82 FR 18502 - Self-Regulatory Organizations; New York Stock Exchange LLC; Notice of Filing and Immediate Effectiveness of Proposal To Adopt a Fee Schedule for Acquisition Companies

SECURITIES AND EXCHANGE COMMISSION

Federal Register Volume 82, Issue 74 (April 19, 2017)

[Federal Register Volume 82, Number 74 (Wednesday, April 19, 2017)]
[Notices]
[Pages 18502-18504]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2017-07876]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-80456; File No. SR-NYSE-2017-14]


Self-Regulatory Organizations; New York Stock Exchange LLC; 
Notice of Filing and Immediate Effectiveness of Proposal To Adopt a Fee 
Schedule for Acquisition Companies

April 13, 2017.
    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 4, 2017, 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-

[[Page 18503]]

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 adopt a fee schedule for Acquisition 
Companies. 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 adopt a flat initial listing fee for 
Acquisition Companies and exempt Acquisition Companies from the 
Exchange's Initial Application Fee. Acquisition Companies (commonly 
referred to in the marketplace as ``special purpose acquisition 
companies'' or ``SPACs'') are listed pursuant to Section 102.06 of the 
NYSE Listed Company Manual (the ``Manual''). Currently, Acquisition 
Companies are subject to the initial listing and annual fee schedule 
set forth in Section 902.03 of the Manual and applied generally to 
listed operating companies.
    The Exchange proposes to adopt new Section 902.11 of the Manual to 
establish a separate listing fee schedule for Acquisition Companies. 
Under proposed Section 902.11, Acquisition Companies would be subject 
to a flat fee of $85,000 upon initial listing. Proposed Section 902.11 
would specify that the common stock and warrants listed by Acquisition 
Companies would continue to be subject to the annual listing fees set 
forth for those categories of securities in Section 902.03.
    Acquisition Companies typically sell units in their initial public 
offering, consisting of a common equity security and a whole or 
fractional warrant to purchase common stock.\4\ Holders of Acquisition 
Company units typically have the right to separate the units shortly 
after the IPO and the Exchange lists the common equity securities and 
the warrants (in addition to the units) upon separation.
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    \4\ The number of warrants included in the units sold in an 
Acquisition Company IPO varies. Sometimes there is a warrant to 
purchase one common share included as part of each unit. Recently 
the units sold in some Acquisition Company IPOs have included a 
fractional warrant to purchase a share. In order to exercise these 
fractional warrants or trade them separate from the units, an 
investor would need to acquire sufficient warrants to be able to 
exercise them for whole numbers of shares.
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    The flat initial listing fee in proposed Section 902.11 would be 
lower than the minimum initial listing fee applicable to Acquisition 
Companies under Section 902.03.\5\ The Exchange notes that Acquisition 
Companies differ in some important respects from traditional operating 
companies and believes that these differences make it reasonable to 
adopt a separate initial listing fee schedule for Acquisition 
Companies.
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    \5\ A new class of common stock listed on the NYSE is subject to 
a minimum initial listing fee of $125,000 and an additional one-time 
special charge of $50,000. As such, the minimum aggregate initial 
listing fees an Acquisition Company must pay in relation to its 
common stock alone amounts to $175,000. In addition, an Acquisition 
Company has to pay initial listing fees for its warrants under the 
schedule set forth for short-term securities (i.e., securities with 
a maximum life of no more than seven years) in Section 902.06. 
Consequently, the minimum fees currently charged in connection with 
an Acquisition Company initial listing far exceed the proposed flat 
fee of $85,000.
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    An Acquisition Company's listing often lasts for a brief period of 
time. Under the Acquisition Company structure, the company's charter 
provides that it must either enter into a business combination within a 
specified limited period of time (typically two years or less, but no 
longer than three years is permitted under Section 102.06) or return 
the funds held in trust to the company's shareholders and dissolve the 
company.\6\ Acquisition Company business combinations do not always 
result in a continued listing of the post-business combination entity, 
as the resultant entity may be a private company or list on another 
exchange or the Acquisition Company may be acquired by another company 
that is already listed. In contrast to an Acquisition Company, when an 
operating company lists, it is reasonable to expect that it will likely 
remain listed for many years. A listed operating company can therefore 
view the upfront cost of paying initial listing fees as relating to the 
benefits it receives from its NYSE listing over an extended period, 
including such things as the prestige associated with a listing, the 
liquid trading market, access to the NYSE's physical facilities, the 
NYSE's technological infrastructure, and the Exchange's regulatory 
program. Acquisition Companies, on the other hand, must assess the 
economic value of a listing on the basis of a potentially very brief 
period of listing. Given the much shorter average length of an 
Acquisition Company's listing, the Exchange believes it is reasonable 
to charge Acquisition Companies lower initial listing fees than 
operating companies.
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    \6\ An Acquisition Company which remains listed upon 
consummation of its business combination is not subject to 
additional initial listing fees at that time, although it must pay 
supplemental listing fees with respect to any additional shares of 
common stock issued in connection with the business combination. An 
Acquisition Company transferring from another national securities 
exchange is not required to pay initial listing fees.
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    Proposed Section 902.11 would make clear that Acquisition Companies 
would not be subject to the $25,000 Initial Application Fee charged to 
applicants under Section 902.03. Given the significantly lower initial 
listing fees that would be charged to Acquisition Company applicants 
under proposed Section 902.11, a $25,000 Initial Application Fee would 
represent a much higher percentage of the initial listing fees payable 
upon listing than it would for an operating company applicant. In 
addition, the Initial Application Fee is used to reduce the initial 
listing fees an applicant pays upon listing. The Exchange has also 
observed that Acquisition Company IPOs are significantly more likely to 
be completed than proposed operating company IPOs, so the likelihood 
that the Exchange will forego revenue if it does not charge the Initial 
Application Fee to Acquisition Companies is significantly reduced.
    The Exchange does not expect the financial impact of these two 
proposed amendments to be material in terms of the level of listing 
fees collected from issuers on the Exchange. Specifically, the Exchange 
notes that Acquisition Companies represent a relatively small number of 
potential listings and therefore anticipates that only a limited number 
of Acquisition Companies will list. Accordingly, the Exchange believes 
that the proposed rule change will not impact the Exchange's resource 
commitment 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

[[Page 18504]]

Section 6(b) of the Exchange Act,\7\ in general, and furthers the 
objectives of Sections 6(b)(4) \8\ 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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    \7\ 15 U.S.C. 78f(b).
    \8\ 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 notes 
that the proposed amendment is not unfairly discriminatory as 
Acquisition Companies frequently have a much shorter period of listing 
on the Exchange than operating companies. It is not unfairly 
discriminatory to exempt Acquisition Companies from the Initial 
Application Fee because the Initial Application Fee would represent a 
significantly larger percentage of the initial listing fees payable by 
an Acquisition Company upon listing and Acquisition Companies are more 
likely than operating companies to successful complete their IPO so the 
Exchange is less likely to forego revenue if they do not pay the 
Initial Application Fee.

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. The proposed rule change is 
designed to adopt reduced initial listing fees for Acquisition 
Companies and will therefore increase the competition for the listing 
of those companies by making the NYSE a more attractive listing venue 
for them.

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 [email protected]. Please include 
File Number SR-NYSE-2017-14 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-2017-14. 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 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 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; 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-2017-14 and should be 
submitted on or before May 10, 2017.

    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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Brent J. Fields,
Secretary.
[FR Doc. 2017-07876 Filed 4-18-17; 8:45 am]
 BILLING CODE 8011-01-P