Document ID: SEC-2006-1597-0001
Agency: sec
Document Type: Notice
Title: Self-regulatory organizations; proposed rule changes: New York Stock Exchange LLC
Posted Date: 2006-12-08T05:00Z

[Federal Register: December 8, 2006 (Volume 71, Number 236)]
[Notices]               
[Page 71219-71221]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr08de06-147]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-54849; File No. SR-NYSE-2006-104]

 
Self-Regulatory Organizations; New York Stock Exchange LLC; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To 
Waive Initial Listing Fee and One-Time Special Charge in Connection 
With Listing New Class of Common Shares Payable by Any Company Listed 
on Another National Securities Exchange That Transfers the Listing of 
Its Primary Class of Common Shares to the NYSE

November 30, 2006.
    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 November 29, 2006, The New York Stock Exchange LLC 
(``Exchange'' or ``NYSE'') filed with the Securities and Exchange 
Commission (``Commission'') the proposed rule change as described in 
Items I and II below, which Items have been prepared substantially by 
NYSE. The Exchange filed the proposal as a ``non-controversial'' 
proposed rule change pursuant to Section 19(b)(3)(A) of the Act,\3\ and 
Rule 19b-4(f)(6) thereunder,\4\ which renders the proposal effective 
upon filing with the Commission.\5\ 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.
    \3\ 15 U.S.C. 78s(b)(3)(A).
    \4\ 17 CFR 240.19b-4(f)(6).
    \5\ NYSE gave the Commission written notice of its intention to 
file the proposed rule change on November 29, 2006. The Commission 
reviewed the proposed rule change and gave NYSE permission to file 
the proposed rule change on the same day. NYSE has asked the 
Commission to waive the 30-day operative delay. See Rule 19b-
4(f)(6)(iii). 17 CFR 240.19b-4(f)(6)(iii).
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    NYSE proposes to amend Section 902.03 of its Listed Company Manual 
to provide that there shall be no initial listing fee payable by any 
company listed on another national securities exchange that transfers 
the listing of its primary class of common shares to the Exchange. The 
Exchange will eliminate initial listing fees for issuers listed on 
other national securities exchanges that transfer their listing to the 
Exchange on or after November 29, 2006. In addition, the Exchange will 
waive with respect to such issuers the special one-time charge of 
$37,500 payable in connection with the initial listing of any class of 
common shares. The text of the proposed rule change is available at 
http://www.nyse.com, at the NYSE, 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, NYSE 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 these statements may be examined at the places specified in 
Item IV below. NYSE has prepared summaries, set forth in Sections A, B, 
and C below, of the most significant aspects of such statements.

A. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    NYSE proposes to amend Section 902.03 of its Listed Company Manual 
to provide that there shall be no initial listing fee payable by any 
company listed on another national securities exchange that transfers 
the listing of its primary class of common shares to the Exchange. NYSE 
will eliminate entry and application fees for exchange issuers that 
transfer their listing to the Exchange on or after November 29, 2006. 
In addition, the Exchange will waive with respect to such issuers the 
special one-time charge of $37,500 payable in connection with the 
initial listing of any class of common shares. For issuers that have 
paid these fees, the Exchange will refund the money. Companies 
transferring from other national securities exchanges will still be 
required to pay the annual listing fee payable by all companies, 
prorated for the first portion of a calendar year after the listing 
date.
    Companies transferring from other national securities exchanges 
will be subject to the same level of annual fees and listing of 
additional shares fees as other NYSE issuers. The proposed rule change 
will not affect the Exchange's commitment of resources to its 
regulatory oversight of the listing

[[Page 71220]]

process or its regulatory programs. Specifically, companies that switch 
their listing 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 believes that the elimination of such fees is 
justified on several grounds. An issuer that already paid initial 
listing fees to an exchange when it became a publicly traded company is 
reluctant to pay a second initial listing fee to another listing venue, 
even if it concludes that the Exchange offers the issuer and its 
investors superior services and market quality. Even if an issuer 
concludes that the Exchange would provide a superior market for its 
stock, the benefits of the switch must currently be weighed against the 
cost of initial inclusion, which can be as much as $250,000. Since the 
expected benefits of the switch would be diffused among the issuers' 
investors and realized over time, but the initial listing fees must be 
paid by the issuer immediately, the Exchange is concerned that issuers 
that stand to benefit may nevertheless opt to forgo a switch. As such, 
the Exchange believes that assessing the initial fees against issuers 
that have already paid fees to list on another market imposes a burden 
on the competition between exchange markets and markets other than 
exchange markets, a competition that the Exchange believes is one of 
the central goals of the national market system. This concern is 
particularly great in light of the fact that the Commission has 
approved the waiver of initial listing fees by Nasdaq with respect to 
companies transferring from other national securities exchanges.\6\
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    \6\ See Securities Exchange Act Release Nos. 50740 (November 29, 
2004), 69 FR 70299 (December 3, 2004) (SR-NASD-2004-140) (notice) 
and 51004 (January 10, 2005), 70 FR 2917 (January 18, 2005) 
(approval order).
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    The Exchange understands that the effect of this proposed rule 
change will be to impose a lower level of listing fees on switching 
issuers than on some other issuers. In light of the fact that the 
Exchange will collect the same level of annual fees and listing of 
additional shares fees from such issuers, however, the Exchange 
believes that the difference does not constitute an inequitable 
allocation of fees. In light of a switching issuer's prior payment to 
another market, the Exchange believes that eliminating initial fees for 
switching issuers is entirely consistent with an equitable allocation 
of listing fees.
    The Exchange does not expect the financial impact of this proposed 
rule change to be material, either in terms of increased levels of 
annual fees from switching issuers or in terms of diminished entry 
fees. Quite simply, even with the proposed rule change in place, the 
Exchange understands that a change in listing venue is a major step for 
an issuer, and therefore the Exchange does not expect that the number 
of switching issuers in a given time frame will be sufficient to have a 
material effect on financial resources. 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.
2. Statutory Basis
    NYSE believes the proposed rule change is consistent with the 
requirement under Section 6(b)(4) \7\ of the Act 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, and the requirement under Section 6(b)(5) \8\ of the Act 
that an exchange have rules that are designed to remove impediments to 
and perfect the mechanism of a free and open market and a national 
market system and are not designed to permit unfair discrimination 
between issuers. In light of a switching issuer's prior payment to 
another market, the Exchange believes that the proposed fee waiver does 
not render the allocation of its listing fees inequitable or unfairly 
discriminatory because the Exchange expects that, on average, the 
review of companies transferring from other national securities 
exchanges to the Exchange will be less costly than the review of a 
previously unlisted company, as the issuer will have previously been 
subject to corporate governance requirements very similar to those of 
the Exchange. The Exchange believes that the fee waiver will make it 
easier for companies to transfer among national securities exchanges 
and will remove a competitive disadvantage the Exchange currently has 
vis a vis Nasdaq and is therefore designed to perfect the mechanism of 
a free and open market.
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    \7\ 15 U.S.C. 78f(b)(4).
    \8\ 15 U.S.C. 78f(b)(5).
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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 purpose of the Act.

C. Self-Regulatory Organization's Statement on Comments on the Proposed 
Rule Change Received From Members, Participants or Others

    The Exchange has neither solicited nor received written comments on 
the proposed rule change.

III. Date of Effectiveness of the Proposed Rule Change and Timing for 
Commission Action

    Because the foregoing proposed rule change does not: (i) 
Significantly affect the protection of investors or the public 
interest; (ii) impose any significant burden on competition; and (iii) 
become operative for 30 days from the date on which it was filed, or 
such shorter time as the Commission may designate if consistent with 
the protection of investors and the public interest, the proposed rule 
change has become effective pursuant to Section 19(b)(3)(A) of the Act 
\9\ and Rule 19b-4(f)(6) thereunder.\10\
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    \9\ 15 U.S.C. 78s(b)(3)(A).
    \10\ 17 CFR 240.19b-4(f)(6).
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    At any time within 60 days of the filing of such proposed rule 
change, the Commission may summarily abrogate 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.
    NYSE has asked that the Commission waive the 30-day operative delay 
contained in Rule 19b-4(f)(6)(iii) under the Act.\11\ Because waiver of 
these fees will enable NYSE to compete for listings with Nasdaq, the 
Commission believes waiver of the 30-day operative delay is consistent 
with the protection of investors and the public interest. Accordingly, 
the Commission designates the proposal to be effective and operative 
upon filing with the Commission.\12\
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    \11\ 17 CFR 240.19b-4(f)(6)(iii).
    \12\ For purposes only of waiving the 30-day operative delay of 
this proposal, the Commission has considered the proposed rule's 
impact on efficiency, competition, and capital formation. 15 U.S.C. 
78c(f).
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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:

[[Page 71221]]

Electronic Comments

     Use the Commission's Internet comment form (http://www.sec.gov/rules/sro.shtml.
); or     Send an e-mail to rule-comments@sec.gov. Please include 

File Number SR-NYSE-2006-104 on the subject line.

Paper Comments

     Send paper comments in triplicate to Nancy M. Morris, 
Secretary, Securities and Exchange Commission, Station Place, 100 F 
Street, NE., Washington, DC 20549-1090.

All submissions should refer to File Number SR-NYSE-2006-104. This file 
number should be included on the subject line if e-mail 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 inspection and 
copying in the Commission's Public Reference Room. Copies of such 
filing also will be available for inspection and copying at the 
principal office of NYSE. 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 available publicly. All submissions should refer to File Number 
SR-NYSE-2006-104 and should be submitted on or before December 29, 
2006.

    For the Commission, by the Division of Market Regulation, 
pursuant to delegated authority.\13\
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    \13\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. E6-20885 Filed 12-7-06; 8:45 am]

BILLING CODE 8011-01-P