[Federal Register Volume 84, Number 246 (Monday, December 23, 2019)]
[Notices]
[Pages 70582-70584]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2019-27588]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-87773; File No. SR-LTSE-2019-04]


Self-Regulatory Organizations; Long-Term Stock Exchange; Notice 
of Filing and Immediate Effectiveness of Proposed Rule Change Relating 
to Dual Listing

December 17, 2019.
    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 December 5, 2019, Long-Term Stock Exchange (``LTSE'' or 
the ``Exchange'') filed with the Securities and Exchange Commission 
(the ``Commission'') the proposed rule change as described in Items I 
and II 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 Substance 
of the Proposed Rule Change

    LTSE proposes to add two definitions to Rule 1.160 to clarify the 
meaning of two amended terms--LTSE-Primary-Listed Security and Non-
LTSE-Primary-Listed Security--in the Rule 11 Series (Trading Rules) in 
the context of an exchange that provides for dually-listed securities.
    The text of the proposed rule change is available at the Exchange's 
website at https://longtermstockexchange.com/, at the principal office 
of the Exchange, and at the Commission's Public Reference Room.

II. Self-Regulatory Organization's Statement on 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 self-regulatory organization 
has prepared summaries, set forth in sections A, B, and C below, of the 
most significant aspects of such statements.

A. Self-Regulatory Organization's Statement on the Purpose of, and the 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The rules of the Exchange provide for dual listings.\4\ The concept 
of dual listing is not new. Companies have dually listed their 
securities on NYSE and Nasdaq,\5\ and more recently, companies dual 
list their securities on a foreign and U.S. exchange.\6\ One of the 
reasons a company may dual list is to commit to comply with a more 
stringent regulatory regime, such as an exchange's listing 
standards.\7\ The Commission recently approved LTSE Rule 14.425, in 
which the Exchange enhanced its listing standards to require companies 
that list with the Exchange to adopt and publish a Long-Term 
Stakeholder Policy, a Long-Term Strategy Policy, a Long-Term

[[Page 70583]]

Compensation Policy, a Long-Term Board Policy and a Long-Term Investor 
Policy (collectively, ``Long-Term Policies'').\8\
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    \4\ See Rule 14.210 (Dually-Listed Securities).
    \5\ See Craig Karmin, Nasdaq Draws 6 Dual Listings, Including H-
P and Schwab, Wall St. J. (Jan. 13, 2004), https://www.wsj.com/articles/SB107391401136003100.
    \6\ Dual listing in the United States and a foreign jurisdiction 
allows a company to more easily reach a global set of investors and 
benefit from a multitude of trading venues. See International 
Investing, Sec. & Exch. Comm'n (Dec. 7, 2016), available at https://www.sec.gov/reportspubs/investor-publications/investorpubsininvesthtm.html (``Although most foreign stocks trade 
in the U.S. markets as ADRs, some foreign companies list their stock 
directly here as well as in their local market. For example, some 
Canadian stocks that are listed and trade on Canadian markets are 
also listed and trade directly in U.S. markets, rather than as ADRs. 
Some foreign companies list their securities in multiple markets, 
which may include U.S. markets.'').
    \7\ See Securities Exchange Act Release No. 50741 (Nov. 29, 
2004), 69 FR 70296, 70298 (Dec. 3, 2004) (``Nasdaq believes issuers 
that become dually listed voluntarily undertake a second set of 
regulations and therefore demonstrate their commitment to regulatory 
excellence.''). See generally Cecilia Caglio, et al., Going Public 
Abroad 3 (DERA, Working Paper, Nov. 2013), available at https://www.sec.gov/files/rsfi-wp2013-01.pdf (``[G]oing public in a market 
with more stringent securities laws can also maximize proceeds by 
enabling the issuing firm to credibly commit to greater ongoing 
disclosure.'').
    \8\ See Securities Exchange Act Release No. 86722 (Aug. 21, 
2019), 84 FR 44952 (Aug. 27, 2019).
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    Dually-Listed Securities as defined in the Exchange Rule 14.210 
refers to securities that also are listed on another national 
securities exchange registered with the Commission under Section 6(a) 
of the Act. Inasmuch as Dually-Listed Securities, by virtue of already 
being listed on another national securities exchange are eligible to 
trade on each of the registered national securities exchanges under 
Unlisted Trading Privileges (``UTP''), the primary benefit to an issuer 
from such a dual listing flows from its commitment to adhere to the 
Exchange's differentiated listing standards, e.g., the Long-Term 
Policies. The Long-Term Policies are intended to better enable 
companies to focus on long-term value creation, potentially enhancing 
opportunities for capital formation, including capital from long-term 
focused institutional investors and index funds that have established 
long-term focused mandates.
    The decision to offer companies the option of dually listing is not 
aimed at displacing the role of the primary listing market in the 
opening and closing auctions. Indeed, the Commission recently noted the 
role of the primary listing market in working with the Nasdaq and NYSE 
to provide transparency on how a closing price would be determined if a 
systems or technical issue prevented normal exchange operations.\9\ In 
that approval order, the Commission noted ``that the primary listing 
market's closing price for a security is relied upon by market 
participants for a variety of reasons, including, but not limited to, 
calculation of index values, calculation of the net asset value of 
mutual funds and exchange-traded products, and the price of derivatives 
that are based on the security.'' \10\
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    \9\ See Securities Exchange Act Release No. 78014 (June 8, 
2016), 81 FR 38755 (June 14, 2016).
    \10\ Id. at 38757. See also Research Note: Equity Market 
Volatility on August 24, 2015, Sec. & Exch. Comm'n (Dec. 2015), 
available at https://www.sec.gov/marketstructure/research/equity_market_volatility.pdf (discussing the impact of the opening 
and re-opening process at the primary listing market, noting that 
S&P Dow Jones Indices LLP (``S&P DJI'') generally uses prices from 
only the primary listing exchange for calculating index values, 
including the S&P 500 Index that provides the reference for 
triggering market-wide circuit breakers and the that the price of 
the opening cross on the primary listing exchange (if it occurs 
before 9:35) is used as a reference price for calculation of the 
first Limit Up-Limit Down price bands of a trading day).
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    To maintain the status quo and ensure that dual listings do not 
interfere with the primary listing market in various market operations, 
including managing the opening and closing auctions as well as 
addressing intra-day auctions as a result of market pauses or halts, 
the Exchange proposes to amend the term ``LTSE-listed security'' as 
used throughout the Rule 11 Series to ``LTSE-Primary-Listed Security'' 
and define it in Rule 1.160 (Definitions) to mean ``a class of 
securities listed on the Exchange for which the Exchange is the primary 
listing market.'' Likewise, the Exchange proposes to amend the term 
``non-LTSE-listed security'' as used throughout the Rule 11 Series to 
``Non-LTSE-Primary-Listed Security'' and define it in Rule 1.160 to 
mean ``(i) any UTP Security; and (ii) any Dually-Listed Securities, as 
provided for in Rule 14.210, which are not LTSE-Primary-Listed 
Securities.'' \11\ These proposed clarifications are already 
implemented in part in the supplementary material to Rule 14.210, which 
excludes the applicability of various provisions in Rule 11.282 
(Regulatory Trading Halts) to Dually-Listed Securities where LTSE is 
not the primary listing market. In reviewing the Rule 11 Series, the 
Exchange observed that there are other provisions in the Rule 11 Series 
that would benefit from similar clarity in the context of dual 
listings. In particular, the provisions applicable to a Market Maker's 
request to withdraw quotations in a security and terminate its 
registration in a security as contained in Rules 11.152(c)(1) and 
(e)(3), and in Rule 11.153(a), pertain to activity for LTSE-Primary-
Listed Securities and are proposed to be amended accordingly. 
Additionally, the provisions in Rule 11.190 describing the handling of 
market orders submitted before the open of the Regular Market Session 
are proposed to be amended in paragraphs (a)(2)(E)(ii) and (f)(1) to 
distinguish between the Auction process provided for in Rule 11.350, 
which applies to LTSE-Primary-Listed Securities, and the Opening 
Process provided for in Rule 11.231, which applies to Non-LTSE-Primary-
Listed Securities.\12\
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    \11\ ``UTP Security'' is defined in Rule 1.160 as ``any security 
that is not listed on the Exchange, but is traded on the Exchange 
pursuant to unlisted trading privileges.'' ``Dually-Listed 
Securities,'' as provided for in Rule 14.210, means ``a class of 
securities that has been approved for listing on another national 
securities exchange registered with the Commission pursuant to 
Section 6(a) of the Act.''
    \12\ The proposed rule change also would amend the title of Rule 
11.231.
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    Although Supplementary Material .01 to Rule 14.210 states that the 
Exchange shall continue to honor the trade halt authority of the 
primary listing market under the CQ and CTA Plans or the UTP Plan, as 
applicable, the proposed rule change would amend Rule 11.281(a)(8) to 
use the new proposed definitions in place of the more generic LTSE-
listed and non-LTSE-listed securities rule text. Similar amendments are 
proposed to Rule 11.282(a)(1) and (a)(4) with respect to Regulatory 
Trading Halts, with the latter addressing, in addition, American 
Depository Receipts (``ADRs'') that are LTSE-Primary-Listed Securities.
    Rule 11.330 describes various data products to be offered by the 
Exchange, and the proposed rule change would amend paragraph (a)(1) to 
clarify that the Auction Information to be provided via the LTSE Web 
Platform pertains to LTSE-Primary-Listed Securities. Lastly, as 
previously noted above, Rule 11.350 governs how auctions are conducted 
on the Exchange. To clarify that these provisions apply to primary 
listed securities, the term ``LTSE-listed security'' is proposed to be 
replaced with ``LTSE-Primary-Listed Security'' in Rule 11.350 
paragraphs (a)(1)(E)(i), (a)(10)-(13), (c)(2), (c)(2)(B), (c)(2)(D), 
(c)(2)(E), (c)(2)(F), (d)(2), (d)(2)(B), (d)(2)(D), (e), (e)(2)(C), 
(f), (f)(1)(A), (f)(2)(C)(iii), (f)(2)(E), (f)(3), (f)(3)(B)(ii), and 
Supplementary Material .02.
    In creating these two new definitions, the Exchange desires to 
maintain the definitions in Rule 1.160 in alphabetical order. However, 
to maintain flexibility to add or delete defined terms in the future, 
the Exchange proposes to remove specific cross-references to defined 
terms throughout the rule book, while keeping the cross-references to 
Rule 1.160, more generally.\13\ These proposed changes would remove the 
cross-reference to ``Rule 1.160(m)'' in Rule 14.202(h), and the 26 
cross-references to ``Rule 1.160(qq)'' in Rules 14.207(b)(1)-(2), 
14.501(c), and 14.505(k), and in the Supplementary Material to Rule 
14.207.
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    \13\ Very few of the definitions are cross-referenced to Rule 
1.160, and even fewer are done at the paragraph or subparagraph 
level.
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2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with the provisions of Section 6 of the Act,\14\ in general, and 
furthers the objectives of Section 6(b)(5) of the Act,\15\ in 
particular, in that it is designed to prevent fraudulent and 
manipulative acts and practices, promote just and equitable principles 
of trade, to foster cooperation and coordination with persons engaged 
in facilitating transactions in securities, to remove impediments to 
and perfect the mechanisms of a free and open market

[[Page 70584]]

and a national market system and, in general, to protect investors and 
the public interest. In this respect, the proposed rule change would 
help ensure that issuers, investors and the public more easily 
understand the meaning and operation of the Exchange's trading rules as 
applied to dually-listed securities.
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    \14\ 15 U.S.C. 78f.
    \15\ 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 Act.

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

    Written comments were neither solicited nor received.

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

    Because the proposed rule change does not: (i) Significantly affect 
the protection of investors or the public interest; (ii) impose any 
significant burden on competition; and (iii) become operative prior to 
30 days from the date on which it was filed, or such shorter time as 
the Commission may designate, if consistent with the protection of 
investors and the public interest, it has become effective pursuant to 
Section 19(b)(3)(A) of the Act \16\ and Rule 19b-4(f)(6) 
thereunder.\17\
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    \16\ 15 U.S.C. 78s(b)(3)(A).
    \17\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)(iii) 
requires a self-regulatory organization to give the Commission 
written notice of its intent to file the proposed rule change, along 
with a brief description and text of the proposed rule change, at 
least five business days prior to the date of filing of the proposed 
rule change, or such shorter time as designated by the Commission. 
The Exchange has satisfied this requirement.
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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) \18\ of the Act to determine whether the proposed 
rule change should be approved or disapproved.
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    \18\ 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 rule-comments@sec.gov. Please include 
File Number SR-LTSE-2019-04 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-LTSE-2019-04. 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 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-LTSE-2019-04 and should be submitted on 
or before January 13, 2020.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\19\
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    \19\ 17 CFR 200.30-3(a)(12).
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J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2019-27588 Filed 12-20-19; 8:45 am]
 BILLING CODE 8011-01-P


