[Federal Register Volume 81, Number 177 (Tuesday, September 13, 2016)]
[Notices]
[Pages 62937-62939]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-21914]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-78782; File No. SR-NYSE-2016-58]


Self-Regulatory Organizations; New York Stock Exchange LLC; 
Notice of Filing of Proposed Rule Change Amending Section 907.00 of the 
NYSE Listed Company Manual To Adjust the Timing of Entitlements to 
Complimentary Products and Services for Special Purpose Acquisition 
Companies

September 7, 2016.
    Pursuant to Section 19(b)(1) \1\ of the Securities Exchange Act of 
1934 (the ``Act'') \2\ and Rule 19b-4 thereunder,\3\ notice is hereby 
given that, on August 26, 2016, New York Stock Exchange LLC (``NYSE'' 
or the ``Exchange'') filed with the Securities and Exchange Commission 
(the ``Commission'') the proposed rule change as described in Items I, 
II, and III below, which Items have been prepared by the self-
regulatory organization. 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\ 15 U.S.C. 78a.
    \3\ 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 Exchange proposes to amend Section 907.00 of the NYSE Listed 
Company Manual (the ``Manual'') to adjust the service entitlements of 
special purpose acquisition companies (``SPACs'') under that rule. The 
proposed rule change is available on the Exchange's Web site at 
www.nyse.com, at the principal office of the Exchange, and at the 
Commission's Public Reference Room.

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 self-regulatory organization 
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 those statements may be examined at 
the places specified in Item IV below. The Exchange has prepared 
summaries, set forth in sections A, B, and C below, of the most 
significant parts of such statements.

[[Page 62938]]

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 amend Section 907.00 of the Manual to 
adjust the service entitlements of special purpose acquisition 
companies (``SPACs'') under that rule.
    The Exchange offers complimentary products and services for a 
period of 24 calendar months from the date of initial listing to a 
category of listed companies defined as Eligible New Listings. Eligible 
New Listings include: (I) Any U.S. company that lists common stock on 
the Exchange for the first time and any non-U.S. company that lists an 
equity security on the Exchange under Section 102.01 or 103.00 of the 
Manual for the first time, regardless of whether such U.S. or non-U.S. 
company conducts an offering and (ii) any U.S. or non-U.S. company 
emerging from a bankruptcy, spinoff (where a company lists new shares 
in the absence of a public offering), and carve-out (where a company 
carves out a business line or division, which then conducts a separate 
initial public offering).
    Eligible New Listings are eligible for services as a Tier A or Tier 
B company as follows:
     Tier A: For Eligible New Listings with a global market 
value of $400 million or more, calculated as of the date of listing on 
the Exchange, the Exchange offers market surveillance, market 
analytics, Web-hosting, Web-casting, corporate governance tools, and 
news distribution products and services for a period of 24 calendar 
months from the date of listing.
     Tier B: For Eligible New Listings with a global market 
value of less than $400 million, calculated as of the date of listing 
on the Exchange, the Exchange offers Web-hosting, market analytics, 
Web-casting, corporate governance tools, and news distribution products 
and services for a period of 24 calendar months from the date of 
listing.
    Notwithstanding the foregoing, however, if an Eligible New Listing 
begins to use a particular product or service provided for under 
Section 907.00 within 30 days of its initial listing date, the 
complimentary period will begin on the date of first use.\4\
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    \4\ The Exchange does not propose to make any changes in this 
filing to the values of the various services set forth above as 
provided to eligible listed companies as specified in Section 
907.00.
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    A SPAC is a special purpose company formed for the purpose of 
effecting a merger, capital stock exchange, asset acquisition, stock 
purchase, reorganization or similar business combination with one or 
more operating businesses or assets. To qualify for initial listing a 
SPAC must meet the requirements of Section 102.06 and 102.01A of the 
Manual.\5\ Section 102.06 of the Manual provides that the Exchange will 
consider on a case-by-case basis the appropriateness for listing of 
SPACs that conduct an initial public offering of which at least 90% of 
the proceeds, together with the proceeds of any other concurrent sales 
of the SPAC's equity securities, will be held in a trust account 
controlled by an independent custodian (the ``Trust Account'') until 
consummation of a business combination in the form of a merger, capital 
stock exchange, asset acquisition, stock purchase, reorganization, or 
similar business combination with one or more operating businesses or 
assets with a fair market value equal to at least 80% of the net assets 
held in trust (net of amounts disbursed to management for working 
capital purposes and excluding the amount of any deferred underwriting 
discount held in trust) (a ``Business Combination'' or the ``Business 
Combination Condition''). Under Section 102.06, the SPAC must be 
liquidated if no Business Combination has been consummated within a 
specified time period not to exceed three years. The Exchange will 
promptly commence delisting procedures with respect to any SPAC that 
fails to consummate its Business Combination within (i) the time period 
specified by its constitutive documents or by contract or (ii) three 
years, whichever is shorter.
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    \5\ Section 102.06 refers to SPACs as ``acquisition companies'' 
or ``ACs.''
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    The Exchange now proposes to amend Section 907.00 to exclude newly-
listed SPACs from the definition of Eligible New Listings. In lieu of 
receiving these services at the time of initial listing, the proposed 
amended rule would treat a SPAC that remains listed after meeting the 
Business Combination Condition as an Eligible New Listing and would 
provide the services to which that status would entitle it for 24 
months from the date of meeting the Business Combination Condition.
    The Exchange believes this approach is appropriate in light of the 
special characteristics of a SPAC. SPACs raise money on a one-time 
basis and typically trade at a price that is very close to their 
liquidation value. As such, SPAC managements are typically not focused 
on their stock price and investor relations to the same degree as 
operating companies are. As the services provided to Eligible New 
Listings are targeted in large part on those market-driven concerns of 
newly-listed operating companies, they are less useful to SPACs. A SPAC 
that has met the Business Combination Condition, on the other hand, is 
similarly situated to a newly-formed publicly-traded operating company 
and the Exchange believes that the services provided to Eligible New 
Listings will be as relevant and attractive to a SPAC that has met the 
Business Combination Condition as to the newly-listed operating 
companies that are generally eligible for those services.
    The Exchange believes that companies will often require a period of 
time after meeting the Business Combination Condition to complete the 
contracting and training process with vendors providing the 
complimentary products and services. Therefore, many companies may not 
be able to begin using the suite of products offered to them 
immediately on becoming eligible. To address this issue, the Exchange 
proposes to specify in Section 907.00 that if a SPAC that has met the 
Business Combination Condition begins using a particular service within 
30 days after the date of meeting the Business Combination Condition, 
the complimentary period begins on such date of first use. In all other 
instances, the complimentary period will begin on the date the SPAC 
meets the Business Combination Condition.
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with Section 6(b) of the Act,\6\ in general, and furthers the 
objectives of Sections 6(b)(4) \7\ of the Act, in particular, in that 
it is designed to provide for the equitable allocation of reasonable 
dues, fees, and other charges among its members and issuers and other 
persons using its facilities. The Exchange also believes that the 
proposed rule change is consistent with Section 6(b)(5) \8\ of the Act 
in that it is not designed to permit unfair discrimination between 
customers, issuers, brokers, or dealers.
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    \6\ 15 U.S.C. 78f(b).
    \7\ 15 U.S.C. 78f(b)(4).
    \8\ 15 U.S.C. 78f(b)(5).
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    The Exchange believes that it is reasonable to offer complimentary 
products and services to attract and retain listings and respond to 
competitive pressures. As SPACs are unlikely to utilize the services 
available to them currently at the time of initial listing but would 
likely find those services useful if they remain listed after

[[Page 62939]]

they meet the Business Combination Condition, the Exchange believes it 
is reasonable to shift the time when SPACs are eligible for the 
services available to Eligible New Listings to the period immediately 
after meeting the Business Combination Condition.
    The Exchange believes that it is not unfairly discriminatory to 
provide SPACs with the applicable services only if and when they meet 
the Business Combination Condition. The Exchange recognizes that not 
all SPACs will meet the Business Combination Condition and that some 
listed SPACs will therefore never become eligible for the services that 
would be provided to an otherwise similarly qualified operating 
company. However, given the specific characteristics of the SPAC 
structure, these services are generally not of any particular value to 
a SPAC prior to meeting the Business Combination Condition and the 
Exchange therefore believes that those SPACs that never qualify for the 
services will not suffer any meaningful detriment as a consequence.
    Allowing SPACs up to 30 days after meeting the Business Combination 
Condition to start using the complimentary products and services is a 
reflection of the Exchange's experience that it can take companies a 
period of time to review and complete necessary contracts and training 
for services following their becoming eligible for those services. 
Allowing this modest 30 day period, if the company needs it, helps 
ensure that the company will have the benefit of the full period 
permitted under the rule to actually use the services, thus giving 
companies the full intended benefit.

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. In many cases, SPACs will 
consider transferring to a new listing venue at the time they meet the 
Business Combination Condition. The proposed rule change enables the 
Exchange to compete for the retention of these companies by offering 
them a package of complimentary products and services that assist their 
transition to being a publicly listed operating company for the first 
time. All similarly situated companies are eligible for the same 
package of services. Therefore, the proposed amendment to Section 
907.00 will increase competition by enabling the Exchange to more 
effectively compete for listings.

C. Self-Regulatory Organization's Statement on Comments on the Proposed 
Rule Change Received From Members, Participants, or Others

    No written comments were solicited or received with respect to the 
proposed rule change.

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

    Within 45 days of the date of publication of this notice in the 
Federal Register or up to 90 days (i) as the Commission may designate 
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 or disapprove 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 email to [email protected]. Please include 
File Number SR-NYSE-2016-58 on the subject line.

Paper Comments

     Send paper comments in triplicate to Brent J. Fields, 
Secretary, Securities and Exchange Commission, 100 F Street NE., 
Washington, DC 20549-1090.

All submissions should refer to File Number SR-NYSE-2016-58. This file 
number should be included on the subject line if email 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 Web site viewing and 
printing in the Commission's Public Reference Room, 100 F Street NE., 
Washington, DC 20549 on official business days between the hours of 
10:00 a.m. and 3:00 p.m. Copies of the 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-2016-58 and should be 
submitted on or before October 4, 2016.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\9\
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    \9\ 17 CFR 200.30-3(a)(12).
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Brent J. Fields,
Secretary.
[FR Doc. 2016-21914 Filed 9-12-16; 8:45 am]
BILLING CODE 8011-01-P