[Federal Register Volume 83, Number 85 (Wednesday, May 2, 2018)]
[Notices]
[Pages 19382-19384]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-09262]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-83117; File No. SR-NYSE-2018-14]


Self-Regulatory Organizations; New York Stock Exchange LLC; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To 
Amend Section 902.11 of the Exchange's Listed Company Manual Concerning 
Fees Applicable to Acquisition Companies for Shares Issued Contingent 
on the Consummation of a Business Combination

April 26, 2018.

    Pursuant to Section 19(b)(1) \1\ of the Securities Exchange Act of 
1934 (the ``Act'') \2\ and Rule 19b-4 thereunder,\3\ notice is hereby 
given that, on April 16, 2018, New York Stock Exchange LLC (``NYSE'' 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 self-
regulatory organization. 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 the 
Substance of the Proposed Rule Change

    The Exchange proposes to amend Rule 902.11. The proposed rule 
change is available on the Exchange's website at www.nyse.com, at the 
principal office 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, 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 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    Section 102.06 of the Manual provides for the listing of companies 
(``Acquisition Companies'' or ``ACs'') with no prior operating history 
that conduct an initial public offering of which at least 90% of the 
proceeds, together with the proceeds of any other concurrent sales of 
the AC's equity securities, will be held in a trust account controlled 
by an independent custodian until consummation of a business 
combination. The business combination can be in the form of a merger, 
capital stock exchange, asset acquisition, stock purchase, 
reorganization, or similar business combination with one or more 
operating businesses or assets (a ``Business Combination'') with a fair 
market value equal to at least 80% of the net assets held in trust (net 
of amounts disbursed to management for working capital purposes and 
excluding the amount of any deferred underwriting discount held in 
trust). A listed AC may remain listed upon consummation of its Business 
Combination, provided it meets the criteria specified in Section 
802.01B of the Manual.
    In the experience of the Exchange, an AC will frequently reconsider 
its listing venue in connection with the consummation of its Business 
Combination.\4\ The Business Combination is a transformative event in 
the life cycle of an AC, when it becomes an operating company instead 
of a blank check company. In connection with that transformation, an AC 
will frequently put in place a new management team and significantly 
change its board of directors and it will often have a significantly 
different shareholder base after the Business Combination than it had 
as an AC. In effect, an AC after its Business Combination is a 
completely different company and it is for this reason that the board 
and management of the company after the transaction would want to 
reconsider the positioning of the company in many respects, including 
its listing venue.
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    \4\ The Exchange began to list ACs on a regular basis in the 
last year, so the practice of ACs changing listing venue at the time 
of their Business Combination has not yet involved any companies 
transferring away from the NYSE in those circumstances.
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    The market for the retention or transfer to another exchange of 
these companies is very competitive and a number of transfers to a new 
listing venue have occurred in recent times in connection with the 
completion of an AC's Business Combination. The listing rules of the 
Exchange,\5\ NYSE American \6\ and NASDAQ Stock Market \7\ all provide 
for a waiver of all initial listing fees in connection with a transfer 
from another national securities exchange, so an AC moving its listing 
upon consummation of its Business Combination never has to pay any 
listing fees in connection with such transfer or the issuance of any 
new shares at the time of its Business Combination. However, until a 
recent amendment to Section 902.11 of the Manual,\8\ an AC remaining 
listed on the Exchange upon consummation of its Business Combination 
had to pay additional listing fees in relation to any additional shares 
issued in connection with the Business Combination. In such instances, 
the AC was faced with the anomalous situation where there would be no 
listing fee burden associated with a transfer to another exchange but 
it would be required to pay significant additional listing fees if it 
remained on its incumbent exchange. Consequently, to eliminate this 
disparate treatment of companies listing after a Business Combination, 
the Exchange amended Section 902.11 of the Manual to provide that any 
AC remaining listed on the Exchange upon consummation of its Business 
Combination would no longer be subject to any additional listing fees 
with respect to any shares issued in connection with such Business 
Combination.
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    \5\ See Section 902.02 of the Manual.
    \6\ See Section 140 of the NYSE American Company Guide.
    \7\ See NASDAQ Marketplace Rule 5910(7) [sic].
    \8\ See Securities Exchange Act Release No. 82731 (February 16, 
2018), 83 FR 8140 (February 23, 2018) (SR-NYSE-2018-06).
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    The Exchange has identified another anomaly in the fees payable by 
an AC if it chooses to remain on the NYSE at the time of its Business 
Combination rather than transfer to another exchange.

[[Page 19383]]

The Exchange has observed that it is not uncommon for an AC to seek to 
raise capital by selling shares in a private placement in conjunction 
with the consummation of its Business Combination. This additional 
capital is needed to provide sufficient liquidity for the AC to 
successfully operate its new business after the Business Combination. 
The private placement generally closes at the same time as the 
consummation of the Business Combination and the closing of the private 
placement is contractually conditioned on such consummation. Under 
current Exchange rules, the AC would be required to pay listing fees 
with respect to the shares issued in any such private placement. By 
contrast, if the AC chose to transfer to another listing venue at the 
time of consummation of its Business Combination, the other market 
would charge no listing fees on those shares as they would be subject 
to the listing fee exemption all of the markets apply to any shares 
outstanding at the time of transfer. As this anomaly would impose a 
cost on the AC if it remained on the NYSE where none would be incurred 
if the company chose to transfer, the Exchange proposes to amend 
Section 902.11 to provide that ACs remaining listed after consummation 
of their Business Combination will not be required to pay listing fees 
in relation to the issuance of any additional shares in a transaction 
which is occurring at the same time as the Business Combination with a 
closing contractually contingent on the consummation of the Business 
Combination.\9\
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    \9\ The Exchange believes that it is appropriate to provide this 
waiver to an AC at the time of its Business Combination and not to 
an operating company that would also be subject to additional 
listing fees in connection with a share issuance subsequent to 
listing. In the Exchange's experience, there is generally no 
parallel to the Business Combination in the life cycle of an 
operating company that would cause it to reconsider its listing 
venue at the time it issued additional shares, so the anomaly the 
Exchange seeks to address in relation to ACs is not relevant to 
operating companies.
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    The Exchange does not expect the revenues it forgoes as a result of 
the proposed waiver to negatively affect its ability to conduct its 
regulatory program.
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with Section 6(b) of the Act,\10\ in general, and furthers the 
objectives of Sections 6(b)(4) \11\ of the Act, in particular, in that 
it is designed to provide for the equitable allocation of reasonable 
dues, fees, and other charges and is not designed to permit unfair 
discrimination among its members and issuers and other persons using 
its facilities. The Exchange also believes that the proposed rule 
change is consistent with Section 6(b)(5) of the Act, in particular in 
that it is designed to promote just and equitable principles of trade, 
to foster cooperation and coordination with persons engaged in 
regulating, clearing, settling, processing information with respect to, 
and facilitating transactions in securities, to remove impediments to 
and perfect the mechanism of a free and open market and a national 
market system, and, in general, to protect investors and the public 
interest.
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    \10\ 15 U.S.C. 78f(b).
    \11\ 15 U.S.C. 78f(b)(4).
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    The Exchange believes that the proposed rule change is consistent 
with Sections 6(b)(4) and 6(b)(5) of the Act in that it represents an 
equitable allocation of fees and does not unfairly discriminate among 
listed companies. In particular, the Exchange notes that the proposed 
amendment is not unfairly discriminatory as it will result in an AC 
that remains listed on the Exchange after its Business Combination 
being treated the same as an AC that transfers to the Exchange from 
another listing venue. The Exchange also believes the proposed rule 
change is not discriminatory with respect to listed operating 
companies, as operating companies generally do not have an event in 
their life cycle parallel to the Business Combination for an AC which 
would normally give rise to a reconsideration of the company's listing 
venue.

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 purpose of the Act. The proposed rule change does 
not impose any burden on competition, as it will have the effect of 
treating an AC that remains listed on the Exchange after its Business 
Combination the same for fee purposes as an AC that transfers to the 
Exchange from another listing venue or transfers to another listing 
venue at that time.

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

    No written comments were solicited or received with respect to the 
proposed rule change.

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

    The foregoing rule change is effective upon filing pursuant to 
Section 19(b)(3)(A) \12\ of the Act and subparagraph (f)(2) of Rule 
19b-4 \13\ thereunder, because it establishes a due, fee, or other 
charge imposed by the Exchange.
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    \12\ 15 U.S.C. 78s(b)(3)(A).
    \13\ 17 CFR 240.19b-4(f)(2).
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    At any time within 60 days of the filing of such proposed rule 
change, the Commission summarily may temporarily suspend such rule 
change if it appears to the Commission that such action is necessary or 
appropriate in the public interest, for the protection of investors, or 
otherwise in furtherance of the purposes of the Act. If the Commission 
takes such action, the Commission shall institute proceedings under 
Section 19(b)(2)(B) \14\ of the Act to determine whether the proposed 
rule change should be approved or disapproved.
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    \14\ 15 U.S.C. 78s(b)(2)(B).
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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 email to [email protected]. Please include 
File Number SR-NYSE-2018-14 on the subject line.

Paper Comments

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

All submissions should refer to File Number SR-NYSE-2018-14. This file 
number should be included on the subject line if email 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 website (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

[[Page 19384]]

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 website viewing and printing in the Commission's Public 
Reference Room, 100 F Street NE, Washington, DC 20549 on official 
business days between the hours of 10:00 a.m. and 3:00 p.m. Copies of 
such filing also will be available for inspection and copying at the 
principal office of the Exchange. All comments received will be posted 
without change. Persons submitting comments are cautioned that we do 
not redact or edit personal identifying information from comment 
submissions. You should submit only information that you wish to make 
available publicly. All submissions should refer to File Number SR-
NYSE-2018-14, and should be submitted on or before May 23, 2018.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\15\
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    \15\ 17 CFR 200.30-3(a)(12).
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Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2018-09262 Filed 5-1-18; 8:45 am]
 BILLING CODE 8011-01-P


