[Federal Register Volume 85, Number 176 (Thursday, September 10, 2020)]
[Notices]
[Pages 55902-55904]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-20024]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-89773; File No. SR-NYSE-2020-40]


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 Listing Fees for Any Issuer 
Not Listed on a National Securities Exchange That Is Listing Upon 
Closing of Its Acquisition of a SPAC Listed on the NYSE

September 4, 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 August 25, 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 the NYSE. 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 the NYSE.
    When a SPAC consummates its business combination, the SPAC is 
typically the legal acquirer in the transaction and, provided it meets 
the continued listing standards applied in connection with a business 
combination by a listed SPAC, it can remain listed on the Exchange. 
Section 902.11 of the Manual specifies that a listed SPAC is not 
required to pay any supplemental listing fees for any shares issued in 
connection with its business combination, so there are no listing fees 
payable in connection with a business combination between an NYSE 
listed SPAC and a company which is not listed on a national securities 
exchange where the NYSE listed SPAC is the acquirer in the 
transaction.\4\ Similarly, the NYSE does not have any provision

[[Page 55903]]

for charging prorated annual fees with respect to shares of currently 
listed companies issued during the course of a calendar year (such 
shares are reflected in the full year annual fee bill for the next 
subsequent calendar year). As such, there are no prorated annual fees 
billed in connection with the issuance of additional shares upon 
consummation of a business combination by an NYSE listed SPAC in which 
the SPAC is the surviving legal entity. By contrast, if a company that 
is not listed on the NYSE or another national securities exchange 
merges with a NYSE listed SPAC and the non-listed company is the 
acquirer in the transaction, the non-listed company is treated as a new 
listing and must pay initial listing fees and prorated annual fees in 
relation to all shares issued and outstanding at the time of initial 
listing.\5\
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    \4\ Section 902.11 provides as follows:
    An Acquisition Company which remains listed upon consummation of 
its Business Combination will not be subject to any fees in relation 
to the issuance of any additional shares in connection with the 
consummation of the Business Combination or 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.
     As the treatment of the issuance of additional shares by a NYSE 
listed SPAC in connection with its business combination is 
specifically dealt with by the fee waiver set forth in Section 
902.11, the provisions of Section 902.03 with respect to the 
issuance of additional shares are inapplicable to issuances that 
qualify for the waiver under Section 902.11.
    \5\ Pursuant to an exception set forth in Section 902.03 of the 
Manual, in the case of transactions such as an a merger between a 
listed and an unlisted company in which the unlisted company is the 
survivor, listing fees for that newly listed issuer are calculated 
at a rate of 25% of total Listing fees for each class of securities 
being listed (to the extent that total calculated listing fee for a 
class of common shares would be greater than $295,000, the 
calculation would be 25% of the $295,000 maximum for a new listing 
of common shares). The special charge of $50,000 and the $150,000 
minimum charge applicable when an issuer first lists a class of 
common shares do not apply to these types of transactions.
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    To address this disparity, the Exchange proposes to amend the fee 
waiver provisions of Section 902.02 of the Manual. Specifically, 
Section 902.02 includes a waiver of the initial listing fee applicable 
to the listing of a company that is not itself listed on a national 
securities exchange immediately prior to its initial listing on the 
Exchange but is listing a class of equity securities upon closing of 
its acquisition of a SPAC which had a class of equity securities listed 
on another national securities exchange prior to the closing of such 
acquisition. The Exchange proposes to extend this waiver so that it 
will apply in cases where a company that is not itself listed on a 
national securities exchange immediately prior to its initial listing 
on the Exchange is listing a class of equity securities upon closing of 
its acquisition of a SPAC which had a class of equity securities listed 
on the NYSE prior to the closing of such acquisition. Similarly, 
Section 902.02 currently provides that the Exchange waives for 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 
requirement to pay annual fees with respect to that primary class of 
common shares or any other class of securities listed in conjunction 
therewith for the remainder of the calendar year in which the listing 
occurs. The Exchange also proposes to extend this waiver so that it 
will apply in cases where a company that is not itself listed on a 
national securities exchange immediately prior to its initial listing 
on the Exchange is listing a class of equity securities [sic] upon 
closing of its acquisition of a SPAC which had a class of equity 
securities listed on the Exchange prior to the closing of such 
acquisition. 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,\6\ in general, and furthers the 
objectives of Section 6(b)(4) \7\ 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,\8\ 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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    \6\ 15 U.S.C. 78f(b).
    \7\ 15 U.S.C. 78f(b)(4).
    \8\ 15 U.S.C. 78f(b)(5).
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The Proposed Change is Reasonable
    The 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.
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. Section 902.11 includes a specific waiver of all 
listing fees for the issuance of shares by an NYSE listed SPAC which 
remains listed upon consummation of its business combination in 
relation to the issuance of any additional shares in connection with 
the consummation of the business combination or 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. Similarly, the NYSE does 
not have any provision for charging prorated annual fees with respect 
to shares of currently listed companies issued during the course of a 
calendar year (such shares are reflected in the full year annual fee 
bill for the next subsequent calendar year). As such, there are no 
prorated annual fees billed in connection with the issuance of 
additional shares upon consummation of a business combination by an 
NYSE listed SPAC in which the SPAC is the surviving legal entity. By 
contrast, if a company that is not listed on the NYSE or another 
national securities exchange merges with a NYSE listed SPAC and the 
non-listed company is the acquirer in the transaction, the non-listed 
company is treated as a new listing and

[[Page 55904]]

must pay initial listing fees and prorated annual fees in relation to 
all shares issued and outstanding at the time of initial listing.
    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 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 proposed waiver will address an 
anomalous discrepancy in fee treatment between business combinations of 
NYSE listed SPACs and companies that are not listed on a national 
securities exchange based solely on which entity is the legal survivor 
in the transaction. 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) \9\ of the Act and subparagraph (f)(2) of Rule 19b-
4 \10\ thereunder, because it establishes a due, fee, or other charge 
imposed by the Exchange.
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    \9\ 15 U.S.C. 78s(b)(3)(A).
    \10\ 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) \11\ of the Act to determine whether the proposed 
rule change should be approved or disapproved.
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    \11\ 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-2020-40 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-2020-40. 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-2020-40 and should be submitted on 
or before October 1, 2020.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\12\
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    \12\ 17 CFR 200.30-3(a)(12).
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J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2020-20024 Filed 9-9-20; 8:45 am]
BILLING CODE 8011-01-P


