Document ID: SEC-2017-0528-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: New York Stock Exchange, LLC
Posted Date: 2017-03-31T04:00Z

[Federal Register Volume 82, Number 61 (Friday, March 31, 2017)]
[Notices]
[Pages 16082-16084]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2017-06332]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-80313; File No. SR-NYSE-2017-12]

Self-Regulatory Organizations; New York Stock Exchange LLC; 
Notice of Filing of Proposed Rule Change To Amend Section 102.01B of 
the NYSE Listed Company Manual To Modify the Requirements That Apply to 
Companies That List Without a Prior Exchange Act Registration and That 
Are Not Listing in Connection With an Underwritten Initial Public 
Offering

March 27, 2017.
    Pursuant to Section 19(b)(1) \1\ of the Securities Exchange Act of 
1934 (the ``Act'') \2\ and Rule 19b-4 thereunder,\3\ notice is hereby 
given that, on March 13, 2017, New York Stock Exchange LLC (``NYSE'' or 
the ``Exchange'') 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 self-
regulatory organization. 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\ 15 U.S.C. 78a.
    \3\ 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 102.01B of the NYSE Listed 
Company Manual (the ``Manual'') to modify the provisions relating to 
the qualification of companies listing without a prior Exchange Act 
registration. The proposed rule change is available on the Exchange's 
Web site 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 the 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The Exchange proposes to amend Section 102.01B of the Manual to 
modify the provisions relating to the qualification of companies 
listing without a prior Exchange Act registration.
    Generally, the Exchange expects to list companies in connection 
with a firm commitment underwritten IPO, upon transfer from another 
market, or pursuant to a spin-off. Companies listing in connection with 
an IPO must demonstrate that they have $40 million in market value of 
publicly-held shares, while companies that are listing upon transfer 
from another exchange or the over-the counter market or pursuant to a 
spin-off must demonstrate that they have $100 million in market value 
of publicly-held shares.
    Section 102.01B currently recognizes that some companies that have 
not previously had their common equity securities registered under the 
Exchange Act, but which have sold common equity securities in a private 
placement, may wish to list their common equity securities on the 
Exchange at the time of effectiveness of a registration statement filed 
solely for the purpose of allowing existing shareholders to sell their 
shares.\4\ Footnote (E) of Section 102.01B provides that the Exchange 
will, on a case by case basis, exercise discretion to list such 
companies. In exercising this discretion, Footnote (E) provides that 
the Exchange will determine that such company has met the $100 million 
aggregate market value of publicly-held shares requirement based on a 
combination of both (i) an independent third-party valuation (a 
``Valuation'') of the company and (ii) the most recent trading price 
for the company's common stock in a trading system for unregistered 
securities operated by a national securities exchange or a registered 
broker-dealer (a ``Private Placement Market''). The Exchange will 
attribute a market value of publicly-held shares to the company equal 
to the lesser of (i) the value calculable based on the Valuation and 
(ii) the value calculable based on the most recent trading price in a 
Private Placement Market.
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    \4\ See NYSE Listed Company Manual, Section 102.01B, Footnote 
(E).
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    Any Valuation used for purposes of Footnote (E) must be provided by 
an entity that has significant experience and demonstrable competence 
in the

[[Page 16083]]

provision of such valuations. The Valuation must be of a recent date as 
of the time of the approval of the company for listing and the 
evaluator must have considered, among other factors, the annual 
financial statements required to be included in the registration 
statement, along with financial statements for any completed fiscal 
quarters subsequent to the end of the last year of audited financials 
included in the registration statement. The Exchange will consider any 
market factors or factors particular to the listing applicant that 
would cause concern that the value of the company had diminished since 
the date of the Valuation and will continue to monitor the company and 
the appropriateness of relying on the Valuation up to the time of 
listing. In particular, the Exchange will examine the trading price 
trends for the stock in the Private Placement Market over a period of 
several months prior to listing and will only rely on a Private 
Placement Market price if it is consistent with a sustained history 
over that several month period evidencing a market value in excess of 
the Exchange's market value requirement. The Exchange may withdraw its 
approval of the listing at any time prior to the listing date if it 
believes that the Valuation no longer accurately reflects the company's 
likely market value.
    While Footnote (E) to Section 102.01B provides for a company 
listing upon effectiveness of a selling shareholder registration 
statement, it does not make any provision for a company listing in 
connection with the effectiveness of an Exchange Act registration 
statement in the absence of an IPO or other Securities Act 
registration. A company is able to become an Exchange Act registrant 
without a concurrent public offering by filing a Form 10 or an annual 
report (such as a Form 10-K or Form 20-F) with the SEC. The Exchange 
believes that it is appropriate to list companies immediately upon 
effectiveness of an Exchange Act registration statement without a 
concurrent Securities Act registration provided the applicable company 
meets all other listing requirements. Consequently, the Exchange 
proposes to amend Footnote (E) to Section 102.01B to explicitly provide 
that it applies to companies listing upon effectiveness of an Exchange 
Act registration statement without a concurrent Securities Act 
registration, as well as to companies listing upon effectiveness of a 
selling shareholder registration statement.
    The Exchange notes that the requirement of Footnote (E) that the 
Exchange rely on recent Private Placement Market trading in addition to 
a Valuation may cause difficulties for certain companies that are 
otherwise clearly qualified for listing. Some companies that are 
clearly large enough to be suitable for listing on the Exchange do not 
have their securities traded at all on a Private Placement Market prior 
to going public. In other cases, the Private Placement Market trading 
is too limited to provide a reasonable basis for reaching conclusions 
about a company's qualification. Consequently, the Exchange proposes to 
amend Footnote (E) to provide an exception to the Private Placement 
Market trading requirement for companies with respect to which there is 
a recent Valuation available indicating at least $250 million in market 
value of publicly-held shares. A Valuation of at least two-and-a-half 
times the $100 million requirement provides a basis for concluding that 
the market value of the company's shares would meet the Valuation 
standard upon commencement of trading on the Exchange. In addition, the 
Exchange notes that any Valuation used for this purpose must be 
provided by an entity that has significant experience and demonstrable 
competence in the provision of such valuations.
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with Section 6(b) \5\ of the Act, in general, and furthers the 
objectives of Section 6(b)(5) of the Act,\6\ in particular 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 proposed rule change would foster 
cooperation and coordination with persons engaged in clearing and 
settling transactions in securities, thereby facilitating such 
transactions.
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    \5\ 15 U.S.C. 78f(b).
    \6\ 15 U.S.C. 78f(b)(5).
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    The proposal to permit companies listing upon effectiveness of an 
Exchange Act registration statement without a concurrent public 
offering or Securities Act registration is designed to protect 
investors and the public interest, because such companies would be 
required to meet all of the same quantitative requirements met by other 
listing applicants. The proposal to amend Footnote (E) to Section 
102.01B to allow companies to avail themselves of that provision 
without any reliance on Private Placement Market trading is designed to 
protect investors and the public interest because any company relying 
solely on a valuation to demonstrate compliance with the market value 
of publicly-held shares requirement would be required to demonstrate a 
market value of publicly-held shares of $250 million, rather than the 
$100 million that is generally applicable.

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

    The Exchange does not believe that the proposed rule change would 
impose any burden on competition that is not necessary or appropriate 
in furtherance of the purpose of the Exchange Act. Rather, the proposed 
rule change would increase competition for new listings by enabling 
companies to list that meet all quantitative requirements but are 
currently unable to list because of the methodology required by the 
currents rules to demonstrate their compliance.

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

    Within 45 days of the date of publication of this notice in the 
Federal Register or up to 90 days (i) as the Commission may designate 
if it finds such longer period to be appropriate and publishes its 
reasons for so finding or (ii) as to which the self-regulatory 
organization consents, the Commission will:
    (A) By order approve or disapprove the proposed rule change, or
    (B) institute proceedings to determine whether the proposed rule 
change should be 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:

[[Page 16084]]

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-2017-12 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-2017-12. 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 Web site (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 Web site 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; the Commission does 
not edit personal identifying information from submissions. You should 
submit only information that you wish to make available publicly. All 
submissions should refer to File Number SR-NYSE-2017-12 and should be 
submitted on or before April 21, 2017.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\7\
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    \7\ 17 CFR 200.30-3(a)(12).
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Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2017-06332 Filed 3-30-17; 8:45 am]
BILLING CODE 8011-01-P