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Federal Register / Vol. 86, No. 136 / Tuesday, July 20, 2021 / Notices
khammond on DSKJM1Z7X2PROD with NOTICES

with its actual costs in processing listing applications than those charged under the current fee schedule.
REIT Group Fee Discount The Exchange proposes to provide group discounts for listings of common stock, preferred stock and warrants where three or more real estate investment trusts REITs are listed on the Exchange and are externally managed by the same entity or entities under common control.
Initial Listing Fee Discount: As proposed, if substantially all of the operations of three or more REITs that list in the same calendar year are externally managed by the same entity or by entities under common control, the initial listing fees payable by such REITs will be capped at an aggregate of $165,000 the REIT Group Cap, to be divided among such issuers in proportion to the shares they list at the time of initial listing. The applicability of the REIT Group Cap to REITs listed during a calendar year will be determined at the end of such calendar year. If a REIT is entitled to a reduced listing fee under the REIT Group Cap, such REIT will be entitled to receive a credit against the following calendar years annual fee and, where applicable, annual fees payable in subsequent calendar years.
Annual Fee Discount: As proposed, if substantially all of the operations of each of a group of three or more listed REITs are externally managed by the same entity or by entities under common control, each REIT in the group will receive a 50% discount on the applicable Annual Fees in relation to any year or portion of a year for which the common management relationship continues in existence.4
A limited number of publicly traded REITs have their operations externally managed by another entity pursuant to a management agreement. Typically, the REIT itself does not have any direct employees. Rather, the external manager is entirely responsible for managing and staffing the operations of the company, in return for management fees and the reimbursement of expenses as set forth in the management agreement. In a limited number of cases, a single entity or affiliated entities may externally manage more than one REIT. As an incentive for all the REITs in such a group to list on the Exchange and to 4 The following is the Annual Fee schedule for common stock and preferred stock:
Up to and including 10 million shares$30,000
More than 10 million shares up to and including 100 million shares$30,000 plus $0.000375 per share above 10 million More than 100 million shares$85,0000

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reflect the efficiencies described below, the Exchange believes that it is appropriate to offer a group discount on initial listing fees and annual fees when there are at least three REITs under common management.
The Exchange believes that the proposed initial and annual fee discounts for a group of three or more REITs that are under common control is equitable and is not unfairly discriminatory, as there are meaningful efficiencies for the Exchange in dealing with the same external management team for multiple REITs. The resources the Exchange expects to expend when dealing with a single external manager in processing the new listing of multiple REITs in a single calendar year or with respect to the ongoing client service and compliance review of multiple REITS
under common control are significantly less than would be the case for a REIT
that is not part of such a group, so the Exchange believes the proposed discount is appropriate.
The Exchange notes that the New York Stock Exchange provides an annual fee discount for REITs that are externally managed by the same entity or by entities under common control.5
2. Statutory Basis The Exchange believes that the proposed rule change is consistent with Section 6b of the Act,6 in general, and furthers the objectives of Section 6b4 7 of the Act, in particular, in that it is designed to provide for the equitable allocation of reasonable dues, fees, and other charges. The Exchange also believes that the proposed rule change is consistent with Section 6b5
of the Act,8 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.
The Exchange operates in a highly competitive marketplace for the listing of equity securities. The Commission has repeatedly expressed its preference for competition over regulatory intervention in determining prices, 5 See Section 902.03A of the NYSE Listed Company Manual.
6 15 U.S.C. 78fb.
7 15 U.S.C. 78fb4.
8 15 U.S.C. 78fb5.

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products, and services in the securities markets.
The Exchange believes that the ever shifting market share among the exchanges with respect to new listings and the transfer of existing listings between competitor exchanges demonstrates that issuers can choose different listing markets in response to fee changes. Accordingly, competitive forces constrain exchange listing fees.
Stated otherwise, changes to exchange listing fees can have a direct effect on the ability of an exchange to compete for new listings and retain existing listings.
The Exchange believes that the proposed modification to the initial listing fee schedule is equitable and is not unfairly discriminatory as it will be applied to all listing applicants in a consistent and transparent manner and is being proposed for the purpose of aligning initial listing fees more closely with the Exchanges actual costs in processing new listings.
The Exchange believes that the proposed initial and annual fee discounts for a group of three or more REITs that are under common control is equitable and is not unfairly discriminatory, as there are meaningful efficiencies for the Exchange in dealing with the same external management team for multiple REITs. The resources the Exchange expects to expend when dealing with a single external manager in processing the new listing multiple REITs in a single calendar year or with respect to the ongoing client service and compliance review of multiple REITS
under common control are significantly less than would be the case for a REIT
that is not part of such a group, so the Exchange believes the proposed discount is appropriate.
The Exchange does not expect the proposed rule changes would affect the Exchanges commitment of resources to its regulatory programs.
B. Self-Regulatory Organizations 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.
Intramarket Competition: All operating companies listing on the Exchange will be eligible to avail themselves of the proposed modified initial fee schedule. Therefore, the Exchange does not believe that the proposed changes to the initial listing fee schedule will have any meaningful effect on the competition among issuers listed on the Exchange. The purpose of the proposed group discount for REITs under common external management is
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