Document ID: SEC-2021-0066-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: New York Stock Exchange, LLC
Posted Date: 2021-01-15T05:00Z

[Federal Register Volume 86, Number 10 (Friday, January 15, 2021)]
[Notices]
[Pages 4166-4168]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2021-00817]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-90893; File No. SR-NYSE-2020-94]

Self-Regulatory Organizations; New York Stock Exchange LLC; Order 
Granting Approval of Proposed Rule Change To Amend Section 907.00 of 
the Manual To Extend the Period of Time for the Entitlement of Certain 
Eligible Issuers To Receive Complimentary Products and Services Under 
That Rule

January 11, 2021.

I. Introduction

    On November 6, 2020, 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'') \1\ and Rule 19b-4 thereunder,\2\ a 
proposed rule change to amend Section 907.00 of the NYSE Listed Company 
Manual (``Manual'') to extend the period of time for certain eligible 
issuers to be entitled to receive complimentary products and services 
under the rule. The proposed rule change was published in the Federal 
Register on November 27, 2020.\2\ The Commission received no comments 
on the proposal. This order grants approval of the proposed rule 
change.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ See Securities Exchange Act Release No. 90466 (November 20, 
2020), 85 FR 76129 (``Notice'').
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II. Description of the Proposal

    As set forth in Section 907.00 of the Manual, the Exchange offers 
certain complimentary products and services and access to discounted 
third-party products and services through the NYSE Market Access Center 
to currently and newly listed issuers, as described on the Exchange's 
website. In addition, the Exchange provides all listed issuers with 
complimentary access to whistleblower hotline services (with a 
commercial value of approximately $4,000 annually) for a period of 24 
calendar months.\3\ The Exchange also provides additional complimentary 
products and services to certain

[[Page 4167]]

categories of currently and newly listed issuers, which complimentary 
services include market surveillance products and services (with a 
commercial value of approximately $55,000 annually), web-hosting 
products and services (with a commercial value of approximately $16,000 
annually), web-casting services (with a commercial value of 
approximately $6,500 annually), market analytics products and services 
(with a commercial value of approximately $30,000 annually), and news 
distribution products and services (with a commercial value of 
approximately $20,000 annually).\4\
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    \3\ See Section 907.00 of the Manual.
    \4\ See id.
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    Section 907.00 of the Manual currently provides that the Exchange 
will offer complimentary products and services to Eligible New Listings 
\5\ and Eligible Transfer Companies \6\ based on two tiers as follows: 
\7\ (i) for Eligible New Listings and Eligible Transfer Companies with 
a global market value of $400 million or more, in each case calculated 
as of the date of listing on the Exchange,\8\ the Exchange offers 
market surveillance, market analytics, web-hosting, webcasting, and 
news distribution products and services for a period of 24 calendar 
months (``Tier A''); and (ii) for Eligible New Listings and Eligible 
Transfer Companies with a global market value of less than $400 
million, in each case calculated as of the date of listing on the 
Exchange, the Exchange offers web-hosting, market analytics, web-
casting, and news distribution products and services for a period of 24 
calendar months (``Tier B'').\9\ NYSE states that the products and 
services offered to Eligible New Listings and Eligible Transfer 
Companies under Section 907.00 of the Manual as part of the 
complimentary offering that is limited to those categories of issuers 
are, and under the proposal will continue to be, provided solely by 
third-party vendors.
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    \5\ For the purposes of Section 907.00, the term ``Eligible New 
Listing'' means (i) any U.S. company that lists common stock on the 
Exchange for the first time and any non-U.S. company that lists an 
equity security on the Exchange under Section 102.01 or 103.00 of 
the Manual for the first time, regardless of whether such U.S. or 
non-U.S. company conducts an offering and (ii) any U.S. or non-U.S. 
company emerging from a bankruptcy, spinoff (where a company lists 
new shares in the absence of a public offering), and carve-out 
(where a company carves out a business line or division, which then 
conducts a separate initial public offering).
    \6\ For purposes of Section 907.00, the term ``Eligible Transfer 
Company'' means any U.S. or non-U.S. company that transfers its 
listing of common stock or equity securities, respectively, to the 
Exchange from another national securities exchange. For purposes of 
Section 907.00, an ``equity security'' means common stock or common 
share equivalents such as ordinary shares, New York shares, global 
shares, American Depository Receipts, or Global Depository Receipts.
    \7\ Section 907.00 of the Manual provides for separate service 
entitlements for acquisition companies listed under Section 102.06 
and the issuers of Equity Investment Tracking Stocks listed under 
Section 102.07. See Notice, supra note 2, at 76129, n.6.
    \8\ Global market value for an Eligible New Listing and Eligible 
Transfer Company is based on the public offering price; if there is 
no public offering in connection with listing on the Exchange, then 
the Exchange shall determine the issuer's global market value at the 
time of listing for purposes of determining whether the issuer 
qualifies for Tier A or B. See Section 907.00 of the Manual.
    \9\ See Section 907.00 of the Manual. The Exchange offers to 
certain companies currently listed on the Exchange (``Eligible 
Current Listings'') a suite of complimentary products and services 
that vary depending on the number of shares of common stock (for 
U.S. issuers) or other equity security (for non-U.S. issuers) that a 
company has issued and outstanding. At the conclusion of the 24-
month period, Eligible New Listings and Eligible Transfer Companies 
would be eligible to receive products and services offered to 
Eligible Current Listings if they qualify under Section 907.00 of 
the Manual. See id.
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    The Exchange proposes to amend Section 907.00 of the Manual to 
extend the period for which Eligible New Listings and Eligible Transfer 
Companies that list on or after the date of Commission approval of the 
proposal \10\ are eligible to receive complimentary products and 
services from 24 calendar months to 48 calendar months for both Tier A 
and Tier B issuers.\11\ The complimentary products and services offered 
to Eligible New Listings and Eligible Transfer Companies for 48 
calendar months under the proposal will remain the same products and 
services as those currently provided to such companies pursuant to 
Section 907.00 of the Manual, as described above. At the conclusion of 
the 48-month period, Eligible New Listings and Eligible Transfer 
Companies would continue to be eligible to receive products and 
services offered to Eligible Current Listings if they qualify under 
Section 907.00 of the Manual.\12\
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    \10\ The Exchange stated that the proposed amendment would be 
applicable to Eligible New Listings and Eligible Transfer Companies 
that list on or after the date of Commission approval of the 
proposal. See Notice, supra note 2, at 76129. NYSE has stated that 
it will file a rule proposal to clarify in Section 907.00 of the 
Manual that listed companies that began receiving complimentary 
products and services as Eligible New Listings and Eligible Transfer 
Companies under the rule in effect prior to approval of this 
proposal will receive such complimentary products and services only 
for 24 months from the date of listing, as set forth under the prior 
rule.
    \11\ Eligible New Listings and Eligible Transfer Companies will 
continue to be entitled to complimentary whistleblower services for 
24 months, as all listed companies currently receive under Section 
907.00 of the Manual. See Notice, supra note 2, at 76129, n.7. See 
also Section 907.00 of the Manual.
    \12\ See proposed Section 907.00 of the Manual. See also supra 
note 9.
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    The Exchange also proposes to remove two obsolete provisions of 
Section 907.00 of the Manual that relate to entitlements that no longer 
exist because the periods of time for which they were effective have 
ended.\13\
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    \13\ Specifically, the Exchange proposes to remove the following 
text from Section 907.00: ``In addition, Eligible New Listings in 
both Tier A and Tier B that list before April 1, 2018 are eligible 
to receive complimentary corporate governance tools (with a 
commercial value of approximately $50,000 annually) for a period of 
24 calendar months. Companies that list on or after April 1, 2018 
will not be eligible to receive any corporate governance tools.''
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III. Discussion and Commission's Findings

    The Commission has carefully reviewed the proposed rule change and 
finds that it is consistent with the requirements of Section 6 of the 
Act.\14\ Specifically, the Commission believes it is consistent with 
the provisions of Sections 6(b)(4) and (5) of the Act,\15\ in 
particular, in that it is designed to provide for the equitable 
allocation of reasonable dues, fees, and other charges among Exchange 
members, issuers, and other persons using the Exchange's facilities, 
and is not designed to permit unfair discrimination between customers, 
issuers, brokers, or dealers. Moreover, the Commission believes that 
the proposed rule change is consistent with Section 6(b)(8) of the Act 
\16\ in that it does not impose any burden on competition not necessary 
or appropriate in furtherance of the purposes of the Act.
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    \14\ 15 U.S.C. 78f. 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).
    \15\ 15 U.S.C. 78f(b)(4) and (5).
    \16\ 15 U.S.C. 78f(b)(8).
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    The Commission believes that the Exchange is responding to 
competitive pressures in the market for listings in making this 
proposal.\17\ The Exchange represents that the market for new listings 
and for the retention and transfer of listed companies is intensely 
competitive and the Commission understands that the Exchange competes, 
in part, by offering complimentary services to companies.\18\ The 
Exchange states that the purpose of this proposal is to attract future 
new listings and transfers and, according to

[[Page 4168]]

the Exchange, extending the time period that products and services are 
available to Eligible New Listings and Eligible Transfer Companies will 
help the Exchange to compete for new listings and transfers from other 
exchanges.\19\ In addition, as noted by the Exchange, the Nasdaq Stock 
Market, Inc. (``Nasdaq'') currently provides four years of 
complimentary services to companies transferring from NYSE to the 
Nasdaq Global Market that have a market capitalization of at least $750 
million.\20\ Accordingly, the Commission believes that it is reasonable 
and consistent with Sections 6(b)(4) \21\ and 6(b)(5) of the Act \22\ 
for the Exchange to extend the time period that it offers complimentary 
products and services to Eligible New Listings and Eligible Transfer 
Companies that list on or after the date of Commission approval of the 
proposal from 24 calendar months to 48 calendar months. In addition, 
the Commission believes that the proposal reflects the current 
competitive environment for exchange listings among national securities 
exchanges, and is appropriate and consistent with Section 6(b)(8) of 
the Act.\23\
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    \17\ See Securities Exchange Act Release No. 65127 (Aug. 12, 
2011), 76 FR 51449 (Aug. 18, 2011) (SR-NYSE-2011-20) (``2011 
Approval Order''). As stated above, the products and services 
offered to Eligible New Listings and Eligible Transfer Companies 
discussed herein are provided by third-party vendors. In its 
proposal, the Exchange stated that issuers are not forced or 
required to use the complimentary products and services and some 
issuers have selected competing products and services. See Notice, 
supra note 2, at 76130.
    \18\ See Notice, supra note 2, at 76129-30.
    \19\ See Notice, supra note 2, at 76129-30.
    \20\ See Nasdaq Marketplace Rule IM-5900-7.
    \21\ 15 U.S.C. 78f(b)(4).
    \22\ 15 U.S.C. 78f(b)(5).
    \23\ 15 U.S.C. 78f(b)(8).
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    The Commission has previously found that the package of 
complimentary services offered to Eligible New Listings and Eligible 
Transfer Companies is equitably allocated among issuers consistent with 
Section 6(b)(4) of the Act.\24\ The Commission notes that all listed 
companies will continue to receive some level of free services and 
that, within each tier, all issuers will continue to receive the exact 
same package of services, for the same period of time. Given that under 
the proposal Eligible New Listings and Eligible Transfer Companies 
within each tier will continue to receive the same complimentary 
products and services for the same period of time, the Commission 
continues to believe that the package of complimentary services is 
equitably allocated among issuers consistent with Section 6(b)(4) of 
the Act \25\ and the rule does not unfairly discriminate between 
issuers consistent with Section 6(b)(5) of the Act.\26\
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    \24\ See 2011 Approval Order, supra note 17, 76 FR at 51452. See 
also Exchange Act Release No. 76127 (Oct. 9, 2015), 80 FR 62584, 
62587 (Oct. 15, 2015) (SR-NYSE-2015-36) (``2015 Approval Order'').
    \25\ 15 U.S.C. 78f(b)(4).
    \26\ 15 U.S.C. 78f(b)(5).
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    The Commission believes that describing in the Exchange's rules the 
products and services available to listed companies, their associated 
values, and the length of time for which issuers are entitled to 
receive such services adds greater transparency to the Exchange's rules 
and to the fees applicable to listed companies and will ensure that 
individual listed companies are not given specially negotiated packages 
of products or services to list, or remain listed, which would raise 
unfair discrimination issues under the Act.\27\ The Commission also 
believes that it is reasonable, and in fact required by Section 19(b) 
of the Act, that the Exchange amend its rules to update the products 
and services it offers to Eligible Current Listings, Eligible Transfer 
Companies, and Eligible New Listings, including the time periods for 
which such products and services are offered and the commercial value 
of such products and services. This provides greater transparency to 
the Exchange's rules and the fees, and the value of free products and 
services, applicable to listed companies. Based on the foregoing, the 
Commission believes that the Exchange has provided a sufficient basis 
for offering Eligible New Listings and Eligible Transfer Companies 
complimentary products and services for a period of 48 calendar months, 
and that this change does not unfairly discriminate among issuers and 
is consistent with the Act.
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    \27\ See 2015 Approval Order, supra note 24, 80 FR at 62587. The 
Commission notes that the Exchange also stated that no other company 
will be required to pay higher fees as a result of the proposal and 
that providing the proposed services will have no impact on the 
resources available for its regulatory programs. See Notice, supra 
note 2, at 76130.
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    Finally, the Commission believes it is consistent with the Act for 
the Exchange to remove obsolete provisions of rule text in order to 
provide greater transparency to the Exchange's rules and fees and to 
avoid confusion.

IV. Conclusion

    It is therefore ordered, pursuant to Section 19(b)(2) of the 
Act,\28\ that the proposed rule change (SR-NYSE-2020-94) be, and it 
hereby is, approved.
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    \28\ 15 U.S.C. 78s(b)(2).
    \29\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\29\
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2021-00817 Filed 1-14-21; 8:45 am]
BILLING CODE 8011-01-P