2018-05076. Self-Regulatory Organizations; New York Stock Exchange LLC; Order Approving Proposed Rule Change To Amend the Complimentary Products and Services Available to Certain Eligible New Listings Pursuant to Section 907.00 of the Exchange's ...  

  • Start Preamble March 8, 2018.

    I. Introduction

    On January 3, 2018, New York Stock Exchange LLC (“NYSE” or the “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 Exchange's Listed Company Manual (“Manual”) to provide that companies initially listed on or after April 1, 2018 will not be eligible to receive corporate governance tools under the Exchange's current services offering. The proposed rule change was published for comment in the Federal Register on January 22, 2018.[3] No comment letters were received in response to the Notice. This order approves the proposed rule change.

    II. Description of the Proposed Rule Change

    The Exchange has proposed to amend Section 907.00 of the Manual to provide that companies initially listed on or after April 1, 2018 will not be eligible to receive the corporate governance tools described under the Exchange's current services offering.

    As set forth in Section 907.00 of the Manual, the Exchange currently provides Eligible New Listings [4] with complimentary corporate governance tools (with a commercial value of Start Printed Page 11268approximately $50,000 annually) [5] for a period of 24 calendar months.[6] According to the Exchange, companies that qualify as Eligible New Listings have generally not been interested in utilizing the corporate governance tools available as part of the Exchange's services offering.[7] The Exchange has therefore proposed to discontinue the corporate governance tools portion of its services offering for companies that list on or after April 1, 2018.[8] The Exchange proposal states, however, that any Eligible New Listing that lists prior to April 1, 2018 will continue to be able to access the corporate governance tools for a period of 24 months to the extent their eligibility permits under current Section 907.00 of the Manual.[9]

    III. Discussion and Commission 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.[10] Specifically, the Commission finds that the proposal is consistent with Sections 6(b)(4) [11] and 6(b)(5) of the Act [12] in particular, in that the proposed rule 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 [13] in that it does not impose any burden on competition not necessary or appropriate in furtherance of the purposes of the Act.

    The Commission believes that it is consistent with the Act for the Exchange to modify its existing complimentary services offering to no longer offer corporate governance tools to Eligible New Listings that list on or after April 1, 2018. The Exchange states that Eligible New Listings have generally not been interested in utilizing the corporate governance tools offered by the Exchange.[14] The Commission believes it is reasonable and consistent with the Act for the Exchange to discontinue such services if it believes they are not being utilized. The Commission notes that the effect of the proposal is to reduce the commercial value of offerings to Eligible New Listings by $50,000 annually, which is the value of the corporate governance tools as currently set forth in Section 907.00 of the Manual.[15] The value of the remaining offerings to Eligible New Listings will continue to remain transparent under Section 907.00 of the Manual. The Commission believes that by accurately describing in the Manual the current products and services available to listed companies and the current values of those products and services, the Exchange is maintaining transparency with respect to its rules and the fees applicable to such companies. This helps to ensure that individual listed companies are not given specially negotiated packages of products and services to list or remain listed that would raise unfair discrimination issues under the Act.[16]

    Under the proposal, Eligible New Listings that list prior to April 1, 2018 will remain eligible to receive all the complimentary products and services currently provided by the Exchange, including the corporate governance tools. The Commission notes that Section 6(b)(5) of the Act does not require that all issuers be treated the same; rather, the Act requires that the rules of an exchange not unfairly discriminate between issuers. The Exchange states that it believes it is not unfairly discriminatory to continue to offer corporate governance tools to companies listed prior to April 1, 2018, as that benefit was part of the services offering that was available at the time of such companies' initial listing and may have had some influence over their listing decisions.[17]

    The Commission believes that the Exchange has provided a sufficient basis for its different treatment of Eligible New Listings that list prior to April 1, 2018 and that this portion of the Exchange's proposal meets the requirements of the Act. In making this determination, the Commission notes that the provision of services under Section 907.00 of the Manual is for a limited duration and that the Exchange has provided a reasonable basis for deciding to treat Eligible New Listings that list prior to April 1, 2018 differently from other listed companies going forward. The Commission notes that at the time such companies listed, they had an expectation, if they intended to utilize the corporate governance tools, to be able to do so for the entire 24 month period as set forth in the current rule. To allow such companies listed prior to April 1, 2018 to finish utilizing corporate governance tools for any remainder of their 24 month period appears to be reasonable, equitable, and not unfairly discriminatory. In addition, the Commission notes that the April 1, 2018 date, to curtail the offering of corporate governance tools for Eligible New Listings that list on or after that date, was transparent and published for comment in advance of approval by the Commission in the order discussed herein. As noted above, the Commission received no comments on the proposal. The Commission has also previously approved proposals providing different services to newly-listed issuers, including those transferring their listing from another exchange, and has found this consistent with Sections 6(b)(4) and 6(b)(5) of the Act.[18] Finally, the Commission notes that it recently approved a similar proposal by the Exchange's affiliate, NYSE American LLC, to discontinue the corporate governance services it provides to certain eligible new listings.[19]

    Accordingly, the Commission finds that the proposed rule change is consistent with the requirements of the Act and, in particular, that the products and services provided under Section 907.00 of the Manual are equitably allocated among issuers consistent with Section 6(b)(4) of the Act, the proposed Start Printed Page 11269rule change does not unfairly discriminate among issuers consistent with Section 6(b)(5) of the Act, and the proposed rule change is appropriate and consistent with Section 6(b)(8) of the Act in that it does not impose any burden on competition not necessary or appropriate in furtherance of the purposes of the Act.[20]

    IV. Conclusion

    It is therefore ordered, pursuant to Section 19(b)(2) of the Act,[21] that the proposed rule change (SR-NYSE-2018-01), be, and hereby is, approved.

    Start Signature

    For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.22

    Eduardo A. Aleman,

    Assistant Secretary.

    End Signature End Preamble

    Footnotes

    3.  See Securities Exchange Act Release No. 82506 (January 16, 2018), 83 FR 3035 (“Notice”).

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    4.  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).

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    5.  See Notice, supra note 3, at 3036 n.5.

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    6.  See Section 907.00 of the Manual. In addition, as set forth in Section 907.00 of the Manual, the Exchange provides certain categories of currently and newly listed issuers with some or all of the following additional complimentary services for a period of 24 months: 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). Id.

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    7.  See Notice, supra note 3, at 3036.

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    8.  See id.

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    9.  See id.

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    10.  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).

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    14.  See Notice, supra note 3, at 3036.

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    15.  See Section 907.00 of the Manual. See also Notice, supra note 3, at 3036 n.5.

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    16.  See Securities Exchange Act Release No. 65127 (August 12, 2011), 76 FR 51449 (August 18, 2011) (SR-NYSE-2011-20) (order approving the initial complimentary products and services provided by the Exchange to Eligible New Listings).

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    17.  See Notice, supra note 3, at 3036.

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    18.  See Securities Exchange Act Release Nos. 76127 (October 9, 2015), 80 FR 62584 (October 16, 2015) (order approving SR-NYSE-2015-36); 72669 (July 24, 2014), 79 FR 44234 (July 30, 2014) (order approving SR-NASDAQ-2014-058); 65963 (December 15, 2011), 76 FR 79262 (December 21, 2011) (order approving SR-NASDAQ-2011-122).

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    19.  See Securities Exchange Act Release No. 81783 (September 29, 2017), 82 FR 46575 (October 5, 2017) (order approving SR-NYSEAMER-2017-05).

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    [FR Doc. 2018-05076 Filed 3-13-18; 8:45 am]

    BILLING CODE 8011-01-P

Document Information

Published:
03/14/2018
Department:
Securities and Exchange Commission
Entry Type:
Notice
Document Number:
2018-05076
Pages:
11267-11269 (3 pages)
Docket Numbers:
Release No. 34-82831, File No. SR-NYSE-2018-01
EOCitation:
of 2018-03-08
PDF File:
2018-05076.Pdf