Document ID: SEC-2018-1985-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: New York Stock Exchange, LLC
Posted Date: 2018-12-27T05:00Z

[Federal Register Volume 83, Number 247 (Thursday, December 27, 2018)]
[Notices]
[Pages 66822-66824]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-28006]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-84854; File No. SR-NYSE-2018-61]

Self-Regulatory Organizations; New York Stock Exchange LLC; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change 
Amending Section 902.02 of the NYSE Listed Company Manual To Modify the 
Investment Management Entity Group Fee Discount

December 19, 2018.
    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 December 7, 2018, 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 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 Section 902.02 of the NYSE Listed 
Company Manual (the ``Manual'') to modify the Investment Management 
Entity Group Fee Discount. 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
    Section 902.02 of the Manual provides for a fee discount applicable 
only to an Investment Management Entity \4\ and its Eligible Portfolio 
Companies \5\ (the ``Investment Management Entity Group Fee 
Discount''). The Investment Management Entity Group Fee Discount is 
subject to a maximum aggregate discount of $500,000 in any given year 
(the ``Maximum Discount'') distributed among the Investment Management 
Entity and each of its Eligible Portfolio Companies in proportion to 
their respective eligible fee obligations in such year.\6\ In addition 
to benefiting from the Investment Management Entity Group Fee Discount, 
the Investment Management Entity and each of the Eligible Portfolio 
Companies continue to have fees capped by the applicable company's 
individual Total Maximum Fee of $500,000.
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    \4\ An Investment Management Entity is a listed company that 
manages private investment vehicles not registered under the 
Investment Company Act.
    \5\ An ``Eligible Portfolio Company'' of an Investment 
Management Entity is a company in which the Investment Management 
Entity has owned at least 20% of the common stock on a continuous 
basis since prior to that company's initial listing.
    \6\ The current rule provides that, for years prior to calendar 
2019, the Investment Management Entity Group Fee Discount is based 
on both annual and listing fees paid in the applicable year and, for 
calendar 2019 and subsequent years, the discount is based only on 
annual fees.
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    Currently, the Investment Management Entity Group Fee Discount is 
as follows:
     A 30% discount on all eligible fees of an Investment 
Management Entity and each of its Eligible Portfolio Companies in any 
year in which the Investment Management Entity has two Eligible 
Portfolio Companies, subject to the Maximum Discount.
     a 50% discount on all eligible fees of an Investment 
Management Entity and each of its Eligible Portfolio Companies in any 
year in which the Investment Management Entity has three or more 
Eligible Portfolio Companies, subject to the Maximum Discount.

[[Page 66823]]

    The Exchange proposes to modify the Investment Management Entity 
Group Fee Discount effective January 1, 2019. For calendar 2019 and all 
calendar years thereafter, the Investment Management Entity Group Fee 
Discount will be a 50% discount on all annual fees of an Investment 
Management Entity and each of its Eligible Portfolio Companies in any 
year in which the Investment Management Entity has one or more Eligible 
Portfolio Companies, subject to the Maximum Discount.
    The Exchange established the Investment Management Entity Group Fee 
Discount \7\ because, in the Exchange's experience, an Investment 
Management Entity puts high-quality and experienced management teams in 
place at its portfolio companies prior to listing and the Investment 
Management Entity continues to provide significant support to those 
companies after listing. Consequently, those companies require lower 
levels of support from the NYSE's business and Regulation groups to 
assist them in navigating the initial and continued listing process and 
the Exchange devotes significantly smaller staff resources to those 
companies on average than to the typical newly-listed company that is 
not controlled prior to listing by an Investment Management Entity. The 
Exchange believed that it was reasonable to share some of the cost 
savings derived from its relationship with an Investment Management 
Entity with the Investment Management Entity and its listed portfolio 
companies.
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    \7\ See Securities Exchange Act Release No. 79582 (December 16, 
2016), 81 FR 93976 (December 22, 2016) (SR-NYSE-2016-70).
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    The Exchange now believes that it is appropriate to adjust the 
discount by providing it where there is a single listed portfolio 
company and to provide the discount at a fixed 50% level (rather than 
the current 30% and 50% tiers based on the number of Eligible Portfolio 
Companies), because the Exchange has observed that the reduction in 
work load and expense it experiences due to the relationship of an 
Eligible Portfolio Company to the Investment Management Entity are 
proportionally the same with respect to each Eligible Portfolio Company 
regardless of how many other Eligible Portfolio Companies there may be. 
Accordingly, the Exchange believes it is reasonable to provide a single 
tier discount without regard to the number of Eligible Portfolio 
Companies an Investment Management Entity may have. The Exchange also 
notes that the proposed amendment is substantially similar to a fee 
discount provided by NASDAQ \8\ and therefore will enable the Exchange 
to better compete for the listing of eligible companies.
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    \8\ See Note 14 infra. [sic]
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    The Exchange does not expect the reduction in revenues associated 
with the proposed fee change to be substantial or to have any effect on 
its ability to appropriately fund its regulatory program.
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with Section 6(b) of the Act,\9\ in general, and furthers the 
objectives of Section 6(b)(4) \10\ 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,\11\ 
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.
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    \9\ 15 U.S.C. 78f(b).
    \10\ 15 U.S.C. 78f(b)(4).
    \11\ 15 U.S.C. 78f(b)(5).
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    The Exchange believes that it is not unfairly discriminatory and 
represents an equitable allocation of reasonable fees to amend the 
Investment Management Entity Group Discount as set forth in this 
proposal, as the amended discount provision better reflects the 
benefits the Exchange derives from the relationship between and 
Investment Management Entity and its Eligible Portfolio Companies, as 
described in more detail above.

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 is 
designed to ensure that the fees charged by the Exchange accurately 
reflect the services provided and benefits realized by listed 
companies. The market for listing services is extremely competitive. 
Each listing exchange has a different fee schedule that applies to 
issuers seeking to list securities on its exchange. Issuers have the 
option to list their securities on these alternative venues based on 
the fees charged and the value provided by each listing. Because 
issuers have a choice to list their securities on a different national 
securities exchange, the Exchange does not believe that the proposed 
fee changes impose a burden on 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) \12\ of the Act and subparagraph (f)(2) of Rule 
19b-4 \13\ thereunder, because it establishes a due, fee, or other 
charge imposed by the Exchange.
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    \12\ 15 U.S.C. 78s(b)(3)(A).
    \13\ 17 CFR 240.19b-4(f)(2).
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    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) \14\ of the Act to determine whether the proposed 
rule change should be approved or disapproved.
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    \14\ 15 U.S.C. 78s(b)(2)(B).
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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-2018-61 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.

[[Page 66824]]

All submissions should refer to File Number SR-NYSE-2018-61. 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-2018-61 and should be submitted on 
or before January 17, 2019.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\15\
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    \15\ 17 CFR 200.30-3(a)(12).
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Brent J. Fields,
Secretary.
[FR Doc. 2018-28006 Filed 12-26-18; 8:45 am]
 BILLING CODE 8011-01-P