Document ID: SEC-2006-0812-0001
Agency: sec
Document Type: Notice
Title: Self-regulatory organizations; proposed rule changes: New York Stock Exchange LLC
Posted Date: 2006-06-26T04:00Z

[Federal Register: June 26, 2006 (Volume 71, Number 122)]
[Notices]               
[Page 36370-36372]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr26jn06-85]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-54008; File No. SR-NYSE-2006-43]

 
Self-Regulatory Organizations; New York Stock Exchange LLC; 
Notice of Filing of Proposed Rule Change To Amend Section 902.02 of the 
Listed Company Manual To Exempt Companies Transferring From NYSE Arca 
From Initial Listing Fees and the Annual Fee for the Year of Such 
Transfer

June 16, 2006.
    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 June 7, 2006, the New York Stock Exchange LLC (the ``NYSE'' or 
the ``Exchange'') filed with the Securities and Exchange Commission 
(``Commission'') the proposed rule change as described in Items I, II, 
and III below, which Items have been prepared by NYSE. 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

    NYSE proposes to amend Section 902.02 of its Listed Company Manual 
(``Manual'') to provide that there shall be no initial listing and no 
prorated annual fee payable with respect to the first partial calendar 
year of listing for any company listed on NYSE Arca, Inc. (``NYSE 
Arca'') that transfers the listing of its primary class of common 
shares to the Exchange. The text of the proposed rule change is 
available at the Commission, at NYSE, and at http://www.nyse.com.

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 Exchange included statements 
concerning the purpose of and basis for the proposed rule change. The 
text of these statements may be examined at the places specified in 
Item IV below. NYSE has prepared summaries, set forth in Sections A, B, 
and C below, of the most significant aspects of such statements.

[[Page 36371]]

A. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    New York Stock Exchange, Inc. and Archipelago Holdings, Inc. merged 
on March 7, 2006, leading to the creation of a new public holding 
company, NYSE Group, Inc. (``NYSE Group''). As a result of the merger, 
NYSE Group is the ultimate parent of two national securities exchanges, 
the Exchange and NYSE Arca.\3\
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    \3\ See Securities Exchange Act Release No. 53382 (SR-NYSE-2005-
77) (February 27, 2006), 71 FR 11251 (March 6, 2006) (SR-NYSE-2005-
77) (approving organizational changes in connection with the 
merger).
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    NYSE Group expects that companies that do not yet meet the 
Exchange's initial listing criteria will list first on NYSE Arca and 
will subsequently transfer their listing to the Exchange if and when 
they qualify to do so. Consistent with this approach, the Exchange 
proposes to amend Section 902.02 of the Manual to grant companies 
transferring the listing of their primary class of common shares to the 
Exchange from NYSE Arca a waiver of the Exchange's initial listing fees 
and the prorated annual listing fee payable in connection with the 
first partial calendar year of listing on the Exchange. The Exchange 
believes this is appropriate as companies transferring to the Exchange 
from NYSE Arca will already have paid annual continued listing fees to 
NYSE Arca for the calendar year in which they transfer, as well as the 
initial listing fee payable under NYSE Arca's rules at the time of 
initial listing on NYSE Arca. In addition, the Exchange notes that NYSE 
Regulation performs listed company regulation for both the Exchange and 
NYSE Arca, including a substantial review of companies upon original 
listing. Companies transferring from NYSE Arca 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 NYSE Arca to the Exchange will be 
less costly than the review of a transfer from the Nasdaq National 
Market (``Nasdaq'') or the American Stock Exchange, as NYSE Regulation 
will already have performed a substantial review of any NYSE Arca 
listed company and will be able to rely on that prior work as a 
baseline in qualifying the company for listing on the Exchange.
    The primary purpose of the proposed fee waiver is to assist in the 
development of NYSE Arca as a listing market. NYSE Group intends to 
build NYSE Arca into an alternative listing venue for companies whose 
only realistic listing option is currently Nasdaq because they do not 
meet the Exchange's own listing standards due to their small size or 
insufficient operating history. NYSE Arca intends to adopt a new set of 
listing standards with thresholds broadly comparable to those of Nasdaq 
and expects to compete directly with Nasdaq for initial public 
offerings that do not qualify for the Exchange. However, NYSE Group 
recognizes that, as a new market, NYSE Arca will initially face 
difficulties in attracting new listings. NYSE Group believes that NYSE 
Arca's affiliation with the Exchange through their common parent is 
highly attractive to companies considering listing on NYSE Arca. 
Companies whose ultimate objective is to list on the Exchange can 
associate themselves with NYSE Group by listing on NYSE Arca at the 
time of their initial public offerings. NYSE Group believes that many 
companies will consider this preferable to listing initially on Nasdaq 
and then transferring to the Exchange upon achieving the Exchange's 
listing standards and that the Exchange's proposed fee waiver will 
appeal to companies considering listing on NYSE Arca because of its 
association with the Exchange. By increasing NYSE Arca's attractiveness 
as a listing venue, the Exchange believes the fee waiver will lead to 
greater competition for new listings, as it will help NYSE Arca become 
a viable alternative to Nasdaq, which does not currently have any 
meaningful competition for new listings that do not qualify for the 
Exchange. NYSE Group is willing to forego the listing fee revenues from 
NYSE Arca transfers because it believes that a significant market 
opportunity exists for NYSE Arca to compete successfully with Nasdaq. 
However, NYSE Group does not wish to waive transfer fees for transfers 
from all other markets as it views initial listing fees as an important 
source of revenue. If the Exchange decides to reimpose these fees with 
respect to transfers from NYSE Arca in the future, it will do so by 
filing a proposed rule change with the Commission.
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with the requirements of Section 6(b)(4) \4\ and 6(b)(5) of the Act \5\ 
that an exchange have rules that (i) provide for the equitable 
allocation of reasonable dues, fees and other charges among its members 
and other persons using its facilities and (ii) are designed to remove 
impediments to and perfect the mechanism of a free and open market and 
a national market system and are not designed to permit unfair 
discrimination between issuers. The Exchange believes that the proposed 
fee waiver does not render the allocation of its listing fees 
inequitable or unfairly discriminatory. The Exchange expects that, on 
average, the review of companies transferring from NYSE Arca to the 
Exchange will be less costly than the review of a transfer from Nasdaq 
or the American Stock Exchange, as NYSE Regulation will already have 
performed a substantial review of any NYSE Arca listed company and will 
be able to rely on that prior work as a baseline in qualifying the 
company for listing on the Exchange. The Exchange believes that, by 
making NYSE Arca a more attractive listing venue, the proposed fee 
waiver will assist NYSE Arca in competing with Nasdaq for listings and 
is therefore designed to perfect the mechanism of a free and open 
market.
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    \4\ 15 U.S.C. 78f(b)(4).
    \5\ 15 U.S.C. 78f(b)(5).
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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.

C. Self-Regulatory Organization's Statement on Comments on the Proposed 
Rule Change Received From Members, Participants or Others

    Written comments were neither solicited nor received by NYSE.

III. Date of Effectiveness of the Proposed Rule Change and Timing for 
Commission Action

    Within 35 days of the date of publication of this notice in the 
Federal Register or within such longer period (i) as the Commission may 
designate up to 90 days of such date if it finds such longer period to 
be appropriate and publishes its reasons for so finding or (ii) as to 
which the Exchange consents, the Commission will:
    (A) By order approve such 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,

[[Page 36372]]

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 e-mail to rule-comments@sec.gov. Please include 

File Number SR-NYSE-2006-43 on the subject line.

Paper Comments

     Send paper comments in triplicate to Nancy M. Morris, 
Secretary, Securities and Exchange Commission, Station Place, 100 F 
Street, NE., Washington, DC 20549-1090.

All submissions should refer to File Number SR-NYSE-2006-43. This file 
number should be included on the subject line if e-mail 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 inspection and 
copying in the Commission's Public Reference Room. Copies of such 
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-2006-43 and should be submitted on or before July 
17, 2006.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\6\
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    \6\ 17 CFR 200.30-3(a)(12).
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Nancy M. Morris,
Secretary.
 [FR Doc. E6-9984 Filed 6-23-06; 8:45 am]

BILLING CODE 8010-01-P