Document ID: SEC-2021-0441-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: New York Stock Exchange, LLC
Posted Date: 2021-04-01T04:00Z

[Federal Register Volume 86, Number 61 (Thursday, April 1, 2021)]
[Notices]
[Pages 17252-17254]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2021-06670]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-91416; File No. SR-NYSE-2021-18]

Self-Regulatory Organizations; New York Stock Exchange LLC; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To 
Amend Rule 103B, Which Governs the Allocation of Securities to 
Designated Market Makers

March 26, 2021.
    Pursuant to Section 19(b)(1) \1\ of the Securities Exchange Act of 
1934 (the ``Act'') \2\ and Rule 19b-4 thereunder,\3\ notice is hereby 
given that on March 15, 2021, 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 
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\ 15 U.S.C. 78a.
    \3\ 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

    The Exchange proposes to amend Rule 103B, which governs the 
allocation of securities to Designated Market Makers (``DMMs''). 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
    The Exchange proposes to amend Rule 103B, which governs the 
allocation of securities to DMMs, to streamline the allocation process 
and facilitate the selection of DMM units by issuers of acquisition 
companies listed under NYSE Listed Company Manual Section 102.06 
(``Acquisition Companies'').
Background
Current Rule 103B
    Rule 103B(III) sets out the procedures under which DMM units are 
assigned to securities listed on the Exchange: An issuer may either 
select a DMM unit after interviewing all DMM units eligible to 
participate in the allocation process (Rule 103B(III)(A)), or delegate 
the authority for selecting its DMM unit to the Exchange (Rule 
103B(III)(B)).
    In addition, Rule 103B(VI)(A)(1) sets out an abbreviated DMM 
allocation process for listing companies that are a spin-off of or a 
company related to a listed company or one that lists a Related 
Security as defined in Rule 103B(VI)(A)(2).\4\ Under Rule 
103B(VI)(A)(1), such a listing company may remain with the DMM unit 
registered in the Related Security or acting as the assigned DMM unit 
to the related listed company or be allocated through the allocation 
process pursuant to NYSE Rule 103B, Section III. The rule further 
provides that if the spin-off company or company related to a listed 
company chooses to have its DMM unit selected by the Exchange pursuant 
to NYSE Rule 103B, Section III(B), and requests not to be allocated to 
the DMM unit that was its listed company's DMM unit, such request will 
be honored.
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    \4\ For purposes of NYSE Rule 103B, a ``Related Security'' is 
defined as: (i) Any security listed on the Exchange issued by a 
company whose common equity securities are listed on the Exchange, 
other than such common equity securities; and (ii) any security 
listed on the Exchange by any issuer affiliated with a company whose 
common equity securities are listed on the Exchange. Related 
Securities of either a listed company whose common equity securities 
are listed on the Exchange or of an affiliated entity of such listed 
company include, but are not limited to, securities listed under 
NYSE Listed Company Manual Section 703.19 (except for Repackaged 
Securities).
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Acquisition Companies
    Section 102.06 of the NYSE Listed Company Manual sets forth the 
listing standards for Acquisition Companies. An Acquisition Company 
(known in the marketplace as a special purpose acquisition company or 
``SPAC'') is a special purpose company formed for the purpose of 
effecting a merger, capital stock exchange, asset acquisition, stock 
purchase, reorganization or similar business combination with one or 
more operating businesses or assets. The securities sold by the 
Acquisition Company in its initial public offering are typically units, 
consisting of one share of common stock and one or more warrants (or a 
fraction of a warrant) to purchase common stock, that are separable at 
some point after the IPO. Under Section 102.06 of the NYSE Listed 
Company Manual, among other things, an Acquisition Company must keep 
90% of the gross proceeds of its IPO in an escrow account until the 
date of a business combination.\5\ The Acquisition Company must also 
complete one or more business combinations, having an aggregate fair 
market value of at least 80% of the value of the escrow account, within 
36 months of the effectiveness of the IPO registration statement.\6\ 
Following a business combination, the combined company must meet the 
Exchange's requirements for initial listing of an operating company.\7\
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    \5\ See Section 102.06 of the NYSE Listed Company Manual. 
Section 102.06 also contains additional quantitative requirements to 
list an Acquisition Company.
    \6\ See generally id. Public shareholders who object to a 
business combination have the right to convert their common stock 
into a pro rata share of the funds held in escrow. See Section 
102.06(b) of the NYSE Listed Company Manual.
    \7\ This includes the requirement to maintain a minimum of 400 
round lot holders. See Sections 102.01A and 802.01B of the NYSE 
Listed Company Manual.
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    An Acquisition Company is formed by a person or group of people 
acting together or by a corporate entity (in each case, a ``Sponsor''). 
Persons affiliated with the Sponsor manage the Acquisition Company, 
seek to identify an appropriate business combination, and successfully 
complete that transaction. The Sponsor is not usually compensated in 
cash by the Acquisition Company, but rather undertakes these activities 
because it receives an ownership interest in the Acquisition Company 
that it acquires for nominal consideration. In many cases, Acquisition 
Company Sponsors are asset management entities or are controlled by 
individuals who have had successful careers in the banking or asset 
management industries. In many

[[Page 17253]]

cases, the same persons or entities have formed more than one 
Acquisition Company over time. As the volume of Acquisition Company 
listings has increased, the Exchange has observed that the number of 
Sponsors that form multiple Acquisition Companies has also grown.
Proposed Rule Change
    The Exchange proposes to amend Rule 103B(VI)(A), governing spin-
offs and listing of related companies and related securities, to permit 
a similar abbreviated DMM allocation process for Acquisition Companies 
to that currently available to issuers that spin-off entities or list 
related companies or securities.
    Specifically, the Exchange would add a new subdivision (3) to Rule 
103B(VI)(A) that would provide that a listing Acquisition Company that 
is either under common control with another currently-listed 
Acquisition Company or is controlled by person(s) who controlled a 
previously-listed Acquisition Company at the time of such other 
Acquisition Company's listing, could choose, as applicable, to be 
allocated to the DMM unit currently registered in such other 
Acquisition Company or registered in such other Acquisition Company 
while it was listed on the Exchange. Alternatively, the proposed rule 
would provide that the listing Acquisition Company could be allocated 
through the allocation process pursuant to NYSE Rule 103B, Section III. 
As proposed, the process would be substantially similar to that in 
place for other issuers listing multiple securities or related entities 
on the Exchange who also have the option under Rule 103B to remain with 
the DMM unit registered in the related security or acting as the 
assigned DMM unit to the related listed company or be allocated through 
the allocation process pursuant to NYSE Rule 103B, Section III. The 
Exchange believes that the proposed rule change tailored to Acquisition 
Companies would provide those issuers with the same flexibility in 
selecting a DMM unit as other issuers currently have under Rule 103B.
    This proposal addresses the growing trend for successful 
Acquisition Company Sponsors to form additional SPACs over time. The 
Exchange believes that an Acquisition Company Sponsor should be able to 
decide that it wishes to engage the same DMM unit for any additional 
Acquisition Company listings, as the Sponsor will be familiar with the 
DMM unit's expertise in trading Acquisition Company securities and 
should be allowed to continue with that DMM unit if it is satisfied 
with its performance. Similarly, if a Sponsor has multiple Acquisition 
Companies trading on the Exchange at the same time, there are 
managerial efficiencies from which the Sponsor benefits in dealing with 
only one DMM unit, rather than multiple different DMM units.
    Finally, the Exchange proposes to technical, non-substantive 
changes to Rule 103B(VI)(A)(1) by capitalizing the words ``Related 
Security'' in two places. The Exchange also proposes to make the 
technical, non-substantive change of re-numbering current subsections 
(3) through (8) of Rule 103B(VI)(A).

2. Statutory Basis

    The Exchange believes that the proposed rule change is consistent 
with Section 6(b) of the Act,\8\ in general, and furthers the 
objectives of Section 6(b)(5) of the Act,\9\ in particular, because it 
is designed to prevent fraudulent and manipulative acts and practices, 
promote just and equitable principles of trade, remove impediments to 
and perfect the mechanism of a free and open market and a national 
market system, and protect investors and the public interest, as 
follows.
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    \8\ 15 U.S.C. 78f(b).
    \9\ 15 U.S.C. 78f(b)(5).
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    The Exchange believes that the proposed amendments to Rule 
103B(VI)(A) would remove impediments to and perfect the mechanism of a 
free and open market and a national market system by permitting 
Acquisition Companies under common control with another currently-
listed Acquisition Company or one controlled by person(s) who 
controlled a previously-listed Acquisition Company at the time of such 
other Acquisition Company's listing to choose to maintain the same DMM 
unit currently registered in the other Acquisition Company or 
registered in such other Acquisition Company while it was listed on the 
Exchange. As noted, this option already exists for other issuers under 
Rule 103B, and enhances the efficiency of listings by allowing issuers 
and DMM units to maintain their preexisting relationships with respect 
to the commonly owned or controlled companies. Acquisition Company 
issuers would benefit from the efficiencies when listing additional 
Acquisition Companies under NYSE Listed Company Manual Section 102.06.
    Finally, the Exchange's proposal to make technical, non-substantive 
changes to Rule 103B(VI)(A)(1) by capitalizing the words ``Related 
Security'' and re-numbering current subsections (3) through (8) of Rule 
103B(VI)(A) adds clarity and transparency to the Exchange's Rules and 
reduces potential investor confusion, which would remove impediments to 
and perfect the mechanism of a free and open market and a national 
market system.

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 because it merely provides a 
process for the allocation of DMM units to Acquisition Companies 
listing on the Exchange consistent with current rules. Nor does the 
Exchange believe that the proposed changes would impose an undue burden 
on intramarket competition between the DMM units, because all eligible 
DMM units will participate in the original Rule 103B(III) allocation 
process for an Acquisition Company.

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

    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) of the Act \10\ and Rule 19b-
4(f)(6) \11\ thereunder.
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    \10\ 15 U.S.C. 78s(b)(3)(A).
    \11\ 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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    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. If the Commission 
takes such action, the Commission will institute proceedings to 
determine whether the proposed rule

[[Page 17254]]

change should be approved or disapproved.

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-2021-18 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-2021-18. 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 10:00 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. 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-2021-18 and should be submitted on 
or before April 22, 2021.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\12\
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    \12\ 17 CFR 200.30-3(a)(12).
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J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2021-06670 Filed 3-31-21; 8:45 am]
BILLING CODE 8011-01-P