Document ID: SEC-2023-0452-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: Long-Term Stock Exchange, Inc.
Posted Date: 2023-04-27T04:00Z

[Federal Register Volume 88, Number 81 (Thursday, April 27, 2023)]
[Notices]
[Pages 25718-25721]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2023-08828]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-97346; File No. SR-LTSE-2023-02]

Self-Regulatory Organizations; Long-Term Stock Exchange, Inc.; 
Notice of Filing and Immediate Effectiveness of a Proposed Rule Change 
To Extend the Term That Newly and Currently Listed Companies May 
Receive Capital Markets Solutions on a Complimentary Basis Under LTSE 
Rule 14.602

April 21, 2023.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that 
on April 12, 2023, Long-Term Stock Exchange, Inc. (``LTSE'' or the 
``Exchange'') filed with the Securities and Exchange Commission 
(``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\ 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

    LTSE proposes to extend from one year, to three-years, the term 
that newly and currently listed Companies may receive Capital Markets 
Solutions on a complimentary basis under LTSE Rule 14.602.
    The text of the proposed rule change is available at the Exchange's 
website at https://longtermstockexchange.com/, at the principal office 
of the Exchange, and at the Commission's Public Reference Room.

II. Self-Regulatory Organization's Statement on 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 these statements may be examined at 
the places specified in Item IV below. The self-regulatory organization 
has prepared summaries, set forth in Sections A, B, and C below, of the 
most significant aspects of such statements.

A. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    In March 2022, LTSE began offering complimentary Capital Markets 
Solutions to newly listed and currently listed Companies following the 
Commission's approval of relevant amendments to Rule 14.602.\3\ Based 
on LTSE's experience with offering Capital Markets Solutions, as well 
as in response to changes in the competitive landscape and market 
conditions, the Exchange proposes to extend from one year, to a three-
year term, the period that newly listed Companies and currently listed 
Companies may receive the complimentary Capital Markets Solutions under 
LTSE Rule 14.602. This proposed change impacts the duration for which 
Capital Markets Solutions are to be provided and does not otherwise 
impact the nature or substance of the offerings under LTSE Rule 14.602.
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    \3\ See Securities Exchange Act Release No. 94465 (March 18, 
2022), 87 FR 16800 (March 24, 2022) File No. SR-LTSE-2021-08.
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    As described in the prior approval order by the Commission,\4\ the 
Capital Markets Solutions has two components: (i) an Investor Alignment 
Solution, and (ii) the Long-Term Investor Platform (``LTIP''). The 
Investor Alignment Solution provides Companies with detailed 
institutional investor analytics and insights into investor behavior to 
enable them to evaluate the behaviors of select investors and provide 
them with a deeper understanding of the ESG landscape and their 
positioning. For each receiving Company, the Exchange's affiliate 
company, LTSE Services, Inc. (``LTSE Services'') \5\ analyzes the ESG 
profile of institutional investors in order to understand and identify 
relevant sources of capital to aid the Company in honing and achieving 
strategic priorities. A highly-experienced, multi-disciplinary team is 
deployed to support this long-term governance and capital markets 
strategy. The Exchange believes that the Investor Alignment Solution 
furthers the Exchange's goal of facilitating long-term focus and value 
creation for companies and investors. The nature or substance of this 
offering under LTSE Rule 14.602 is not impacted by the proposed rule 
change.
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    \4\ Id.
    \5\ As noted in the Commission's order approving LTSE as a 
national securities exchange, LTSE maintains a commercial 
relationship with LTSE Services to leverage the company's 
technological expertise to support the Exchange's software needs. 
See In the Matter of the Application of Long Term Stock Exchange, 
Inc.; for Registration as a National Securities Exchange; Findings, 
Opinion, and Order of the Commission, Securities Exchange Act 
Release No. 85828 (May 10, 2019), 84 FR 21841, 21842 (May 15, 2019). 
LTSE Services also provides communications and marketing services to 
the Exchange.
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    The LTIP is a platform that provides listed Companies with a means 
to upload and effectively manage and utilize their registered 
shareholder data received from their transfer agent. For example, the 
LTIP allows Companies to more easily track, analyze and utilize 
registered shareholder data in support of their investor relations, 
strategic initiatives, board review and governance functions. 
Additionally, as part of the LTIP, LTSE Services will assist \6\ 
Companies with methods of outreach to and education of existing or 
potential investors regarding the process for becoming a registered 
shareholder, including the need for investors to work with their 
broker-dealer to complete a submission to the DRS Profile System 
maintained by the DTC.\7\
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    \6\ The registered shareholder information in LTIP is 
proprietary to the Company and viewable only by the Company and its 
authorized agent.
    \7\ Any outreach to existing or potential investors is entirely 
at the discretion of the Company and will be conducted exclusively 
by the Company; no personnel from LTSE Services or LTSE will have 
any role in communicating with investors on behalf of the Company. 
The LTIP also will, based on customer demand, provide a means for 
the Company to communicate with registered shareholders who choose 
to participate on the Company's LTIP account.
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    Proposed Rule 14.602(b)(2)(A) would provide that within 90 days of 
listing on the Exchange, a Company has the option to request and 
commence receiving the Capital Markets Solutions on a complimentary 
basis for a three-year term. As is the case in the current rule text, 
the three-year term will begin from the date of first use of the 
Capital Markets Solutions by the newly-listed Company, subject to the 
90-day period from the date of listing to request and begin receiving 
the service. The only

[[Page 25719]]

proposed change in Rule 14.602(b)(2)(A) is changing the duration of the 
period during which a Company may receive the Capital Markets Solutions 
on a complimentary basis from one year to three years.
    The Exchange is proposing an amendment to Rule 14.602(b)(2)(B), 
providing a currently listed Company that has already commenced 
receiving the services as of the effective date of this filing SR-LTSE-
2023-02 the option to request to continue receiving such services on a 
complimentary basis for an additional two-year term. This two-year term 
will begin from the one-year anniversary of the date the Company 
initially commenced receiving the Capital Markets Solutions. The 
Exchange is also proposing to delete the following language: ``Within 
90 days of the effectiveness of this rule,'' because it is no longer 
applicable. The Exchange is proposing no other substantive changes to 
Rule 14.602(b)(2)(B).
    The Exchange believes extending the period for Companies to receive 
Capital Markets Solutions on a complimentary basis aligns with LTSE's 
objective of supporting long-term value creation for listed Companies 
and their investors. Additionally, by offering such services on a 
complimentary basis for a longer term--i.e., three years--LTSE is able 
to enhance the value Companies receive by listing on the Exchange. 
However, no Company is required to use these services as a condition of 
initial or continued listing. All such services are optional for listed 
Companies and they may choose to cease receiving services at any point 
during the proposed three-year period. At the end of the proposed 
three-year term, Companies may choose to renew these services on a 
contractual basis with LTSE Services and pay for them in regular 
course, or discontinue them. If a Company chooses to discontinue the 
services, there would be no effect on the Company's continued listing 
on the Exchange. LTSE notes that no other Company will be required to 
pay higher fees as a result of the proposed amendments and represents 
that extending the term of these complimentary services will have no 
impact on the resources available for its regulatory programs. LTSE 
also represents that no confidential trading or regulatory information 
generated or received by the Exchange will be shared with LTSE Services 
or leveraged for the provision of its products and services.
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with the provisions of Section 6 of the Act,\8\ in general, and 
furthers the objectives of Section 6(b)(4) of the Act,\9\ in 
particular, in that it is designed to provide for the equitable 
allocation of reasonable dues, fees, and other charges among the 
Exchange's 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) of the Act \10\ 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.
    \9\ 15 U.S.C. 78f(b)(4).
    \10\ 15 U.S.C. 78f(b)(5).
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    The Exchange believes that it is fair and reasonable to offer 
products and services to companies. The Exchange believes that the 
existing U.S. exchange listing market for operating companies is 
essentially a duopoly with the vast majority of operating companies 
listed on U.S. securities exchanges listing on the New York Stock 
Exchange (``NYSE'') or Nasdaq Stock Market LLC (``Nasdaq''). The 
Exchange faces competition from NYSE and Nasdaq as a new entrant into 
the exchange listing market as both offer complimentary services to 
newly and currently listed companies in order to attract and retain 
listings.\11\ Similarly, the Exchange believes that offering such 
products and services to newly and currently listed Companies would 
enhance the value proposition for listing, allow the Exchange to more 
effectively attract companies to list on the Exchange and retain its 
current listings. Equally important, LTSE believes that the Capital 
Markets Services will support Companies in identifying investors who 
are aligned with their long-term business, vision and policies.
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    \11\ See, Securities Exchange Act Release No. 90955 (January 19, 
2021), 86 FR 7155, 7157 (January 26, 2021) (noting that ``Nasdaq 
faces competition in the market for listing services, and competes, 
in part, by offering valuable services to companies. Nasdaq believes 
that it is reasonable to offer complimentary services to attract and 
retain listings as part of this competition''). See also, Securities 
Exchange Act Release No. 93865 (December 23, 2021), 86 FR 74115, 
74118 (December 29, 2021) (noting that, ``The NYSE faces competition 
in the market for listing services, and competes, in part, by 
offering valuable services to companies. The Exchange believes that 
it is reasonable to offer complimentary services to attract and 
retain listings as part of this competition.'').
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    The Exchange also believes that to the extent the Exchange's 
listing program is successful, it will provide a competitive 
alternative, which will thereby benefit companies and investors, and 
remove impediments to and perfect the mechanism of a free and open 
market and a national market system, consistent with the protection of 
investors and the public interest. Other exchanges also acknowledge the 
competition in the market for listing services and they compete, in 
part, by offering products and services to companies. Like other 
exchanges, LTSE also believes that it is fair and reasonable to offer 
complimentary services to attract new listings and retain current 
listings as part of this competition.\12\ For example, Nasdaq, through 
its affiliate Nasdaq Corporate Solutions, LLC, or a selected third-
party, offers an ``Eligible New Listing'' or ``Eligible Switch'' access 
to complimentary services for at least three years.\13\ Similarly, NYSE 
offers complimentary services to ``Eligible New Listings'' and 
``Eligible Transfer Companies'' for a period of 48 calendar months.\14\ 
As noted above, the proposed rule change would provide all current and 
newly LTSE-listed Companies the Capital Markets Solutions for three 
years.
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    \12\ Id.
    \13\ See Nasdaq Listing Rule IM-5900-7(c) and (d). See also 
Securities Exchange Act Release No. 91318 (March 12, 2021), 86 FR 
14774 (March 18, 2021) (order approving proposed Nasdaq rule change 
to modify and expand the package of complimentary services provided 
to Eligible Companies under IM-5900-7).
    \14\ See NYSE Listed Company Manual Section 907; see also 
Securities Exchange Act Release No. 94222 (February 10, 2022), 87 FR 
8886 (February 16, 2022) (order approving proposed rule change to 
amend Section 907 of the Listed Company Manual regarding products 
and services being offered to eligible companies).
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    LTSE believes extending the term that all newly listed and 
currently listed Companies receive Capital Markets Solutions on a 
complimentary basis is consistent with just and equitable principles of 
trade and the protection of investors and the public interest because 
it has the potential to enhance current and newly listed companies' 
engagement and alignment with shareholders for the purpose of long-term 
value creation. These services are also a reflection of the Exchange's 
differentiated listing standards, which are explicitly designed to 
promote long-term focus and value creation,\15\ and are central to 
LTSE's mission of reducing short-termism in the capital markets.\16\ 
Additionally, LTSE is not differentiating the complimentary services 
offered among listed Companies based on the number of shares 
outstanding or market capitalization; the Capital Markets Solutions are 
made available to all listed Companies for the same period of time.
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    \15\ See Policies and Principles noted in LTSE Rule 14.425.
    \16\ See Securities Exchange Act Release No. 86327 (July 8, 
2019), 84 FR 33293 (July 12, 2019) File No. SR-LTSE-2019-01 (notice 
of filing of proposed rule change to adopt LTSE Rule 14.425).

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[[Page 25720]]

    Finally, the Exchange believes it is reasonable to balance its need 
to remain competitive with other listing venues, while at the same time 
ensuring adequate revenue to meet its regulatory responsibilities. The 
Exchange notes that no Company will be required to pay higher fees 
because of this proposal, and it represents that providing the proposed 
services will have no impact on the resources available for its 
regulatory programs.

B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange does not believe that the proposed rule change will 
result in any burden on competition that is not necessary or 
appropriate in furtherance of the purposes of the Act. To the contrary, 
and as discussed in the Statutory Basis section, LTSE believes that the 
proposed rule change will enhance competition by facilitating LTSE's 
listing program which will allow the Exchange to provide companies with 
another listing option, thereby promoting intermarket competition 
between exchanges in furtherance of the principles of Section 11A(a)(1) 
of the Act \17\ in that it is designed to promote fair competition 
between exchange markets by offering a new listing market. As noted 
above, LTSE faces competition in the market for listing services, and 
aims to compete by offering valuable services to listed Companies. The 
proposed rule change reflects that competition, but does not impose any 
burden on the competition with other exchanges. Other exchanges also 
offer similar services to companies for similar time frames as this 
proposed rule change,\18\ thereby increasing competition to the benefit 
of those companies and their stakeholders. Moreover, as a dual listing 
venue, LTSE expects to face competition from existing exchanges because 
companies have a choice to list their securities solely on a primary 
listing venue. Consequently, the degree to which LTSE's products and 
services could impose any burden on intermarket competition is 
extremely limited, and LTSE does not believe that such offerings would 
impose any burden on competing venues that is not necessary or 
appropriate in furtherance of the purposes of the Act.
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    \17\ 15 U.S.C. 78k-1(a)(1).
    \18\ See Nasdaq Listing Rule IM-5900-7 and NYSE Listed Company 
Manual Section 907. See also supra notes 11 and 12.
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    LTSE also does not believe that the proposed rule change will 
result in any burden on intramarket competition since all currently 
listed Companies will be able to receive the Capital Markets Services 
for the proposed three-year term. Moreover, the extension of these 
complimentary services to three years does not remove the requirement 
under the existing rule that a Company requesting such services must do 
so within 90 days of listing on the Exchange. Consequently, LTSE does 
not believe that the proposal will impose any burden on intramarket 
competition that is not necessary or appropriate in furtherance of the 
purposes of the Act.

C. Self-Regulatory Organization's Statement on Comments on the Proposed 
Rule Change Received From Members, Participants, or Others

    The Exchange has neither solicited nor received written comments on 
the proposed rule change.

III. Date of Effectiveness of the Proposed Rule Change and Timing for 
Commission Action

    Because the foregoing 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)(iii) of the Act \19\ and 
subparagraph (f)(6) of Rule 19b-4 thereunder.\20\
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    \19\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \20\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6) 
requires a self-regulatory organization to give the Commission 
written notice of its intent to file 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. 
The Exchange has satisfied this requirement.
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    A proposed rule change filed pursuant to Rule 19b-4(f)(6) under the 
Act normally does not become operative for 30 days after the date of 
its filing. However, Rule 19b-4(f)(6)(iii) \21\ permits the Commission 
to designate a shorter time if such action is consistent with the 
protection of investors and the public interest. The Exchange has 
requested that the Commission waive the 30-day operative delay so that 
the proposal may become operative immediately upon filing. The Exchange 
asserts that waiver of the operative delay would be consistent with the 
protection of investors and the public interest because it would allow 
the Exchange to immediately extend the term of services being provided 
to currently listed Companies and permit uninterrupted continuation of 
services. In addition, the Exchange states that extending the period 
for Companies to receive Capital Markets Solutions on a complimentary 
basis aligns with its objective of supporting long-term value creation 
for listed Companies and their investors. For these reasons, and 
because the proposal raises no novel legal or regulatory issues, the 
Commission believes that waiver of the 30-day operative delay is 
consistent with the protection of investors and the public interest. 
Accordingly, the Commission hereby waives the 30-day operative delay 
and designates the proposed rule change operative upon filing.\22\
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    \21\ 17 CFR 240.19b-4(f)(6)(iii).
    \22\ For purposes only of waiving the 30-day operative delay, 
the Commission has also considered the proposed rule's impact on 
efficiency, competition, and capital formation. See 15 U.S.C. 
78c(f).
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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.

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 (https://www.sec.gov/rules/sro.shtml); or
     Send an email to [email protected]. Please include 
File Number SR-LTSE-2023-02 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-LTSE-2023-02. 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 (https://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

[[Page 25721]]

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 
10:00 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. Do 
not include personal identifiable information in submissions; you 
should submit only information that you wish to make available 
publicly. We may redact in part or withhold entirely from publication 
submitted material that is obscene or subject to copyright protection. 
All submissions should refer to File Number SR-LTSE-2023-02 and should 
be submitted on or before May 18, 2023.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\23\
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    \23\ 17 CFR 200.30-3(a)(12), (59).
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Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2023-08828 Filed 4-26-23; 8:45 am]
BILLING CODE 8011-01-P