Document ID: SEC-2023-0397-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: New York Stock Exchange, LLC
Posted Date: 2023-04-10T04:00Z

[Federal Register Volume 88, Number 68 (Monday, April 10, 2023)]
[Notices]
[Pages 21223-21225]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2023-07414]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-97251; File No. SR-NYSE-2023-17]

Self-Regulatory Organizations; New York Stock Exchange LLC; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To 
Amend Section 902.02 of the NYSE Listed Company Manual With Respect to 
the Qualification of Eligible Portfolio Companies of an Investment 
Management Entity for the Investment Management Entity Group Fee 
Discount

April 4, 2023.
    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 March 29, 2023, 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 Exchange. 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.
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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 amend the provisions with respect to 
the qualification of Eligible Portfolio Companies of an Investment 
Management Entity for the Investment Management Entity Group Fee 
Discount. In order to qualify for the Investment Management Entity 
Group Fee Discount in any calendar year, an issuer must submit 
satisfactory proof to the Exchange no later than the first trading day 
of such calendar year that it meets the ownership requirements 
specified above. The Exchange proposes to extend the application of the 
Investment Management Entity Group Discount to the annual fees payable 
with respect to the first partial year of listing by any newly-listed 
company that is able to demonstrate at the time of listing that it 
qualifies as an Eligible Portfolio Company of an Investment Management 
Entity. 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 includes a subsection entitled 
``Investment Management Entity Group Fee Discount.'' For purposes of 
this

[[Page 21224]]

subsection, an Investment Management Entity is a listed company that 
manages private investment vehicles not registered under the Investment 
Company Act. 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. The Exchange applies a 
fee discount applicable only to an Investment Management Entity and its 
Eligible Portfolio Companies (the ``Investment Management Entity Group 
Fee Discount''). 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 its fees 
capped by the applicable company's individual Total Maximum Fee of 
$500,000. The Investment Management Entity Group Fee Discount (i) is 
limited to annual fees and (ii) represents 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. In order to 
qualify for the Investment Management Entity Group Fee Discount in any 
calendar year, an issuer must submit satisfactory proof to the Exchange 
no later than the first trading day of such calendar year that it meets 
the ownership requirements specified above.
    For the reasons set forth below under ``Statutory Basis,'' the 
Exchange proposes to extend the application of the Investment 
Management Entity Group Discount to the annual fees payable with 
respect to the first partial year of listing by any newly-listed 
company that is able to demonstrate at the time of listing that it 
qualifies as an Eligible Portfolio Company of an Investment Management 
Entity.
    The Exchange also proposes to make some non-substantive changes to 
Section 902.02 to remove provisions that are no longer needed, as they 
do not apply by their terms to any calendar year starting on or after 
January 1, 2021.
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with Section 6(b) of the Act,\3\ in general, and furthers the 
objectives of Section 6(b)(4) \4\ 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,\5\ 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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    \3\ 15 U.S.C. 78f(b).
    \4\ 15 U.S.C. 78f(b)(4).
    \5\ 15 U.S.C. 78f(b)(5).
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    The Exchange established the Investment Management Entity Group Fee 
Discount \6\ because, among other reasons, 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. By comparison, 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 believes it 
is 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. Because these 
cost savings also exist in the first partial year of listing of an 
Eligible Portfolio Company, the Exchange proposes to extend the 
application of the Investment Management Entity Group Fee Discount to 
the annual fees such companies are billed in their first partial year 
of listing, provided that the newly-listed company is able to 
demonstrate at the time of listing that it qualifies as an Eligible 
Portfolio Company of an Investment Management Entity.
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    \6\ 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 also proposes to make non-substantive changes to 
Section 902.02 to remove provisions that are no longer needed, as they 
do not apply by their terms to any calendar year starting on or after 
January 1, 2021.
    For the foregoing reasons, the Exchange believes that the proposal 
is consistent with the Act.

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

    The Exchange believes that the proposed rule change will not impose 
any burden on competition not necessary or appropriate in furtherance 
of the purposes of the Act. The proposed fee reduction will be 
applicable to all similarly situated issuers on the same basis.
    The Exchange believes that the proposed fee limitation will not 
have any meaningful effect on the competition among issuers listed on 
the Exchange. The Exchange operates in a highly competitive market in 
which issuers can readily choose to list new securities on other 
exchanges and transfer listings to other exchanges if they deem fee 
levels at those other venues to be more favorable.
    Because competitors are free to modify their own fees in response, 
and because issuers may change their listing venue, the Exchange does 
not believe its proposed fee change can impose any burden on 
intermarket 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 has become effective upon filing pursuant 
to Section 19(b)(3)(A) \7\ of the Act and paragraph (f) thereunder. At 
any time within 60 days of the filing of the 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.
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    \7\ 15 U.S.C. 78s(b)(3)(A).
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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:

[[Page 21225]]

Electronic Comments

     Use the Commission's internet comment form (http://www.sec.gov/rules/sro.shtml); or
     Send an email to [email protected]. Please include 
File Number SR-NYSE-2023-17 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-2023-17. 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 such 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-2023-17 and should be submitted on 
or before May 1, 2023.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\8\
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    \8\ 17 CFR 200.30-3(a)(12).
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Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2023-07414 Filed 4-7-23; 8:45 am]
BILLING CODE 8011-01-P