Document ID: SEC-2022-1313-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: New York Stock Exchange LLC
Posted Date: 2022-10-03T04:00Z

[Federal Register Volume 87, Number 190 (Monday, October 3, 2022)]
[Notices]
[Pages 59856-59859]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2022-21335]

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

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-95930; File No. SR-NYSE-2022-39]

Self-Regulatory Organizations; New York Stock Exchange LLC; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To 
Amend Fee Provisions of the Listed Company Manual Applicable to 
Companies Listing Upon Emergence From Bankruptcy

September 27, 2022.
    Pursuant to Section 19(b)(1) \1\ of the Securities Exchange Act of 
1934 (the

[[Page 59857]]

``Act'') \2\ and Rule 19b-4 thereunder,\3\ notice is hereby given that, 
on September 14, 2022, 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 Exchange. 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 amend Section 902.02 of the NYSE Listed 
Company Manual (the ``Manual'') to: (i) modify the conditions under 
which a listed company can qualify for the reduced fees that are 
provided to companies listing upon emergence from bankruptcy; (ii) 
specify that any company listing in connection with an underwritten 
public offering is not eligible for the reduction in annual fees or a 
waiver of initial listing fees provided to companies emerging from 
bankruptcy under that rule; and (iii) reset the annual fee reduction 
rate for companies listing upon emergence from bankruptcy. The proposed 
rule change is available on the Exchange's website 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
Annual Fees
    Section 902.02 of the Manual includes a subsection entitled ``Total 
Maximum Fee Payable in a Calendar Year by an Issuer Listing Upon 
Emergence from Bankruptcy'' (the ``Bankruptcy Subsection''), which sets 
forth a limitation on listing fees charged to companies that list upon 
emergence from bankruptcy. If an issuer lists upon emergence from 
bankruptcy, its annual fees will be calculated quarterly for the fiscal 
quarter in which it lists and in each of the succeeding 12 full fiscal 
quarters, at a rate of one-fourth of the applicable annual fee rate. 
The total fees (including listing fees and annual fees) that may be 
billed to such an issuer during this period will be subject to a 
$25,000 cap in the fiscal quarter in which the issuer lists and in each 
of the succeeding 12 full fiscal quarters. This fee cap is subject to 
the same exclusions as apply in relation to the $500,000 per year fee 
cap described in Section 902.02 under the subsection ``Total Maximum 
Fee Payable in a Calendar Year.'' If there are one or more fiscal 
quarters remaining in the year after the conclusion of the period 
described in this paragraph, the issuer will, on a prorated basis, be 
billed the regular annual fee subject to the $500,000 total fee cap for 
the remainder of that year.
    The Exchange now proposes to amend the Bankruptcy Subsection to 
provide that an issuer will be entitled to the fee reductions and per 
year fee cap if it lists within 12 months of emergence from bankruptcy 
(rather than only if the issuer lists immediately upon emergence from 
bankruptcy). The Exchange believes that it is reasonable to expand the 
eligibility for the fee reductions set forth under the Bankruptcy 
Subsection to companies listing within 12 months of emergence from 
bankruptcy because these companies are subject to many of the same 
challenges as companies that list immediately upon emergence from 
bankruptcy. The Exchange notes that some companies choose not to list 
immediately upon emergence from bankruptcy or are unable to do so as 
they do not meet Exchange distribution standards until their post-
emergence equity has traded for some time. The Exchange believes making 
the fee reduction available to companies within 12 months of emerging 
from bankruptcy would incentivize issuers to list on the Exchange, 
which should result in increased transparency and liquidity with 
respect to the issuer's securities.
    The Exchange also proposes to amend the Bankruptcy Subsection to 
provide that the fee limitations thereunder will not be available for 
any company listing in connection with an underwritten public offering. 
The Exchange made the following statement in connection with its 
original proposal of this fee provision:

    Companies emerging from bankruptcy are typically not raising any 
new capital at the time of listing, so the payment of initial 
listing fees is more burdensome than for companies that are listing 
upon an initial public offering. Also, because of the desire in 
bankruptcy proceedings to ensure that creditors are paid as much as 
possible, such companies are much more sensitive to both the initial 
and continued costs associated with listing.\4\
---------------------------------------------------------------------------

    \4\ See Securities Exchange Act Release No. 55421 (March 8, 
2007): 72 FR 11925 (March 14, 2007) (SR-NYSE-2007-19).

    The Exchange notes that companies often plan to list immediately 
upon emergence from bankruptcy and that the costs of the listing are 
therefore considered in the context of the payments made to settle the 
claims of creditors as part of the reorganization plan authorized by 
the bankruptcy court. However, an underwritten public offering is by 
its nature a transaction that is separate from and subsequent to the 
bankruptcy reorganization process and typically does not happen 
directly after emergence. As all of the claims of the issuer's 
creditors in the bankruptcy process are settled at the time of the 
issuer's emergence from bankruptcy, the focus on maximizing payments to 
the creditors of the bankrupt company and the associated sensitivity to 
the continued costs of listing cited at the time of adopting this fee 
provision are no longer relevant in the case of a company listing in 
connection with an underwritten public offering at some point after 
emergence. Furthermore, the Exchange believes that the fact that such 
companies are raising capital at the time of listing will generally 
place them in a financially more secure position than other companies 
listing after emergence from bankruptcy and will generally make them 
more comparable to companies listing in connection with an initial 
public offering.
    The Exchange also proposes to amend the Bankruptcy Subsection by 
resetting the fee reduction rate for qualified issuers listing on or 
after September 15, 2022. Specifically, if an issuer lists upon 
emergence from bankruptcy, its annual fees will be calculated quarterly 
for the fiscal quarter in which it lists and in each of the succeeding 
12 full fiscal quarters, at a rate of one-half of the applicable annual 
fee rate, rather than at a rate of one-quarter of the applicable rate 
as is the case under the rule as currently written. The Exchange 
believes that this adjustment is reasonable in light of the significant 
increase in the cost of services provided

[[Page 59858]]

to issuers since the adoption of the current fee discount provision in 
2007. The Exchange further believes that the proposed amended 
discounted fee structure will cause the affected issuers to pay fees 
that are more closely aligned with the cost of servicing their 
listings. This proposed amendment would not affect issuers that listed 
before September 15, 2022. Issuers with securities listed before that 
date would continue to pay the rate of one-fourth of the applicable 
annual fee rate as set forth in the current rule. The Exchange believes 
this is reasonable as these issuers made their decision to list on the 
Exchange on the basis of their eligibility for this reduced fee rate 
for the first 36 months of their listing and it would therefore be 
unfair to raise their fee cap during that period.
Initial Listing Fees
    Section 902.02 also contains a provision waiving initial listing 
fees for certain categories of listings, including the listing of a 
company within 36 months of emergence from bankruptcy that has not had 
a security listed on a national securities exchange during such period. 
The Exchange proposes to exclude from this waiver any company listing 
in connection with an underwritten public offering. As is the case with 
the annual fee reduction for companies emerging from bankruptcy, the 
Exchange believes that the fact that such companies are raising capital 
at the time of listing will generally place them in a financially more 
secure position than other companies listing after emergence from 
bankruptcy and will generally make them more comparable to companies 
listing in connection with an initial public offering.
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with Section 6(b) of the Act,\5\ in general, and furthers the 
objectives of Section 6(b)(4) \6\ of the Act, in particular, in that it 
is designed to provide for the equitable allocation of reasonable dues, 
fees, and other charges. The Exchange also believes that the proposed 
rule change is consistent with Section 6(b)(5) of the Act,\7\ 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.
---------------------------------------------------------------------------

    \5\ 15 U.S.C. 78f(b).
    \6\ 15 U.S.C. 78f(b)(4).
    \7\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

    The Exchange believes that it is reasonable to expand the 
eligibility for the fee reductions set forth under the Bankruptcy 
Subsection to companies listing within 12 months of emergence from 
bankruptcy because those companies are subject to many of the same 
challenges as companies that list immediately upon emergence from 
bankruptcy. The Exchange notes that some companies choose not to list 
immediately upon emergence from bankruptcy or are unable to do so as 
they do not meet Exchange distribution standards until their post-
emergence equity has traded for some time. The Exchange believes the 
proposed fee reduction would provide an incentive for those companies 
to list on the Exchange.
    In this regard, the Exchange notes that the issuers that would 
benefit from the proposed expanded eligibility for the fee reduction, 
like all other listing applicants, would be required to satisfy the 
Exchange's listings standards as well as the other governance 
requirements and standards that the Exchange requires of issuers listed 
on the Exchange. Accordingly, the Exchange believes that it is in the 
public's interest, and the interest of the issuer, to provide an 
opportunity for the increased transparency and liquidity that is 
attendant with listing on the Exchange and therefore that it is 
reasonable to provide the applicable fee reduction for such issuers. 
The Exchange believes that the number of additional issuers that will 
qualify for this fee reduction, as proposed, will be limited. The 
Exchange also believes that limiting the fee reduction to 12 months 
following emergence from bankruptcy is reasonable because, in the 
Exchange's opinion, it is a period of time that is sufficient for the 
issuer to proceed with its reorganization and meet the Exchange's 
qualifications for listing.
    The Exchange believes that the proposed adjustment to the fee rate 
for eligible issuers under the Bankruptcy Subsection from one-quarter 
of the applicable annual fee rate to one-half of such rate is 
reasonable in light of the significant increase in the cost of services 
provided to issuers since the adoption of the current fee discount 
provision in 2007. The Exchange believes that the proposed amended 
discounted fee structure will cause the affected issuers to pay fees 
that are more closely aligned with the cost of servicing their 
listings. The Exchange further believes it is reasonable to continue to 
apply the rate of one-fourth of the applicable annual fee rate set 
forth in the current version of the Bankruptcy Subsection to issuers 
that listed prior to the adoption of the proposed amendment, as these 
issuers made their decision to list on the Exchange on the basis of 
their eligibility for this reduced fee rate for the first 36 months of 
their listing and it would therefore be unfair to raise their fee cap 
during that period.
    The Exchange also believes that it is reasonable to not provide the 
initial fee waiver or the proposed annual fee reduction to companies 
that have emerged from bankruptcy within the previous 36 or 12 months, 
as applicable, but that are listing in connection with an underwritten 
public offering. The Exchange notes that any company that is listing in 
connection with an underwritten public offering after emergence from 
bankruptcy will already have settled all claims of its creditors at the 
time of emergence, so the focus on maximizing payments to the creditors 
of the bankrupt company and the associated sensitivity to the continued 
costs of listing cited at the time of adopting this fee provision are 
not relevant to such companies. Furthermore, the fact that such 
companies are raising capital at the time of listing will generally 
place them in a financially more secure position than other companies 
listing after emergence from bankruptcy and will generally make them 
more comparable to companies listing in connection with an initial 
public offering. For the foregoing reasons, the Exchange believes that 
it does not constitute an inequitable allocation of fees and is not 
unfairly discriminatory to treat companies differently for purposes of 
these fee provisions if they are listing in connection with an 
underwritten public offering.
    For the foregoing reasons, the Exchange believes that the proposal 
is consistent with the Act.

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 not necessary or appropriate in 
furtherance of the purposes of the Act. The proposed conditions on fees 
will be applicable to all similarly situated issuers on the same basis.
    The Exchange does not believe that the proposed fee changes will 
have any meaningful effect on the competition among issuers listed on 
the Exchange.

[[Page 59859]]

The Exchange operates in a highly competitive market in which issuers 
can readily choose to list new securities on other exchanges and 
transfer listings to other exchanges if they deem fee levels at those 
other venues to be more favorable.
    Because competitors are free to modify their own fees in response, 
and because issuers may change their listing venue, the Exchange does 
not believe its proposed fee change can impose any burden on 
intermarket 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 foregoing rule change is effective upon filing pursuant to 
Section 19(b)(3)(A) \8\ of the Act and subparagraph (f)(2) of Rule 19b-
4 \9\ thereunder, because it establishes a due, fee, or other charge 
imposed by the Exchange.
---------------------------------------------------------------------------

    \8\ 15 U.S.C. 78s(b)(3)(A).
    \9\ 17 CFR 240.19b-4(f)(2).
---------------------------------------------------------------------------

    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) \10\ of the Act to determine whether the proposed 
rule change should be approved or disapproved.
---------------------------------------------------------------------------

    \10\ 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 [email protected]. Please include 
File Number SR-NYSE-2022-39 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-2022-39. 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 website (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 website 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 a.m. and 3 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. Persons submitting comments are cautioned that 
we do not redact or edit personal identifying information from comment 
submissions. You should submit only information that you wish to make 
available publicly. All submissions should refer to File Number SR-
NYSE-2022-39 and should be submitted on or before October 24, 2022.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\11\
---------------------------------------------------------------------------

    \11\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

J. Matthew DeLesDernier,
Deputy Secretary.
[FR Doc. 2022-21335 Filed 9-30-22; 8:45 am]
BILLING CODE 8011-01-P