Document ID: SEC-2018-1933-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: New York Stock Exchange, LLC
Posted Date: 2018-12-14T05:00Z

[Federal Register Volume 83, Number 240 (Friday, December 14, 2018)]
[Notices]
[Pages 64391-64393]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-27084]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-84775; File No. SR-NYSE-2018-57]

Self-Regulatory Organizations; New York Stock Exchange LLC; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To 
Amend Certain of Its Listing Fees

December 10, 2018.
    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 November 29, 2018, 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.
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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 amend certain of its listing fees. 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 amend certain of its listing fees set 
forth in Chapter 9 of the Manual, in each case with effect from the 
beginning of the calendar year commencing on January 1, 2019.
    The annual fee set forth in Section 902.03 of the Manual will 
increase from $0.00108 per share to $0.0011 per share for each of the 
following: A primary class of common shares (including Equity 
Investment Tracking Stocks); each additional class of common shares 
(including tracking stock), a primary class of preferred stock (if no 
class of common shares is listed); each additional class of preferred 
stock (whether the primary class is common or preferred stock); and 
each class of warrants. In addition, the minimum annual fee will be 
increased from $65,000 to $68,000 for each of (i) a primary class of 
common shares (including Equity Investment Tracking Stocks) and (ii) a 
primary class of preferred stock (if no class of common shares is 
listed).
    The Exchange proposes to amend the annual fee schedule for 
structured products set forth in Section 902.05 of the Manual and for 
short term securities set forth in Section 902.06. In each case, the 
annual fee per share will increase from $0.00108 to $0.0011 per share. 
The minimum annual fee will increase from $25,000 to $35,000 for 
securities listed under Sections 902.05 and 902.06 (except for warrants 
to purchase equity securities, which will remain $5,000). In addition, 
the Exchange proposes to amend the provision in Section 902.02 relating 
to the $500,000 Total Maximum Fee by including annual fees paid for all 
structured products in calculating the Total Maximum Fee. The Exchange 
notes that retail debt securities are already included in the Total 
Maximum Fee calculation. Historically many listed structured products 
were financial products issued by banks and other financial 
institutions so there was a reasonable basis for excluding them from 
the benefits of the Total Maximum Fee provision. Today, however, most 
structured products listed on the Exchange are issued by listed 
companies for similar financing reasons to those for which they issue 
retail debt, so it is reasonable to treat them the same for purposes of 
the Total Maximum Fee calculation.
    The Exchange proposes to make an adjustment to the Investment 
Management Entity Group Fee Discount set forth in Section 902.02 of the 
Manual. The Investment Management Entity Group Fee Discount is 
currently based on all annual and listing fees paid by the Investment 
Management Entity and its Eligible Portfolio Companies in the 
applicable calendar year. The Exchange proposes to amend the

[[Page 64392]]

discount by applying it only to annual fees incurred as of January 1 of 
the applicable year.\4\ The current approach is logistically difficult 
for Exchange staff and the benefitting companies, as the size and 
proportionate share of the discount received by each company cannot be 
calculated until year-end, as it must reflect the effect of 
supplemental listing fees incurred for issuances of new shares during 
the course of the year in addition to annual fees. A discount based on 
annual fee bills incurred on January 1 will be more transparent and 
predictable and will enable the Exchange to reduce the benefiting 
companies' bills at the beginning of the year rather than charging them 
in full and giving them a credit for the discount at year-end. In 
connection with this modification, the Exchange also proposes to modify 
the manner in which a company qualifies as an Eligible Portfolio 
Company to reflect the fact that the benefits--and therefore Eligible 
Portfolio Company Status--will be determined at the beginning of the 
applicable year. As such, for calendar 2019 and subsequent years, a 
company will be an Eligible Portfolio Company if it was listed on the 
Exchange as of the first trading day of such calendar year. In order to 
qualify for the Investment Management Entity Group Fee Discount in 
calendar 2019 or any subsequent 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.\5\
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    \4\ The Investment Management Entity Group Fee Discount is 
limited to $500,000 per year for any Investment Management Entity 
and its Eligible Portfolio Companies and, in the Exchange's 
experience, each group of companies utilizing the discount has 
benefited from the maximum $500,000 amount. The Exchange expects 
that all groups of companies utilizing the discount will continue to 
benefit from the maximum discount in the future based solely on 
their annual fee obligations.
    \5\ Under the current rule, a company qualifies for the 
Investment Management Entity Group Fee Discount in any calendar year 
by submitting satisfactory proof to the Exchange no later than 
December 31 that it has met the ownership requirements specified 
above for the entire period between January 1 and September 30 of 
that year.
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    As described below, the Exchange proposes to make the 
aforementioned fee increases to better reflect the Exchange's costs 
related to listing equity securities and the corresponding value of 
such listing to issuers.
    The Exchange also proposes to remove a number of references in 
Chapter 9 to fees that are no longer applicable as they were superseded 
by new fee rates specified in the rule text or refer to fees that are 
no longer applicable.
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with Section 6(b) of the Act,\6\ in general, and furthers the 
objectives of Section 6(b)(4) \7\ 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,\8\ 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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    \6\ 15 U.S.C. 78f(b).
    \7\ 15 U.S.C. 78f(b)(4).
    \8\ 15 U.S.C. 78f(b)(5).
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    The Exchange believes that it is not unfairly discriminatory and 
represents an equitable allocation of reasonable fees to amend Chapter 
Nine of the Manual to increase the various listing fees as set forth 
above because of the increased costs incurred by the Exchange since it 
established the current rates. In that regard, the Exchange notes that 
its general costs have increased since its most recent fee adjustments, 
including due to price inflation. In addition, the Exchange continues 
to improve and increase the services it provides to listed companies. 
These improvements include the continued development and enhancement of 
an interactive web-based platform designed to improve communication 
between the Exchange and listed companies, the availability to listed 
companies of the Exchange's new state-of-the-art conference facilities 
at 11 Wall Street, and continued development of an investor relations 
tool available to all listed companies which provides companies with 
information enabling them to better understand the trading and 
ownership of their securities and the cost of providing content for 
inclusion in that tool.
    The inclusion of all structured products in the Total Maximum Fee 
calculation is not unfairly discriminatory and represents an equitable 
allocation of reasonable fees, as retail debt securities are already 
included in the Total Maximum Fee calculation. Most listed structured 
products are issued by listed companies for similar financing reasons 
to those for which they issue retail debt, so it is reasonable, 
equitable and not unfairly discriminatory to treat them the same for 
purposes of the Total Maximum Fee calculation.
    The adjustments to the Investment Management Entity Group Fee 
Discount are not unfairly discriminatory and represent an equitable 
allocation of reasonable fees, because a discount based on annual fee 
bills incurred on January 1 will be more transparent and predictable 
and will enable the Exchange to reduce the benefitting companies' bills 
at the beginning of the year rather than charging them in full and 
giving them a credit for the discount at year-end. The proposed 
amendment is not unfairly discriminatory because the eligible fees and 
the test for receiving the benefits of the discount will be the same 
for all listed companies.
    The above fee changes are not unfairly discriminatory because the 
same fee schedule will apply to all listed issuers. Further, the 
Exchange operates in a competitive environment and its fees are 
constrained by competition in the marketplace. Other venues currently 
list all of the categories of securities covered by the proposed fees 
and if a company believes that the Exchange's fees are unreasonable it 
can decide either not to list its securities or to list them on an 
alternative venue.
    The proposed removal of text relating to fees that are no longer 
applicable is ministerial in nature and has no substantive effect.

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 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.

[[Page 64393]]

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) \9\ of the Act and subparagraph (f)(2) of Rule 19b-
4 \10\ thereunder, because it establishes a due, fee, or other charge 
imposed by the Exchange.
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    \9\ 15 U.S.C. 78s(b)(3)(A).
    \10\ 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) \11\ of the Act to determine whether the proposed 
rule change should be approved or disapproved.
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    \11\ 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 rule-comments@sec.gov. Please include 
File Number SR-NYSE-2018-57 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-2018-57. 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-2018-57 and should be submitted on 
or before January 4, 2019.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\12\
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    \12\ 17 CFR 200.30-3(a)(12).
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Eduardo A. Aleman,
Deputy Secretary.
[FR Doc. 2018-27084 Filed 12-13-18; 8:45 am]
 BILLING CODE 8011-01-P