4154 Federal Register / Vol. 86, No. 10 / Friday, January 15, 2021 / Notices 

31See Notice, supra note 3, 85 FR at 78373–75. 

32N.Y. State Tech. Law § 30 (McKinney 2012). 

33Unif. Electronic Transactions Act (Unif. L. 

Comm’n 1999). 

34Electronic Signatures in Global and National 

Commerce 15 U.S.C. § 70. 

35See Notice, supra note 3, 85 FR at 78373–75. 

36 17 CFR 240.17Ad–22(e)(1). 

37 17 CFR 240.17Ad–22(e)(10). 

38 Id. 

39 17 CFR 240.17Ad–22(e)(11). 

40 15 U.S.C. 78q–1. 

41 15 U.S.C. 78s(b)(2). 

42 In approving the proposed rule change, the 

Commission considered the proposals’ impact on 

efficiency, competition, and capital formation. 15 

U.S.C. 78c(f). 

43 17 CFR 200.30–3(a)(12). 

1 15 U.S.C. 78s(b)(1). 

2 17 CFR 240.19b–4. 

instruments governed by New York law. 

As described in the Notice, DTC 

believes that the proposed rules change 

would provide for a well-founded, clear, 

transparent, and enforceable legal basis 

for the valid issuance of E–CDs into 

DTC from issuers domiciled in any 

relevant jurisdiction.31 Specifically, 

DTC conducted analysis of the legal 

basis for E–CDs under the Uniform 

Commercial Code, the New York 

Electronic Signatures and Records 

Act,32 the Uniform Electronic 

Transactions Act,33 and the federal 

Electronic Signatures in Global and 

National Commerce Act.34 DTC believes 

that it has structured the E–CDs to meet 

the requirements of each law.35 By 

conducting this analysis of applicable 

laws, the Commission believes that DTC 

designed the proposal to help ensure 

that E–CDs are well-founded, 

transparent, and legally enforceable in 

all relevant jurisdictions, consistent 

with Rule 17Ad–22(e)(1) under the 

Act.36

C. Consistency With Rule 17Ad– 

22(e)(10) 

Rule 17Ad–22(e)(10) under the Act 

requires that DTC establish, implement, 

maintain and enforce written policies 

and procedures reasonably designed to 

establish and maintain operational 

practices that manage the risks 

associated with physical deliveries.37

The proposed rule change will 

provide for the issuance of Electronic 

Master Certificates for E–CDs. As such, 

the proposal should help reduce risks of 

loss related to the physical CDs that 

would otherwise be physically 

transported to DTC for deposit and later 

returned to issuers or their agents for 

redemption upon maturity of the CD. By 

reducing the risk of loss of physical 

master certificates by allowing their 

replacement with Electronic Master 

Certificates, the Commission believes 

the proposal is designed to manage the 

risks associated with physical 

deliveries.38

D. Consistency With Rule 17Ad– 

22(e)(11) 

Rule 17Ad–22(e)(11) under the Act 

requires that DTC establish, implement, 

maintain and enforce written policies 

and procedures reasonably designed to 

(i) maintain securities in an 

immobilized or dematerialized form for 

their transfer by book entry; (ii) prevent 

the unauthorized creation or deletion of 

securities; and (iii) protect assets against 

custody risk through appropriate rules 

and procedures consistent with relevant 

laws, rules and regulations in 

jurisdictions where it operates.39

The proposed rule change will 

provide for the issuance of Electronic 

Master Certificates for E–CDs. First, by 

providing for the deposit of securities in 

the name of Cede & Co. to be deposited 

in electronic form and stored in an 

electronic vault, the proposed rule 

change will provide for the 

immobilization and dematerialization of 

these master certificates for the transfer 

of CDs by book entry. Thus, the 

Commission believes the proposal is 

designed to maintain securities in an 

immobilized or dematerialized form for 

their transfer by book entry. Second, by 

the use of this centralized process for 

issuance and processing of CDs, the 

proposed rule change should facilitate 

the prevention of the unauthorized 

creation or deletion of securities 

processed through the E–CD program. 

Therefore, the Commission believes the 

proposal is designed to prevent the 

unauthorized creation or deletion of 

securities. Third, by the utilization of 

Electronic Master Certificates in the 

forms of System E–CD Templates issued 

under the applicable E–CD BLOR to 

account for relevant laws, the 

Commission believes the proposal is 

designed to protect assets against 

custody risk through appropriate rules 

and procedures consistent with relevant 

laws, rules, and regulations in 

jurisdictions where it operates. 

IV. Conclusion 

On the basis of the foregoing, the 

Commission finds that the proposed 

rule change is consistent with the 

requirements of the Act and, in 

particular, with the requirements of 

Section 17A of the Act 40 and the rules 

and regulations promulgated 

thereunder. 

It is therefore ordered, pursuant to 

Section 19(b)(2) of the Act 41 that 

proposed rule change SR–DTC–2020– 

017, be, and hereby is, APPROVED.42

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.43

J. Matthew DeLesDernier, 

Assistant Secretary. 

[FR Doc. 2021–00815 Filed 1–14–21; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–90890; File No. SR–NYSE– 

2020–103] 

Self-Regulatory Organizations; New 

York Stock Exchange LLC; Notice of 

Filing and Immediate Effectiveness of 

Proposed Rule Change Amending 

Section 902.02 of the NYSE Listed 

Company Manual 

January 11, 2021. 

Pursuant to Section 19(b)(1) of the 

Securities Exchange Act of 1934 

(‘‘Act’’) 1 and Rule 19b–4 thereunder,2

notice is hereby given that on December 

28, 2020, New York Stock Exchange 

LLC (‘‘NYSE’’ or the ‘‘Exchange’’) filed 

with the Securities and Exchange 

Commission (‘‘Commission’’) a 

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. 

I. Self-Regulatory Organization’s 

Statement of the Terms of Substance of 

the Proposed Rule Change 

The Exchange proposes to amend 

Section 902.02 of the NYSE Listed 

Company Manual (the ‘‘Manual’’) to 

modify the terms of the Investment 

Management Entity Group Fee Discount. 

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, 

Federal Register / Vol. 86, No. 10 / Friday, January 15, 2021 / Notices 4155 

3 In addition to benefiting from the Investment 

Management Entity Group Fee Discount, the 

Investment Management Entity and each of the 

Eligible Portfolio Companies each continue to have 

its fees capped by the applicable company’s 

individual total maximum fee of $500,000 per 

annum. 

4 15 U.S.C. 78f(b). 

5 15 U.S.C. 78f(b)(4). 

6 15 U.S.C. 78f(b)(5). 

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 

Pursuant to Section 902.02 of the 

Manual, the Exchange provides a fee 

discount applicable only to an 

Investment Management Entity and its 

Eligible Portfolio Companies (the 

‘‘Investment Management Entity Group 

Fee Discount’’). For purposes of Section 

902.02, an Investment Management 

Entity is a listed company that manages 

private investment vehicles not 

registered under the Investment 

Company Act. An ‘‘Eligible Portfolio 

Company’’ of an Investment 

Management Entity is a company in 

which the Investment Management 

Entity has owned at least 20% of the 

common stock on a continuous basis 

since prior to that portfolio company’s 

initial listing. The Investment 

Management Entity Group Fee Discount 

is (i) limited to annual fees and (ii) 

represents a 50% discount on all annual 

fees of an Investment Management 

Entity and each of its Eligible Portfolio 

Companies in any year in which the 

Investment Management Entity has one 

or more Eligible Portfolio Companies. 

As currently applied, the Investment 

Management Entity Group Fee Discount 

is subject to a maximum aggregate 

discount of $500,000 in any given year 

(the ‘‘Maximum Discount’’) distributed 

among the Investment Management 

Entity and each of its Eligible Portfolio 

Companies in proportion to their 

respective eligible fee obligations in 

such year.3

The Exchange proposes to eliminate 

the Maximum Discount limitation on 

the Investment Management Entity 

Group Fee Discount with effect from the 

calendar year commencing January 1, 

2021. Consequently, the Investment 

Management Entity and each Eligible 

Portfolio Company would receive a 

discount from each company’s annual 

fee bill equal to 50% of such company’s 

annual fees, without any limitation 

imposed by the application of the 

Maximum Discount. The purpose of this 

proposal is to remove the arbitrary 

differences the application of the 

Maximum Discount imposes on the 

benefits companies receive from the 

Investment Management Entity Group 

Fee Discount. 

The following is an illustrative 

example: 

Scenario One: An Investment 

Management Entity incurs $500,000 in 

annual fees before the discount and has 

two Eligible Portfolio Companies, each 

of which incurs $250,000 in annual fees 

before the discount. Applying the 

Maximum Discount on a prorated basis, 

the Investment Management Entity 

would receive a discount of $250,000 

(and pay $250,000 in annual fees), while 

each of the two Eligible Portfolio 

Companies would receive a discount of 

$125,000 (and each pay $125,000 in 

annual fees). 

Scenario Two: An Investment 

Management Entity incurs $500,000 in 

annual fees before the discount and has 

four Eligible Portfolio Companies, each 

of which incurs $250,000 in annual fees 

before the discount. Applying the 

Maximum Discount on a prorated basis, 

the Investment Management Entity 

would receive a discount of $166,666.67 

(and pay $333,333.33 in annual fees), 

while each of the four Eligible Portfolio 

Companies would receive a discount of 

$83,333.33 (and each pay $166,666.67 

in annual fees). 

In both these scenarios, the 

Investment Management Entity has the 

same annual fee bill before the 

application of the Investment 

Management Entity Group Fee Discount 

($500,000) and each Eligible Portfolio 

Company also has the same annual fee 

bill prior to the application of the 

discount ($250,000). However, as a 

result of the limitation imposed by the 

Maximum Discount, the Investment 

Management Entity in Scenario One 

pays $250,000 in annual fees, while the 

Investment Management Entity in 

Scenario Two pays $333,333.33 in 

annual fees. Similarly, in both 

scenarios, all of the Eligible Portfolio 

Companies have the same annual fee 

obligation of $250,000 prior to 

application of the discount, but the 

limitation imposed by the Maximum 

Discount causes the Eligible Portfolio 

Companies in Scenario One to pay 

$125,000 in annual fees after 

application of the discount, while the 

Eligible Portfolio Companies in Scenario 

Two each pay $166,666.67 in annual 

fees. This proposal would eliminate this 

discrepancy in the treatment of 

companies that are the same size and 

would otherwise be subject to identical 

treatment for annual fee billing 

purposes. 

The Exchange notes that the 

elimination of the Maximum Discount 

would result in reduction in revenue as 

the overall discount to annual fees that 

companies can claim pursuant to the 

Investment Management Entity Group 

Fee Discount would increase. Because 

only a small percentage of listed 

companies qualify for the Investment 

Management Entity Group Fee Discount, 

the proposed rule change would not 

affect the Exchange’s commitment of 

resources to its regulatory programs. 

The Exchange also proposes to make 

some nonsubstantive changes to Section 

902.02 to remove provisions that are no 

longer needed, as they do not apply by 

their terms to any calendar year starting 

after January 1, 2019. 

2. Statutory Basis 

The Exchange believes that the 

proposed rule change is consistent with 

Section 6(b) of the Act,4 in general, and 

furthers the objectives of Section 

6(b)(4) 5 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,6 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. 

The Exchange operates in a highly 

competitive marketplace for the listing 

of equity securities. The Commission 

has repeatedly expressed its preference 

for competition over regulatory 

intervention in determining prices, 

products, and services in the securities 

markets. 

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. 

The Exchange believes that the 

proposed amendment is equitable and is 

4156 Federal Register / Vol. 86, No. 10 / Friday, January 15, 2021 / Notices 

7 15 U.S.C. 78s(b)(3)(A). 

8 17 CFR 240.19b–4(f)(2). 

9 15 U.S.C. 78s(b)(2)(B). 

10 17 CFR 200.30–3(a)(12). 

1 15 U.S.C. 78s(b)(1). 

2 17 CFR 240.19b–4. 

3 15 U.S.C. 78s(b)(3)(A)(iii). 

4 17 CFR 240.19b–4(f)(6). 

not unfairly discriminatory as it being 

implemented solely to avoid arbitrarily 

different annual fee billing outcomes for 

companies based solely on the impact of 

the Maximum Discount. 

Only a small percentage of listed 

companies qualify for the Investment 

Management Entity Group Fee Discount. 

Consequently, the proposed rule change 

would not affect the Exchange’s 

commitment of resources to its 

regulatory programs. 

The changes the Exchange proposes to 

make to Section 902.02 to remove 

provisions that are no longer needed, as 

they do not apply by their terms to any 

calendar year starting after January 1, 

2019, are nonsubstantive in nature. 

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. 

Intramarket Competition. 

The purpose of the proposed 

amendment is to eliminate the arbitrary 

effects of the of the [sic] Maximum 

Discount in the application of the 

Investment Management Entity Group 

Fee Discount. As only a small 

percentage of listed companies qualify 

for the Investment Management Entity 

Group Fee Discount and the proposal 

makes the application of the discount 

more consistent across that small 

category of listed issuers, the Exchange 

does not believe that the proposed rule 

change 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 

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) 7 of the Act and 

subparagraph (f)(2) of Rule 19b–4 8

thereunder, because it establishes a due, 

fee, or other charge imposed by the 

Exchange. 

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) 9 of the Act to 

determine whether the proposed rule 

change should be approved or 

disapproved. 

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 rule-comments@

sec.gov. Please include File Number SR– 

NYSE–2020–103 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–2020–103. 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–NYSE–2020–103, and 

should be submitted on or before 

February 5, 2021. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.10

J. Matthew DeLesDernier, 

Assistant Secretary. 

[FR Doc. 2021–00812 Filed 1–14–21; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–90899; File No. SR– 

CboeBYX–2020–034] 

Self-Regulatory Organizations; Cboe 

BYX Exchange, Inc.; Notice of Filing 

and Immediate Effectiveness of a 

Proposed Rule Change To Establish a 

Policy Relating to Billing Errors 

January 11, 2021. 

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 December 

31, 2020, Cboe BYX Exchange, Inc. (the 

‘‘Exchange’’ or ‘‘BYX’’) filed with the 

Securities and Exchange Commission 

(the ‘‘Commission’’) the proposed rule 

change as described in Items I and II 

below, which Items have been prepared 

by the Exchange. The Exchange filed the 

proposal as a ‘‘non-controversial’’ 

proposed rule change pursuant to 

Section 19(b)(3)(A)(iii) of the Act 3 and 

Rule 19b–4(f)(6) thereunder.4 The 

Commission is publishing this notice to