Document ID: SEC-2019-1986-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: New York Stock Exchange LLC
Posted Date: 2019-12-30T05:00Z

[Federal Register Volume 84, Number 249 (Monday, December 30, 2019)]
[Notices]
[Pages 72047-72050]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-28077]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-87832; File No. SR-NYSE-2019-63]

Self-Regulatory Organizations; New York Stock Exchange LLC; 
Notice of Filing and Immediate Effectiveness of a Proposed Rule Change 
Amending Annual Listing Fees for Equity Securities, Debt Securities, 
and Listed Structured Products Traded on NYSE Bonds

December 20, 2019.
    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 December 13, 2019, 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, 2020. These 
amendments only reflect changes in the amounts charged for listed 
securities and do not reflect any change in the services provided to 
the issuer in connection with such listing.
Annual Fees for Common Equity Securities
    The annual fee set forth in Section 902.03 of the Manual will 
increase from $0.00110 per share to $0.00113 per share for each of the 
following: A primary class of common shares (including Equity 
Investment Tracking

[[Page 72048]]

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 
primary class is common or preferred stock); and each class of 
warrants. In addition, the minimum annual fee will be increased from 
$68,000 to $71,000 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 make the aforementioned fee increases in 
Section 902.03 to better reflect the Exchange's costs related to 
listing equity securities and the corresponding value of such listing 
to issuers. The Exchange's costs of servicing the listing of an equity 
security include the resources devoted to the required regulatory 
oversight, the processing of corporate actions, and the maintenance of 
the client relationship. Many of these costs have increased due to 
inflation and other factors over the period since the current fee 
levels were adopted. The revised fees will be applied in the same 
manner to all issuers with listed securities in the affected categories 
and the changes will not disproportionately affect any specific 
category of issuers.
Annual Fees for Securities Subject to Section 902.08
    The Exchange proposes to amend its annual fees for structured 
products listed under Section 703.19 and traded on NYSE Bonds and all 
debt securities listed under Sections 102.03 and 103.05 (excluding non-
listed debt of NYSE issuers and affiliate companies and domestic listed 
debt of issuers exempt from registration under the Exchange Act) 
(collectively ``NYSE Bonds Securities'') with effect in the calendar 
year starting January 1, 2020. Under the current rule, an issuer must 
pay a separate annual fee for each listed NYSE Bonds Security at a flat 
rate of $25,000 per listed issuance (except that non-NYSE issuers \4\ 
listing debt securities under Sections 102.03 and 103.05 are charged a 
$45,000 annual fee). The proposed annual fee schedule for all NYSE 
Bonds Securities (including debt of non-NYSE issuers) is as follows:
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    \4\ I.e., companies that do not have their common equity 
securities listed on the Exchange.

If the issuer has at least one and no more than five listed NYSE Bonds 
Securities: $25,000
If the issuer has at least six and no more than 10 listed NYSE Bonds 
Securities: $50,000
If the issuer has at least 11 and no more than 15 listed NYSE Bonds 
Securities: $75,000
If the issuer has more than 15 listed NYSE Bonds Securities: $100,000

    It has been the Exchange's experience that there are both 
regulatory and customer service efficiencies in dealing with multiple 
classes of such securities listed by the same issuer. In light of these 
facts, the Exchange believes that the proposed tiered approach to 
annual fees under Section 902.08 better reflects the Exchange's 
resource allocation and costs than is the case with the current fee 
structure. The revised fee schedule will be applied to all issuers of 
NYSE Bond Securities in the same manner. The proposed tiering structure 
will result in issuers that have larger numbers of listed issuances of 
NYSE Bond Securities paying a lower effective annual fee rate per 
issuance. The Exchange believes that this fee differential is 
appropriate in light of the efficiencies described above. While the 
Exchange recognizes that this will result in a significant reduction in 
the amount paid per listed security by some issuers, it believes this 
reduction reasonably reflects the incremental resources devoted to 
listing additional securities of the same issuer. The tiering approach 
will also enable the Exchange to respond to a changing and increasingly 
competitive landscape for the listing of these types of securities.
Initial Listing Fees for Bonds of Non-NYSE Issuers
    In addition to adopting the same tiering approach to annual fees 
for debt of non-NYSE listed companies as for debt of NYSE listed 
companies, the Exchange also proposes to reduce the initial listing fee 
for debt of non-NYSE listed companies from $45,000 to $25,000, which is 
the same rate charged to NYSE listed companies. While the Exchange has 
previously adopted a separate fee schedule for the listing of bonds of 
non-NYSE issuers on the grounds that it believed the cost of servicing 
those listings was meaningfully higher, the Exchange has concluded 
based on its more recent observation that the regulatory and other 
resources it expends in servicing the listing of a debt issuance of a 
non-NYSE listed issuer are not actually meaningfully greater at this 
time than those expended in relation to the listed debt of an NYSE 
company. The proposed fee reduction will also enable the Exchange to 
respond to a changing and increasingly competitive landscape for the 
listing of these types of securities. For the foregoing reasons, the 
Exchange believes it is appropriate to charge the same initial and 
annual listing fees for all NYSE Bond Securities, regardless of whether 
the issuer's common equity is listed on the Exchange.
Waiver of Initial Listing Fee and Prorated Annual Fee for Transfers
    The Exchange proposes to waive initial listing fees and the 
prorated annual listing fee with respect to the first part year of 
listing for any NYSE Bonds Security that lists upon transfer from 
another national securities exchange. The Exchange notes that companies 
transferring in mid-year will already have paid listing fees for that 
year to the exchange on which they were previously listed and that the 
double payment the Exchange's initial listing fee and prorated annual 
fee imposes on them imposes a significant financial burden and acts as 
a disincentive to transferring. The Exchange also notes that the 
proposed waivers are consistent with the approach taken by the NYSE 
itself and the other national securities exchanges with respect to the 
waiver of fees in connection with the transfer of common equity 
securities from another national securities exchange.
    The Exchange proposes to make a conforming change to Section 902.02 
to reflect the fact that the Exchange will provide the proposed waivers 
set forth above.
    The proposed rule change would not affect the Exchange's commitment 
of resources to its regulatory oversight of the listing process or its 
regulatory programs.
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with Section 6(b) of the Act,\5\ in general, and furthers the 
objectives of Section 6(b)(4) \6\ 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,\7\ 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

[[Page 72049]]

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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    \5\ 15 U.S.C. 78f(b).
    \6\ 15 U.S.C. 78f(b)(4).
    \7\ 15 U.S.C. 78f(b)(5).
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The Proposed Change is Reasonable
    The Exchange operates in a highly competitive marketplace for the 
listing of both the various categories of equity securities affected by 
the proposed fee adjustment and the categories of securities listed and 
traded on NYSE Bonds. The Commission has repeatedly expressed its 
preference for competition over regulatory intervention in determining 
prices, products, and services in the securities markets.
    The Exchange believes that the ever-shifting market share among the 
exchanges with respect to new listings and the transfer of existing 
listings between competitor exchanges demonstrates that issuers can 
choose different listing markets in response to fee changes. 
Accordingly, competitive forces constrain exchange listing fees. Stated 
otherwise, changes to exchange listing fees can have a direct effect on 
the ability of an exchange to compete for new listings and retain 
existing listings.
    Given this competitive environment, in the Exchange's view, the 
small increase to the annual fees for various categories of equity 
securities represent a reasonable attempt to address the Exchange's 
increased costs in servicing these listings while continuing to attract 
and retain listings. Similarly, the Exchange believes that the proposed 
tiering of annual fees for securities listed on NYSE Bonds represents a 
reasonable attempt to attract and retain listings of those categories 
of securities, while also representing a reasonable approach in light 
of the efficiencies associated with listing multiple classes of 
securities of the same issuer. The Exchange believes that the proposal 
to charge the same fees with respect to bonds of non-NYSE issuers as 
are charged for bonds of NYSE companies is reasonable because the cost 
of servicing those securities is comparable to the cost of servicing 
similar securities of NYSE listed companies. The Exchange believes that 
the proposal to waive initial listing fees and the first year's 
prorated annual fees for NYSE Bonds Securities transferring from 
another national securities exchange is reasonable because the cost of 
paying listing fees to both the NYSE and the predecessor exchange 
imposes a significant financial burden and acts as a disincentive to 
transferring.
The Proposal is an Equitable Allocation of Fees
    The Exchange believes its proposal equitably allocates its fees 
among its market participants.
    The Exchange believes that the proposed amendments to the annual 
fees for equity securities are equitable because they do not change the 
existing framework for such fees, but simply increase the minimum fees 
and per unit rates by a small amount to reflect increased operating 
costs. Similarly, as the fee structure remains effectively unchanged 
apart from small increases in the rates paid by all issuers, in the 
Exchange's view, the changes to annual fees for equity securities 
neither target nor will they have a disparate impact on any particular 
category of issuer.
    The Exchange believes that the proposed amendments to the annual 
fees for securities listed and traded on NYSE Bonds (and to the initial 
and annual fees for bonds of non-NYSE issuers) are equitable because 
they reflect the similar costs efficiencies experienced by the Exchange 
in listing multiple securities of similar categories of a single 
issuer, as well as the similar costs associated with servicing the 
listing of bonds of non-NYSE issuers to those associated with listed 
bonds of NYSE listed companies. While issuers with multiple classes of 
eligible securities will benefit from lower fees, the Exchange believes 
that there will be no disparate impact on any category of issuers, 
because the fee paid in connection with the listing of a single class 
of securities will remain unchanged and no issuer will be required to 
pay an increased fee rate. The Exchange believes that the waiver of 
initial listing fees and the prorated annual fee for the first year of 
listing for securities transferring from another national securities 
exchange is not inequitable as it expects will be available to a small 
number of issuers and is being implemented solely to relieve these 
issuers of the burden of duplicative payments to two exchanges.
The Proposal Is Not Unfairly Discriminatory
    The Exchange believes that the proposal is not unfairly 
discriminatory.
    The proposed 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. As discussed above under ``Purpose,'' the Exchange 
believes that the proposed tiered approach to annual fees under Section 
902.08 better reflects the Exchange's resource allocation and costs 
than is the case with the current fee structure.
    Finally, the Exchange believes that it is subject to significant 
competitive forces, as described below in the Exchange's statement 
regarding the burden on competition.
    For the foregoing reasons, the Exchange believes that the proposal 
is consistent with the Act.

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.
Intramarket Competition
    The proposed amended fees will be charged to all listed issuers on 
the same basis. The Exchange does not believe that the proposed amended 
fees will have any meaningful effect on the competition among issuers 
listed on the Exchange.
Intermarket Competition
    The Exchange operates in a highly competitive market in which 
issuers can readily choose to list new securities on other exchanges 
and transfer listings to other exchanges if they deem fee levels at 
those other venues to be more favorable. Because competitors are free 
to modify their own fees in response, and because issuers may change 
their chosen listing venue, the Exchange does not believe its proposed 
fee change can impose any burden on intermarket competition.

[[Page 72050]]

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) \8\ of the Act and subparagraph (f)(2) of Rule 19b-
4 \9\ thereunder, because it establishes a due, fee, or other charge 
imposed by the Exchange.
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    \8\ 15 U.S.C. 78s(b)(3)(A).
    \9\ 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) \10\ of the Act to determine whether the proposed 
rule change should be approved or disapproved.
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    \10\ 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-2019-63 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-2019-63. 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-2019-63 and should be submitted on 
or before January 21, 2020.
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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\
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2019-28077 Filed 12-27-19; 8:45 am]
BILLING CODE 8011-01-P