Document ID: SEC-2016-0174-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: NYSE MKT, LLC
Posted Date: 2016-02-03T05:00Z

[Federal Register Volume 81, Number 22 (Wednesday, February 3, 2016)]
[Notices]
[Pages 5803-5806]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-01932]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-76996; File No. SR-NYSEMKT-2016-12]

Self-Regulatory Organizations; NYSE MKT LLC; Notice of Filing of 
Proposed Rule Change Amending the NYSE MKT Company Guide To Create a 
New Section 146 Under Which a Certain Category of Newly Listed Issuers 
Would Be Entitled To Receive Complimentary Products and Services From 
the Exchange

January 28, 2016.
    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 January 14, 2016, NYSE MKT LLC (the ``Exchange'' or 
``NYSE MKT'') 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 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 the NYSE MKT Company Guide (the 
``Company Guide'') to create a new Section 146 under which a certain 
category of newly listed issuers would be entitled to receive 
complimentary products and services from the Exchange. The proposed 
rule change is available on the Exchange's Web site 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,

[[Page 5804]]

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 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The Exchange proposes to amend the Company Guide to create a new 
Section 146 under which a certain category of newly listed issuers 
would be entitled to receive complimentary products and services from 
the Exchange. The Exchange proposes to offer such complimentary 
products and services for a period of 24 calendar months from the date 
of initial listing to (i) any U.S. company that lists common stock on 
the Exchange for the first time and any non-U.S. company that lists an 
equity security \4\ on the Exchange under Section 101 or 110 of the 
Company Guide for the first time, regardless of whether such U.S. or 
non-U.S. company conducts an offering, (ii) any U.S. or non-U.S. 
company that transfers its listing of common stock or equity 
securities, respectively, to the Exchange from another national 
securities exchange or (iii) any U.S. or non-U.S. company emerging from 
a bankruptcy, spinoff (where a company lists new shares in the absence 
of a public offering), and carve-out (where a company carves out a 
business line or division, which then conducts a separate initial 
public offering) (each, an ``Eligible New Listing'').
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    \4\ For purposes of the proposed rule, ``equity securities'' 
means common stock or common share equivalents such as ordinary 
shares, New York shares, global shares, American Depository 
Receipts, or Global Depository Receipts.
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    Historically, the Exchange has served as an alternative listing 
venue to the New York Stock Exchange (the ``NYSE'') for small 
capitalization companies unable to meet the NYSE's heightened initial 
listing standards. In this respect, the Exchange regularly competes 
with the Nasdaq Capital Market tier of the Nasdaq Stock Market and, in 
some cases, with the Nasdaq Global Market tier of the Nasdaq Stock 
Market. Like the Exchange, Nasdaq Capital Market and Nasdaq Global 
Market each have initial listing standards that can more readily 
accommodate small capitalization companies than the NYSE. The Exchange 
hopes in the future to compete for new listings to a greater degree 
with the Nasdaq Global Market. One way that the exchanges compete with 
each other is to offer companies services that aid their transition to 
being public or listed on a new exchange. For example, the Nasdaq 
Global Market currently offers newly listed companies the following 
services for a period of 24 calendar months following their listing: 
whistleblower hotline, investor relations Web site, press releases, 
interactive webcasting and market analytic tools.\5\ The total retail 
value of these services is approximately $70,000 per year.
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    \5\ See Nasdaq Stock Market Rule IM-5900-7(b).
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    To enable it to compete for listings with the Nasdaq Global Market, 
the Exchange proposes to offer Eligible New Listings Web-hosting 
products and services (with a commercial value of approximately $16,000 
annually), web-casting services (with a commercial value of 
approximately $6,500 annually), whistleblower hotline services (with a 
commercial value of approximately $4,000 annually), news distribution 
products and services (with a commercial value of approximately $20,000 
annually) and corporate governance tools (with a commercial value of 
approximately $15,000 annually) for a period of 24 calendar months from 
the date of initial listing on the Exchange.
    The Exchange believes that each of the services it proposes to 
offer to Eligible New Listings on the Exchange may be valuable to 
companies that are listing publicly for the first time or transferring 
their listing to the Exchange. Web-hosting products and services assist 
Eligible New Listings in engaging with their shareholders by providing 
them with a Web site that contains business content that can be viewed 
by investors. Similarly, web-casting services are an important tool 
utilized by listed companies to communicate with shareholders in 
connection with their quarterly earnings release process. A 
whistleblower hotline assists Eligible New Listings in complying with, 
among other things, the requirements of the Sarbanes-Oxley Act, Foreign 
Corrupt Practices Act and UK Bribery Act. News distribution products 
and services assist Eligible New Listings in complying with Exchange 
disclosure requirements. Lastly, corporate governance tools will help 
educate the board of directors of each Eligible New Listing about 
corporate governance best practices.
    The Exchange proposes to codify in the new Section 146 of the 
Company Guide that all companies listed on the Exchange are entitled to 
certain complimentary products and services via the Exchange's Market 
Access Center. The Market Access Center is a market information 
analytics platform that is a combination of technology-enabled market 
intelligence insight and a team of highly skilled market professionals. 
The platform was created to provide issuers with better market insight 
and information across all exchanges and trading venues. The Market 
Access Center includes products and services that were (i) developed by 
the Exchange using proprietary data and/or intellectual property or 
(ii) built by a third-party expressly for the Exchange's listed 
companies. Within this platform all issuers have access to tools and 
information related to market intelligence, education, investor 
outreach, media visibility, corporate governance, and advocacy 
initiatives. For example, the Market Access Center offers daily trading 
summaries; a trading alert system highlighting user-defined trading or 
market events; a Web site featuring timely content for Exchange-listed 
senior executives featuring trading information, market data, and 
institutional ownership. All issuers listed on the Exchange have access 
to the Exchange's Market Access Center on the same basis. The products 
and services currently available through the Exchange's Market Access 
Center have a commercial value of approximately $50,000.
    The specific tools and services offered by the products discussed 
herein will be developed by the Exchange or by third-party vendors. 
NYSE Governance Services \6\ will offer and develop the corporate 
governance tools discussed herein, but will not provide any other 
service discussed herein. NYSE Governance Services is an entity that is 
owned by the Exchange's parent

[[Page 5805]]

company and is a leading provider of corporate governance, risk and 
compliance services to a diverse set of customers, including, among 
others, companies listed on the Exchange. Companies that are offered 
these products are under no obligation to accept them and a company's 
listing on the Exchange is not conditioned upon acceptance of any 
product or service. The Exchange notes that, from time to time, 
companies elect to purchase products and services from other vendors at 
their own expense rather than accepting comparable products and 
services offered by the Exchange.
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    \6\ The Exchange believes that NYSE Governance Services is not a 
``facility'' of the Exchange. 15 U.S.C. 78c(a)(2). The Act defines 
``facility'' to include an exchange's ``premises, tangible or 
intangible property whether on the premises or not, any right to the 
use of such premises or property or any service thereof for the 
purpose of effecting or reporting a transaction on an exchange 
(including, among other things, any system or communication to or 
from the exchange, by ticker or otherwise, maintained by or with the 
consent of the exchange), and any right of the exchange to the use 
of any property or service.'' NYSE Governance Services is a distinct 
entity that is separate from the Exchange and engages in a discrete 
line of business that is not ``for the purpose of effecting or 
reporting a transaction'' on an exchange. While this proposal is 
being filed with the Commission under Section 19(b)(2) of the Act 
because it relates to services offered in connection with a listing 
on the Exchange, the Exchange does not believe it is required to 
file NYSE Governance Services' price schedule or changes that do not 
relate to services offered in connection with a listing on the 
Exchange.
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    The Exchange believes that companies listing on the Exchange for 
the first time often require a period of time after listing to complete 
the contracting and training process with vendors providing the 
complimentary products and services. Therefore, many companies are not 
able to begin using the suite of products offered to them immediately 
on the date of listing. To address this issue, the Exchange proposes to 
specify in Section 146 that if an Eligible New Listing begins using a 
particular service within 30 days after the date of listing, the 
complimentary period begins on such date of first use. In all other 
instances, the complimentary period will begin on the listing date.
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with Section 6(b) of the Act,\7\ in general, and furthers the 
objectives of Sections 6(b)(4) \8\ of the Act, in particular, in that 
it is designed to provide for the equitable allocation of reasonable 
dues, fees, and other charges among its 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) \9\ of the Act 
in that it is not designed to permit unfair discrimination between 
customers, issuers, brokers, or dealers.
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    \7\ 15 U.S.C. 78f(b).
    \8\ 15 U.S.C. 78f(b)(4).
    \9\ 15 U.S.C. 78f(b)(5).
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    The Exchange believes that it is reasonable to offer complimentary 
products and services to attract new listings and respond to 
competitive pressures. The Exchange faces competition in the market for 
listing services and it competes, in part, by improving the quality of 
the services that it offers to listed companies. By offering products 
and services on a complimentary basis and ensuring that it is offering 
the services most valued by its listed issuers, the Exchange will 
improve the quality of the services that listed companies receive.
    The Exchange believes it is appropriate to offer a package of 
complimentary products and services to Eligible New Listings because 
such services will ease the transition of companies that are becoming 
public for the first time or transferring their listing to a new 
exchange. Further, Nasdaq offers a comparable suite of complimentary 
products and services to new listings and transfers and the proposed 
rule change will enable the Exchange to more effectively compete for 
listings.
    Allowing companies up to 30 days after their listing to start using 
the complimentary products and services is a reflection of the 
Exchange's experience that it can take companies a period of time to 
review and complete necessary contracts and training for services 
following their listing. Allowing this modest 30 day period, if the 
company needs it, helps ensure that the company will have the benefit 
of the full period permitted under the rule to actually use the 
services, thus giving companies the full intended benefit.

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. The proposed rule change 
enables the Exchange to compete for listings by offering Eligible New 
Listings a package of complimentary products and services that assist 
their transition to being publicly listed for the first time or 
transferring their listing to the Exchange. All similarly situated 
companies are eligible for the same package of services. Further, the 
Exchange notes that the Nasdaq Global Market already offers a similar 
suite of complimentary products and services to companies initially 
listing or transferring their listing from the New York Stock Exchange 
to its market. Therefore, the proposed creation of Section 146 of the 
Company Guide will increase competition by enabling the Exchange to 
more effectively compete for listings.

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

    Within 45 days of the date of publication of this notice in the 
Federal Register or up to 90 days (i) as the Commission may designate 
if it finds such longer period to be appropriate and publishes its 
reasons for so finding or (ii) as to which the self-regulatory 
organization consents, the Commission will:
    (A) By order approve or disapprove the proposed rule change, or
    (B) institute proceedings to determine whether the proposed rule 
change should be 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-NYSEMKT-2016-12 on the subject line.

Paper Comments

     Send paper comments in triplicate to Brent J. Fields, 
Secretary, Securities and Exchange Commission, 100 F Street NE., 
Washington, DC 20549-1090.

All submissions should refer to File Number SR-NYSEMKT-2016-12. 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 Web site (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 Web site 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

[[Page 5806]]

inspection and copying at the principal office of the Exchange. All 
comments received will be posted without change; the Commission does 
not edit personal identifying information from submissions. You should 
submit only information that you wish to make available publicly. All 
submissions should refer to File Number SR-NYSEMKT-2016-12 and should 
be submitted on or before February 24, 2016.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\10\
Robert W. Errett,
Deputy Secretary.
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    \10\ 17 CFR 200.30-3(a)(12).
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[FR Doc. 2016-01932 Filed 2-2-16; 8:45 am]
 BILLING CODE 8011-01-P