
[Federal Register: February 11, 2009 (Volume 74, Number 27)]
[Notices]
[Page 6941-6942]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr11fe09-104]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-59364; File No. SR-NYSEArca-2009-03]


Self-Regulatory Organizations; Notice of Filing of Proposed Rule
Change by NYSE Arca, Inc. To Establish a Technical Original Listing Fee
Specific to Derivative Securities Products and Structured Products

 February 5, 2009.
    Pursuant to Section 19(b)(1) \1\ of the Securities Exchange Act of
1934 (the ``Exchange Act'') \2\ and Rule 19b-4 thereunder,\3\ notice is
hereby given that, on January 23, 2009, NYSE Arca, Inc. (``NYSE Arca''
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 Exchange. 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 its rules governing NYSE Arca, LLC
(also referred to as the ``NYSE Arca Marketplace''), which is the
equities trading facility of NYSE Arca Equities. The Exchange proposes
to adopt a technical original listing fee applicable specifically to
Derivative Securities Products (as defined below) and Structured
Products (as defined below). The filing also removes from the NYSE Arca
Schedule of Fees and Charges a reference to a fee waiver that was
applicable only in 2007 and is therefore no longer relevant. The text
of the proposed rule change is available on the Exchange's Web site
(http://www.nyse.com), at the Exchange's Office of the Secretary, 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 adopt a technical original listing fee
applicable specifically to Derivative Securities Products and
Structured Products.
    For the purposes of this proposed fee, the term ``Derivative
Securities Products'' shall include securities described in NYSE Arca
Equities Rules 5.2(j)(3) (Investment Company Units); 8.100 (Portfolio
Depositary Receipts); 8.200 (Trust Issued Receipts); 8.201 (Commodity-
Based Trust Shares); 8.202 (Currency Trust Shares); 8.203 (Commodity
Index Trust Shares); 8.204 (Commodity Futures Trust Shares); 8.300
(Partnership Units); 8.500 (Trust Units); and 8.600 (Managed Fund
Shares). The term ``Structured Products'' shall include securities
listed under Rule 5.2(j)(1) (Other Securities); 5.2(j)(2) (Equity
Linked Notes), Rule 5.2(j)(4) (Index-Linked Exchangeable Notes); Rule
5.2(j)(6) (Equity Index-Linked Securities, Commodity-Linked Securities,
Currency-Linked Securities, Fixed Income Index-Linked Securities,
Futures-Linked Securities and Multifactor Index-Linked Securities);
Rule 5.2(j)(7) (Trust Certificates); Rule 8.3 (Currency and Index
Warrants); and Rule 8.400 (Paired Trust Shares).
    Derivative Securities Products and Structured Products are
currently subject to the Exchange's existing technical original listing
fee of $5,000, which is applicable to all listed securities (other than
closed-end funds, for which the Exchange previously adopted a separate
technical original listing fee of $15,000).\4\ For purposes of the
existing technical original listing fee and the proposed separate
technical original listing fee for Derivative Securities Products and
Structured Products, a technical original listing would occur as a
result of a change in state of incorporation, reincorporation under the
laws of same state, reverse stock split, recapitalization, creation of
a holding company or new company by operation of law or through an
exchange offer, or similar events affecting the nature of a listed
security. The fee applies if the change in the company's status is
technical in nature and the shareholders of the original company
receive or retain a share-for-share interest in the new company without
any change in their position in the issuer's capital structure or
rights.
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    \4\ See Exchange Act Release No. 55917 (June 15, 2007), 72 FR
34325 (June 21, 2007) (SR-NYSEArca-2007-22).
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    The Exchange believes that the existing $5,000 fee is not suitable
for Derivative Securities Products and Structured Products, as it is
very high in comparison to the initial and continued listing fees for
those securities. Issuers of Derivative Securities Products pay a flat
initial listing fee of $5,000 and issuers of Structured Products pay a
minimum of $5,000 in initial listing fees and a maximum of $45,000,
depending on how many securities are issued. In comparison, the minimum
initial listing fee for operating company common stock is $100,000 and
the maximum is $150,000. The annual fee for Derivative Securities
Products ranges from $2,000 to $25,000 and for Structured Products from
$10,000 to $55,000. Generally, in comparison, annual fees for common
stock of operating companies range from $30,000 to $85,000. Generally,
for any given number of securities issued and outstanding, the initial
and annual fees payable for a listed common stock far exceed the amount
payable for a comparable number of securities of a Derivative
Securities Product or Structured Product. The Exchange believes that
the existing technical original listing fee is disproportionate in
relation to the other costs of listing Derivative Securities Products
and Structured Products on the Exchange and that a $2,500 fee is more
consistent with the pricing expectations of issuers of these categories
of securities. The $2,500 fee may include multiple issues of securities
from the same issuer. The Exchange believes that charging a single
application fee for multiple securities covered on a single application
is appropriate, as there is very little additional work required by
Exchange staff to process multiple technical original listings of the
same issuer in comparison to the work required in connection with the
processing of an application for a single security. The Exchange
recognizes that it does not take this approach to multiple classes of
equity securities of an operating company, but believes that the
distinction is appropriate for two reasons: (i) Given the much lower
listing fees associated with the listing of Derivative Securities
Products and Structured Products than with operating company equity
listings, even the $2,500 technical original listing fee would be
proportionately much greater in comparison to the initial and annual
fees paid by issuers of Derivative

[[Page 6942]]

Securities Products and Structured Products than would be the case for
issuers of operating company equity securities, and (ii) issuers of
Derivative Securities Products and Structured Products are much more
likely than issuers of operating company securities to effectuate
reverse stock splits (one of the most common events giving rise to a
technical original listing) in multiple classes of securities at the
same time.\5\
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    \5\ The Exchange notes that it has listed a significant number
of Derivative Securities Products and Structured Products that are
leveraged, i.e., whose value changes based on a positive or negative
multiple of the performance of an index. The leveraged nature of
these products makes it much more likely that they will have an
unusually low trading price, which frequently leads an issuer to
effectuate a reverse stock split to reprice the security at a more
typical trading price. The Exchange has not had this experience yet
with leveraged products, but notes that leveraged products have been
listed for the first time over the last two years.
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    The filing also removes from the NYSE Arca Schedule of Fees and
Charges a reference to a fee waiver that was applicable only in 2007
and is therefore no longer relevant. Issuers are subject to Annual Fees
in the year of listing, pro-rated based on days listed that calendar
year. However, for those issuers dually listed on the Exchange and
another securities exchange on January 1, 2007 who gave notice by June
30, 2007 to the Exchange of their intention to voluntarily withdraw
from listing on the Exchange (and in fact withdraw during 2007), the
2007 annual listing fees were waived (and not subject to prorating).
This filing removes text from Footnote 8 to the NYSE Arca Schedule of
Fees and Charges which described this waiver, as that text is of no
further relevance.
    The NYSE Arca Schedule of Fees and Charges can be found on the
Exchange's Web site at http://www.nyse.com/pdfs/NYSEArca_Listing_
Fees.pdf.
2. Statutory Basis
    The bases under the Exchange Act for this proposed rule change are:
(i) The requirement under Section 6(b)(4) \6\ that an exchange have
rules that provide for the equitable allocation of reasonable dues,
fees and other charges among its members and issuers and other persons
using its facilities, and (ii) the requirement under Section 6(b)(5)
\7\ of the Exchange 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. The Exchange believes that the
proposed technical original listing fee specific to Derivative
Securities Products and Structured Products constitutes an equitable
allocation of fees, as it will be applied consistently to all listed
securities in those classes and is set at a level that is consistent
with the Exchange's overall approach to pricing for Derivative
Securities Products and Structured Products.
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    \6\ 15 U.S.C. 78f(b)(4).
    \7\ 15 U.S.C. 78f(b)(4)(sic). The Commission notes that the
correct citation should reflect 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 purposes of the Exchange Act.

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

    Written comments on the proposed rule change 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 the 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 Exchange 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 Number SR-NYSEArca-2009-03 on the subject line.

Paper Comments

     Send paper comments in triplicate to Elizabeth M. Murphy,
Secretary, Securities and Exchange Commission, 100 F Street, NE.,
Washington, DC 20549-1090.

All submissions should refer to File Number SR-NYSEArca-2009-03. 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, 100 F Street,
NE., Washington, DC 20549, on official business days between the hours
of 10 a.m. and 3 p.m. Copies of the filing will also be available for
inspection and copying at NYSE Arca's principal office and on its
Internet Web site at www.nyse.com. 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-NYSEArca-2009-03 and should be submitted on or before
March 4, 2009.
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    \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. E9-2855 Filed 2-10-09; 8:45 am]

BILLING CODE 8011-01-P
