[Federal Register Volume 85, Number 59 (Thursday, March 26, 2020)]
[Notices]
[Pages 17136-17138]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2020-06303]
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SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-88441; File No. SR-NYSE-2020-21]
Self-Regulatory Organizations; New York Stock Exchange LLC;
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To
Suspend Until June 30, 2020 the Application of Its Continued Listing
Requirement With Respect to Global Market Capitalization
March 20, 2020.
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 March 19, 2020, 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 and
II below, which Items have been prepared by the Exchange. 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.
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I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Exchange proposes to suspend until June 30, 2020 the
application of its continued listing requirement that companies must
maintain an average global market capitalization over a consecutive 30
trading-day period of at least $15 million (the ``Market Capitalization
Standard''). The proposed rule change is available on the Exchange's
website 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 U.S. and global equities markets have experienced unprecedented
market-wide declines as a result of the ongoing spread of COVID-19. As
a consequence, since the commencement of the current market turbulence
in the last week of February 2020, the Exchange has experienced an
unusually high number (as compared to historical levels) of listed
companies that are in imminent danger of immediate suspension and
delisting under Section 802.01B of the Manual for failure to comply
with the Market Capitalization Standard.\3\
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\3\ Section 802.01B of the Manual states that ``the Exchange
will promptly initiate suspension and delisting procedures with
respect to a company (including the issuer of an Equity Investment
Tracking Stock) that is listed under any financial standard set out
in Sections 102.01C or 103.01B if a company is determined to have
average global market capitalization over a consecutive 30 trading-
day period of less than $15,000,000, regardless of the original
standard under which it listed. A company is not eligible to follow
the procedures outlined in Sections 802.02 and 802.03 with respect
to this criterion.''
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In response to the conditions described above, the Exchange
proposes
[[Page 17137]]
to suspend, until June 30, 2020, the application of the Market
Capitalization Standard. The extreme volatility and the precipitous
decline in trading prices of many securities experienced in the U.S.
and global equities markets could lead to a high number of securities
being immediately suspended from trading and delisted during a short
period of highly volatile markets. The proposed suspension of the
Market Capitalization Standard until June 30, 2020 will provide
temporary relief to these companies and their shareholders in response
to these extraordinary market conditions.
Currently, when a company is identified as being noncompliant with
the Market Capitalization Standard, trading in its securities is
immediately suspended and the company is subject to delisting. Such a
company that is noncompliant with the Market Capitalization Standard is
not eligible to submit a plan to regain compliance pursuant to Sections
802.02 and 802.03 of the Manual. However, while its securities are
suspended from trading, such company may appeal its delisting to a
Committee of the Board of Directors of the Exchange. The proposed
suspension of the Market Capitalization Standard will not affect the
status of any company that has been formally notified for noncompliance
with the Market Capitalization Standard and is currently in the
Exchange's delisting appeal process prior to the date of this filing.
Instead, under the proposed suspension of the Exchange's Market
Capitalization Standard, companies would not be notified of new events
of noncompliance with the Market Capitalization Standard during the
suspension period.\4\ Following the temporary rule suspension, any new
events of noncompliance with the Exchange's Market Capitalization
Standard would be determined based on a consecutive 30 trading-day
period commencing on or after July 1, 2020.
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\4\ A company would continue to be subject to delisting for
failure to comply with other listing requirements.
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The Exchange would be able to implement the proposed rule change
immediately upon effectiveness of this proposed rule change.
2. Statutory Basis
The proposed rule change is consistent with Section 6(b) of the
Act,\5\ in general, and furthers the objectives of Section 6(b)(5) of
the Act,\6\ in particular, in that it is designed to prevent fraudulent
and manipulative acts and practices, to promote just and equitable
principles of trade, to foster cooperation and coordination with
persons engaged in 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 the public
interest and the interests of investors, and because it is not designed
to permit unfair discrimination between customers, issuers, brokers, or
dealers.
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\5\ 15 U.S.C. 78f(b).
\6\ 15 U.S.C. 78f(b)(5).
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As a result of uncertainty related to the ongoing spread of the
COVID-19 virus, the prices of securities listed on U.S. exchanges are
experiencing rapid and significant declines. The proposed rule change
is designed to reduce uncertainty regarding the ability of certain
companies to remain listed on the NYSE during the current highly
unusual market conditions, thereby protecting investors, facilitating
transactions in securities, and removing an impediment to a free and
open market. All companies listed on the Exchange that fall below the
Market Capitalization Standard as of the time of filing of this
proposal would be eligible to take advantage of the proposed suspension
of the Market Capitalization Standard.
B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange does not believe that the proposed rule change would
impose any burden on competition that is not necessary or appropriate
in furtherance of the purposes of the Act. The proposed rule change is
not designed to address any competitive issues but rather is designed
to reduce uncertainty for certain companies and their shareholders
regarding the ability of certain securities to remain listed on the
NYSE during the current highly unusual market conditions.
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
The Exchange has filed the proposed rule change pursuant to Section
19(b)(3)(A)(iii) of the Act \7\ and Rule 19b-4(f)(6) thereunder.\8\
Because the proposed rule change does not: (i) Significantly affect the
protection of investors or the public interest; (ii) impose any
significant burden on competition; and (iii) become operative prior to
30 days from the date on which it was filed, or such shorter time as
the Commission may designate, if consistent with the protection of
investors and the public interest, the proposed rule change has become
effective pursuant to Section 19(b)(3)(A) of the Act \9\ and Rule 19b-
4(f)(6) thereunder.\10\
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\7\ 15 U.S.C. 78s(b)(3)(A)(iii).
\8\ 17 CFR 240.19b-4(f)(6).
\9\ 15 U.S.C. 78s(b)(3)(A).
\10\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)(iii)
requires the Exchange to give the Commission written notice of the
Exchange's intent to file the proposed rule change, along with a
brief description and text of the proposed rule change, at least
five business days prior to the date of filing of the proposed rule
change, or such shorter time as designated by the Commission. The
Commission has waived the five business day notification requirement
for this proposed rule change.
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A proposed rule change filed under Rule 19b-4(f)(6) \11\ normally
does not become operative for 30 days after the date of the filing.
However, pursuant to Rule 19b-4(f)(6)(iii),\12\ the Commission may
designate a shorter time if such action is consistent with the
protection of investors and the public interest. The Exchange has asked
the Commission to waive the 30-day operative delay so that the proposed
rule change may become operative immediately upon filing.
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\11\ 17 CFR 240.19b-4(f)(6).
\12\ 17 CFR 240.19b-4(f)(6)(iii).
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The Exchange stated that the proposed rule change is designed to
respond to the unprecedented uncertainty and resulting market declines
related to the global spread of the COVID-19 virus. In support of its
request to waive the 30-day operative delay, the Exchange stated that
the markets have already triggered four Level 1 Market Wide Circuit
Breaker Halts in one week, which is unprecedented. According to the
Exchange, given the ongoing uncertainty relating to the global spread
of the COVID-19 virus, the Exchange has no way of knowing whether there
will be additional market declines that would result in large numbers
of companies unexpectedly falling below the Market Capitalization
Standard in the immediate future. The Exchange stated that if that were
to occur, such companies would be subject to immediate suspension and
delisting. The proposal would suspend, until June 30, 2020, the
application of the Market Capitalization Standard for all listed
companies that fall below this standard on or after the effective date
of this filing. The Exchange stated that waiver of the 30-day operative
delay would avoid the immediate suspension and delisting of companies
falling below the
[[Page 17138]]
Market Capitalization Standard as of a result of these unprecedented
market conditions, and reduce the level of uncertainty of listed
issuers and their investors with respect to their continued listing
status. For these reasons, the Commission believes that waiver of the
30-day operative delay is consistent with the protection of investors
and the public interest. Accordingly, the Commission hereby waives the
30-day operative delay and designates the proposal operative upon
filing.\13\
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\13\ For purposes only of waiving the 30-day operative delay,
the Commission has considered the proposed rule change's impact on
efficiency, competition, and capital formation. See 15 U.S.C.
78c(f).
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At any time within 60 days of the filing of such proposed rule
change, the Commission summarily may temporarily suspend such rule
change if it appears to the Commission that such action is necessary or
appropriate in the public interest, for the protection of investors, or
otherwise in furtherance of the purposes of the Act. If the Commission
takes such action, the Commission shall institute proceedings under
Section 19(b)(2)(B) \14\ of the Act to determine whether the proposed
rule change should be approved or disapproved.
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\14\ 15 U.S.C. 78s(b)(2)(B).
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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 rule-comments@sec.gov. Please include
File Number SR-NYSE-2020-21 on the subject line.
Paper Comments
Send paper comments in triplicate to Secretary, Securities
and Exchange Commission, 100 F Street NE, Washington, DC 20549-1090.
All submissions should refer to File Number SR-NYSE-2020-21. 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 website (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 website 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. Persons submitting comments are
cautioned that we do not redact or edit personal identifying
information from comment submissions. You should submit only
information that you wish to make available publicly. All submissions
should refer to File Number SR-NYSE-2020-21, and should be submitted on
or before April 16, 2020.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\15\
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\15\ 17 CFR 200.30-3(a)(12).
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J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2020-06303 Filed 3-25-20; 8:45 am]
BILLING CODE 8011-01-P