Document ID: SEC-2012-2137-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: NYSE MKT LLC
Posted Date: 2012-12-26T05:00Z

[Federal Register Volume 77, Number 247 (Wednesday, December 26, 2012)]
[Notices]
[Pages 76158-76160]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2012-30978]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-68469; File No. SR-NYSEMKT-2012-70]

Self-Regulatory Organizations; NYSE MKT LLC; Notice of Filing and 
Immediate Effectiveness of Proposed Rule Change To Amend Section 140 of 
the NYSE MKT LLC Company Guide To Introduce an Initial Application Fee

December 19, 2012.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(the ``Act'') \1\ and Rule 19b-4 thereunder,\2\ notice is hereby given 
that on December 6, 2012, NYSE MKT LLC (``NYSE MKT'' or ``Exchange'') 
filed with the Securities and Exchange Commission (``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\ 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 140 of its Company Guide to 
introduce an Initial Application Fee. The Exchange proposes to 
immediately reflect the proposed changes in the Company Guide, but not 
to implement the proposed changes until January 1, 2013. 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 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The Exchange proposes to amend Section 140 of its Company Guide to 
introduce an Initial Application Fee. The Exchange proposes to 
immediately reflect the proposed changes in the Company Guide, but not 
to implement the proposed changes until January 1, 2013.\3\
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    \3\ The Exchange has proposed changes to the Company Guide, as 
reflected in the Exhibit 5 attached hereto, in a manner that would 
permit readers of the Company Guide to identify the changes that 
would be implemented on January 1, 2013. The Commission notes that 
the Exhibit 5 referenced in the previous sentence is attached to the 
filing, not to this Notice.
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    The Exchange proposes to introduce an Initial Application Fee of 
$5,000 within Section 140 of the Company Guide, which would be 
effective January 1, 2013. An issuer would be required to pay an 
Initial Application Fee if it applied to list shares of common or 
preferred stock or common stock equivalents on the Exchange, including 
securities issued by non-U.S. companies, except that an issuer:

[[Page 76159]]

    (i) Applying to transfer from a national securities exchange to 
list exclusively on the Exchange; or
    (ii) Applying to list on the Exchange that is already listed on any 
other national securities exchange

would not be required to pay an Initial Application Fee in connection 
with its application for such listing or dual listing. Accordingly, 
issuers for which the Initial Application Fee waivers would be 
applicable would generally be the same as the issuers for which the 
Original Listing Fees would be waived, as provided in Section 140 of 
the Company Guide.\4\ The Initial Application Fee would be non-
refundable.
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    \4\ See Section 140 of the Company Guide. See also Securities 
Exchange Act Release Nos. 68117 (October 26, 2012), 77 FR 66207 
(November 2, 2012) (SR-NYSEMKT-2012-51), and 59560 (March 11, 2009), 
74 FR 11392 (March 17, 2009) (SR-NYSEALTR-2009-02). The Initial 
Application Fee would only apply with respect to the listing of 
common or preferred stock or common stock equivalents. Original 
Listing Fees are not limited in this respect.
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    In accordance with Section 201 of the Company Guide, an issuer 
applying to list an equity security on the Exchange is subject to a 
preliminary confidential review by NYSE Regulation, Inc. (``NYSER'') in 
which NYSER determines the issuer's qualification for listing. If NYSER 
determines in connection with this preliminary confidential review that 
the issuer is qualified for listing, the issuer is informed that it has 
been cleared as eligible to list and that the Exchange will accept a 
formal Original Listing Application from the Issuer. It is the 
Exchange's practice to notify the issuer of its eligibility clearance 
and the conditions to its listing by means of a letter (the ``pre-
clearance'' letter).
    For an issuer subject to the Initial Application Fee, its payment 
would be a prior condition to eligibility clearance being granted. As a 
practical matter, the Exchange anticipates that an issuer would pay the 
Initial Application Fee after NYSER has completed its preliminary 
confidential review and has determined that the issuer is eligible to 
submit a formal Original Listing Application, but before the ``pre-
clearance'' letter has been issued. Typically, the Exchange is in 
contact with an issuer prior to the issuance of a ``pre-clearance'' 
letter and provides oral confirmation of the issuer's eligibility 
clearance prior to the issuance of the ``pre-clearance'' letter.
    The Initial Application Fee would be applied towards the applicable 
Original Listing Fees for an issuer that lists common or preferred 
stock or common stock equivalents on the Exchange. If an issuer paid an 
Initial Application Fee in connection with the application to list 
common or preferred stock or common stock equivalents but did not 
immediately list such security, the Issuer would not be required to pay 
a subsequent Initial Application Fee if it later listed such security 
so long as (i) the issuer had a registration statement regarding such 
security on file with the Commission, or, (ii) if the issuer withdrew 
its registration statement, the issuer refiled a registration statement 
regarding such security within 12 months of the date of such 
withdrawal. The Exchange is proposing the Initial Application Fee 
because it would allow the Exchange to recover, in part, the costs 
associated with processing and evaluating an issuer's application, 
irrespective of whether the relevant issuance qualifies for listing or 
whether such issuer decides to list on the Exchange. In addition, the 
Initial Application Fee would provide a disincentive for impractical 
applications by issuers. The proposed change is not otherwise intended 
to address any other matter, and the Exchange is not aware of any 
significant problem that issuers would have in complying with the 
proposed change.
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with Section 6(b) of the Securities Exchange Act of 1934 (the 
``Act''),\5\ in general, and furthers the objectives of Section 6(b)(4) 
and 6(b)(5) of the Act,\6\ in particular, because it provides for the 
equitable allocation of reasonable dues, fees, and other charges among 
its members, issuers and other persons using its facilities and does 
not unfairly discriminate between customers, issuers, brokers or 
dealers.
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    \5\ 15 U.S.C. 78f(b).
    \6\ 15 U.S.C. 78f(b)(4) and 15 U.S.C. 78f(b)(5).
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    The Exchange believes that the proposed Initial Application Fee of 
$5,000 is reasonable because it would allow the Exchange to recover, in 
part, the costs associated with processing and evaluating an issuer's 
application, irrespective of whether the relevant issuance qualifies 
for listing or whether such issuer decides to list on the Exchange. In 
this regard, the Exchange believes that the Initial Application Fee of 
$5,000 is reasonably related to the amount of time, resources and cost 
associated with the Exchange's review of an initial application for 
listing common or preferred stock or common stock equivalents, 
including securities issued by non-U.S. companies.\7\ Furthermore, the 
Exchange believes that the Initial Application Fee is reasonable 
because it would provide a disincentive for impractical applications by 
issuers.
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    \7\ The Exchange notes that NASDAQ charges a non-refundable 
$5,000 application fee to issuers on The NASDAQ Capital Market. See 
NASDAQ Rule 5920. See also Securities Exchange Act Release No. 59663 
(March 31, 2009), 74 FR 15552 (April 6, 2009) (SR-NASDAQ-2009-018). 
NASDAQ also charges a non-refundable $25,000 application fee to 
issuers on The NASDAQ Global Market. See NASDAQ Rule 5910. See also 
Securities Exchange Act Release No. 61669 (March 5, 2010), 75 FR 
11958 (March 12, 2010) (SR-NASDAQ-2009-081).
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    The Exchange believes that the Initial Application Fee is equitable 
and not unfairly discriminatory because it would be charged to all 
issuers that apply for listing common or preferred stock or common 
stock equivalents on the Exchange, except, as proposed, those issuers 
that qualify for a waiver. In this regard, the Exchange believes that 
it is equitable and not unfairly discriminatory to charge an Initial 
Application Fee to issuers that apply to list common or preferred stock 
or common stock equivalents on the Exchange, but not to issuers of 
other types of securities. Specifically, while the Exchange conducts a 
comprehensive and thorough review of every listing application it 
receives, regardless of security type or issuer, the Exchange believes 
that its costs associated with processing and evaluating an issuer's 
application to list common or preferred stock or common stock 
equivalents on the Exchange are generally significantly higher than the 
costs associated with other types of securities, such that it is 
equitable and not unfairly discriminatory to charge the Initial 
Application Fee only to issuers of common or preferred stock or common 
stock equivalents. In this regard, the Exchange notes that the review 
that is required to be performed with respect to an issuer of common or 
preferred stock or common stock equivalents is more extensive than that 
required for the review of, for example, an issuer of a closed-end 
fund.
    The Exchange also believes that it is reasonable to provide a 
waiver of the Initial Application Fee to an issuer applying to transfer 
from a national securities exchange to list exclusively on the Exchange 
or applying to list on the Exchange that is already listed on any other 
national securities exchange because the issuer would have already paid 
a listing fee and may have already paid an application fee to the other 
exchange for the initial application to list on that market.\8\ 
Accordingly, it is

[[Page 76160]]

reasonable to not charge the Initial Application Fee so as to avoid 
double-charging issuers for the listing of their shares of common or 
preferred stock or common stock equivalents. It is also equitable and 
not unfairly discriminatory to waive the Initial Application Fee 
because all such issuers would be eligible for the waiver of the 
Initial Application Fee. It is also equitable and not unfairly 
discriminatory because such issuers would be under no obligation to 
transfer their listing to the Exchange or dually list on the Exchange 
and would be disincentivized to do so if they were subject to the 
Initial Application Fee. In this regard, the waiver would contribute to 
providing issuers with the ability to choose the listing market that 
best suits their needs and that is the ideal market for listing their 
shares of common or preferred stock or common stock equivalents.
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    \8\ See Id. [sic].
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    Overall, the Exchange believes that instances of the Initial 
Application Fee waiver being granted to issuers that apply to list on 
the Exchange will be relatively rare. Accordingly, the Exchange does 
not anticipate that it will experience any meaningful diminution in 
revenue as a result of the proposed waiver and therefore does not 
believe that the proposed waiver would in any way negatively affect its 
ability to continue to adequately fund its regulatory program or the 
services that the Exchange provides to issuers.

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.

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 NYSE MKT.
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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.

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-NYSEMKT-2012-70 on the subject line.

Paper Comments

     Send paper comments in triplicate to Elizabeth M. Murphy, 
Secretary, Securities and Exchange Commission, 100 F Street NE., 
Washington, DC 20549-1090.
All submissions should refer to File Number SR-NYSEMKT-2012-70. 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 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 publicly available. All 
submissions should refer to File Number SR-NYSEMKT-2012-70 and should 
be submitted on or before January 16, 2013.
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    \11\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\11\
Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2012-30978 Filed 12-21-12; 4:15 pm]
BILLING CODE 8011-01-P