Document ID: SEC-2016-2091-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: New York Stock Exchange LLC
Posted Date: 2016-11-30T05:00Z

[Federal Register Volume 81, Number 230 (Wednesday, November 30, 2016)]
[Notices]
[Pages 86369-86371]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-28773]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-79383; File No. SR-NYSE-2016-77]

Self-Regulatory Organizations; New York Stock Exchange LLC; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change 
Amending Section 907.00 of the Listed Company Manual

November 23, 2016.
    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 November 10, 2016, 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 
and II 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 907.00 of the Listed Company 
Manual (the ``Manual'') to clarify how it will treat currently listed 
U.S. issuers and non-U.S. companies who qualify to receive Tier One or 
Tier Two services as a result of a corporate action completed between 
October 1 and December 31 of a particular calendar year. 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
    Pursuant to Section 907.00 of the Manual, the Exchange offers a 
suite of complimentary products and services to certain companies 
currently listed on the Exchange (``Eligible Current Listings''). A 
company qualifies to receive such complimentary products and services 
based on the number of shares of common stock in the case of U.S. 
companies or other equity security in the case of non-U.S. companies 
that it has outstanding. Presently, the Exchange determines eligibility 
to receive complimentary products and services for a calendar year 
based on the number of shares outstanding as of September 30 of the 
immediately preceding calendar year. If a company has the requisite 
number of shares outstanding on September 30, it will begin (or 
continue, as the case may be) to receive the suite of complimentary 
products and services for which it is eligible as of the following 
January 1.\4\
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    \4\ Eligible Current Listings that have 270 million or more 
shares issued and outstanding as of September 30 (each a ``Tier One 
Eligible Current Listing'') are presently offered (i) a choice of 
market surveillance or market analytics products and services, and 
(ii) Web-hosting and Web-casting products and services, on a 
complimentary basis. Eligible Current Listings that have between 160 
million and 269.9 million shares issued and outstanding as of 
September 30 (each a ``Tier Two Eligible Current Listing'') are 
presently offered a choice of market analytics or Web-hosting and 
Web-casting products and services.
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    For planning and budgeting purposes, it is helpful for both the 
Exchange and listed companies to determine a reasonable period in 
advance the Tier One and Tier Two Eligible Current Listings that will 
receive complimentary products and services the following year.\5\ 
Therefore, the Exchange has historically looked at a company's shares 
outstanding as of September 30 to determine qualification for the 
following year. On occasion, there is a company that does not qualify 
[sic] Tier One or Tier Two services based on its shares outstanding as 
of September 30, but that subsequently completes a corporate action 
(such as a share issuance or stock split) between October 1 and 
December 31 that would enable it to either (i) qualify for the first 
time or (ii) qualify for a higher tier of services if the Exchange made 
its eligibility determination as of a later date. Under existing 
Exchange rules, the unfortunate outcome for such companies is that they 
do not qualify to receive complimentary products and services for, in 
some cases, nearly 15 months after they became eligible.
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    \5\ See Securities Exchange Act Release No. 34-68143 (November 
2, 2012), 77 FR 67053 (November 8, 2012) (SR-NYSE-2012-44). This 
provides qualifying issuers with nearly three months to select from 
the available services in their tier for the following calendar year 
as well as providing non-qualifying issuers with time to budget and 
plan for obtaining the service elsewhere.
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    The Exchange proposes to amend Section 907.00 of the Manual to 
clarify that, if a company becomes a Tier One or Tier Two Eligible 
Current Listing due to a corporate action completed between October 1 
and December 31 of a particular year that results in an increased 
number of outstanding shares, such company will receive the suite of 
complimentary products and services to which it is entitled by virtue 
of that designation as of the immediately following January 1. The 
Exchange will continue to conduct its initial eligibility review as of 
September 30. This will enable the Exchange to capture the vast 
majority of Tier One and Tier Two Eligible Current Listings to assist 
both itself and listed companies in their planning and budget process 
for the following year. The Exchange will then conduct a secondary 
review each year towards the end of December to determine whether any 
additional companies have become eligible to receive services or have 
become eligible to receive a higher tier or [sic] services.
    The Exchange notes that listed companies are subject to an annual 
fee that is billed each January 1 and is calculated based on the number 
of shares outstanding on the preceding December 31.\6\ In this regard, 
under the Exchange's existing rules, a company that increases its 
shares outstanding due to a corporate action completed subsequent to 
September 30 would be billed a higher annual fee on the following 
January 1 but would not receive any complimentary products and services 
for which it may be eligible for an entire year. The Exchange's

[[Page 86370]]

current proposal seeks to address this anomaly by ensuring that 
companies obtain the benefits of listing normally provided to other 
issuers paying comparable annual listing fees.
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    \6\ See Section 902.02 of the Manual.
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    In the event that a U.S. issuer or non-U.S. company that was 
eligible for Tier One or Tier Two services as of September 30, then 
completes a corporate action between October 1 and December 31 that 
reduces its shares outstanding and makes it no longer eligible, the 
Exchange proposes that it would not discontinue services as of the 
following January 1. Instead, the Exchange proposes that it would re-
evaluate the following September 30 and determine to discontinue as of 
the following January 1 if the issuer remained ineligible.\7\ The 
Exchange believes it could be unnecessarily harmful to an issuer that 
reduces its outstanding shares due to a corporate action in the fourth 
quarter to immediately discontinue providing services the following 
year. As described above, a significant reason for determining 
eligibility on September 30 is to provide ineligible issuers time to 
budget and plan to procure services from an alternative vendor. The 
Exchange believes that any company that undertakes a corporate action 
in the fourth quarter that results in a reduction in its shares 
outstanding is likely doing so for reasons other than to reduce its 
forthcoming annual listing fee. A company in that situation may have 
expected that it would be eligible for Tier One or Tier Two services 
based on its September 30 shares outstanding and the Exchange believes 
it could disadvantage them to discontinue services so close to the year 
end.
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    \7\ However, if a company remained ineligible on September 30, 
but regained eligibility between October 1 and December 31, it would 
continue to receive the package of services for which it became 
eligible.
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2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with Section 6(b) of the Act,\8\ in general, and furthers the 
objectives of Sections 6(b)(4) \9\ of the Act, in particular, in that 
it is designed to provide for the equitable allocation of reasonable 
dues, fees, and other charges among its members and issuers and other 
persons using its facilities. The Exchange also believes that the 
proposed rule change is consistent with Section 6(b)(5) \10\ of the Act 
in that it is not designed to permit unfair discrimination between 
customers, issuers, brokers, or dealers.
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    \8\ 15 U.S.C. 78f(b).
    \9\ 15 U.S.C. 78f(b)(4).
    \10\ 15 U.S.C. 78f(b)(5).
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    The Exchange believes that its proposed rule change is consistent 
with Section 6(b)(4) of the Act because it ensures that all companies 
that are subject to the same fee structure as of January 1 each year 
are also eligible to receive the same benefits of listing. Under 
existing rules, the Exchange charges companies an annual fee based on 
shares outstanding on December 31, but determines eligibility for 
complimentary products and services based on shares outstanding as of 
September 30. The proposed rule change will ensure that, for the vast 
majority of listed companies, the Exchange takes into account a 
company's shares outstanding on December 31 not only for purposes of 
charging annual listing fees but also for purposes of determining an 
issuer's eligibility to receive complimentary products and services or 
receive a higher tier of complimentary products and services.
    The Exchange believes that its proposed rule change is consistent 
with Section 6(b)(5) of the Act because it prevents unfair 
discrimination between issuers by ensuring that no issuer is deprived 
of eligibility for services simply because they became a Tier One or 
Tier Two Eligible Current Listing in the last three months of a 
calendar year after the Exchange has made its eligibility 
determinations for the next calendar year. The Exchange believes that 
its proposal to continue offering Tier One or Tier Two services for one 
additional year to a company that became ineligible as a result of a 
corporate action undertaken in the fourth quarter does not unfairly 
discriminate between issuers. The Exchange believes this situation 
would occur very rarely and issuers in this situation would continue to 
receive services for only one additional year. The Exchange believes 
all issuers would benefit from knowing that their services would not be 
discontinued on short notice.

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. The proposed change simply 
clarifies how the Exchange will treat Tier One and Tier Two Eligible 
Current Listings who achieve that designation as a result of a 
corporate action completed after September 30, but prior to December 31 
in a given year. As described above, except for a very small number of 
companies that may continue to receive services for an additional year 
despite losing eligibility in the fourth quarter, under the proposed 
rule change, all issuers that are similarly situated on January 1 will 
receive the same package of complimentary products and services and no 
issuer will be treated differently simply because it became a Tier One 
or Tier Two Eligible Current Listing in the final three months of the 
preceding year. The Exchange believes that its proposal that it 
continue to offer services for an additional year to companies that 
became ineligible during the fourth quarter does not significantly 
impact the public interest or impose any significant burden on 
competition. Such proposal simply offers all issuers a measure of 
protection against having their services discontinued on short notice.

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

    Because the proposed rule change does not (i) significantly affect 
the protection of investors or the public interest; (ii) impose any 
significant burden on competition; and (iii) become operative for 30 
days from the date on which it was filed, or such shorter time as the 
Commission may designate, it has become effective pursuant to Section 
19(b)(3)(A) of the Act \11\ and Rule 19b-4(f)(6) thereunder.\12\
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    \11\ 15 U.S.C. 78s(b)(3)(A).
    \12\ 17 CFR 240.19b-4(f)(6). As required under Rule 19b-
4(f)(6)(iii), the Exchange provided the Commission with written 
notice of its intent to file the proposed rule change, along with a 
brief description and the text of the proposed rule change, at least 
five business days prior to the date of filing of the proposed rule 
change, or such shorter time as designated by the Commission.
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    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. If the Commission 
takes such action, the Commission shall institute proceedings to 
determine whether the proposed rule change should be approved or 
disapproved.

[[Page 86371]]

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-2016-77 on the subject line.

Paper Comments

     Send paper comments in triplicate to Brent J. Fields, 
Secretary, Securities and Exchange Commission, 100 F Street NE., 
Washington, DC 20549-1090.

All submissions should refer to File Number SR-NYSE-2016-77. 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 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-2016-77, and should be 
submitted on or before December 21, 2016.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\13\
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    \13\ 17 CFR 200.30-3(a)(12).
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Robert W. Errett,
Deputy Secretary.
[FR Doc. 2016-28773 Filed 11-29-16; 8:45 am]
 BILLING CODE 8011-01-P