[Federal Register Volume 72, Number 95 (Thursday, May 17, 2007)]
[Notices]
[Pages 27893-27895]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E7-9438]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-55742; File No. SR-NYSE-2007-19]
Self-Regulatory Organizations; New York Stock Exchange LLC;
Notice of Filing of Amendment No. 1 and Order Granting Accelerated
Approval to a Proposed Rule Change as Modified by Amendment No. 1
Relating to the Waiver of Certain Listing Fees
May 10, 2007.
I. Introduction
On February 22, 2007, the 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 (``Act'' or ``Exchange Act'') \1\ and Rule 19b-4
thereunder,\2\ a proposal to waive certain listing fees. The proposal
was published for comment in the Federal Register on March 14, 2007.\3\
The Commission received no comments on the proposal. The Exchange filed
Amendment No. 1 with the Commission on April 27, 2007.\4\ This order
provides notice of and solicits comment on the proposed rule change as
modified by Amendment No. 1 and approves the proposal on an accelerated
basis.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
\3\ See Securities Exchange Act Release No. 55421 (March 14,
2007), 72 FR 1350 (the ``Notice'').
\4\ Amendment No. 1 (i) Proposed a clarifying change to the
proposed rule text and (ii) added language to the purpose section to
clarify the effect of the waiver of listing fees for a company
listing its primary class of common stock that is not listed on a
national securities exchange but is registered under the Act. The
text of Amendment No. 1 is available on the Exchange's Web site
(http://www.nyse.com), at the Exchange's Office of the Secretary,
and at the Commission's Public Reference Room.
---------------------------------------------------------------------------
II. Description of the Proposal
The Exchange proposes to amend Section 902.02 of its Listed Company
Manual (the ``Manual'') to provide that there shall be no initial
listing fee applicable to (i) Any company listing upon emergence from
bankruptcy, or (ii) any company listing its primary class of common
stock that is not listed on a national securities exchange but is
registered under the Act.
The Exchange also proposes a temporary cap on fees payable by
companies listing upon emergence from bankruptcy. Annual fees for such
issuers will be billed at a rate of one-fourth of the applicable annual
fee rate for the fiscal quarter the issuer lists and for each of the
succeeding 12 full fiscal quarters. Further, the total fees (including
initial listing fees and annual fees) that may be billed to such an
issuer during this period would be subject to a $25,000 cap in the
fiscal quarter in which the issuer lists and in each of the succeeding
12 full fiscal quarters. The exclusions applicable to the standard fee
cap, set forth in Section 902.02 under the heading ``Total Maximum Fee
Payable in a Calendar Year,'' would also apply to issuers listing upon
emergence from bankruptcy.
The Exchange believes that the initial listing fee waiver and fee
cap for companies listing upon emergence from bankruptcy are justified
by the unique circumstances of those issuers, which, according to the
NYSE, among other things, tend to be more sensitive to the initial and
continued costs associated with listing because of the desire in
bankruptcy proceedings to ensure creditors are paid as much as
possible. According to the Exchange, because bankrupt companies face
unique challenges in the listing process, the number of companies that
will benefit from the fee waiver and lower fee cap applicable to
bankrupt companies will be very limited, and the fee cap will apply
only during a three-year transitional period, the Exchange does not
believe that the treatment this proposal would afford to bankrupt
companies constitutes an inequitable or unfairly discriminatory
allocation of fees.
In addition, the Exchange believes that waiving initial listing
fees for a company listing its primary class of common stock which is
registered under that Act but not listed on a national securities
exchange is appropriate and does not constitute an inequitable or
unfairly discriminatory allocation of fees. The Exchange anticipates
that most companies taking advantage of this waiver will be formerly-
listed companies that were delisted as a result of a failure to timely
file annual reports with the Commission.\5\ The Exchange notes that
these companies usually seek to re-list on the Exchange as soon as
their filings are up to date.\6\ According to the Exchange, because
such companies had previously paid initial listing fees to the Exchange
or to another national securities exchange, the Exchange believes that
to make them pay these fees again would further penalize them
unnecessarily.
---------------------------------------------------------------------------
\5\ In Amendment No. 1, the Exchange stated that there may
occasionally be an initial listing on the Exchange of a company
which is trading in the over-the-counter market immediately prior to
listing and which was not previously delisted as a result of a
failure to timely file annual reports with the Commission. However,
in the Exchange's experience, very few such companies meet the
Exchange's listing requirements and, therefore, the Exchange expects
the number of such listings and the related loss of fee revenue to
be immaterial.
\6\ In its filing, the Exchange stated that typically, such
companies are otherwise in good standing with the Exchange or with
another national securities exchange, but fell behind on their
reporting obligations under the Act because their auditors or the
Commission required restatements of their financial statements. The
Commission notes that the timely filing of accurate financial
reports under the Act is critical to investors and our national
market and assures that investors receive up to date financial
information about listed companies.
---------------------------------------------------------------------------
The Exchange has represented that the proposed rule change would
not affect its commitment of resources to its regulatory oversight of
the listing process or its regulatory programs. Companies that benefit
from one of the proposed waivers would be reviewed for compliance with
Exchange listing standards in the same manner as any other company that
applies to be listed on the Exchange. The Exchange would conduct a full
and independent review of each issuer's compliance with the Exchange's
listing standards.
The Exchange also has represented that it does not expect the
financial impact of this proposed rule change to be material, either in
terms of increased levels of annual fees from transferring issuers or
in terms of diminished initial listing fee revenues. A limited number
of companies are qualified and seek to list on the Exchange that are
either emerging from bankruptcy or have a registered class of common
stock but are not currently listed on another market. Accordingly, the
proposed rule change will not impact the Exchange's resource commitment
to its regulatory oversight
[[Page 27894]]
of the listing process or its regulatory programs.
Following their approval, the Exchange would apply the amendments
contained in the proposal retroactively to February 22, 2007, the date
of filing of the proposed rule change.\7\
---------------------------------------------------------------------------
\7\ See supra note 3
---------------------------------------------------------------------------
III. Discussion
After careful review, the Commission finds that the proposed rule
change, as amended, is consistent with the requirements of the Act and
the rules and regulations thereunder applicable to a national
securities exchange.\8\ In particular, the Commission finds that the
proposal is consistent with Section 6(b)(4) of the Act,\9\ which
requires that an exchange have rules that provide for the equitable
allocation of reasonable dues, fees, and other charges among its
members and other persons using its facilities. The Commission also
finds that the proposal is consistent with Section 6(b)(5) of the
Act,\10\ which requires, inter alia, that the rules of a national
securities exchange be designed to remove impediments to and perfect
the mechanism of a free and open market and a national market system
and not designed to permit unfair discrimination between issuers. The
Commission has not received any comments on the proposal. This order
approves the proposed rule change, as modified by Amendment No 1.
---------------------------------------------------------------------------
\8\ In approving this proposed rule change, the Commission has
considered the proposed rule's impact on efficiency, competition,
and capital formation. See 15 U.S.C. 78c(f)
\9\ 15 U.S.C. 78f(b)(4)
\10\ 15 U.S.C. 78f(b)(5)
---------------------------------------------------------------------------
The Commission notes that companies who re-list upon emerging from
bankruptcy or who re-list upon a return to good standing following
delisting have usually paid listing fees to either the Exchange or to
another national securities exchange at the time of their initial
listing. In addition, with respect to the cap on annual fees for
companies listing upon emergence from bankruptcy, the Commission notes
that the fee cap is a temporary one, designed to enable recently
bankrupt companies to manage the costs associated with listing,
consistent with the desire in bankruptcy proceeding to ensure that
creditors are paid as much as possible. For these reasons, the Exchange
argues, the waiver of listing fees and the cap on annual fees are
equitable.
The Commission recognizes that, as drafted, the initial fee waiver
would extend to companies that have never listed on a national
securities exchange, which thus have never paid listing fees. In this
regard, the Exchange acknowledges that some companies other than those
returning to good standing after recent delisting--e.g., a company
trading on the over-the-counter market--may seek to take advantage of
the waiver of listing fees for companies not listed on a national
securities exchange but registered under the Act. However, the Exchange
expects the number of such companies eligible for the waiver to be very
small, since very few of these companies would meet the Exchange's
quantitative listing requirements.
The Commission also notes that the Exchange has represented that
the waiver of listing fees and the cap on annual fees should not have a
material financial impact on the exchange, or impact the Exchange's
resource commitment to its regulatory oversight of the listing process
or its regulatory programs.
Further, the proposal does not have any impact on whether a company
is actually eligible to list on the Exchange. The Commission expects,
and the Exchange has represented, that a full and independent review of
compliance with listing standards will be conducted for any company
seeking to take advantage of either of the fee waivers, just as for any
company that applies for listing on the Exchange.
In light of these arguments, the Commission agrees that the
proposed waiver and fee cap, which are retroactively effective to
February 22, 2007, the date of the filing of the proposed rule
change,\11\ do not constitute an inequitable allocation of reasonable
dues, fees, and other charges, do not permit unfair discrimination
between issuers, and are generally consistent with the Act.
---------------------------------------------------------------------------
\11\ See supra note 3
---------------------------------------------------------------------------
Pursuant to Section 19(b)(2) of the Act,\12\ the Commission finds
good cause for approving the proposal prior to the thirtieth day after
the publication of the proposal, as modified by Amendment No. 1, in the
Federal Register. The revisions to the proposed rule change made by
Amendment No. 1 do not raise any novel or substantive regulatory
issues, and clarify the proposal. Therefore, the Commission finds good
cause for approving the amended proposal on an accelerated basis.
---------------------------------------------------------------------------
\12\ 15 U.S.C. 78s(b)(2)
---------------------------------------------------------------------------
IV. Solicitation of Comments Concerning Amendment No. 1
Interested persons are invited to submit written data, views, and
arguments concerning the proposed rule change as modified by Amendment
No. 1, including whether it 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-NYSE-2007-19 on the subject line.
Paper Comments
Send paper comments in triplicate to Nancy M. Morris,
Secretary, Securities and Exchange Commission, Station Place, 100 F
Street, NE., Washington, DC 20549-1090.
All submissions should refer to File Number SR-NYSE-2007-19. 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 Room. 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 available publicly. All submissions should refer to
File Number SR-NYSE-2007-19 and should be submitted on or before June
7, 2007.
V. Conclusion
It is therefore ordered, pursuant to Section 19(b)(2) of the
Act,\13\ that the proposed rule change (File No. SR-NYSE-2007-19), as
modified by Amendment No. 1, be, and it hereby is, approved on an
accelerated basis.
---------------------------------------------------------------------------
\13\ Id.
[[Page 27895]]
---------------------------------------------------------------------------
For the Commission, by the Division of Market Regulation,
pursuant to delegated authority.\14\
---------------------------------------------------------------------------
\14\ 17 CFR 200.30-3(a)(12)
---------------------------------------------------------------------------
Jill M. Peterson,
Assistant Secretary.
[FR Doc. E7-9438 Filed 5-16-07; 8:45 am]
BILLING CODE 8010-01-P