Document ID: SEC-2007-0695-0001
Agency: sec
Document Type: Notice
Title: Self-regulatory organizations; proposed rule changes: NYSE Arca Inc.
Posted Date: 2007-05-17T04:00Z

[Federal Register: May 17, 2007 (Volume 72, Number 95)]
[Notices]               
[Page 27895-27896]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr17my07-134]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-55743; File No. SR-NYSEArca-2007-24]

 
Self-Regulatory Organizations; NYSE Arca Inc.; Order Approving a 
Proposed Rule Change to Waive Certain Listing Fees

May 10, 2007

I. Introduction

    On February 28, 2007, NYSE Arca, Inc. (``NYSE Arca'' or 
``Exchange''), through its wholly owned subsidiary, NYSE Arca Equities, 
Inc., filed with the Securities and Exchange Commission 
(``Commission''), pursuant to Section 19(b)(1) of the Securities 
Exchange Act of 1934 (``Act'' or ``Exchange Act'') \1\ and Rule 19b-4 
thereunder,\2\ a proposal to waive certain listing fees. The proposal 
was published for comment in the Federal Register on March 16, 2007.\3\ 
The Commission received no comments on the proposal. This order 
approves the proposed rule change.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ See Securities Exchange Act Release No. 55430 (March 8, 
2007), 72 FR 12651 (the ``Notice'').
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II. Description of the Proposal

    The Exchange proposes to amend its listing fee schedule to provide 
that there shall be no initial listing fee applicable to (i) any 
company listing following emergence from bankruptcy, or (ii) any 
company listing its primary class of common stock that is not listed on 
a national securities exchange but is registered under the Act.
    The Exchange believes that the initial listing fee waiver for 
companies listing upon emergence from bankruptcy is justified the 
unique circumstances of those issuers, which, according to the NYSE, 
among other things, tend to be more sensitive to the initial and 
continued costs associated with listing because of the desire in 
bankruptcy proceedings to ensure creditors are paid as much as 
possible. According to the Exchange, because bankrupt companies face 
unique challenges in the listing process, and because the number of 
companies that will benefit from the fee waiver will be very limited, 
the Exchange does not believe that the treatment this proposal would 
afford to bankrupt companies constitutes an inequitable or unfairly 
discriminatory allocation of fees.
    In addition, the Exchange believes that waiving initial listing 
fees for a company listing its primary class of common stock which is 
registered under that Act but not listed on a national securities 
exchange is appropriate and does not constitute an inequitable or 
unfairly discriminatory allocation of fees. The Exchange anticipates 
that most companies taking advantage of this waiver will be formerly-
listed companies that were delisted as a result of a failure to timely 
file annual reports with the Commission. These companies usually seek 
to re-list on the Exchange as soon as their filings are up to date.\4\ 
According to the Exchange, because such companies had previously paid 
initial listing fees to the Exchange or to another national securities 
exchange, the Exchange believes that to make them pay these fees again 
would further penalize them unnecessarily.
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    \4\ In its filing, the Exchange stated that typically, such 
companies are otherwise in good standing with a national securities 
exchange, but fell behind on their reporting obligations under the 
Act because their auditors or the Commission required restatements 
of their financial statements. The Commission notes that the timely 
filing of accurate financial reports under the Act is critical to 
investors and our national market and assures that investors receive 
up to date financial information about listed companies.
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    The Exchange stated that other companies trading in the over-the-
counter market that have not previously been listed on a national 
securities exchange may seek to qualify for the waiver of initial 
listing fees. However, the Exchange believes that not many of these 
companies will be able to meet its quantitative initial listing 
standards, and thus does not believe that waiving initial listing fees 
for such companies will have a meaningful effect on the Exchange's 
revenue or constitute an inequitable or unfairly discriminatory 
allocation of fees.
    The Exchange has represented that the proposed rule change will not 
affect the Exchange's commitment of resources to its regulatory 
oversight of the listing process or its regulatory programs. Companies 
that benefit from one of the proposed waivers will be reviewed for 
compliance with Exchange listing standards in the same manner as any 
other company that applies to be listed on the Exchange. The Exchange 
will conduct a full and independent review of each issuer's compliance 
with the Exchange's listing standards.
    The Exchange also has represented that it does not expect the 
financial impact of this proposed rule change to be material, either in 
terms of increased levels of annual fees from transferring issuers or 
in terms of diminished initial listing fee revenues. A limited number 
of companies are qualified and seek to list on the Exchange that are 
either emerging from bankruptcy or have a registered class of common 
stock but are not currently listed on another market. Accordingly, the 
proposed rule change will not impact the Exchange's resource commitment 
to its regulatory oversight of the listing process or its regulatory 
programs.
    Following their approval, the Exchange would apply the amendments 
contained in the proposal retroactively to February 28, 2007, the date 
of filing of the proposed rule change.\5\
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    \5\ See supra note 3.
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III. Discussion

    After careful review, the Commission finds that the proposed rule 
change, as amended, is consistent with the requirements of the Act and 
the rules and regulations thereunder applicable to a national 
securities exchange.\6\ In particular, the Commission finds that the 
proposal is consistent with Section 6(b)(4) of the Act,\7\ which 
requires that an exchange have rules that provide for the equitable 
allocation of reasonable dues, fees, and other charges among its 
members and other persons using its facilities. The Commission also 
finds that the proposal is consistent with Section 6(b)(5) of the 
Act,\8\ which requires, inter alia, that the rules of a national 
securities exchange be designed to remove impediments to and perfect 
the mechanism of a free and open market and a national market system 
and not designed to permit unfair discrimination between issuers. The 
Commission has not received any comments on the proposal. This order 
approves the proposed rule change.
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    \6\ 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).
    \7\ 15 U.S.C. 78f(b)(4).
    \8\ 15 U.S.C. 78f(b)(5).
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    The Commission notes that companies who re-list upon emerging from 
bankruptcy or who re-list upon a return to good standing following 
delisting have usually paid listing fees to either the Exchange or to 
another national securities exchange at the time of their initial 
listing. For this reason, the Exchange argues, the waiver of listing 
fees constitutes an equitable allocation of reasonable fees.
    The Commission recognizes that, as drafted, the initial fee waiver 
would extend to companies that have never

[[Page 27896]]

listed on a national securities exchange, which thus have never paid 
listing fees. In this regard, the Exchange acknowledges that some 
companies other than those returning to good standing after recent 
delisting--e.g., a company trading on the over-the-counter market--may 
seek to take advantage of the waiver of listing fees for companies not 
listed on a national securities exchange but registered under the Act. 
However, the Exchange expects the number of such companies eligible for 
the waiver to be very small, since not many of these companies would 
meet the Exchange's quantitative listing requirements.
    The Commission also notes that the Exchange has represented that 
the waiver of listing fees should not have a material financial impact 
on the exchange, or impact the Exchange's resource commitment to its 
regulatory oversight of the listing process or its regulatory programs.
    Further, the proposal does not have any impact on whether a company 
is actually eligible to list on the Exchange. The Commission expects, 
and the Exchange has represented, that a full and independent review of 
compliance with listing standards will be conducted for any company 
seeking to take advantage of either of the fee waivers, just as for any 
company that applies for listing on the Exchange.
    In light of these arguments, the Commission agrees that the 
proposed waivers, which are retroactively effective to February 28, 
2007, the date of the filing of the proposed rule change,\9\ do not 
constitute an inequitable allocation of reasonable dues, fees, and 
other charges, do not permit unfair discrimination between issuers, and 
are generally consistent with the Act.
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    \9\ See supra note 3.
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IV. Conclusion

    It is therefore ordered, pursuant to Section 19(b)(2) of the 
Act,\10\ that the proposed rule change (File No. SR-NYSEArca-2007-24) 
be, and it hereby is, approved.
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    \10\ Id.
    \11\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\11\
Jill M. Peterson,
Assistant Secretary.
[FR Doc. E7-9439 Filed 5-16-07; 8:45 am]

BILLING CODE 8010-01-P