[Federal Register Volume 87, Number 49 (Monday, March 14, 2022)]
[Notices]
[Pages 14312-14315]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2022-05248]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-94378; File No. SR-NYSE-2022-12]


Self-Regulatory Organizations; New York Stock Exchange LLC; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To 
Amend Sections 902.03 and 902.11 of the NYSE Listed Company Manual To 
Establish Fees for the Listing of Rights

March 8, 2022.
    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 February 25, 2022, 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 Exchange. 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 Sections 902.03 and 902.11 of the 
NYSE Listed Company Manual (the ``Manual'') to establish fees for the 
listing of rights and to remove rule text that is no longer applicable. 
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.

[[Page 14313]]

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

1. Purpose
    The Exchange recently adopted a new listing standard to provide for 
the listing of rights (See Section 703.12(II) of the Manual).\4\ The 
Exchange now proposes to adopt fees for listed rights.
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    \4\ See Securities Exchange Act Release No. 94075 (January 27, 
2022); 87 FR 5915 (February 2, 2022) (SR-NYSE-2022-03).
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    The Exchange proposes to adopt a fee schedule for listed rights 
equivalent to that currently applicable to listed warrants. Both types 
of securities represent the right to acquire shares of a listed equity 
security at a future time. The distinction is that, unlike warrants, 
rights are generally distributed without charge to all of the holders 
of a class of existing listed securities. Given the similarities, the 
Exchange anticipates that the resources devoted to the listing and 
regulation of rights will be substantially the same as is already the 
case for listed warrants. As such, the Exchange proposes to apply the 
same fee schedule to listed rights as it currently applies to warrants 
under Section 902.03 of the Manual. In connection with the listing of a 
class of warrants, Section 902.03 provides for a fee of $0.004 per 
warrant. Section 902.03 provides that listed warrants are subject to 
annual fees at a rate of $0.0017 per warrant, subject to a minimum 
annual fee of $5,000 per series of warrants. While the aforementioned 
fees currently apply to listed warrants, there are specific provisions 
for warrants of two types of issuers--foreign issuers and Acquisition 
Companies. As described below, the Exchange proposes to apply the same 
fees for rights associated with those types of companies.
    Section 902.03 includes text that describes fees for warrants 
issued by foreign companies, where the common equity securities into 
which the warrants are exercisable trade in the form of American 
Depositary Receipts on the Exchange. Specifically, Section 902.03 
provides that, where a listed company's primary listed security is an 
ADR and it lists warrants that are exercisable into the equity 
securities underlying such ADRs, it will be charged: (i) Initial 
listing fees for the warrants adjusted to reflect the maximum number of 
ADRs that could be created upon exercise of such warrants; and (ii) 
annual fees for the outstanding warrants adjusted to reflect the 
maximum number of ADRs that could be created upon exercise of such 
warrants. The Exchange proposes to apply these same provisions to 
rights issued by a foreign company where the company's primary listed 
security is an ADR and it lists rights that are exercisable into the 
equity securities underlying such ADRs.
    Section 902.11 sets forth the fees applicable to Acquisition 
Companies (i.e., Special Purpose Acquisition Companies or ``SPACs'') 
listed under Section 102.06 of the Manual. SPACs typically sell units 
in their initial public offering consisting of a common share and one 
or more warrants (or a fraction of a warrant). Under Section 902.11, a 
listed Acquisition Company is subject to a flat annual fee of $85,000, 
covering both its common shares and its warrants. The Exchange proposes 
to amend this provision to specify that the flat annual fee also covers 
any rights issued by the Acquisition Company.
    The Exchange also proposes to delete rule text from both Section 
902.03 and Section 902.11 regarding fees that were in effect for 
calendar years prior to 2022 but are no longer in effect, as this rule 
text is now irrelevant.
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 operates in a highly competitive marketplace for the 
listing of the various categories of securities, including the rights 
affected by the proposed fees. The Commission has repeatedly expressed 
its preference for competition over regulatory intervention in 
determining prices, products, and services in the securities markets. 
Specifically, in Regulation NMS,\8\ the Commission highlighted the 
importance of market forces in determining prices and SRO revenues and, 
also, recognized that current regulation of the market system ``has 
been remarkably successful in promoting market competition in its 
broader forms that are most important to investors and listed 
companies.'' \9\
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    \8\ Release No. 34-51808 (June 9, 2005); 70 FR 37496 (June 29, 
2005).
    \9\ See Regulation NMS, 70 FR at 37499.
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    The Exchange believes that the ever-shifting market share among the 
exchanges with respect to new listings and the transfer of existing 
listings between competitor exchanges demonstrates that issuers can 
choose different listing markets in response to fee changes. 
Accordingly, competitive forces constrain exchange listing fees. Stated 
otherwise, changes to exchange listing fees can have a direct effect on 
the ability of an exchange to compete for new listings and retain 
existing listings.
    As discussed above, rights are very similar in their structure to 
warrants. And the Exchange anticipates devoting substantially the same 
resources to the listing of a series of rights as it does to the 
listing of a series of warrants. Therefore, the Exchange believes that 
it is reasonable and represents an equitable allocation of its fees 
among market participants to apply to listed rights the existing fees 
currently charged to issuers of listed warrants.
    The Exchange believes that the proposal is not unfairly 
discriminatory because the same fee schedule will apply to all issuers 
of listed rights. In addition, rights have substantial structural 
similarities to warrants and the Exchange believes it is therefore 
appropriate to apply the same fee schedule to the two classes of 
securities. Conversely, rights are not similar in nature to any other 
class of securities listed on the Exchange, so the Exchange does not 
believe it is unfairly discriminatory to charge different fees for the 
listed rights than for any other class of listed securities other than 
warrants. Further, the Exchange operates in a competitive environment 
and its fees are constrained by competition in the marketplace. Other 
national securities exchanges currently list rights, and if a company 
believes that the Exchange's fees are unreasonable it can decide either 
not to list its rights or to list them on an alternative venue.
    The Exchange believes that the proposal to charge listing fees for 
rights on an ADR-equivalent basis is equitable and not unfairly 
discriminatory because

[[Page 14314]]

it would remove the anomalous outcome that a company whose listed ADRs 
represent multiple underlying common shares would otherwise be required 
to pay higher fees for the listing of rights exercisable into its 
listed equity securities than are paid by a company whose common stock 
is listed directly or whose listed ADRs represent a single common 
share.
    The Exchange recognizes that the proposal would result in a 
differential treatment of rights issued by companies with ADRs listed 
on the Exchange from that of other issuers of rights, leading to lower 
bills in many cases for the companies with listed ADRs. However, the 
Exchange notes that companies with listed ADRs that represent multiple 
underlying shares (or fractional shares) face unique circumstances when 
deciding how to structure their rights. If those companies want to 
market their rights in both their home market and the United States, 
there are clear advantages to the company and its investors if the same 
security is issued in both markets. In particular, issuing the same 
security avoids pricing confusion and, by ensuring complete 
fungibility, facilitates the movement of rights between the two markets 
in aftermarket trading. As the ADRs would not be traded in the home 
market and might not be properly understood by investors there, it is 
clear why a company would make the decision to issue rights to purchase 
a single common share in both markets rather than issuing rights to 
purchase ADRs in the US market and rights to purchase a single share in 
the home market. While other categories of listed companies may also 
sometimes choose to issue rights that are exercisable for multiple 
listed common shares or a fraction of a common share, their reasons for 
doing so are not the same unique market structural reasons that cause 
foreign companies to do so when their listed equity security is an ADR. 
Consequently, while the proposal does result in a different treatment 
of foreign companies with listed ADRs in a very limited circumstance, 
the Exchange believes that this proposed difference in treatment is not 
unfairly discriminatory. The Exchange also notes that foreign companies 
with listed ADRs would not always pay lower fees on rights if this 
proposal was adopted. Rather, the issuer would always pay fees on an 
ADR-equivalent basis, which would result in lower fees if the listed 
ADR represents multiple common shares and higher fees if it represents 
a fractional common share.
    The changes the Exchange proposes to make to Sections 902.02 and 
902.11 to remove provisions that are no longer needed, as they do not 
apply by their terms to any calendar year starting after January 1, 
2022, are non-substantive in nature.
    For the foregoing reasons, the Exchange believes that the proposal 
is consistent with the Act.

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.
Intramarket Competition
    The proposed amended fees will be charged to all listed issuers on 
the same basis. The Exchange does not believe that the proposed fees 
will have any meaningful effect on the competition among issuers listed 
on the Exchange.
Intermarket Competition
    The Exchange operates in a highly competitive market in which 
issuers can readily choose to list new securities on other exchanges 
and transfer listings to other exchanges if they deem fee levels at 
those other venues to be more favorable. Because competitors are free 
to modify their own fees in response, and because issuers may change 
their chosen listing venue, the Exchange does not believe its proposed 
fee change can impose any burden on intermarket 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) \10\ of the Act and subparagraph (f)(2) of Rule 
19b-4 \11\ thereunder, because it establishes a due, fee, or other 
charge imposed by the Exchange.
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    \10\ 15 U.S.C. 78s(b)(3)(A).
    \11\ 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) \12\ of the Act to determine whether the proposed 
rule change should be approved or disapproved.
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    \12\ 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-2022-12 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-2022-12. 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 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

[[Page 14315]]

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-2022-12 and should be submitted on or before April 4, 2022.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\13\
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    \13\ 17 CFR 200.30-3(a)(12).
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J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2022-05248 Filed 3-11-22; 8:45 am]
BILLING CODE 8011-01-P