[Federal Register Volume 85, Number 83 (Wednesday, April 29, 2020)]
[Notices]
[Pages 23872-23874]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-09036]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-88734; File No. SR-NYSE-2020-15]


Self-Regulatory Organizations; New York Stock Exchange LLC; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To 
Amend Section 902.02 of the NYSE Listed Company Manual To Waive Initial 
Listing Fees and First Partial Year Annual Fees for Certain Companies 
Listing Upon Closing of an Acquisition of a Special Purpose Acquisition 
Company

April 23, 2020.
    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 13, 2020, 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 Substance 
of the Proposed Rule Change

    The Exchange proposes to amend Section 902.02 of the NYSE Listed 
Company Manual (the ``Manual'') to waive initial listing fees and the 
first partial year annual fee for any company not listed on a national 
securities exchange that is listing upon closing of its acquisition of 
a special purpose acquisition company listed on another national 
securities exchange. 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 the 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The Exchange proposes to amend Section 902.02 of the Manual to 
waive initial listing fees and the first partial year annual fee for 
any company not listed on a national securities exchange that is 
listing upon closing of its acquisition of a special purpose 
acquisition company (``SPAC'') listed on another national securities 
exchange.
    When a SPAC consummates its business combination, it may choose a 
new listing venue for its post-business

[[Page 23873]]

combination existence as an operating company. In most such cases, the 
SPAC is the legal acquirer in the business combination transaction and 
thus the company transferring its listing to the NYSE is the same 
entity as was listed on the other national securities exchange prior to 
the acquisition (i.e., the SPAC). When a SPAC that is the legal 
acquirer transfers its listing to the NYSE following the business 
combination, the initial listing fee and first partial year annual fee 
are waived. Specifically, Section 902.02 of the Manual provides that 
any company listing any class of equity securities upon transfer from 
another market will not be subject to any initial listing fees in 
connection with such listing (including, if applicable, the one-time 
special charge of $50,000 payable in connection with the listing of any 
new class of common shares). Similarly, Section 902.02 also provides 
that issuers transferring the listing of their primary class of common 
shares from another national securities exchange are not required to 
pay annual fees with respect to that primary class of common shares or 
any other class of securities transferred in conjunction therewith for 
the remainder of the calendar year in which the transfer occurs.
    However, in fulfilling the requirements for a SPAC to complete an 
acquisition under applicable exchange rules, occasionally the SPAC is 
not the legal acquirer in the business combination and, instead, the 
business combination is structured so that the SPAC is acquired by the 
operating company. Under the current NYSE rules, a company listing in 
connection with its acquisition of a SPAC listed on another national 
securities exchange would not benefit from a similar waiver of listing 
fees.
    To address this disparity, the Exchange proposes to amend the fee 
waiver provisions of Section 902.02 of the Manual. Specifically, the 
Exchange proposes to extend the waiver of the initial listing fee 
applicable to transfers to any company that was unlisted immediately 
prior to the initial listing on the Exchange of any class of equity 
securities upon closing of its acquisition of a SPAC that had a class 
of equity securities listed on another national securities exchange 
prior to the closing of such acquisition. Similarly, the Exchange 
proposes to extend to any company that is not listed immediately prior 
to listing its primary class of common shares upon closing of its 
acquisition of a SPAC the benefits of the provision in Section 902.02 
that waives for companies transferring their primary class of common 
shares from another exchange the requirement to pay annual fees with 
respect to that primary class of common shares or any other class of 
securities transferred in conjunction therewith for the remainder of 
the calendar year in which the transfer occurs. The decision whether to 
structure a business combination with the SPAC as the legal acquirer 
rather than the other party does not result in the listing of a 
substantively different entity. Accordingly, the Exchange believes 
there is no basis for charging fees purely on the basis of the 
structure of the business combination chosen by the parties.
    The Exchange does not expect there to be a significant number of 
listings in which this proposed fee waiver will be applicable. 
Consequently, the proposed rule change would not affect the Exchange's 
commitment of resources to its regulatory oversight of the listing 
process or its regulatory programs.
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with Section 6(b) of the Act,\4\ in general, and furthers the 
objectives of Section 6(b)(4) \5\ of the Act, in particular, in that it 
is designed to provide for the equitable allocation of reasonable dues, 
fees, and other charges. The Exchange also believes that the proposed 
rule change is consistent with Section 6(b)(5) of the Act,\6\ 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 
and is not designed to permit unfair discrimination between customers, 
issuers, brokers, or dealers.
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    \4\ 15 U.S.C. 78f(b).
    \5\ 15 U.S.C. 78f(b)(4).
    \6\ 15 U.S.C. 78f(b)(5).
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The Proposed Change Is Reasonable
    he [sic] Exchange operates in a highly competitive marketplace for 
the listing of equity securities. The Commission has repeatedly 
expressed its preference for competition over regulatory intervention 
in determining prices, products, and services in the securities 
markets.
    The Exchange believes that the ever shifting market share among the 
exchanges with respect to new listings and the transfer of existing 
listings between competitor exchanges demonstrates that issuers can 
choose different listing markets in response to fee changes. 
Accordingly, competitive forces constrain exchange listing fees. Stated 
otherwise, changes to exchange listing fees can have a direct effect on 
the ability of an exchange to compete for new listings and retain 
existing listings.
    Given this competitive environment, the Exchange believes that the 
proposed fee waivers are reasonable because the cost of paying initial 
listing fees and the first part year of annual fees to the NYSE acts as 
a disincentive to listing on the Exchange.
The Proposal Is an Equitable Allocation of Fees
    The Exchange believes that the proposed fee waivers are equitable 
as it being implemented solely to avoid an anomalous fee outcome 
arising from the manner in which a SPAC business combination has been 
structured.
The Proposal Is Not Unfairly Discriminatory
    The Exchange believes that the proposal is not unfairly 
discriminatory, because the proposed waivers are solely intended to 
avoid the impact on a small group of issuers of an anomalous fee 
outcome arising from the manner in which a SPAC business combination 
has been structured and not to provide them with any benefit that would 
place them in a more favorable position than other newly-listed 
companies, including specifically other previously unlisted companies 
that list upon completion of an acquisition of a company listed on the 
NYSE or another national securities exchange.\7\
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    \7\ Section 902.03 of the Manual includes separate fee 
limitations that benefit a company that is not listed on a national 
securities exchange immediately prior to the time that it lists in 
connection with its acquisition of an NYSE listed company.
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    A SPAC is a shell company with no business operations. 
Consequently, the parties to a business combination between a SPAC and 
an operating company have significant flexibility in how they choose to 
structure the business combination, including in determining which 
entity will be the legal acquirer. Accordingly, the Exchange is 
proposing to amend its fee structure to reflect the incidental nature 
of the resulting SPAC business combination and to avoid treating 
companies undergoing similar business combinations disparately
    By contrast to a SPAC business combination, there are typically 
more significant limitations on the ability of the parties to a merger 
between two operating companies to make decisions

[[Page 23874]]

about which entity will be the acquirer, including, for example, the 
desire to maintain the acquirer's SEC registration and concerns about 
how to present the combined entity to the market. As such, it is much 
more likely that the listing fee implications of how the transaction is 
structured would be a major consideration for the parties to a SPAC 
business combination than would be the case in a merger between two 
operating companies. As the implications of the proposed fee waivers 
for decisions relating to the transaction structures utilized by 
unlisted companies listing in connection with the acquisition of a SPAC 
are typically greater than for other companies listing in conjunction 
with merger transactions, the proposed waivers are not unfairly 
discriminatory.
    Finally, the Exchange believes that it is subject to significant 
competitive forces, as described below in the Exchange's statement 
regarding the burden on competition.
    For the foregoing reasons, the Exchange believes that the proposal 
is consistent with the Act.

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.
Intramarket Competition
    The proposed waiver will be available to all similarly situated 
issuers on the same basis. The Exchange does not believe that the 
proposed waivers will have any meaningful effect on the competition 
among issuers listed on the Exchange.
Intermarket Competition
    The Exchange operates in a highly competitive market in which 
issuers can readily choose to list new securities on other exchanges 
and transfer listings to other exchanges if they deem fee levels at 
those other venues to be more favorable. Because competitors are free 
to modify their own fees in response, and because issuers may change 
their listing venue, the Exchange does not believe its proposed fee 
change can impose any burden on intermarket competition

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) \8\ of the Act and subparagraph (f)(2) of Rule 19b-
4 \9\ thereunder, because it establishes a due, fee, or other charge 
imposed by the Exchange.
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    \8\ 15 U.S.C. 78s(b)(3)(A).
    \9\ 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) \10\ of the Act to determine whether the proposed 
rule change should be approved or disapproved.
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    \10\ 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-NYSE-2020-15 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-2020-15. 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-NYSE-2020-15 and should be submitted on 
or before May 20, 2020.
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    \11\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\11\
J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2020-09036 Filed 4-28-20; 8:45 am]
BILLING CODE 8011-01-P


