80 FR 34751 - Self-Regulatory Organizations; NYSE MKT LLC; Order Approving Proposed Rule Change To Amend the Sixth Amended and Restated Operating Agreement of the Exchange
SECURITIES AND EXCHANGE COMMISSION Federal Register Volume 80, Issue 116 (June 17, 2015)
Federal Register Volume 80, Issue 116 (June 17, 2015)
| Page Range | 34751-34753 | |
| FR Document | 2015-14822 |
[Federal Register Volume 80, Number 116 (Wednesday, June 17, 2015)] [Notices] [Pages 34751-34753] From the Federal Register Online [www.thefederalregister.org] [FR Doc No: 2015-14822] ----------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION [Release No. 34-75148; File No. SR-NYSEMKT-2015-27] Self-Regulatory Organizations; NYSE MKT LLC; Order Approving Proposed Rule Change To Amend the Sixth Amended and Restated Operating Agreement of the Exchange June 11, 2015. I. Introduction On April 17, 2015, NYSE MKT LLC (``Exchange'' or ``NYSE MKT'') filed with the Securities and Exchange Commission (``Commission''), pursuant to Section 19(b)(1) \1\ of the Securities Exchange Act of 1934 (``Act''),\2\ and Rule 19b-4 thereunder,\3\ a proposed rule change to amend the Sixth Amended and Restated Operating Agreement (``Operating Agreement'') of the Exchange. The proposed rule change was published for comment in the Federal Register on May 4, 2015.\4\ The Commission received no comment letters on the proposed rule change. This order approves the proposed rule change. --------------------------------------------------------------------------- \1\ 15 U.S.C. 78s(b)(1). \2\ 15 U.S.C. 78a. \3\ 17 CFR 240.19b-4. \4\ See Securities Exchange Act Release No. 74825 (April 28, 2015), 80 FR 25341 (``Notice''). --------------------------------------------------------------------------- II. Description of the Proposal NYSE MKT proposes to amend the Exchange's Operating Agreement to (1) establish a Regulatory Oversight Committee (``ROC''), and (2) remove the requirement that the independent directors who make up the majority of the board of directors of the Exchange (``Board'') also be directors of [[Page 34752]] Intercontinental Exchange, Inc. (``ICE''), the Exchange's parent company. A. Creation of a ROC The Exchange proposes to add subsection (ii) to Section 2.03(h) of the Operating Agreement to establish a ROC and to delineate its composition and functions. The ROC would have the responsibility to independently monitor the Exchange's regulatory operations.\5\ In particular, pursuant to Section 2.03(h)(ii), the ROC would: --------------------------------------------------------------------------- \5\ See Notice, 80 FR at 25342. ---------------------------------------------------------------------------Oversee the Exchange's regulatory and self-regulatory organization responsibilities and evaluate the adequacy and effectiveness of the Exchange's regulatory and self-regulatory organization responsibilities; assess the Exchange's regulatory performance; and advise and make recommendations to the Board or other committees of the Board about the Exchange's regulatory compliance, effectiveness and plans. In furtherance of these functions, the Exchange proposes that the ROC shall have the authority and obligation to: (i) Review the regulatory budget of the Exchange and specifically inquire into the adequacy of resources available in the budget for regulatory activities; (ii) meet regularly with the Chief Regulatory Officer (``CRO'') in executive session; (iii) in consultation with the Exchange's Chief Executive Officer, establish the goals, assess the performance, and recommend the CRO's compensation; and (iv) keep the Board informed with respect to the foregoing matters. With respect to the ROC's composition, Section 2.03(h)(ii) would provide that the ROC shall consist of at least three members, each of whom shall be a director of either the Exchange or of NYSE Regulation, Inc. (``NYSE Regulation''), and who satisfy the independence requirements of the Exchange.\6\ The Exchange represents that it believes that a ROC comprised of at least three independent members has been recognized as one of several measures that can help ensure the independence of the regulatory function from the market operations and commercial interests of a national securities exchange.\7\ --------------------------------------------------------------------------- \6\ The Exchange's independence requirements are set forth in the Company Director Independence Policy of the Exchange. See Securities Exchange Act Release No. 67564 (August 1, 2012), 77 FR 47151 (August 7, 2012) (SR-NYSE-2012-17) (approving, among other things, the Exchange's Company Director Independence Policy). \7\ See Notice, 80 FR at 25342. --------------------------------------------------------------------------- In addition, Section 2.03(h)(ii) of the Operating Agreement would provide that the Board, on affirmative vote of a majority of directors, at any time may remove a member of the ROC for cause, and also would provide that a failure of the ROC member to qualify as independent under the Company Director Independence Policy would constitute a basis to remove a member of the ROC for cause. If the term of office of a ROC member terminates, and the remaining term of office of such member at the time of termination is not more than three months, Section 2.03(h)(ii) would provide that during the period of vacancy, the ROC would not be deemed to be in violation of its compositional requirements by virtue of the vacancy. To clarify the process for filling vacancies on any committee of the Exchange, including the ROC, the Exchange also proposes to amend Section 2.03(h) of the Operating Agreement to provide that vacancies in the membership of any committee shall be filled by the Board. The Exchange represents that it believes that the proposed adoption of a ROC would ensure the continued independence of the regulatory process.\8\ --------------------------------------------------------------------------- \8\ See Notice, 80 FR at 25343. --------------------------------------------------------------------------- B. Exchange Independent Directors Currently, Section 2.03(a)(i) of the Operating Agreement, which governs the Board's composition, provides that a majority of the Exchange's directors shall be U.S. persons who are members of the board of directors of ICE and who satisfy the Exchange's Company Director Independence Policy. Each such director is defined as an ``ICE Independent Director'' in Section 2.03(a)(i) of the Operating Agreement. The Exchange proposes to amend Section 2.03(a)(i) to remove the requirement that the independent directors, who must comprise the majority of the Board also be directors of ICE, by amending the definition of ``ICE Independent Director'' to remove the reference to ICE, and to make conforming changes in both subsections (i) and (ii) of Section 2.03(a). The Exchange represents that, under this modification to its Operating Agreement, a majority of the directors of the Board would continue to satisfy the Company Director Independence Policy.\9\ The Exchange also notes that it believes that eliminating the requirement that the independent directors of the Exchange also be directors of ICE would allow the Exchange to broaden the pool of potential Board members, resulting in a more diversified Board membership while still ensuring the directors' independence.\10\ The Exchange states that eliminating the requirement that the independent directors of the Exchange also be directors of ICE would result in the Exchange's Board composition requirements being commensurate with the board requirements of its affiliate, NYSE Arca, Inc., which does not require any of its directors to be directors of ICE.\11\ --------------------------------------------------------------------------- \9\ See Notice, 80 FR at 25343. \10\ Id. \11\ Id. --------------------------------------------------------------------------- III. Discussion and Commission Findings After careful review, the Commission finds that the proposed rule change is consistent with the Act and the rules and regulations thereunder applicable to a national securities exchange.\12\ In particular, the Commission finds that the proposed rule change is consistent with Section 6(b)(1) of the Act,\13\ which requires an exchange to be so organized and have the capacity to carry out the purposes of the Act and to comply, and to enforce compliance by its members and persons associated with its members, with the Act, the rules and regulations thereunder, and the rules of the exchange. The Commission also finds that the proposed rule change is consistent with Section 6(b)(5) of the Act,\14\ which requires that the rules of the exchange be designed, among other things, to prevent fraudulent and manipulative acts and practices, to promote just and equitable principles of trade, 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. --------------------------------------------------------------------------- \12\ In approving this proposed rule change, the Commission notes that it has considered the proposed rule's impact on efficiency, competition, and capital formation. See 15 U.S.C. 78c(f). \13\ 15 U.S.C. 78(b)(1). \14\ 15 U.S.C. 78(b)(5). --------------------------------------------------------------------------- The Commission believes that the Exchange's creation of a ROC as an independent committee to oversee the adequacy and effectiveness of the Exchange's regulatory responsibilities, compliance and plans, is appropriate and should help the Exchange to fulfill its self-regulatory obligations. The Commission notes that, under proposed Section 2.03(h)(ii) of the Operating Agreement, the responsibilities, enumerated functions, and authority of the ROC are substantially similar to those of other exchanges.\15\ In addition, the Commission believes that the [[Page 34753]] proposed requirement that the members of the ROC consist of either directors of the Exchange or directors of NYSE Regulation who satisfy the independence requirements of the Exchange's Company Director Independence Policy, and the provisions relating to the removal of a member of the ROC either for cause or for failing to qualify as independent, should help ensure the continued independence of the members of the ROC. The proposal to establish a ROC should assist the Exchange in meeting its statutory obligations to comply, and to enforce compliance by its members and persons associated with its members, with the Act, the rules and regulations thereunder, and the rules of the Exchange. --------------------------------------------------------------------------- \15\ See, e.g., Bylaws of NASDAQ Stock Market LLC, Article III, Section 5(c); Third Amended and Restated Bylaws of BATS Exchange, Inc., Article V, Section 6(c); Amended and Restated Bylaws of Miami International Securities Exchange, LLC, Article IV, Section 4.5(c). --------------------------------------------------------------------------- The Commission notes that, while the proposal removes the requirement that the independent directors who make up the majority of the Board also be ICE directors, it does not alter the requirement under the Operating Agreement that a majority of the Board must satisfy the Exchange's Company Director Independence Policy.\16\ Thus, the majority of directors on the Exchange's Board must still qualify as independent directors under the Exchange's Company Director Independence Policy. Moreover, removing the requirement that the independent directors on the Exchange's Board also be directors of ICE may result in a more diversified Board composition as candidates for membership on the Board who qualify as independent under the Company Director Independence Policy need not be limited to those candidates who also serve on the board of directors of ICE. --------------------------------------------------------------------------- \16\ See supra note 6. --------------------------------------------------------------------------- Accordingly, the Commission finds that the proposed rule change is consistent with the Act. IV. Conclusion It is therefore ordered, pursuant to Section 19(b)(2) of the Act, that the proposed rule change (SR-NYSEMKT-2015-27) is approved. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.\17\ --------------------------------------------------------------------------- \17\ 17 CFR 200.30-3(a)(12). --------------------------------------------------------------------------- Robert W. Errett, Deputy Secretary. [FR Doc. 2015-14822 Filed 6-16-15; 8:45 am] BILLING CODE 8011-01-P
![Federal Register / Vol. 80, No. 116 / Wednesday, June 17, 2015 / Notices 34751
(B) Self-Regulatory Organization’s III. Date of Effectiveness of the inspection and copying at the principal
Statement on Burden on Competition Proposed Rule Change and Timing for office of the Exchange. All comments
Commission Action received will be posted without change;
The Exchange believes its proposed
amendments to its Fee Schedule would The foregoing rule change has become the Commission does not edit personal
not impose any burden on competition effective pursuant to Section 19(b)(3)(A) identifying information from
that is not necessary or appropriate in of the Act 19 and paragraph (f) of Rule submissions. You should submit only
furtherance of the purposes of the Act. 19b–4 thereunder.20 At any time within information that you wish to make
The Exchange does not believe that the 60 days of the filing of the proposed rule available publicly. All submissions
proposed change represents a significant change, the Commission summarily may should refer to File Number SR–BATS–
departure from previous pricing offered temporarily suspend such rule change if 2015–44 and should be submitted on or
by the Exchange or pricing offered by it appears to the Commission that such before July 8, 2015.
the Exchange’s competitors. action is necessary or appropriate in the For the Commission, by the Division of
Additionally, Members may opt to public interest, for the protection of Trading and Markets, pursuant to delegated
disfavor the Exchange’s pricing if they investors, or otherwise in furtherance of authority.21
believe that alternatives offer them the purposes of the Act. Robert W. Errett,
better value. Accordingly, the Exchange IV. Solicitation of Comments Deputy Secretary.
does not believe that the proposed [FR Doc. 2015–14831 Filed 6–16–15; 8:45 am]
change will impair the ability of Interested persons are invited to
BILLING CODE 8011–01–P
Members or competing venues to submit written data, views, and
arguments concerning the foregoing,
maintain their competitive standing in
including whether the proposed rule SECURITIES AND EXCHANGE
the financial markets.
change is consistent with the Act. COMMISSION
Fee Code A Comments may be submitted by any of
The Exchange believes that its the following methods:
[Release No. 34–75148; File No. SR–
proposal to pass through a rebate of Electronic Comments NYSEMKT–2015–27]
$0.0015 per share for Members’ orders • Use the Commission’s Internet
that yield fee code A would increase comment form (http://www.sec.gov/ Self-Regulatory Organizations; NYSE
intermarket competition because it rules/sro.shtml); or MKT LLC; Order Approving Proposed
offers customers an alternative means to • Send an email to rule-comments@ Rule Change To Amend the Sixth
route to Nasdaq for a similar rate as sec.gov. Please include File Number SR– Amended and Restated Operating
entering orders in certain symbols on BATS–2015–44 on the subject line. Agreement of the Exchange
Nasdaq directly. The Exchange believes
Paper Comments June 11, 2015.
that its proposal would not burden
intramarket competition because the • Send paper comments in triplicate I. Introduction
proposed rate would apply uniformly to to Brent J. Fields, Secretary, Securities On April 17, 2015, NYSE MKT LLC
all Members. and Exchange Commission, 100 F Street (‘‘Exchange’’ or ‘‘NYSE MKT’’) filed
NE., Washington, DC 20549–1090. with the Securities and Exchange
BATS Connect
All submissions should refer to File Commission (‘‘Commission’’), pursuant
The Exchange does not believe the Number SR–BATS–2015–44. This file to Section 19(b)(1) 1 of the Securities
proposed fees for BATS Connect will number should be included on the Exchange Act of 1934 (‘‘Act’’),2 and
result in any burden on competition. subject line if email is used. To help the Rule 19b–4 thereunder,3 a proposed rule
The proposed rule change is designed to Commission process and review your change to amend the Sixth Amended
provide subscribers with an alternative comments more efficiently, please use and Restated Operating Agreement
means to access other market centers on only one method. The Commission will (‘‘Operating Agreement’’) of the
the Exchange’s network if they choose post all comments on the Commission’s Exchange. The proposed rule change
or in the event of a market disruption Internet Web site (http://www.sec.gov/ was published for comment in the
where other alternative connection rules/sro.shtml). Copies of the Federal Register on May 4, 2015.4 The
methods become unavailable. BATS submission, all subsequent Commission received no comment
Connect is not the exclusive method to amendments, all written statements letters on the proposed rule change.
connect to these market centers and with respect to the proposed rule This order approves the proposed rule
subscribers may utilize alternative change that are filed with the change.
methods to connect to the product if Commission, and all written
they believe the Exchange’s proposed communications relating to the II. Description of the Proposal
pricing is unreasonable or otherwise. proposed rule change between the NYSE MKT proposes to amend the
Therefore, the Exchange does not Commission and any person, other than Exchange’s Operating Agreement to (1)
believe the proposed rule change will those that may be withheld from the establish a Regulatory Oversight
have any effect on competition. public in accordance with the Committee (‘‘ROC’’), and (2) remove the
(C) Self-Regulatory Organization’s provisions of 5 U.S.C. 552, will be requirement that the independent
Statement on Comments on the available for Web site viewing and directors who make up the majority of
asabaliauskas on DSK5VPTVN1PROD with NOTICES
Proposed Rule Change Received From printing in the Commission’s Public the board of directors of the Exchange
Members, Participants or Others Reference Room, 100 F Street NE., (‘‘Board’’) also be directors of
Washington, DC 20549, on official
The Exchange has not solicited, and business days between the hours of 21 17 CFR 200.30–3(a)(12).
does not intend to solicit, comments on 10:00 a.m. and 3:00 p.m. Copies of the 1 15 U.S.C. 78s(b)(1).
this proposed rule change. The filing will also be available for 2 15 U.S.C. 78a.
Exchange has not received any 3 17 CFR 240.19b–4.
unsolicited written comments from 19 15 U.S.C. 78s(b)(3)(A). 4 See Securities Exchange Act Release No. 74825
Members or other interested parties. 20 17 CFR 240.19b–4(f). (April 28, 2015), 80 FR 25341 (‘‘Notice’’).
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![Federal Register / Vol. 80, No. 116 / Wednesday, June 17, 2015 / Notices 34753
proposed requirement that the members SECURITIES AND EXCHANGE II. Self-Regulatory Organization’s
of the ROC consist of either directors of COMMISSION Statement of the Purpose of, and
the Exchange or directors of NYSE Statutory Basis for, the Proposed Rule
[Release No. 34–75147; File No. SR–EDGA–
Regulation who satisfy the 2015–24]
Change
independence requirements of the In its filing with the Commission, the
Exchange’s Company Director Self-Regulatory Organizations; EDGA Exchange included statements
Independence Policy, and the Exchange, Inc.; Notice of Filing and concerning the purpose of and basis for
provisions relating to the removal of a Immediate Effectiveness of a Proposed the proposed rule change and discussed
member of the ROC either for cause or Rule Change Related to Fees for Use any comments it received on the
for failing to qualify as independent, of EDGA Exchange, Inc. proposed rule change. The text of these
should help ensure the continued statements may be examined at the
June 11, 2015.
independence of the members of the places specified in Item IV below. The
Pursuant to Section 19(b)(1) of the
ROC. The proposal to establish a ROC Exchange has prepared summaries, set
Securities Exchange Act of 1934 (the
should assist the Exchange in meeting forth in Sections A, B, and C below, of
‘‘Act’’),1 and Rule 19b–4 thereunder,2
its statutory obligations to comply, and the most significant parts of such
notice is hereby given that on June 9,
to enforce compliance by its members statements.
2015, EDGA Exchange, Inc. (the
and persons associated with its ‘‘Exchange’’ or ‘‘EDGA’’) filed with the (A) Self-Regulatory Organization’s
members, with the Act, the rules and Securities and Exchange Commission Statement of the Purpose of, and
regulations thereunder, and the rules of (‘‘Commission’’) the proposed rule Statutory Basis for, the Proposed Rule
the Exchange. change as described in Items I, II and III Change
The Commission notes that, while the below, which Items have been prepared 1. Purpose
by the Exchange.3 The Exchange has
proposal removes the requirement that The Exchange proposes to: (i) Increase
designated the proposed rule change as
the independent directors who make up the rebate from $0.00040 per share to
one establishing or changing a member
the majority of the Board also be ICE due, fee, or other charge imposed by the $0.00150 per share for orders that yield
directors, it does not alter the Exchange under Section 19(b)(3)(A)(ii) fee code A, which routes to Nasdaq and
requirement under the Operating of the Act 4 and Rule 19b–4(f)(2) adds liquidity; and (ii) adopt fees for the
Agreement that a majority of the Board thereunder,5 which renders the use of a communication and routing
must satisfy the Exchange’s Company proposed rule change effective upon service known as BATS Connect.
Director Independence Policy.16 Thus, filing with the Commission. The Fee Code A
the majority of directors on the Commission is publishing this notice to
Exchange’s Board must still qualify as In securities priced at or above $1.00,
solicit comments on the proposed rule
independent directors under the the Exchange currently provides a
change from interested persons.
Exchange’s Company Director rebate of $0.00040 per share for
I. Self-Regulatory Organization’s Members’ orders that yield fee code A,
Independence Policy. Moreover,
Statement of the Terms of Substance of which routes to Nasdaq and adds
removing the requirement that the
the Proposed Rule Change liquidity. The Exchange proposes to
independent directors on the amend its Fee Schedule to increase this
Exchange’s Board also be directors of The Exchange filed a proposal to
amend its fees and rebates applicable to rebate to $0.00150 per share for
ICE may result in a more diversified Members’ orders that yield fee code A.
Board composition as candidates for Members 6 of the Exchange pursuant to
EDGA Rule 15.1(a) and (c) (‘‘Fee The proposed change represents a pass
membership on the Board who qualify through of the rate that BATS Trading,
Schedule’’) to: (i) Increase the rebate
as independent under the Company Inc. (‘‘BATS Trading’’), the Exchange’s
from $0.00040 per share to $0.00150 per
Director Independence Policy need not affiliated routing broker-dealer, is
share for orders that yield fee code A,
be limited to those candidates who also rebated for routing orders to Nasdaq
which routes to the Nasdaq Stock
serve on the board of directors of ICE. Market LLC (‘‘Nasdaq’’) and adds when it does not qualify for a volume
Accordingly, the Commission finds liquidity; and (ii) adopt fees for the use tiered rebate. When BATS Trading
that the proposed rule change is of a communication and routing service routes to Nasdaq, it is rebated a standard
consistent with the Act. known as BATS Connect. rate of $0.00150 per share.7 BATS
The text of the proposed rule change Trading will pass through this rate on
IV. Conclusion is available at the Exchange’s Web site Nasdaq to the Exchange and the
at www.batstrading.com, at the Exchange, in turn, will pass through this
It is therefore ordered, pursuant to rate to its Members. The Exchange notes
Section 19(b)(2) of the Act, that the principal office of the Exchange, and at
the Commission’s Public Reference that the proposed change is in response
proposed rule change (SR–NYSEMKT– to Nasdaq’s June 2015 fee change where
Room.
2015–27) is approved. Nasdaq will no longer offer a rebate of
For the Commission, by the Division of 1 15 U.S.C. 78s(b)(1). $0.00040 per share for orders in select
Trading and Markets, pursuant to delegated 2 17 CFR 240.19b–4. symbols (‘‘Nasdaq’s Select Symbol
authority.17 3 The Commission notes that a previous version Program’’) to its customers, such as
of the proposal was filed as SR–EDGA–2015–21.
asabaliauskas on DSK5VPTVN1PROD with NOTICES
Robert W. Errett, The proposal was withdrawn on June 9, 2015. 7 The Exchange notes that to the extent BATS
Deputy Secretary. 4 15 U.S.C. 78s(b)(3)(A)(ii).
Trading does or does not achieve any volume tiered
5 17 CFR 240.19b–4(f)(2).
[FR Doc. 2015–14822 Filed 6–16–15; 8:45 am] discount on Nasdaq or routes an order to Nasdaq
6 The term ‘‘Member’’ is defined as ‘‘any in a symbol that is not included in Nasdaq’s Select
BILLING CODE 8011–01–P
registered broker or dealer, or any person associated Symbol Program to receive a rebate of $0.00150 per
with a registered broker or dealer, that has been share, its rate for fee code A will not change. The
admitted to membership in the Exchange. A Exchange further notes that, due to billing system
Member will have the status of a ‘‘member’’ of the limitations that do not allow for separate rates by
16 See supra note 6. Exchange as that term is defined in Section 3(a)(3) tape, it will pass through the lesser rebate of
17 17 CFR 200.30–3(a)(12). of the Act.’’ See Exchange Rule 1.5(n). $0.00150 per share for all Tapes A, B & C securities.
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Document Created: 2015-12-15 14:22:22
Document Modified: 2015-12-15 14:22:22
| Category | Regulatory Information | |
| Collection | Federal Register | |
| sudoc Class | AE 2.7: GS 4.107: AE 2.106: | |
| Publisher | Office of the Federal Register, National Archives and Records Administration | |
| Section | Notices | |
| FR Citation | 80 FR 34751 |
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