[Federal Register: December 3, 2003 (Volume 68, Number 232)]
[Notices]
[Page 67717-67718]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr03de03-108]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-48833; File No. SR-NYSE-2003-33]
Self-Regulatory Organizations; Notice of Filing of a Proposed
Rule Change and Amendment No. 1 Thereto by the New York Stock Exchange,
Inc. Relating to Exchange Fees for Closed-End Funds
November 25, 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 October 20, 2003, the New York Stock Exchange, Inc. (``NYSE'' or
``Exchange'') filed with the Securities and Exchange Commission
(``Commission'') the proposed rule change as described in Items I, II
and III below, which Items have been prepared by the NYSE. On November
24, 2003, the NYSE filed Amendment No. 1 to the proposed rule
change.\3\ 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.
\3\ See letter from Darla Stuckey, Corporate Secretary, NYSE, to
Nancy J. Sanow, Assistant Director, Division of Market Regulation,
Commission, dated November 24, 2003 (``Amendment No. 1'').
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The New York Stock Exchange, Inc. (the ``Exchange'' or the
``NYSE'') proposes to amend Section 902.02 of the Listed Company Manual
(the ``Manual'') to amend the continued listing fees applicable to
closed-end funds. The text of the proposed rule change is set forth
below. Proposed new language is in italics; proposed deletions are in
[brackets].
* * * * *
Listed Company Manual
902.00 Listing Fees
* * * * *
902.02 Schedule of Current Listing Fees
* * * * *
C. Continuing Annual Fee
* * * * *
The continuing annual fees for closed end funds are as follows:
[Per Share Rates--
1st and 2nd million shares................................. $1,650
Additional shares.......................................... 830
Minimum Fees--
Million Shares
1+-10...................................................... $25,000
10+-50..................................................... 35,000
50+-100.................................................... 48,410
100+-200................................................... 64,580
200+....................................................... 80,440]
[All issued shares are included in the continuing annual fee
calculation for closed end funds, except those which have been subject
to a continuing annual fee for a consecutive period of 15 years. After
15 years, such shares are excluded in the calculation of fees on the
per share basis.] Closed end funds will pay at a rate of $930 per
million shares, subject to a minimum annual fee of $25,000. Fund
families with between [5] 3 and [15] 14 closed-end funds listed will
receive a 5% discount off the calculated continuing annual fee for each
fund listed, and those with [16 or] more than 14 listed closed-end
funds will receive a discount of [10] 15%. No fund family shall pay
aggregate continuing annual fees in excess of $1 million in any one
year.
* * * * *
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 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 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
The Exchange has recently reduced the original listing fees
applicable to closed-end funds,\4\ and has capped at $75,000 the
original listing fees applicable to two or more funds from the same
fund family listing on the same date.\5\
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\4\ See Securities Exchange Act Release No. 48360 (August 18,
2003), 68 FR 51045 (August 25, 2003) (SR-NYSE-2003-22).
\5\ See Securities Exchange Act Release No. 48685 (October 23,
2003), 68 FR 61710 (October 29, 2003) (SR-NYSE-2003-32).
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The Exchange is now proposing to amend the continuing annual
listing fees applicable to closed-end funds by establishing a new
continuing fee structure with increased fund family discounts, and a
new per million share base rate applicable to all closed-end funds.
In establishing a new base rate applicable to all closed-end funds,
the Exchange will no longer apply the existing five-tiered continued
listing fee structure and, instead, closed-end funds will pay at a rate
of $930 per million shares, subject to a minimum annual fee of $25,000.
To clarify the applicability of the $25,000 minimum, that amount would
actually cover funds with up to 26,881,720 shares outstanding. It is
only beyond that size that the multiplication of the per share rate
($930/million) by the shares outstanding would produce a fee in excess
of the $25,000 minimum.
The Exchange also proposes to increase and expand the availability
of the discounts applicable to fund families with multiple funds
listed. As proposed, fund families with between 3 and 14 closed-end
funds listed will receive a 5% discount off the calculated continuing
annual fee for each fund listed, and those with more than 14 listed
closed-end funds will receive a discount of 15%. Currently, fund
families with between 5 and 15 closed-end funds listed receive a 5%
discount off the calculated continuing annual fee for each fund listed,
and those with 16 or more listed closed-end funds receive a discount of
10%.
In a previous filing revising listing fees generally,\6\ the
Exchange eliminated the fee policy under which shares subject to
continuing annual fees for a period of 15 consecutive years became
exempt from further fees. At the time, the Exchange noted that it was
[[Page 67718]]
continuing the 15-year exemption policy for closed-end funds pending
further study and revision of the fees charged to closed-end funds
generally. Given the new fee structure implemented for closed-end funds
under this proposal and the other filings referred to herein, the
Exchange has concluded that it is now appropriate to eliminate the 15-
year exemption policy for closed-end funds consistent with the
amendments made with respect to listed operating companies in December
2002.
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\6\ See Securities Exchange Act Release No. 47115 (December 31,
2002), 68 FR 1495 (January 10, 2003) (SR-NYSE-2002-62).
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The impact of the proposed continuing annual fee changes in their
entirety on an individual fund will vary depending on a fund's shares
outstanding and other circumstances. First of all, the Exchange states
that its rule has, and will continue to have, an overall fund family
fee cap of $1 million per year. Of the 407 listed closed end funds, the
Exchange states that 118 are in fund families covered by the $1 million
fee cap. Of the remaining 289 funds, factoring in the net effect of the
change to the new per share rate from the existing five-tiered formula,
the elimination of the 15-year exemption policy, and the increases in
the fund family discounts, the Exchange's analysis (based on the
information it currently has on fund shares outstanding) is that 55
funds would experience an increase in continuing annual fees, 150 would
experience a decrease, and 84 would experience no net change. Of those
that can be expected to experience an increase, the Exchange expects
that the average increase would be 15.6% and the median increase 8.2%.
The Exchange expects that the maximum increase for any one fund would
be 73% (in that case, $44,700). Of the 150 funds the Exchange expects
to experience a decrease, the average decrease would be 25.4% and the
median decrease would be 28.6%. The maximum decrease for any one fund
would be 36% (in that case, $12,000). While some funds would experience
an increase in continuing annual fees and others a decrease, the
overall impact on the Exchange would be a net decrease in continuing
annual fees of approximately $900,000.
2. Statutory Basis
The basis under the Act for this proposed rule change is the
requirement under Section 6(b)(4)\7\ 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 proposed rule change does not impose any burden on competition
that is not necessary or appropriate in 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 not solicited, and does not intend to solicit,
comments on this proposed rule change. The Exchange has not received
any unsolicited written comments from members or other interested
parties.
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 NYSE 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 amended
proposal 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-2003-33 and should
be submitted by December 24, 2003.
For the Commission, by the Division of Market Regulation,
pursuant to delegated authority.\8\
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\8\ 17 CFR 200.30-3(a)(12).
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Margaret H. McFarland,
Deputy Secretary.
[FR Doc. 03-30063 Filed 12-2-03; 8:45 am]
BILLING CODE 8010-01-P