[Federal Register: May 12, 2006 (Volume 71, Number 92)]
[Notices]
[Page 27764-27768]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr12my06-116]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-53764; File No. SR-PCX-2006-16]
Self-Regulatory Organizations; Pacific Exchange, Inc. (n/k/a NYSE
Arca, Inc.); Notice of Filing of Proposed Rule Change and Amendments
No. 1 and No. 2 Thereto To Revise Fees for Equity Securities Issued by
Operating Companies Listed on the Archipelago Exchange
May 5, 2006.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act''),\1\ and Rule 19b-4 thereunder,\2\
[[Page 27765]]
notice is hereby given that on March 1, 2006, the Pacific Exchange,
Inc. (n/k/a NYSE Arca, Inc.) (``NYSE Arca'' or ``Exchange''), through
its wholly owned subsidiary PCX Equities, Inc. (n/k/a NYSE Arca
Equities, Inc.), 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 NYSE Arca.\3\ On
March 17, 2006, the Exchange filed Amendment No. 1 to the proposed rule
change.\4\ On May 5, 2006, the Exchange filed Amendment No. 2 to the
proposed rule change.\5\ The Commission is publishing this notice to
solicit comments on the proposed rule change, as amended, from
interested persons.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
\3\ On March 6, 2006, the Pacific Exchange, Inc. (``PCX'') filed
a rule proposal, which was effective upon filing, that amended its
rules to reflect these name changes: from PCX to NYSE Arca; from PCX
Equities, Inc. to NYSE Arca Equities, Inc.; from PCX Holdings, Inc.,
to NYSE Arca Holdings, Inc.; and from the Archipelago Exchange,
L.L.C. to NYSE Arca, L.L.C. See File No. SR-PCX-2006-24 (March 6,
2006).
\4\ See Amendment No. 1.
\5\ See Amendment No. 2.
---------------------------------------------------------------------------
I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The NYSE Arca proposes to amend its Schedule of Fees and Charges
(``Fee Schedule'') to revise the application, initial, annual and
additional shares listing fees for equity securities issued by
operating companies listed on the Archipelago Exchange, the equities
facility of the Exchange. The Exchange also proposes related
modifications to the Fee Schedule.
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 NYSE Arca included
statements concerning the purpose of, and basis for, the proposed rule
change as amended 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
In connection with the recently completed acquisition of the NYSE
Arca and Arca Equities by Archipelago Holdings, Inc.--the parent of
NYSE Arca, L.L.C. (``NYSE Arca Marketplace'')--and the now completed
merger between Archipelago Holdings, Inc. and the New York Stock
Exchange (``NYSE''), NYSE Arca undertook a review of its listings
business and competitive position in a rapidly changing industry.\6\ As
a result of this review, the NYSE Arca determined to make significant
changes to the fees associated with its listings program. Accordingly,
the NYSE Arca proposes to revise, and in some cases increase, the
application, initial, annual and additional share listing fees for
equity securities issued by operating companies listed on NYSE Arca
Marketplace. This filing also proposes a number of related
modifications to the Fee Schedule.\7\
---------------------------------------------------------------------------
\6\ For instance, on December 8, 2005, Nasdaq announced that it
had completed its acquisition of Instinet Group Incorporated,
including INET ECN. In addition, on August 24, 2005, the Boston
Stock Exchange, along with Citigroup, Credit Suisse First Boston,
Fidelity Brokerage Company and Lehman Brothers, announced the
formation of a new joint venture that will launch an electronic
stock exchange, the Boston Equities Exchange. Further, on August 16,
2005, the Philadelphia Stock Exchange announced that Citigroup,
Credit Suisse First Boston, Morgan Stanley and UBS have each
acquired equity stakes in that exchange, with provisions that allow
for each firm to obtain additional equity based on specific
performance criteria.
\7\ These proposed fee changes apply only to equity securities
issued by operating companies. They do not apply to other types of
listed issues, including but not limited to open and closed-end
funds, exchange-traded funds, commodity-based trusts, trust issued
receipts, portfolio depositary receipts, structured products and
investment company units. For these issues, the Fee Schedule remains
unchanged.
---------------------------------------------------------------------------
The NYSE Arca believes this proposal would enable it to compete
effectively for listings, while supporting the ongoing costs of issuer
services, including regulatory oversight and product and service
offerings. This proposal further seeks to streamline and clarify the
fees applicable to operating companies, making them more transparent
and easier to understand and apply.
a. Application Fee. Currently, the NYSE Arca levies a non-
refundable application processing fee of $500, credited towards the
applicable initial listing fee if the application is approved. The
Exchange proposes to eliminate the application fee.
b. Maximum Total Fees Paid by an Issuer Each Year. The NYSE Arca
proposes a maximum cap of $250,000 on the total fees paid each year by
an issuer. Currently, the Exchange does not have such an issuer cap.
c. Listing Fee.\8\ Currently, the Listing Fee applicable to common
stock upon first listing depends on whether the stock is listed in
conjunction with an initial public offering (``IPO'') or not, and
whether it is classified as a Tier I or Tier II listing.\9\ For IPOs
listed exclusively on Tier I,\10\ the Listing Fee is based on the
issuer's total shares outstanding (``TSO''), as follows:
---------------------------------------------------------------------------
\8\ There are two types of fees applicable to issuers--Listing
Fees and Annual Fees. Previously, NYSE Arca referred to Listing Fees
as Initial Listing Fees and Additional Share Listing Fees. For ease
of application, in light of the completed merger between Archipelago
Holdings, Inc. and the NYSE, NYSE Arca proposes to conform its fee
nomenclature to the NYSE's nomenclature.
\9\ Tier I is designed for larger capitalization, mature
issuers; Tier II is for smaller issuing companies. Both Tiers have
their own set of listing criteria.
\10\ See NYSE Arca Equities Rule 5.2(c).
------------------------------------------------------------------------
TSO Listing fee
------------------------------------------------------------------------
Less than 10,000,000....................................... $25,000
10,000,001 to 30,000,000................................... 75,000
30,000,000 to $75,000,000.................................. 100,000
Greater than $75,000,000................................... 125,000
------------------------------------------------------------------------
For IPOs listed exclusively on Tier II,\11\ the current Listing Fee
is fixed at $25,000. For IPOs which dually list, there is no Listing
Fee, regardless of Tier classification. There is also no Listing Fee
for already publicly-traded companies which transfer their listings
from another marketplace, regardless of whether such issuers are
exclusively or dually listed, their Tier classification, or TSO.
---------------------------------------------------------------------------
\11\ See NYSE Arca Equities Rule 5.2(k).
---------------------------------------------------------------------------
To simplify and streamline these fees, the NYSE Arca proposes to
adopt new Listing Fees based on TSO at the time a security is listed on
NYSE Arca Marketplace, as follows: \12\
---------------------------------------------------------------------------
\12\ For purposes of Listing Fee calculations, NYSE Arca would
include treasury stock, restricted stock and shares issued in
conjunction with the exercise of an overallotment option, if
applicable, in the number of shares for which an issuer is billed at
the time a security is first listed.
------------------------------------------------------------------------
TSO Listing fee
------------------------------------------------------------------------
Up to and including 30 million............................. $100,000
30,000,001 up to and including 50 million.................. 125,000
Over 50 million............................................ 150,000
------------------------------------------------------------------------
These proposed fees also would apply to each class of preferred
stock or warrant listed, whether or not the issuer has common shares
also listed.\13\ Further, these fees would apply regardless of Tier
classification or whether the issue is exclusively or
[[Page 27766]]
dually listed. These proposed Listing Fees also would apply to foreign
private issuers, but only to the extent their securities are issued and
outstanding in the United States.\14\ However, in light of the recently
completed merger between Archipelago Holdings, Inc. and the NYSE,
issuers that transfer their listing to the NYSE Arca Marketplace from
the NYSE would not be subject to Listing Fees upon initial listing.
---------------------------------------------------------------------------
\13\ As discussed below, for additional classes of common stock
when the issuer has a class of common stock already listed, the
Exchange would levy a flat Listing Fee for initial listing of
$5,000.
\14\ See 17 CFR 240.3b-4 (defining ``foreign private issuer'').
---------------------------------------------------------------------------
For additional classes of common stock, preferred stock, debt
instruments, purchase rights and warrants, the current initial listing
fee is $2,500, regardless of whether such securities are also listed
elsewhere. These fees apply to each additional issue listed, regardless
of shares outstanding or Tier classification.
For additional classes of common stock, the NYSE Arca proposes a
flat Listing Fee of $5,000 in lieu of the per share schedule above.
The Listing Fee for debt instruments and purchase rights remains
$2,500.
d. Technical Original Listing Fee.\15\ Currently, the NYSE Arca
charges a fee for technical original listing applications of $2,500.
Under the current rule, a technical original listing occurs as a result
of, for example:
---------------------------------------------------------------------------
\15\ To conform to NYSE fee nomenclature, NYSE Arca proposes to
adopt the term ``Technical Original Listing'' in place of
``Substitute Initial Listing.''
---------------------------------------------------------------------------
Change in the issuer's state of incorporation;
Reincorporation under the laws of the same state;
Recapitalization;
Creation of a holding company or a new company by
operation of law or through an exchange offer; \16\ or
---------------------------------------------------------------------------
\16\ The proposed new rule text regarding the application of the
fee in these circumstances codifies the Exchange's existing
practice.
---------------------------------------------------------------------------
Similar events, which, in effect, create a new security or
which alters any of its rights, preferences, privileges or terms.
Additionally, this fee currently applies if the change in the
company's status is technical in nature and the shareholders of the
original company receive or retain a share-for-share interest in the
new company without any change in their equity position or rights.\17\
By the proposed rule change, the NYSE Arca proposes to rename the
fee,\18\ to codify its current practice regarding applying the fee,\19\
and to increase the amount of the fee to $5,000 per application.
---------------------------------------------------------------------------
\17\ The proposed new rule text regarding the application of the
fee in these circumstances codifies the Exchange's existing
practice.
\18\ See supra at n.15.
\19\ See supra at n.16 and n.17.
---------------------------------------------------------------------------
e. Annual Fee. Currently, the Annual Fee depends on whether a
security was listed in conjunction with an IPO, whether the security is
listed exclusively or dually, and Tier classification. For Tier I
exclusive IPO listings, the current Annual Fee is based on TSO, as
follows:
------------------------------------------------------------------------
TSO Annual fee
------------------------------------------------------------------------
Less than 10,000,000....................................... $15,000
10,000,001 to 50,000,000................................... 20,000
50,000,001 to 100,000,000.................................. 35,000
Greater than 100,000,000................................... 50,000
------------------------------------------------------------------------
For Tier II exclusive IPO listings, the current annual Fee is
$12,500, regardless of TSO.
For dual listings in conjunction with IPOs, and exclusive and dual
listings of already publicly-traded companies, the Exchange does not
levy an Annual Fee for the first 12-calendar months following listing.
At the end of this 12-month period, NYSE Arca proposes to assess, on a
pro-rated basis, the applicable Annual Fee for the balance of the then
current calendar year, as follows:
For exclusive IPO Listings, the Annual Fee is based on the
fees set forth above for exclusive IPOs, depending on Tier
classification;
For dual IPO and exclusive and dual non-IPO Listings, the
Annual Fee is $10,000, regardless of Tier classification or shares
outstanding.
The current maximum Annual Fee payable by a single issuer for all
issues listed is $90,000. Annual Fees are not pro-rated or reduced for
securities that delist for any reason.
The Exchange proposes an Annual Fee for listed issuers listing
common or preferred securities as follows: A minimum of $30,000 for
issuers with up to and including 10 million TSO plus, for each share
over 10 million TSO up to and including 100 million TSO, issuers would
be subject to an additional per share charge of $0.000375. For all
issuers with TSO above 100 million, the Annual Fee would be a flat
$85,000 per issue listed. For example, an issuer with 54.5 million TSO
would pay an Annual Fee of $46,687.50 ($30,000 plus $0.000375 times
44.5 million), an issuer with 100 million TSO would pay an Annual Fee
of $63,750 ($30,000 plus $0.000375 times 90 million), and an issuer
with 110 million TSO would pay the maximum Annual Fee of $85,000 per
issue. These proposed Annual Fees would also apply to foreign private
issuers, but only to the extent securities are issued and outstanding
in the United States. The NYSE Arca would calculate the Annual Fee for
foreign private issuers based on a four-quarter average of the
securities issued and outstanding in the United States during the
preceding year.\20\
---------------------------------------------------------------------------
\20\ The purpose of utilizing a four-quarter average is to
recognize the possibility of flow-back and flow-in of securities to
and from the home country market and more reasonably reflect the
number of securities in the United States over the course of the
year.
---------------------------------------------------------------------------
To the extent that an issuer that is billed by NYSE Arca as a
foreign private issuer has a change in status that requires the issuer
to commence filing U.S. periodic and annual reports with the Commission
during the course of a year, NYSE Arca would bill that issuer Listing
and Annual Fees as a domestic issuer at the beginning of the first
calendar year following the issuer's change in status. An issuer that
changes its status would not be subject to new Listing Fees for
worldwide securities already issued and outstanding.
For additional classes of common stock, preferred stock, debt
instruments, purchase rights and warrants, the NYSE Arca's current
Annual Fee is $500, regardless of whether they are also listed
elsewhere. These fees apply to each such issue listed, regardless of
shares outstanding or Tier classification.
For issuers with more than one class of common stock listed, the
Exchange proposes an Annual Fee of $20,000 or $0.000375 per share
listed, whichever is greater, for each additional class of common
stock.\21\
---------------------------------------------------------------------------
\21\ For purposes of Annual Fee calculation when an issuer has
multiple classes of common stock listed, the NYSE Arca would assess
the class of common stock with the highest TSO the Annual Fee
proposed above for listed issuers, that is, a minimum Annual Fee of
$30,000 for up to and including 10 million TSO plus, if applicable,
a per share charge of $0.000375 on each share over 10 million up to
and including 100 million TSO, subject to the $85,000 maximum Annual
Fee per issue. For each additional class of common stock listed, the
NYSE Arca would assess Annual Fees as proposed above for additional
classes, that is, an Annual Fee of $20,000 or $0.000375 per share
listed, whichever is greater.
---------------------------------------------------------------------------
For additional classes of preferred stock where the issuer has a
class of common or preferred stock already listed, the Exchange
proposes an Annual Fee of $5,000 or $0.000375 per share, whichever is
greater. Further, the NYSE Arca proposes an Annual Fee for each class
of warrant listed of $5,000 or $0.000375 per warrant, whichever is
greater. The Annual Fee for debt instruments and purchase rights would
remain $500.
Issues would be subject to the Annual Fee in the year of listing,
pro-rated based on days listed that calendar year. However, issuers
that transfer their
[[Page 27767]]
listing from the NYSE to the NYSE Arca Marketplace would, for the year
of transfer, be subject only to the applicable NYSE Annual Fee billed
for that year and, in subsequent years, such issuers would pay the
applicable NYSE Arca Marketplace Annual Fee; similarly, issuers that
transfer their listings from NYSE Arca Marketplace to the NYSE would,
for the year of transfer, be subject only to the applicable NYSE Arca
Marketplace Annual Fee billed for that year and, in subsequent years,
such issuers would pay applicable NYSE Annual Fees.
f. Subsequent Listing of Additional Securities.\22\ Currently, the
fee applicable to all issuers for Subsequent Listing of Additional
Securities is $.0025 per additional share listed, assessed beginning
with the 100,000th additional share listed per application. There is no
charge per application for the first 99,999 additional shares listed.
For domestic issuers, the minimum and a maximum charge per application
currently depends on whether an issue is exclusively or dually listed,
as follows:
---------------------------------------------------------------------------
\22\ Previously, the NYSE Arca referred to Subsequent Listing of
Additional Securities as Additional Shares Listing.
---------------------------------------------------------------------------
For all exclusive listings, the maximum charge per
application is $15,000 and the annual maximum charge is $30,000;
For all dual listings, the maximum charge per application
is $7,500 and the maximum annual charge is $14,000; and
For all applications to list additional shares, the
current minimum charge is $500.
In addition, for American Depositary Receipts (``ADRs'') and
American Depositary Shares (``ADSs'') only, NYSE Arca's current maximum
additional shares listing charge per year is $10,000, the minimum
charge per application is $500, and the maximum per application charge
at $7,500. These fees are assessed only on the ADRs and ADSs that are
issued and outstanding in the United States.
For an issuer to list additional shares of a class of previously
listed securities, NYSE Arca proposes to adopt the following schedule,
subject to a minimum fee of $5,000 per application:
------------------------------------------------------------------------
Fee per
Number of securities issued share
------------------------------------------------------------------------
Up to and including 75 million............................ $0.0048
75,000,001 to 300 million................................. 0.00375
Over 300 million.......................................... 0.0019
------------------------------------------------------------------------
The Listing Fees for subsequent listings of additional shares are
calculated starting at the rate applicable to the number of shares
already listed and outstanding (including treasury stock and restricted
stock). This schedule applies to subsequent issuances of common stock,
preferred stock and warrants.
These fees would be assessed as follows, subject to any maximum on
fees paid by an issuer per year:
To the extent that an issuer submits a supplemental
listing application for shares that are immediately issued, such as in
connection with a merger or acquisition, stock split or stock dividend,
Listing Fees for those shares would be billed at the time the
supplemental listing application is processed.
However, to the extent an issuer submits a supplemental
listing application for shares that are not issued at the time of
listing, such as for an equity compensation plan or for convertible
securities where the listed securities will be issued over time, only
the $5,000 minimum supplemental listing application fee would be billed
at the time the supplemental listing application is processed. Listing
Fees would accrue on these securities as of the date of issuance and
the accrued Listing Fees would be billed at the beginning of the
following year along with the issuer's Annual Fees.
These fees would also apply to foreign private issuers, but only to
the extent securities are issued and outstanding in the United States,
subject to any maximum on fees paid by an issuer per year. In addition,
issuers that transfer their listing to the NYSE Arca Marketplace from
the NYSE would be subject to these fees.
g. Miscellaneous Administrative Fees. Currently, NYSE Arca charges
$250 to administer certain modifications to NYSE Arca records. The
Exchange, stating that this fee has not been increased in many years,
proposes to increase this fee to $2,500 per modification, which
includes changes in company name, symbol, par value, and title of
security or designation. The fee would also apply to poison pill plans
(also known as shareholder rights plans).
h. Maximum Listing Fee for Stock Splits and Stock Dividends. The
NYSE Arca proposes that Listing Fees on shares issued in conjunction
with stock splits and stock dividends be capped at $150,000 per split
or issuance, subject to the $250,000 maximum on total fees paid each
year by an issuer. Currently, the Exchange does not have such a cap.
i. Listing Fee Discounts. In the case of transactions such as a
consolidation between two or more listed issuers that result in the
formation of a new issuer that immediately lists upon consummation of
the consolidation, or a merger between a listed issuer and an unlisted
issuer that results in the unlisted issuer surviving or the creation of
a new issuer (which lists within 12 months from the consummation of the
transaction), Listing Fees for that newly listed issuer would be 25% of
the Listing Fee for each class of securities being listed, up to 25% of
the maximum applicable to the issue(s) listed. No discount would be
applied, however, where a listed issuer survives the merger or
consolidation, or in the case of a backdoor (or ``reverse'') merger.
j. Rule Change Implementation. The NYSE Arca proposes to implement
these revised fees, as applicable, for all currently listed issuers
upon effectiveness of this proposal, except as follows:
For calendar year 2006, NYSE Arca proposes that issuers
listed on NYSE Arca Marketplace, and issuers with listing applications
pending as of the effective date of this proposal, would continue to be
subject to the current Fee Schedule. As of January 1, 2007, however,
all such issuers would be subject to the Fee Schedule as proposed to be
revised.
Further, NYSE Arca proposes, for the period through
December 31, 2007, that all issuers which transfer their listings from
Nasdaq or the American Stock Exchange, or apply to list during that
time, would not be subject to Listing Fees upon initial listing. Such
issuers, however, would be subject to Annual Fees and Fees for
Subsequent Listing of Additional Securities, as proposed above. Going
forward, NYSE Arca would consider whether to extend this period beyond
December 31, 2007, and would make any necessary proposals under Rule
19b-4 prior to that date.
2. Statutory Basis
The NYSE Arca believes that the proposal is consistent with Section
6(b) of the Act \23\ in general, and Section 6(b)(4) of the Act \24\ in
particular, in that it provides for the equitable allocation of
reasonable dues, fees and other charges among its ETP Holders, issuers,
and other persons using its facilities.
---------------------------------------------------------------------------
\23\15 U.S.C. 78f(b).
\24\15 U.S.C. 78f(b)(4).
---------------------------------------------------------------------------
B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange believes that the proposed rule change would not
impose any burden on competition that is not necessary or appropriate
in furtherance of the purposes of the Act.
[[Page 27768]]
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants or Others
The Exchange has not solicited, and does not intend to solicit,
comments on this proposed rule change. The Exchange has not received
any written comments from members or other interested parties.
III. Date of Effectiveness of the Proposed Rule
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 self-regulatory organization 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. 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 e-mail to rule-comments@sec.gov. Please include
File No. SR-PCX-2006-16 on the subject line.
Paper Comments
Send paper comments in triplicate to Nancy M. Morris,
Secretary, Securities and Exchange Commission, 100 F Street, NE.,
Washington, DC 20549-1090.
All submissions should refer to File Number SR-PCX-2006-16. This file
number should be included on the subject line if e-mail 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 Commissions 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 inspection and copying in the
Commission's Public Reference Room. Copies of such filing also will be
available for inspection and copying at the principal office of the
NYSE Arca. 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-PCX-
2006-16 and should be submitted by June 2, 2006.
For the Commission, by the Division of Market Regulation,
pursuant to delegated authority.\25\
---------------------------------------------------------------------------
\25\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------
Nancy M. Morris,
Secretary.
[FR Doc. E6-7270 Filed 5-11-06; 8:45 am]
BILLING CODE 8010-01-P