediate 
Effectiveness of Proposed Rule Change by the New York Stock Exchange, 
Inc. To Reduce the Original Listing Fee Applicable to Closed-End Funds

August 18, 2003.
    Pursuant to section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act'') \1\ and Rule 19b-4 thereunder,\2\ notice hereby is given that 
on August 15, 2003, the New York Stock Exchange, Inc. (``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 Exchange. The NYSE 
has represented that the proposal meets the criteria of paragraph 
(f)(6) of Rule 19b-4 and, therefore, may take effect immediately. 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 proposes amending Section 902.02 of its Listed Company 
Manual to reduce the original listing fee

[[Page 51046]]

applicable to closed-end funds. Below is the text of the proposed rule 
change. Proposed new language is italicized; proposed deletions are 
bracketed.
* * * * *

Listed Company Manual

902.00 Listing Fees
* * * * *
902.02 Schedule of Current Listing Fees
* * * * *

A. Original Listing Fee

    A special charge of $36,800 in addition to initial fees (described 
below) is payable in connection with the original listing of a 
company's stock. In any event, each issuer is subject to a minimum 
original listing fee of $150,000 inclusive of the special charge 
referenced in the preceding sentence.
    The special charge is also applicable to an application which in 
the opinion of the Exchange is a ``back-door listing''. See Para. 
703.08(F) for definition.
    Original listings of [C]closed-end funds are not subject to either 
the special charge or to the minimum original listing fee. Closed-end 
funds will instead pay an original listing fee based on the number of 
shares outstanding upon listing. Closed-end funds with up to 10 million 
shares outstanding will be subject to a $20,000 original listing fee, 
closed-end funds with greater than 10 million shares up to 20 million 
shares outstanding will be subject to a $30,000 original listing fee, 
and closed-end funds with more than 20 million shares outstanding will 
be subject to a $40,000 original listing fee. Original listings of 
closed-end funds are also not subject to the initial fees described 
below.
Initial Fee
    The initial fee schedule applies to original listings,** other than 
to original listings of closed-end funds as described above, and to the 
listing of additional shares of an already listed class of stock,* new 
issues of preferred stock, warrants, or similar securities which are 
the subject of subsequent applications. New issues of additional 
classes of common stock of listed companies will be charged a fixed 
initial fee of $5,000 in lieu of the per share schedule.
    Each stock or warrant--and in the case of preferred stock, each 
series--shall be regarded as a separate issue.
    Each application must cover the maximum number of shares that may 
be issued involving the particular transaction in question. However, 
the initial fee payable at the time of consideration of an application 
will cover only the determinable number of shares to be issued at or 
about that time. The balance of any initial fee under this schedule 
will accrue when subsequent issuance is made of shares not issued and 
paid for at the time that application is considered. This covers items 
like future issuances of shares for stock options, employee stock 
plans, conversion of other securities, contingencies, etc. Billing for 
such accrued initial fees is made as soon as possible following the 
close of the calendar year. Payment shall be made within 30 days of 
date upon receipt of invoice.
    The initial fee shall be paid on shares issued at the time of 
billing by the Exchange. The subsequent reacquisition by the company 
and/or surrender to it for exchange, cancellation, or retirement shall 
not reduce this fee. The Exchange should be advised of shares 
cancelled. The shares authorized for listing on the Exchange should be 
reduced by the number of shares cancelled as well as by the shares no 
longer required to be issued under a specific plan for which an 
application was previously filed with the Exchange.
    The pertinent initial fees per million shares are:

------------------------------------------------------------------------
                        Fee bracket                          Initial fee
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1st and 2nd million shares................................       $14,750
3rd and 4th million shares................................         7,400
5th up to 300 million shares..............................         3,500
In excess of 300 million shares...........................         1,900
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    Reduced Initial Fee--A fee of $15,000 will apply to a company which 
either changes its state of incorporation or reincorporates, forms a 
holding company which replaces a listed company or has a reverse stock 
split. This fee will be applicable only if the change in the company's 
status is technical in nature and providing also that shareholders of 
the original company receive a share-for-share interest in the new 
company without any change in their equity position or rights.
    Amalgamations are calculated at 25% of the applicable basic initial 
fee. An amalgamation is defined as the listing of shares resulting from 
merger or consolidation of two or more listed companies into a new 
company or into an unlisted company which becomes listed.
    Mergers between an unlisted company and a listed company (other 
than back door listings (as defined in para.703.08(E))--If listing 
occurs within 12 months of the merger, 25% of the applicable basic 
initial fee, except during the first year following the listed 
company's original listing, where the fee shall be the lesser of (1) 
25% of the applicable basic initial fee or (2) the full fee less a 
credit for the fee the listed company paid at the time of its initial 
listing.
    In all other circumstances, the full initial fee rate will apply. 
For example: where a change in a listed security is effected which in 
the opinion of the Exchange in effect represents a new issue or class 
of security, or where the rights or privileges or the identities of 
previous shareholders are altered.
    Minimum Initial Fee--The minimum fee for the consideration of an 
application is $2,500. Credit against initial fees will be limited to 
the determinable number of shares to be issued at or about the time the 
application is processed where the minimum fee applies. The minimum 
initial fee of $2,500 will apply for changes such as change of name, 
change of par value, the title of the security, etc., since these 
require changes in Exchange records.

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

    *Fees on shares issued in conjunction with stock splits are 
capped at $250,000 per split and at $500,000 for all splits over a 
rolling three calendar-year period. Fees on shares issued in 
conjunction with a merger or acquisition (other than amalgamations) 
are capped at $500,000.
    **Fees on shares listed in conjunction with the original listing 
are limited to $250,000 [thousand] per company, inclusive of the 
special charge and encompassing all classes of securities.
* * * * *

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 regarding 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
    Like many other sectors of the industry, closed-end funds have come 
under considerable cost pressure in

[[Page 51047]]

recent years. The cost pressure has been exacerbated by a 1998 
accounting interpretation that required funds to cease amortizing the 
original listing fee over several years, requiring them to recognize 
the entire amount in the first year. To date in 2003, under the current 
schedule, the smallest fund listing on the NYSE paid an original 
listing fee of approximately $44,000, and the largest closed-end funds 
paid the maximum original listing fee of $250,000.\3\
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    \3\ Currently, the initial fee schedule in 902.02 of the NYSE 
Listing Company Manual provides changes that are applied to each 
million shares issued. Closed-end fund offerings are often 
substantial. The Exchange notes that its current listing fees can 
affect NAV. Therefore, the Exchange believes that the reduction in 
listing fees will benefit investors because incurred costs are paid 
from the investor's equity raised for the closed-end fund offering. 
Telephone conversation among Raymond Bell, Vice President of New 
Listing and Client Services, AnneMarie Tierney, Senior Counsel, 
NYSE, and Florence Harmon, Senior Special Counsel, Division of 
Market Regulation, Commission, dated August 18, 2003.
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    The Exchange is, therefore, proposing to reduce the original 
listing fees applicable to closed-end funds. It would establish a 
three-tiered structure based on the number of shares outstanding. 
Closed-end funds with up to 10 million shares outstanding would be 
subject to a $20,000 original listing fee, funds with greater than 10 
million shares up to 20 million shares outstanding would be charged 
$30,000, and funds with more than 20 million shares outstanding would 
be subject to a $40,000 original fee.
2. Statutory Basis
    The NYSE believes that the basis under the Act for the proposed 
rule change is section 6(b)(4),\4\ which requires 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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    \4\ 15 U.S.C. 78f(b)(4).
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B. Self-Regulatory Organization's Statement on Burden on Competition

    The NYSE does not believe that the proposed rule change would 
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

    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

    The Exchange asserts that, because the foregoing proposed rule 
change does not: (i) Significantly affect the protection of investors 
or the public interest; (ii) impose any significant burden on 
competition; and (iii) become operative for 30 days from the date on 
which it was filed (or such shorter time as the Commission may 
designate), it may become effective pursuant to section 19(b)(3)(A) of 
the Act \5\ and Rule 19b-4(f)(6) thereunder.\6\ At any time within 60 
days of the filing of the proposed rule change, the Commission may 
summarily abrogate 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.\7\
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    \5\ 15 U.S.C. 78s(b)(3)(A).
    \6\ 17 CFR 240.19b-4(f)(6).
    \7\ See 15 U.S.C. 78s(b)(3)(C).
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    A proposed rule change filed under Rule 19b-4(f)(6) normally would 
not become operative prior to 30 days after the date of the filing. 
However, Rule 19b-4(f)(6) permits the Commission to designate a shorter 
time if such action is consistent with the protection of investors and 
the public interest. The Commission believes that lowering the initial 
listing fees for closed-end funds will benefit those who invest in such 
funds by reducing the costs associated with the issuance of the shares. 
Accordingly, the Commission hereby determines to waive the 30-day pre-
operative period, and the proposed rule change becomes operative 
immediately.\8\
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    \8\ For purposes only of accelerating the operative date of this 
proposal, the Commission has considered the proposed rule's impact 
on efficiency, competition, and capital formation. See 15 U.S.C. 
78c(f).
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    Rule 19b-4(f)(6) also requires the self-regulatory organization 
submitting the proposed rule change to give the Commission written 
notice of its intent to file the proposed rule change, along with a 
brief description and text of the proposed rule change, at least five 
business days prior to the date of filing, or such shorter time as 
designated by the Commission. The NYSE has requested that the 
Commission waive the five-day pre-filing requirement, and the 
Commission hereby grants that request.

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 at the 
Commission's Public Reference Room. Copies of such filing will also be 
available for inspection and copying at the principal office of the 
Exchange. All submissions should refer to File No. SR-NYSE-2003-22 and 
should be submitted by September 15, 2003.

    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. 03-21641 Filed 8-22-03; 8:45 am]
BILLING CODE 8010-01-P