Document ID: SEC-2008-1320-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: New York Stock Exchange LLC.
Posted Date: 2008-09-26T04:00Z

[Federal Register: September 26, 2008 (Volume 73, Number 188)]
[Notices]               
[Page 55883-55885]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr26se08-96]                         

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

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-58599; File No. SR-NYSE-2008-56]

 
Self-Regulatory Organizations; New York Stock Exchange LLC; Order 
Approving Proposed Rule Change To Amend Section 902.09 of the Listed 
Company Manual To Establish Fees for Securities Listed Under Sections 
703.21 and 703.22 of the Listed Company Manual and Traded on NYSE Bonds 
and To Waive Fees for Structured Products Transferred From the Amex to 
the NYSE

September 19, 2008.

I. Introduction

    On July 24, 2008, the New York Stock Exchange LLC (``NYSE'' or 
``Exchange'') filed with the Securities and Exchange Commission 
(``Commission''), pursuant to Section 19(b)(1) of the Securities 
Exchange Act of 1934 (``Act''),\1\ and Rule 19b-4 thereunder,\2\ a 
proposed rule change establish fees for securities listed under 
Sections 703.21 and 703.22 of the Listed Company Manual and traded on 
NYSE Bonds \3\ and to waive fees for certain structured products 
transferred from the American Stock Exchange LLC (``Amex'') to the 
NYSE. The proposed rule change was published in the Federal Register on 
August 11, 2008.\4\ The Commission received no comments on the 
proposal. This order approves the proposed rule change.
---------------------------------------------------------------------------

    \1\ 15 USC. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ NYSE Bonds is the Exchange trading system designated for the 
purposes of receiving, processing, executing, and reporting orders 
in bonds. See NYSE Rule 86.
    \4\ See Securities Exchange Act Release No. 58301 (August 4, 
2008), 73 FR 46672.
---------------------------------------------------------------------------

II. Description of the Proposal

    The Exchange proposes to amend Section 902.09 of the Manual to 
extend the initial and continued listing fees charged thereunder to 
certain listed securities traded on the equity floor to securities 
listed under Section 703.21 (Equity-Linked Debt Securities) and Section 
703.22 (Index-Linked Securities) and traded on NYSE Bonds.\5\ The 
Exchange does not currently set forth in the Manual any listing fees 
for securities that are listed under either Section 703.21 of the 
Manual (Equity-Linked Debt Securities) or Section

[[Page 55884]]

703.22 of the Manual (Index-Linked Securities) and traded on NYSE 
Bonds. The Exchange has determined that the most appropriate fee 
schedule for these securities is that set forth in Section 902.09 of 
the Manual.\6\
---------------------------------------------------------------------------

    \5\ Section 902.09 of the Manual currently sets forth initial 
and continued listing fees to securities listed under Section 703.15 
of the Manual (Foreign Currency Warrants and Currency Index 
Warrants) and Section 703.22 of the Manual (Index-Linked Securities) 
and traded on the equity floor of the Exchange.
    \6\ See Section 902.09 of the Manual, which sets forth the 
listing fees and annual fees being proposed to be extended to Index-
Linked Securities and Equity-Linked Debt Securities traded on NYSE 
Bonds. Generally, the section provided a graduated scale of initial 
listing fees depending on how many shares are outstanding, ranging 
from a minimum fee of $5,000 for shares outstanding up to 1 million, 
to a maximum fee of $45,000 for shares outstanding in excess of 15 
million. Section 902.09 also provided a graduated scale of annual 
fees depending on the total number of securities outstanding per 
listed issue, ranging from a minimum fee of $10,000 for shares 
outstanding up to 6 million, to a maximum fee of $55,000 for shares 
outstanding in excess of 50 million.
---------------------------------------------------------------------------

    In addition, the Exchange proposes to waive, in connection with 
transfers to the NYSE from NYSE Alternext US after the closing of the 
purchase of the Amex by NYSE Euronext (the ``Merger''),\7\ (i) all fees 
payable under Section 902.08 of the Manual in connection with such 
transfers,\8\ and (ii) in the case of securities that will be traded on 
NYSE Bonds, all fees payable under Section 902.09 of the Manual in 
connection with such transfer, including the prorated annual fee 
payable for the calendar year in which the transfer occurs. The fee 
waivers described in the previous sentence will only apply (i) if such 
transfer occurs during the calendar year in which the Merger is 
consummated and (ii) if the Merger is consummated no later than March 
31, 2009.
---------------------------------------------------------------------------

    \7\ NYSE Euronext, the ultimate parent company of the Exchange, 
has agreed to acquire the Amex pursuant to an Agreement and Plan of 
Merger, dated as of January 17, 2008. The members of the Amex voted 
to approve the transaction on June 17, 2008. No vote of the NYSE 
Euronext shareholders is required. When filing its proposed rule 
change, the NYSE stated that it is currently anticipated that the 
acquisition will be consummated during the third quarter of 2008.
    \8\ Section 902.08 of the Manual sets forth listing fees for 
securities that list under the debt standard in Section 703.19 of 
the Manual and trade on NYSE Bonds. There is no listing fee for the 
debt of NYSE equity issuers and affiliated companies, or for the 
debt of issuers exempt from registration under the Act. There is an 
initial listing fee of $15,000 for all other debt securities.
---------------------------------------------------------------------------

    In its filing, NYSE stated that in connection with the acquisition, 
NYSE Euronext intends to discontinue the listing on NYSE Alternext US 
of bonds and structured products issued in $1,000 face amounts. To the 
extent that these securities qualify for listing under the applicable 
NYSE standards, the Exchange will encourage the issuers to apply to 
list those securities on the NYSE for trading on NYSE Bonds. As the 
issuers of these securities will already have paid listing fees to NYSE 
Alternext US and will be transferring to the NYSE as a result of a 
business decision made by NYSE Euronext, the Exchange proposes to waive 
all listing fees that would be payable in connection with the listing 
of securities transferred from NYSE Alternext US and traded on NYSE 
Bonds, including securities listed under Sections 703.19, 703.21 and 
703.22, provided the transfer to NYSE Bonds occurs during the calendar 
year in which the Merger is consummated.\9\ This waiver will only take 
effect upon consummation of NYSE Euronext's acquisition of the Amex.
---------------------------------------------------------------------------

    \9\ NYSE states that as annual fees for listed securities are 
calculated based on the number of securities outstanding on January 
1 and billed on an annual basis, the proposed fee waiver will not 
apply to additional securities of a class that has been transferred 
from NYSE Alternext US that are issued after the date of transfer.
---------------------------------------------------------------------------

    The Exchange also stated in its filing that the proposed fee waiver 
does not render the allocation of its listing fees inequitable or 
unfairly discriminatory, in particular because, after the Merger, NYSE 
Regulation, Inc. (``NYSE Regulation'') will perform listed company 
regulation for both the Exchange and NYSE Alternext US, including a 
substantial review of companies upon original listing. The Exchange 
further notes that many of the regulatory staff who currently perform 
initial and continued listing reviews at the Amex will become employees 
of NYSE Regulation at the time of the Merger and will continue to 
perform the same duties with respect to Amex companies after the 
Merger. According to the Exchange, securities transferring from NYSE 
Alternext US 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 securities 
transferring from NYSE Alternext US to the Exchange will be less costly 
than the review of a transfer from an unaffiliated market, as the Amex 
listing regulatory staff that will have been absorbed by NYSE 
Regulation will already have performed a substantial review of any 
Amex-listed company, and NYSE Regulation will be able to rely on that 
prior work as a baseline in qualifying the company for listing on the 
Exchange and in conducting ongoing compliance activities with respect 
to any such company. Furthermore, the Exchange anticipates that the 
revenue it foregoes as a consequence of this waiver will be an 
immaterial amount that would not have any impact on its ability to 
finance its regulatory activities.

III. Discussion

    The Commission finds that the proposed rule change is consistent 
with the requirements of the Act and the rules and regulations 
thereunder applicable to a national securities exchange and, in 
particular, the requirements of Section 6(b) of the Act and the rules 
and regulations thereunder. Specifically, the Commission finds that the 
proposal is consistent with Sections 6(b)(4) \10\ and 6(b)(5) of the 
Act,\11\ which require that an exchange have rules that provide for the 
equitable allocation of reasonable dues, fees, and other charges among 
its members and other persons using its facilities, and are designed, 
among other things, to promote just and equitable principles of trade, 
to remove impediments to and perfect the mechanism of a free and open 
market and a national market system, to protect investors and the 
public interest, and to not permit unfair discrimination between 
customers, issuers, brokers, or dealers.\12\
---------------------------------------------------------------------------

    \10\ 15 USC. 78f(b)(4).
    \11\ 15 USC. 78f(b)(5).
    \12\ In approving this proposed rule change, the Commission 
notes that it has considered the proposed rules' impact on 
efficiency, competition, and capital formation. See 15 USC. 78c(f).
---------------------------------------------------------------------------

    The Commission believes that the fees set forth for securities 
listed under either Section 703.21 of the Manual (Equity-Linked Debt 
Securities) or Section 703.22 of the Manual (Index-Linked Securities) 
and traded on NYSE Bonds are consistent with the Act, and Section 
6(b)(4) of the Act \13\ in particular. The Exchange has not previously 
listed any securities under Sections 703.21 or 703.22 of the Manual 
that traded on NYSE Bonds and consequently does not currently set forth 
in the Manual any listing fees for such securities. The Commission 
notes that the Exchange has determined that the most appropriate fee 
schedule for these securities is that set forth in Section 902.09 of 
the Manual. As noted above, these fees currently set forth initial and 
continued listing fees for Foreign Currency Warrants, Currency Index 
Warrants, and Index-Linked Securities traded on the equity floor of the 
Exchange, and the extension of these fees to Equity-Linked Debt 
Securities and Index-Linked Securities traded on NYSE Bonds appears to 
be reasonable.\14\
---------------------------------------------------------------------------

    \13\ 15 USC. 78f(b)(4).
    \14\ The Commission notes that for certain structured products, 
including Equity-Linked Debt Securities traded on the equity floor 
that the fees in Section 902.05 of the Manual or Section 902.06 of 
the Manual apply. Index-Linked Securities, irrespective of whether 
traded on the equity floor or on NYSE Bonds, would follow the fee 
schedule in Section 902.09 of the Manual.

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

[[Page 55885]]

    The Commission further believes that the waiver of certain listing 
fees in connection with transfers to the NYSE from NYSE Alternext US 
after the closing of the Merger is consistent with the Act. The 
Commission notes that an issuer seeking to transfer to the Exchange has 
already paid initial listing fees to another national securities 
exchange when it became a publicly traded company. The Commission also 
notes that the Exchange does not expect the loss of initial listing 
fees to be material and has stated that the fee waiver will not affect 
the Exchange's ability to finance its regulatory activities. In 
addition, after the calendar year of the transfer of the issuer's 
security, the Exchange would assess annual fees and listing of 
additional shares fees from these issuers. Further, the Exchange 
believes that there will be lower burdens and costs associated with its 
review of issuers transferring from another national securities 
exchange and in conducting ongoing compliance activities with respect 
to such companies. The Commission notes that NYSE has stated that 
review of transfers from NYSE Alternext US will be less costly than for 
an unaffiliated entity, as the same regulatory staff on Amex (that will 
have been absorbed by NYSE Regulation) will have conducted a 
substantial review of an Amex company that NYSE Regulation will be able 
to rely upon as a baseline in qualifying the company for listing on the 
Exchange and in conducting ongoing compliance activities with respect 
to any such company. Therefore, the Commission believes it is not 
inequitable or unfair to provide for a waiver of initial and annual 
fees for a limited period of time after the merger is consummated. 
Notwithstanding this, the Commission expects that a full and 
independent review of compliance with the listing standards will be 
conducted for any company seeking to take advantage of the fee waiver, 
just as for any company that applies for listing on the Exchange. 
Further, the Commission expects the Exchange to maintain its commitment 
to resources to its regulatory oversight of the listing process and its 
ongoing compliance review of listed companies under its regulatory 
program.
    Based on the above, the Commission believes the proposed listing 
fees and listing fee waivers do not constitute an inequitable 
allocation of reasonable dues, fees, and other charges under Section 
6(b)(4) of the Act,\15\ do not permit unfair discrimination between 
issuers under Section 6(b)(5) of the Act,\16\ and are otherwise 
consistent with the requirements of the Act.
---------------------------------------------------------------------------

    \15\ 15 U.S.C. 78f(b)(4).
    \16\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

IV. Conclusion

    It is therefore ordered, pursuant to Section 19(b)(2) of the 
Act,\17\ that the proposed rule change (SR-NYSE-2008-56) is hereby 
approved.
---------------------------------------------------------------------------

    \17\ 15 U.S.C. 78s(b)(2).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\18\
---------------------------------------------------------------------------

    \18\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Florence E. Harmon,
Acting Secretary.
 [FR Doc. E8-22587 Filed 9-25-08; 8:45 am]

BILLING CODE 8010-01-P