[Federal Register Volume 87, Number 156 (Monday, August 15, 2022)]
[Notices]
[Pages 50140-50142]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2022-17435]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-95460; File No. SR-LTSE-2022-04]


Self-Regulatory Organizations; Long-Term Stock Exchange, Inc.; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change 
Relating to a Temporary Reduction in the Annual Listing Fee

August 9, 2022.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(the ``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given 
that on July 27, 2022, Long-Term Stock Exchange, Inc. (``LTSE'' 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\ 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

    LTSE proposes a rule change to: (i) amend the Annual Listing Fee 
applicable for Companies renewing their listing for calendar year 2023, 
and (ii) make a minor clarifying change to the Initial Listing Fee 
provisions.
    The text of the proposed rule change is available at the Exchange's 
website at https://longtermstockexchange.com/, at the principal office 
of the Exchange, and at the Commission's Public Reference Room.

II. Self-Regulatory Organization's Statement on 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 these statements may be examined at 
the places specified in Item IV below. The self-regulatory organization 
has prepared summaries, set forth in Sections A, B, and C below, of the 
most significant aspects of such statements.

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

1. Purpose
    The Exchange is filing this proposed rule change to amend Rule 
14.601 to reduce the Annual Listing Fee for any listed Company \3\ 
renewing its listing for calendar year 2023 by 40 percent in light of 
the recent market dislocation. The Initial Listing Fees would remain at 
their current levels.\4\
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    \3\ Capitalized terms shall have the meaning provided in the 
LTSE Rule Book. See e.g., LTSE Rule 14.002(a)(8) [sic] (definition 
of ``Company'').
    \4\ A Company that lists on the Exchange is assessed an Initial 
Listing Fee at the time it lists, which covers the period from date 
of listing until the end of the calendar year. The Annual Listing 
Fee is assessed on a Company for remaining listed on the Exchange in 
a subsequent year.
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a. Annual Listing Fee
    Upon listing its Primary Equity Securities on LTSE, a Company is 
assessed an Initial Listing Fee in accordance with LTSE Rule 
14.601(a)(1). The amount of the Initial Listing Fee is set forth in the 
fee schedule in LTSE Rule 14.601(a)(3) and is based on the market 
capitalization of the Company when it lists on the Exchange.\5\
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    \5\ The Initial Listing Fee is prorated based on the number of 
trading days in the year remaining at the time of a Company's 
initial listing. See LTSE Rule 14.601(a)(1)(iv).
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    For each subsequent year that a Company remains listed on the 
Exchange, it is assessed an Annual Listing Fee. The Annual Listing Fee 
for a Company's Primary Equity Securities also is based on the 
Company's market capitalization. Specifically, the Annual Listing Fee 
for an upcoming calendar year is calculated on December 1 (or such date 
of listing if after December 1), and is based on the company's Form 10-
Q and Form 10-K filings over the prior four fiscal quarters. Thus, the 
Annual Listing Fee is calculated from filings covering the fourth 
quarter of the prior calendar year and the first three quarters of the 
current calendar year. Where a Company does not have Form 10-Q and Form 
10-K filings for the prior four fiscal quarters, its Annual Listing Fee 
is calculated in the same manner as its Initial Listing Fee (but not

[[Page 50141]]

at the prorated level).\6\ The Annual Listing Fee is not refunded if a 
company is delisted or elects to delist during the calendar year.\7\
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    \6\ LTSE Rule 14.601(a)(2)(i).
    \7\ LTSE Rule 14.601(a)(2)(ii).
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    In light of the recent market dislocation as discussed below, LTSE 
is reducing its Annual Listing Fee by 40 percent for any listed Company 
renewing its listing for calendar year 2023. This fee reduction will 
apply only to a Company that will be assessed an Annual Listing Fee in 
2022 for purposes of remaining listed on LTSE for calendar year 
2023.\8\ The 40 percent reduction applies only to the Annual Listing 
Fee; the Initial Listing Fee remains unchanged. Additionally, the 
reduction in the Annual Listing Fee pursuant to the proposed rule 
change is applicable only for an Annual Listing Fee assessed in 2022 
for purposes of remaining listed on LTSE for calendar year 2023.
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    \8\ Likewise, all Companies who will be assessed an Annual 
Listing Fee in December 2023 for remaining listed on the Exchange in 
2024 will do so in accordance with the same fee schedule. This is a 
one time reduction and does not carry forward to listed Companies in 
subsequent years.
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    To better reflect the temporary divergence in the Initial Listing 
Fee and Annual Listing Fee, LTSE is creating two separate fee 
schedules.\9\
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    \9\ See Rule 14.602(a)(3)(i) covering the Initial Listing Fee, 
and Rule 14.602(a)(3)(ii) covering the Annual Listing Fee.
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    The Exchange believes that it is reasonable and appropriate to 
temporarily reduce the Annual Listing Fee in light of the recent 
significant market dislocation. The broad-based market dislocation in 
the first half of 2022 has led stocks to some of their largest declines 
in many decades.\10\ Although these market-wide dislocations are in 
many cases unrelated to the long-term fundamentals of a company, their 
impact to Companies in the short-term is real. The Exchange is designed 
to support Companies in realizing their success over the long-term, and 
the temporary reduction in the Annual Listing Fee recognizes the 
pressures created by current market conditions.\11\ Additionally, 
inasmuch as the market for listings is highly competitive, the Exchange 
believes that a temporary reduction in Annual Listing Fees is 
appropriate to signal its commitment to those Companies that have 
listed on the Exchange or long-term focused Companies that may do so 
later this year under the current macroeconomic climate.
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    \10\ Akuna Otani, Markets Post Worst First Half of a Year in 
Over Five Decades, Wall Street Journal (June 30, 2022). https://www.wsj.com/articles/markets-head-toward-worst-start-to-a-year-in-decades-11656551051.
    \11\ See, e.g., Martin Alvarez, The Canary in the Capital 
Markets' Coal Mine: Protecting Long-Term Strategy, Medium (May 16, 
2022) https://medium.com/@martin_46598/the-canary-in-the-capital-markets-coal-mine-protecting-long-term-strategy-62c5044bcdc7; Martin 
Alvarez, Fasten your Seatbelts: The Fed and the Art of Economic 
Cycle Maintenance, Medium (June 27, 2022) https://medium.com/@martin_46598/fasten-your-seatbelts-the-fed-and-the-art-of-economic-cycle-maintenance-ff669b8781b3.
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    The Exchange does not believe that the proposed temporary reduction 
in its Annual Listing Fee will have any adverse impact on the amount of 
funds available for its regulatory program.
b. Initial Listing Fee
    In addition, the proposed rule change would make a minor clarifying 
change to paragraph (a)(1)(iv) to provide that the reference to 
prorating the Initial Listing Fee is based on the number of remaining 
trading days after listing on the Exchange in that calendar year. Since 
the Initial Listing Fee covers only the calendar year in which a 
Company initially lists on the Exchange, the phrase ``remaining trading 
days after listing on the Exchange'' was always intended to refer to 
the number of remaining trading days in the calendar year of listing; 
the proposed rule change now makes that explicit.
2. Statutory Basis
    The Exchange believes the proposed rule change is consistent with 
the requirements of Section 6(b) of the Act \12\ in general, and 
furthers the objectives of Section 6(b)(4) of the Act \13\ in 
particular, because it provides for the equitable allocation of 
reasonable dues, fees, and other charges among its members, issuers, 
and other persons using its facilities. The Exchange also believes that 
the proposed rule change is consistent with the requirements of Section 
6(b)(5) of the Act \14\ because 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 and dealers.
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    \12\ 15 U.S.C. 78f(b).
    \13\ 15 U.S.C. 78f(b)(4).
    \14\ 15 U.S.C. 78f(b)(5).
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    The Exchange believes that the temporary reduction of the Annual 
Listing Fee for remaining listed on the Exchange for calendar year 2023 
represents an equitable allocation of charges among issuers and is non 
unfairly discriminatory in that it applies a consistent 40% fee 
reduction to the Annual Listing Fee for all Companies listed on the 
Exchange, or any company that becomes listed on the Exchange in 2022, 
which will then be assessed an Annual Listing Fee in 2022 to remain 
listed in calendar year 2023. LTSE further believes that the proposed 
rule change is reasonable and appropriate in view of the highly 
competitive market for listings and the disruptions faced by Companies 
as a result of the recent market dislocation. The benefits to a 
Company, its shareholders and stakeholders from pursuing long-term 
value creation were discussed extensively in the background and 
rationale for LTSE's Long-Term Policies.\15\ While LTSE believes that 
the current environment reinforces the importance for a Company to 
demonstrate its commitment to long-termism and the Long-Term Policies 
set forth in Rule 14.425, the Exchange believes that a temporary 
reduction in the Annual Listing Fee is reasonable and appropriate in 
the current environment where companies have resource constraints.\16\ 
As noted above, the proposed rule change applies the reduction to the 
Annual Listing Fee to all Companies who will be charged such fee to 
remain listed on the Exchange in 2023.
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    \15\ See Securities Exchange Act Release No. 86327 (July 8, 
2019), 84 FR 33293 (July 12, 2019).
    \16\ The Exchange considered, but ultimately decided against, 
proposing a similar, temporary reduction in the Initial Listing 
Fees. Because any Company that lists on LTSE this year would receive 
the benefit of the reduced Annual Listing Fee for remaining listed 
on the Exchange in 2023, it was decided that amending the Initial 
Listing Fees, which are also already prorated, was unnecessary.
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    Additionally, the Exchange operates in a highly competitive market 
for the listing of Primary Equity Securities. The Commission has 
repeatedly expressed its preference for competition over regulatory 
intervention in determining prices, products, and services in the 
securities markets. A temporary reduction in Annual Listing Fee 
contributes to the competitive marketplace. The Exchange believes 
therefore that the proposed rule change supports an open market and the 
national market system, and is consistent with the public interest.
    Finally, the Exchange believes that the proposed clarifying text 
regarding the Initial Listing Fees is consistent with Section 6(b)(5) 
of the Act in that it merely clarifies the meaning of an existing rule, 
with further clarity being in the public interest.

[[Page 50142]]

B. Self-Regulatory Organization's Statement on Burden on Competition

    LTSE does not believe that the proposed rule change will result in 
any burden on competition that is not necessary or appropriate in 
furtherance of the purposes of the Act. The proposed rule change would 
establish a temporary reduction in the Annual Listing Fee.
    The market for listing services is highly competitive. Each listing 
exchange has established a fee schedule that applies to issuers seeking 
to list securities, or keep their securities listed, 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 rule change imposes a burden on competition.
    Intramarket Competition. The proposed rule change would establish a 
temporarily-reduced Annual Listing Fee that will be charged to all 
Companies listed on LTSE on the same basis. The Exchange does not 
believe that the proposed temporary fee change will have any meaningful 
effect on the competition among issuers listed on the Exchange. Again, 
the reduced Annual Listing Fee is available for all Companies that are 
listed on LTSE in calendar year 2022 for purposes of remaining listed 
for calendar year 2023.
    Intermarket Competition. The Exchange operates in a highly 
competitive market in which issuers can readily choose to list 
securities on other exchanges and transfer listings to other exchanges 
if they deem fee levels at those other venues to be more favorable. 
Consequently, the Exchange does not believe the proposed rule change 
will impose any burden on intermarket competition in a manner that is 
not necessary or appropriate in furtherance of the purposes of the Act. 
The Exchange also notes that other listing venues adjust their fees 
from time to time.\17\
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    \17\ See, e.g., Securities Exchange Act Release No. 90519 
(November 25, 2020), 85 FR 77324 (December 1, 2020) (Nasdaq's Notice 
of Filing and Immediate Effectiveness of Proposed Rule Change To 
Modify Certain Annual Listing Fees).
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C. Self-Regulatory Organization's Statement on Comments on the Proposed 
Rule Change Received From Members, Participants, or Others

    Written comments were neither solicited nor received.

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

    The foregoing proposal has become effective pursuant to section 
19(b)(3)(A)(ii) of the Act,\18\ and Rule 19b-4(f)(2) \19\ thereunder. 
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 to determine whether 
the proposed rule should be approved or disapproved.
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    \18\ 15 U.S.C. 78s(b)(3)(A)(ii).
    \19\ 17 CFR 240.19b-4(f)(2).
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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-LTSE-2022-04 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-LTSE-2022-04. 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 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-LTSE-2022-04 and should be submitted on 
or before September 6, 2022.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\20\
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    \20\ 17 CFR 200.30-3(a)(12).
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J. Matthew DeLesDernier,
Deputy Secretary.
[FR Doc. 2022-17435 Filed 8-12-22; 8:45 am]
BILLING CODE 8011-01-P