[Federal Register: September 10, 2003 (Volume 68, Number 175)]
[Notices]
[Page 53411-53413]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr10se03-108]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-48429; File No. SR-NYSE-2003-25]
Self-Regulatory Organizations; Notice of Filing of Proposed Rule
Change by the New York Stock Exchange, Inc. Relating to Continuing
Annual Fees for ``Repackaged'' Securities
September 3, 2003.
Pursuant to section 19(b)(1) of the Securities Exchange Act of 1934
(``Act'')\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that
on August 28, 2003, the New York Stock Exchange, Inc. (``NYSE'' or
``Exchange'') filed with the Securities and Exchange Commission
(``SEC'' or ``Commission'') the proposed rule change as described in
Items I, II, and III below, which Items have been prepared by the
Exchange. 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\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The NYSE proposes to amend section 902.02 of the Listed Company
Manual (the ``Manual'') to implement certain changes to the continuing
fees payable in connection with certain structured products known as
``repackaged'' securities and to reinstate the Exchange's ``15-year''
policy with respect to previously listed ``repackaged'' securities, as
more fully described below.
Below is the text of the proposed rule change. Proposed new
language is italicized and proposed deletions are in brackets.
* * * * *
Listed Company Manual
902.00 Listing Fees
* * * * *
902.02 Schedule of Current Listing Fees
* * * * *
[[Page 53412]]
C. Continuing Annual Fee
* * * * *
Per Share Calculation--All issued shares including treasury shares
are included in the calculation.
Continuing Annual Fees
(Effective January 1, 2003)
Per Share Rate--$930 per million
Minimum Fee--$35,000
* * * * *
Computation of Fee--Other Equity Issues--
The fee is the greater of the minimum of $5,000 per issue or the
fee calculated on a per share basis. All issued shares are included in
the calculation.
Special Rule for Repackaged Securities
Any issue of Repackaged Securities (as defined below), will be
subject to the continuing annual fee schedule in effect at the time of
listing of such issue, regardless of any changes to the fee schedule
made thereafter.
For the purpose of this Para. 902.02.C., Repackaged Securities are
securities listed under Para. 703.19 of this Manual, issued by a trust
with a term of years, where the assets of the trust consist primarily
of underlying fixed-income securities, and where the trust is funded
(or a reserve is created) at issuance to cover the trust's principal
obligations and associated expenses during the life of the Repackaged
Securities.
Overall Fee Cap
In calculating the continuing listing fee for a listed company, the
fees for all classes (or series) of listed securities of the company,
excluding derivative products, fixed income products, and closed-end
funds, are aggregated and the total continuing listing fee is capped at
$500,000.
* * * * *
II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
In its filing with the Commission, the Exchange 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 statements may be examined at the places specified in
Item IV below. The Exchange has prepared summaries, set forth in
sections A, B, and C below, of the most significant aspects of such
statements.
A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
1. Purpose
On January 1, 2003, the Exchange instituted certain changes to the
Schedule of Current Listing Fees for NYSE listed securities, including
an increase of continuing annual fees for NYSE listed securities and
discontinuance of the ``15-year'' policy, which previously removed from
the calculation of continuing annual fees any shares that have been
listed on the NYSE for 15 years or more.\3\ Following the
implementation of these fee changes, certain of the Exchange's member
firms brought to the attention of the Exchange that the increase in
continuing annual fees and elimination of the Exchange's ``15-year''
policy had a significant negative impact on the economics of
``repackaged'' securities.
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\3\ Securities Exchange Act Release No. 47115 (December 31,
2002), 68 FR 1495 (January 10, 2003) (File No. SR-NYSE-2002-62).
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For purposes of this filing, a ``repackaged'' security is a
security (such security referred to as a ``Repack'') issued by a trust
the assets of which are primarily fixed-income securities.\4\ The
Repacks issued by the trust have set maturity dates which correspond to
the maturity of the underlying securities and typically range from 25
to 50 years, but can be called prior to maturity, typically at par or
face value. A typical Repack also offers a call protection period,
generally five to seven years from issuance, and is subject also to a
call of the underlying securities. The trusts themselves are structured
to be relatively maintenance free and self-funded. Funds required for
the maintenance of the trust, including any listing fees, are
calculated based on the expected life of the Repacks and paid (or
reserved for) on a present value basis at the time of initial issuance.
As of January 1, 2003, there were approximately 150 Repacks listed on
the Exchange.
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\4\ Fixed-income securities include debt and trust preferred
securities. Among the Repacks listed on the Exchange are:
COBALTSSM, TRUCSSM, CorTSSM,
PCARSSM, CBTCSM, PPLUSSM,
SATURNSSM and CABCOSM.
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Because of the Repack trusts' financial structure, any increase to
applicable listing fees during the life of the Repack has significant
economic and administrative implications for the trust and its
depositor (also sometimes referred to as a trustor). The Exchange
represents that when the Exchange increased its continuing annual fees
for listed companies and discontinued its ``15-year'' policy,\5\ the
Repack trusts did not have sufficient funding to pay listing fees, and
the trust depositor became responsible for providing significant
additional--and unexpected--funding to the Repack trusts.
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\5\ See supra note 3.
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With respect to Repacks listed prior to January 1, 2003, the
Exchange is proposing to (a) roll back the continuing annual fee
increase that became effective on January 1, 2003, and (b) reinstate
the ``15-year'' policy thereby removing from the calculation of
continuing annual fees any underlying shares of Repacks listed on the
NYSE for 15 years or more.\6\
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\6\ Note that to the extent that Repacks are typically called
prior to 15 years, the Exchange's ``15-year'' policy would not
ordinarily come into play. However, for Repacks listed prior to
January 1, 2003, the effect of the ``15-year'' policy was included
in the calculation of the funding needed for Repacks listed, so its
removal going forward adversely affected the funding calculation for
those Repacks.
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In respect of Repacks listed after January 1, 2003, the Exchange
proposes to provide that the continuing annual fee applicable to
Repacks at the time of listing will remain in effect for the life of
the security. The ``15-year'' policy will not be applicable to Repacks
listed after January 1, 2003.
The Exchange believes that these fee changes will provide fee
certainty for present and future Repacks by allowing trust depositors
to reserve appropriately for continuing annual fees at the time of
listing at the then effective fee schedule.
2. Statutory Basis
The Exchange believes that proposed rule change is consistent with
the requirement of section 6(b)(4) of the Act,\7\ which provides that
an Exchange have rules that provide for the equitable allocation of
reasonable dues, fees and other charges among its members and issuers
and other persons using its facilities.
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\7\ 15 U.S.C. 78f(b)(4).
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B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange believes that the proposed rule change does not impose
any burden on competition that is not necessary or appropriate in the
furtherance of the purposes of the Act.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants or Others
The Exchange has neither solicited nor received written comments on
the proposed rule change.
[[Page 53413]]
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
Within 35 days of the date of publication of this notice in the
Federal Register or within such longer period (i) as the Commission may
designate up to 90 days of such date if it finds such longer period to
be appropriate and publishes its reasons for so finding or (ii) as to
which the Exchange consents, the Commission will:
(A) By order approve such proposed rule change, or
(B) Institute proceedings to determine whether the proposed rule
change should be disapproved.
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. Persons making written submissions
should file six copies thereof with the Secretary, Securities and
Exchange Commission, 450 Fifth Street, NW., Washington, DC 20549-0609.
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 inspection and copying in the
Commission's Public Reference Room. Copies of such filing will also be
available for inspection and copying at the principal office of the
NYSE. All submissions should refer to File No. SR-NYSE-2003-25 and
should be submitted by October 1, 2003.
For the Commission by the Division of Market Regulation,
pursuant to delegated authority.\8\
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\8\ 17 CFR 200.30-2(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 03-22982 Filed 9-9-03; 8:45 am]
BILLING CODE 8010-01-P