[Federal Register Volume 72, Number 119 (Thursday, June 21, 2007)]
[Notices]
[Pages 34325-34326]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E7-12017]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-55917; File No. SR-NYSEArca-2007-22]


Self-Regulatory Organizations; NYSE Arca, Inc.; Order Approving 
Proposed Rule Change as Amended by Amendments No. 1, 2, and 3 Thereto 
Relating to Listing and Annual Fees for Derivative Securities Products, 
Closed-End Funds and Structured Products

June 15, 2007.

I. Introduction

    On February 27, 2007, the NYSE Arca, Inc. (``NYSE Arca'' or the 
``Exchange''), through its wholly owned subsidiary, NYSE Arca Equities, 
Inc., filed with the Securities and Exchange Commission 
(``Commission''), pursuant to Section 19(b)(1) of the Securities 
Exchange Act of 1934 (``Act'') \1\ and Rule 19b-4 thereunder,\2\ a 
proposal to restructure and amend its Schedule of Fees and Charges 
(``Fee Schedule'') to revise fees applicable to Derivative Securities 
Products, Closed-End Funds, and Structured Products listed on NYSE 
Arca, L.L.C., the equities facility of NYSE Arca Equities. NYSE Arca 
filed Amendment No. 1 to the proposed rule change on May 1, 2007 and 
filed Amendment No. 2 to the proposed rule change on May 3, 2007. The 
proposed rule change was published for comment in the Federal Register 
on May 14, 2007.\3\ On June 12, 2007, NYSE Arca filed Amendment No. 3 
to the proposed rule change.\4\ The Commission received no comments 
regarding the proposal. This order approves the proposed rule change, 
as amended.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ See Securities Exchange Act Release No. 55720 (May 7, 2007), 
72 FR 27160 (``Notice'').
    \4\ For a description of Amendment No. 3, see Description of the 
Proposal, infra. Amendment No. 3 is a technical amendment, therefore 
it is not subject to notice and comment.
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II. Description of the Proposal

    NYSE Arca proposes to substantially revise its Fee Schedule. In 
particular, as detailed in its proposal,\5\ NYSE Arca proposes to (1) 
eliminate the Application Processing Fee for Derivative Securities 
Products,\6\ Closed-End Funds,\7\ and Structured Products; (2) impose 
an original listing fee of $5,000 per Derivative Securities Product; 
(3) amend the annual fee for some Derivative Securities Products; and 
(4) establish a separate listing and annual fees for Closed-End Funds. 
NYSE Arca also proposes a number of related modifications to the Fee 
Schedule, including fee discounts, limitations, minimums and caps for 
Closed-End Funds.\8\
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    \5\ See Notice, supra note 3.
    \6\ For purposes of this proposal, Derivative Securities 
Products include securities qualified for listing and trading on 
NYSE Arca under the following NYSE Arca Equities Rules: Rule 
5.2(j)(3) (Investment Company Units), 5.2(j)(5) (Equity Gold 
Shares), 8.100 (Portfolio Depositary Receipts), 8.200 (Trust Issued 
Receipts), 8.201 (Commodity-Based Trust Shares), 8.202 (Currency 
Trust Shares), 8.300 (Partnership Units), and 8.400 (Paired Trust 
Securities), as these rules may be amended from time to time.
    \7\ Closed-End Funds are a type of investment company registered 
under the Investment Company Act of 1940 that offer a fixed number 
of shares. Their assets are professionally managed in accordance 
with the Closed-End Fund's investment objectives and policies, and 
may be invested in stocks, fixed income securities or a combination 
of both.
    \8\ In addition, NYSE Arca proposed to amend the Fee Schedule to 
specify that for other structured products the $20,000 Listing Fee 
applies to an initial listing (e.g., a listing transfer to NYSE Arca 
from another exchange) in addition to Initial Public Offerings.
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    NYSE Arca proposes to implement these revised fees, as applicable, 
to all issuers of Derivative Securities Products, Closed-End Funds, and 
Structured Products retroactively as of January 1, 2007 with the 
exception of listing fees for Closed-End Funds, which would take effect 
as of the date of Commission approval of the proposed rule change.

Amendment No. 3

    In Amendment No. 3, NYSE Arca proposes minor revisions to the Fee 
Schedule to correct the grammar in certain sections of the rule text 
and to conform the rule text to proposed rule changes that were 
recently approved by the Commission. Amendment No. 3 does not change 
the proposal substantively. Specifically, NYSE Arca amended the rule 
text to clarify the three examples in which the listing fee cap for 
Closed-End Funds would apply, in particular: (1) When shares are issued 
in conjunction with a merger or consolidation where a listed company 
survives; (2) subsequent public offerings of a listed security; or (3) 
where there are conversions of convertible securities into a listed 
security. Amendment No. 3 also clarified that when listing additional 
Closed-End Funds, the issuer will be billed a listing fee that is the 
greater of $2,500 or the fee calculated on a per share basis.

III. Discussion

    After careful consideration, the Commission finds that the proposed 
rule change is consistent with the requirements of the Act and the 
rules and regulations thereunder applicable to a national securities 
exchange \9\ and, in particular, the requirements of Section 6 of the 
Act.\10\ Specifically, the Commission finds that the proposed rule 
change is consistent with Section 6(b)(5) of the Act,\11\ which 
requires, among other things, that the rules of a national securities 
exchange be designed to promote just and equitable principles of trade, 
to remove impediments to and perfect the mechanism of a free and open 
market and a national market system, and, in

[[Page 34326]]

general, to protect investors and the public interest. The Commission 
also finds that the proposed rule change is consistent with Section 
6(b)(4) of the Act,\12\ which requires that the rules of the exchange 
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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    \9\ In approving this proposed rule change, the Commission has 
considered the proposed rule's impact on efficiency, competition, 
and capital formation. 15 U.S.C. 78c(f).
    \10\ 15 U.S.C. 78f.
    \11\ 15 U.S.C. 78f(b)(5).
    \12\ 15 U.S.C. 78f(b)(4).
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    NYSE Arca's proposal specifies the listing fees and annual fees 
applicable to Derivative Securities Products, Closed-End Funds, and 
Structured Products. Numerical examples on how fees are calculated 
provide appropriate clarification, where necessary.\13\ The Commission 
notes that the amended Fee Schedule will in some cases reduce and in 
some cases increase the applicable listing fees and annual fees owed by 
issuers, depending on various factors including the number of funds 
listed by the same issuer, the shares outstanding for each fund, and 
with respect to Closed-End Funds, the applicability of fee discounts, 
limitations, minimums and caps.
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    \13\ For example, the Fee Schedule specifies that treasury 
stock, restricted stock and shares issued in conjunction with the 
exercise of an over-allotment option, if applicable, are included in 
the number of shares a Closed-End Fund is billed for at the time a 
security is first listed.
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    The Commission notes that the revised Annual Fee for Derivative 
Securities Products would be billed quarterly in arrears, beginning 
after the first calendar quarter in 2007, effective as of January 1, 
2007.\14\ The proposed Annual Fee for Closed-End Funds would apply as 
of January 1, 2007, and, for issuers listed in calendar year 2007, will 
be pro-rated based on days listed in 2007. The proposed listing fees 
for Derivative Securities Products would also be effective as of 
January 1, 2007 while the listing fees for Closed-End Funds will be 
effective as of the date of this approval order. NYSE Arca represented 
that the retroactive fees would affect only a few issuers, specifically 
two issuers of Investment Company Units (Derivative Securities 
Products) \15\ and three Closed-End Funds, all of which are aware of 
the proposed listing and annual fees.
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    \14\ Billing for the first calendar quarter of 2007, for 
example, will be based on the number of shares outstanding for an 
issue on March 30, 2007. For example, for an issue with 45 million 
shares outstanding on March 30, 2007, the Annual Fee payable for the 
quarter would be $1,000 ($4,000 Annual Fee divided by 4). If, at the 
end of the second calendar quarter of 2007, the number of shares 
outstanding for such issue increased to 55 million, the Annual Fee 
payable for such quarter would be $2,000 ($8,000 Annual Fee divided 
by 4). For the list of revised annual fees, see Notice, supra note 
3.
    \15\ NYSE Arca represented that the retroactive fees would not 
affect the Derivative Securities Products currently listed on the 
Exchange. The Investment Company Units of one issuer with two 
separate trusts was a transfer from another national securities 
exchange and not subject to a listing fee in accordance with 
Commentary .04 to the Exchange's Fee Schedule (which will cease to 
have effect on December 31, 2007). An additional issuer, which 
listed a series of Investment Company Units on the Exchange on March 
28, 2007, would incur $5,000 under the proposed fee schedule, rather 
than the current $20,000 initial listing fee and, thus, benefit from 
this proposal.
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    The Commission believes the Fee Schedule overall is consistent with 
the Act. The Commission notes that the proposed annual and listing fees 
are identical to the fee schedule for Closed-End Funds and Derivative 
Securities Products of the New York Stock Exchange LLC (``NYSE'') as 
set forth in Sections 902.04 and 902.07 of the NYSE Listed Company 
Manual. The Commission notes that applying sections of the amended Fee 
Schedule, effective as of January 1, 2007, will enable the Exchange to 
apply its Fee Schedule uniformly to all affected issuers listed on the 
Exchange, including those listed in the first quarter of 2007, who may 
benefit from cost savings resulting from the revised Fee Schedule.

IV. Conclusion

    It is therefore ordered, pursuant to Section 19(b)(2) of the 
Act,\16\ that the proposed rule change, as amended, (SR-NYSEArca-2007-
22) is hereby approved.
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    \16\ 15 U.S.C. 78s(b)(2).

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\17\
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    \17\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. E7-12017 Filed 6-20-07; 8:45 am]
BILLING CODE 8010-01-P