[Federal Register Volume 70, Number 157 (Tuesday, August 16, 2005)]
[Notices]
[Pages 48224-48227]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E5-4426]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-52225; File No. SR-PCX-2005-19]


Self-Regulatory Organizations; Pacific Exchange, Inc.; Notice of 
Filing of Proposed Rule Change and Amendment No. 1 Thereto Relating to 
Proposed New Listing Fees

August 8, 2005.
    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 February 28, 2005, the Pacific Exchange, Inc. (``PCX''), through its 
wholly owned subsidiary PCX Equities, Inc. (``PCXE'' 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 PCXE. On June 15, 2005, the Exchange filed 
Amendment No. 1 to the proposed rule change.\3\ The Commission is 
publishing this notice to solicit comments on the proposed rule change, 
as amended, from interested persons.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ In Amendment No. 1, the Exchange (a) modified the text of 
the proposed rule change to clarify the implementation of the 
proposed rule change and to add provisions regarding American 
Depositary Receipts and American Depositary Shares and (b) provided 
further information regarding the purpose of the proposal.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange is proposing to amend its Schedule of Fees and Charges 
(``Schedule''), as follows: (1) implement new initial listing fees 
specifically for common stock issued in initial public offerings 
(``IPOs'') \4\ and listed exclusively by the PCXE for trading on the 
Archipelago Exchange (``ArcaEx''), a facility of the PCXE, and make 
related modifications to the initial listing fees; (2) exempt from 
initial listing fees already-public issues which are listed and/or 
quoted on other marketplaces (``Transfer Listings''), whether or not 
dually listed; (3) exempt from annual maintenance fees transfer 
listings for the first 12 calendar months after listing, whether or not 
dually listed; (4) revise the annual maintenance fees; and (5) revise 
the additional shares listing fees.
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    \4\ An ``IPO'' is the first public sale, issuance or 
distribution of stock by a company. IPOs include ``spin-offs'' where 
a company's common shares are issued or distributed to shareholders 
of the ``parent'' company subject to registration under the Act.
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    The text of the proposed rule change is available on PCX's Web 
site, http://

[[Page 48225]]

www.pacificex.com, at PCX's Office of the Secretary, and at the 
Commission's Public Reference Section.

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

    In its filing with the Commission, PCXE 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. PCXE 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 the 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The Exchange proposes to increase certain portions of its listing 
fees and make a number of related modifications. PCXE has determined 
that such increases are necessary to help ensure sufficient cost 
recovery resulting from expenditures for operations, technology and 
infrastructure incurred in connection with ArcaEx's listings 
initiative.\5\ ArcaEx has made and continues to make substantial 
investments in resources, services and value-added products that are 
readily available for listed companies, including a recently launched 
data product that provides a wide variety of market-related information 
to issuers.\6\ The Exchange also developed the proposed revised 
Schedule in order to compete effectively with other markets for new 
listings on the basis of cost and value. Considering the nature and 
breadth of the benefits and services available to listed issuers, the 
Exchange believes that the proposed revised Schedule offers listed 
issuers significant economic benefits. Moreover, notwithstanding these 
proposed increases and modifications to the Schedule, these fees are 
generally lower than comparable listing fees at other marketplaces.\7\
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    \5\ The Exchange represents that the proposed listings fees 
modifications, including the proposed exemptions from certain 
listing fees, will not negatively impact the Exchange's regulatory 
program.
    \6\ The Exchange acknowledges that a number of the proposed 
changes represent significant increases from prior listing fees. 
However, PCXE believes that the initial listing and related fees are 
extremely dated as the Exchange has not modified them in a number of 
years. Further, following the 2002 alliance between PCX and 
Archipelago that established the Archipelago Exchange as a facility 
of the Exchange, the Exchange has committed extensive resources and 
efforts to develop and support the listings program. Since then, the 
Exchange continued to operate under an antiquated Schedule and now 
finds that some modifications, which include some increases to 
certain fees, are necessary to operate the listings program and 
effectively compete in the marketplace.
    \7\ See listing fees of the American Stock Exchange (http://www.amex.com) and the Nasdaq National Market (http://www.nasdaq.com/about/nasdaq_listing_req_fees.pdf).
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Summary of Current and Proposed Fees

    (a) Initial Listing Fees. Currently, the one-time initial listing 
fee for common stock is based on whether the issue is dually listed on 
the New York Stock Exchange, the American Stock Exchange, or the Nasdaq 
National Market. If an issue is dually listed, the initial listing fee 
is fixed at $10,000 per issue; otherwise, the initial listing fee is 
fixed at $20,000 per issue. The initial listing fee for additional 
classes of common stock, preferred stock, warrants, debit instruments, 
purchase rights and units is $2,500, regardless of whether such 
securities are also listed elsewhere. These fees apply to each issue 
listed, regardless of shares outstanding or listing tier 
classification.
    PCXE proposes initial listing fees specifically for common stock 
listed in conjunction with IPOs. For IPOs listed exclusively on Tier 
I,\8\ PCXE proposes initial listing fees based on the aggregate total 
shares outstanding, as follows:
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    \8\ See PCXE Rule 5.2(c).

------------------------------------------------------------------------
                                                               Initial
           Aggregate total shares outstanding \9\            listing fee
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Less than 10,000,000.......................................      $25,000
10,000,001 to 30,000,000...................................       75,000
30,000,001 to 75,000,000...................................      100,000
Greater than 75,000,000....................................      125,000
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    The Exchange proposes an IPO Tier I initial listing fees based on a 
sliding scale of the issuer's aggregate total shares outstanding. With 
this tiered structure the Exchange intends to reflect the time and 
resources necessary to review listing applications that correspond 
generally to the size of issuers, the complexity of capital structures 
and financial statements, and the sophisticated nature of business 
plans and transactions.
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    \9\ The Exchange will determine the issuer's aggregate total 
shares outstanding as reported by the issuer in its periodic filings 
with the Commission or other publicly available information.
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    For IPOs listed exclusively on Tier II,\10\ the Exchange proposes a 
fixed initial listing fee of $25,000. The Exchange believes this fixed 
fee is appropriate because Tier II listed issuers are typically 
smaller-capitalized issuers with relatively shorter operating histories 
than Tier I qualified issuers. Further, a fixed fee for these issuers 
will enable the Exchange to compete for listings of this size with 
other marketplaces.
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    \10\ See PCXE Rule 5.2(k).
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    For IPOs that dually list, the Exchange proposes an exemption from 
initial listing fees. The Exchange also proposes an exemption from 
initial listing fees for Transfer Listings, whether exclusively or 
dually listed. These exemptions apply regardless of Tier classification 
or shares outstanding. The Exchange believes these exemptions are 
appropriate in order for the Exchange to effectively compete for dual 
listings.\11\ The applicable fees to list additional classes of common 
stock, preferred stock, warrants, debit instruments, purchase rights 
and units will remain unchanged.
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    \11\ The Exchange expends similar time, energy and resources in 
processing issuers that dual list. However, the Exchange has made a 
business decision to forgo the initial listing fee for competitive 
purposes and anticipates that it will make up the cost in other 
listings related fees and future listing business.
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    The Exchange proposes to implement these new IPO and Transfer 
Listing fees for all listing applications submitted on or after April 
1, 2005, should the Commission approve the proposed rule change. The 
current fees will continue to apply to issues already listed or 
applications that are pending as of March 31, 2005.
    (b) Annual Maintenance Fees. Currently, the annual maintenance fees 
are fixed and based on whether the issue is dually listed on the New 
York Stock Exchange, American Stock Exchange, or the Nasdaq National 
Market. For dually listed securities, the maintenance fee is $1,000 per 
issue; otherwise, the maintenance fee is $2,000 per issue. For each 
additional issue, the annual maintenance fee is $500. The annual 
minimum fee is $1,000 and the annual maximum fee is $5,000. Moreover, 
annual maintenance fees are not incurred in the year of listing; 
rather, they are payable beginning in the first full calendar year 
following the year of listing.
    The Exchange proposes to adopt specific annual maintenance fees for 
exclusive IPO listings. For Tier I exclusive IPO listings, PCXE 
proposes to adopt annual maintenance fees based on the aggregate total 
shares outstanding, as follows: \12\
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    \12\ Similar to the initial listing fees, the purpose of the 
tiered pricing based on aggregate total shares outstanding is to 
charge the listed company a maintenance fee depending on the time, 
energy and resources necessary, given the size of the listed issuer.

[[Page 48226]]



------------------------------------------------------------------------
                                                                Annual
             Aggregate total shares outstanding              maintenance
                                                                 fee
------------------------------------------------------------------------
Less than 10,000,000.......................................      $15,000
10,000,001 to 50,000,000...................................       20,000
50,000,001 to 100,000,000..................................       35,000
Greater than 100,000,000...................................       50,000
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    For Tier II exclusive IPO listings, PCXE proposes to adopt an 
annual maintenance fee of $12,500, regardless of shares outstanding. 
Consistent with current practice, the Exchange will not assess these 
annual maintenance fees for the year of listing, but rather, will first 
assess them for the first full calendar year following the year of 
listing.
    For dual IPO and Transfer Listings, the Exchange proposes an 
exemption from annual maintenance fees for the first 12 calendar months 
following listing for competitive purposes.\13\ At the end of this 12-
month period, the Exchange will assess, on a pro-rated basis, the 
applicable annual maintenance fee for the balance of the then current 
calendar year.\14\ Thereafter, for exclusive Transfer Listings, the 
Exchange will assess an annual maintenance fee based on the fees set 
forth above for exclusive IPOs, depending on Tier classification. For 
dual listings (including dual IPO and Transfer Listings), the Exchange 
will assess a fixed annual maintenance fee of $10,000, regardless of 
Tier classification or shares outstanding. The Exchange intends to make 
these assessments at the beginning of the calendar year for that year. 
If any such dual listing subsequently lists exclusively, the Exchange 
will assess an annual maintenance fee based on the fees set forth above 
for exclusive IPOs, starting in the first full calendar year following 
the change to an exclusive listing.
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    \13\ In February 2004, Nasdaq determined that it would not 
charge entry, annual or additional listing fees for a one-year 
period from the date of listing on Nasdaq for any NYSE listed 
security that dually listed on Nasdaq between January 12, 2004 and 
December 31, 2004. See Securities Exchange Act Release No. 49286 
(February 19, 2004), 69 FR 8999 (February 26, 2004) (SR-NASD-2004-
004). Subsequently, Nasdaq exempted from entry and additional 
listing fees those NYSE issuers remaining dually listed after the 
one-year period and those NYSE issuers dually listing thereafter, 
but imposed an annual fee of $15,000 on such issuers at the end of 
their first year on Nasdaq. See Securities Exchange Act Release No. 
51005 (January 10, 2005), 70 FR 2917 (January 18, 2005) (SR-NASD-
2004-142).
    \14\ For example, an issuer that transfers a listing in June 
2005 will be subject to the exemption and will not be assessed 
annual maintenance fees until June of 2006 (prorated for 2006) when 
the issuer would ordinarily be assessed annual maintenance fees in 
January 2006 for the first full calendar year after listing.
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    PCXE proposes to implement these revised annual maintenance fees 
for all listing applications submitted on or after April 1, 2005, 
should the Commission approve the proposed rule change. For all issues 
already listed, and listing applications pending, as of March 31, 2005, 
the current annual maintenance listing fees will continue to apply.
    In addition, the Exchange proposes to increase the maximum annual 
maintenance fee payable by a single issuer for all issues listed from 
$5,000 to $90,000, in order to be consistent with the fee changes 
proposed herein. Annual maintenance fees will not be pro-rated or 
reduced for securities that delist for any reason.
    (c) Additional Shares Listing Fee. Currently, the fee applicable to 
issuers to list additional shares is $.0025 per share listed, with a 
$500 minimum and a $7,500 maximum per application. The maximum total 
charge per year is $15,000.
    The Exchange proposes to make a number of modifications to the 
Additional Shares Listing Fee. For all exclusive listings, including 
exclusive IPO and transfer listings, the Exchange proposes to eliminate 
the per share fee entirely for the first 99,999 additional shares per 
application. The Exchange proposes to eliminate the fee on these shares 
so as not to assess issuers for small additional issuances and also to 
enhance its ability to effectively compete with other marketplaces.\15\ 
For such listings, the $.0025 per share fee will remain the same, and 
will be assessed beginning on each additional share listed above 
99,999. The Exchange also proposes increased maximum charges for listed 
issuers that choose to list additional shares, that is, to increase the 
$7,500 maximum charge per application to $15,000 and the $15,000 annual 
maximum charge to $30,000. These increases may potentially result in 
increased additional share charges for issuers, depending on the nature 
and size of the additional issuance. The $500 minimum charge (per 
application) will remain unchanged.
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    \15\ Nasdaq does not charge issuers for the first 49,999 
additional shares listed each quarter. See supra note 7.
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    For all dual listings, the Exchange proposes to eliminate the fee 
entirely for the first 99,999 additional shares per application in 
order to effectively compete with other marketplaces. The Exchange also 
proposes to eliminate the fee on these shares so as not to assess 
issuers for small additional issuances. For such listings, the $.0025 
per share fee will be assessed beginning on each additional share 
listed above 99,999. The Exchange also proposes to modify the annual 
maximum charge applicable to such listings to $14,000 so as to provide 
for an increased limitation for listed issuers that choose to list 
additional shares, which will result in charges that are beyond the 
current maximum charges. The minimum and maximum charge per application 
will remain unchanged. The Exchange further proposes an exemption from 
such additional share fees for all dual IPO and dual transfer listings 
for the 12 calendar months after listing. Thereafter, such listings 
will be subject to the additional shares listing fee as set forth 
above.
    Lastly, for dually listed American Depositary Receipts (``ADRs'') 
and American Depositary Shares (``ADSs'') only, the Exchange proposes 
to decrease the maximum additional shares listing charge per year to 
$10,000 and maintain the minimum charge per application at $500 and the 
maximum per application charge at $7,500. These fees shall only be 
assessed on the ADRs and ADSs that are listed. The Exchange's proposed 
revisions to the additional shares listing fees, as applicable, will 
apply to all currently listed issuers starting April 1, 2005, should 
the Commission approve the proposed rule change.

Implementation

    PCXE proposes to implement the revised initial and annual 
maintenance listings fees, as applicable, for all applications 
submitted on or after April 1, 2005, should the Commission approve the 
proposed rule change. For all issues listed, and listing applications 
pending, as of March 31, 2005, the current initial and annual 
maintenance listing fees will continue to apply. The Exchange's 
proposed revisions to the additional shares listing fees will apply 
going forward to all currently listed issuers starting April 1, 2005, 
should the Commission approve the proposed rule change.
2. Statutory Basis
    The Exchange believes that the proposal is consistent with Section 
6(b) \16\ of the Act, in general, and Section 6(b)(4) \17\ of the Act, 
in particular, in that it provides for the equitable allocation of 
reasonable dues, fees and other charges among issuers and other persons 
using its facilities.
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    \16\ 15 U.S.C. 78f(b).
    \17\ 15 U.S.C. 78f(b)(4).

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[[Page 48227]]

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

    The Exchange did not solicit or receive any written comments with 
respect to 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 the 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. 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 e-mail to [email protected]. Please include 
File Number SR-PCX-2005-19 on the subject line.

Paper Comments

     Send paper comments in triplicate to Jonathan G. Katz, 
Secretary, Securities and Exchange Commission, Station Place, 100 F 
Street, NE., Washington, DC 20549-9303.
    All submissions should refer to File Number SR-PCX-2005-19. This 
file number should be included on the subject line if e-mail 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 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 Section. Copies of 
such filing also will be available for inspection and copying at the 
principal office of PCX. 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 available publicly. All submissions should refer to File Number 
SR-PCX-2005-19 and should be submitted on or before September 6, 2005.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\18\
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    \18\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. E5-4426 Filed 8-15-05; 8:45 am]
BILLING CODE 8010-01-P