[Federal Register Volume 73, Number 188 (Friday, September 26, 2008)]
[Notices]
[Pages 55885-55887]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E8-22658]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-58601; File No. SR-NYSE-2008-74]
Self-Regulatory Organizations; New York Stock Exchange LLC; Order
Approving Proposed Rule Change To Enable the Exchange To Waive Annual
Listing Fees for Securities Transferring From the Amex or NYSE Arca,
Inc.
September 19, 2008.
I. Introduction
On August 4, 2008, the New York Stock Exchange LLC (``NYSE'' or
``Exchange'') filed with the Securities and Exchange Commission
(``Commission''), pursuant to Section 19(b)(1) of the Securities
Exchange Act of 1934 (``Act''),\1\ and Rule 19b-4 thereunder,\2\ a
proposed rule change to waive annual listing fees for securities
transferring to NYSE from the American Stock Exchange LLC (``Amex'') or
NYSE Arca, Inc. (``NYSE Arca''). The proposed rule change was published
in the Federal Register on August 15, 2008.\3\ The Commission received
no comments on the proposal. This order approves the proposed rule
change.
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\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
\3\ See Securities Exchange Act Release No. 58311 (August 5,
2008), 73 FR 47994.
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II. Description of the Proposal
The Exchange proposes to amend Section 902.02 of the Manual to
provide that, with retroactive effect from January 1, 2008, for issuers
that transfer their primary class of common stock from Amex to the
Exchange, there shall be no annual fee for the remainder of the
calendar year in which the transfer occurs for the transferred common
stock and any other class of securities of a company listed on the
Amex. This proposed rule change (i) is conditioned on the consummation
of NYSE Euronext's acquisition of the Amex (the ``Merger''),\4\ (ii)
will not take effect until the date of consummation of the Merger, and
(iii) will be of no further effect if the closing of the Merger does
not take place by March 31, 2009. The amendment also provides that
companies transferring the listing of their primary class of common
stock from NYSE Arca to the Exchange (with respect to which the
Exchange already waives annual fees for the first part year, pursuant
to Section 902.02 of the Manual) will not be charged the prorated
annual fee in the first year of listing for any other class of
securities that is transferred in connection with the transfer of the
common stock.
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\4\ NYSE Euronext, the ultimate parent company of the Exchange,
has agreed to acquire the Amex pursuant to an Agreement and Plan of
Merger, dated as of January 17, 2008. The members of the Amex voted
to approve the transaction on June 17, 2008. No vote of the NYSE
Euronext shareholders is required. After the closing of the Merger,
the Amex will be renamed NYSE Alternext US LLC.
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A. Securities Transferring From Amex
The Exchange proposes to amend Section 902.02 of the Manual to
grant companies transferring the listing of their primary class of
common shares and any other class of securities to the Exchange from
the Amex a waiver of the prorated annual listing fee that would
normally be payable in connection with the first partial calendar year
of listing on the Exchange. As noted in its proposal, the Exchange
believes this is appropriate because companies transferring to the
Exchange from the Amex will already have paid annual continued listing
fees to the Amex for the calendar year in which they transfer. The
Exchange further stated that since some companies may choose to
transfer from the Amex to the Exchange in advance of the consummation
of the acquisition, and such companies will be making their transfer
decisions in expectation of the Merger, the Exchange believes that they
should not be penalized for transferring before the closing date.
Consequently, the Exchange believes that it is appropriate to apply the
fee waiver retroactively to all companies that transfer to the Exchange
from the Amex during the portion of the year in which the Merger is
consummated prior to such consummation.
In its proposal, the Exchange stated that this fee waiver is not
unfairly discriminatory and does not constitute an inequitable
allocation of fees, in particular because, after the Merger, NYSE
Regulation, Inc. (``NYSE
[[Page 55886]]
Regulation'') will perform listed company regulation for both the
Exchange and Amex, including a substantial review of companies upon
original listing. Many of the regulatory staff who currently perform
initial and continued listing reviews at the Amex will become employees
of NYSE Regulation at the time of the Merger and will continue to
perform the same duties with respect to Amex companies after the
Merger. Companies transferring from Amex will be subjected to the same
rigorous regulatory review as any other applicant for listing on the
Exchange. However, the Exchange expects that, on average, the review of
companies transferring from Amex to the Exchange will be less costly
than the review of a transfer from an unaffiliated market, because the
Amex listing regulatory staff that will have been absorbed by NYSE
Regulation will already have performed a substantial review of any Amex
listed company and NYSE Regulation will be able to rely on that prior
work as a baseline in qualifying the company for listing on the
Exchange and in conducting ongoing compliance activities with respect
to those companies.
The Exchange also believes that waiving, subject to consummation of
the Merger, the prorated annual fees applicable to any Amex security
transferred to the NYSE prior to the Merger is not unfairly
discriminatory or an inequitable allocation of fees. In its proposal,
the Exchange stated that the proposed fee waiver will not impact its
ability to devote the same level of resources to its oversight of the
companies that benefit from the waiver as it does for other listed
companies or, more generally, impact its resource commitment to its
regulatory oversight of the listing process or its regulatory programs.
The Exchange notes that, after consummation of the Merger, the annual
fee revenue paid by companies to the Amex prior to the Merger will be
available to NYSE Regulation to finance its regulatory activities in
relation to Amex-listed companies, regardless of whether such companies
remain on NYSE Alternext US or have chosen to transfer their listing to
the NYSE at some point during the year either before or after the
Merger. The Exchange asserted that therefore collecting annual fees
from companies upon transfer from the Amex to the NYSE would constitute
a double billing of those companies for the regulatory expenses
incurred by NYSE Regulation in relation to those companies during the
year of transfer.
B. Securities Transferring From NYSE Arca
Section 902.02 of the Manual currently provides that any company
transferring the listing of its primary class of common equity
securities from NYSE Arca to the Exchange will not be charged any
annual fees in connection with the first partial year of listing on the
Exchange. The Exchange proposes to extend the NYSE Arca annual fee
waiver to the prorated annual fees that would otherwise be payable with
respect to any other class of securities that an issuer is transferring
to the Exchange from NYSE Arca in conjunction with its transfer of its
common stock, for the remainder of the calendar year in which the
transfer occurs. The Exchange believes this waiver is appropriate in
light of the fact that the Exchange and NYSE Arca share a common parent
and, without the waiver, NYSE Euronext would be collecting two separate
annual fees in relation to such securities. In addition, the same staff
from NYSE Regulation are responsible for compliance review of all
securities listed on both markets and their prior experience with any
securities transferring from NYSE Arca will significantly lessen the
burden and costs associated with continued compliance review of those
securities once they have been transferred to the NYSE. Specifically,
the Exchange believes that the proposed fee waiver will not impact its
ability to devote the same level of resources to its oversight of the
companies that benefit from the waiver as it does for other listed
companies or, more generally, impact its resource commitment to its
regulatory oversight of the listing process or its regulatory programs.
III. Discussion
The Commission finds that the proposed rule change is consistent
with the requirements of the Act and the rules and regulations
thereunder applicable to a national securities exchange and, in
particular, the requirements of Section 6(b) of the Act and the rules
and regulations thereunder. Specifically, the Commission finds that the
proposal is consistent with Sections 6(b)(4) \5\ and 6(b)(5) of the
Act,\6\ which require that an exchange have rules that provide for the
equitable allocation of reasonable dues, fees, and other charges among
its members and other persons using its facilities, and are designed,
among other things, to promote just and equitable principles of trade,
to remove impediments to and perfect the mechanism of a free and open
market and a national market system, to protect investors and the
public interest, and to not permit unfair discrimination between
customers, issuers, brokers, or dealers.\7\
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\5\ 15 USC. 78f(b)(4).
\6\ 15 USC. 78f(b)(5).
\7\ In approving this proposed rule change, the Commission notes
that it has considered the proposed rules' impact on efficiency,
competition, and capital formation. See 15 U.S.C. 78c(f).
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National securities exchanges traditionally assess annual listing
fees on listed companies at the beginning of the calendar year. When a
company transfers to another marketplace, such annual fees are
typically pro-rated by the new market for the remainder of the calendar
year. Annual fees aid a listed market in, among other things,
conducting its regulatory responsibilities to ensure compliance by
listed companies with continued listing standards and other regulatory
requirements. The Commission has carefully examined the fee waiver in
light of NYSE's ongoing regulatory responsibilities as to the
transferred companies and, for the reasons set forth below, has
determined that the proposed limited annual fee waiver is consistent
with the Act.
The Commission notes that an Amex or NYSE Arca issuer seeking to
transfer to the Exchange has already paid annual continued listing fees
to another national securities exchange for the calendar year in which
it transferred. Further, the Commission recognizes that subsequent to
the consummation of the Merger, both Amex as NYSE Alternext US, NYSE
Arca, and NYSE will be under the same common ownership. The Commission
also notes that the Exchange anticipates the review of securities
transferring from Amex to be less costly than the review of a transfer
from an unaffiliated market, because Amex listing regulatory staff that
will be part of NYSE Regulation will continue to perform both initial
and continued listing reviews. In addition, the Commission notes that
the same staff from NYSE Regulation are responsible for compliance
review of all securities listed on both NYSE and NYSE Arca, and the
Exchange asserted that this will significantly lessen the burden and
costs associated with continued compliance review of NYSE Arca
transfers.
The Commission further believes that the application of the waiver
to companies transferring to the NYSE from Amex prior to the Merger,
occurring only upon consummation of the Merger, is not unfairly
discriminatory and does not constitute
[[Page 55887]]
an inequitable allocation of fees. The Commission notes that the
Exchange has represented that after consummation of the Merger, the
annual fee revenue paid by companies to the Amex prior to the Merger
will be available to NYSE Regulation to finance its regulatory
activities in relation to Amex-listed companies, regardless of whether
such companies remain on NYSE Alternext US or have chosen to transfer
their listing to the NYSE at some point during the year either before
or after the Merger. Since the retroactive effect is conditioned on
consummation of the Merger, the fee waiver recognizes that these
regulatory efficiencies will only occur upon that event.
The Commission also notes that the fee waiver is for a limited
time, applicable to the remainder of the calendar year in which the
transfer occurs. Annual fees for both Amex and NYSE Arca transfers will
continue to be assessed after the initial pro-rated annual fee waiver.
The limited period of the fee waiver helps to ensure that that NYSE
will have adequate fees to continue compliance and oversight of its
listing program.
In summary, based on the reasons set forth above, including NYSE's
assertions that (i) the same regulatory staff on both Amex (that will
have been absorbed by NYSE Regulation) and NYSE Regulation will have
conducted a substantial review of an Amex or NYSE Arca company that
NYSE Regulation will be able to rely upon as a baseline in qualifying
the company for both listing on the Exchange and in conducting ongoing
compliance activities with respect to any such company; and (ii) the
retroactive effect for Amex transfers will only occur if the Merger is
consummated, the Commission believes it is not inequitable or unfair to
provide for a waiver of annual fees for a limited period of time. The
Commission expects, and the Exchange has represented, that a rigorous
and independent review of compliance with the listing standards will be
conducted for any company seeking to take advantage of the fee waiver,
just as for any company that lists on the Exchange. In addition, the
Commission expects the Exchange to maintain its commitment of resources
to its regulatory oversight of the listing process and its ongoing
compliance review of listed companies under its regulatory program.
Based on the above, the Commission believes the proposed fee waiver
does not constitute an inequitable allocation of reasonable dues, fees,
and other charges under Section 6(b)(4) of the Act,\8\ does not permit
unfair discrimination between issuers under Section 6(b)(5) of the
Act,\9\ and is otherwise consistent with the requirements of the Act.
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\8\ 15 U.S.C. 78f(b)(4).
\9\ 15 U.S.C. 78f(b)(5).
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IV. Conclusion
It is therefore ordered, pursuant to Section 19(b)(2) of the
Act,\10\ that the proposed rule change (SR-NYSE-2008-74) is hereby
approved.
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\10\ 15 U.S.C. 78s(b)(2).
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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Florence E. Harmon,
Acting Secretary.
[FR Doc. E8-22658 Filed 9-25-08; 8:45 am]
BILLING CODE 8010-01-P