

[Federal Register: February 13, 2008 (Volume 73, Number 30)]
[Notices]               
[Page 8387]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr13fe08-151]                         


[[Page 8387]]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-57291; File No. SR-NYSE-2007-113]

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

February 7, 2008.

I. Introduction

    On December 20, 2007, the New York Stock Exchange LLC (``NYSE'' or 
``Exchange'') filed with the Securities and Exchange Commission 
(``Commission''), pursuant to section 19(b)(1) of the Securities 
Exchange Act of 1934 (the ``Act''),\1\ and Rule 19b-4 thereunder,\2\ a 
proposed rule change to amend Annual Fees applicable to groups of Real 
Estate Investment Trusts (``REITs'') under common external management. 
The proposed rule change was published for comment in the Federal 
Register on January 4, 2008.\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. 57061 (December 28, 
2007), 73 FR 0902.
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II. Description of the Proposal

    The Exchange proposes to amend section 902 of the Listed Company 
Manual by inserting proposed new section 902.03A. In its filing, the 
Exchange stated that 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 is proposing to offer a group discount on Annual Fees when 
there are at least three REITs under common external management.
    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). This filing seeks 
approval to apply the discount retroactively to January 1, 2008.

III. Discussion and Commission Findings

    The Commission finds that the proposed rule change is consistent 
with the requirements of the Act and the rules and regulations 
thereunder applicable to a national securities exchange.\4\ In 
particular, the Commission finds that the proposal is consistent with 
section 6(b)(4) of the Act,\5\ 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,\6\ 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.
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    \4\ In approving this proposed rule change, the Commission notes 
that it has considered the proposed rule's impact on efficiency, 
competition, and capital formation. 15 U.S.C. 78c(f).
    \5\ 15 U.S.C. 78f(b)(4).
    \6\ 15 U.S.C. 78f(b)(5).
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    The Commission notes that the Exchange does not believe the 
limitation of the proposed discount to groups of three or more REITS 
under common external management is unfairly discriminatory. In support 
of this the Exchange states that: (i) It has a reasonable competitive 
justification for the discount; (ii) if it applied the discount to 
groups of less than three REITS it could lead to a significant loss of 
revenue to the Exchange; and (iii) it is not increasing the Annual Fees 
for REITs, and other, issuers. The Commission also notes that the 
Exchange has represented that the loss of revenue from the discount, as 
proposed, will not hinder its ability to fulfill its regulatory 
responsibilities.
    The Commission believes it is reasonable for the Exchange to 
balance its need to remain competitive, while at the same time ensuring 
adequate revenue to meet its regulatory responsibilities. The 
Commission further 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.
    In light of these arguments, the Commission agrees that the 
proposed discount, which is retroactively effective to January 1, 2008, 
does not constitute an inequitable allocation of reasonable dues, fees, 
and other charges, does not permit unfair discrimination between 
issuers, and is generally consistent with the Act.

IV. Conclusion

    It is therefore ordered, pursuant to section 19(b)(2) of the 
Act,\7\ that the proposed rule change (SR-NYSE-2007-113) is hereby 
approved.
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    \7\ 15 U.S.C. 78s(b)(2).
    \8\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\8\
Florence E. Harmon,
Deputy Secretary.
 [FR Doc. E8-2610 Filed 2-12-08; 8:45 am]

BILLING CODE 8011-01-P
