80 FR 55395 - ISE Mercury, LLC; Order Granting Application for a Conditional Exemption Pursuant to Section 36(a) of the Exchange Act From Certain Requirements of Rules 6a-1 and 6a-2 Under the Exchange Act

SECURITIES AND EXCHANGE COMMISSION

Federal Register Volume 80, Issue 178 (September 15, 2015)

Page Range		55395-55397
FR Document		2015-23106
Federal Register, Volume 80 Issue 178 (Tuesday, September 15, 2015)
[Federal Register Volume 80, Number 178 (Tuesday, September 15, 2015)]
[Notices]
[Pages 55395-55397]
From the Federal Register Online  [www.thefederalregister.org]
[FR Doc No: 2015-23106]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-75867]


ISE Mercury, LLC; Order Granting Application for a Conditional 
Exemption Pursuant to Section 36(a) of the Exchange Act From Certain 
Requirements of Rules 6a-1 and 6a-2 Under the Exchange Act

September 9, 2015.

I. Introduction

    On September 29, 2014, ISE Mercury, LLC (``Applicant'') submitted 
to the Securities and Exchange Commission (``Commission'') an 
application on Form 1 under the Securities Exchange Act of 1934 
(``Exchange Act'') to register as a national securities exchange. In 
connection with this application, the Applicant, pursuant to Exchange 
Act Rule 0-12,\1\ has requested an exemption under Section 36(a)(1) of 
the Exchange Act \2\ from certain requirements of Exchange Act Rules 
6a-1(a) and 6a-2 (``Exemption Request'').\3\ This order grants the 
Applicant's request for exemptive relief, subject to the satisfaction 
of certain conditions, which are outlined below.
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    \1\ 17 CFR 240.0-12.
    \2\ 15 U.S.C. 78mm(a)(1).
    \3\ 17 CFR 240.6a-1(a) and 6a-2. See letter from Michael Simon, 
Secretary and General Counsel, ISE Mercury, LLC, to Brent J. Fields, 
Secretary, Commission, dated June 26, 2015.
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II. Application for Conditional Exemption from Certain Requirements of 
Exchange Act Rules 6a-1 and 6a-2

A. Filing Requirements Under Exchange Act Rule 6a-1(a)

    Exchange Act Rule 6a-1(a) requires an applicant for registration as 
a national securities exchange to file an application with the 
Commission on Form 1. Exhibit C to Form 1 requires the applicant to 
provide certain information with respect to each of its subsidiaries 
and affiliates.\4\ For purposes of Form 1, an ``affiliate'' is ``[a]ny 
person that, directly or indirectly, controls, is under common control 
with, or is controlled by, the national securities exchange . . . 
including any employees.'' \5\ Form 1 defines ``control'' as ``[t]he 
power, directly or indirectly, to direct the management or policies of 
a company, whether through ownership of securities, by contract, or 
otherwise . . . .'' \6\ Form 1 provides, further, that any person that 
directly or indirectly has the right to vote 25% or more of a class of 
voting securities, or has the power to sell or direct the sale of 25% 
or more of a class of voting securities, is presumed to control the 
entity.\7\
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    \4\ Specifically, Exhibit C requires the applicant to provide, 
for each subsidiary or affiliate, and for any entity with whom the 
applicant has a contractual or other agreement relating to the 
operation of an electronic trading system used to effect 
transactions on the exchange: (1) The name and address of the 
organization; (2) the form of organization; (3) the name of the 
state and statute citation under which it is organized, and the date 
of its incorporation in its present form; (4) a brief description of 
the nature and extent of the affiliation; (5) a brief description of 
the organization's business or functions; (6) a copy of the 
organization's constitution; (7) a copy of the organization's 
articles of incorporation or association, including all amendments; 
(8) a copy of the organization's by-laws or corresponding rules or 
instruments; (9) the name and title of the organization's present 
officers, governors, members of all standing committees, or persons 
performing similar functions; and (10) an indication of whether the 
business or organization ceased to be associated with the applicant 
during the previous year, and a brief statement of the reasons for 
termination of the association.
    \5\ Form 1 Instructions, Explanation of Terms, 17 CFR 249.1.
    \6\ Id.
    \7\ Id.
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    Exhibit D to Form 1 requires an applicant for registration as a 
national securities exchange to provide unconsolidated financial 
statements for the latest fiscal year for each subsidiary or affiliate. 
Exhibit D requires the financial statements to include, at a minimum, a 
balance sheet and an income statement with such footnotes and other 
disclosures as are necessary to avoid rendering the financial 
statements misleading. Exhibit D provides, in addition, that if any 
affiliate or subsidiary of the applicant is required by another 
Commission rule to submit annual financial statements, a statement to 
that effect, with a citation to the other Commission rule, may be 
provided in lieu of the financial statements required in Exhibit D.
    A Form 1 application is not considered filed until all necessary 
information, including financial statements and other required 
documents, have been furnished in the proper form.\8\
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    \8\ 17 CFR 202.3(b)(2). See also 17 CFR 240.0-3(a). Defective 
Form 1 applications ``may be returned with a request for correction 
or held until corrected before being accepted as a filing.'' See 17 
CFR 202.3(b)(2). See also Securities Exchange Act Release No. 40760 
(December 8, 1998), 63 FR 70844, 70881 (December 22, 1998) 
(``Regulation ATS Adopting Release'') at note 329 and accompanying 
text.
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B. Filing Requirements under Exchange Act Rule 6a-2

    Exchange Act Rule 6a-2(a)(2) requires a national securities 
exchange to update the information provided in Exhibit C within 10 days 
of any action that causes the information provided in Exhibit C to 
become inaccurate or incomplete. In addition, Exchange Act Rule 6a-
2(b)(1) requires a national securities exchange to file Exhibit D on or 
before June 30 of each year, and Exchange Act Rule 6a-2(c) requires a 
national securities exchange to file Exhibit C every three years.

C. Exemption Request

    On June 26, 2015, the Applicant requested that the Commission grant 
an exemption under Section 36 of the Exchange Act from the requirement 
under Exchange Act Rule 6a-1 to file the information requested of the 
Applicant in Exhibits C and D to Form 1 for the ``Foreign Indirect 
Affiliates,'' as defined below.\9\ In addition, the Applicant requested 
an exemption, subject to certain conditions, with respect to the 
Foreign Indirect Affiliates from the requirements under: (1) Exchange 
Act Rule 6a-2(a)(2) to amend Exhibit C within 10 days if the 
information in Exhibit C becomes inaccurate or incomplete; and (2) 
Exchange Act Rules 6a-2(b)(1) and (c) to

[[Page 55396]]

file periodic updates to Exhibits C and D.
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    \9\ See Exemption Request, supra note 3.
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    The Applicant is a wholly-owned subsidiary of International 
Securities Exchange Holdings, Inc. (``ISE Holdings'').\10\ ISE Holdings 
is a wholly-owned subsidiary of U.S. Exchange Holdings, Inc., which is 
15% owned by Deutsche B[ouml]rse AG (``Deutsche B[ouml]rse'') and 85% 
owned by a German stock corporation, Eurex Frankfurt AG (``Eurex 
Frankfurt''). Eurex Frankfurt is wholly-owned by Deutsche B[ouml]rse. 
According to the Applicant, the parent ownership structure of U.S. 
Exchange Holdings, Inc. is comprised entirely of foreign entities, 
Eurex Frankfurt and Deutsche B[ouml]rse (collectively, the ``Foreign 
Direct Affiliates''), which in turn hold ownership interests, either 
directly or indirectly, in excess of 25% in a large number of other 
foreign entities, some of which also own interests in other entities in 
excess of 25% as well (such Foreign Direct Affiliate-owned entities are 
referred to, collectively, as the ``Foreign Indirect Affiliates'').\11\
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    \10\ See Exemption Request, supra note 3, at 2.
    \11\ See id.
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    Because of the limited and indirect nature of its connection to the 
Foreign Indirect Affiliates, the Applicant believes that the corporate 
and financial information of the Foreign Indirect Affiliates required 
by Exhibits C and D of Form 1 would have little relevance to the 
Commission's review of the Applicant's Form 1 application or, if the 
Commission were to approve the Applicant's Form 1 application, as 
amended, to the Commission's ongoing oversight of the Applicant as a 
national securities exchange.\12\ In this regard, the Exemption Request 
states that the Foreign Indirect Affiliates have no ability to 
influence the management, policies, or finances of the Applicant and no 
obligation to provide funding to, or ability to materially affect the 
funding of, the Applicant.\13\ The Exemption Request also states that: 
(1) The Foreign Indirect Affiliates have no ownership interest in the 
Applicant or in any of the controlling shareholders of the Applicant; 
and (2) there are no commercial dealings between the Applicant and the 
Foreign Indirect Affiliates.\14\ Further, the Exemption Request states 
that obtaining detailed corporate and financial information with 
respect to the Foreign Indirect Affiliates (1) is unnecessary for the 
protection of investors and the public interest and (2) would be unduly 
burdensome and inefficient because these affiliates are located in 
foreign jurisdictions and the disclosure of such information could 
implicate foreign information sharing restrictions in such 
jurisdictions.\15\
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    \12\ See id. at 2-3.
    \13\ See Exemption Request, supra note 3, at 3.
    \14\ See id. The Applicant states that ``commercial dealings'' 
means any direct or indirect arrangement, agreement, or 
understanding or any other relationship including, but not limited 
to, the providing of hardware, software, technology services or any 
other goods or services that support the operation of ISE Mercury or 
any facility of ISE Mercury. See id., supra note 3, at 3 n. 5.
    \15\ See id. The Applicant also believes that providing the 
information required by Exhibits C and D with respect to the Foreign 
Indirect Affiliates could raise confidentiality concerns because 
many of the Foreign Indirect Affiliates are not public companies. 
Id.
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    As a condition to the granting of exemptive relief, the Applicant 
has agreed to provide: (i) A listing of the names of the Foreign 
Indirect Affiliates; (ii) an organizational chart setting forth the 
affiliation of the Foreign Indirect Affiliates and the Foreign Direct 
Affiliates and the Applicant; and (iii) in Exhibit C of the Applicant's 
Form 1 application, a description of the nature of the Foreign Indirect 
Affiliates' affiliation with the Foreign Direct Affiliates and the 
Applicant. In addition, as a condition to the granting of exemptive 
relief from the requirements of Exchange Act Rule 6a-2(a)(2), 6a-
2(b)(1), and 6a-2(c), as described above, the Applicant has agreed to 
provide amendments to the information required under conditions (i) 
through (iii) above on or before June 30th of each year. Further, the 
Applicant notes that it will provide the information required by 
Exhibits C and D for all of its affiliates other than the Foreign 
Indirect Affiliates, including the Foreign Direct Affiliates.\16\
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    \16\ See Exemption Request, supra note 3, at 3.
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III. Order Granting Conditional Section 36 Exemption

    Section 6 of the Exchange Act \17\ sets forth a procedure for an 
exchange to register as a national securities exchange.\18\ Exchange 
Act Rule 6a-1(a) \19\ requires an application for registration as a 
national securities exchange to be filed on Form 1 in accordance with 
the instructions in Form 1. A Form 1 application is not considered 
filed until all necessary information, including financial statements 
and other required documents, has been furnished in the proper 
form.\20\ Exchange Act Rule 6a-2 establishes ongoing requirements to 
file certain amendments to Form 1.
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    \17\ 15 U.S.C. 78f.
    \18\ Specifically, Section 6(a) of the Exchange Act states that 
``[a]n exchange may be registered as a national securities exchange 
. . . by filing with the Commission an application for registration 
in such form as the Commission, by rule, may prescribe containing 
the rules of the exchange and such other information and documents 
as the Commission, by rule, may prescribe as necessary or 
appropriate in the public interest or for the protection of 
investors.'' Section 6 of the Exchange Act also sets forth various 
requirements to which a national securities exchange is subject.
    \19\ 17 CFR 240.6a-1(a).
    \20\ 17 CFR 202.3(b)(2). See also supra note 8.
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    Section 36(a)(1) of the Exchange Act provides that ``the 
Commission, by rule, regulation, or order, may conditionally or 
unconditionally exempt any person, security, or transaction, or any 
class or classes of persons, securities, or transactions, from any 
provision or provisions of [the Exchange Act] or of any rule or 
regulation thereunder, to the extent that such exemption is necessary 
or appropriate in the public interest, and is consistent with the 
protection of investors.'' \21\ For the reasons discussed below, the 
Commission believes that it is appropriate in the public interest and 
consistent with the protection of investors to exempt the Applicant 
from the requirement under Exchange Act Rule 6a-1 to provide the 
information required in Exhibits C and D to Form 1 with respect to the 
Foreign Indirect Affiliates, subject to the following conditions:
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    \21\ 15 U.S.C. 78mm(a)(1).
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    (1) The Applicant must provide a list of the names of the Foreign 
Indirect Affiliates;
    (2) the Applicant must provide an organizational chart setting 
forth the affiliation of the Foreign Indirect Affiliates and the 
Foreign Direct Affiliates and the Applicant; and
    (3) as part of Exhibit C to the Applicant's Form 1 Application, the 
Applicant must provide a description of the nature of the affiliation 
between the Foreign Indirect Affiliates and the Foreign Direct 
Affiliates and the Applicant.
    The Commission believes, further, that it is appropriate in the 
public interest and consistent with the protection of investors to 
exempt the Applicant, with respect to the Foreign Indirect Affiliates, 
from the requirements under: (a) Exchange Act Rule 6a-2(a)(2) to amend 
Exhibit C within 10 days of any action that renders the information in 
Exhibit C inaccurate or incomplete; (b) Exchange Act Rules 6a-2(c) to 
provide periodic updates of Exhibit C; and (c) Exchange Act Rules 6a-
2(b)(1) to provide periodic updates of Exhibit D, subject to the 
condition that the Applicant provide amendments to the information 
required under conditions (1) through (3) above on or before June 30th 
of each year.
    As part of an application for exchange registration, the 
information included in

[[Page 55397]]

Exhibits C and D is designed to help the Commission make the 
determinations required under Sections 6(b) and 19(a) of the Exchange 
Act \22\ with respect to the application. The updated Exhibit C and D 
information required under Exchange Act Rule 6a-2 is designed to help 
the Commission exercise its oversight responsibilities with respect to 
national securities exchanges. Specifically, Exhibit D is designed to 
provide the Commission with information concerning the financial status 
of an exchange and its affiliates and subsidiaries,\23\ and Exhibit C 
is designed to provide the Commission with the names and organizational 
documents of these affiliates and subsidiaries.\24\ Such information is 
designed to help the Commission determine whether an applicant for 
exchange registration would have, and a national securities exchange 
continues to have, the ability to carry out its obligations under the 
Exchange Act.
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    \22\ 15 U.S.C. 78f(b) and 78s(a).
    \23\ See Securities Exchange Act Release No. 18843 (June 25, 
1982), 47 FR 29259 (July 6, 1982) (proposing amendments to Form 1); 
see also Form 1, 17 CFR 249.1, and supra Section II.A.
    \24\ Form 1, 17 CFR 249.1. See also supra note 4.
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    Since the most recent amendments to Form 1 in 1998,\25\ many 
national securities exchanges that previously were member-owned 
organizations with few affiliated entities have demutualized. Some of 
these demutualized exchanges have consolidated under holding companies 
with numerous affiliates that, in some cases, have only a limited and 
indirect connection to the national securities exchange, with no 
ability to influence the management or policies of the registered 
exchange, and no obligation to fund, or to materially affect the 
funding of, the registered exchange. The Commission believes that, for 
these affiliated entities, the information required under Exhibits C 
and D would have limited relevance to the Commission's review of an 
application for exchange registration or to its oversight of a 
registered exchange.
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    \25\ See Regulation ATS Adopting Release, supra note 8, at 
Section IV.C.
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    Based on the Applicant's representations, the indirect nature of 
the relationship between the Applicant and the Foreign Indirect 
Affiliates, and the information that the Applicant will provide with 
respect to the Foreign Direct Affiliates and the Foreign Indirect 
Affiliates, the Commission believes that it will have sufficient 
information to review the Applicant's Form 1 application and to make 
the determinations required under Sections 6(b) and 19(a) of the 
Exchange Act with respect to its application for registration as a 
national securities exchange.\26\ The Commission believes, further, 
that if the Commission were to approve the Applicant's Form 1 
application, it will have the information necessary to oversee the 
Applicant's activities as a national securities exchange. In 
particular, the Commission notes that the Applicant has represented 
that it would have no direct connection to the Foreign Indirect 
Affiliates, that the Foreign Indirect Affiliates would have no ability 
to influence the management or policies of the Applicant, and that the 
Foreign Indirect Affiliates would have no obligation to fund, or 
ability to materially affect the funding of, the Applicant. In 
addition, the Commission notes that the Applicant has represented that: 
(1) The Foreign Indirect Affiliates have no ownership interest in the 
Applicant or in any of the controlling equity holders of the Applicant; 
and (2) there are no commercial dealings between the Applicant and the 
Foreign Indirect Affiliates.\27\
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    \26\ 15 U.S.C. 78f(b) and 78s(a). Section 6(b) of the Exchange 
Act enumerates certain determinations that the Commission must make 
with respect to an exchange before granting the registration of the 
exchange as a national securities exchange. The Commission will not 
grant an exchange registration as a national securities exchange 
unless the Commission determines that the exchange meets these 
requirements. See Regulation ATS Adopting Release, supra note 8, at 
Section IV.B.
    \27\ See Exemption Request, supra note 3, at 3; supra note 15.
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    Given the limited and indirect relationship between the Applicant 
and the Foreign Indirect Affiliates, as described above, the Commission 
believes that the detailed corporate and financial information required 
in Exhibits C and D with respect to the Foreign Indirect Affiliates is 
unnecessary for the Commission's review of the Applicant's Form 1 
application and would be unnecessary for the Commission's oversight of 
the Applicant as a registered national securities exchange following 
any Commission approval of its Form 1 application.
    For the reasons discussed above, the Commission finds that the 
conditional exemptive relief requested by the Applicant is appropriate 
in the public interest and is consistent with the protection of 
investors.
    The Commission may modify by order the terms, scope or conditions 
of this exemption if it determines that such modification is necessary 
or appropriate in the public interest, or is consistent with the 
protection of investors. Furthermore, the Commission may limit, 
suspend, or revoke this exemption if it finds that the Applicant has 
failed to comply with, or is unable to comply with, any of the 
conditions set forth in this order, if such action is necessary or 
appropriate in the public interest, or is consistent with the 
protection of investors.
    It is ordered, pursuant to Section 36 of the Exchange Act,\28\ that 
the Applicant is exempt from the requirements to: (1) Include in its 
Form 1 application the information required in Exhibits C and D to Form 
1 with respect to the Foreign Indirect Affiliates; and (2) with respect 
to the Foreign Indirect Affiliates, update the information in Exhibits 
C and D to Form 1 as required by Exchange Act Rules 6a-2(a)(2), 6a-
2(b)(1), and 6a-2(c) subject to the following conditions:
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    \28\ 15 U.S.C. 78mm.
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    (i) The Applicant must provide a list of the names of the Foreign 
Indirect Affiliates;
    (ii) the Applicant must provide an organizational chart setting 
forth the affiliation of the Foreign Indirect Affiliates and the 
Foreign Direct Affiliates and the Applicant; and
    (iii) as part of Exhibit C to the Applicant's Form 1 Application, 
the Applicant must provide a description of the nature of the 
affiliation between the Foreign Indirect Affiliates and the Foreign 
Direct Affiliates and the Applicant.
    In addition, the Applicant must provide amendments to the 
information required under conditions (i) through (iii) above on or 
before June 30th of each year.

    By the Commission.
Robert W. Errett,
Deputy Secretary.
[FR Doc. 2015-23106 Filed 9-14-15; 8:45 am]
BILLING CODE 8011-01-P
55396 Federal Register / Vol. 80, No. 178 / Tuesday, September 15, 2015 / Notices

file periodic updates to Exhibits C and corporate and financial information considered filed until all necessary
D. with respect to the Foreign Indirect information, including financial
The Applicant is a wholly-owned Affiliates (1) is unnecessary for the statements and other required
subsidiary of International Securities protection of investors and the public documents, has been furnished in the
Exchange Holdings, Inc. (‘‘ISE interest and (2) would be unduly proper form.20 Exchange Act Rule 6a–2
Holdings’’).10 ISE Holdings is a wholly- burdensome and inefficient because establishes ongoing requirements to file
owned subsidiary of U.S. Exchange these affiliates are located in foreign certain amendments to Form 1.
Holdings, Inc., which is 15% owned by jurisdictions and the disclosure of such Section 36(a)(1) of the Exchange Act
Deutsche Börse AG (‘‘Deutsche Börse’’) information could implicate foreign provides that ‘‘the Commission, by rule,
and 85% owned by a German stock information sharing restrictions in such regulation, or order, may conditionally
corporation, Eurex Frankfurt AG jurisdictions.15 or unconditionally exempt any person,
(‘‘Eurex Frankfurt’’). Eurex Frankfurt is As a condition to the granting of security, or transaction, or any class or
wholly-owned by Deutsche Börse. exemptive relief, the Applicant has classes of persons, securities, or
According to the Applicant, the parent agreed to provide: (i) A listing of the transactions, from any provision or
ownership structure of U.S. Exchange names of the Foreign Indirect Affiliates; provisions of [the Exchange Act] or of
Holdings, Inc. is comprised entirely of (ii) an organizational chart setting forth any rule or regulation thereunder, to the
foreign entities, Eurex Frankfurt and the affiliation of the Foreign Indirect extent that such exemption is necessary
Deutsche Börse (collectively, the Affiliates and the Foreign Direct or appropriate in the public interest,
‘‘Foreign Direct Affiliates’’), which in Affiliates and the Applicant; and (iii) in and is consistent with the protection of
turn hold ownership interests, either Exhibit C of the Applicant’s Form 1 investors.’’ 21 For the reasons discussed
directly or indirectly, in excess of 25% application, a description of the nature below, the Commission believes that it
in a large number of other foreign of the Foreign Indirect Affiliates’ is appropriate in the public interest and
entities, some of which also own affiliation with the Foreign Direct consistent with the protection of
interests in other entities in excess of Affiliates and the Applicant. In investors to exempt the Applicant from
25% as well (such Foreign Direct addition, as a condition to the granting the requirement under Exchange Act
Affiliate-owned entities are referred to, of exemptive relief from the Rule 6a–1 to provide the information
collectively, as the ‘‘Foreign Indirect requirements of Exchange Act Rule 6a– required in Exhibits C and D to Form 1
Affiliates’’).11 2(a)(2), 6a–2(b)(1), and 6a–2(c), as with respect to the Foreign Indirect
Because of the limited and indirect described above, the Applicant has Affiliates, subject to the following
nature of its connection to the Foreign agreed to provide amendments to the conditions:
Indirect Affiliates, the Applicant information required under conditions (1) The Applicant must provide a list
believes that the corporate and financial (i) through (iii) above on or before June of the names of the Foreign Indirect
information of the Foreign Indirect Affiliates;
30th of each year. Further, the
Affiliates required by Exhibits C and D (2) the Applicant must provide an
Applicant notes that it will provide the
of Form 1 would have little relevance to organizational chart setting forth the
information required by Exhibits C and
the Commission’s review of the affiliation of the Foreign Indirect
D for all of its affiliates other than the
Applicant’s Form 1 application or, if the Affiliates and the Foreign Direct
Foreign Indirect Affiliates, including the
Commission were to approve the Affiliates and the Applicant; and
Foreign Direct Affiliates.16
Applicant’s Form 1 application, as (3) as part of Exhibit C to the
amended, to the Commission’s ongoing III. Order Granting Conditional Section Applicant’s Form 1 Application, the
oversight of the Applicant as a national 36 Exemption Applicant must provide a description of
securities exchange.12 In this regard, the the nature of the affiliation between the
Section 6 of the Exchange Act 17 sets
Exemption Request states that the Foreign Indirect Affiliates and the
forth a procedure for an exchange to
Foreign Indirect Affiliates have no Foreign Direct Affiliates and the
register as a national securities
ability to influence the management, Applicant.
exchange.18 Exchange Act Rule 6a–
policies, or finances of the Applicant The Commission believes, further,
1(a) 19 requires an application for
and no obligation to provide funding to, that it is appropriate in the public
registration as a national securities
or ability to materially affect the funding interest and consistent with the
exchange to be filed on Form 1 in
of, the Applicant.13 The Exemption protection of investors to exempt the
accordance with the instructions in
Request also states that: (1) The Foreign Applicant, with respect to the Foreign
Form 1. A Form 1 application is not
Indirect Affiliates have no ownership Indirect Affiliates, from the
interest in the Applicant or in any of the 15 See id. The Applicant also believes that requirements under: (a) Exchange Act
controlling shareholders of the providing the information required by Exhibits C Rule 6a–2(a)(2) to amend Exhibit C
Applicant; and (2) there are no and D with respect to the Foreign Indirect Affiliates within 10 days of any action that
commercial dealings between the could raise confidentiality concerns because many renders the information in Exhibit C
Applicant and the Foreign Indirect of the Foreign Indirect Affiliates are not public
companies. Id.
inaccurate or incomplete; (b) Exchange
Affiliates.14 Further, the Exemption 16 See Exemption Request, supra note 3, at 3. Act Rules 6a–2(c) to provide periodic
Request states that obtaining detailed 17 15 U.S.C. 78f. updates of Exhibit C; and (c) Exchange
18 Specifically, Section 6(a) of the Exchange Act Act Rules 6a–2(b)(1) to provide periodic
10 See Exemption Request, supra note 3, at 2. states that ‘‘[a]n exchange may be registered as a updates of Exhibit D, subject to the
11 See id. national securities exchange . . . by filing with the condition that the Applicant provide
12 See id. at 2–3. Commission an application for registration in such
mstockstill on DSK4VPTVN1PROD with NOTICES

13 See Exemption Request, supra note 3, at 3. form as the Commission, by rule, may prescribe amendments to the information required
14 See id. The Applicant states that ‘‘commercial containing the rules of the exchange and such other under conditions (1) through (3) above
dealings’’ means any direct or indirect arrangement, information and documents as the Commission, by on or before June 30th of each year.
agreement, or understanding or any other rule, may prescribe as necessary or appropriate in As part of an application for exchange
relationship including, but not limited to, the the public interest or for the protection of
investors.’’ Section 6 of the Exchange Act also sets registration, the information included in
providing of hardware, software, technology
services or any other goods or services that support forth various requirements to which a national
securities exchange is subject. 20 17 CFR 202.3(b)(2). See also supra note 8.
the operation of ISE Mercury or any facility of ISE
Mercury. See id., supra note 3, at 3 n. 5. 19 17 CFR 240.6a–1(a). 21 15 U.S.C. 78mm(a)(1).

VerDate Sep<11>2014 19:04 Sep 14, 2015 Jkt 235001 PO 00000 Frm 00075 Fmt 4703 Sfmt 4703 E:\FR\FM\15SEN1.SGM 15SEN1
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Exhibits C and D is designed to help the respect to its application for registration to comply with, or is unable to comply
Commission make the determinations as a national securities exchange.26 The with, any of the conditions set forth in
required under Sections 6(b) and 19(a) Commission believes, further, that if the this order, if such action is necessary or
of the Exchange Act 22 with respect to Commission were to approve the appropriate in the public interest, or is
the application. The updated Exhibit C Applicant’s Form 1 application, it will consistent with the protection of
and D information required under have the information necessary to investors.
Exchange Act Rule 6a–2 is designed to oversee the Applicant’s activities as a It is ordered, pursuant to Section 36
help the Commission exercise its national securities exchange. In of the Exchange Act,28 that the
oversight responsibilities with respect to particular, the Commission notes that Applicant is exempt from the
national securities exchanges. the Applicant has represented that it requirements to: (1) Include in its Form
Specifically, Exhibit D is designed to would have no direct connection to the 1 application the information required
provide the Commission with Foreign Indirect Affiliates, that the in Exhibits C and D to Form 1 with
information concerning the financial Foreign Indirect Affiliates would have respect to the Foreign Indirect Affiliates;
status of an exchange and its affiliates no ability to influence the management and (2) with respect to the Foreign
and subsidiaries,23 and Exhibit C is or policies of the Applicant, and that the Indirect Affiliates, update the
designed to provide the Commission Foreign Indirect Affiliates would have information in Exhibits C and D to Form
with the names and organizational no obligation to fund, or ability to 1 as required by Exchange Act Rules 6a–
documents of these affiliates and materially affect the funding of, the 2(a)(2), 6a–2(b)(1), and 6a–2(c) subject to
subsidiaries.24 Such information is Applicant. In addition, the Commission the following conditions:
designed to help the Commission notes that the Applicant has represented (i) The Applicant must provide a list
determine whether an applicant for that: (1) The Foreign Indirect Affiliates of the names of the Foreign Indirect
exchange registration would have, and a have no ownership interest in the Affiliates;
national securities exchange continues Applicant or in any of the controlling (ii) the Applicant must provide an
to have, the ability to carry out its equity holders of the Applicant; and (2) organizational chart setting forth the
obligations under the Exchange Act. there are no commercial dealings affiliation of the Foreign Indirect
Since the most recent amendments to between the Applicant and the Foreign Affiliates and the Foreign Direct
Form 1 in 1998,25 many national Indirect Affiliates.27 Affiliates and the Applicant; and
securities exchanges that previously Given the limited and indirect (iii) as part of Exhibit C to the
were member-owned organizations with relationship between the Applicant and Applicant’s Form 1 Application, the
few affiliated entities have the Foreign Indirect Affiliates, as Applicant must provide a description of
demutualized. Some of these described above, the Commission the nature of the affiliation between the
demutualized exchanges have believes that the detailed corporate and Foreign Indirect Affiliates and the
consolidated under holding companies financial information required in Foreign Direct Affiliates and the
with numerous affiliates that, in some Exhibits C and D with respect to the Applicant.
cases, have only a limited and indirect Foreign Indirect Affiliates is In addition, the Applicant must
connection to the national securities unnecessary for the Commission’s provide amendments to the information
exchange, with no ability to influence review of the Applicant’s Form 1 required under conditions (i) through
the management or policies of the application and would be unnecessary (iii) above on or before June 30th of each
registered exchange, and no obligation for the Commission’s oversight of the year.
to fund, or to materially affect the Applicant as a registered national
funding of, the registered exchange. The securities exchange following any By the Commission.
Commission believes that, for these Commission approval of its Form 1 Robert W. Errett,
affiliated entities, the information application. Deputy Secretary.
required under Exhibits C and D would For the reasons discussed above, the [FR Doc. 2015–23106 Filed 9–14–15; 8:45 am]
have limited relevance to the Commission finds that the conditional BILLING CODE 8011–01–P
Commission’s review of an application exemptive relief requested by the
for exchange registration or to its Applicant is appropriate in the public
oversight of a registered exchange. interest and is consistent with the SECURITIES AND EXCHANGE
Based on the Applicant’s protection of investors. COMMISSION
representations, the indirect nature of The Commission may modify by order
the relationship between the Applicant the terms, scope or conditions of this [Release No. 34–75866; File No. SR–Phlx–
and the Foreign Indirect Affiliates, and exemption if it determines that such 2015–75]
the information that the Applicant will modification is necessary or appropriate Self-Regulatory Organizations;
provide with respect to the Foreign in the public interest, or is consistent NASDAQ OMX PHLX LLC; Notice of
Direct Affiliates and the Foreign Indirect with the protection of investors. Filing and Immediate Effectiveness of
Affiliates, the Commission believes that Furthermore, the Commission may Proposed Rule Change To Modify the
it will have sufficient information to limit, suspend, or revoke this exemption Phlx Pricing Schedule
review the Applicant’s Form 1 if it finds that the Applicant has failed
application and to make the September 9, 2015.
determinations required under Sections 26 15 U.S.C. 78f(b) and 78s(a). Section 6(b) of the Pursuant to Section 19(b)(1) of the
6(b) and 19(a) of the Exchange Act with Exchange Act enumerates certain determinations
that the Commission must make with respect to an
Securities Exchange Act of 1934
mstockstill on DSK4VPTVN1PROD with NOTICES

exchange before granting the registration of the (‘‘Act’’),1 and Rule 19b–4 thereunder,2
22 15 U.S.C. 78f(b) and 78s(a). exchange as a national securities exchange. The notice is hereby given that on August
23 See Securities Exchange Act Release No. 18843 Commission will not grant an exchange registration 27, 2015, NASDAQ OMX PHLX LLC
(June 25, 1982), 47 FR 29259 (July 6, 1982) as a national securities exchange unless the
(proposing amendments to Form 1); see also Form Commission determines that the exchange meets
(‘‘Phlx’’ or ‘‘Exchange’’) filed with the
1, 17 CFR 249.1, and supra Section II.A. these requirements. See Regulation ATS Adopting
24 Form 1, 17 CFR 249.1. See also supra note 4. 28 15 U.S.C. 78mm.
Release, supra note 8, at Section IV.B.
25 See Regulation ATS Adopting Release, supra 27 See Exemption Request, supra note 3, at 3; 1 15 U.S.C. 78s(b)(1).
note 8, at Section IV.C. supra note 15. 2 17 CFR 240.19b–4.

VerDate Sep<11>2014 19:04 Sep 14, 2015 Jkt 235001 PO 00000 Frm 00076 Fmt 4703 Sfmt 4703 E:\FR\FM\15SEN1.SGM 15SEN1
Document Created: 2015-12-15 10:09:22
Document Modified: 2015-12-15 10:09:22
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 55395