82_FR_46106 82 FR 45917 - Self-Regulatory Organizations: Investors Exchange LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change Related to Listing Fees

82 FR 45917 - Self-Regulatory Organizations: Investors Exchange LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change Related to Listing Fees

SECURITIES AND EXCHANGE COMMISSION

Federal Register Volume 82, Issue 189 (October 2, 2017)

Page Range45917-45921
FR Document2017-21002

Federal Register, Volume 82 Issue 189 (Monday, October 2, 2017)
[Federal Register Volume 82, Number 189 (Monday, October 2, 2017)]
[Notices]
[Pages 45917-45921]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2017-21002]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-81725; File No. SR-IEX-2017-30]


Self-Regulatory Organizations: Investors Exchange LLC; Notice of 
Filing and Immediate Effectiveness of Proposed Rule Change Related to 
Listing Fees

September 26, 2017.
    Pursuant to Section 19(b)(1) \1\ of the Securities Exchange Act of 
1934 (``Act'') \2\ and Rule 19b-4 thereunder,\3\ notice is hereby given 
that, on September 13, 2017, the Investors Exchange LLC (``IEX'' or the 
``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

    Pursuant to the provisions of Section 19(b)(1) under the Securities 
Exchange Act of 1934 (``Act''),\4\ and Rule 19b-4 thereunder,\5\ 
Investors Exchange LLC (``IEX'' or ``Exchange'') is filing with the 
Commission a proposed rule change to amend Rule 14.601, which is 
currently reserved, to (i) adopt an annual fee of $50,000 for companies 
listing on the Exchange and (ii) provide for specified fee credits.
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    \4\ 15 U.S.C. 78s(b)(1).
    \5\ 17 CRF [sic] 240.19b-4.
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    The text of the proposed rule change is available at the Exchange's 
Web site at www.iextrading.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 the 
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 these statement [sic] 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 of the Purpose of, and the 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    On June 17, 2016, the Commission granted IEX's application for 
registration as a national securities exchange under Section 6 of the 
Act including approval of rules applicable to the qualification, 
listing and delisting of companies on the Exchange.\6\ The Exchange 
plans to begin a listing program in 2017 and is proposing to adopt a 
simple fee structure for listed companies.\7\ Specifically, the 
Exchange proposes to amend Rule 14.601 to (i) adopt an all-inclusive 
annual fee of $50,000 for companies listing on the Exchange and (ii) 
provide for specified fee credits for a company that is approved for 
IEX listing \8\ and, prior to or within 120 calendar days of the first 
IEX listing, announces its intent to transfer its listing to IEX in the 
company's press release issued pursuant to Rule 12d2-2(c)(2)(iii) under 
the Act \9\ announcing its intent to withdraw its securities from 
listing on its current national securities exchange.
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    \6\ See Securities Exchange Act Release No. 34-78101 (June 17, 
2016), 81 FR 41141 (June 23, 2016) (File No. 10-222).
    \7\ The Exchange's listing program launch is pending Commission 
rulemaking to amend Rule 146 under Section 18 of the Securities Act 
of 1933 (``Securities Act'') to designate securities listed on the 
Exchange as covered securities for purposes of Section 18(b) of the 
Securities Act. See Securities Act Release No. 10390 (July 14, 2017) 
82 FR 33839 (July 21, 2017) (File No. S7-06-17) proposing such rule 
amendment.
    \8\ See IEX Rule 14.202.
    \9\ Rule 12d2-2(c) under the Act specifies, among other things, 
the requirements applicable to an issuer of a class of securities 
listed on a national securities exchange to notify the Commission of 
its withdrawal of such securities from listing on such national 
securities exchange. Subparagraph 2(ii) thereto requires that the 
issuer must provide notice to its national securities exchange of 
such determination no fewer than 10 days before notification to the 
Commission. Subparagraph (2)(iii) thereto requires that 
``[c]ontemporaneous with providing written notice to the exchange of 
its intent to withdraw a class of securities from listing and/or 
registration, the issuer must publish notice of such intention, 
along with its reasons for such withdrawal, via a press release and, 
if it has a publicly accessible Web site, posting such notice on 
that Web site.''
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    As proposed, paragraph (a) of Rule 14.601 contains introductory 
text stating that the rule sets forth the required listing fees. 
Paragraph (b) specifies a $50,000 all-inclusive annual listing fee that 
will be payable annually by each listed company on January 1st of each 
year for the upcoming calendar year, subject to fee credits as 
specified in paragraph (c) and described more fully below. The annual 
listing fee will not be charged in the first calendar year of a 
company's listing on IEX, but thereafter would be the only fee payable 
by a listed company per year for all aspects of its listing. The 
Exchange is not proposing to charge application fees, entry fees, fees 
for the listing of additional shares, recordkeeping fees, substitution 
listing fees, fees for a written interpretation of listing rules or 
hearing fees. All listed companies will be subject to the same annual 
listing fee, without differentiation based on the number of shares 
outstanding, unless eligible for a fee credit as described below. 
Paragraph (b) also provides that the annual fee will be subject to a 
pro-rata refund if the company ceases to be

[[Page 45918]]

listed on IEX during the calendar year for which such fee was paid. 
Paragraph (d) specifies that the Exchange is not proposing to charge 
any other listing fees.
    The Exchange proposes to provide a fee credit to any company that 
is approved for IEX listing and prior to or within 120 calendar days of 
the first IEX listing, announces its intent to transfer its listing to 
IEX in the company's press release issued pursuant to Rule 12d2-
2(c)(2)(iii) under the Act \10\ announcing its intent to withdraw its 
securities from listing on its current national securities exchange. 
The credit will also apply to the first IEX listing if such listing is 
a transfer from another national securities exchange. The Exchange will 
provide notice of the first listing to the issuer community on the day 
when the first listing occurs. The fee credit will be the greater of 
$250,000 or the amount of any nonrefundable listing fees actually paid 
by the company to another listing exchange during the calendar year in 
which it lists on IEX if the company is no longer listed on such other 
exchange upon listing on IEX. The fee credit may only be used to offset 
the IEX all-inclusive listing fee.\11\
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    \10\ Id.
    \11\ See proposed Rule 14.601(b).
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    Notwithstanding the fee credit, IEX will have sufficient resources 
available for its listing compliance program, which helps to assure 
that listing standards are properly enforced and investors are 
protected. Specifically, as described in the Commission's order 
approving IEX's exchange application, the Exchange and IEX Group, Inc. 
(its parent) have entered into an agreement that requires IEX Group, 
Inc. to provide adequate funding for the Exchange's operations, 
including regulation of the Exchange.\12\
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    \12\ See supra note 6 [sic].
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2. Statutory Basis
    IEX believes that the proposed rule change is consistent with the 
provisions of Section 6(b) \13\ of the Act in general, and furthers the 
objectives of Sections [sic] 6(b)(4) \14\ of the Act, in particular, in 
that it is designed to provide for the equitable allocation of 
reasonable dues, fees and other charges among its Members, issuers and 
other persons using its facilities. Additionally, IEX believes that the 
proposed fees are consistent with the investor protection objectives of 
Section 6(b)(5) \15\ of the Act, in particular, in that they are 
designed to promote just and equitable principles of trade, to remove 
impediments to a free and open market and national market system, and 
in general to protect investors and the public interest, and are not 
designed to permit unfair discrimination between customers, issuers, 
brokers, or dealers.
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    \13\ 15 U.S.C. 78f.
    \14\ 15 U.S.C. 78f(b)(4).
    \15\ 15 U.S.C. 78f(b)(5).
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    As a preliminary matter, IEX is a new entrant in the exchange 
listing market and expects to face intense competition from the New 
York Stock Exchange (``NYSE'') and the Nasdaq Stock Market 
(``NASDAQ''), which, IEX believes, essentially operate as a duopoly in 
the U.S. listing market with the vast majority of operating companies 
listed on U.S. securities exchanges listed on those two. As discussed 
more fully below, IEX's proposed simple low cost flat-fee structure, 
combined with the limited fee credit, as well as no fee in the first 
year of listing, is designed to address the significant competitive 
challenges. Moreover, in view of the competition among listing 
exchanges, whereby companies can easily choose not to list on IEX, the 
fees that IEX can charge listed companies are constrained by the fees 
charged by its competitors and IEX cannot charge fees in a manner that 
would be unreasonable, inequitable, or unfairly discriminatory.
    As described more fully below, IEX's proposed listing fees and 
credits are available to all listed companies in a consistent and 
transparent manner, treating similarly situated companies similarly. 
IEX has chosen to structure its listing fees differently than NYSE and 
NASDAQ, which are generally based on shares outstanding. This structure 
has existed for many years, and has been justified on the basis that 
companies with fewer shares outstanding tend to be smaller companies, 
which may use fewer of the listing exchange's services and be more 
willing to forgo an exchange listing if it costs more.\16\ However, the 
Exchange does not believe that the number of shares outstanding of a 
particular company necessarily corresponds to the size of the company. 
To the contrary, there are a variety of examples that demonstrate that 
shares outstanding does not correlate to larger market capitalization. 
This fee structure thus results in similarly situated companies being 
charged materially different listing fees. For example, Conagra Brands, 
Inc. (symbol: CAG), Fleetcor Technologies Inc. (symbol: FLT), and 
Autozone Inc. (symbol: AZO) each have similar market capitalizations 
($13.5 billion, $13.1 billion, and $14.7 billion respectively) but 
because of differences in shares outstanding, we estimate that CAG paid 
an annual listing fee in 2017 to NYSE of $436,438 per year while FLT 
paid $96,473 and AZO paid $59,500. Similarly, NVIDIA Corp (symbol: 
NVDA) and The Priceline Group Inc. (symbol: PCLN) each have similar 
market capitalizations ($99 billion and $87.8 billion respectively) but 
because of differences in shares outstanding, we estimate that NVDA 
paid an annual listing fee in 2017 to NASDAQ of $155,000 while PCLN 
paid $55,000. And we estimate that Biocryst Pharmaceuticals Inc. 
(symbol: BCRX), with a market capitalization of only $397.3 million, 
paid a $100,000 annual listing fee to NASDAQ in 2017, almost double the 
PCLN fee notwithstanding that PCLN's market capitalization is 
approximately 221 times greater ($87.4 billion greater) than BCRX's 
market capitalization.\17\
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    \16\ See Securities Exchange Act Release No. 73647 (November 19, 
2014), 79 FR 70232 (November 25, 2014) (SR-NASDAQ-2014-087).
    \17\ Market capitalization estimates are based on Bloomberg data 
as of August 28, 2017. NYSE and NASDAQ listing fee estimates are 
based on listing fees reflected in Section 902 of the NYSE Listed 
Company Manual and the NASDAQ Rule 5900 Series (as applicable) and 
assumes (for NASDAQ) that each company paid the all-inclusive annual 
listing fee. Listing fee estimates are based on shares outstanding 
as reflected in Bloomberg data as of August 28, 2017.
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    In addition, a company that has made the decision to effect a 
forward stock split will, under the existing exchange pricing 
structure, be charged double their previous listing fee (subject to any 
relevant maximum fees as discussed below) despite the fact that the 
company has not changed in structure or market capitalization.
    IEX also does not believe that smaller companies use fewer listing 
exchange services. To the contrary, the Exchange believes that larger 
companies generally use fewer regulatory services than smaller 
companies since they tend to be more consistently above the continued 
listing requirements, and also tend to utilize more sophisticated 
advisors for interactions with the listing exchange. Thus, the Exchange 
believes that its simple listing fee and credit structure is a more 
reasonable and equitable approach, as described below.
    The Exchange believes that $50,000 per year for the all-inclusive 
annual listing fee is fair and reasonable based on IEX's anticipated 
costs to support and maintain a listing business, including its listing 
compliance program. IEX also notes that the proposed fee is less than 
all NYSE fees, within the range of NASDAQ fees, and materially less 
than the maximum annual fees charged by each of NYSE and NASDAQ. 
Currently, annual listing fees for NYSE range from $59,500 to

[[Page 45919]]

$500,000,\18\ while annual listing fees for NASDAQ range from $32,000 
to $155,000,\19\ each depending on the company's total shares 
outstanding. The all-inclusive annual listing fees applicable to 
companies listed on the NASDAQ Global Select Market range from $45,000-
$155,000.\20\ IEX notes that its listing standards are substantially 
similar to the listing standards for NASDAQ Global Select market and 
therefore believes that it is most relevant to compare the IEX proposed 
all-inclusive annual listing fee to the NASDAQ Global Select Market 
all-inclusive annual listing fee range.
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    \18\ See Sections 902.02 and 902.03 of the NYSE Listed Company 
Manual.
    \19\ See NASDAQ Rule 5920(c) for NASDAQ Capital Market annual 
fees, Rule 5910(c) for NASDAQ Global and Global Select annual fees, 
and IM-5910-1 for the all inclusive annual listing fees applicable 
to companies listed on the NASDAQ Global Market (including the 
Global Select Market).
    \20\ Id.
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    IEX also believes that it is reasonable to structure its fee as an 
all-inclusive fee. NASDAQ has begun to structure its annual listing 
fees as an all-inclusive fee, noting that such a fee structure 
simplifies billing and provides transparency and certainty to companies 
as to the annual cost of listing.\21\ IEX also believes that such 
considerations warrant use of an all-inclusive fee.
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    \21\ See, e.g., Securities Exchange Act Release No. 78149 (June 
24, 2016), 81 FR 42388 (June 29, 2016) (SR-NASDAQ-2016-085).
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    IEX further believes that it is reasonable to provide a fee credit 
under the terms described in the Purpose section. Transferring a 
listing to a new exchange is a significant decision for a public 
company, and the Exchange anticipates that NYSE and NASDAQ will each 
actively seek to retain listed companies considering transferring their 
listing to IEX. Accordingly, the Exchange believes that although 
listing on IEX will provide certain benefits to issuers compared to 
listing on NYSE and NASDAQ--such as its investor and issuer focused 
model--the Exchange also believes that meaningful fee credits are 
initially necessary to establish its listing program quickly.
    As the Commission has explicitly acknowledged, the current listing 
market is highly concentrated, noting that, ``[e]ntrant exchanges cann 
. . . face barriers to entry related to reputation. Exchanges that 
enter the market may not be able to quickly establish a strong 
reputation for high quality listings, which may adversely affect their 
ability to compete with incumbent exchanges. This lack of reputation 
may discourage both investors and issuers from transacting or listing 
on an entrant exchange, which may reinforce an entrant exchange's lack 
of reputation.'' \22\
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    \22\ See Securities Act Release No. 10390 (July 14, 2017), 82 FR 
33839 (July 21, 2017) (File No. S7-06-17).
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    As proposed, IEX's fee credit is designed to address these 
significant competitive challenges, and quickly establish a strong 
reputation for high quality listings. Based on discussions with 
companies currently listed on NYSE and NASDAQ, the Exchange believes 
that a meaningful fee credit is necessary to incentivize currently 
listed companies to transfer their listing to IEX. In this regard, 
companies generally view a listing transfer as a long-term commitment 
and therefore the financial incentive should align with such long-term 
commitment. IEX further believes, based on these discussions, that in 
order to be meaningful the fee credit must accomplish two objectives: 
Provide at least five years of free listing and cover the listing fees 
already paid by the company in the year of listing on IEX.\23\ In order 
to address both objectives, the fee credit will be for a minimum of 
$250,000 (to cover five years of listing fees) or the greater of the 
amount of any nonrefundable listing fee actually paid by the company to 
another listing exchange during the calendar year in which it lists on 
IEX if the company is no longer listed on such other exchange upon 
listing on IEX.
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    \23\ In the event that the Exchange proposes increases to its 
listing fees, such increases will include a grandfathering provision 
for companies that have remaining credits available so that each 
such company obtains the contemplated years of free listing as 
proposed herein, subject to Commission filing and effectiveness.
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    Further, the Exchange believes that it is reasonable, and 
consistent with an equitable allocation of listing fees to provide a 
larger fee credit to companies that have already paid comparatively 
larger listing fees to NYSE or NASDAQ, which for some NYSE companies is 
as high as $500,000.\24\ In this regard, the Exchange believes that an 
NYSE or NASDAQ listed company that has paid such larger listing fees 
may require a corresponding credit in order to incentivize the company 
to transfer its listing to IEX. Accordingly, the Exchange believes that 
providing an enhanced credit is not an inequitable allocation of fees 
because it merely operates to address the potential disincentive to 
list that may exist for a company that has paid listing fees higher 
than $250,000. All similarly situated companies will receive the same 
credit.
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    \24\ See Section 902 of the NYSE Listed Company Manual.
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    The Exchange notes that there is precedent to provide a listing fee 
credit based on the amount of listing fees paid to another exchange. 
For example, NASDAQ Rules provide that NASDAQ waives a portion of its 
annual fee in the case of securities that transfer to NASDAQ, by 
providing such companies with a credit in the pro-rated amount of any 
annual listing fee paid to its prior listing exchange for the period of 
time after the transfer, which is used to offset NASDAQ listing fees 
for the first year of listing.\25\ In its rule filing adopting this 
credit,\26\ NASDAQ (then a subsidiary of the National Association of 
Securities Dealers, Inc.), noted that the credit would remove 
impediments to and perfect the mechanism of a free and open market and 
a national market system by removing an impediment to issuers 
transferring from another market to NASDAQ. Similarly, IEX's proposed 
enhanced listing fee credit for a company that paid more than $250,000 
in listing fees in the year of its transfer to IEX is designed to 
incentivize such companies to transfer to IEX by providing a credit for 
listing fees actually paid to another exchange in the year of transfer, 
thereby removing a potential impediment to such transfers. Further, the 
Exchange notes that NYSE and Nasdaq each offer incentives to certain 
listed companies that transfer from the other market in the form of 
specified products and services that are valued as high as $757,500 for 
a transfer from NYSE to Nasdaq and $263,000 for a transfer from Nasdaq 
to NYSE.\27\ Similarly, the IEX's proposed credit is designed to 
incentivize companies listed on other markets to transfer their listing 
to IEX. Thus, IEX believes that the monetary value of its proposed fee 
credit transfer incentives is comparable

[[Page 45920]]

to the monetary value of the transfer incentives offered by NYSE and 
NASDAQ.
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    \25\ See NASDAQ IM-5900-4 (Waiver of Certain Annual Listing Fees 
Upon Transfer of a Non-Nasdaq Exchange Listed Security).
    \26\ See Securities Exchange Act Release No. 53696 (April 21, 
2006), 71 FR 25273 (April 28, 2006) (SR-NASD-2006-047).
    \27\ See Section 907.00 of the NYSE Listed Company Manual and 
Nasdaq Rule IM-5900-7. The Exchange notes that the transfer 
incentive values are provided over multiple years. Further, the 
value of the Nasdaq incentives noted are for listed companies with a 
market capitalization of $5 billion that transfer from NYSE to the 
Nasdaq Global Market or Global Select Market. Listed companies that 
transfer from NYSE to the Nasdaq Global Market or Global Select 
Market with market capitalization of up to $750 million and between 
$750 million or more but less than $5 million [sic] receive 
incentives over multiple years in the form of specified products and 
services valued at an aggregate of $144,500 and $553,500 
respectively. The value of the NYSE incentives noted are for listed 
companies with a global market value of $400 million or more that 
transfer from another national securities exchange to NYSE. Listed 
companies with a global market value of less than $400 million 
receive incentives over 24 calendar months in the form of specified 
products and services valued at $153,000.
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    Moreover, as discussed above, both NYSE and NASDAQ charge listing 
fees predominantly based on the number of shares outstanding, such that 
a company with fewer shares outstanding is generally charged a lower 
listing fee than a company with a larger number of shares outstanding. 
By providing a higher credit to a company that has paid listing fees in 
excess of $250,000 to NYSE, the IEX credit is designed to take into 
account the fact that some issuers have been subject to higher fees 
based on their number of shares outstanding, and to provide issuers a 
credit incentive on that basis.
    The Exchange believes that limiting the fee credit to companies 
that announce their intent to transfer listing to IEX prior to or 
within 120 calendar days of the first IEX listing, as described in the 
Purpose Section, will operate as an incentive to companies listed on 
NYSE or NASDAQ to transfer their listing to IEX expeditiously in order 
to enable the Exchange to achieve critical mass relatively quickly, in 
a highly competitive environment. As described in the Purpose Section, 
the Exchange will provide notice to the issuer community on the day 
when the first listing occurs, and IEX believes that the 120 calendar 
day period will provide ample time for any company that meets IEX's 
listing requirements to successfully complete the clearance \28\ and 
application processes,\29\ issue the required press release within 120 
calendar days of the first IEX listing, and thus receive the fee 
credit. As the Commission has noted, and as discussed above, if a new 
listing exchange does not quickly establish a strong reputation for 
high quality listings, it may adversely affect its ability to compete 
with incumbent exchanges.\30\ Structuring the availability of the fee 
credit within the specified time window is designed to address the 
imperative to quickly establish a strong reputation for high quality 
listings.
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    \28\ See IEX Rule 14.201.
    \29\ See IEX Rule 14.202.
    \30\ See supra note 22 [sic], Section VI., Economic Analysis at 
33842.
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    The Exchange believes that this structure is reasonable, not an 
inequitable allocation of fees, and not unfairly discriminatory since 
while the time window is open any company that meets IEX's listing 
standards will be able to make a decision to list on IEX, make the 
requisite announcement, and obtain the fee credit once it lists on IEX. 
While a company that is not in existence at that time would not be able 
to take the actions necessary to obtain a fee credit, IEX does not 
believe that this issue means that the fee credit is inequitable or 
unfairly discriminatory. NASDAQ provides several other categories of 
fee incentives to companies that transfer to NASDAQ from another 
exchange. These include an entry fee waiver, as well as a 
``grandfathering'' incentive related to the all-inclusive annual 
listing fee whereby the company's fee is based on the lower of its 
shares outstanding as of the date of listing or at the time of billing. 
For example, NASDAQ provides an accommodation to companies that applied 
to list on NASDAQ prior to January 1, 2015 and list after that date 
whereby such companies are billed based on the lower of its shares 
outstanding at the time of application of listing.\31\ Thus companies 
that apply to list on NASDAQ after January 1, 2015 are not able to take 
advantage of this accommodation, including companies that did not exist 
prior to January 1, 2015. In its rule filing proposing this 
accommodation, NASDAQ asserts that it is consistent with the Act based 
on competitive considerations.\32\ Similarly, IEX's proposed fee credit 
is designed to address competitive considerations (as discussed above) 
and is thus also consistent with the Act. Accordingly, IEX believes 
that the timing of availability of the fee credit to individual 
companies does not raise any new or novel issues not already considered 
by the Commission.
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    \31\ See, e.g., NASDAQ IM-5910-1(b)(2) (All-Inclusive Annual 
Listing Fee).
    \32\ See Securities Exchange Act Release No. 74472 (March 11, 
2015), 80 FR 13925 (March 17, 2015) (SR-NASDAQ-2015-017).
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    Finally, IEX believes that it is consistent with the protection of 
investors, the public interest and removing impediments to a free and 
open market and a national market system to provide a pro-rata refund 
of the annual listing fee to a company that ceases to be listed on IEX 
during the calendar year for which such fee was paid. In this regard, 
IEX further believes that if a company ceases to be listed on IEX, 
either because of a corporate action (e.g., merger, acquisition, going 
private transaction) or delisting (whether voluntary or otherwise), the 
company will not have received listing for the entire year and 
therefore should not be required to pay for the entire year. IEX notes 
that NYSE and NASDAQ listing fees are nonrefundable, and believes that 
this structure can have an anticompetitive impact on the listing market 
since companies may be hesitant to transfer listing mid-year, thus 
forgoing the benefits of a nonrefundable listing fee already paid. In 
contrast, IEX's proposal to provide a pro-rata refund is designed to be 
pro-competitive by providing listed companies with the ability to 
transfer listing mid-year without financial penalty.
    In conclusion, the Exchange submits that its proposed fee structure 
satisfies the requirements of Sections 6(b)(4) and 6(b)(5) of the Act 
for the reasons discussed above in that it is an equitable allocation 
of fees, does not permit unfair discrimination between customers, 
issuers, brokers, or dealers, and is designed to promote just and 
equitable principles of trade, to remove impediments to and perfect the 
mechanism of a free and open market and a national market system. For 
the foregoing reasons, the Exchange also believes that its simplified 
fee structure is consistent with the Act, in that it is designed to 
promote just and equitable principles of trade, to remove impediments 
to a free and open market and national market system and in general to 
protect investors and the public interest.

B. Self-Regulatory Organization's Statement on Burden on Competition

    IEX does not believe that the proposed rule change will result in 
any burden on competition that is not necessary or appropriate in 
furtherance of the purposes of the Act. The Exchange does not believe 
that the proposed rule change will impose any burden on intermarket 
competition that is not necessary or appropriate in furtherance of the 
purposes of the Act. To the contrary, the Exchange believes that the 
proposed listing fee structure is designed to provide a competitive 
alternative to listing on NYSE or NASDAQ. The Exchange operates in a 
highly competitive market in which issuers can readily favor competing 
listing exchanges if fee schedules and services at such other exchanges 
are viewed as more favorable. As a new listing exchange, IEX expects to 
face intense competition from NYSE and NASDAQ. Consequently, the 
Exchange believes that the degree to which IEX fees could impose any 
burden on competition is extremely limited, and does not believe that 
such fees would burden competition among issuers or with competing 
venues in a manner that is not necessary or appropriate in furtherance 
of the purposes of the Act. The Exchange also notes that other listing 
venues are similarly free to set their fees.
    The Exchange does not believe that the proposed rule change will 
impose

[[Page 45921]]

any burden on intramarket competition that is not necessary or 
appropriate in furtherance of the purposes of the Act because, while 
different issuers will be eligible for different fee credits, these 
different fee credits are not based on the type of listed company but 
on the timing of listing on IEX and, when a higher credit is provided, 
on the listing fees already paid to its prior listing exchange. As 
discussed in the Statutory Basis section, limiting fee credits to 
companies that issue the required press release prior to or within 120 
calendar days of the first IEX listing is designed to incentivize 
companies to transfer to IEX expeditiously in order to gain critical 
mass quickly. Further, providing a higher fee credit to companies that 
paid nonrefundable listing fees of more than $250,000 to another 
listing exchange during the calendar year in which it lists on IEX is 
designed to provide a meaningful incentive to such companies to 
transfer their listing to IEX. All similarly situated issuers would be 
treated similarly since the higher credit would be based on the amount 
of the listing fee paid.

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

    The foregoing rule change has become effective pursuant to Section 
19(b)(3)(A)(ii) \33\ of the Act.
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    \33\ 15 U.S.C. 78s(b)(3)(A)(ii).
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    At any time within 60 days of the filing of the 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) \34\ of the Act to determine whether the proposed 
rule change should be approved or disapproved.
---------------------------------------------------------------------------

    \34\ 15 U.S.C. 78s(b)(2)(B).
---------------------------------------------------------------------------

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-IEX-2017-30 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-IEX-2017-30. 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-IEX-2017-30 and should be 
submitted on or before October 23, 2017.
---------------------------------------------------------------------------

    \35\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\35\
Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2017-21002 Filed 9-29-17; 8:45 am]
 BILLING CODE 8011-01-P



                                                                               Federal Register / Vol. 82, No. 189 / Monday, October 2, 2017 / Notices                                                    45917

                                                subject line if email is used. To help the              and Exchange Commission                               structure for listed companies.7
                                                Commission process and review your                      (‘‘Commission’’) the proposed rule                    Specifically, the Exchange proposes to
                                                comments more efficiently, please use                   change as described in Items I, II, and               amend Rule 14.601 to (i) adopt an all-
                                                only one method. The Commission will                    III below, which Items have been                      inclusive annual fee of $50,000 for
                                                post all comments on the Commission’s                   prepared by the self-regulatory                       companies listing on the Exchange and
                                                Internet Web site (http://www.sec.gov/                  organization. The Commission is                       (ii) provide for specified fee credits for
                                                rules/sro.shtml). Copies of the                         publishing this notice to solicit                     a company that is approved for IEX
                                                submission, all subsequent                              comments on the proposed rule change                  listing 8 and, prior to or within 120
                                                amendments, all written statements                      from interested persons.                              calendar days of the first IEX listing,
                                                with respect to the proposed rule                                                                             announces its intent to transfer its
                                                change that are filed with the                          I. Self-Regulatory Organization’s                     listing to IEX in the company’s press
                                                Commission, and all written                             Statement of the Terms of Substance of                release issued pursuant to Rule 12d2–
                                                communications relating to the                          the Proposed Rule Change                              2(c)(2)(iii) under the Act 9 announcing
                                                proposed rule change between the                           Pursuant to the provisions of Section              its intent to withdraw its securities from
                                                Commission and any person, other than                   19(b)(1) under the Securities Exchange                listing on its current national securities
                                                those that may be withheld from the                     Act of 1934 (‘‘Act’’),4 and Rule 19b–4                exchange.
                                                public in accordance with the                           thereunder,5 Investors Exchange LLC                      As proposed, paragraph (a) of Rule
                                                provisions of 5 U.S.C. 552, will be                     (‘‘IEX’’ or ‘‘Exchange’’) is filing with the          14.601 contains introductory text stating
                                                available for Web site viewing and                      Commission a proposed rule change to                  that the rule sets forth the required
                                                printing in the Commission’s Public                     amend Rule 14.601, which is currently                 listing fees. Paragraph (b) specifies a
                                                Reference Room, 100 F Street NE.,                       reserved, to (i) adopt an annual fee of               $50,000 all-inclusive annual listing fee
                                                Washington, DC 20549, on official                       $50,000 for companies listing on the                  that will be payable annually by each
                                                business days between the hours of 10                   Exchange and (ii) provide for specified               listed company on January 1st of each
                                                a.m. and 3 p.m. Copies of such filing                   fee credits.                                          year for the upcoming calendar year,
                                                also will be available for inspection and                                                                     subject to fee credits as specified in
                                                                                                           The text of the proposed rule change
                                                copying at the principal office of                                                                            paragraph (c) and described more fully
                                                                                                        is available at the Exchange’s Web site
                                                FINRA. All comments received will be                                                                          below. The annual listing fee will not be
                                                                                                        at www.iextrading.com, at the principal
                                                posted without change; the Commission                                                                         charged in the first calendar year of a
                                                                                                        office of the Exchange, and at the
                                                does not edit personal identifying                                                                            company’s listing on IEX, but thereafter
                                                                                                        Commission’s Public Reference Room.
                                                information from submissions. You                                                                             would be the only fee payable by a
                                                should submit only information that                     II. Self-Regulatory Organization’s                    listed company per year for all aspects
                                                you wish to make available publicly. All                Statement of the Purpose of, and the                  of its listing. The Exchange is not
                                                submissions should refer to File                        Statutory Basis for, the Proposed Rule                proposing to charge application fees,
                                                Number SR–FINRA–2017–029 and                            Change                                                entry fees, fees for the listing of
                                                should be submitted on or before                                                                              additional shares, recordkeeping fees,
                                                                                                          In its filing with the Commission, the              substitution listing fees, fees for a
                                                October 23, 2017.
                                                                                                        self-regulatory organization included                 written interpretation of listing rules or
                                                  For the Commission, by the Division of                statements concerning the purpose of
                                                Trading and Markets, pursuant to delegated                                                                    hearing fees. All listed companies will
                                                                                                        and basis for the proposed rule change                be subject to the same annual listing fee,
                                                authority.14
                                                                                                        and discussed any comments it received                without differentiation based on the
                                                Eduardo A. Aleman,                                      on the proposed rule change. The text
                                                Assistant Secretary.                                                                                          number of shares outstanding, unless
                                                                                                        of these statement [sic] may be                       eligible for a fee credit as described
                                                [FR Doc. 2017–21001 Filed 9–29–17; 8:45 am]             examined at the places specified in Item              below. Paragraph (b) also provides that
                                                BILLING CODE 8011–01–P                                  IV below. The self-regulatory                         the annual fee will be subject to a pro-
                                                                                                        organization has prepared summaries,                  rata refund if the company ceases to be
                                                                                                        set forth in Sections A, B, and C below,
                                                SECURITIES AND EXCHANGE                                 of the most significant aspects of such                  7 The Exchange’s listing program launch is
                                                COMMISSION                                              statements.                                           pending Commission rulemaking to amend Rule
                                                [Release No. 34–81725; File No. SR–IEX–                                                                       146 under Section 18 of the Securities Act of 1933
                                                                                                        A. Self-Regulatory Organization’s                     (‘‘Securities Act’’) to designate securities listed on
                                                2017–30]
                                                                                                        Statement of the Purpose of, and the                  the Exchange as covered securities for purposes of
                                                                                                        Statutory Basis for, the Proposed Rule                Section 18(b) of the Securities Act. See Securities
                                                Self-Regulatory Organizations:                                                                                Act Release No. 10390 (July 14, 2017) 82 FR 33839
                                                Investors Exchange LLC; Notice of                       Change                                                (July 21, 2017) (File No. S7–06–17) proposing such
                                                Filing and Immediate Effectiveness of                                                                         rule amendment.
                                                                                                        1. Purpose                                               8 See IEX Rule 14.202.
                                                Proposed Rule Change Related to
                                                Listing Fees                                               On June 17, 2016, the Commission                      9 Rule 12d2–2(c) under the Act specifies, among

                                                                                                        granted IEX’s application for registration            other things, the requirements applicable to an
                                                September 26, 2017.                                                                                           issuer of a class of securities listed on a national
                                                                                                        as a national securities exchange under               securities exchange to notify the Commission of its
                                                   Pursuant to Section 19(b)(1) 1 of the                Section 6 of the Act including approval               withdrawal of such securities from listing on such
                                                Securities Exchange Act of 1934                         of rules applicable to the qualification,             national securities exchange. Subparagraph 2(ii)
                                                (‘‘Act’’) 2 and Rule 19b–4 thereunder,3                 listing and delisting of companies on                 thereto requires that the issuer must provide notice
                                                                                                                                                              to its national securities exchange of such
                                                notice is hereby given that, on                         the Exchange.6 The Exchange plans to                  determination no fewer than 10 days before
sradovich on DSK3GMQ082PROD with NOTICES




                                                September 13, 2017, the Investors                       begin a listing program in 2017 and is                notification to the Commission. Subparagraph
                                                Exchange LLC (‘‘IEX’’ or the                            proposing to adopt a simple fee                       (2)(iii) thereto requires that ‘‘[c]ontemporaneous
                                                ‘‘Exchange’’) filed with the Securities                                                                       with providing written notice to the exchange of its
                                                                                                                                                              intent to withdraw a class of securities from listing
                                                                                                          4 15 U.S.C. 78s(b)(1).
                                                  14 17
                                                                                                                                                              and/or registration, the issuer must publish notice
                                                        CFR 200.30–3(a)(12).                              5 17 CRF [sic] 240.19b–4.                           of such intention, along with its reasons for such
                                                  1 15 U.S.C. 78s(b)(1).                                  6 See Securities Exchange Act Release No. 34–       withdrawal, via a press release and, if it has a
                                                  2 15 U.S.C. 78a.
                                                                                                        78101 (June 17, 2016), 81 FR 41141 (June 23, 2016)    publicly accessible Web site, posting such notice on
                                                  3 17 CFR 240.19b–4.                                   (File No. 10–222).                                    that Web site.’’



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                                                45918                        Federal Register / Vol. 82, No. 189 / Monday, October 2, 2017 / Notices

                                                listed on IEX during the calendar year                  principles of trade, to remove                        differences in shares outstanding, we
                                                for which such fee was paid. Paragraph                  impediments to a free and open market                 estimate that CAG paid an annual listing
                                                (d) specifies that the Exchange is not                  and national market system, and in                    fee in 2017 to NYSE of $436,438 per
                                                proposing to charge any other listing                   general to protect investors and the                  year while FLT paid $96,473 and AZO
                                                fees.                                                   public interest, and are not designed to              paid $59,500. Similarly, NVIDIA Corp
                                                   The Exchange proposes to provide a                   permit unfair discrimination between                  (symbol: NVDA) and The Priceline
                                                fee credit to any company that is                       customers, issuers, brokers, or dealers.              Group Inc. (symbol: PCLN) each have
                                                approved for IEX listing and prior to or                   As a preliminary matter, IEX is a new              similar market capitalizations ($99
                                                within 120 calendar days of the first IEX               entrant in the exchange listing market                billion and $87.8 billion respectively)
                                                listing, announces its intent to transfer               and expects to face intense competition               but because of differences in shares
                                                its listing to IEX in the company’s press               from the New York Stock Exchange                      outstanding, we estimate that NVDA
                                                release issued pursuant to Rule 12d2–                   (‘‘NYSE’’) and the Nasdaq Stock Market                paid an annual listing fee in 2017 to
                                                2(c)(2)(iii) under the Act 10 announcing                (‘‘NASDAQ’’), which, IEX believes,                    NASDAQ of $155,000 while PCLN paid
                                                its intent to withdraw its securities from              essentially operate as a duopoly in the               $55,000. And we estimate that Biocryst
                                                listing on its current national securities              U.S. listing market with the vast                     Pharmaceuticals Inc. (symbol: BCRX),
                                                exchange. The credit will also apply to                 majority of operating companies listed                with a market capitalization of only
                                                the first IEX listing if such listing is a              on U.S. securities exchanges listed on                $397.3 million, paid a $100,000 annual
                                                transfer from another national securities               those two. As discussed more fully                    listing fee to NASDAQ in 2017, almost
                                                exchange. The Exchange will provide                     below, IEX’s proposed simple low cost                 double the PCLN fee notwithstanding
                                                notice of the first listing to the issuer               flat-fee structure, combined with the                 that PCLN’s market capitalization is
                                                community on the day when the first                     limited fee credit, as well as no fee in              approximately 221 times greater ($87.4
                                                listing occurs. The fee credit will be the              the first year of listing, is designed to             billion greater) than BCRX’s market
                                                greater of $250,000 or the amount of any                address the significant competitive                   capitalization.17
                                                nonrefundable listing fees actually paid                challenges. Moreover, in view of the                     In addition, a company that has made
                                                by the company to another listing                       competition among listing exchanges,                  the decision to effect a forward stock
                                                exchange during the calendar year in                    whereby companies can easily choose                   split will, under the existing exchange
                                                which it lists on IEX if the company is                 not to list on IEX, the fees that IEX can             pricing structure, be charged double
                                                no longer listed on such other exchange                 charge listed companies are constrained               their previous listing fee (subject to any
                                                upon listing on IEX. The fee credit may                 by the fees charged by its competitors                relevant maximum fees as discussed
                                                only be used to offset the IEX all-                     and IEX cannot charge fees in a manner                below) despite the fact that the company
                                                inclusive listing fee.11                                that would be unreasonable,                           has not changed in structure or market
                                                   Notwithstanding the fee credit, IEX                  inequitable, or unfairly discriminatory.              capitalization.
                                                will have sufficient resources available                   As described more fully below, IEX’s                  IEX also does not believe that smaller
                                                for its listing compliance program,                     proposed listing fees and credits are                 companies use fewer listing exchange
                                                which helps to assure that listing                      available to all listed companies in a                services. To the contrary, the Exchange
                                                standards are properly enforced and                     consistent and transparent manner,                    believes that larger companies generally
                                                investors are protected. Specifically, as               treating similarly situated companies                 use fewer regulatory services than
                                                described in the Commission’s order                     similarly. IEX has chosen to structure its            smaller companies since they tend to be
                                                approving IEX’s exchange application,                   listing fees differently than NYSE and                more consistently above the continued
                                                the Exchange and IEX Group, Inc. (its                   NASDAQ, which are generally based on                  listing requirements, and also tend to
                                                parent) have entered into an agreement                  shares outstanding. This structure has                utilize more sophisticated advisors for
                                                that requires IEX Group, Inc. to provide                existed for many years, and has been                  interactions with the listing exchange.
                                                adequate funding for the Exchange’s                     justified on the basis that companies                 Thus, the Exchange believes that its
                                                operations, including regulation of the                 with fewer shares outstanding tend to be              simple listing fee and credit structure is
                                                Exchange.12                                             smaller companies, which may use                      a more reasonable and equitable
                                                                                                        fewer of the listing exchange’s services              approach, as described below.
                                                2. Statutory Basis                                      and be more willing to forgo an                          The Exchange believes that $50,000
                                                   IEX believes that the proposed rule                  exchange listing if it costs more.16                  per year for the all-inclusive annual
                                                change is consistent with the provisions                However, the Exchange does not believe                listing fee is fair and reasonable based
                                                of Section 6(b) 13 of the Act in general,               that the number of shares outstanding of              on IEX’s anticipated costs to support
                                                and furthers the objectives of Sections                 a particular company necessarily                      and maintain a listing business,
                                                [sic] 6(b)(4) 14 of the Act, in particular,             corresponds to the size of the company.               including its listing compliance
                                                in that it is designed to provide for the               To the contrary, there are a variety of               program. IEX also notes that the
                                                equitable allocation of reasonable dues,                examples that demonstrate that shares                 proposed fee is less than all NYSE fees,
                                                fees and other charges among its                        outstanding does not correlate to larger              within the range of NASDAQ fees, and
                                                Members, issuers and other persons                      market capitalization. This fee structure             materially less than the maximum
                                                using its facilities. Additionally, IEX                 thus results in similarly situated                    annual fees charged by each of NYSE
                                                believes that the proposed fees are                     companies being charged materially                    and NASDAQ. Currently, annual listing
                                                consistent with the investor protection                 different listing fees. For example,                  fees for NYSE range from $59,500 to
                                                objectives of Section 6(b)(5) 15 of the                 Conagra Brands, Inc. (symbol: CAG),
                                                Act, in particular, in that they are                    Fleetcor Technologies Inc. (symbol:                      17 Market capitalization estimates are based on
sradovich on DSK3GMQ082PROD with NOTICES




                                                designed to promote just and equitable                  FLT), and Autozone Inc. (symbol: AZO)                 Bloomberg data as of August 28, 2017. NYSE and
                                                                                                        each have similar market capitalizations              NASDAQ listing fee estimates are based on listing
                                                  10 Id.                                                ($13.5 billion, $13.1 billion, and $14.7              fees reflected in Section 902 of the NYSE Listed
                                                                                                                                                              Company Manual and the NASDAQ Rule 5900
                                                  11 See proposed Rule 14.601(b).                       billion respectively) but because of                  Series (as applicable) and assumes (for NASDAQ)
                                                  12 See supra note 6 [sic].                                                                                  that each company paid the all-inclusive annual
                                                  13 15 U.S.C. 78f.                                       16 See Securities Exchange Act Release No. 73647    listing fee. Listing fee estimates are based on shares
                                                  14 15 U.S.C. 78f(b)(4).
                                                                                                        (November 19, 2014), 79 FR 70232 (November 25,        outstanding as reflected in Bloomberg data as of
                                                  15 15 U.S.C. 78f(b)(5).                               2014) (SR–NASDAQ–2014–087).                           August 28, 2017.



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                                                                             Federal Register / Vol. 82, No. 189 / Monday, October 2, 2017 / Notices                                                     45919

                                                $500,000,18 while annual listing fees for               entrant exchange’s lack of                             based on the amount of listing fees paid
                                                NASDAQ range from $32,000 to                            reputation.’’ 22                                       to another exchange. For example,
                                                $155,000,19 each depending on the                          As proposed, IEX’s fee credit is                    NASDAQ Rules provide that NASDAQ
                                                company’s total shares outstanding. The                 designed to address these significant                  waives a portion of its annual fee in the
                                                all-inclusive annual listing fees                       competitive challenges, and quickly                    case of securities that transfer to
                                                applicable to companies listed on the                   establish a strong reputation for high                 NASDAQ, by providing such companies
                                                NASDAQ Global Select Market range                       quality listings. Based on discussions                 with a credit in the pro-rated amount of
                                                from $45,000–$155,000.20 IEX notes that                 with companies currently listed on                     any annual listing fee paid to its prior
                                                its listing standards are substantially                 NYSE and NASDAQ, the Exchange                          listing exchange for the period of time
                                                similar to the listing standards for                    believes that a meaningful fee credit is               after the transfer, which is used to offset
                                                NASDAQ Global Select market and                         necessary to incentivize currently listed              NASDAQ listing fees for the first year of
                                                therefore believes that it is most relevant             companies to transfer their listing to                 listing.25 In its rule filing adopting this
                                                to compare the IEX proposed all-                        IEX. In this regard, companies generally               credit,26 NASDAQ (then a subsidiary of
                                                inclusive annual listing fee to the                     view a listing transfer as a long-term                 the National Association of Securities
                                                NASDAQ Global Select Market all-                        commitment and therefore the financial                 Dealers, Inc.), noted that the credit
                                                inclusive annual listing fee range.                     incentive should align with such long-                 would remove impediments to and
                                                   IEX also believes that it is reasonable              term commitment. IEX further believes,                 perfect the mechanism of a free and
                                                to structure its fee as an all-inclusive                based on these discussions, that in order              open market and a national market
                                                fee. NASDAQ has begun to structure its                  to be meaningful the fee credit must                   system by removing an impediment to
                                                annual listing fees as an all-inclusive                 accomplish two objectives: Provide at                  issuers transferring from another market
                                                fee, noting that such a fee structure                   least five years of free listing and cover             to NASDAQ. Similarly, IEX’s proposed
                                                simplifies billing and provides                         the listing fees already paid by the                   enhanced listing fee credit for a
                                                transparency and certainty to companies                 company in the year of listing on IEX.23               company that paid more than $250,000
                                                as to the annual cost of listing.21 IEX                 In order to address both objectives, the               in listing fees in the year of its transfer
                                                also believes that such considerations                  fee credit will be for a minimum of                    to IEX is designed to incentivize such
                                                warrant use of an all-inclusive fee.                    $250,000 (to cover five years of listing               companies to transfer to IEX by
                                                   IEX further believes that it is                      fees) or the greater of the amount of any              providing a credit for listing fees
                                                reasonable to provide a fee credit under                nonrefundable listing fee actually paid                actually paid to another exchange in the
                                                the terms described in the Purpose                      by the company to another listing                      year of transfer, thereby removing a
                                                section. Transferring a listing to a new                exchange during the calendar year in                   potential impediment to such transfers.
                                                exchange is a significant decision for a                which it lists on IEX if the company is                Further, the Exchange notes that NYSE
                                                public company, and the Exchange                        no longer listed on such other exchange                and Nasdaq each offer incentives to
                                                anticipates that NYSE and NASDAQ                        upon listing on IEX.                                   certain listed companies that transfer
                                                will each actively seek to retain listed                   Further, the Exchange believes that it              from the other market in the form of
                                                companies considering transferring their                is reasonable, and consistent with an                  specified products and services that are
                                                listing to IEX. Accordingly, the                        equitable allocation of listing fees to                valued as high as $757,500 for a transfer
                                                Exchange believes that although listing                 provide a larger fee credit to companies               from NYSE to Nasdaq and $263,000 for
                                                on IEX will provide certain benefits to                 that have already paid comparatively                   a transfer from Nasdaq to NYSE.27
                                                issuers compared to listing on NYSE                     larger listing fees to NYSE or NASDAQ,                 Similarly, the IEX’s proposed credit is
                                                and NASDAQ—such as its investor and                     which for some NYSE companies is as                    designed to incentivize companies
                                                issuer focused model—the Exchange                       high as $500,000.24 In this regard, the                listed on other markets to transfer their
                                                also believes that meaningful fee credits               Exchange believes that an NYSE or                      listing to IEX. Thus, IEX believes that
                                                are initially necessary to establish its                NASDAQ listed company that has paid                    the monetary value of its proposed fee
                                                listing program quickly.                                such larger listing fees may require a                 credit transfer incentives is comparable
                                                   As the Commission has explicitly                     corresponding credit in order to
                                                acknowledged, the current listing                       incentivize the company to transfer its                   25 See NASDAQ IM–5900–4 (Waiver of Certain

                                                market is highly concentrated, noting                   listing to IEX. Accordingly, the                       Annual Listing Fees Upon Transfer of a Non-
                                                that, ‘‘[e]ntrant exchanges cann . . . face             Exchange believes that providing an                    Nasdaq Exchange Listed Security).
                                                                                                                                                                  26 See Securities Exchange Act Release No. 53696
                                                barriers to entry related to reputation.                enhanced credit is not an inequitable
                                                                                                                                                               (April 21, 2006), 71 FR 25273 (April 28, 2006) (SR–
                                                Exchanges that enter the market may not                 allocation of fees because it merely                   NASD–2006–047).
                                                be able to quickly establish a strong                   operates to address the potential                         27 See Section 907.00 of the NYSE Listed
                                                reputation for high quality listings,                   disincentive to list that may exist for a              Company Manual and Nasdaq Rule IM–5900–7. The
                                                which may adversely affect their ability                company that has paid listing fees                     Exchange notes that the transfer incentive values
                                                to compete with incumbent exchanges.                    higher than $250,000. All similarly                    are provided over multiple years. Further, the value
                                                                                                                                                               of the Nasdaq incentives noted are for listed
                                                This lack of reputation may discourage                  situated companies will receive the                    companies with a market capitalization of $5 billion
                                                both investors and issuers from                         same credit.                                           that transfer from NYSE to the Nasdaq Global
                                                transacting or listing on an entrant                       The Exchange notes that there is                    Market or Global Select Market. Listed companies
                                                exchange, which may reinforce an                        precedent to provide a listing fee credit              that transfer from NYSE to the Nasdaq Global
                                                                                                                                                               Market or Global Select Market with market
                                                                                                                                                               capitalization of up to $750 million and between
                                                  18 See Sections 902.02 and 902.03 of the NYSE            22 See Securities Act Release No. 10390 (July 14,
                                                                                                                                                               $750 million or more but less than $5 million [sic]
                                                Listed Company Manual.                                  2017), 82 FR 33839 (July 21, 2017) (File No. S7–       receive incentives over multiple years in the form
                                                  19 See NASDAQ Rule 5920(c) for NASDAQ                 06–17).                                                of specified products and services valued at an
sradovich on DSK3GMQ082PROD with NOTICES




                                                Capital Market annual fees, Rule 5910(c) for               23 In the event that the Exchange proposes
                                                                                                                                                               aggregate of $144,500 and $553,500 respectively.
                                                NASDAQ Global and Global Select annual fees, and        increases to its listing fees, such increases will     The value of the NYSE incentives noted are for
                                                IM–5910–1 for the all inclusive annual listing fees     include a grandfathering provision for companies       listed companies with a global market value of $400
                                                applicable to companies listed on the NASDAQ            that have remaining credits available so that each     million or more that transfer from another national
                                                Global Market (including the Global Select Market).     such company obtains the contemplated years of         securities exchange to NYSE. Listed companies
                                                  20 Id.                                                free listing as proposed herein, subject to            with a global market value of less than $400 million
                                                  21 See, e.g., Securities Exchange Act Release No.     Commission filing and effectiveness.                   receive incentives over 24 calendar months in the
                                                78149 (June 24, 2016), 81 FR 42388 (June 29, 2016)         24 See Section 902 of the NYSE Listed Company       form of specified products and services valued at
                                                (SR–NASDAQ–2016–085).                                   Manual.                                                $153,000.



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                                                45920                        Federal Register / Vol. 82, No. 189 / Monday, October 2, 2017 / Notices

                                                to the monetary value of the transfer                   existence at that time would not be able              to transfer listing mid-year, thus
                                                incentives offered by NYSE and                          to take the actions necessary to obtain               forgoing the benefits of a nonrefundable
                                                NASDAQ.                                                 a fee credit, IEX does not believe that               listing fee already paid. In contrast,
                                                   Moreover, as discussed above, both                   this issue means that the fee credit is               IEX’s proposal to provide a pro-rata
                                                NYSE and NASDAQ charge listing fees                     inequitable or unfairly discriminatory.               refund is designed to be pro-competitive
                                                predominantly based on the number of                    NASDAQ provides several other                         by providing listed companies with the
                                                shares outstanding, such that a company                 categories of fee incentives to                       ability to transfer listing mid-year
                                                with fewer shares outstanding is                        companies that transfer to NASDAQ                     without financial penalty.
                                                generally charged a lower listing fee                   from another exchange. These include                     In conclusion, the Exchange submits
                                                than a company with a larger number of                  an entry fee waiver, as well as a                     that its proposed fee structure satisfies
                                                shares outstanding. By providing a                      ‘‘grandfathering’’ incentive related to               the requirements of Sections 6(b)(4) and
                                                higher credit to a company that has paid                the all-inclusive annual listing fee                  6(b)(5) of the Act for the reasons
                                                listing fees in excess of $250,000 to                   whereby the company’s fee is based on                 discussed above in that it is an equitable
                                                NYSE, the IEX credit is designed to take                the lower of its shares outstanding as of             allocation of fees, does not permit unfair
                                                into account the fact that some issuers                 the date of listing or at the time of                 discrimination between customers,
                                                have been subject to higher fees based                  billing. For example, NASDAQ provides                 issuers, brokers, or dealers, and is
                                                on their number of shares outstanding,                  an accommodation to companies that                    designed to promote just and equitable
                                                and to provide issuers a credit incentive               applied to list on NASDAQ prior to                    principles of trade, to remove
                                                on that basis.                                          January 1, 2015 and list after that date              impediments to and perfect the
                                                   The Exchange believes that limiting                  whereby such companies are billed                     mechanism of a free and open market
                                                the fee credit to companies that                        based on the lower of its shares                      and a national market system. For the
                                                announce their intent to transfer listing               outstanding at the time of application of             foregoing reasons, the Exchange also
                                                to IEX prior to or within 120 calendar                  listing.31 Thus companies that apply to               believes that its simplified fee structure
                                                days of the first IEX listing, as described             list on NASDAQ after January 1, 2015                  is consistent with the Act, in that it is
                                                in the Purpose Section, will operate as                 are not able to take advantage of this                designed to promote just and equitable
                                                an incentive to companies listed on                     accommodation, including companies                    principles of trade, to remove
                                                NYSE or NASDAQ to transfer their                        that did not exist prior to January 1,                impediments to a free and open market
                                                listing to IEX expeditiously in order to                2015. In its rule filing proposing this               and national market system and in
                                                enable the Exchange to achieve critical                 accommodation, NASDAQ asserts that it                 general to protect investors and the
                                                mass relatively quickly, in a highly                    is consistent with the Act based on                   public interest.
                                                competitive environment. As described                   competitive considerations.32 Similarly,              B. Self-Regulatory Organization’s
                                                in the Purpose Section, the Exchange                    IEX’s proposed fee credit is designed to              Statement on Burden on Competition
                                                will provide notice to the issuer                       address competitive considerations (as
                                                community on the day when the first                                                                              IEX does not believe that the
                                                                                                        discussed above) and is thus also                     proposed rule change will result in any
                                                listing occurs, and IEX believes that the               consistent with the Act. Accordingly,
                                                120 calendar day period will provide                                                                          burden on competition that is not
                                                                                                        IEX believes that the timing of                       necessary or appropriate in furtherance
                                                ample time for any company that meets                   availability of the fee credit to
                                                IEX’s listing requirements to                                                                                 of the purposes of the Act. The
                                                                                                        individual companies does not raise any               Exchange does not believe that the
                                                successfully complete the clearance 28                  new or novel issues not already
                                                and application processes,29 issue the                                                                        proposed rule change will impose any
                                                                                                        considered by the Commission.                         burden on intermarket competition that
                                                required press release within 120                          Finally, IEX believes that it is
                                                calendar days of the first IEX listing,                                                                       is not necessary or appropriate in
                                                                                                        consistent with the protection of                     furtherance of the purposes of the Act.
                                                and thus receive the fee credit. As the                 investors, the public interest and
                                                Commission has noted, and as                                                                                  To the contrary, the Exchange believes
                                                                                                        removing impediments to a free and                    that the proposed listing fee structure is
                                                discussed above, if a new listing                       open market and a national market
                                                exchange does not quickly establish a                                                                         designed to provide a competitive
                                                                                                        system to provide a pro-rata refund of                alternative to listing on NYSE or
                                                strong reputation for high quality                      the annual listing fee to a company that
                                                listings, it may adversely affect its                                                                         NASDAQ. The Exchange operates in a
                                                                                                        ceases to be listed on IEX during the                 highly competitive market in which
                                                ability to compete with incumbent                       calendar year for which such fee was                  issuers can readily favor competing
                                                exchanges.30 Structuring the availability               paid. In this regard, IEX further believes            listing exchanges if fee schedules and
                                                of the fee credit within the specified                  that if a company ceases to be listed on              services at such other exchanges are
                                                time window is designed to address the                  IEX, either because of a corporate action             viewed as more favorable. As a new
                                                imperative to quickly establish a strong                (e.g., merger, acquisition, going private             listing exchange, IEX expects to face
                                                reputation for high quality listings.                   transaction) or delisting (whether
                                                   The Exchange believes that this                                                                            intense competition from NYSE and
                                                                                                        voluntary or otherwise), the company                  NASDAQ. Consequently, the Exchange
                                                structure is reasonable, not an                         will not have received listing for the
                                                inequitable allocation of fees, and not                                                                       believes that the degree to which IEX
                                                                                                        entire year and therefore should not be               fees could impose any burden on
                                                unfairly discriminatory since while the                 required to pay for the entire year. IEX
                                                time window is open any company that                                                                          competition is extremely limited, and
                                                                                                        notes that NYSE and NASDAQ listing                    does not believe that such fees would
                                                meets IEX’s listing standards will be                   fees are nonrefundable, and believes
                                                able to make a decision to list on IEX,                                                                       burden competition among issuers or
                                                                                                        that this structure can have an
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                                                make the requisite announcement, and                                                                          with competing venues in a manner that
                                                                                                        anticompetitive impact on the listing                 is not necessary or appropriate in
                                                obtain the fee credit once it lists on IEX.             market since companies may be hesitant
                                                While a company that is not in                                                                                furtherance of the purposes of the Act.
                                                                                                          31 See, e.g., NASDAQ IM–5910–1(b)(2) (All-
                                                                                                                                                              The Exchange also notes that other
                                                  28 SeeIEX Rule 14.201.                                Inclusive Annual Listing Fee).
                                                                                                                                                              listing venues are similarly free to set
                                                 29 See IEX Rule 14.202.                                  32 See Securities Exchange Act Release No. 74472    their fees.
                                                 30 See supra note 22 [sic], Section VI., Economic      (March 11, 2015), 80 FR 13925 (March 17, 2015)           The Exchange does not believe that
                                                Analysis at 33842.                                      (SR–NASDAQ–2015–017).                                 the proposed rule change will impose


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                                                                                   Federal Register / Vol. 82, No. 189 / Monday, October 2, 2017 / Notices                                                45921

                                                any burden on intramarket competition                     Comments may be submitted by any of                    SECURITIES AND EXCHANGE
                                                that is not necessary or appropriate in                   the following methods:                                 COMMISSION
                                                furtherance of the purposes of the Act
                                                because, while different issuers will be                  Electronic Comments
                                                                                                                                                                 [Release No. 34–81733; File No. SR–
                                                eligible for different fee credits, these                   • Use the Commission’s Internet                      NASDAQ–2017–081]
                                                different fee credits are not based on the                comment form (http://www.sec.gov/
                                                type of listed company but on the                         rules/sro.shtml); or                                   Self-Regulatory Organizations; The
                                                timing of listing on IEX and, when a                                                                             NASDAQ Stock Market LLC; Notice of
                                                higher credit is provided, on the listing                   • Send an email to rule-comments@
                                                                                                                                                                 Withdrawal of a Proposed Rule Change
                                                fees already paid to its prior listing                    sec.gov. Please include File Number SR–
                                                                                                                                                                 To Extend the Implementation Date for
                                                exchange. As discussed in the Statutory                   IEX–2017–30 on the subject line.
                                                                                                                                                                 Certain Changes to the Rule 5700
                                                Basis section, limiting fee credits to                    Paper Comments                                         Series and Rule 5810
                                                companies that issue the required press
                                                release prior to or within 120 calendar                     • Send paper comments in triplicate                  September 27, 2017.
                                                days of the first IEX listing is designed                 to Brent J. Fields, Secretary, Securities                 On August 7, 2017, The NASDAQ
                                                to incentivize companies to transfer to                   and Exchange Commission, 100 F Street
                                                IEX expeditiously in order to gain                                                                               Stock Market LLC (‘‘Nasdaq’’) filed with
                                                                                                          NE., Washington, DC 20549–1090.                        the Securities and Exchange
                                                critical mass quickly. Further, providing
                                                a higher fee credit to companies that                     All submissions should refer to File                   Commission (‘‘Commission’’), pursuant
                                                paid nonrefundable listing fees of more                   Number SR–IEX–2017–30. This file                       to Section 19(b)(1) of the Securities
                                                than $250,000 to another listing                          number should be included on the                       Exchange Act of 1934 1 and Rule 19b–
                                                exchange during the calendar year in                      subject line if email is used. To help the             4 thereunder,2 a proposed rule change
                                                which it lists on IEX is designed to                      Commission process and review your                     to extend the implementation date for
                                                provide a meaningful incentive to such                    comments more efficiently, please use                  certain changes concerning the
                                                companies to transfer their listing to                    only one method. The Commission will                   continued listing requirements for
                                                IEX. All similarly situated issuers would                 post all comments on the Commission’s                  exchange-traded products in the Nasdaq
                                                be treated similarly since the higher                     Internet Web site (http://www.sec.gov/                 Rule 5700 Series and related changes to
                                                credit would be based on the amount of                    rules/sro.shtml). Copies of the                        Nasdaq Rule 5810. The proposed rule
                                                the listing fee paid.                                     submission, all subsequent                             change was published for comment in
                                                C. Self-Regulatory Organization’s                         amendments, all written statements                     the Federal Register on August 22,
                                                Statement on Comments on the                              with respect to the proposed rule                      2017.3 The Commission received one
                                                Proposed Rule Change Received From                        change that are filed with the                         comment letter on the proposed rule
                                                Members, Participants, or Others                          Commission, and all written                            change.4 On September 22, 2017,
                                                                                                          communications relating to the                         Nasdaq withdrew the proposed rule
                                                  Written comments were neither                           proposed rule change between the                       change (SR–NASDAQ–2017–081).
                                                solicited nor received.                                   Commission and any person, other than                    For the Commission, by the Division of
                                                III. Date of Effectiveness of the                         those that may be withheld from the                    Trading and Markets, pursuant to delegated
                                                Proposed Rule Change and Timing for                       public in accordance with the                          authority.5
                                                Commission Action                                         provisions of 5 U.S.C. 552, will be                    Eduardo A. Aleman,
                                                   The foregoing rule change has become                   available for Web site viewing and                     Assistant Secretary.
                                                effective pursuant to Section                             printing in the Commission’s Public                    [FR Doc. 2017–21159 Filed 9–29–17; 8:45 am]
                                                19(b)(3)(A)(ii) 33 of the Act.                            Reference Room, 100 F Street NE.,
                                                                                                                                                                 BILLING CODE 8011–01–P
                                                                                                          Washington, DC 20549 on official
                                                   At any time within 60 days of the
                                                filing of the proposed rule change, the                   business days between the hours of
                                                Commission summarily may                                  10:00 a.m. and 3:00 p.m. Copies of the
                                                temporarily suspend such rule change if                   filing also will be available for
                                                it appears to the Commission that such                    inspection and copying at the principal
                                                action is necessary or appropriate in the                 office of the Exchange. All comments
                                                public interest, for the protection of                    received will be posted without change;
                                                investors, or otherwise in furtherance of                 the Commission does not edit personal
                                                the purposes of the Act. If the                           identifying information from
                                                Commission takes such action, the                         submissions. You should submit only
                                                Commission shall institute proceedings                    information that you wish to make
                                                under Section 19(b)(2)(B) 34 of the Act to                available publicly. All submissions
                                                determine whether the proposed rule                       should refer to File Number SR–IEX–
                                                change should be approved or                              2017–30 and should be submitted on or
                                                disapproved.                                              before October 23, 2017.
                                                IV. Solicitation of Comments                                For the Commission, by the Division of
                                                                                                          Trading and Markets, pursuant to delegated               1 15 U.S.C. 78s(b)(1).
                                                  Interested persons are invited to
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                                                                                                          authority.35                                             2 17 CFR 240.19b–4.
                                                submit written data, views and                            Eduardo A. Aleman,                                       3 See Securities Exchange Act Release No. 81406
                                                arguments concerning the foregoing,                                                                              (August 16, 2017), 82 FR 39920.
                                                including whether the proposed rule                       Assistant Secretary.
                                                                                                                                                                   4 See letter from Jane Heinrichs, Associate
                                                change is consistent with the Act.                        [FR Doc. 2017–21002 Filed 9–29–17; 8:45 am]
                                                                                                                                                                 General Counsel, Investment Company Institute, to
                                                                                                          BILLING CODE 8011–01–P                                 Brent J. Fields, Secretary, Commission, dated
                                                  33 15 U.S.C. 78s(b)(3)(A)(ii).                                                                                 September 1, 2017.
                                                  34 15 U.S.C. 78s(b)(2)(B).                                35 17   CFR 200.30–3(a)(12).                           5 17 CFR 200.30–3(a)(12).




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Document Created: 2017-09-30 04:40:39
Document Modified: 2017-09-30 04:40:39
CategoryRegulatory Information
CollectionFederal Register
sudoc ClassAE 2.7:
GS 4.107:
AE 2.106:
PublisherOffice of the Federal Register, National Archives and Records Administration
SectionNotices
FR Citation82 FR 45917 

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