[Federal Register Volume 82, Number 111 (Monday, June 12, 2017)]
[Notices]
[Pages 26964-26966]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2017-12040]
[[Page 26964]]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-80867; File No. SR-NYSE-2017-08]
Self-Regulatory Organizations; New York Stock Exchange LLC;
Notice of Filing of Proposed Rule Change To Amend its Listing Standards
for Closed-end Funds
June 6, 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 May 24, 2017, New York Stock Exchange LLC (``NYSE'' 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
The Exchange proposes to amend its listing standards for closed-end
funds. The proposed rule change is available on the Exchange's Web site
at www.nyse.com, at the principal office of the Exchange, and at the
Commission's Public Reference Room.
II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
In its filing with the Commission, the self-regulatory organization
included statements concerning the purpose of, and basis for, the
proposed rule change and discussed any comments it received on the
proposed rule change. The text of those statements may be examined at
the places specified in Item IV below. The Exchange has prepared
summaries, set forth in sections A, B, and C below, of the most
significant parts of such statements.
A. Self-Regulatory Organization's Statement of the Purpose of, and the
Statutory Basis for, the Proposed Rule Change
1. Purpose
The Exchange proposes to amend its listing standards for closed-end
funds to conform them to those of NYSE MKT LLC (``NYSE MKT'').
Paragraph A of Section 102.04 of the NYSE Listed Company Manual
(the ``Manual'') currently permits the listing of a closed-end
management investment company registered under the Investment Company
Act of 1940 (a ``Fund'') that meets the distribution requirements of
Section 102.01A of the Manual and the stock price and market value of
publicly-held shares requirement of Section 102.01B of the Manual,
provided that the required market value of publicly held shares for
Funds is $60 million regardless of whether it is an IPO or an existing
Fund. Notwithstanding the foregoing requirement for market value of
publicly held shares of $60 million, the Exchange will generally
authorize the listing of all the Funds in a group of Funds listed
concurrently with a common investment adviser or investment advisers
who are ``affiliated persons'', as defined in Section 2(a)(3) of the
Investment Company Act of 1940, as amended, if:
Total group market value of publicly held shares equals in
the aggregate at least $200 million;
The group market value of publicly held shares averages at
least $45 million per Fund; and
No one Fund in the group has market value of publicly held
shares of less than $30 million.
Section 802.01B of the Manual provides that the Exchange will
promptly initiate suspension and delisting procedures with respect to a
Fund if the average market capitalization of the entity over 30
consecutive trading days is below $15 million. In addition, the
Exchange will promptly initiate suspension and delisting procedures
with respect to a Fund if it ceases to maintain its closed-end status.
The Exchange will notify the Fund if the average market capitalization
falls below $25 million and will advise the Fund of the delisting
standard. Funds are not eligible to follow the cure procedures outlined
in Sections 802.02 and 802.03 of the Manual.
The Exchange proposes to amend Paragraph A of Section 102.04 and
Section 802.01B to eliminate their current requirements with respect to
the initial and continued listing of Funds and replace them with
listing requirements substantively identical to those under the current
NYSE MKT listing standards for Funds. The proposed amended standards
would include requirements with respect to a Fund's net asset value.
The net asset value (or ``NAV'') of a Fund is the value of all Fund
assets (less liabilities) divided by the number of shares outstanding.
All Funds disclose NAV on at least a quarterly basis and many disclose
it more frequently. While Funds typically trade at either a premium or
discount to NAV, their share price generally maintains a close
relationship to NAV. As a consequence, the market price of a Fund is
less reliant on the price discovery mechanism of a liquid trading
market than is the case with operating companies. As Exchange listing
requirements with respect to publicly held shares are generally
intended to facilitate a liquid trading market for operating companies,
the role of a Fund's NAV in determining the market price of its
securities makes publicly held shares requirements less important for
Funds than for operating companies. Therefore, the Exchange believes
that NAV is an appropriate additional or alternative measure of the
suitability of Funds for initial and continued listing.
As proposed, a Fund would be qualified for listing on a stand-alone
basis if it has a market value of publicly held shares or net assets of
at least $20 million. As further proposed, Funds would be eligible to
be listed concurrently with a common investment adviser or investment
advisers who are ``affiliated persons'', as defined in Section 2(a)(3)
of the Investment Company Act of 1940, as amended, if:
The group has a total market value of publicly held shares
or net assets of at least $75 million;
The Funds in the group have an average market value of
publicly held shares or net assets of at least $15 million; and
Each Fund in the group has a market value of publicly held
shares or net assets of at least $10 million.
These proposed initial listing standards are based on Section
101(g) of the NYSE MKT Company Guide without any substantive
differences.
The continued listing standards for Funds set forth in Section
802.01B currently provide that a Fund is subject to delisting if its
average market capitalization is less than $15 million over 30 trading
days. The Exchange proposes to replace this requirement with a new
continued listing standard providing that a Fund would be subject to
delisting if the total market value of publicly held shares and net
assets are each less than $5 million for more than 60 consecutive
calendar days. These proposed continued listing standards are based on
Section 1003(b)(v) of the NYSE MKT Company Guide without
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any substantive differences.\4\ The Exchange further proposes to lower
the threshold for when the Exchange would advise the Fund of the
delisting standard. Because the market capitalization component of the
delisting standard would be $5 million of total market value of
publicly held shares over 60 calendar days instead of an average of $15
million of market capitalization over 30 trading days as is currently
the case, the Exchange proposes to similarly reduce the notification
threshold from an average market capitalization of $25 million to a
total market value of publicly held shares over a 60 calendar day
period of $10 million.
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\4\ The Exchange would monitor compliance on an ongoing basis
with the proposed amended total market value of publicly held shares
requirement. The Exchange would communicate with any Fund whose
total market value of publicly held shares fell below $5 million
over 60 calendar days to enable the Fund to provide evidence that
its net assets had exceeded $5 million over the required period. The
Exchange would promptly initiate suspension and delisting procedures
with respect to any such Fund that was unable at that time to
display compliance with the net asset requirement. The Exchange
notes that no Fund listed on the NYSE is currently below compliance
with its continued listing standards.
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The Exchange also proposes to conform its distribution standards
for continued listing of Funds to those of NYSE MKT. Common stocks of
Funds are currently subject to the distribution requirements for the
common stocks of operating companies set forth in Section 802.01A of
the Manual.\5\ The Exchange proposes to replace those requirements for
Funds with distribution standards substantively identical to those
applied to Funds by NYSE MKT under Section 1003(b)(i) of the NYSE MKT
Company Guide. Under the proposed amendment, the Exchange would
normally give consideration to the prompt initiation of suspension and
delisting procedures with respect to the common stock of a Fund if:
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\5\ Under Section 802.01A, a Fund is below compliance if (i) its
total number of stockholders is less than 400; (ii) the number of
total stockholders is less than 1,200 and the average monthly
trading volume is less than100,000 shares (for the most recent 12
months); or (iii) the number of publicly-held shares is less than
600,000.
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(A) The number of shares publicly held \6\ (is less than 200,000;
or
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\6\ Shares held by directors, officers, or their immediate
families and other concentrated holdings of 10 percent or more will
be excluded in calculating the number of publicly-held shares and
number of public shareholders for purposes of the proposed continued
listing standards. The definition of publicly-held shares in the
NYSE MKT rule is worded differently but is applied in exactly the
same way that the proposed NYSE provision would be applied.
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(B) the total number of public shareholders is less than 300; or
(C) the total market value of shares publicly held is less than
$1,000,000 for more than 90 calendar consecutive days.
The Exchange and NYSE MKT are under common ownership and issuers
listed on both markets are subject to oversight by the same regulatory
staff. Therefore, the staff of NYSE Regulation responsible for
regulation of both markets has observed over time the application of
the NYSE MKT listing rules for Funds. In the staff's experience, Funds
listed under the NYSE MKT Fund listing standards rarely become
unsuitable over time for continued exchange trading. Consequently, the
Exchange believes that, in adopting listing standards for Funds that
are substantially similar to those of NYSE MKT, its proposed initial
and continued listing standards for Funds would be consistent with the
protection of investors.
The Exchange is also proposing to correct a typographical error in
Section 802.01B.
2. Statutory Basis
The Exchange believes that the proposed rule change is consistent
with Section 6(b) of the Act,\7\ in general, and furthers the
objectives of Section 6(b)(5) \8\ of the Act, in particular in that it
is designed to promote just and equitable principles of trade, to
foster cooperation and coordination with persons engaged in regulating,
clearing, settling, processing information with respect to, and
facilitating transactions in securities, to remove impediments to and
perfect the mechanism of a free and open market and a national market
system, and, in general, to protect investors and the public interest
and is not designed to permit unfair discrimination between customers,
issuers, brokers, or dealers.
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\7\ 15 U.S.C. 78f(b).
\8\ 15 U.S.C. 78f(b)(5).
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The proposed amendment is consistent with Section 6(b)(5) of the
Act, as the initial and continued listing criteria set forth in the
proposed rules are designed to protect investors and the public
interest. As noted above, the Exchange's proposed amended listing
requirements for Funds are substantively identical to those of NYSE
MKT. The Exchange and NYSE MKT are under common ownership and issuers
listed on both markets are subject to oversight by the same regulatory
staff. Therefore, the staff of NYSE Regulation which is responsible for
regulation of both the Exchange and NYSE MKT has observed over an
extended period of time the application of the NYSE MKT listing rules
for Funds. Over this extended period, the staff's experience has been
that the application of the NYSE MKT Fund listing standards has
resulted in the listing of Funds that have generally been suitable on
an ongoing basis for exchange trading. Consequently, based on this
experience, the Exchange believes that, by adopting amended initial and
continued listing standards for Funds that are substantially the same
as those of NYSE MKT, the Exchange would continue to have listing
standards which would ensure that listed Funds are suitable for
exchange trading. Consequently, the Exchange believes that the proposed
rule change is consistent with the protection of investors and the
public interest.
The modification of the market capitalization level at which the
Exchange provides an early warning to an issuer from $25 million of
average market capitalization over 30 trading days to $10 million of
market value of publicly held shares over 60 calendar days is
consistent with the proposed amendment to the substantive continued
listing standard. It would provide issuers with sufficient warning of
any potential noncompliance and is therefore consistent with the
protection of investors and the public interest.
The Exchange believes that the proposed amendment would facilitate
the listing and trading of a greater number of Funds on the Exchange,
enhancing competition among market participants, to the benefit of
investors and the marketplace.
B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange does not believe that the proposed rule change will
impose any burden on competition that is not necessary or appropriate
in furtherance of the purposes of the Act. The proposed rule change is
designed to harmonize the Exchange's rules with those of NYSE MKT. As
such, it is intended to promote competition for the listing of Funds by
providing them with a greater number of listing venue alternatives.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others
No written comments were solicited or received with respect to the
proposed rule change.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
Within 45 days of the date of publication of this notice in the
Federal
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Register or up to 90 days (i) as the Commission may designate 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 or disapprove the 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 email to [email protected]. Please include
File Number SR-NYSE-2017-08 on the subject line.
Paper Comments
Send paper comments in triplicate to Brent J. Fields,
Secretary, Securities and Exchange Commission, 100 F Street NE.,
Washington, DC 20549-1090.
All submissions should refer to File Number SR-NYSE-2017-08. 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 such filing also will be available
for inspection and copying at the principal office of the Exchange. All
comments received will be posted without change; the Commission does
not edit personal identifying information from submissions. You should
submit only information that you wish to make available publicly. All
submissions should refer to File Number SR-NYSE-2017-08, and should be
submitted on or before July 3, 2017.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\9\
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\9\ 17 CFR 200.30-3(a)(12).
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Brent J. Fields,
Secretary.
[FR Doc. 2017-12040 Filed 6-9-17; 8:45 am]
BILLING CODE 8011-01-P