The New York Stock Exchange LLC has proposed a new Rule 405B which would require member organizations to provide their customers with written notice of all fees related to their customer accounts, as well as require that the fees be reasonable and not unfairly discriminatory between customers. The new rule is a codification of guidance issued in NYSE Information Memo 05-41.
As proposed, Rule 405B(1)(a) would require member organizations to provide each customer with written notification of all fees that are in effect at the time the account is opened, or that will take effect within 30 days of the account being opened. Additionally, Rule 405B(1)(b) would require member organizations to mail written notice of increased fees, or imposition of any new fees, at least 30 days prior to the increase or imposition to the last known address of every customer whose account is subject to such fees. Further, member organizations would be required to post a notification of the types of fee changes, and the projected date of such changes, on their internet website (if they maintain a website).
Proposed Rule 405B(2) provides for methods of notification and would allow member organizations to either send a separate written notification to inform customers of fees or include the fee notices with account statements or newsletters. The Rule also provides for electronic delivery of written fee notices. Proposed Rule 405B(3) explains the fees covered by the rule to include commissions, charges for managed and non-managed accounts, and other account related charges, such as interest or dividend reinvestments, transfer or custody of securities, appraisals, safekeeping and margin. Additionally, proposed Rule 405B(4) would require that fees imposed on customers by member organizations be reasonable and not unfairly discriminatory; however, the proposed rule would not prohibit or restrict firms’ ability to structure their pricing schedules based upon the uniqueness of their various customer relationships.