FR 2021-02589

Summary of the Document

The New York Stock Exchange (NYSE) is proposing a rule change to clarify the complimentary products and services given to companies listed on the exchange. These offerings are part of Section 907.00 of the NYSE Manual and include services like market surveillance and web-hosting. The duration of these services depends on when a company listed and its market value. Notably, companies listed on or after January 11, 2021, can receive these services for 48 months. In contrast, those listed before this date continue to receive them for 24 months. The rule change aims to enhance clarity and transparency, without significantly impacting investor protection or competition.

Significant Issues and Concerns

One notable issue is the fairness of the rule concerning the tiered system for complimentary services. Companies with a global market value of less than $400 million receive fewer services compared to their larger counterparts. This could raise concerns about equitable treatment of smaller companies.

Furthermore, the distinction in service duration based on the listing date—48 months for those after January 11, 2021, versus 24 months for earlier listings—might seem inequitable to companies who listed before the cutoff date. They are being treated differently based on timing rather than business needs.

The document also includes numerous regulatory references and acronyms, which may not be easily understood by those unfamiliar with securities regulations. Simplifying this language could improve comprehension for the general public.

Impact on the Public

For investors and the general public, this proposal primarily aims to improve understanding of the services offered by the NYSE to listed companies. The transparency brought about by this clarification could lead to a more informed investment community.

Impact on Specific Stakeholders

For the NYSE-listed companies, especially those nearing their listing date, understanding the precise nature of services available to them is crucial for strategic planning. Companies that listed before the January 11 date may feel disadvantaged due to the different service durations, potentially influencing their perception of the exchange's fairness.

Larger companies benefit more under this rule, as their market value entitles them to a wider array of services. Smaller firms may feel that they are not receiving equitable treatment, which could affect their decision to list or maintain their listing on the NYSE.

Overall, while the amendment promotes transparency, it highlights discrepancies in service treatment between different company sizes and listing timelines. Efforts to address these concerns could further enhance fairness and competitiveness in the exchange's listings.

In examining the financial references within the document, one can observe a detailed allocation of complimentary products and services provided by the New York Stock Exchange (NYSE) to certain eligible entities. These services are intended to support companies listed on the NYSE and are organized into tiers based on the companies' global market value.

Summary of Financial Allocations

The NYSE offers several complimentary products and services to newly listed and transferred companies, valued at specific annual amounts. These include:

• Market surveillance products and services valued at approximately $55,000 annually.
• Web-hosting products and services valued at approximately $16,000 annually.
• Web-casting services valued at approximately $6,500 annually.
• Market analytics products and services valued at approximately $30,000 annually.
• News distribution products and services valued at approximately $20,000 annually.

These financial figures illustrate the NYSE's commitment to providing substantial support to its listings, with the values suggesting a significant investment in offering these services.

Financial Allocations and Identified Issues

The tiering system, which categorizes companies based on their global market value, merits attention. Specifically:

• Tier A companies, with a global market value of $400 million or more, are eligible to receive the complete suite of services, including market surveillance, market analytics, web-hosting, web-casting, and news distribution.

• Tier B companies, with a global market value of less than $400 million, are eligible for a reduced package, which excludes market surveillance.

This differentiation raises questions about fairness, as highlighted in the issues. Companies with a lower market value receive fewer services, which might be viewed as inequitable, given that smaller companies could arguably benefit more from comprehensive support.

Further, the differentiation in the duration of service entitlement before and after January 11, 2021, compounds these concerns. Companies listing before this date receive services for only 24 months, compared to the 48 months provided to those listing after. This discrepancy may be perceived as unfair by those affected, adding another layer to the complexity of the rule's implementation.

The document does not provide specifics on how the "commercial value" of these services is determined or verified. This lack of transparency could lead to questions about how these values were assigned, especially for those trying to understand the full benefit of these complimentary products.

By addressing these issues with clarity and justification for the tier system and valuation methods, the NYSE can enhance understanding and acceptance of its support offerings among its listed entities.