

[Federal Register: January 4, 2008 (Volume 73, Number 3)]
[Notices]               
[Page 902-903]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr04ja08-57]                         

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-57061; File No. SR-NYSE-2007-113]

 
Self-Regulatory Organizations; New York Stock Exchange LLC; 
Notice of Filing of Proposed Rule Change To Amend Annual Fees 
Applicable to Groups of Real Estate Investment Trusts Under Common 
External Management

December 28, 2007.
    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 December 20, 2007, the New York Stock Exchange, LLC (``NYSE'' 
or ``Exchange'') filed with the Securities and Exchange Commission 
(``Commission'') the proposed rule change as described in Items I, II, 
and III below, which Items have been prepared substantially by NYSE. 
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.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    NYSE proposes to provide a discount on Annual Fees to each company 
in any group of three or more real estate investment trusts (``REITs'') 
that are under the management of the same external management company. 
This filing seeks approval to apply the discount retroactively to 
January 1, 2008. The text of the proposed rule change is available on 
the NYSE's Web site at http://www.nyse.com, at the principal offices 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, NYSE included statements 
concerning the purpose of and basis for 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
    The Exchange proposes to amend Section 902 of the Manual by 
inserting proposed new Section 902.03A. This filing seeks approval to 
apply the discount retroactively to January 1, 2008. REITs will 
continue to be subject to the Annual Fees applicable to listed equity 
securities as set forth in Section 902.03. However, Section 902.03A 
will provide that, where all of the operations of each of a group of 
three or more listed REITs are externally managed by the same entity or 
by affiliated entities, each REIT in the group will receive a 30% 
discount on the applicable Annual Fees in relation to any year in which 
the common management relationship exists as of January 1. A newly-
listed REIT that qualifies for the discount will receive it in relation 
to the part of the year for which it pays a prorated Annual Fee upon 
initial listing. For example, a REIT that lists on July 1 and whose 
outstanding number of shares would subject it to a $100,000 Annual Fee 
would normally pay a prorated amount of $50,000 because it would be 
listed for exactly half of the first year of listing. If that REIT 
qualifies for the group discount, it would pay $35,000 (70% of the 
prorated Annual Fee that would otherwise be payable).
    A limited number of publicly traded REITs have their operations 
externally managed by another entity pursuant to a management 
agreement. Typically, the REIT itself does not have any direct 
employees. Rather, the external manager is entirely responsible for 
managing and staffing the operations of the company, in return for 
management fees and the reimbursement of expenses as set forth in the 
management agreement. The manager will typically have representation on 
the board of each REIT under its management and will be compensated in 
significant part in the form of performance-based incentive

[[Page 903]]

compensation based on the REIT's earnings.
    In a limited number of cases, a single entity or affiliated 
entities may externally manage more than one REIT. As an incentive for 
all of the REITs in such a group to list on the Exchange, the Exchange 
proposes to offer a group discount on Annual Fees when there are at 
least three REITs under common management. The Exchange believes that 
this will be attractive to management companies that externally manage 
multiple REITs as it will increase the REITs' earnings and therefore 
also increase the performance-based management fees received by the 
external manager. The Exchange expects that external managers and their 
board representatives will be highly incentivized to encourage the 
boards of their managed REITs to avail themselves of the discount and 
that it will therefore motivate eligible REITs to remain listed on the 
Exchange or to transfer their listing to the Exchange.
    The Exchange does not believe that the limitation of the proposed 
discount to groups of three or more REITs under common management is 
unfairly discriminatory. While the Exchange perceives a competitive 
benefit to be obtained by providing the discount, we are also cognizant 
of the fact that the discount will cause us to lose revenue. We are 
concerned that the revenue loss we could sustain over time if we 
applied the discount to circumstances where two REITs shared common 
management would far exceed the benefit in terms of retaining listings 
or obtaining new listings, as the number of eligible REITs could 
broaden significantly. The small reduction in revenue the Exchange 
expects as a result of the discount will not hinder the Exchange's 
ability to fulfill its regulatory responsibilities. The Exchange also 
notes that the Annual Fees applicable to all other REITs and operating 
companies are remaining unchanged, so no company that is not qualified 
for the discount is being asked to pay higher Annual Fees than it is 
currently paying.
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with the provisions of Section 6 of the Act \3\ in general and Section 
6(b)(4) \4\ in particular, in that it is designed to provide for the 
equitable allocation of reasonable dues, fees, and other charges among 
its members and other persons using its facilities.
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    \3\ 15 U.S.C. 78f. 3
    \4\ 15 U.S.C. 78f(b)(4).
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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 purposes of the Act.

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

    Written comments were neither solicited nor received.

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

    Within 35 days of the date of publication of this notice in the 
Federal Register or within such longer period (i) as the Commission may 
designate up to 90 days of such date if it finds such longer period to 
be appropriate and publishes its reasons for so finding or (ii) as to 
which the self-regulatory organization consents, the Commission will:
    A. By order approve such proposed rule change, or
    B. Institute proceedings to determine whether the proposed rule 
change should be disapproved.

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 e-mail to rule-comments@sec.gov. Please include 

File No. SR-NYSE-2007-113 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-2007-113. 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, on official business 
days between the hours of 10 a.m. and 3 p.m. 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-2007-113 and should be submitted on or before January 25, 2008.
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    \5\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\5\
Nancy M. Morris,
Secretary.
 [FR Doc. E7-25625 Filed 1-3-08; 8:45 am]

BILLING CODE 8011-01-P
