[Federal Register Volume 84, Number 107 (Tuesday, June 4, 2019)]
[Notices]
[Pages 25856-25858]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-11560]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-85961; File No. SR-NYSE-2019-30]
Self-Regulatory Organizations; New York Stock Exchange LLC;
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To
Adopt a Listing Fee Schedule for Pre-Revenue Companies
May 29, 2019.
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 May 16, 2019, 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 adopt a listing fee schedule specific to
companies that have not generated any significant revenues at the time
of their original listing. The proposed rule change is available on the
Exchange's website 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.
A. Self-Regulatory Organization's Statement of the Purpose of, and the
Statutory Basis for, the Proposed Rule Change
1. Purpose
The Exchange's Global Market Capitalization Test (as set forth in
Section 102.01C of the Exchange's Listed Company Manual (the
``Manual'')) allows the Exchange to list companies that have not yet
recorded any significant revenues, provided the issuer has at least a
$200 million global market capitalization and meets the other
requirements for listing. These companies are typically engaged in
research and development (in many cases they are biotechnology
companies focused on developing new drug candidates) or are in the
early stages of commercialization of a product.
[[Page 25857]]
Generally, a company of this kind relies primarily on the proceeds from
its initial public offering to fund its operations. As such, the fees
charged by the Exchange represent a more significant expense for these
companies than they do for other newly-listed companies and in many
cases these fees are an impediment to the Exchange in competing for the
listing of these companies.
To address the issues described above, the Exchange proposes to
amend Section 902.02 of the Manual to adopt a discounted annual fee
schedule for newly-listed companies that list on or after June 1, 2019
and have not recorded in excess of $5 million of revenue in either (i)
the most recent completed fiscal year prior to listing or (ii) during
the year of listing through the most recently completed fiscal quarter
before the listing date (``Pre-Revenue Companies'').\4\ The Annual Fees
of any company that qualifies as a Pre-Revenue Company at the time of
listing will be calculated quarterly for the fiscal quarter in which it
lists and in each of the succeeding 12 full fiscal quarters, at a rate
of one-fourth of the applicable Annual Fee rate. In addition, the total
fees (including Listing Fees and Annual Fees, but excluding Listing
Fees paid at the time of initial listing) that may be billed to such an
issuer during this period will 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. This fee cap is subject to the same exclusions
as apply in relation to the $500,000 per year fee cap described under
``Total Maximum Fee Payable in a Calendar Year.'' If there are one or
more fiscal quarters remaining in the calendar year after the
conclusion of the period described in this paragraph, the issuer will,
on a prorated basis, be billed the regular Annual Fee subject to the
$500,000 total fee cap for the remainder of that calendar year.
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\4\ The Exchange will rely on a company's revenues as reported
in its SEC filings for purposes of determining whether it qualifies
as a Pre-Revenue Company.
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The Exchange believes the proposed fee schedule for Pre-Revenue
Companies is reasonable, as paying the Exchange's fees is more
burdensome for these early stage companies than it is for companies
that generate significant revenues from operations. The Exchange
believes that it is reasonable to apply the reduced fee level for a
limited period, as Pre-Revenue Companies typically begin to generate
significant revenues from operations within three years from the time
of initial listing.
The proposed rule change would not affect the Exchange's commitment
of resources to its regulatory oversight of the listing process or its
regulatory programs.
2. Statutory Basis
The Exchange believes that the proposed rule change is consistent
with Section 6(b) of the Act,\5\ in general, and furthers the
objectives of Section 6(b)(4) \6\ of the Act, in particular, in that it
is designed to provide for the equitable allocation of reasonable dues,
fees, and other charges. The Exchange also believes that the proposed
rule change is consistent with Section 6(b)(5) of the Act,\7\ in that
it is designed to promote just and equitable principles of trade, to
foster cooperation and coordination with persons engaged in regulating,
clearing, settling, processing information with respect to, and
facilitating transactions in securities, to remove impediments to and
perfect the mechanism of a free and open market and a national market
system, and, in general, to protect investors and the public interest
and is not designed to permit unfair discrimination between customers,
issuers, brokers, or dealers.
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\5\ 15 U.S.C. 78f(b).
\6\ 15 U.S.C. 78f(b)(4).
\7\ 15 U.S.C. 78f(b)(5).
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The Exchange believes that it is not unfairly discriminatory and
represents an equitable allocation of reasonable fees to adopt the
proposed separate fee schedule for Pre-Revenue Companies, as those
companies have limited resources and the Exchange's fees are more
burdensome for them than they are for companies that are generating
significant revenues from operations.
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. The proposed rule change is
designed to ensure that the fees charged by the Exchange accurately
reflect the services provided and benefits realized by listed
companies. The market for listing services is extremely competitive.
Each listing exchange has a different fee schedule that applies to
issuers seeking to list securities on its exchange. Issuers have the
option to list their securities on these alternative venues based on
the fees charged and the value provided by each listing. Because
issuers have a choice to list their securities on a different national
securities exchange, the Exchange does not believe that the proposed
fee changes impose a burden on competition.
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
The foregoing rule change is effective upon filing pursuant to
Section 19(b)(3)(A) \8\ of the Act and subparagraph (f)(2) of Rule 19b-
4 \9\ thereunder, because it establishes a due, fee, or other charge
imposed by the Exchange.
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\8\ 15 U.S.C. 78s(b)(3)(A).
\9\ 17 CFR 240.19b-4(f)(2).
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At any time within 60 days of the filing of such proposed rule
change, the Commission summarily may temporarily suspend 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. If the Commission
takes such action, the Commission shall institute proceedings under
Section 19(b)(2)(B) \10\ of the Act to determine whether the proposed
rule change should be approved or disapproved.
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\10\ 15 U.S.C. 78s(b)(2)(B).
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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-2019-30 on the subject line.
Paper Comments
Send paper comments in triplicate to Secretary, Securities
and Exchange Commission, 100 F Street NE, Washington, DC 20549-1090.
All submissions should refer to File Number SR-NYSE-2019-30. 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
[[Page 25858]]
only one method. The Commission will post all comments on the
Commission's internet website (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 website 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. Persons submitting comments are
cautioned that we do not redact or edit personal identifying
information from comment submissions. You should submit only
information that you wish to make available publicly. All submissions
should refer to File Number SR-NYSE-2019-30 and should be submitted on
or before June 25, 2019.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\11\
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\11\ 17 CFR 200.30-3(a)(12).
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Eduardo A. Aleman,
Deputy Secretary.
[FR Doc. 2019-11560 Filed 6-3-19; 8:45 am]
BILLING CODE 8011-01-P