Document ID: SEC-2022-1504-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: New York Stock Exchange, LLC
Posted Date: 2022-11-18T05:00Z

[Federal Register Volume 87, Number 222 (Friday, November 18, 2022)]
[Notices]
[Pages 69368-69371]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2022-25237]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-96321; File No. SR-NYSE-2022-51]

Self-Regulatory Organizations; New York Stock Exchange LLC; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To 
Establish Initial and Annual Fees for Exchange Traded Products

November 15, 2022.
    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 November 7, 2022, 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

[[Page 69369]]

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 establish initial and annual fees for the 
listing of Exchange Traded Products on the Exchange. 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
    The Exchange proposes to establish initial and annual fees for the 
listing of Exchange Traded Products (``ETPs'') \4\ on the Exchange by 
adopting a new Section 902.12 to the NYSE Listed Company Manual (the 
``Manual'').
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    \4\ See NYSE Rule 1.1(l). As discussed below, proposed Section 
902.12 would incorporate the definition of ETP so issuers can easily 
identify the class of securities that would be subject to the 
initial and annual listing fees.
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    The proposed changes respond to the current extremely competitive 
environment for ETP listings in which issuers can readily favor 
competing venues or transfer their listings if they deem fee levels at 
a particular venue to be excessive, or discount opportunities available 
at other venues to be more favorable. The proposed changes are designed 
to establish a fee structure for the listing of ETPs on the Exchange 
that would incentivize issuers to list new products and transfer 
existing products as well as to maintain listings on the Exchange, 
which the Exchange believes will enhance competition both among issuers 
and listing venues, to the benefit of investors.
Proposed Rule Change
    As proposed, new Section 902.12 of the Manual would set forth 
initial listing and annual listing fees for listed ETPs. Proposed 
Section 902.12 would be titled ``Listing Fees for Exchange Traded 
Products.'' \5\ Under the proposed heading, the Exchange would include 
the following text (new text italicized):
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    \5\ The Exchange also proposes a conforming change to Section 
902.02 (General Information on Fees) to add ETPs to the list of 
securities therein.

    The Listing Fees and Annual Fees set out in this section apply 
to Exchange Traded Products as defined in NYSE Rule 1.1(l), which 
defines an ``Exchange Traded Product'' as a security that meets the 
definition of ``derivative securities product'' in Rule 19b-4(e) 
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under the Securities and Exchange Act of 1934 (the ``Act'').

    Below this proposed text, a new heading titled ``Initial Listing 
Fees'' would be followed by a chart beneath setting forth proposed 
initial listing fees of $20,000 (for up to and including 10 million 
shares), $30,000 (for over 10 million up to and including 20 million 
shares) or $40,000 (for over 20 million shares). As set forth in 
proposed footnote *, the Exchange would waive the initial listing fees 
for issuers that transfer their listings from any other national 
securities exchange. The proposed listing fee waiver would apply to all 
class of securities of an ETP.
    Further, the Exchange proposes a technical original listing fee of 
$2,500 per application fixed charge, which may include multiple issues 
of securities. As explained in proposed footnote **, a Technical 
Original Listing would occur as a result of a change in state of 
incorporation, reincorporation under the laws of same state, reverse 
stock split, recapitalization, creation of a holding company or new 
company by operation of law or through an exchange offer, or similar 
events affecting the nature of a listed security. As further explained, 
the proposed fee would apply if the change in the company's status is 
technical in nature and the shareholders of the original company 
receive or retain a share-for-share interest in the new company without 
any change in their equity position or rights. The proposed fee and 
text is based on the technical original listing fee applicable to ETPs 
listed on the Exchange's affiliate NYSE Arca, Inc. (``NYSE Arca'').\6\
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    \6\ See NYSE Arca Schedule of Fees and Charges for Exchange 
Services, available at https://www.nyse.com/publicdocs/nyse/markets/nyse-arca/NYSE_Arca_Listing_Fee_Schedule.pdf.
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    Finally, under a second new heading titled ``Annual Listing Fees,'' 
the Exchange proposes that ETPs would be charged annual listing fees at 
a rate of $0.001025 per share, with a minimum fee of $25,000. As set 
forth in proposed footnote ***, issuers transferring their listings 
from another national securities exchange would not be required to pay 
Annual Fees for the remainder of the calendar year in which the 
transfer occurs. The proposed waiver of Annual Fees would apply to all 
classes of securities.
    The proposed fees for listed ETPs are the same as the fees 
currently applicable to listed Closed-End Funds set forth in Section 
902.04 of the Manual.\7\ Given the structural similarities between 
Closed-End Funds and ETPs, the Exchange believes that the anticipated 
costs associated with the listing and regulating ETPs, including costs 
related to issuer services, listing administration, product development 
and regulatory oversight, would be similar to Closed-End Funds. Given 
this correlation, the Exchange believes that applying the same fees to 
listed ETPs would be reasonable.
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    \7\ Under Section 902.04, a Closed-End Fund is charged initial 
listing fees when it first lists a class of common stock according 
to a tiered schedule. Under this tiered schedule, a Closed-End Fund 
pays $20,000 (for up to and including 10 million shares), $30,000 
(for over 10 million up to and including 20 million shares) or 
$40,000 (for over 20 million shares). Additionally, under Section 
902.04, Closed-End Funds are subject to annual fees at a rate of 
$0.001025 per share, subject to a $25,000 minimum fee. In addition, 
a $2,500 fee applies to applications for changes that involve 
modifications to Exchange records, for example, changes of name, par 
value, title of security or designation.
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    Each of the proposed changes described above are not otherwise 
intended to address other issues, and the Exchange is not aware of any 
significant problems that market participants would have in complying 
with the proposed changes
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with section 6(b) of the Act,\8\ in general, and furthers the 
objectives of section 6(b)(4) \9\ 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,\10\ 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

[[Page 69370]]

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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    \8\ 15 U.S.C. 78f(b).
    \9\ 15 U.S.C. 78f(b)(4).
    \10\ 15 U.S.C. 78f(b)(5).
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The Proposed Change Is Reasonable
    The Exchange operates in a highly competitive marketplace for the 
listing of the various categories of securities, including the ETPs 
affected by the proposed fees. The Commission has repeatedly expressed 
its preference for competition over regulatory intervention in 
determining prices, products, and services in the securities markets. 
Specifically, in Regulation NMS,\11\ the Commission highlighted the 
importance of market forces in determining prices and SRO revenues and, 
also, recognized that current regulation of the market system ``has 
been remarkably successful in promoting market competition in its 
broader forms that are most important to investors and listed 
companies.'' \12\
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    \11\ See Securities Exchange Act Release No. 51808 (June 9, 
2005), 70 FR 37495, 37499 (June 29, 2005) (S7-10-04) (Final Rule) 
(``Regulation NMS Adopting Release'').
    \12\ See Regulation NMS Adopting Release, 70 FR at 37499.
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    The Exchange believes that the ever-shifting market share among the 
exchanges with respect to new listings and the transfer of existing 
listings between competitor exchanges demonstrates that issuers can 
choose different listing markets in response to fee changes. 
Accordingly, competitive forces constrain exchange listing fees. Stated 
otherwise, changes to exchange listing fees can have a direct effect on 
the ability of an exchange to compete for new listings and retain 
existing listings.
    Given this competitive environment, the proposal represents a 
reasonable attempt to establish pricing for ETPs on the Exchange. As 
noted, ETPs are structurally similar to Closed-End Funds and the 
Exchange anticipates devoting substantially similar resources to the 
listing and regulation of ETPs. Therefore, the Exchange believes that 
it is reasonable and represents an equitable allocation of its fees 
among market participants to apply the same initial and annual fees to 
issuers of listed ETPs as the Exchange currently charges issuers of 
Closed-End Funds.
    Further, the Exchange believes it is reasonable to not charge a 
listing fee upon listing and to not charge an annual fee for the 
remainder of the calendar year after an ETP transfers to the Exchange 
because such a transferring ETP would have already paid listing and/or 
annual listing fees to the predecessor national securities exchange and 
may incur multiple listing and/or annual fees in the same year in 
connection with a listing transfer, which may operate as a disincentive 
to transferring a listing to the Exchange that the issuer has 
determined is preferable based on the issuer's assessment of the 
Exchange's services, value and market quality. Due to the very limited 
anticipated loss of revenue associated with the proposed waiver, the 
Exchange does not expect the proposed fee waiver to affect its ability 
to devote the same level of resources to its oversight of its listed 
issuers that benefit from the waiver as it does for other issuers or, 
more generally, impact its resource commitment to its regulatory 
oversight of the listing process or its regulatory programs.
The Proposal is an Equitable Allocation of Fees
    The Exchange believes its proposal equitably allocates its fees 
among its market participants. In the prevailing competitive 
environment, issuers can readily favor competing venues or transfer 
listings if they deem fee levels at a particular venue to be excessive, 
or discount opportunities available at other venues to be more 
favorable.
    The proposed listing and annual fees for ETPs are equitable because 
the proposed increased annual fees would apply uniformly to all 
issuers. Moreover, the proposed fees would be equitably allocated among 
issuers because issuers would qualify for the listed fee based on 
issuing ETPs and for the annual fee based on the number of shares 
outstanding and under criteria applied uniformly to all such issuers. 
The proposal neither targets nor will it have a disparate impact on any 
particular category of market participant. The proposed annual fees 
would be applicable to all existing and potential ETP issuers uniformly 
and in equal measure.
    In addition, the Exchange believes the proposed waiver of listing 
and annual fees for ETPs transferring from another national securities 
exchange represents an equitable allocation of fees because the 
proposed waivers would apply to all issuers that transfer ETP listings 
to the Exchange on an equal basis and would enable all issuers 
transferring ETPs from any other national securities exchange to 
benefit from the same waivers with respect to listing and/or annual 
fees for the specified time period. The Exchange believes that the 
proposed waivers would therefore equitably allocate fees among issuers 
transferring ETP listings to the Exchange.
The Proposal Is Not Unfairly Discriminatory
    The Exchange believes that the proposal is not unfairly 
discriminatory. In the prevailing competitive environment, issuers are 
free to list elsewhere if they believe that alternative venues offer 
them better value.
    The Exchange believes that the proposal is not unfairly 
discriminatory because the same fee schedule will apply to all issuers 
of ETPs listed on the Exchange.
    In addition, Exchange Listed Products have substantial structural 
similarities to Closed-End Funds and the Exchange believes it is 
therefore it is not unfairly discriminatory to offer the same listing 
fees for ETPs as are currently applicable to Closed-End Fund products. 
Conversely, ETPs are not similar to any other class of securities 
listed on the Exchange, so the Exchange does not believe it is unfairly 
discriminatory to charge different fees for the listed ETPs than it 
does for any other class of listed securities other than Closed-End 
Funds.
    In addition, the Exchange believes that the proposed waiver of 
listing and annual fees for ETPs transferring from another national 
securities exchange is not unfairly discriminatory because the proposed 
amendment would enable all issuers transferring ETPs from any other 
national securities exchange to benefit from the same waivers with 
respect to fees for the specified time period. The proposed waivers 
would apply to all issuers of securities that transfer ETP listings to 
the Exchange. Therefore, the Exchange believes there would be no unfair 
discrimination against issuers of securities transferring ETP listings 
to the Exchange. Further, the Exchange believes that the proposed 
waivers are not unfairly discriminatory with respect to issuers that 
are already listed on the Exchange because, as noted above, issuers 
transferring ETPs from other markets may already have paid listing and/
or annual fees at their predecessor exchange and may incur multiple 
listing and/or annual fees in the same year in connection with a 
listing transfer, which may operate as a disincentive to transferring 
an ETP listing to the Exchange. As also noted, due to the very limited 
anticipated loss of revenue associated with the proposed waiver, the 
Exchange does not expect the proposed fee waiver to affect its ability 
to devote the same level of resources to its oversight of its listed 
issues that benefit from the waiver as it does for other issuers or, 
more generally, impact its resource commitment to its regulatory 
oversight of the listing process or its regulatory programs.

[[Page 69371]]

    Finally, the Exchange believes that it is subject to significant 
competitive forces, as described below in the Exchange's statement 
regarding the burden on competition.
    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

    In accordance with Section 6(b)(8) of the Act,\13\ the Exchange 
believes that the proposed rule change would not impose any burden on 
competition that is not necessary or appropriate in furtherance of the 
purposes of the Act. The proposed rule change is designed to ensure 
that the fees charged by the Exchange accurately reflect the services 
provided and benefits realized by listed companies. The market for 
listing services is extremely competitive. Each listing exchange has a 
different fee schedule that applies to issuers seeking to list 
securities on its exchange. Issuers have the option to list their 
securities on these alternative venues based on the fees charged and 
the value provided by each listing. Because issuers have a choice to 
list their securities on a different national securities exchange, the 
Exchange does not believe that the proposed fee changes impose a burden 
on competition.
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    \13\ See 15 U.S.C. 78f(b)(8).
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Intramarket Competition
    The proposed changes are designed to attract listings to the 
Exchange by establishing listing and annual fees for an ETPs listed 
under a new rule. The Exchange believes that the proposed changes would 
incentivize issuers to develop and list new products, transfer existing 
products to the Exchange, and maintain listings on the Exchange. The 
proposed fees would be available to all issuers, and, as such, the 
proposed change would not impose a disparate burden on competition 
among market participants on the Exchange.
Intermarket Competition
    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 chosen listing venue, the Exchange does not believe its proposed 
fee change can impose any burden on intermarket competition. As such, 
the proposal is a competitive proposal designed to enhance pricing 
competition among listing venues and implement pricing for ETPs to 
reflect the revenue and expenses associated with listing on the 
Exchange.

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) \14\ of the Act and subparagraph (f)(2) of Rule 
19b-4 \15\ thereunder, because it establishes a due, fee, or other 
charge imposed by the Exchange.
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    \14\ 15 U.S.C. 78s(b)(3)(A).
    \15\ 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) \16\ of the Act to determine whether the proposed 
rule change should be approved or disapproved.
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    \16\ 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 [email protected]. Please include 
File Number SR-NYSE-2022-51 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-2022-51. 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-2022-51 and should be submitted on 
or before December 9, 2022.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\17\
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    \17\ 17 CFR 200.30-3(a)(12).
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Sherry R. Haywood,
Assistant Secretary.
[FR Doc. 2022-25237 Filed 11-17-22; 8:45 am]
BILLING CODE 8011-01-P