[Federal Register Volume 83, Number 50 (Wednesday, March 14, 2018)]
[Notices]
[Pages 11267-11269]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-05076]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-82831; File No. SR-NYSE-2018-01]


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 Listed Company Manual

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.
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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. 82506 (January 16, 
2018), 83 FR 3035 (``Notice'').
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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

[[Page 11268]]

approximately $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\
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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).
    \5\ See Notice, supra note 3, at 3036 n.5.
    \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.
    \7\ See Notice, supra note 3, at 3036.
    \8\ See id.
    \9\ See id.
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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.
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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).
    \11\ 15 U.S.C. 78f(b)(4).
    \12\ 15 U.S.C. 78f(b)(5).
    \13\ 15 U.S.C. 78f(b)(8).
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    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\
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    \14\ See Notice, supra note 3, at 3036.
    \15\ See Section 907.00 of the Manual. See also Notice, supra 
note 3, at 3036 n.5.
    \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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    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\
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    \17\ See Notice, supra note 3, at 3036.
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    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\
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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).
    \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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    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

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rule 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\
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    \20\ 15 U.S.C. 78f(b)(4), (5), and (8).
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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.
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    \21\ 15 U.S.C. 78s(b)(2).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\22\
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    \22\ 17 CFR 200.30-3(a)(12).
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Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2018-05076 Filed 3-13-18; 8:45 am]
 BILLING CODE 8011-01-P


