[Federal Register Volume 89, Number 185 (Tuesday, September 24, 2024)]
[Notices]
[Pages 77943-77945]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-21764]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-101093; File No. SR-NYSE-2024-57]


Self-Regulatory Organizations; New York Stock Exchange LLC; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To 
Amend Section 902.02 of the NYSE Listed Company Manual

September 18, 2024.
    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 September 10, 2024, New York Stock Exchange LLC (``NYSE'' or the 
``Exchange'') filed with the Securities and Exchange Commission 
(``SEC'' or ``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

    The Exchange proposes to amend Section 902.02 of the NYSE Listed 
Company Manual (the ``Manual'') to clarify that for purposes of 
qualifying for the Investment Management Entity Group Fee Discount, an 
Investment Management Entity is a company that is listed on the 
Exchange or another national securities exchange. 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, 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 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The Exchange presently offers a discount on annual fees to 
Investment Management Entities and their Eligible Portfolio 
Companies.\3\ The discount equals a 50% reduction 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. Under Section 902.02 of the 
Manual, an ``Investment Management Entity'' is defined as ``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 defined as ``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 company's initial listing.''
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    \3\ See Section 902.02 of the Manual.
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    The Exchange proposes to amend the definition of Investment 
Management Entity contained in Section 902.02 to specify that it is a 
company listed on the Exchange or another national securities exchange 
that manages private investment vehicles not registered under the 
Investment Company Act. As amended, the definition would not limit 
qualification as an Investment Management Entity to only those 
companies listed on the Exchange. Instead, a company meeting the 
remaining requirements of the definition could qualify as long as it is 
listed on the Exchange or another national securities exchange.
    When the Exchange adopted the Investment Management Entity Group 
Fee Discount in 2016, it noted that the fee reduction was appropriate 
because it (i) benefits from its ongoing relationships with Investment 
Management Entities and (ii) experiences efficiencies when dealing with 
portfolio companies that are guided by Investment Management Entities. 
This is, in part, attributable to the fact that Investment Management 
Companies typically have prior experience with the Exchange and thus 
the Exchange incurs lower costs in pitching for the listings of their 
portfolio companies. In addition, because Investment Management 
Companies generally install experienced management teams at portfolio 
companies and offer ongoing support after listing, the Exchange's 
business and Regulation staff generally have to devote fewer resources 
to servicing these listings.\4\
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    \4\ See Securities Exchange Act Release No. 79582 (December 16, 
2016), 81 FR 93976 (December 22, 2016) (concerning SR-NYSE-2016-70).
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    The Exchange now believes that many of the efficiencies that 
warranted the fee discount in the first place, are applicable 
regardless of whether the Investment Management Entity is listed on the 
Exchange or another national securities exchange. For example, the 
Exchange and Nasdaq have similar rules for listed companies, including 
in the area of corporate governance. Therefore, an Investment 
Management Entity with experience guiding companies to list on Nasdaq 
is likely to provide similar levels of support to a portfolio company 
listing on the Exchange. Therefore, the Exchange believes it is 
appropriate to amend Section 902.02 of the Manual to

[[Page 77944]]

specify that in order to benefit from the annual fee discount, a 
qualifying Investment Management Entity can be listed on the Exchange 
or another national securities exchange.
    The Exchange notes that Nasdaq offers a comparable 50% discount on 
annual fees to investment management entities and eligible portfolio 
companies and, for purposes of qualifying for this discount, Nasdaq 
rules expressly permit the investment management company to be listed 
on Nasdaq or another national securities exchange.\5\ The Exchange's 
proposed amendment, therefore, simply conforms its fee discount to the 
comparable discount offered by Nasdaq.
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    \5\ See Nasdaq Rule 5910(b)(2)(E).
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2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with Section 6(b) of the Act,\6\ in general, and furthers the 
objectives of Section 6(b)(4) \7\ 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,\8\ 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.
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    \6\ 15 U.S.C. 78f(b).
    \7\ 15 U.S.C. 78f(b)(4).
    \8\ 15 U.S.C. 78f(b)(5).
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    The Exchange believes that it is not unfairly discriminatory and 
represents an equitable allocation of reasonable fees to amend Section 
902.02 of the Manual to clarify that for purposes of qualifying for the 
Investment Management Entity Group Fee Discount, an Investment 
Management Entity is a company that is listed on the Exchange or 
another national securities exchange.
The Proposed Change Is Reasonable
    The Exchange believes that the proposed change to its Investment 
Management Entity fee discount is reasonable. In that regard, the 
Exchange notes that the efficiencies that warranted the fee discount in 
the first place, are largely applicable regardless of whether the 
Investment Management Entity is listed on the Exchange or another 
national securities exchange. For example, the Exchange and Nasdaq have 
similar rules for listed companies, including in the area of corporate 
governance. Therefore, an Investment Management Entity with experience 
guiding companies to list on Nasdaq is likely to provide similar levels 
of support to a portfolio company listing on the Exchange. Therefore, 
the Exchange anticipates that it will experience cost efficiencies from 
servicing the listing of an Eligible Portfolio Company even when the 
related Investment Management Entity is listed on another national 
securities exchange.
The Proposal Is an Equitable Allocation of Fees
    The Exchange believes its proposal equitably allocates its fees 
among its market participants.
    The Exchange believes that the proposed amendment to the Investment 
Management Entity fee discount is equitable because it does not change 
the existing framework for such discount, but instead represents a 
reasonable extension of the discount. As amended, the proposed rule 
would state that, for eligibility purposes, an Investment Management 
Entity can be listed on the Exchange or another national securities 
exchange. The Exchange believes that the proposed rule change 
represents an equitable allocation of fees because the Exchange 
experiences similar cost efficiencies in servicing Eligible Portfolio 
Companies regardless of whether the related Investment Management 
Entity is listed on the Exchange or another national securities 
exchange.
The Proposal Is Not Unfairly Discriminatory
    The Exchange believes that the proposal is not unfairly 
discriminatory. The proposed fee changes are not unfairly 
discriminatory among issuers because, as discussed above, the Exchange 
experiences cost efficiencies in servicing Eligible Portfolio Companies 
that it does not experience with other operating companies listed on 
the Exchange. Therefore, the Exchange believes it is not unfairly 
discriminatory to provide a fee discount to such companies.
    For the foregoing reasons, the Exchange believes that the proposal 
is consistent with the Act.

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

    The Exchange believes that the proposal will not impose any burden 
on competition that is not necessary or appropriate in furtherance of 
the purposes of Section 6(b)(8) of the Act.\9\
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    \9\ 15 U.S.C. 78f(b)(8).
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    The proposed rule change simply aligns the provisions of the 
existing fee discount that the Exchange provides to Investment 
Management Companies and their Eligible Portfolio Companies with the 
comparable fee discount offered by Nasdaq. As such, the Exchange 
believes that the proposed rule change will enhance competition for 
listings by enabling the Exchange and Nasdaq to vie for listings on 
equivalent terms.

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 has become effective upon filing pursuant 
to Section 19(b)(3)(A) \10\ of the Act and paragraph (f) 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.
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    \10\ 15 U.S.C. 78s(b)(3)(A).
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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

    <bullet> Use the Commission's internet comment form (https://www.sec.gov/rules/sro.shtml); or
    <bullet> Send an email to <a href="/cdn-cgi/l/email-protection#394b4c555c145a5654545c574d4a794a5c5a175e564f"><span class="__cf_email__" data-cfemail="93e1e6fff6bef0fcfefef6fde7e0d3e0f6f0bdf4fce5">[email protected]</span></a>. Please include 
file number SR-NYSE-2024-57 on the subject line.

Paper Comments

    <bullet> 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-2024-57. 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

[[Page 77945]]

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-NYSE-2024-57, and should be submitted on or 
before October 15, 2024.

    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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Vanessa A. Countryman,
Secretary.
[FR Doc. 2024-21764 Filed 9-23-24; 8:45 am]
BILLING CODE 8011-01-P


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