Document ID: SEC-2014-0813-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: New York Stock Exchange LLC
Posted Date: 2014-05-16T04:00Z

[Federal Register Volume 79, Number 95 (Friday, May 16, 2014)]
[Notices]
[Pages 28581-28583]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2014-11291]

-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-72147; File No. SR-NYSE-2014-24]

Self-Regulatory Organizations; New York Stock Exchange LLC; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change 
Amending Section 902.02 of the Listed Company Manual To Modify How It 
Calculates Annual Fees for Certain Issuers in Their First Year of 
Listing on the Exchange Which Will Result in Large Issuers Receiving a 
Reduction in Their First Year's Annual Fee That Is Proportional to 
Their Reduced Time Listed on the Exchange

May 12, 2014.
    Pursuant to Section 19(b)(1) \1\ of the Securities Exchange Act of 
1934 (the ``Act'') \2\ and Rule 19b-4 thereunder,\3\ notice is hereby 
given that, on May 6, 2014, 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 self-
regulatory organization. The Commission is publishing this notice to 
solicit comments on the proposed rule change from interested persons.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 15 U.S.C. 78a.
    \3\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------

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 Listed Company 
Manual (the ``Manual'') to modify how it calculates annual fees for 
certain issuers in their first year of listing on the Exchange. Such 
modification will result in large issuers receiving a reduction in 
their first year's annual fee that is proportional to their reduced 
time listed on the Exchange. The text of the proposed rule change is 
available on the Exchange's Web site 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
    The Exchange proposes to amend Section 902.02 of the Manual to 
modify how it calculates annual fees for certain issuers in their first 
year of listing on the Exchange. Such modification will result in large 
issuers receiving a reduction in their first year's annual fee that is 
proportional to their reduced time listed on the Exchange.
    Pursuant to Section 902.02 of the Manual, listed companies are 
charged an annual fee for each class or series of security listed on 
the Exchange. The annual fee is calculated based on the number of 
shares issued and outstanding, including treasury stock and restricted 
stock.\4\ In its first year of listing, a company's annual fee is 
prorated from the date of initial listing through the year end.
---------------------------------------------------------------------------

    \4\ Currently, the annual fee for a listed company's primary 
class of common shares is $0.00093 per share, subject to a minimum 
total annual fee of $42,000.
---------------------------------------------------------------------------

    Listed companies also pay other fees to the Exchange, including 
fees associated with initial and supplemental listing applications. In 
any given calendar year, however, Section 902.02 of the Manual 
specifies that the total fees that the Exchange may bill a listed 
company are capped at $500,000 (the ``Total Maximum Fee''). Therefore, 
a large company with a significant number of shares outstanding whose 
annual fee would otherwise exceed $500,000 will only be billed the 
Total Maximum Fee for that year. Similarly, a company whose annual fee 
is below $500,000 will only incur additional fees (with respect to 
supplemental listing applications, for example) up to the Total Maximum 
Fee.
    As noted above, the Exchange prorates an [sic] company's annual fee 
in its first year of listing. Currently, the Exchange determines a 
newly listed company's prorated annual fee by calculating what the 
company's annual fee would be if it were listed for the entire calendar 
year and then charging only that percentage that corresponds to the 
period from the date of initial listing through the year end. If a 
listed company's prorated annual fee exceeds $500,000 it is only 
charged that portion of the annual fee that, when aggregated with any 
other fees it has already been billed by the Exchange, brings it to the 
Total Maximum Fee, and it will not incur any additional fees during the 
calendar year. If a company's prorated annual fee is below $500,000 it 
would pay the full amount of such prorated annual fee and continue to 
incur additional fees until it hits the Total Maximum Fee.
    By way of example, assume Company A lists on the Exchange on July 
1. If Company A had been listed on the Exchange for the entire calendar 
year, its annual fee would be $2,000,000. Because it will be listed for 
only six months, however, Company A's annual fee is prorated to 
$1,000,000. Under its current policy, the Exchange then applies the 
Total Maximum Fee and bills Company A only $500,000 of its prorated 
annual fee. Because Company A has hit the Total Maximum Fee, it will 
not incur any additional fees (with respect to supplemental listing 
applications, for example) during that calendar year.
    Assume Company B also lists on the Exchange on July 1. If Company B 
had been listed on the Exchange for the entire calendar year, its 
annual fee would be $800,000. Because it will be listed for only six 
months, however, Company B's annual fee is prorated to $400,000. Under 
the Exchange's current policy, Company B will be billed the $400,000 
prorated annual fee and will continue to incur additional fees (with 
respect to supplemental listing

[[Page 28582]]

applications, for example) until it hits the Total Maximum Fee.
    Assume Company C also lists on the Exchange on July 1. If Company C 
had been listed on the Exchange for the entire calendar year, its 
annual fee would be $400,000. Because it will be listed for only six 
months, however, Company C's annual fee is prorated to $200,000. 
Company C will be billed the $200,000 prorated annual fee and will 
continue to incur additional fees (with respect to supplemental listing 
applications, for example) until it hits the Total Maximum Fee.
    Because the Exchange has the Total Maximum Fee that it may charge 
listed companies in any given calendar year, the Exchange proposes to 
amend the manner in which it calculates a prorated annual fee during a 
company's first year of listing. Instead of using a company's actual 
annual fee (calculated on a per share basis) for purposes of 
calculating a company's prorated annual fee and then reducing it to the 
Total Maximum Fee as applicable, the Exchange proposes to use the 
lesser of an issuer's annual fee and the Total Maximum Fee as the 
starting point and prorate that figure for the period of time a company 
is listed on the Exchange during its first year.
    Returning to the examples above and giving effect to the Exchange's 
proposed policy, assume Company A lists on the Exchange on July 1. If 
Company A had been listed on the Exchange for the entire calendar year, 
its annual fee would be $2,000,000. Because of the Total Maximum Fee, 
however, the most Company A can be billed in any calendar year is 
$500,000. The Exchange therefore will prorate the Total Maximum Fee and 
bill Company A an annual fee of $250,000 for the six months it is 
listed on the Exchange in that first year. Company A will continue to 
incur additional fees (with respect to supplemental listing 
applications, for example) until it hits the Total Maximum Fee.
    Assume Company B also lists on the Exchange on July 1. If Company B 
had been listed on the Exchange for the entire calendar year, its 
annual fee would be $800,000. Because of the Total Maximum Fee, 
however, the most Company B can be billed in any calendar year is 
$500,000. Under its proposed new policy, therefore, the Exchange will 
prorate the Total Maximum Fee and bill Company B an annual fee of 
$250,000 for the six months it is listed on the Exchange in that first 
year. Company B will continue to incur additional fees (with respect to 
supplemental listing applications, for example) until it hits the Total 
Maximum Fee.
    Assume Company C also lists on the Exchange on July 1. If Company C 
had been listed on the Exchange for the entire calendar year, its 
annual fee would be $400,000. Because Company C's annual fee is less 
than the Total Maximum Fee, its prorated annual fee will be calculated 
based on the entire $400,000. Accordingly, Company C's annual fee will 
be prorated to $200,000 for the six months it is listed on the 
Exchange. Company C will continue to incur additional fees (with 
respect to supplemental listing applications, for example) until it 
hits the Total Maximum Fee.
    The Exchange believes this proposed rule change more fairly and 
equitably allocates listing fees because it would provide a pro rata 
annual fee to all listed companies. Under the Exchange's current rules, 
a large company whose prorated annual fee exceeds the Total Maximum Fee 
still pays the Total Maximum Fee even though it is only listed for a 
portion of a calendar year. That same large company will pay the exact 
same annual fee during its second year of listing when it is listed for 
a full twelve months. The Exchange believes that the proposed rule 
change appropriately recognizes that a company should pay a reduced 
annual fee in its first year of listing when it is only listed for a 
portion of such year. Accordingly, the proposed rule change further 
[sic] the Exchange's goal of proportionately allocating fees among 
listed companies.
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with Section 6(b) of the Act,\5\ in general, and furthers the 
objectives of Sections 6(b)(4) \6\ of the Act, in particular, in that 
it is designed to provide for the equitable allocation of reasonable 
dues, fees, and other charges among its members and issuers and other 
persons using its facilities. The Exchange also believes that the 
proposed rule change is consistent with Section 6(b)(5) \7\ of the Act 
in that it is not designed to permit unfair discrimination between 
customers, issuers, brokers, or dealers.
---------------------------------------------------------------------------

    \5\ 15 U.S.C. 78f(b).
    \6\ 15 U.S.C. 78f(b)(4).
    \7\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

    The Exchange believes that it is reasonable to modify the way in 
which it calculates a listed company's prorated annual fee in its first 
year of listing. The Exchange's current practice results in certain 
large issuers paying the same annual fee during their first year of 
listing (when they may only be listed for a portion of the year) and 
their second year of listing (when they are listed for the entire 
twelve months). The Exchange's proposed rule change will result in 
large issuers receiving a reduction in their first year's annual fee 
that is proportional to their reduced time listed on the Exchange. The 
Exchange believes such reduction results in a more equitable allocation 
of fees. The proposed rule change is not designed to permit unfair 
discrimination because all issuers listed on the exchange will now be 
entitled to pay a pro rata annual fee in their first year of listing.

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

    The Exchange does not believe that the proposed rule change will 
impose any burden on competition that is not necessary or appropriate 
in furtherance of the purposes of the Act. The proposed change simply 
modifies the way in which the Exchange calculates prorated annual fees 
for certain large issuers that are listed for less than an entire year. 
Such modification will result in large issuers receiving a reduction in 
their first year's annual fee that is proportional to their reduced 
time listed on the Exchange. The proposed rule change ensures that the 
Exchange has fair billing practices and can effectively compete for 
listings. Accordingly, the Exchange does not believe that the proposed 
change will impose any burden on 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 is effective upon filing pursuant to 
Section 19(b)(3)(A) \8\ of the Act and subparagraph (f)(2) of Rule 19b-
4 \9\ thereunder, because it establishes a due, fee, or other charge 
imposed by the Exchange.
---------------------------------------------------------------------------

    \8\ 15 U.S.C. 78s(b)(3)(A).
    \9\ 17 CFR 240.19b-4(f)(2).
---------------------------------------------------------------------------

    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

[[Page 28583]]

the purposes of the Act. If the Commission takes such action, the 
Commission shall institute proceedings under Section 19(b)(2)(B) \10\ 
of the Act to determine whether the proposed rule change should be 
approved or disapproved.
---------------------------------------------------------------------------

    \10\ 15 U.S.C. 78s(b)(2)(B).
---------------------------------------------------------------------------

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-2014-24 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-2014-24. 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 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 Web site 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 NYSE. 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-2014-24, and should be 
submitted on or before June 6, 2014.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\11\
---------------------------------------------------------------------------

    \11\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2014-11291 Filed 5-15-14; 8:45 am]
BILLING CODE 8011-01-P