Federal Register / Vol. 86, No. 32 / Friday, February 19, 2021 / Notices 10379 

13 17 CFR 200.30–3(a)(57). 

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

2 17 CFR 240.19b–4. 

3See Securities Exchange Act Release No. 90382 

(November 9, 2020), 85 FR 73121 (‘‘Notice’’). 

4 15 U.S.C. 78s(b)(2). 

5See Securities Exchange Act Release No. 90739, 

85 FR 85759 (December 29, 2020). 

6 15 U.S.C. 78s(b)(2)(B). 

7See Securities Exchange Act Release No. 57785 

(May 6, 2008), 73 FR 27597 (May 13, 2008) (SR– 

NYSE–2008–17) (adopting Section 102.06 of the 

Listed Company Manual (‘‘Manual’’). See also 

Notice, supra note 3. 

8See Section 102.06 of the Manual. Under 

Section 102.06 of the Manual, if a vote is not held 

on the business combination the company must 

provide all shareholders with the opportunity to 

redeem all their shares into a pro rata share of the 

funds held in escrow pursuant to Rule 13e–4 and 

Regulation 14E under the Securities Exchange Act 

of 1934, which regulates issuer tender offers. 

9See Section 802.01B of the Manual. The 

applicable requirement is 400 holders of round lots. 

10See Notice, supra note 3, at 73122. 

11See proposed amendment to Section 802.01B of 

the Manual. See also Notice, supra note 3, at 73122. 

12NYSE states, for example, that the merger 

agreement may result in the Acquisition Company 

issuing a round lot of shares to more than 400 

holders of the target of the business combination at 

closing. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.13

Jill M. Peterson, 

Assistant Secretary. 

[FR Doc. 2021–03344 Filed 2–18–21; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–91120; File No. SR–NYSE– 

2020–90] 

Self-Regulatory Organizations; New 

York Stock Exchange LLC; Order 

Instituting Proceedings To Determine 

Whether To Approve or Disapprove a 

Proposed Rule Change To Amend the 

Requirement Applicable to Special 

Purpose Acquisition Companies Upon 

Consummation of a Business 

Combination Concerning Compliance 

With the Round Lot Shareholder 

Requirement 

February 12, 2021. 

I. Introduction 

On October 27, 2020, 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 amend its listing requirements 

applicable to special purpose 

acquisition companies (‘‘SPACs’’ or 

‘‘Acquisition Companies’’) upon 

consummation of a business 

combination by allowing such 

companies 15 calendar days following 

the closing of a business combination to 

demonstrate compliance with the 

Exchange’s round lot shareholder 

requirement. The proposed rule change 

was published for comment in the 

Federal Register on November 16, 

2020.3 On December 21, 2020, pursuant 

to Section 19(b)(2) of the Act,4 the 

Commission designated a longer period 

within which to approve the proposed 

rule change, disapprove the proposed 

rule change, or institute proceedings to 

determine whether to disapprove the 

proposed rule change to February 14, 

2021.5 The Commission has received no 

comment letters on the proposed rule 

change. The Commission is instituting 

proceedings pursuant to Section 

19(b)(2)(B) of the Act 6 to determine 

whether to approve or disapprove the 

proposed rule change. 

II. Description of the Proposed Rule 

Change 

An Acquisition Company or SPAC is 

a company whose business plan is to 

complete an initial public offering and 

engage in a merger or acquisition with 

one or more unidentified companies 

within a specific period of time.7

NYSE’s listing rules require, among 

other things, a SPAC to deposit and 

retain at least 90% of the proceeds from 

its initial public offering (‘‘IPO’’) in an 

escrow account, complete one or more 

business combinations having an 

aggregate fair market value of at least 

80% of the value of the escrow account 

within 36 months of the effectiveness of 

its IPO registration statement, and 

provide the public shareholders, if a 

vote is held, who object to the business 

combination with the right to convert 

their common stock into a pro rata share 

of the funds held in escrow.8

Following each business combination, 

the combined company is subject to 

Section 801 and Section 802.01 of the 

Manual in its entirety and will be 

required immediately to meet those 

requirements, which include: (i) A price 

per share of at least $4.00; (ii) a global 

market capitalization of at least 

$150,000,000; (iii) an aggregate market 

value of publicly-held shares of at least 

$40,000,000; and (iv) the requirements 

with respect to shareholders and 

publicly-held shares set forth in Section 

102.01A for companies listing in 

connection with an initial public 

offering, including the round lot 

shareholder requirement.9 If the 

combined company does not meet the 

requirements of Sections 801 and 802.01 

of the Manual following a business 

combination, Section 802.01B of the 

Manual provides that a SPAC will be 

promptly subject to suspension and 

delisting proceedings. 

In its proposal, the Exchange stated 

that its existing rules require that ‘‘an 

Acquisition Company must satisfy all 

initial listing requirements immediately 

upon consummation of its Business 

Combination.’’ 10 The Exchange 

asserted, however, that Section 802.01B 

of the Manual does not provide a 

timetable for the company to 

demonstrate that it satisfies those 

requirements. Accordingly, the 

Exchange proposed to specify that if the 

SPAC demonstrates that it will satisfy 

all requirements except the applicable 

round lot shareholder requirement, then 

the SPAC will receive 15 calendar days 

following the closing to demonstrate 

that it satisfied the applicable round lot 

shareholder requirement immediately 

following the transaction’s closing. 

In addition, the Exchange stated that, 

when a listed SPAC consummates its 

business combination, the Exchange 

also considers whether the business 

combination gives rise to a ‘‘back door 

listing’’ as described in Section 

703.08(E) of the Manual. If the resulting 

company would not qualify for original 

listing, including by not meeting the 

applicable distribution standards, the 

Exchange will promptly initiate 

suspension and delisting of the SPAC. 

The Exchange proposed to modify its 

rule in relation to business 

combinations that give rise to a ‘‘back 

door listing’’ to specify that if the SPAC 

demonstrates that it will satisfy all 

requirements except the applicable 

round lot shareholder requirement, then 

the company will receive 15 calendar 

days following the closing to 

demonstrate that it satisfied the 

applicable round lot shareholder 

requirement immediately following the 

transaction’s closing.11

The Exchange stated that it 

determines compliance with the round 

lot shareholder requirement at the time 

of a business combination by reviewing 

a company’s public disclosures and 

information provided by the company 

about the transaction.12 According to 

the Exchange, if it cannot determine 

compliance using public information, it 

will typically request the company to 

provide additional information such as 

registered shareholder lists from the 

company’s transfer agent, data from 

Cede & Co. about shares held in street 

name, or data from broker-dealers and 

third parties that distribute information 

such as proxy materials for the brokerdealers. If the company can provide 

information demonstrating compliance 

before the business combination closes, 


tkelley on DSKBCP9HB2PROD with NOTICES
10380 Federal Register / Vol. 86, No. 32 / Friday, February 19, 2021 / Notices 

13The Exchange stated that shareholders of the 

SPAC would be harmed if NYSE issued a delisting 

determination at a time when the company did, in 

fact, satisfy all initial listing requirements but could 

not yet provide proof. 

14 15 U.S.C. 78s(b)(2)(B). 

15 Id. 

16 15 U.S.C. 78f(b)(5). 

17See, e.g., Securities Exchange Act Release Nos. 

57785 (May 6, 2008), 73 FR 27597 (May 13, 2008) 

(SR–NYSE–2008–17) (stating that the distribution 

standards, which includes exchange holder 

requirements ‘‘. . . should help to ensure that the 

[SPAC’s] securities have sufficient public float, 

investor base, and liquidity to promote fair and 

orderly markets’’); 58228 (July 25, 2008), 73 FR 

44794 (July 31, 2008) (SR–Nasdaq–2008–013) 

(approving a proposal to adopt listing standards for 

SPACs); and 86117 (June 14, 2018), 84 FR 28879 

(June 20, 2018) (SR–NYSE–2018–46) (disapproving 

a proposal to reduce the minimum number of 

public holders continued listing requirement 

applicable to SPACs from 300 to 100). 

the Exchange stated that no further 

information would be required. 

However, the Exchange asserted that 

in some cases it can be difficult for a 

company to obtain evidence 

demonstrating the number of 

shareholders that the company has or 

will have following a business 

combination. The Exchange stated that 

shareholders in a SPAC may redeem or 

tender their shares until just before the 

time of the business combination, and 

the SPAC may not know how many 

shareholders will choose to redeem 

until very close to the consummation of 

the business combination. The 

Exchange stated that this could impact 

its ability to determine compliance 

before the business combination closes, 

in cases where the number of round lot 

shareholders is close to the applicable 

requirement. 

Accordingly, for a SPAC that has 

demonstrated that it will satisfy all of 

the initial listing requirements except 

for the round lot shareholder 

requirement before consummating the 

business combination (including the 

initial listing standards that are 

applicable in the event that the business 

combination gives rise to a ‘‘back door 

listing’’), the Exchange has proposed to 

allow the SPAC 15 calendar days after 

the closing of the business combination 

to demonstrate that it also complied 

with the round lot requirement at the 

time of the business combination. The 

Exchange stressed that under its 

proposal a SPAC must still demonstrate 

that it satisfied the round lot 

shareholder requirement immediately 

following the business combination, and 

that the proposal merely would give the 

SPAC 15 calendar days to provide 

evidence that it did. 

The Exchange stated that the proposal 

‘‘balances the burden placed on the 

Acquisition Company to obtain accurate 

shareholder information for the new 

entity and the need to ensure that a 

company that does not satisfy the initial 

listing requirements following a 

Business Combination enters the 

delisting process promptly.’’ 13 The 

Exchange further stated that if the 

company does not evidence compliance 

within the proposed time period, 

Exchange staff would immediately 

commence suspension and delisting 

proceedings with respect to the 

company. 

III. Proceedings To Determine Whether 

To Approve or Disapprove SR–NYSE– 

2020–90 and Grounds for Disapproval 

Under Consideration 

The Commission is instituting 

proceedings pursuant to Section 

19(b)(2)(B) of the Act 14 to determine 

whether the proposed rule change 

should be approved or disapproved. 

Institution of such proceedings is 

appropriate at this time in view of the 

legal and policy issues raised by the 

proposed rule change. Institution of 

proceedings does not indicate that the 

Commission has reached any 

conclusions with respect to any of the 

issues involved. 

Pursuant to Section 19(b)(2)(B) of the 

Act,15 the Commission is providing 

notice of the grounds for disapproval 

under consideration. The Commission is 

instituting proceedings to allow for 

additional analysis of the proposed rule 

change’s consistency with the Act, and 

in particular, Section 6(b)(5) of the Act, 

which requires, among other things, that 

the rules of a national securities 

exchange be ‘‘designed to prevent 

fraudulent and manipulative acts and 

practices, 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, and, in 

general, to protect investors and the 

public interest; and are not designed to 

permit unfair discrimination between 

customers, issuers, brokers, or 

dealers.’’ 16

The Commission has consistently 

recognized the importance of the 

minimum number of holders and other 

similar requirements in exchange listing 

standards. Among other things, such 

listing standards help ensure that 

exchange listed securities have 

sufficient public float, investor base, 

and trading interest to provide the depth 

and liquidity necessary to promote fair 

and orderly markets.17

As discussed above, the Exchange 

proposed to provide a SPAC 15 calendar 

days following the closing of a business 

combination to demonstrate that it 

satisfied the applicable round lot holder 

requirement immediately following the 

closing. The Exchange asserted that it 

can be difficult for a SPAC to obtain 

evidence demonstrating the number of 

holders it will have following the 

business combination because SPAC 

shareholders have the right to redeem or 

tender their shares until just before the 

time of such business combination. The 

Exchange, however, has provided no 

data or other evidence to support its 

position that SPACs have particular 

difficulties demonstrating compliance 

with the minimum number of holders 

requirements. For example, the 

Exchange has not provided any data 

showing the extent to which SPACs 

have been unable to meet the applicable 

minimum number of holders 

requirement immediately following the 

business combination, or the extent to 

which this was due to last minute 

redemptions by SPAC shareholders. The 

Exchange also has provided no data or 

other evidence showing how long it has 

taken SPACs that have been unable to 

meet the applicable minimum number 

of holders requirement, whether or not 

due to last minute shareholder 

redemptions, to come into compliance 

with such requirements. 

Further, the Exchange has not 

explained how providing a SPAC an 

additional 15 days following the closing 

of the business combination simply to 

demonstrate that it complied with the 

applicable minimum number of holders 

requirement immediately following the 

closing, would address the substantive 

compliance concerns associated with 

last minute shareholder redemptions by 

SPACs that are close to the minimum 

requirement. The Exchange also has not 

addressed the risk that, by waiting for 

SPACs to demonstrate compliance with 

the minimum number of holders 

requirements until after the closing of 

the business combination, noncompliant companies could be listed on 

the Exchange despite not meeting initial 

listing standards or those relating to a 

‘‘back door listing,’’ and have their 

securities continue to trade until the 

delisting process has been completed. 

As a result, a SPAC could complete a 

business combination and very soon 

thereafter be subject to delisting 

proceedings, and during such time its 

securities may trade with a number of 

holders that is substantially less than 

the required minimum. The Exchange 

has not addressed the impact this could 

have on SPAC shareholders and other 

market participants, or explained why 

subjecting them to these risks is 


tkelley on DSKBCP9HB2PROD with NOTICES
Federal Register / Vol. 86, No. 32 / Friday, February 19, 2021 / Notices 10381 

18Rule 700(b)(3), Commission Rules of Practice, 

17 CFR 201.700(b)(3). 

19See id. 

20Section 19(b)(2) of the Act, as amended by the 

Securities Act Amendments of 1975, Public Law 

94–29 (June 4, 1975), grants the Commission 

flexibility to determine what type of proceeding— 

either oral or notice and opportunity for written 

comments—is appropriate for consideration of a 

particular proposal by a self-regulatory 

organization. See Securities Act Amendments of 

1975, Senate Comm. on Banking, Housing & Urban 

Affairs, S. Rep. No. 75, 94th Cong., 1st Sess. 30 

(1975). 

21 17 CFR 200.30–3(a)(57). 

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

2 17 CFR 240.19b–4. 

3See Securities Exchange Act Release No. 89058 

(June 12, 2020), 85 FR 36918. Comments received 

on the proposed rule change are available on the 

Commission’s website at: https://www.sec.gov/ 

comments/sr-cboe-2020-051/srcboe2020051.htm. 

4 In Amendment No. 1, the Exchange: (1) 

Amended its proposal to modify the proposed 

maximum size requirement for AIM and C–AIM 

agency orders in SPX to ten contracts rather than 

a size determined by the Exchange of up to 100 

contracts, specify that this size requirement would 

apply to all agency orders in SPX, and make related 

conforming changes to its proposed rule text; and 

(2) provided additional data, justification, and 

support for its modified proposal. The full text of 

Amendment No. 1 is available on the Commission’s 

Continued 

consistent with the protection of 

investors and the public interest, and 

the other requirements of Section 6(b)(5) 

of the Act. 

Under the Commission’s Rules of 

Practice, the ‘‘burden to demonstrate 

that a proposed rule change is 

consistent with the Exchange Act and 

the rules and regulations issued 

thereunder . . . is on the self-regulatory 

organization [‘SRO’] that proposed the 

rule change.’’ 18 The description of a 

proposed rule change, its purpose and 

operation, its effect, and a legal analysis 

of its consistency with applicable 

requirements must all be sufficiently 

detailed and specific to support an 

affirmative Commission finding, and 

any failure of an SRO to provide this 

information may result in the 

Commission not having a sufficient 

basis to make an affirmative finding that 

a proposed rule change is consistent 

with the Exchange Act and the 

applicable rules and regulations.19

For these reasons, the Commission 

believes it is appropriate to institute 

proceedings pursuant to Section 

19(b)(2)(B) of the Act to determine 

whether the proposal should be 

approved or disapproved. 

IV. Procedure: Request for Written 

Comments 

The Commission requests that 

interested persons provide written 

submissions of their views, data, and 

arguments with respect to the issues 

identified above, as well as any other 

concerns they may have with the 

proposal. In particular, the Commission 

invites the written views of interested 

persons concerning whether the 

proposal is consistent with Section 

6(b)(5) or any other provision of the Act, 

or the rules and regulations thereunder. 

Although there do not appear to be any 

issues relevant to approval or 

disapproval that would be facilitated by 

an oral presentation of views, data, and 

arguments, the Commission will 

consider, pursuant to Rule 19b–4, any 

request for an opportunity to make an 

oral presentation.20

Interested persons are invited to 

submit written data, views, and 

arguments regarding whether the 

proposal should be approved or 

disapproved by March 12, 2021. Any 

person who wishes to file a rebuttal to 

any other person’s submission must file 

that rebuttal by March 26, 2021. The 

Commission asks that commenters 

address the sufficiency of the 

Exchange’s statements in support of the 

proposal, in addition to any other 

comments they may wish to submit 

about the proposed rule change. 

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–2020–90 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–2020–90. 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–2020–90 and should 

be submitted by March 12, 2021. 

Rebuttal comments should be submitted 

by March 26, 2021. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.21

Jill M. Peterson, 

Assistant Secretary. 

[FR Doc. 2021–03337 Filed 2–18–21; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–91119; File No. SR–CBOE– 

2020–051] 

Self-Regulatory Organizations; Cboe 

Exchange, Inc.; Notice of Filing of 

Amendment No. 2 and Order Granting 

Accelerated Approval of a Proposed 

Rule Change, as Modified by 

Amendment Nos. 1 and 2, To Amend 

the Automated Price Improvement 

Auction Rules in Connection With 

Agency Order Size Requirements 

February 12, 2021. 

I. Introduction 

On June 11, 2020, Cboe Exchange, Inc. 

(‘‘Exchange’’ or ‘‘Cboe’’) 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 

permitting the Exchange to impose a 

maximum size requirement for an 

agency order submitted into the 

Automated Price Improvement 

Mechanism (‘‘AIM’’) and the Complex 

Automated Price Improvement 

Mechanism (‘‘C–AIM’’) in S&P 500®

Index Options (‘‘SPX’’). The proposed 

rule change was published for comment 

in the Federal Register on June 18, 

2020.3 On July 23, 2020, the Exchange 

submitted Amendment No. 1 to the 

proposed rule change, which replaced 

and superseded the proposed rule 

change in its entirety.4 On July 27, 2020, 


tkelley on DSKBCP9HB2PROD with NOTICES