[Federal Register Volume 89, Number 142 (Wednesday, July 24, 2024)]
[Notices]
[Pages 59941-59944]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-16222]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-100551; File No. SR-CboeBZX-2024-065]


Self-Regulatory Organizations; Cboe BZX Exchange, Inc.; Notice of 
Filing and Immediate Effectiveness of a Proposed Rule Change To Modify 
the Fees the Exchange Charges Companies Seeking a Review of a Delisting 
Determination, Public Reprimand Letter, or Written Denial of an Initial 
Listing Application

July 18, 2024.
    Pursuant to Section 19(b)(1) \1\ of the Securities Exchange Act of 
1934 (``Act'') and Rule 19b-4 thereunder,\2\ notice is hereby given 
that on July 3, 2024, Cboe BZX Exchange, Inc. (the ``Exchange'' or 
``BZX'') 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\ 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

    Cboe BZX Exchange, Inc. (``BZX'' or the ``Exchange'') is filing 
with the Securities and Exchange Commission (``Commission'' or ``SEC'') 
a proposed rule change to modify the fees the Exchange charges 
Companies seeking a review of a Delisting Determination, public 
reprimand letter, or written denial of an initial listing application. 
The text of the proposed rule change is provided in Exhibit 5.
    The text of the proposed rule change is also available on the 
Exchange's website (http://markets.cboe.com/us/equities/regulation/rule_filings/BZX/), at the Exchange's Office of the Secretary, 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 Exchange 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 Exchange 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 of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    Pursuant to Exchange Rule 14.12(h), Companies \3\ may seek review 
of a determination by the Exchange's Listing Qualifications Department 
\4\ to deny initial or delisting a Company's securities or to issue a 
Public Reprimand Letter,\5\ by requesting a hearing before an 
independent Hearings Panel (the ``Hearings Panel'').\6\ Exchange Rule 
14.12(h)(1)(C) provides that a Company requesting a hearing must, 
within 15 calendar days of the Staff Delisting Determination,\7\ must 
submit a hearing fee. Hearing fees are currently charged as follows: 
(i) when the Company has requested a written hearing, $1,000; or (ii) 
when the Company has requested an oral hearing, whether in person or by 
telephone, $5,000. Companies may also appeal a Hearings Panel decision 
to the Exchange Listing Council.\8\ Exchange Rule 14.12(i)(1) requires 
a Company seeking such an appeal to submit a fee of $4,000. The 
Exchange has not amended these fees since the Exchange listing rules 
were originally adopted in 2011.\9\ The Exchange now proposes to (i) 
increase the hearing fee for both written and oral hearings to $20,000; 
and (ii) increase the fee to appeal a Hearings Panel decision

[[Page 59942]]

to the Exchange Listing Council to $15,000. The Exchange is increasing 
the fees because the anticipated costs incurred in preparing for and 
conducting hearings and appeals have increased since the fees were 
originally adopted.\10\
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    \3\ See Exchange Rule 14.1(a)(3).
    \4\ See Exchange Rule 14.12(b)(7).
    \5\ See Exchange Rule 14.12(b)(9).
    \6\ See Exchange Rule 14.12(b)(5).
    \7\ See Exchange Rule 14.12(b)(11).
    \8\ See Exchange Rule 14.12(b)(6).
    \9\ See Securities Exchange Act Release Nos. 64546 (May 25, 
2011) 76 FR 31660 (June 1, 2011) (SR-BATS-2011-018) (Notice of 
Filing of Proposed Rule Change To Adopt Rules for the Qualification, 
Listing and Delisting of Companies on the Exchange); 65225 (August 
30, 2011) 76 FR 55148 (September 6, 2011) (Order Approving Proposed 
Rule Change To Adopt Rules for the Qualification, Listing and 
Delisting of Companies on the Exchange).
    \10\ The Exchange initially filed the proposed fee changes on 
June 13, 2024 (SR-CboeBZX-2024-056). On June 25, 2024, the Exchange 
withdrew that filing and submitted SR-CboeBZX-2024-060. On July 3, 
2024, the Exchange withdrew that filing and submitted this filing.
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    The Exchange recognizes that in the past, fees for a written 
hearing have been lower than fees for an oral one. The Exchange 
believes that the basis for this historical distinction is unclear, and 
upon review, found to be unwarranted. The cost to a company that elects 
a written hearing may be lower because the company's related expenses, 
such as travel and legal representation, may be avoided. However, the 
anticipated costs to the Exchange associated with a written hearing are 
similar to those associated with an oral hearing. The Exchange believes 
that the fees should reflect that Staff and Panels expend similar 
resources, time, and effort in ensuring a full and fair hearing for all 
hearing participants, and both processes afford the same benefit to the 
issuer. Therefore, while the proposed amendment preserves the 
availability of a written hearing to any company that requests one, the 
Exchange proposes to charge the same fee for a written hearing as for 
an oral one.\11\
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    \11\ The Exchange notes that Nasdaq similarly eliminated the 
distinction in fees between a written and an oral hearing. See 
Securities Exchange Act Release No. 68676 (January 16, 2013) 78 FR 
4914 (January 23, 2013) (SR-Nasdaq-2013-004) (Notice of Filing and 
Immediate Effectiveness of a Proposed Rule Change To Modify Fees for 
Review of Delisting Determinations and Appeal of Panel Decisions).
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    While the Exchange has had no Company request a hearing by the 
Hearings Panel for Tier I or Tier II securities listed on the Exchange, 
the Exchange expects that the costs of the review process would include 
significant time and resources to maintain the infrastructure for the 
processes and to prepare for and conduct individual hearings and 
appeals.\12\ For example, with respect to review by the Hearings 
Panels, the Exchange expects to incur expenses related to the Exchange 
staff that facilitates the hearings and provides legal counsel and 
support to the independent Hearings Panel members, the honorarium paid 
to the Hearings Panel members, the cost of maintaining a transcript of 
the hearing, and the cost of obtaining an advisor to the Hearing Panel. 
Listings Qualification Staff reviews each Company's submissions to the 
Hearings Panel and provides the Hearings Panel with its analysis of the 
Company's plans; Listings Qualification Staff also provides written 
submissions in support of the delisting, listing denial, or Public 
Reprimand determination. In addition, in some matters Listings 
Qualification Staff is expected to attend hearings to respond to 
presentations by the Company and answer questions from the Hearings 
Panel members. Listings Qualification Staff also must manage and 
coordinate the Hearings Panel dockets, maintain the systems that track 
hearing matters, draft initial decisions for review by the Hearings 
Panel members, and monitor post-hearing compliance efforts in matters 
where the Hearings Panel has granted the Company a period of time to 
cure a deficiency.\13\
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    \12\ The Exchange notes that issuers of two exchange-traded 
products (``ETPs'') listed on the Exchange have requested a hearing 
by the Hearings Panel under Rule 14.12(h) in prior years, which are 
listed under Exchange Rule 14.11 rather than Rules 14.8 or 14.9. The 
Exchange anticipates the costs for a Hearings Panel would generally 
be the same for ETPs as they would for Tier I or Tier II securities 
listed on the Exchange.
    \13\ The Exchange notes that Nasdaq similarly increased its fees 
to request review by a Hearings Panel to $20,000 and the fee for an 
appeal to the Exchange's Listing Council to $15,000. See Securities 
Exchange Act Release No. 96966 (February 22, 2023) 88 FR 12710 
(February 28, 2023) (SR-Nasdaq-2023-004) (Notice of Filing and 
Immediate Effectiveness of Proposed Rule Change To Modify the Fees 
the Exchange Charges Companies Seeking Review of a Delisting 
Determination, Public Reprimand Letter, or Written Denial of an 
Initial Listing Application).
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    The Exchange also expects additional costs associated with the 
Exchange Listing Council's review of every Hearings Panel decision, in 
determining whether to call that decision for review as described in 
Rule 14.12(j)(2). In that regard, the Exchange expects to incur 
expenses related to the Exchange staff that facilitates the call for 
review process and that provides legal counsel and support to the 
Exchange's Listing Council members, the cost of obtaining an advisor to 
the Listing Council, as well as the honorarium paid to the Exchange's 
Listing Council members. When a matter is called for review, the 
Exchange expects to incur costs related to the staff in the Listing 
Qualifications Department, which reviews the Company's submissions to 
the Exchange's Listing Council and provides the Exchange's Listing 
Council with Listing Qualification Staff's analysis of the Company's 
plans and any issues identified by the Exchange's Listing Council in 
its call for review. The Exchange staff also must manage and coordinate 
the Exchange's Listing Council docket, maintain the systems that track 
call for review matters, and draft initial decisions for review by 
Exchange's Listing Council members. The Exchange believes that these 
additional costs for the call for review process are appropriately 
considered as part of the cost of the Hearings Panel review, since 
every Hearings Panel decision is subject to review by the Exchange's 
Listing Council and the decision as to whether to call a matter for 
review rests with the Exchange's Listing Council.\14\
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    \14\ Id.
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    Where a Company appeals a matter to the Exchange's Listing Council, 
the Exchange expects similar additional costs as well, which the 
Exchange believes should be borne by the Company through the appeal 
fee. Specifically, like where a decision is called for review, when a 
Company appeals a decision the Exchange would incur expenses related to 
the Exchange staff that facilitates the process and that provides legal 
counsel and support to the Exchange's Listing Council members, the 
honorarium paid to the Exchange's Listing Council members, Listings 
Qualification Staff review and analysis of the Company's submissions to 
the Exchange's Listing Council, management of the docket, maintaining 
the systems that track Exchange's Listing Council appellate matters and 
drafting the initial decisions for review by Exchange's Listing Council 
members.
    Throughout the hearing and Exchange's Listing Council process, the 
Exchange expects to incur costs to maintain and upgrade its electronic 
systems for tracking Companies and maintaining a clear record, as 
required by Exchange and SEC rules.\15\ The Exchange will also maintain 
lists on its website,\16\ updated every business day, that reflect the 
status of all Companies in the deficiency process.\17\
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    \15\ See Exchange Rule 14.12(m)(1). See also Rule 420(e) of the 
SEC Rules of Practice, 17 CFR 201.420(e) which requires the Exchange 
to certify and file a copy of the record upon which a delisting or 
denial was based where the Company requests Commission review of the 
Exchange's action.
    \16\ See https://www.cboe.com/us/equities/listings/listed_products/below_standard/.
    \17\ Supra note 13.
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    All of these expenses have presumably increased in the 13 years 
since the fees were adopted in 2011. Accordingly, the Exchange proposes 
to increase the fee to request review by a Hearings Panel to $20,000 
and the fee for an appeal to the Exchange's Listing Council to $15,000, 
which the Exchange believes will accurately reflect the Exchange's 
anticipated costs. The Exchange believes that this is an equitable 
allocation based on the expenses incurred in connection with

[[Page 59943]]

each portion of the overall appellate process. The revised fees will 
allow the Exchange to recoup a portion of the expected expenses it 
incurs in the review and appeal processes that will more closely 
approximate its actual costs associated with those processes.\18\ The 
proposed fee would be effective to any Company that was issued a Staff 
Delisting Determination with an issuance date on or after the date of 
this filing.\19\
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    \18\ Supra note 13.
    \19\ As noted above, this filing was originally filed June 13, 
2024.
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2. Statutory Basis
    The Exchange believes the proposed rule change is consistent with 
the Act and the rules and regulations thereunder applicable to the 
Exchange and, in particular, the requirements of Section 6(b) of the 
Act.\20\ Specifically, the Exchange believes the proposed rule change 
is consistent with the Section 6(b)(5) \21\ requirements that the rules 
of an exchange be designed to prevent fraudulent and manipulative acts 
and practices, 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. 
Additionally, the Exchange believes the proposed rule change is 
consistent with the Section 6(b)(5) \22\ requirement that the rules of 
an exchange not be designed to permit unfair discrimination between 
customers, issuers, brokers, or dealers as well as Section 6(b)(4) \23\ 
as it is designed to provide for the equitable allocation of reasonable 
dues, fees and other charges among its Members and other persons using 
its facilities.
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    \20\ 15 U.S.C. 78f(b).
    \21\ 15 U.S.C. 78f(b)(5).
    \22\ Id.
    \23\ 15 U.S.C. 78f(b)(4).
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    Specifically, the proposed fee increase is reasonable because it 
will better reflect the Exchange's expected costs related to hearings 
and appeals. The Exchange has not increased these fees since adopted in 
2011, but the expected costs have increased since that time.\24\ The 
fees will help offset the anticipated costs of conducting hearings and 
appeals, which serve to ensure that the Exchange's listing standards 
are properly enforced for the protection of investors. The proposed 
changes are equitable and not unfairly discriminatory because they 
would apply equally to all Companies that choose to request a hearing 
for review of a Delisting Determination. In addition, aligning the fees 
for hearings with the underlying costs of the review process is 
equitable because doing so will help minimize the extent that Companies 
that are compliant with all listing standards may subsidize the costs 
of review for Companies that are non-compliant.
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    \24\ Supra note 13.
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    The Exchange also believes that the proposed fees are consistent 
with the investor protection objectives of Section 6(b)(5) of the Act 
\25\ in that they are designed to promote just and equitable principles 
of trade, to remove impediments to a free and open market and national 
market systems, and in general to protect investors and the public 
interest. Specifically, the fees are designed to provide adequate 
resources for appropriate preparation to conduct reviews of the 
Exchange's Listing Qualifications' Staff determinations and appeals of 
Hearings Panel decisions, which help to assure that the Exchange's 
listing standards are properly enforced and investors are protected.
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    \25\ 15 U.S.C. 78f(b)(5).
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    The Exchange also believes that the proposed changes are consistent 
with Section 6(b)(7) of the Act,\26\ in that the proposed fees are 
consistent with the provision by the Exchange of a fair procedures for 
the prohibition or limitation by the Exchange of any person with 
respect to access to services offered by the Exchange. In particular, 
the Exchange believes that the proposed amended fees should not deter 
listed issuers from availing themselves of the right to appeal because 
the fees will still be set at a level that will be affordable for 
listed Companies. The Exchange does not believe that the proposed fee 
is unduly burdensome or would discourage any company from seeking a 
hearing or appeal. Furthermore, the proposed fees are in-line with 
similar fees on Nasdaq.
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    \26\ 15. U.S.C. 78f(b)(7).
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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. As discussed above, this 
proposed fee is based on the anticipated increase in costs to the 
Exchange to provide a delisting review process, which is in turn 
necessary to ensure investor protection as well as a transparent 
process for issuers.\27\ Moreover, the market for listing services is 
extremely competitive and listed companies may freely choose 
alternative venues based on the aggregate fees assessed, and the value 
provided by each listing. This rule proposal does not burden 
competition with other listing venues, which are similarly free to 
align their fees on the costs incurred by the process they offer. For 
this reason, and the reasons discussed in connection with the statutory 
basis for the proposed rule change, the Exchange does not believe that 
the proposed rule change will result in any burden on competition for 
listings.
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    \27\ Supra note 13.
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C. Self-Regulatory Organization's Statement on Comments on the Proposed 
Rule Change Received From Members, Participants, or Others

    The Exchange neither solicited nor received comments on the 
proposed rule change.

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

    The foregoing rule change has become effective pursuant to Section 
19(b)(3)(A) of the Act \28\ and paragraph (f) of Rule 19b-4 \29\ 
thereunder. At any time within 60 days of the filing of the 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 will institute proceedings to 
determine whether the proposed rule change should be approved or 
disapproved.
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    \28\ 15 U.S.C. 78s(b)(3)(A).
    \29\ 17 CFR 240.19b-4(f).
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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 (https://www.sec.gov/rules/sro.shtml); or
     Send an email to [email protected]. Please include 
file number SR-CboeBZX-2024-065 on the subject line.

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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-CboeBZX-2024-065. 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 (https://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 
a.m. and 3 p.m. Copies of the filing also will be available for 
inspection and copying at the principal office of the Exchange. Do not 
include personal identifiable information in submissions; you should 
submit only information that you wish to make available publicly. We 
may redact in part or withhold entirely from publication submitted 
material that is obscene or subject to copyright protection. All 
submissions should refer to file number SR-CboeBZX-2024-065 and should 
be submitted on or before August 14, 2024.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\30\
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    \30\ 17 CFR 200.30-3(a)(12).
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J. Matthew DeLesDernier,
Deputy Secretary.
[FR Doc. 2024-16222 Filed 7-23-24; 8:45 am]
BILLING CODE 8011-01-P