81 FR 90893 - Self-Regulatory Organizations; New York Stock Exchange LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change Amending Section 902.04 of the NYSE Listed Company Manual

SECURITIES AND EXCHANGE COMMISSION

Federal Register Volume 81, Issue 241 (December 15, 2016)

[Federal Register Volume 81, Number 241 (Thursday, December 15, 2016)]
[Notices]
[Pages 90893-90895]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2016-30079]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-79515; File No. SR-NYSE-2016-80]


Self-Regulatory Organizations; New York Stock Exchange LLC; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change 
Amending Section 902.04 of the NYSE Listed Company Manual

December 9, 2016.
    Pursuant to Section 19(b)(1) \1\ of the Securities Exchange Act of 
1934 (``Act'' or ``Exchange Act'') \2\ and Rule 19b-4 thereunder,\3\ 
notice is hereby given that, on November 30, 2016, New York Stock 
Exchange LLC (``NYSE'' or ``Exchange'') filed with the Securities and 
Exchange Commission (``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 902.04 of the NYSE Listed 
Company Manual (the ``Manual'') to adopt a fee discount for issuers 
that list 20 or more closed-end funds on the Exchange. The proposed 
rule change is available on the Exchange's Web site 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 902.04 of the Manual to 
adopt a fee discount for issuers that list 20 or more closed-end funds 
on the Exchange. The proposed new discount will take effect on January 
1, 2017. Currently, fund families that list between three and 14 
closed-end funds receive a 5% discount off the calculated Annual Fee 
for each fund listed, and those with 15 or more listed closed-end funds 
receive a discount of 15%.\4\ Aggregate Annual Fees for any fund family 
are capped at $1,000,000 in any given year.
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    \4\ Closed-end funds are charged Annual Fees at a rate of 
$0.001025 per share.
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    Currently, a small number of fund families benefit from the 
$1,000,000 fee cap. In most cases, fund families that benefit from the 
cap have a significant number of funds listed on the Exchange

[[Page 90894]]

and would otherwise have paid fees far in excess of $1,000,000. 
Therefore, the effective discount they receive to their uncapped fees 
typically exceeds 50%.
    There are a number of other, smaller fund families that have 20 or 
more funds listed on the Exchange whose aggregate fees approach but do 
not exceed $1,000,000 and who therefore do not benefit from the cap. 
Consequently, those fund families pay fees at a far higher effective 
fee rate than is paid by those fund families whose fees are capped. The 
purpose of the proposed 50% discount is to significantly reduce this 
disparity.
    The Exchange believes that a reduction in the effective fee rate 
paid by fund families that have 20 or more listed funds, but do not 
benefit from the cap, would create an incentive for them to initiate 
new funds, increasing competition in the industry. In particular, the 
Exchange believes that the proposed amendment may create an incentive 
for fund families to create a greater number of smaller funds than is 
currently the case, as smaller funds are particularly concerned about 
limiting their operating costs.
    The Exchange believes that it is not unfairly discriminatory to 
provide a greater discount for fund families listing more than [sic] 20 
funds than for smaller fund families, as a significant amount of the 
costs of conducting the Exchange's regulatory activities and providing 
client services with respect to a fund family are fixed costs and, 
consequently, the cost to the Exchange of servicing any incremental 
fund are smaller when that fund is part of a larger fund family than 
when it is part of a smaller fund family.
    The Exchange does not believe that the proposed fee discount will 
have any effect on its ability to fund its regulatory activities.
    The Exchange also proposes to amend Section 902.04 to remove 
obsolete references to fee levels that are no longer applicable.
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with Section 6(b) of the Exchange Act,\5\ in general, and furthers the 
objectives of Sections 6(b)(4) \6\ of the Exchange Act, in particular, 
in that it is designed to provide for the equitable allocation of 
reasonable dues, fees, and other charges and is not designed to permit 
unfair discrimination among its members and issuers and other persons 
using its facilities. The Exchange also believes that the proposed rule 
change is consistent with Section 6(b)(5) of the Exchange Act, in 
particular in that it is designed to promote just and equitable 
principles of trade, to foster cooperation and coordination with 
persons engaged in regulating, clearing, settling, processing 
information with respect to, and facilitating transactions in 
securities, to remove impediments to and perfect the mechanism of a 
free and open market and a national market system, and, in general, to 
protect investors and the public interest.
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    \5\ 15 U.S.C. 78f(b).
    \6\ 15 U.S.C. 78f(b)(4).
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    The Exchange believes that the proposed rule change is consistent 
with Sections 6(b)(4) and 6(b)(5) of the Exchange Act in that it 
represents an equitable allocation of fees and does not unfairly 
discriminate among listed companies. In particular, the Exchange 
believes the proposal represents an equitable allocation of fees and is 
not unfairly discriminatory because it would create an effective fee 
rate for a group of smaller fund families that is more consistent with 
the effective fee rate paid by larger fund families that benefit from 
the fee cap provision of the rule. The proposed amendment would also 
promote competition, as it would lower the costs of operating a fund 
for many issuers and will therefore incentivize those issuers to create 
new funds.
    The Exchange believes that it is not unfairly discriminatory to 
provide a greater discount for fund families listing more than [sic] 20 
funds than for smaller fund families, as a significant amount of the 
costs of conducting the Exchange's regulatory activities and providing 
client services with respect to a fund family are fixed costs and, 
consequently, the cost to the Exchange of servicing any incremental 
fund are smaller when that fund is part of a larger fund family than 
when it is part of a smaller fund family.

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 Exchange Act. The proposed rule 
change is designed to provide a group of smaller issuers of closed-end 
funds with an effective fee rate that is closer to the effective rate 
charged to larger issuers that benefit from the rule's fee cap 
provision. The market for listing services is extremely competitive. 
Each listing exchange has a different fee schedule that applies to 
issuers seeking to list securities on its exchange. Issuers have the 
option to list their securities on these alternative venues based on 
the fees charged and the value provided by each listing. Because 
issuers have a choice to list their securities on a different national 
securities exchange, the Exchange does not believe that the proposed 
fee change imposes a burden on 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) \7\ of the Act and subparagraph (f)(2) of Rule 19b-
4 \8\ thereunder, because it establishes a due, fee, or other charge 
imposed by the Exchange.
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    \7\ 15 U.S.C. 78s(b)(3)(A).
    \8\ 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) \9\ of the Act to determine whether the proposed 
rule change should be approved or disapproved.
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    \9\ 15 U.S.C. 78s(b)(2)(B).
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IV. Solicitation of Comments

    Interested persons are invited to submit written data, views, and 
arguments concerning the foregoing, including whether the proposed rule 
change is consistent with the Act. Comments may be submitted by any of 
the following methods:

Electronic Comments

     Use the Commission's Internet comment form (http://www.sec.gov/rules/sro.shtml); or
     Send an email to [email protected]. Please include 
File Number SR-NYSE-2016-80 on the subject line.

Paper Comments

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

All submissions should refer to File Number SR-NYSE-2016-80. This file

[[Page 90895]]

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 Web site (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 Web site viewing and 
printing in the Commission's Public Reference Room, 100 F Street NE., 
Washington, DC 20549 on official business days between the hours of 
10:00 a.m. and 3:00 p.m. Copies of such filing also will be available 
for inspection and copying at the principal office of the Exchange. All 
comments received will be posted without change; the Commission does 
not edit personal identifying information from submissions. You should 
submit only information that you wish to make available publicly. All 
submissions should refer to File Number SR-NYSE-2016-80, and should be 
submitted on or before January 5, 2017.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\10\
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    \10\ 17 CFR 200.30-3(a)(12).
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Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2016-30079 Filed 12-14-16; 8:45 am]
 BILLING CODE 8011-01-P