Document ID: SEC-2013-2073-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: New York Stock Exchange LLC
Posted Date: 2013-12-09T05:00Z

[Federal Register Volume 78, Number 236 (Monday, December 9, 2013)]
[Notices]
[Pages 73905-73906]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2013-29262]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-70971; File No. SR-NYSE-2013-68]

Self-Regulatory Organizations; New York Stock Exchange LLC; Order 
Approving Proposed Rule Change Amending Section 907.00 of the Listed 
Company Manual To Expand the Suite of Complimentary Products and 
Services That Are Offered to Listed Companies

December 3, 2013.

I. Introduction

    On October 1, 2013, New York Stock Exchange LLC (``NYSE'' or the 
``Exchange'') filed with the Securities and Exchange Commission 
(``Commission''), pursuant to Section 19(b)(1) \1\ of the Securities 
Exchange Act of 1934 (``Act'') \2\ and Rule 19b-4 thereunder,\3\ a 
proposed rule change amending Section 907.00 of the Listed Company 
Manual (``Manual'') to expand the suite of complimentary products and 
services that are offered to all listed issuers and to certain current 
and newly listed issuers. The proposed rule change was published for 
comment in the Federal Register on October 22, 2013.\4\ The Commission 
received no comments on the proposal. This order approves the proposed 
rule change.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 15 U.S.C. 78a.
    \3\ 17 CFR 240.19b-4.
    \4\ See Securities Exchange Act Release No. 70628 (Oct. 8, 
2013), 78 FR 62889 (``Notice'').
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II. Description of the Proposal

    The Exchange has proposed to amend Section 907.00 of the Manual to 
expand the suite of complimentary products and services that it offers 
to certain listed companies. Under current Exchange rules, all listed 
issuers receive some complimentary products and services through NYSE 
Market Access Center; however, certain tiers of currently listed 
issuers and newly listed issuers receive additional products and 
services. As specifically set forth in Section 907.00 of the Manual, 
the Exchange offers products and services in the following general 
categories to certain current and newly listed companies: market 
surveillance, web-hosting, market analytics and news distribution. 
According to the NYSE, the available products and services have 
approximate commercial values ranging from $10,000 to $45,000 
annually.\5\ The complimentary products and services are offered to 
companies under a tiered system based on shares issued and outstanding 
for currently listed companies, or global market value for newly listed 
companies.
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    \5\ Section 907.00 of the Manual currently states that the 
market surveillance products and services have a commercial value of 
approximately $45,000 annually, web-hosting products and services 
have a commercial value of approximately $12,000-$16,000 annually, 
market analytics products and services have a commercial value of 
approximately $20,000 annually and news distribution products and 
services have a commercial value of approximately $10,000 annually.
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    With respect to currently listed companies, companies that have 
more than 270 million shares issued and outstanding (a ``Tier One 
Company'') are offered (i) a choice of market surveillance or market 
analytics products and services, and (ii) web-hosting products and 
services on a complimentary basis. Companies that have between 160 
million and 269.9 million shares issued and outstanding (a ``Tier Two 
Company'') are offered a choice of market analytics or web-hosting 
products and services.
    For newly listed companies, the Exchange offers different product 
and service options for an initial period of two years based on such 
company's global market value. A company with a global market value of 
$400 million or more (a ``Tier A Company'') is offered (i) a choice of 
market surveillance products and services for a period of twelve months 
or market analytics products and services for a period of 24 months, 
and (ii) web-hosting and news distribution products and services for a 
period of 24 months. Newly-listed companies with a global market value 
of less than $400 million (a ``Tier B Company'') are offered web-
hosting and news distribution products and services for a period of 24 
months.
    The Exchange has proposed to amend Section 907.00 of the Manual to 
add three additional categories of complimentary products and services 
that will be offered to listed companies in the various tiers as 
described below. Specifically, the Exchange proposes to include 
corporate governance tools and advisory services (the ``Enhanced 
Package''), which the Exchange states has a commercial value of 
approximately $45,000 annually, and corporate governance tools (the 
``Basic Package''), which the Exchange states has a commercial value of 
approximately $20,000 annually, to the list of complimentary products 
and services offered to certain listed companies. Further, the Exchange 
has proposed to offer data room services and virtual investor relation 
tools,\6\ which the Exchange states has a commercial value of 
approximately $15,000-$20,000 annually, to the list of complimentary 
products and services offered to all listed companies. The Enhanced 
Package will be offered to Tier One Companies as a third alternative to 
the market surveillance and market analytics products they are already 
offered. The Basic Package will be offered to Tier Two Companies as a 
third alternative to the market analytics and web-hosting products they 
are already offered. The Basic Package also will be offered to Tier A 
Companies as a second alternative to the market analytics products and 
services that are offered for a 24-month period. The data room services 
and virtual investor relation tools will be offered to all listed 
companies on an annual basis. The Exchange has proposed to offer these 
tools through an affiliated service provider and may engage additional 
third-party providers in the future.
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    \6\ In its filing, the NYSE explained that a data room is a 
password-protected Web site used for document storage. It is 
typically used to store due diligence materials to be reviewed in 
connection with transactional activity. Virtual investor relations 
tools are Web sites used to present roadshows and other investor 
presentations on a short-term basis, typically in connection with a 
specific transaction.
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    The Basic Package, offered to Tier Two and Tier A Companies, will 
consist of a combination of governance, risk, compliance and board 
tools for company directors and executives. In its filing, the Exchange 
noted that it expects that these tools will provide generic, easily 
implemented corporate governance advice and/or educational tools that 
are applicable to a wide range of listed companies.
    The Enhanced Package, offered to Tier One Companies, will offer the 
same tools as the Basic Package but will also include access to 
advisory services. In its filing, the NYSE noted that such advisory 
services may include ongoing, periodic review of a company's corporate 
governance policies as well as benchmarking such polices against a 
company's peer group. In support of this change, the Exchange stated 
that the

[[Page 73906]]

advisory services will offer companies a more individualized assessment 
of their corporate governance practices particular to the specific 
nature of their industry and organization.
    As noted above, the specific tools and services offered by these 
products will be developed by the Exchange, through an affiliated 
service provider, or by third-party vendors. 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. According to the Exchange, 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.
    Moreover, according to the Exchange, the proposed expansion of 
additional complimentary products and services will not benefit any 
category of listed companies over another one. Further, according to 
the Exchange, the additional Enhanced and Basic Packages discussed 
above will not increase the overall value of complimentary products and 
services offered to companies within each tier and are simply being 
offered as an additional alternative choice. The Commission also notes 
that under the proposal the data room services and virtual investor 
relation tools are being offered equally to all listed companies.

III. Discussion and Commission's Findings

    The Commission has carefully reviewed the proposed rule change and 
finds that it is consistent with the requirements of Section 6 of the 
Act.\7\ Specifically, the Commission believes it is consistent with the 
provisions of Sections 6(b)(4) and (5) of the Act,\8\ in particular, in 
that it is designed to provide for the equitable allocation of 
reasonable dues, fees, and other charges among Exchange members, 
issuers, and other persons using the Exchange's facilities, and is not 
designed to permit unfair discrimination between customers, issuers, 
brokers, or dealers. Moreover, the Commission believes that the 
proposed rule change is consistent with Section 6(b)(8) of the Act \9\ 
in that it does not impose any burden on competition not necessary or 
appropriate in furtherance of the purposes of the Act.
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    \7\ 15 U.S.C. 78f. In approving this proposed rule change, the 
Commission has considered the proposed rule's impact on efficiency, 
competition, and capital formation. See 15 U.S.C. 78c(f).
    \8\ 15 U.S.C. 78f(b)(4) and (5).
    \9\ 15 U.S.C. 78f(b)(8).
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    The Commission believes that it is consistent with the Act for the 
Exchange to give issuers under Tier One the option of receiving 
corporate governance tools and advisory services as an alternative to 
market surveillance or market analytics products and services, and in 
addition to the other products and services they are currently offered, 
as well as to allow issuers under Tier Two and Tier A the option of 
receiving corporate governance tools as an alternative, and in 
addition, to the other products and services they are currently 
offered. In addition, the Commission believes that it is consistent 
with the Act for the Exchange to offer the data room services and 
virtual investor relation tools to all listed issuers, irrespective of 
whether they are eligible for additional services under a tier. The 
Exchange has represented that it 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. According to the 
Exchange, by offering products and services on a complimentary basis 
and ensuring that it is offering the services most valued by its listed 
issuers, it improves the quality of the services that listed companies 
receive. Accordingly, the Commission believes that the NYSE's proposal 
reflects the current competitive environment for exchange listings 
among national securities exchanges and is appropriate and consistent 
with Section 6(b)(8).
    Moreover, the Commission believes that it is appropriate for the 
Exchange to offer varying services to different categories of 
issuers.\10\ According to the Exchange, Tier One Companies, because 
they tend to be larger, more complex organizations, would benefit most 
from the individualized attention offered by the advisory services 
element of the Enhanced Package. By comparison, the Exchange states 
that Tier Two and Tier A Companies tend to be mid-sized companies and 
therefore are smaller, less complex organizations than Tier One 
Companies that can benefit from the general tools offered by the Basic 
Package. Further, according to the Exchange most Tier B Companies are 
smaller and, less complex organizations than Tier Two and Tier A 
companies and are unlikely to require the tools offered by the Basic 
Package.\11\ Additionally, the Enhanced and Basic Packages are simply 
being offered as an additional alternative choice and are approximately 
equal to the commercial value of other products already being offered 
to listed companies in each applicable tier. Further, all listed 
companies will continue to receive some level of free services, 
including the addition of the free data room services and virtual 
investor relation tools being approved in this order. Finally, the 
Commission believes that the change will provide greater transparency 
under the Exchange's rules as to the actual fees, and the value of free 
products and services, applicable to listed companies.
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    \10\ See Securities Exchange Act Release No. 65127 (Aug. 12, 
2011), 76 FR 51449 (Aug. 18, 2011) (SR-NYSE-2011-20) (``Approval 
Order''), finding that the existing tiers are consistent with the 
Act. In particular, the Approval Order states that while not all 
issuers receive the same level of services, NYSE has stated that 
trading volume and market activity are related to the level of 
services that the listed companies would use in the absence of 
complimentary arrangements. The Commission found, among other 
things, that ``. . . the products and services and their commercial 
value are equitably allocated among issuers consistent with Section 
6(b)(4) of the Act, and the rule does not unfairly discriminate 
between issuers consistent with Section 6(b)(5) of the Act.'' See 
Approval Order, 76 FR at 51452.
    \11\ See Notice, supra note 4.
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    Based on the factors noted above, the Commission continues to 
believe that the products and services and their commercial value are 
equitably allocated among issuers consistent with Section 6(b)(4) of 
the Act, and that the rule does not unfairly discriminate between 
issuers consistent with Section 6(b)(5) of the Act.\12\
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    \12\ See also Approval Order, supra note 10.
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IV. Conclusion

    It is therefore ordered, pursuant to Section 19(b)(2) of the 
Act,\13\ that the proposed rule change (NYSE-2013-68) be, and it hereby 
is, approved.
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    \13\ 15 U.S.C. 78s(b)(2).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\14\
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    \14\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2013-29262 Filed 12-6-13; 8:45 am]
BILLING CODE 8011-01-P