Document ID: SEC-2007-0697-0001
Agency: sec
Document Type: Notice
Title: Self-regulatory organizations; proposed rule changes: New York Stock Exchange LLC
Posted Date: 2007-05-17T04:00Z

[Federal Register: May 17, 2007 (Volume 72, Number 95)]
[Notices]               
[Page 27893-27895]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr17my07-133]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-55742; File No. SR-NYSE-2007-19]

 
Self-Regulatory Organizations; New York Stock Exchange LLC; 
Notice of Filing of Amendment No. 1 and Order Granting Accelerated 
Approval to a Proposed Rule Change as Modified by Amendment No. 1 
Relating to the Waiver of Certain Listing Fees

May 10, 2007.

I. Introduction

    On February 22, 2007, the New York Stock Exchange LLC (``NYSE'' or 
``Exchange'') filed with the Securities and Exchange Commission 
(``Commission''), pursuant to Section 19(b)(1) of the Securities 
Exchange Act of 1934 (``Act'' or ``Exchange Act'') \1\ and Rule 19b-4 
thereunder,\2\ a proposal to waive certain listing fees. The proposal 
was published for comment in the Federal Register on March 14, 2007.\3\ 
The Commission received no comments on the proposal. The Exchange filed 
Amendment No. 1 with the Commission on April 27, 2007.\4\ This order 
provides notice of and solicits comment on the proposed rule change as 
modified by Amendment No. 1 and approves the proposal on an accelerated 
basis.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ See Securities Exchange Act Release No. 55421 (March 14, 
2007), 72 FR 1350 (the ``Notice'').
    \4\ Amendment No. 1 (i) Proposed a clarifying change to the 
proposed rule text and (ii) added language to the purpose section to 
clarify the effect of the waiver of listing fees for a company 
listing its primary class of common stock that is not listed on a 
national securities exchange but is registered under the Act. The 
text of Amendment No. 1 is available on the Exchange's Web site 
(http://www.nyse.com), at the Exchange's Office of the Secretary, 

and at the Commission's Public Reference Room.
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II. Description of the Proposal

    The Exchange proposes to amend Section 902.02 of its Listed Company 
Manual (the ``Manual'') to provide that there shall be no initial 
listing fee applicable to (i) Any company listing upon emergence from 
bankruptcy, or (ii) any company listing its primary class of common 
stock that is not listed on a national securities exchange but is 
registered under the Act.
    The Exchange also proposes a temporary cap on fees payable by 
companies listing upon emergence from bankruptcy. Annual fees for such 
issuers will be billed at a rate of one-fourth of the applicable annual 
fee rate for the fiscal quarter the issuer lists and for each of the 
succeeding 12 full fiscal quarters. Further, the total fees (including 
initial listing fees and annual fees) that may be billed to such an 
issuer during this period would 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. The exclusions applicable to the standard fee 
cap, set forth in Section 902.02 under the heading ``Total Maximum Fee 
Payable in a Calendar Year,'' would also apply to issuers listing upon 
emergence from bankruptcy.
    The Exchange believes that the initial listing fee waiver and fee 
cap for companies listing upon emergence from bankruptcy are justified 
by the unique circumstances of those issuers, which, according to the 
NYSE, among other things, tend to be more sensitive to the initial and 
continued costs associated with listing because of the desire in 
bankruptcy proceedings to ensure creditors are paid as much as 
possible. According to the Exchange, because bankrupt companies face 
unique challenges in the listing process, the number of companies that 
will benefit from the fee waiver and lower fee cap applicable to 
bankrupt companies will be very limited, and the fee cap will apply 
only during a three-year transitional period, the Exchange does not 
believe that the treatment this proposal would afford to bankrupt 
companies constitutes an inequitable or unfairly discriminatory 
allocation of fees.
    In addition, the Exchange believes that waiving initial listing 
fees for a company listing its primary class of common stock which is 
registered under that Act but not listed on a national securities 
exchange is appropriate and does not constitute an inequitable or 
unfairly discriminatory allocation of fees. The Exchange anticipates 
that most companies taking advantage of this waiver will be formerly-
listed companies that were delisted as a result of a failure to timely 
file annual reports with the Commission.\5\ The Exchange notes that 
these companies usually seek to re-list on the Exchange as soon as 
their filings are up to date.\6\ According to the Exchange, because 
such companies had previously paid initial listing fees to the Exchange 
or to another national securities exchange, the Exchange believes that 
to make them pay these fees again would further penalize them 
unnecessarily.
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    \5\ In Amendment No. 1, the Exchange stated that there may 
occasionally be an initial listing on the Exchange of a company 
which is trading in the over-the-counter market immediately prior to 
listing and which was not previously delisted as a result of a 
failure to timely file annual reports with the Commission. However, 
in the Exchange's experience, very few such companies meet the 
Exchange's listing requirements and, therefore, the Exchange expects 
the number of such listings and the related loss of fee revenue to 
be immaterial.
    \6\ In its filing, the Exchange stated that typically, such 
companies are otherwise in good standing with the Exchange or with 
another national securities exchange, but fell behind on their 
reporting obligations under the Act because their auditors or the 
Commission required restatements of their financial statements. The 
Commission notes that the timely filing of accurate financial 
reports under the Act is critical to investors and our national 
market and assures that investors receive up to date financial 
information about listed companies.
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    The Exchange has represented that the proposed rule change would 
not affect its commitment of resources to its regulatory oversight of 
the listing process or its regulatory programs. Companies that benefit 
from one of the proposed waivers would be reviewed for compliance with 
Exchange listing standards in the same manner as any other company that 
applies to be listed on the Exchange. The Exchange would conduct a full 
and independent review of each issuer's compliance with the Exchange's 
listing standards.
    The Exchange also has represented that it does not expect the 
financial impact of this proposed rule change to be material, either in 
terms of increased levels of annual fees from transferring issuers or 
in terms of diminished initial listing fee revenues. A limited number 
of companies are qualified and seek to list on the Exchange that are 
either emerging from bankruptcy or have a registered class of common 
stock but are not currently listed on another market. Accordingly, the 
proposed rule change will not impact the Exchange's resource commitment 
to its regulatory oversight

[[Page 27894]]

of the listing process or its regulatory programs.
    Following their approval, the Exchange would apply the amendments 
contained in the proposal retroactively to February 22, 2007, the date 
of filing of the proposed rule change.\7\
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    \7\ See supra note 3
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III. Discussion

    After careful review, the Commission finds that the proposed rule 
change, as amended, is consistent with the requirements of the Act and 
the rules and regulations thereunder applicable to a national 
securities exchange.\8\ In particular, the Commission finds that the 
proposal is consistent with Section 6(b)(4) of the Act,\9\ which 
requires that an exchange have rules that provide for the equitable 
allocation of reasonable dues, fees, and other charges among its 
members and other persons using its facilities. The Commission also 
finds that the proposal is consistent with Section 6(b)(5) of the 
Act,\10\ which requires, inter alia, that the rules of a national 
securities exchange be designed to remove impediments to and perfect 
the mechanism of a free and open market and a national market system 
and not designed to permit unfair discrimination between issuers. The 
Commission has not received any comments on the proposal. This order 
approves the proposed rule change, as modified by Amendment No 1.
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    \8\ 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)
    \9\ 15 U.S.C. 78f(b)(4)
    \10\ 15 U.S.C. 78f(b)(5)
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    The Commission notes that companies who re-list upon emerging from 
bankruptcy or who re-list upon a return to good standing following 
delisting have usually paid listing fees to either the Exchange or to 
another national securities exchange at the time of their initial 
listing. In addition, with respect to the cap on annual fees for 
companies listing upon emergence from bankruptcy, the Commission notes 
that the fee cap is a temporary one, designed to enable recently 
bankrupt companies to manage the costs associated with listing, 
consistent with the desire in bankruptcy proceeding to ensure that 
creditors are paid as much as possible. For these reasons, the Exchange 
argues, the waiver of listing fees and the cap on annual fees are 
equitable.
    The Commission recognizes that, as drafted, the initial fee waiver 
would extend to companies that have never listed on a national 
securities exchange, which thus have never paid listing fees. In this 
regard, the Exchange acknowledges that some companies other than those 
returning to good standing after recent delisting--e.g., a company 
trading on the over-the-counter market--may seek to take advantage of 
the waiver of listing fees for companies not listed on a national 
securities exchange but registered under the Act. However, the Exchange 
expects the number of such companies eligible for the waiver to be very 
small, since very few of these companies would meet the Exchange's 
quantitative listing requirements.
    The Commission also notes that the Exchange has represented that 
the waiver of listing fees and the cap on annual fees should not have a 
material financial impact on the exchange, or impact the Exchange's 
resource commitment to its regulatory oversight of the listing process 
or its regulatory programs.
    Further, the proposal does not have any impact on whether a company 
is actually eligible to list on the Exchange. The Commission expects, 
and the Exchange has represented, that a full and independent review of 
compliance with listing standards will be conducted for any company 
seeking to take advantage of either of the fee waivers, just as for any 
company that applies for listing on the Exchange.
    In light of these arguments, the Commission agrees that the 
proposed waiver and fee cap, which are retroactively effective to 
February 22, 2007, the date of the filing of the proposed rule 
change,\11\ do not constitute an inequitable allocation of reasonable 
dues, fees, and other charges, do not permit unfair discrimination 
between issuers, and are generally consistent with the Act.
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    \11\ See supra note 3
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    Pursuant to Section 19(b)(2) of the Act,\12\ the Commission finds 
good cause for approving the proposal prior to the thirtieth day after 
the publication of the proposal, as modified by Amendment No. 1, in the 
Federal Register. The revisions to the proposed rule change made by 
Amendment No. 1 do not raise any novel or substantive regulatory 
issues, and clarify the proposal. Therefore, the Commission finds good 
cause for approving the amended proposal on an accelerated basis.
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    \12\ 15 U.S.C. 78s(b)(2)
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IV. Solicitation of Comments Concerning Amendment No. 1

    Interested persons are invited to submit written data, views, and 
arguments concerning the proposed rule change as modified by Amendment 
No. 1, including whether it 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-NYSE-2007-19 on the subject line.

Paper Comments

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

    All submissions should refer to File Number SR-NYSE-2007-19. 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 Room. 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; 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-NYSE-2007-19 and should be submitted on or before June 
7, 2007.

V. Conclusion

    It is therefore ordered, pursuant to Section 19(b)(2) of the 
Act,\13\ that the proposed rule change (File No. SR-NYSE-2007-19), as 
modified by Amendment No. 1, be, and it hereby is, approved on an 
accelerated basis.
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    \13\ Id.

[[Page 27895]]

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    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\14\
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    \14\ 17 CFR 200.30-3(a)(12)
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Jill M. Peterson,
Assistant Secretary.
 [FR Doc. E7-9438 Filed 5-16-07; 8:45 am]

BILLING CODE 8010-01-P