Document ID: SEC-2017-0600-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: New York Stock Exchange, LLC
Posted Date: 2017-04-13T04:00Z

[Federal Register Volume 82, Number 70 (Thursday, April 13, 2017)]
[Notices]
[Pages 17919-17921]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2017-07455]

-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-80398; File No. SR-NYSE-2017-15]

Self-Regulatory Organizations; New York Stock Exchange LLC; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To 
Remove Section 204.25 (Treasury Stock Changes) From the NYSE Listed 
Company Manual

April 7, 2017.
    Pursuant to Section 19(b)(1) \1\ of the Securities Exchange Act of 
1934 (``Act'') \2\ and Rule 19b-4 thereunder,\3\ notice is hereby given 
that, on March 27, 2017, 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 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.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 15 U.S.C. 78a.
    \3\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------

I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange proposes to remove Section 204.25 (``Treasury Stock 
Changes'') from the NYSE Listed Company Manual (the ``Manual''). 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 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The Exchange proposes to remove Section 204.25 (``Treasury Stock 
Changes'') from the Manual.
    Section 204.25 provides that if issued and listed stock of a listed 
company is reacquired or disposed of, directly or indirectly, for the 
account of the company, the Exchange is required to receive notice of 
such transaction within ten days after the close of the fiscal quarter 
in which it occurs. This notice need state only the total number of 
shares reacquired (shares of a company's own stock acquired by the 
company and held for its own account are typically referred to as 
``treasury shares'') or disposed of during the quarter and the balance 
held by the company at the end of the quarter. If, during such quarter, 
there were both reacquisitions and dispositions, the total amount 
reacquired and the total amount disposed of should be stated. The only 
purposes for which the Exchange generally uses treasury share 
information is for determining compliance with its shareholder approval 
requirements in relation to share issuances and for calculating annual 
listing fees.
    The Exchange believes it is unnecessary to require listed companies 
to submit this information on a quarterly basis as it has not regularly 
relied on this information for any regulatory purpose for many 
years.\4\ In the event that the Exchange needs information about a 
listed company's treasury stock position, it will either request that 
information from the company in question or it will obtain it by 
reviewing the company's financial statements included in its Form 10-K 
or Form 10-Q. In addition, the Exchange notes that the primary purpose 
for which it uses treasury share data is for purposes of analyzing 
transactions under Sections 312.03 (``Shareholder Approval'') and 
303A.08 (``Shareholder Approval of Equity Compensation

[[Page 17920]]

Plans'').\5\ To that end, the Exchange notes that Part 1 of Section 
703.01 of the Manual provides that, in the event a company is issuing 
shares from treasury in a transaction or series of related 
transactions, it must notify the Exchange in writing in advance of the 
issuance, indicating whether shareholder approval is required pursuant 
to Sections 303A.08 or 312.03 and, if required, the date such 
shareholder approval was obtained.\6\ In addition, the Exchange notes 
that the form of subsequent listing application companies must complete 
whenever they apply to list additional shares requires the company to 
provide information about the total number of shares outstanding at the 
time of entering into a definitive agreement in connection with the 
applicable transaction, as well as the number of shares held in 
treasury at that time. This requirement enables the Exchange to 
calculate the percentage of the company's then outstanding shares 
represented by the shares issued in the transaction and thereby ensure 
that companies are complying with the shareholder approval requirements 
of Section 312.03.
---------------------------------------------------------------------------

    \4\ A listed company's treasury stock position was significant 
at one time, as listed companies were able to reissue treasury 
shares without giving rise to any shareholder approval requirements 
under Section 312.03 of the Manual. Since the adoption of Section 
312.04(j), issuances of treasury shares are treated like any other 
issuance of common stock for purposes of Section 312.03. See 
Securities Exchange Act Release No. 54999 (December 21, 2006); 72 FR 
170 (January 3, 2007) (SR-NYSE-2006-30).
    \5\ Exchange rules do not impose any substantive restrictions on 
listed companies' ability to repurchase their own stock.
    \6\ If the issuance involves both shares issued from treasury 
and newly issued, the company may include this notification in the 
subsequent listing application that the company files to list the 
newly issued shares.
---------------------------------------------------------------------------

    Section 902.03 of the Manual provides that companies must pay 
annual listing fees on all shares outstanding, including treasury 
shares. The Exchange bills companies for annual fees each year based on 
the number of shares outstanding as of the previous December 31 
(including treasury shares) as reported to the Exchange for that 
purpose by the company's transfer agent. As such, the information 
currently provided to the Exchange by companies pursuant to Section 
204.25 with respect to changes in companies' treasury share positions 
is not needed in connection with the Exchange's billing procedures.
    The Exchange notes that it does not rely on treasury share 
reporting under Section 204.25 in monitoring compliance with its 
continued listing standards with respect to market capitalization and 
publicly-held shares. Rather, the Exchange relies on the number of 
shares outstanding as reported on a quarterly basis [sic] on the cover 
of a company's annual report filed with the SEC and (where applicable) 
Form 10-Qs. We also check these requirements against information 
provided by the market data vendors.
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with Section 6(b) of the Act,\7\ in general, and furthers the 
objectives of Section 6(b)(5) \8\ of the Act, 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 Exchange believes the proposed rule 
change is consistent with these goals in that it is designed to protect 
the public interest, because the information gathered pursuant to the 
current treasury stock reporting requirement can be obtained directly 
from the applicable listed company or from its public filings on an as-
needed basis and is also provided in connection with every subsequent 
listing application.
---------------------------------------------------------------------------

    \7\ 15 U.S.C. 78f(b).
    \8\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

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 rule change is 
designed to remove a treasury share reporting requirement imposed on 
all listed companies because the Exchange can obtain that information 
from public disclosures or from the applicable listed company or from 
its public filings on an as-needed basis. As such, the proposed 
amendment will not impose any burden on competition.

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 Exchange has filed the proposed rule change pursuant to Section 
19(b)(3)(A)(iii) of the Act \9\ and Rule 19b-4(f)(6) thereunder.\10\ 
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 prior to 
30 days from the date on which it was filed, or such shorter time as 
the Commission may designate, if consistent with the protection of 
investors and the public interest, the proposed rule change has become 
effective pursuant to Section 19(b)(3)(A) of the Act and Rule 19b-
4(f)(6)(iii) thereunder.
---------------------------------------------------------------------------

    \9\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \10\ 17 CFR 240.19b-4(f)(6). The Commission notes that 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.
---------------------------------------------------------------------------

    At any time within 60 days of the filing of such 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 under 
Section 19(b)(2)(B) \11\ of the Act to determine whether the proposed 
rule change should be approved or disapproved.
---------------------------------------------------------------------------

    \11\ 15 U.S.C. 78s(b)(2)(B).
---------------------------------------------------------------------------

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-2017-15 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-2017-15. 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

[[Page 17921]]

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-2017-15 and should be submitted on or before May 4, 
2017.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\12\
---------------------------------------------------------------------------

    \12\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2017-07455 Filed 4-12-17; 8:45 am]
 BILLING CODE 8011-01-P