Document ID: SEC-2021-0162-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: New York Stock Exchange, LLC
Posted Date: 2021-02-04T05:00Z

[Federal Register Volume 86, Number 22 (Thursday, February 4, 2021)]
[Notices]
[Pages 8240-8242]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2021-02265]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-91012; File No. SR-NYSE-2021-06]

Self-Regulatory Organizations; New York Stock Exchange LLC; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change 
Amending Sections 902.02 and 902.11 of the NYSE Listed Company Manual 
To Defer the Billing of Initial Listing Fees Payable by Acquisition 
Companies

January 29, 2021.
    Pursuant to Section 19(b)(1) \1\ of the Securities Exchange Act of 
1934 (``Act'') \2\ and Rule 19b-4 thereunder,\3\ notice is hereby given 
that, on January 21, 2021, the New York Stock Exchange LLC (``NYSE'' or 
``Exchange'') filed with the Securities and Exchange Commission 
(``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 Sections 902.02 and 902.11 of the 
NYSE Listed Company Manual (the ``Manual'') to defer the billing of 
initial listing fees payable by Acquisition Companies. The text of the. 
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 102.06 sets forth listing requirements applicable to any 
company with a business plan is to complete an initial public offering 
and engage in a merger or acquisition with one or more unidentified 
companies within a specific period (``Acquisition Company''). Section 
902.11 provides that an Acquisition Company is subject to a flat 
initial listing fee of $85,000 at the time of initial listing. Based on 
experience listing these companies, the Exchange proposes to defer the 
billing and payment of initial listing fees until one year from the 
date of an Acquisition Company's initial listing on the Exchange. For 
the avoidance of doubt, such fee is owed to the Exchange at the time of 
initial listing based on the fee schedule in effect on the date of 
listing but will be billed by the Exchange and become payable on the 
first anniversary of the date of listing. The Exchange notes that the 
Nasdaq Stock Market (``Nasdaq'') is the Exchange's primary competitor 
in the market for the listing of Acquisition Companies and that Nasdaq 
has a deferral provision comparable to the deferral the Exchange 
proposes.\4\
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    \4\ See Securities Exchange Act Release No. 89403 (July 31, 2020 
[sic]), 85 FR 46198 (July 31, 2008 [sic]) (SR-NASDAQ-2020-038).
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    Acquisition Companies are formed to raise capital in an initial 
public offering (``IPO'') with the purpose of using the proceeds to 
acquire one or more unspecified businesses or assets to be identified 
after the IPO. However, unlike other types of listed companies that 
have pre-existing operations or that fund their operations by proceeds 
raised from the IPO, following the IPO, an Acquisition Company funds a 
trust account with an amount typically equal to 100% of the gross 
proceeds of the IPO.\5\ As such, operating expenses are typically borne 
by the Acquisition Company's sponsor, particularly during the initial 
post-IPO period. The Acquisition Company's sponsor is the entity or 
management team that forms the Acquisition Company and, typically, runs 
the operations of the Acquisition Company until an appropriate target 
company is identified and the business combination is consummated. The 
funds in the trust account are typically invested in short-term U.S. 
government securities or held as cash, earning interest over time. 
Thus, the unique structure of an Acquisition Company results in the 
sponsor's extreme fee sensitivity, particularly during the initial 
post-IPO period before any substantial amount of interest is earned 
from the trust account. The Exchange believes that the market practice 
of depositing 100% of the gross proceeds of the IPO in a trust account 
(rather than the minimum of 90% required by Section 102.06) benefits 
shareholders and is consistent with investor protection because it 
assures that shareholders choosing to exercise their right to redeem 
shares for a pro rata share of the trust account will receive the full 
IPO price paid, rather than a lesser amount guaranteed by Exchange 
rules. Accordingly, to encourage this market practice the Exchange 
believes it is appropriate to defer the payment of the initial listing 
fee owed by an Acquisition Company listed on the Exchange until the 
first anniversary of the date of listing. The initial listing fee paid 
at that time would be based on the fee schedule in effect at the time 
of initial listing.
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    \5\ Section 102.06 of the Manual provides that an Acquisition 
Company could pay operating and other expenses, subject to a 
limitation that 90% of the gross proceeds of the company's offering 
must be retained in the trust account. However, the Exchange 
understands that marketplace demands typically dictate that 100% of 
the gross proceeds from the IPO be kept in the trust account and 
that only interest earned on that account be used to pay taxes and a 
limited amount of operating expenses.
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    The Exchange believes that the proposed fee deferral would provide 
an incentive to sponsors to list Acquisition Companies on the Exchange. 
The Exchange also believes it is reasonable to balance its need to 
remain competitive with other listing venues, while at the same time 
ensuring

[[Page 8241]]

adequate revenue to meet is regulatory responsibilities. The Exchange 
notes that the fee deferral will not cause any reduction to the 
Exchange's revenue and no other company will be required to pay higher 
fees as a result of the proposed amendments and represents that the 
proposed fee deferral will have no impact on the resources available 
for its regulatory programs.
    The Exchange proposes to amend Section 902.02 to make it clear that 
the statement in that section that initial listing fees are payable at 
the time of listing will not be applicable to Acquisition Companies.
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with Section 6(b) of the Act,\6\ in general, and furthers the 
objectives of Section 6(b)(4) \7\ 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,\8\ 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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    \6\ 15 U.S.C. 78f(b).
    \7\ 15 U.S.C. 78f(b)(4).
    \8\ 15 U.S.C. 78f(b)(5).
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    As a preliminary matter, the Exchange competes for listings with 
other national securities exchanges and companies can easily choose to 
list on, or transfer to, those alternative venues. As a result, the 
fees the Exchange can charge listed companies are constrained by the 
fees charged by its competitors and the Exchange cannot charge prices 
in a manner that would be unreasonable, inequitable, or unfairly 
discriminatory.
    The Exchange believes that the proposed rule change to defer the 
initial listing fees charged to Acquisition Companies as set forth in 
Section 902.11 for one year from the date of listing is reasonable and 
not unfairly discriminatory because it recognizes the unique structure 
of Acquisition Companies that results in a sponsor's extreme fee 
sensitivity, particularly during the initial post-IPO period before any 
substantial amount of interest is earned from the trust account. Unlike 
other companies, which have pre-existing operations and immediate 
access to the IPO proceeds, Acquisition Companies are unique because at 
least 90%, and typically 100%, of the IPO proceeds are held in trust 
for the shareholders and are not available to fund the Acquisition 
Company's operations. Acquisition Companies also do not have any prior 
operations that generate cash that could be used to fund their 
operations. The Exchange also believes that the proposed fee deferral 
is reasonable in that it will create a commercial incentive for 
sponsors to list Acquisition Companies on the Exchange. The Exchange 
competes for listings, in part, by the level of its listing fees. As 
Nasdaq has previously adopted a one year deferral of its entry fees for 
Acquisition Companies, it is reasonable for the Exchange to adopt a 
comparable deferral to enable it to remain competitive in the market 
for the listing of Acquisition Companies.
    The Exchange also notes that no other company will be required to 
pay higher fees as a result of the proposed amendments. Therefore, the 
Exchange believes that allowing an Acquisition Company to pay initial 
listing fees on a deferred basis is reasonable and not inequitable or 
unfairly discriminatory.
    Finally, the Exchange believes that the proposal to defer such fees 
is consistent with the investor protection objectives of Section 
6(b)(5) of the Act in that they are designed to promote just and 
equitable principles of trade, to remove impediments to a free and open 
market and national market system, and in general to protect investors 
and the public interest. Specifically, the amount of revenue deferred 
by allowing Acquisition Companies to pay initial listing fees one year 
from the date of listing is not substantial, and the fee deferral may 
result in more Acquisition Companies listing on the Exchange, thereby 
increasing the resources available for the Exchange's listing 
compliance program, which helps assure that listing standards are 
properly enforced and investors are protected. In addition, the 
Exchange believes that the market practice of depositing 100% of the 
gross proceeds of the IPO in a trust account for the benefit of 
shareholders (rather than the required 90%) benefits those shareholders 
and is consistent with the investor protection goals of the Act because 
it helps assure that shareholders exercising their right to redeem 
their shares for a pro rata share of the trust account will receive the 
full IPO price paid, rather than a lesser amount guaranteed by NYSE 
rules.
    The Exchange believes that the potential impact on revenue from the 
initial listing fee deferral, as proposed, will not hinder its ability 
to fulfill its regulatory responsibilities.

B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange does not believe that the proposed rule change will 
result in any burden on competition that is not necessary or 
appropriate in furtherance of the purposes of the Act, as amended. The 
market for listing services is extremely competitive and listed 
companies may freely choose alternative venues based on the aggregate 
fees assessed, and the value provided by each listing. This rule 
proposal does not burden competition with other listing venues, which 
are similarly free to set their fees. The Exchange notes that Nasdaq is 
its primary competitor for the listing of Acquisition Companies and 
that Nasdaq has already adopted a deferral of its listing fees 
comparable to the one the Exchange is proposing. For these reasons, the 
Exchange does not believe that the proposed rule change will result in 
any burden on competition 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

    The foregoing rule change is effective upon filing pursuant to 
Section 19(b)(3)(A) \9\ of the Act and subparagraph (f)(2) of Rule 19b-
4 \10\ thereunder, because it establishes a due, fee, or other charge 
imposed by the Exchange.
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    \9\ 15 U.S.C. 78s(b)(3)(A).
    \10\ 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) \11\ of the Act to determine whether the proposed 
rule

[[Page 8242]]

change should be approved or disapproved.
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    \11\ 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-2021-06 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-2021-06. 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-2021-06 and should be submitted on 
or before February 25, 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. 2021-02265 Filed 2-3-21; 8:45 am]
BILLING CODE 8011-01-P