Document ID: SEC-2008-1315-0001
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 55885-55887]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr26se08-97]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-58601; File No. SR-NYSE-2008-74]

 
Self-Regulatory Organizations; New York Stock Exchange LLC; Order 
Approving Proposed Rule Change To Enable the Exchange To Waive Annual 
Listing Fees for Securities Transferring From the Amex or NYSE Arca, 
Inc.

September 19, 2008.

I. Introduction

    On August 4, 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 to waive annual listing fees for securities 
transferring to NYSE from the American Stock Exchange LLC (``Amex'') or 
NYSE Arca, Inc. (``NYSE Arca''). The proposed rule change was published 
in the Federal Register on August 15, 2008.\3\ The Commission received 
no comments on the proposal. This order approves the proposed rule 
change.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ See Securities Exchange Act Release No. 58311 (August 5, 
2008), 73 FR 47994.
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II. Description of the Proposal

    The Exchange proposes to amend Section 902.02 of the Manual to 
provide that, with retroactive effect from January 1, 2008, for issuers 
that transfer their primary class of common stock from Amex to the 
Exchange, there shall be no annual fee for the remainder of the 
calendar year in which the transfer occurs for the transferred common 
stock and any other class of securities of a company listed on the 
Amex. This proposed rule change (i) is conditioned on the consummation 
of NYSE Euronext's acquisition of the Amex (the ``Merger''),\4\ (ii) 
will not take effect until the date of consummation of the Merger, and 
(iii) will be of no further effect if the closing of the Merger does 
not take place by March 31, 2009. The amendment also provides that 
companies transferring the listing of their primary class of common 
stock from NYSE Arca to the Exchange (with respect to which the 
Exchange already waives annual fees for the first part year, pursuant 
to Section 902.02 of the Manual) will not be charged the prorated 
annual fee in the first year of listing for any other class of 
securities that is transferred in connection with the transfer of the 
common stock.
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    \4\ 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. After the closing of the Merger, 
the Amex will be renamed NYSE Alternext US LLC.
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A. Securities Transferring From Amex

    The Exchange proposes to amend Section 902.02 of the Manual to 
grant companies transferring the listing of their primary class of 
common shares and any other class of securities to the Exchange from 
the Amex a waiver of the prorated annual listing fee that would 
normally be payable in connection with the first partial calendar year 
of listing on the Exchange. As noted in its proposal, the Exchange 
believes this is appropriate because companies transferring to the 
Exchange from the Amex will already have paid annual continued listing 
fees to the Amex for the calendar year in which they transfer. The 
Exchange further stated that since some companies may choose to 
transfer from the Amex to the Exchange in advance of the consummation 
of the acquisition, and such companies will be making their transfer 
decisions in expectation of the Merger, the Exchange believes that they 
should not be penalized for transferring before the closing date. 
Consequently, the Exchange believes that it is appropriate to apply the 
fee waiver retroactively to all companies that transfer to the Exchange 
from the Amex during the portion of the year in which the Merger is 
consummated prior to such consummation.
    In its proposal, the Exchange stated that this fee waiver is not 
unfairly discriminatory and does not constitute an inequitable 
allocation of fees, in particular because, after the Merger, NYSE 
Regulation, Inc. (``NYSE

[[Page 55886]]

Regulation'') will perform listed company regulation for both the 
Exchange and Amex, including a substantial review of companies upon 
original listing. 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. Companies transferring from Amex 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 Amex to the Exchange will be less costly 
than the review of a transfer from an unaffiliated market, because 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 those companies.
    The Exchange also believes that waiving, subject to consummation of 
the Merger, the prorated annual fees applicable to any Amex security 
transferred to the NYSE prior to the Merger is not unfairly 
discriminatory or an inequitable allocation of fees. In its proposal, 
the Exchange stated that the proposed fee waiver will not impact its 
ability to devote the same level of resources to its oversight of the 
companies that benefit from the waiver as it does for other listed 
companies or, more generally, impact its resource commitment to its 
regulatory oversight of the listing process or its regulatory programs. 
The Exchange notes that, after consummation of the Merger, the annual 
fee revenue paid by companies to the Amex prior to the Merger will be 
available to NYSE Regulation to finance its regulatory activities in 
relation to Amex-listed companies, regardless of whether such companies 
remain on NYSE Alternext US or have chosen to transfer their listing to 
the NYSE at some point during the year either before or after the 
Merger. The Exchange asserted that therefore collecting annual fees 
from companies upon transfer from the Amex to the NYSE would constitute 
a double billing of those companies for the regulatory expenses 
incurred by NYSE Regulation in relation to those companies during the 
year of transfer.

B. Securities Transferring From NYSE Arca

    Section 902.02 of the Manual currently provides that any company 
transferring the listing of its primary class of common equity 
securities from NYSE Arca to the Exchange will not be charged any 
annual fees in connection with the first partial year of listing on the 
Exchange. The Exchange proposes to extend the NYSE Arca annual fee 
waiver to the prorated annual fees that would otherwise be payable with 
respect to any other class of securities that an issuer is transferring 
to the Exchange from NYSE Arca in conjunction with its transfer of its 
common stock, for the remainder of the calendar year in which the 
transfer occurs. The Exchange believes this waiver is appropriate in 
light of the fact that the Exchange and NYSE Arca share a common parent 
and, without the waiver, NYSE Euronext would be collecting two separate 
annual fees in relation to such securities. In addition, the same staff 
from NYSE Regulation are responsible for compliance review of all 
securities listed on both markets and their prior experience with any 
securities transferring from NYSE Arca will significantly lessen the 
burden and costs associated with continued compliance review of those 
securities once they have been transferred to the NYSE. Specifically, 
the Exchange believes that the proposed fee waiver will not impact its 
ability to devote the same level of resources to its oversight of the 
companies that benefit from the waiver as it does for other listed 
companies or, more generally, impact its resource commitment to its 
regulatory oversight of the listing process or its regulatory programs.

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) \5\ and 6(b)(5) of the 
Act,\6\ 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.\7\
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    \5\ 15 USC. 78f(b)(4).
    \6\ 15 USC. 78f(b)(5).
    \7\ 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 U.S.C. 78c(f).
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    National securities exchanges traditionally assess annual listing 
fees on listed companies at the beginning of the calendar year. When a 
company transfers to another marketplace, such annual fees are 
typically pro-rated by the new market for the remainder of the calendar 
year. Annual fees aid a listed market in, among other things, 
conducting its regulatory responsibilities to ensure compliance by 
listed companies with continued listing standards and other regulatory 
requirements. The Commission has carefully examined the fee waiver in 
light of NYSE's ongoing regulatory responsibilities as to the 
transferred companies and, for the reasons set forth below, has 
determined that the proposed limited annual fee waiver is consistent 
with the Act.
    The Commission notes that an Amex or NYSE Arca issuer seeking to 
transfer to the Exchange has already paid annual continued listing fees 
to another national securities exchange for the calendar year in which 
it transferred. Further, the Commission recognizes that subsequent to 
the consummation of the Merger, both Amex as NYSE Alternext US, NYSE 
Arca, and NYSE will be under the same common ownership. The Commission 
also notes that the Exchange anticipates the review of securities 
transferring from Amex to be less costly than the review of a transfer 
from an unaffiliated market, because Amex listing regulatory staff that 
will be part of NYSE Regulation will continue to perform both initial 
and continued listing reviews. In addition, the Commission notes that 
the same staff from NYSE Regulation are responsible for compliance 
review of all securities listed on both NYSE and NYSE Arca, and the 
Exchange asserted that this will significantly lessen the burden and 
costs associated with continued compliance review of NYSE Arca 
transfers.
    The Commission further believes that the application of the waiver 
to companies transferring to the NYSE from Amex prior to the Merger, 
occurring only upon consummation of the Merger, is not unfairly 
discriminatory and does not constitute

[[Page 55887]]

an inequitable allocation of fees. The Commission notes that the 
Exchange has represented that after consummation of the Merger, the 
annual fee revenue paid by companies to the Amex prior to the Merger 
will be available to NYSE Regulation to finance its regulatory 
activities in relation to Amex-listed companies, regardless of whether 
such companies remain on NYSE Alternext US or have chosen to transfer 
their listing to the NYSE at some point during the year either before 
or after the Merger. Since the retroactive effect is conditioned on 
consummation of the Merger, the fee waiver recognizes that these 
regulatory efficiencies will only occur upon that event.
    The Commission also notes that the fee waiver is for a limited 
time, applicable to the remainder of the calendar year in which the 
transfer occurs. Annual fees for both Amex and NYSE Arca transfers will 
continue to be assessed after the initial pro-rated annual fee waiver. 
The limited period of the fee waiver helps to ensure that that NYSE 
will have adequate fees to continue compliance and oversight of its 
listing program.
    In summary, based on the reasons set forth above, including NYSE's 
assertions that (i) the same regulatory staff on both Amex (that will 
have been absorbed by NYSE Regulation) and NYSE Regulation will have 
conducted a substantial review of an Amex or NYSE Arca company that 
NYSE Regulation will be able to rely upon as a baseline in qualifying 
the company for both listing on the Exchange and in conducting ongoing 
compliance activities with respect to any such company; and (ii) the 
retroactive effect for Amex transfers will only occur if the Merger is 
consummated, the Commission believes it is not inequitable or unfair to 
provide for a waiver of annual fees for a limited period of time. The 
Commission expects, and the Exchange has represented, that a rigorous 
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 lists on the Exchange. In addition, the 
Commission expects the Exchange to maintain its commitment of 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 fee waiver 
does not constitute an inequitable allocation of reasonable dues, fees, 
and other charges under Section 6(b)(4) of the Act,\8\ does not permit 
unfair discrimination between issuers under Section 6(b)(5) of the 
Act,\9\ and is otherwise consistent with the requirements of the Act.
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    \8\ 15 U.S.C. 78f(b)(4).
    \9\ 15 U.S.C. 78f(b)(5).
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IV. Conclusion

    It is therefore ordered, pursuant to Section 19(b)(2) of the 
Act,\10\ that the proposed rule change (SR-NYSE-2008-74) is hereby 
approved.
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    \10\ 15 U.S.C. 78s(b)(2).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\11\
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    \11\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Acting Secretary.
 [FR Doc. E8-22658 Filed 9-25-08; 8:45 am]

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