[Federal Register Volume 84, Number 160 (Monday, August 19, 2019)]
[Notices]
[Pages 42967-42971]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-17694]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-86651; File No. SR-NYSE-2019-14]


Self-Regulatory Organizations; New York Stock Exchange LLC; 
Notice of Filing of Amendment No. 1 and Order Granting Accelerated 
Approval of a Proposed Rule Change, as Modified by Amendment No. 1, To 
Amend Section 703.18 of the Listed Company Manual To Permit the Listing 
of Event-Based Contingent Value Rights and Make Other Changes to the 
Listing Standards for Contingent Value Rights

August 13, 2019.

I. Introduction

    On April 25, 2019, 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 703.18 of the Exchange's Listed 
Company Manual (``Manual'') to expand the circumstances under which a 
contingent value right (``CVR'') may be listed on the Exchange and make 
other changes to the listing standards for CVRs. The proposed rule 
change was published for comment in the Federal Register on May 15, 
2019.\3\ On August 8, 2019, the Exchange filed Amendment No. 1 to the 
proposed rule change.\4\ The Commission received no comment letters on 
the proposed rule change. The Commission is publishing this notice to 
solicit comments on Amendment No. 1 from interested persons, and is 
approving the proposed rule change, as modified by Amendment No. 1, on 
an accelerated basis.
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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. 85812 (May 9, 2019), 
84 FR 21861 (``Notice'').
    \4\ In Amendment No. 1, the Exchange revised the proposal to: 
(1) Require public disclosure of all material terms of a CVR prior 
to listing; (2) require public disclosure of an occurrence of any 
event or events upon which a CVR payment is conditioned, or the 
failure of such event or events to occur, in accordance with 
Sections 202.05 and 202.06 of the Manual; (3) specify that the 
Exchange will not list a CVR if, at the time of the proposed 
listing, the issuer is below compliance with applicable listing 
standards; (4) state that, in addition to its original proposal to 
promptly delist any CVR when the issuer's common stock ceases to be 
listed on a national securities exchange, the Exchange will also 
promptly delist a CVR when the related equity security to which the 
cash payment at maturity is tied is no longer listed on a national 
security exchange; and (5) make technical, clarifying changes. 
Amendment No. 1 is available at https://www.sec.gov/comments/sr-nyse-2019-14/srnyse201914-5944385-189087.pdf.
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II. Description of the Proposed Rule Change, as Modified by Amendment 
No. 1

    Section 703.18 of the Manual currently provides only for the 
listing of CVRs that are related to the price of an affiliate's equity 
security (a ``Price-Based CVR'').\5\ The Exchange proposes to amend 
Section 703.18 of the Manual to also provide for the listing of CVRs 
based on the occurrence of a specified event or events related to the 
business of the issuer or an affiliate of the issuer (an ``Event-Based 
CVR''). As proposed by the Exchange, an Event-Based CVR would be 
defined as an unsecured obligation of the issuer providing for a 
possible cash payment, within a specified time period, upon the 
occurrence of a specified event or events relating to the business of 
the issuer of the CVR or an affiliate of such issuer.\6\ The Exchange 
notes that, with the exception of the payment triggering event or 
events, Event-Based CVRs are identical in structure to Price-Based 
CVRs.\7\ The Exchange also proposes to amend Section 703.18 of the 
Manual to make other changes to the listing standards for both Price-
Based and Event-Based CVRs, as described in more detail below.
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    \5\ Under Section 703.18 of the Manual, Price-Based CVRs are 
defined as unsecured obligations of the issuer providing for a 
possible cash payment at maturity based upon the price performance 
of an affiliate's equity security.
    \6\ See proposed Section 703.18 of the Manual. See also 
Amendment No. 1.
    \7\ See Notice, supra note 3, at 21862. See also proposed 
Section 703.18 of the Manual.
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    According to the Exchange, Price-Based CVRs are generally 
distributed to shareholders of an acquired company who are receiving 
shares of the acquirer as acquisition consideration.\8\ The Price-Based 
CVRs provide the acquiree's shareholders with some medium-term 
protection against poor stock price performance of the shares of the 
acquirer by guaranteeing them a specified cash payment if the 
acquirer's average stock price is below a specified level at the time 
of maturity of the Price-Based CVR.\9\ According to the Exchange, 
Event-Based CVRs are also typically issued to the shareholders of an 
acquired entity as consideration in an acquisition transaction.\10\ 
Event-Based CVRs entitle their holders to receive a specified cash 
payment upon the occurrence of a specified event or events related to 
the business of the issuer or an affiliate of the issuer prior to the 
maturity date of the Event-Based CVR.\11\ The Event-Based CVR provides 
the shareholders of the acquiree an additional interest in the medium-
term performance of the merged entity upon occurrence of its specified 
event(s).\12\ Pursuant to the amended proposal, the Exchange would 
require that all material terms of a Price-Based or Event-Based CVR be 
publicly disclosed prior to listing a CVR.\13\
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    \8\ See Notice, supra note 3, at 21861.
    \9\ See id. at 21861-62.
    \10\ See id. at 21862.
    \11\ See id. See also Amendment No. 1.
    \12\ See Notice, supra note 3, at 21862, which also provides 
examples of common Event-Based CVRs.
    \13\ See Amendment No. 1.
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    Section 703.18 of the Manual currently provides that the issuer of 
a listed CVR must be an entity that has assets in excess of $100 
million and meets the ``size and earnings'' requirements of Section 102 
of the Manual. While the proposed rule change will retain the $100 
million assets requirement for CVRs, the Exchange proposes to amend the 
reference to the ``size and earnings requirements'' of Section 102 of 
the Manual by specifying instead that the issuer must meet the 
requirements of Sections 102.01B and 102.01C of the Manual.\14\ The 
requirements of Section 102.01B of the Manual include the size 
requirements for all newly-listed operating companies. In the case of 
companies listing CVRs, Section 102.01B would require the company to 
have an aggregate market value of publicly held shares of $100 million 
\15\ and a $4.00 stock price.
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    \14\ See proposed Section 703.18(A) of the Manual.
    \15\ As noted by the Exchange, this is the same requirement that 
currently applies to companies transferring from another national 
securities exchange. See Notice, supra note 3, at 21862.
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    As for the requirement for the issuer of the CVR to also meet one 
of the standards set forth in Section 102.01C of

[[Page 42968]]

the Manual, that section sets forth two financial standards, the 
Earnings Test and the Global Market Capitalization Test. The Global 
Market Capitalization Test, which was adopted subsequent to the 
approval of Section 703.18 of the Manual, requires that an issuer have 
$200 million in global market capitalization at the time of listing, 
but includes no earnings criteria.\16\ In its proposal, the Exchange 
stated that it believes that an issuer that meets the requirements of 
the Global Market Capitalization Test is likely to be a substantial 
company capable of meeting its financial obligations under the terms of 
a listed CVR.\17\ According to the Exchange, most issuers currently 
qualify for listing on the Exchange pursuant to the Global Market 
Capitalization Test.\18\ The Earnings Test under Section 102.01C would 
require the issuer of a CVR to have an aggregate amount of pre-tax 
earnings over its last three fiscal years and specified amounts during 
the last two most recent fiscal years.\19\
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    \16\ See Section 102.01C(II) of the Manual.
    \17\ See Notice, supra note 3, at 21862.
    \18\ See id.
    \19\ See Section 102.01C(I) of the Manual. The Earnings Test 
requires that, subject to certain specified exclusions and 
adjustments, an issuer have pre-tax earnings from continuing 
operations of: (1) At least $10,000,000 in the aggregate for the 
last three fiscal years, at least $2,000,000 in each of the last two 
fiscal years, and a positive amount in each of the last three fiscal 
years; or (2) at least $12,000,000 in the aggregate for the last 
three fiscal years, at least $5,000,000 in the most recent fiscal 
year, and at least $2,000,000 in the next most recent fiscal year.
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    Pursuant to the amended proposed rule change, the Exchange will not 
list a CVR if, at the time of the proposed listing, the issuer of the 
CVR has been deemed to be below compliance on an ongoing basis with the 
listing standards of the national securities exchange where either the 
equity security to whose price performance a Price-Based CVR is linked 
or the issuer's common stock is listed.\20\ The amended proposed rule 
change will also require the issuer of an Event-Based CVR to make 
public disclosure, in accordance with the provisions of Sections 202.05 
and 202.06 of the Manual, upon the occurrence of any event that must 
occur as a condition to the issuer's obligation to make a cash payment 
with respect to the CVR (or if such an event is deemed to have occurred 
pursuant to the terms of the documents governing the CVR) or at any 
such time as it becomes clear that a condition to the cash payment with 
respect to the CVR has not been met as required by the documents 
governing the terms of the CVR.\21\
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    \20\ See Amendment No. 1.
    \21\ See id.
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    Currently, Section 703.18 of the Manual also provides that a CVR 
may be delisted when the related equity security to which the cash 
payment at maturity is tied is delisted. To reflect the fact that the 
delisting provision will now relate to both Price-Based CVRs and Event-
Based CVRs and that Event-Based CVRs are not tied to the performance of 
a specific security, the Exchange proposes to modify this provision to 
provide that a CVR will also be delisted when the issuer's common stock 
ceases to be listed on a national securities exchange.\22\ Pursuant to 
the proposed rule change, if either the related equity security to 
which the cash payment at maturity is tied or the common stock of a CVR 
issuer ceases to be listed on a national securities exchange, the CVR 
will promptly be delisted and the Exchange will not have discretion to 
continue listing the CVR.\23\
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    \22\ See id.
    \23\ See Notice, supra note 3, at 21862; Amendment No. 1.
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    Finally, the Exchange proposes to update a reference in Section 
703.18 of the Manual to ``New York Stock Exchange, Inc.'' by replacing 
it with a reference to ``New York Stock Exchange LLC,'' which is the 
correct current legal entity name for the Exchange. In addition, the 
Exchange proposes to add an introductory sentence prior to the 
information circular form description contained in Section 703.18 of 
the Manual. The Exchange represents that it intends to issue an 
information circular as described in Section 703.18 of the Manual 
immediately prior to the listing of any CVR, including any Event-Based 
CVR to inform members and member organizations of the special 
characteristics and risks of CVRs, as well as the suitability 
requirements and other applicable rules.\24\
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    \24\ See Notice, supra note 3, at 21862.
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    The Exchange further represents that it will monitor activity in 
CVRs, including Event-Based CVRs, to identify and deter any potential 
improper trading activity in such securities and will adopt enhanced 
surveillance procedures to enable it to monitor CVRs alongside the 
common equity securities of the issuer or its affiliates, as 
applicable.\25\ The Exchange also states that it will rely on its 
existing trading surveillances, administered by the Exchange or the 
Financial Industry Regulatory Authority (``FINRA'') on behalf of the 
Exchange, which are designed to detect violations of Exchange rules and 
applicable federal securities laws.\26\
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    \25\ See id.
    \26\ See id.
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III. Discussion and Commission Findings

    The Commission finds that the proposed rule change, as modified by 
Amendment No. 1, is consistent with the requirements of the Act and the 
rules and regulations thereunder applicable to a national securities 
exchange and, in particular, the requirements of Section 6(b) of the 
Act and the rules and regulations thereunder. Specifically, the 
Commission finds that the proposal is consistent with Section 6(b)(5) 
of the Act,\27\ which requires that an exchange have rules designed to, 
among other things, prevent fraudulent and manipulative acts and 
practices, remove impediments to and perfect the mechanisms of a free 
and open market and a national market system, protect investors and the 
public interest, and not permit unfair discrimination between 
customers, issuers, brokers, or dealers.\28\
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    \27\ 15 U.S.C. 78f(b)(5).
    \28\ In approving this proposed rule change, the Commission 
notes that it has considered the proposed rule's impact on 
efficiency, competition, and capital formation. See 15 U.S.C. 
78c(f).
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    The development and enforcement of adequate standards governing the 
initial and continued listing of securities on an exchange is an 
activity of critical importance to financial markets and the investing 
public. Listing standards, among other things, serve as a means for an 
exchange to screen issuers and to provide listed status only to bona 
fide companies that have or will have sufficient public float, investor 
base, and trading interest to provide the depth and liquidity necessary 
to promote fair and orderly markets. Meaningful listing standards are 
especially important given the expectations of investors regarding the 
nature of securities that have achieved an exchange listing and the 
role of an exchange in overseeing and assuring compliance with its 
listing standards. Once a security has been approved for initial 
listing, maintenance criteria allow an exchange to monitor the status 
and trading characteristics of that issue to ensure that it continues 
to meet the exchange's standards for market depth and liquidity so that 
fair and orderly markets can be maintained.
    CVRs are typically used as consideration offered to the 
shareholders of the target company in a business combination 
transaction, such as a merger or an exchange offer. As described above, 
the Exchange has proposed to adopt listing standards for Event-Based 
CVRs as well as modify the standards currently applicable to Price-
Based CVRs. CVRs have unique

[[Page 42969]]

characteristics that combine features of debt, equity, and securities 
derivative instruments.\29\ The Commission believes that the Exchange's 
proposal to establish listing criteria for Event-Based CVRs should 
adequately address the unique concerns raised by the listing of such 
securities and should help to ensure that only substantial companies 
capable of meeting their financial obligations can list such CVRs on 
the Exchange, thereby protecting investors and the public interest 
consistent with the Act. The Commission further believes that, for many 
of the same reasons as noted for Event-Based CVRs, the Exchange's 
proposed revisions to its current listing criteria applicable to Price-
Based CVRs are consistent with the Act and the protection of investors. 
The proposal, as discussed below, should also aid the Exchange in 
maintaining fair and orderly markets for CVRs and preventing fraudulent 
and manipulative acts and practices.
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    \29\ See Securities Exchange Act Release No. 28072 (May 30, 
1990), 55 FR 23166 (June 6, 1990) (SR-NYSE-90-15) (order approving 
original listing standards for CVRs on the Exchange).
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    The Exchange's proposed quantitative listing standards should help 
to ensure that only substantial companies capable of meeting their 
financial obligations issue Event-Based CVRs.\30\ This is important in 
light of the contingent financial obligations created by these 
instruments, and should serve to protect investors and the public 
interest by ensuring that the companies listing Event-Based CVRs on the 
Exchange are of substantial size, which can help to indicate such 
companies have sufficient financial means to meet their settlement 
obligations. Specifically, an issuer of an Event-Based CVR must have 
assets in excess of $100 million, $100 million in market value of 
publicly-held shares,\31\ a price per share of at least $4.00,\32\ and 
$200 million in global market capitalization at the time of listing or, 
in the alternative, it meets the Earnings Test in Section 102.01C of 
the Manual.\33\ Taken together, the Commission believes these criteria 
are important for an issuer to meet to in order to list an Event-Based 
CVR on the Exchange, as well as for the listing of Price-based CVRs. In 
addition, as with Price-Based CVRs, an Event-Based CVR issue must have 
at least one million CVRs outstanding, at least 400 holders, a minimum 
life of one year, and at least $4 million market value.\34\ While the 
distribution and liquidity standards applicable to CVRs can help to 
ensure there should be adequate depth, liquidity, and investor interest 
to support an exchange listing, the issuer requirements will provide 
some minimum level of indicia that the issuer of a CVR should be able 
to meet any future payment obligations to shareholders of Event-Based, 
as well as Price-Based, CVRs pursuant to the applicable CVR agreement.
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    \30\ An issuer must also comply with the corporate governance 
requirements of either the Exchange or the national securities 
exchange where its common stock or equity security is listed.
    \31\ See Section 102.01B of the Manual.
    \32\ See id.
    \33\ See Section 102.01C of the Manual. See also supra note 19 
(describing the requirements of the Earnings Test); proposed Section 
703.18(A) of the Manual.
    \34\ See Section 703.18(B) of the Manual.
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    The Commission recognizes that the current quantitative standards 
for Price-Based CVRs require the company issuing the CVR to meet the 
NYSE earnings requirements in order to list a CVR. While earnings at 
the time of listing of a CVR can provide an indication that a company 
should be able to meet its financial obligations on the CVR in the 
future, the Commission recognizes that earnings may not necessarily be 
the only indicia that illustrates that a company can meet its 
obligations under the terms of the CVR. Given that most listed 
companies now initially list on the Exchange using the Global Market 
Capitalization Test, that the Commission has found that such standards 
are consistent with the Act, and that the Exchange is retaining the 
requirement that the issuer of a CVR have assets in excess of $100 
million and must meet the requirements set forth in Section 102.01B of 
the Manual,\35\ the Commission believes it is reasonable for the 
Exchange to allow CVRs to be listed by companies that meet these new 
requirements.
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    \35\ See text accompanying supra notes 14-15 (describing these 
requirements as applicable to CVRs).
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    The Exchange also will not list a CVR if, at the time of the 
proposed listing, the issuer of the CVR has been deemed to be below 
compliance on an ongoing basis with the listing standards of the 
national securities exchange where either the equity security to whose 
price performance a Price-Based CVR is linked or the issuer's common 
stock is listed.\36\ The Commission believes that this is consistent 
with the protection of investors and the public interest pursuant to 
Section 6(b)(5) of the Act in that it would not permit a CVR to be 
listed on the Exchange if the listed company was below compliance, and 
therefore, potentially subject to delisting, on the national securities 
exchange where its common stock, or equity security linked to the CVR, 
was listed.\37\ Finally, as with Price-Based CVRs, Event-Based CVRs may 
be delisted when the aggregate market value of the publicly-held CVR is 
less than $1,000,000 and will be promptly delisted if either the 
related equity security to which the cash payment at maturity is tied 
\38\ or the issuer's common stock ceases to be listed on a national 
securities exchange.\39\ The Commission believes this latter 
requirement is important and consistent with the protection of 
investors and the public interest in that it ensures that the issuer of 
a CVR is meeting the continued quantitative and qualitative listing 
standards of a national securities exchange on an ongoing basis while 
the CVR is traded on the Exchange.
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    \36\ See Amendment No. 1. The issuer of a CVR also has to comply 
with the corporate governance requirements of the national 
securities exchange where its common stock or equity security is 
listed. An issuer of a CVR may not be below compliance with these 
corporate governance standards (as well as the quantitative 
continued listing standards) for its common stock or equity security 
on the national securities exchange where such security is listed at 
the time of the listing of the CVR. This should provide additional 
protections for investors in both Event-Based and Price-Based CVRs.
    \37\ This is similar to existing listing requirements for other 
types of securities. See, e.g., Sections 102.07 (listing standards 
for Equity Investment Tracking Stocks) and 102.08 (listing standards 
for Subscription Receipts) of the Manual.
    \38\ The Commission notes that the reference in this delisting 
provision to the related equity security to which the cash payment 
at maturity is tied applies primarily to Price-Based CVRs since an 
Event-Based CVR is tied to an event rather than the market price of 
another listed equity security.
    \39\ See Section 703.18 of the Manual; Amendment No. 1.
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    In addition, the proposed rule change would require that, prior to 
listing a Price-Based or Event-Based CVR, an issuer be required to 
publicly disclose all material terms of the CVR.\40\ The proposed rule 
change would also require the issuer of an Event-Based CVR to make 
public disclosure upon the occurrence of any event that must occur as a 
condition to the issuer's obligation to make a cash payment with 
respect to the CVR (or if such an event is deemed to have occurred 
pursuant to the terms of the documents governing the CVR) or at any 
such time as it becomes clear that a condition to the cash payment with 
respect to the CVR has not been met as required by the documents 
governing the terms of the CVR.\41\ The Commission believes that these 
disclosure requirements should help to protect investors and the public 
interest by ensuring that investors have sufficient information to make 
investment decisions relating to CVRs. The Commission further believes 
that the requirement to publicly disclose whether a specified event has 
occurred

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or failed to occur should help to protect investors and prevent 
fraudulent manipulative acts and practices by ensuring that investors 
and market participants will have access to important information 
needed to trade, and make investment decisions in, the CVRs and that 
such information will be publicly available to all investors at the 
same time. Notification to the Exchange, as required by Section 202.06 
of the Manual, will also provide the Exchange with the information 
necessary for it to determine whether a temporary trading halt may be 
appropriate for an Event-Based or Price-Based CVR in order to ensure 
fair and orderly markets.\42\
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    \40\ See Amendment No. 1.
    \41\ See id.
    \42\ Section 202.06 of the Manual, among other things, requires 
notification by listed companies to the Exchange at least 10 minutes 
before a material news announcement if such announcement is made 
between 7:00 a.m. and 4:00 p.m. so the Exchange can consider whether 
trading in the security should be temporarily halted.
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    Under the Exchange's proposal, Event-based CVRs are defined as an 
unsecured obligation of the issuer providing for a possible cash 
payment upon the occurrence of a specified event or events related to 
the business of the issuer or an affiliate of the issuer. The 
Commission believes that requiring that the CVR to be related to the 
business of the issuer or an affiliate of the issuer is an essential 
requirement that ensures that the company will have the information 
necessary to determine if the required events have occurred or not 
occurred within any required time frames under the terms of the CVR and 
make timely required public disclosure.\43\
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    \43\ The Commission notes that under the Exchange's rules, 
Price-Based CVRs are similarly related to the performance of an 
affiliate's equity security.
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    Moreover, the Exchange's proposed rule for listing Event-Based CVRs 
also addresses the additional regulatory concerns raised by these 
products. Like other financial products with unique features trading on 
the Exchange, Event-Based CVRs combine features of debt, equity, and 
securities derivative instruments. Consequently, this product may be 
more complex than straight stock, bond, or equity warrants. In this 
filing, the Exchange has proposed to distribute an information circular 
apprising member firms of the special characteristics, risks, and 
suitability obligations associated with Event-Based CVRs.\44\ The 
Commission believes distribution of this information circular will help 
to alert members to the special disclosure and suitability obligations 
that apply to Event-Based CVRs and that are relevant in making 
recommendations for investors to purchase such securities.\45\
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    \44\ See Notice, supra note 3, at 21862; infra, note 45. See 
also proposed Section 703.18 of the Manual.
    \45\ In particular, the circular states, among other things, 
that it is suggested that transactions in CVRs be recommended only 
to investors whose accounts have been approved for options trading 
and that members making recommendations in CVRs should make a 
determination that the customer has such knowledge and experience in 
financial matters that the customer may reasonably be expected to be 
capable of evaluating the risks and special characteristics, and is 
financially able to bear the risks, of a recommendation to invest in 
CVRs. These requirements, among others set forth in the circular, 
should help to ensure that members recommend transactions only to 
those customers with an understanding of the risks attendant to the 
trading of Event-Based CVRs. The Commission notes that the 
information circular will be in the same form as the one the 
Exchange currently distributes in connection with Price-Based CVRs. 
See proposed Section 703.18 of the Manual.
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    The Exchange will also monitor activity in Event-Based CVRs to 
identify and deter any potential improper trading activity in such 
securities and will adopt enhanced surveillance procedures to enable it 
to monitor Event-Based CVRs alongside the common equity securities of 
the issuer or its affiliates, as applicable. Since news and information 
concerning a company and its primary equity security or common stock 
can have an impact on the company's Event-Based CVRs, this enhanced 
surveillance should help to monitor the trading activity in the Event-
Based CVRs.\46\ To the extent the common equity security is traded on 
another national securities exchange, these procedures are expected to 
ensure proper coordination. The Commission believes that these 
safeguards and standards should help to ensure that the listing, and 
continued listing, of any Event-Based CVRs on the Exchange (as well as 
Price-Based CVRs under the revised listing standards) will be 
consistent with investor protection, the public interest, and the 
maintenance of fair and orderly markets. In this regard, the Commission 
expects the Exchange to thoroughly review any potential listing of 
Event-Based CVRs, as well as Price-Based CVRs, to ensure that its 
listing standards have been met and continue to be met, as well as to 
monitor trading in the Event-Based and Priced-Based CVRs and related 
common stock or equity security of the issuer.
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    \46\ As noted above, the Exchange will also rely on its existing 
trading surveillances, administered by the Exchange or FINRA on 
behalf of the Exchange, which are designed to detect violations of 
Exchange rules and applicable federal securities laws.
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    Based on the above, the Commission believes the proposed rule 
change is reasonable and should provide for the listing of Event-Based 
CVRs, with baseline investor protection and other standards. The 
Commission believes, as discussed above, that the Exchange has 
developed sufficient standards to allow the listing of Event-Based CVRs 
on the Exchange and finds the proposal consistent with the requirements 
set forth under the Act, and in particular, Section 6(b)(5). For 
similar reasons, the Commission finds that the revised standards for 
Price-Based CVRs are also consistent with the Act.\47\
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    \47\ 15 U.S.C. 78s(b)(4) and (b)(5). The Commission further 
believes that the Exchange's proposal to update a reference in the 
rule text and make other conforming changes to Section 703.18 of the 
Manual is consistent with the Act in that it will enhance the 
clarity of the proposed rule and thereby reduce potential investor 
confusion.
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IV. Solicitation of Comments on Amendment No. 1 to the Proposed Rule 
Change

    Interested persons are invited to submit written data, views, and 
arguments concerning whether Amendment No. 1 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 rule-comments@sec.gov. Please include 
File Number SR-NYSE-2019-14 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-2019-14. 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 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 the filing also will be available for inspection 
and copying at the principal

[[Page 42971]]

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-2019-14, 
and should be submitted on or before September 9, 2019.

V. Accelerated Approval of Proposed Rule Change, as Modified by 
Amendment No. 1

    The Commission finds good cause to approve the proposed rule 
change, as modified by Amendment No. 1, prior to the thirtieth day 
after the date of publication of notice of the filing of Amendment No. 
1 in the Federal Register. As discussed above, in Amendment No. 1, the 
Exchange revised the proposal to: (1) Require public disclosure of all 
material terms of a CVR prior to listing; (2) require public disclosure 
of an occurrence of any event or events upon which a CVR payment is 
conditioned, or the failure of such event or events to occur, in 
accordance with Sections 202.05 and 202.06 of the Manual; (3) specify 
that the Exchange will not list a CVR if, at the time of the proposed 
listing, the issuer is below compliance with applicable listing 
standards; (4) state that, in addition to its original proposal to 
promptly delist any CVR when the issuer's common stock ceases to be 
listed on a national securities exchange, the Exchange will also 
promptly delist a CVR when the related equity security to which the 
cash payment at maturity is tied is no longer listed on a national 
security exchange; and (5) make technical, clarifying changes.
    The Commission believes that Amendment No. 1 does not raise any 
novel regulatory issues or make any significant substantive changes to 
the original proposal, which was subject to a full notice and comment 
period during which no comments were received. Rather, Amendment No. 1 
strengthens the original proposal by requiring additional public 
disclosure of important information in connection with an Exchange-
listed CVR, which will increase transparency to investors in CVRs and 
provide the Exchange with the information necessary to determine when a 
temporary trading halt in an Event-Based CVR may be appropriate in 
order to better maintain a fair and orderly market. Amendment No. 1 
also provides additional specificity regarding the circumstances in 
which the Exchange will not permit the listing of a CVR, or will delist 
a CVR, which will provide additional protections for potential 
investors in CVRs. The Commission also believes that Amendment No. 1 
provides additional accuracy, clarity, and justification to the 
proposal, thereby facilitating the Commission's ability to make the 
findings set forth above to approve the proposal. Accordingly, the 
Commission finds good cause, pursuant to Section 19(b)(2) of the 
Act,\48\ to approve the proposed rule change, as modified by Amendment 
No. 1, on an accelerated basis.
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    \48\ 15 U.S.C. 78s(b)(2).
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VI. Conclusion

    It is therefore ordered, pursuant to Section 19(b)(2) of the 
Act,\49\ that the proposed rule change (SR-NYSE-2019-14), as modified 
by Amendment No. 1, be, and hereby is, approved on an accelerated 
basis.
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    \49\ 15 U.S.C. 78s(b)(2).
    \50\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\50\
Jill M. Peterson,
Assistant Secretary.
[FR Doc. 2019-17694 Filed 8-16-19; 8:45 am]
 BILLING CODE 8011-01-P


