Document ID: SEC-2019-0754-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: New York Stock Exchange, LLC
Posted Date: 2019-06-04T04:00Z

[Federal Register Volume 84, Number 107 (Tuesday, June 4, 2019)]
[Notices]
[Pages 25856-25858]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-11560]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-85961; File No. SR-NYSE-2019-30]

Self-Regulatory Organizations; New York Stock Exchange LLC; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To 
Adopt a Listing Fee Schedule for Pre-Revenue Companies

May 29, 2019.
    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 May 16, 2019, 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 adopt a listing fee schedule specific to 
companies that have not generated any significant revenues at the time 
of their original listing. 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's Global Market Capitalization Test (as set forth in 
Section 102.01C of the Exchange's Listed Company Manual (the 
``Manual'')) allows the Exchange to list companies that have not yet 
recorded any significant revenues, provided the issuer has at least a 
$200 million global market capitalization and meets the other 
requirements for listing. These companies are typically engaged in 
research and development (in many cases they are biotechnology 
companies focused on developing new drug candidates) or are in the 
early stages of commercialization of a product.

[[Page 25857]]

Generally, a company of this kind relies primarily on the proceeds from 
its initial public offering to fund its operations. As such, the fees 
charged by the Exchange represent a more significant expense for these 
companies than they do for other newly-listed companies and in many 
cases these fees are an impediment to the Exchange in competing for the 
listing of these companies.
    To address the issues described above, the Exchange proposes to 
amend Section 902.02 of the Manual to adopt a discounted annual fee 
schedule for newly-listed companies that list on or after June 1, 2019 
and have not recorded in excess of $5 million of revenue in either (i) 
the most recent completed fiscal year prior to listing or (ii) during 
the year of listing through the most recently completed fiscal quarter 
before the listing date (``Pre-Revenue Companies'').\4\ The Annual Fees 
of any company that qualifies as a Pre-Revenue Company at the time of 
listing will be calculated quarterly for the fiscal quarter in which it 
lists and in each of the succeeding 12 full fiscal quarters, at a rate 
of one-fourth of the applicable Annual Fee rate. In addition, the total 
fees (including Listing Fees and Annual Fees, but excluding Listing 
Fees paid at the time of initial listing) that may be billed to such an 
issuer during this period will be subject to a $25,000 cap in the 
fiscal quarter in which the issuer lists and in each of the succeeding 
12 full fiscal quarters. This fee cap is subject to the same exclusions 
as apply in relation to the $500,000 per year fee cap described under 
``Total Maximum Fee Payable in a Calendar Year.'' If there are one or 
more fiscal quarters remaining in the calendar year after the 
conclusion of the period described in this paragraph, the issuer will, 
on a prorated basis, be billed the regular Annual Fee subject to the 
$500,000 total fee cap for the remainder of that calendar year.
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    \4\ The Exchange will rely on a company's revenues as reported 
in its SEC filings for purposes of determining whether it qualifies 
as a Pre-Revenue Company.
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    The Exchange believes the proposed fee schedule for Pre-Revenue 
Companies is reasonable, as paying the Exchange's fees is more 
burdensome for these early stage companies than it is for companies 
that generate significant revenues from operations. The Exchange 
believes that it is reasonable to apply the reduced fee level for a 
limited period, as Pre-Revenue Companies typically begin to generate 
significant revenues from operations within three years from the time 
of initial listing.
    The proposed rule change would not affect the Exchange's commitment 
of resources to its regulatory oversight of the listing process or its 
regulatory programs.
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with Section 6(b) of the Act,\5\ in general, and furthers the 
objectives of Section 6(b)(4) \6\ 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,\7\ 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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    \5\ 15 U.S.C. 78f(b).
    \6\ 15 U.S.C. 78f(b)(4).
    \7\ 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 adopt the 
proposed separate fee schedule for Pre-Revenue Companies, as those 
companies have limited resources and the Exchange's fees are more 
burdensome for them than they are for companies that are generating 
significant revenues from operations.

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) \8\ of the Act and subparagraph (f)(2) of Rule 19b-
4 \9\ thereunder, because it establishes a due, fee, or other charge 
imposed by the Exchange.
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    \8\ 15 U.S.C. 78s(b)(3)(A).
    \9\ 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) \10\ of the Act to determine whether the proposed 
rule change should be approved or disapproved.
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    \10\ 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-2019-30 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-2019-30. 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

[[Page 25858]]

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-2019-30 and should be submitted on 
or before June 25, 2019.

    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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Eduardo A. Aleman,
Deputy Secretary.
[FR Doc. 2019-11560 Filed 6-3-19; 8:45 am]
BILLING CODE 8011-01-P