FR 2024-30687

The document outlines a proposal by NYSE American LLC to adjust its fee structure for listing bonds and stocks. These proposed changes, filed with the Securities and Exchange Commission (SEC), aim to increase certain fees to better reflect service costs and align with fees charged by the New York Stock Exchange (NYSE). The proposal includes increasing annual fees for stocks based on the number of shares an issuer has and introducing new fee structures for bonds, including a flat original listing fee and a tiered annual fee system. A noteworthy addition is the proposed maximum cap on fees for bond issuers in a given calendar year. The SEC is seeking public comments on this initiative.

General Summary and Main Themes

The NYSE American LLC is proposing changes to its fee structure for various securities to account for increased costs and to align more closely with the NYSE. For stocks, the annual fees will increase for both small and large issuers. For bonds, a new flat fee for initial listings and a tiered annual fee based on the number of bonds will be introduced, along with a cap on the total fees a bond issuer can pay each year. This adjustment is presented as necessary to manage rising operational costs and to reflect the value provided to issuers by listing their securities.

Significant Issues and Concerns

A primary concern raised by the proposal is the increase in fees, which could be burdensome for issuers, particularly smaller firms. While the document argues that these fees reflect increased expenses and the value of the listing, the justification laid out may not fully persuade everyone, as it lacks detailed analysis or specific data supporting these claims.

The alignment of fees with the NYSE's schedule is linked to shared trading platforms and standards, yet there is limited discussion about any unique aspects of the NYSE American that might justify a different approach. This could raise questions about whether the fee structures should, in fact, differ.

Language within the document might pose a challenge to those not well-versed in financial or legal terminology. The complexity and specificities of the regulatory requirements might obscure understanding for the general public or smaller stakeholders.

Broad Impact on the Public

These changes might indirectly affect broader investment communities by potentially influencing where companies choose to list their securities. The increased costs could discourage some companies from listing on the NYSE American, potentially reducing the variety of investment opportunities available on this platform.

Impact on Specific Stakeholders

For stock and bond issuers, particularly smaller ones, the proposed fee increases and new structures might represent an additional financial strain. The tiered system for bonds could disproportionately affect smaller companies that cannot distribute costs over a large number of listings.

Conversely, larger issuers, especially those who list multiple bond series, might benefit from the proposed fee cap, which could provide a financial ceiling on listing costs in a given year. The cap acknowledges efficiencies in listing numerous bond series, although the document does not provide detailed evidence of these efficiencies.

Overall, while the intended goal of aligning fees and covering costs could provide benefits by enhancing service offerings and ensuring financial sustainability, the method and rationale require clearer communication to fully engage all affected parties in a meaningful way. The document's reference to the SEC seeking public comment indicates an opportunity for stakeholders to express concerns or support, potentially influencing the final outcome of this proposal.

In examining the proposed changes to the fee structures outlined in the Federal Register document, several financial allocations and references become evident. These references involve specific monetary adjustments planned by the NYSE American and how they aim to align fees with the similar structures at the NYSE.

Summary of Financial Changes

The document outlines significant changes to both the annual and original listing fees for stocks and bonds traded on the NYSE American. For stock issuers, the Exchange plans to increase the annual fee from $55,000 to $60,000 for companies with 50 million or fewer shares outstanding and from $75,000 to $80,000 for those with more than 50 million shares. These increases are intended to reflect the growing costs associated with providing services and regulatory activities required for such listings.

For bonds, the proposed changes shift from a fee structure based on the principal amount to a flat fee model. The original listing fee for bonds will now be $25,000, moving away from the prior structure of $100 per $1 million of the principal amount, with a minimum fee of $5,000 and a maximum fee of $10,000. Additionally, the annual fee for bonds will transition from a flat $5,000 to a tiered system: $25,000 for issuers with one to five bonds, $50,000 for six to ten bonds, $75,000 for eleven to fifteen, and $100,000 for more than fifteen bonds.

Relation to Identified Issues

The proposed fee increases have sparked several issues, primarily revolving around their justification and potential impacts on different issuer categories. While the Exchange cites increased operational costs and the desire to align with the NYSE as reasons for these changes, there are concerns that these justifications remain broad and somewhat vague. For instance, terms like "increased costs" and the "value of listing" lack clear explanation or quantification in the text, which could lead readers to question the necessity and fairness of these increases, particularly for smaller issuers who might be disproportionately affected.

Moreover, the alignment with NYSE practices is deemed appropriate by the Exchange, yet there is little acknowledgment of potential differences between the NYSE and NYSE American that may warrant distinct fee structures. The fee changes are presented as a reflection of increased service value and cost efficiencies, yet without detailed data or a deeper analysis, stakeholders may find these assertions inadequate, particularly regarding the newly established $100,000 maximum fee cap.

Stakeholder Engagement

Another issue highlighted is the absence of written comments from members or participants, which might suggest insufficient stakeholder engagement or communication regarding these financial changes. The lack of recorded feedback raises questions about the breadth of consultation with those who will be directly impacted by the new fees.

Conclusion

Overall, the financial references in the document raise important questions about the impact of these fee adjustments and the clarity of their justifications. It is crucial for regulators to ensure that fee changes are transparently communicated and adequately justified, avoiding potential disparate impacts on smaller issuers and ensuring alignment with the competitive dynamics and unique characteristics of the NYSE American.