Document ID: SEC-2007-0090-0001
Agency: sec
Document Type: Notice
Title: Self-regulatory organizations; proposed rule changes: American Stock Exchange LLC
Posted Date: 2007-01-19T05:00Z

[Federal Register: January 19, 2007 (Volume 72, Number 12)]
[Notices]               
[Page 2563-2566]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr19ja07-95]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-55096; File No. SR-Amex-2007-03]

 
Self-Regulatory Organizations; American Stock Exchange LLC; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change 
Modifying Listing Fees for Transferring and Dual Listing Issuers and 
Reverse Mergers

January 12, 2007.
    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 January 8, 2007, the American Stock Exchange LLC (``Amex'' or 
``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 substantially prepared by Amex. The 
Exchange has designated the proposed rule change as a ``non-
controversial'' rule change pursuant to Section 19(b)(3)(A)(iii) of the 
Act \3\ and Rule 19b-4(f)(6) thereunder,\4\ which renders the proposal 
effective upon filing with the Commission. 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.
    \3\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \4\ 17 CFR 240.19b-4(f)(6).
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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 (A) Section 140 of the Amex Company 
Guide to waive the initial listing fee and listing application fee for 
any issuer listed on another national securities exchange that 
transfers its listing to or dual lists on the Exchange, (B) Section 141 
of the Amex Company Guide to assess the standard annual listing fee for 
any issuer listed on another national securities exchange that dual 
lists on the Exchange, (C) Section 142 of the Amex Company Guide to 
waive additional listing fees for a one-year period from the date of 
initial listing for any issuer listed on another national securities 
exchange that dual lists on the Exchange, and (D) Section 341 of the 
Amex Company Guide to impose a flat $5,000 fee and no listing of 
additional shares fees for Reverse Mergers (as defined below) that 
occur within 24 months of initial listing.
    The text of the proposed rule change is available on the Amex's Web 
site at http://www.amex.com/atamex/ruleFilings/2007/SR_Amex_2007_03_imm.pdf
, at the Amex, 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 Exchange 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 Exchange 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
    (a) Transfers and Dual Listings. Currently, an issuer listed on 
another national securities exchange that transfers its listing to Amex 
(i.e., the issuer becomes listed on Amex and ceases to be listed on the 
other exchange) is subject to an initial listing fee as set forth in 
Section 140 (Original Listing Fees) of the Amex Company Guide and a 
one-time listing application fee of $5,000 upon initial listing. The

[[Page 2564]]

Exchange proposes to amend Section 140 to eliminate initial listing 
fees and the $5,000 listing application fee for issuers that transfer 
their listing to the Exchange. A transferring issuer will still be 
required to pay annual listing fees as set forth in Section 141 (Annual 
Fees) of the Amex Company Guide, pro-rated to reflect only the portion 
of the year during which the issuer is listed on Amex, and fees for the 
listing of additional shares as set forth in Section 142 (Additional 
Listing Fees) of the Amex Company Guide.
    With regards to dual listings, an issuer already listed on a 
national securities exchange that dual lists on Amex currently pays 50% 
of the initial listing fees, 50% of the one-time listing application 
fee of $5,000, 50% of the annual listing fees for a five-year period 
following initial listing, and standard listing of additional shares 
fees. The Exchange proposes to amend Section 140 to eliminate initial 
listing fees and the $5,000 listing application fee for issuers that 
dual list on the Exchange. The Exchange also proposes to amend Section 
141 to remove the five-year, 50% annual listing fee reduction. As a 
result, an issuer that dual lists on the Exchange will be subject to 
standard annual listing fees, pro-rated to reflect only the portion of 
the year during which the issuer is listed on Amex. Finally, the 
Exchange proposes to amend Section 142 to exempt an issuer that dual 
lists on the Exchange from paying fees for the listing of additional 
shares for a one-year period following its initial listing on Amex.
    The Exchange believes that the proposed initial listing fee waivers 
for transfers and dual listings are warranted for a number of reasons. 
An issuer transferring to Amex from another national securities 
exchange will already have paid annual listing fees to that exchange 
for the calendar year in which it transfers, as well as the initial 
listing fees payable at the time of initial listing on such exchange. 
Additionally, an issuer that dual lists on the Amex will already have 
paid initial and annual listing fees to its primary exchange and will 
be subject to the primary exchange's fees for the listing of additional 
shares. The Exchange believes that such an issuer will be reluctant to 
pay duplicative listing fees to another listing venue, even if it 
concludes that a change in listing or an additional listing would be 
beneficial.
    Thus, the Exchange is of the opinion that assessing the initial 
listing, listing application and, in the case of a dually listed 
issuer, listing of additional shares fees (for the first year) against 
an issuer that has already paid fees and/or have a continuing 
obligation to pay fees to list on another exchange imposes an undue 
burden on competition. This is particularly true in light of the fact 
that the Commission has approved the waiver of initial listing fees by 
The NASDAQ Stock Market LLC (``Nasdaq'') \5\ and the New York Stock 
Exchange LLC (``NYSE'') \6\ with respect to issuers transferring from 
other national securities exchanges. Furthermore, issuers listed on 
NYSE that dual list on Nasdaq do not have to pay Nasdaq initial 
listing, listing application or listing of additional shares fees and 
are only subject to a $15,000 annual listing fee after their first year 
of listing on Nasdaq.\7\ By enabling issuers to determine more easily 
the benefits of switching to and/or dual listing on Amex, the Exchange 
believes that the proposed rule change will promote competition among 
markets.
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    \5\ See Securities Exchange Act Release No. 51004 (January 10, 
2005), 70 FR 2917 (January 18, 2005) (SR-NASD-2004-140).
    \6\ See Securities Exchange Release No. 54849 (November 30, 
2006), 71 FR 71219 (December 8, 2006) (SR-NYSE-2006-104).
    \7\ See Nasdaq Rules 4510 and 4520.
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    Besides enhancing the appeal of Amex as a listing market, the 
waived listing fees are proposed as an incentive to issuers to compare 
the services and quality of the Amex market without having to pay full 
listing fees on two markets. The Exchange believes that the comparison 
between executions on Amex and on other markets will enable issuers to 
assess the benefits of an Amex listing. Ultimately, the Exchange would 
encourage dual listed issuers to transfer their listings exclusively to 
Amex, once they have experienced first-hand the benefits of an Amex 
listing.
    The Exchange believes that the waiver of initial listing and 
listing application fees, in particular, is justified from the 
standpoint of Amex's experience with regard to the time and effort 
generally required to process listing applications of transferring and 
dual listing issuers. Issuers listed on other national securities 
exchanges are already familiar with the regulatory and compliance 
requirements of a listing regime. The Exchange will conduct a full and 
independent review of each issuer's compliance with Amex listing 
standards; however, listed applicants generally raise fewer regulatory 
and other compliance issues than unlisted applicants because they are 
already subject to the full panoply of continued listing requirements 
of their current exchanges. Accordingly, the Exchange believes that the 
review of a listing application of such an issuer will in most cases be 
less time-consuming than the review of an application from an issuer 
not already listed on another market despite the fact that both reviews 
will be subject to the same degree of regulatory scrutiny.
    The Exchange understands that the effect of this proposed rule 
change will be to impose initially a lower level of listing fees on 
transferring and dual listing issuers than on some other issuers. Since 
the Exchange will collect the same level of annual fees and listing of 
additional shares fees, with the exception of the one-year exemption 
period for dual listings, from such issuers, however, the Exchange 
believes that the difference does not constitute an inequitable 
allocation of fees. In light of a transferring or dual listing issuer's 
prior payment to another market, the Exchange believes that eliminating 
initial fees for such issuers is entirely consistent with an equitable 
allocation of listing fees.
    With regards to the imposition of standard annual listing fees to 
dual listed issuers, the Exchange believes that it is no longer 
necessary to assess reduced annual listing fees given the proposed 
initial listing and listing application fee waivers. An issuer 
currently seeking to dual list on the Exchange can expect to pay 
$25,000 to $35,000 in initial listing fees, inclusive of the listing 
application fee,\8\ and annual listing fees at a rate of $8,250 to 
$17,000 for five years.\9\ When the dual listing program was approved 
by the Commission,\10\ the Exchange thought that a 50% reduction in 
both initial and annual listing fees would generate new listings. The 
Exchange has discovered, however, that issuers generally weigh the 
benefits of a dual listing against the cost of an initial Amex listing, 
as opposed to the continuing costs of an Amex listing. Since it will be 
more cost effective for issuers to dual list on Amex if there are zero 
initial listing fees, the Exchange believes that such issuers will not 
be dissuaded from dual listing if they are charged standard annual 
listing fees.
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    \8\ See Section 140 of the Amex Company Guide.
    \9\ See Section 141 of the Amex Company Guide.
    \10\ See Securities Exchange Release No. 53778 (May 9, 2006), 71 
FR 28057 (May 15, 2006) (SR-Amex-2005-125).
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    (b) Reverse Mergers. The Exchange also proposes to amend Section 
341 of the Amex Company Guide to reduce the fees applicable to the 
listing of additional shares in connection with Reverse Mergers that 
occur within 24 months of initial listing on Amex. Section 341 provides 
that, if an issuer listed on Amex engages in any plan of

[[Page 2565]]

acquisition, merger, or consolidation, the net effect of which is that 
it is acquired by an unlisted entity; even if the listed issuer is the 
nominal survivor, the surviving entity is required to satisfy the 
initial listing standards. Such transactions are typically referred to 
as ``Reverse Mergers.''
    For listings of additional securities in connection with a Reverse 
Merger, an issuer is currently required to pay a one-time fee of 
$10,000 and the applicable listing of additional shares fees set forth 
in Section 142. In lieu of the $10,000 fee plus listing of additional 
shares fees, the Exchange proposes to charge an issuer that completes a 
Reverse Merger within 24 months of initial listing a one-time fee of 
$5,000 and no listing of additional shares fees. The Exchange believes 
that the proposed fee reduction is equitable because such issuers will 
have recently paid initial and annual listing fees to Amex. 
Additionally, the Exchange hopes the fee reduction will encourage 
issuers to maintain their Amex listing following a Reverse Merger.
    In conclusion, the Exchange does not expect the financial impact of 
the fee changes to be material, either in terms of increased levels of 
annual fees from transferring and/or dual listing issuers or in terms 
of diminished initial listing and listing of additional shares fees. 
Even with the proposed rule change in place, the Exchange understands 
that a change in listing venue is a major step for an issuer, and 
therefore the Exchange does not expect that the number of transferring 
and/or dual listing issuers in a given time frame will be sufficient to 
have a material effect on financial resources. Accordingly, the 
proposed rule change will not affect Amex's commitment of resources to 
its regulatory oversight of the listing process or its regulatory 
program. The Exchange represents that transferring and dual listing 
issuers and issuers deemed to be engaged in Reverse Mergers will be 
subject to the same rigorous regulatory review as any other applicant 
listing on the Amex and will be required to meet all applicable Amex 
listing standards on a continuing basis.
2. Statutory Basis
    The proposed rule change is consistent with Section 6(b) of the 
Act,\11\ in general, and furthers the objectives of Sections 6(b)(4) 
\12\ and 6(b)(5) \13\ of the Act, in particular, in that it provides 
for the equitable allocation of reasonable dues, fees, and other 
charges among Amex's members and issuers and other persons using Amex's 
facilities, is designed to remove impediments to and perfect the 
mechanism of a free and open market and a national market system, and 
is not designed to permit unfair discrimination between issuers.
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    \11\ 15 U.S.C. 78f(b).
    \12\ 15 U.S.C. 78f(b)(4).
    \13\ 15 U.S.C. 78f(b)(5).
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B. Self-Regulatory Organization's Statement on Burden on Competition

    The proposed rule change does not impose any burden on competition 
that is not necessary or appropriate in furtherance of the purposes of 
the Act. Rather, the Exchange believes that the proposed rule change 
will enhance competition by allowing issuers that are listed on another 
exchange to move their listing to or dual list on Amex without being 
required to pay fees that are duplicative of fees already paid to that 
exchange.

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 Exchange has designated the foregoing rule change as a ``non-
controversial'' rule change pursuant to Section 19(b)(3)(A)(iii) of the 
Act \14\ and Rule 19b-4(f)(6) thereunder \15\ because the rule change 
does not: (i) Significantly affect the protection of investors or the 
public interest; (ii) impose any significant burden on competition; or 
(iii) become operative for 30 days from the day on which it was filed, 
or such shorter time as the Commission may designate if consistent with 
the protection of investors and the public interest.\16\
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    \14\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \15\ 17 CFR 240.19b-4(f)(6).
    \16\ 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, along with a brief description and 
text of 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. Amex satisfied this 
requirement.
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    The Exchange has requested that the Commission waive the 30-day 
operative delay. The Commission believes that granting Amex's request 
is consistent with the protection of investors and the public interest. 
The pre-operative delay generally gives parties affected by a rule 
change a reasonable period to come into compliance. In this case, 
however, the rule change relates to fee waivers and fee reductions 
where no adjustment period is necessary. Waiving the pre-operative 
delay will allow eligible parties to obtain the benefit of the fee 
waivers and fee reductions immediately. Accordingly, the Commission 
designates the proposal to be operative upon filing with the 
Commission.\17\
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    \17\ For purposes only of waiving the 30-day operative delay of 
this proposal, the Commission has considered the propose 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 may summarily abrogate 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 (http://www.sec.gov/rules/sro.shtml.
); or     Send an e-mail to rule-comments@sec.gov. Please include 

File Number SR-Amex-2007-03 on the subject line.

Paper Comments

     Send paper comments in triplicate to Nancy M. Morris, 
Secretary, Securities and Exchange Commission, 100 F Street, NE., 
Washington, DC 20549-1090.

All submissions should refer to File Number SR-Amex-2007-03. This file 
number should be included on the subject line if e-mail 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 inspection and 
copying in the Commission's Public Reference

[[Page 2566]]

Room. Copies of such filing also will be available for inspection and 
copying at the principal office of Amex. 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-Amex-2007-03 and should be submitted on 
or before February 9, 2007.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\18\
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    \18\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
 [FR Doc. E7-690 Filed 1-18-07; 8:45 am]

BILLING CODE 8011-01-P