80 FR 9286 - Self-Regulatory Organizations; National Stock Exchange, Inc.; Order Granting Approval of Proposed Rule Change in Connection With a Proposed Transaction in Which National Stock Exchange Holdings, Inc. Will Acquire Ownership of the Exchange From the CBOE Stock Exchange, LLC
SECURITIES AND EXCHANGE COMMISSION Federal Register Volume 80, Issue 34 (February 20, 2015)
Federal Register Volume 80, Issue 34 (February 20, 2015)
| Page Range | 9286-9291 | |
| FR Document | 2015-03515 |
[Federal Register Volume 80, Number 34 (Friday, February 20, 2015)] [Notices] [Pages 9286-9291] From the Federal Register Online [www.thefederalregister.org] [FR Doc No: 2015-03515] ----------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION [Release No. 34-74270; File No. SR-NSX-2014-017] Self-Regulatory Organizations; National Stock Exchange, Inc.; Order Granting Approval of Proposed Rule Change in Connection With a Proposed Transaction in Which National Stock Exchange Holdings, Inc. Will Acquire Ownership of the Exchange From the CBOE Stock Exchange, LLC February 13, 2015. I. Introduction On December 16, 2014, National Stock Exchange, Inc. (``NSX'' or the ``Exchange'') 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 make certain amendments to its corporate governance documents in order to effectuate a proposed transaction (the ``Transaction'') in which the Exchange will become a wholly-owned subsidiary of National Stock Exchange Holdings, Inc., a Delaware corporation (``NSX Holdings''). The proposed rule change was published for comment in the Federal Register on January 2, 2015.\4\ The Commission received no comments on the proposal. --------------------------------------------------------------------------- \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. 73944 (December 24, 2014), 80 FR 85 (SR-NSX-2014-017) (``Notice''). --------------------------------------------------------------------------- The Commission has reviewed carefully the proposed rule change and finds that the proposed rule change is consistent with the requirements of the Act and the rules and regulations thereunder applicable to a national securities exchange.\5\ In particular, the Commission finds that the proposed rule change is consistent with sections 6(b)(1) and (3) of the Act,\6\ which, among other things, require a national securities exchange to be so organized and have the capacity to be able to carry out the purposes of the Act, and to enforce compliance by its members and persons associated with its members with the provisions of the Act, the rules and regulations thereunder, and the rules of the exchange, and assure the fair representation of its members in the selection of its directors and administration of its affairs, and provide that one or more directors shall be representative of issuers and investors and not be associated with a member of the exchange, broker, or dealer. The Commission also finds that the proposal is consistent with section 6(b)(5) of the Act,\7\ which requires that the rules of the exchange be designed 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. --------------------------------------------------------------------------- \5\ In approving the proposed rule change, the Commission has considered its impact on efficiency, competition and capital formation. See 15 U.S.C. 78c(f). \6\ 15 U.S.C. 78f(b)(1) and (b)(3). \7\ 15 U.S.C. 78f(b)(5). --------------------------------------------------------------------------- II. Discussion A. Corporate Structure and Proposed Transaction Currently, the Exchange is a wholly-owned subsidiary of the CBOE Stock [[Page 9287]] Exchange, LLC (``CBSX'').\8\ Pursuant to the terms of a Stock Purchase Agreement, dated September 8, 2014, by and among CBSX, NSX Holdings and the Exchange (the ``SPA''), NSX Holdings has agreed to acquire all of the outstanding capital stock of NSX upon the closing of the Transaction (the ``Closing'') in return for cash consideration paid to CBSX.\9\ Following the completion of the Transaction, the Exchange will remain a Delaware for-profit stock corporation with authority to issue 1,000 shares of common stock and, at all times, all of the outstanding stock of the Exchange will be owned by NSX Holdings. --------------------------------------------------------------------------- \8\ CBSX is the record and beneficial owner of 100 shares of the Exchange, par value $.01 per share, which represents all of the issued and outstanding shares of capital stock of the Exchange. See Notice, supra note 4, at 86. \9\ For a more detailed explanation of the conditions necessary to effectuate the Closing, see Notice, supra note 4, at 86, n.8. --------------------------------------------------------------------------- The Exchange is, and will remain, registered as a national securities exchange under section 6 of the Act \10\ and a self- regulatory organization (``SRO'') as defined in section 3(a)(26) of the Act \11\ after the Closing.\12\ The Exchange states that it plans to reopen its trading operations as soon as practicable after the Closing and plans to operate the Exchange using its existing trading system pursuant to the rules of the Exchange currently in effect (the ``Exchange Rules'').\13\ However, the Exchange states that the re- opening of its marketplace will be subject to additional proposed rule changes filed by the Exchange with the Commission and such proposed rule changes being approved by the Commission.\14\ In addition, the Exchange states that the Exchange Rules, all of which remain in full force and effect as of the date of the instant rule filing, will continue to govern the activities of the Exchange up to and after the Closing, and the Exchange will continue to discharge its SRO responsibilities pursuant to the Exchange's registration under section 6 of the Act.\15\ Furthermore, assuming consummation of the Transaction, the Exchange noted that NSX Holdings has represented that, at all times, it will ensure that the Exchange has access to sufficient financial resources for it to discharge its SRO responsibilities after the date of the Closing.\16\ --------------------------------------------------------------------------- \10\ 15 U.S.C. 78f. \11\ 15 U.S.C. 78c(a)(26). \12\ See Notice, supra note 4, at 86. \13\ See Notice, supra note 4, at 86. The Exchange ceased trading operations as of the close of business on May 30, 2014. See Exchange Act Release No. 72107 (May 6, 2014), 79 FR 27017 (May 12, 2014) (SR-NSX-2014-14) (``Cessation of Operations Filing''). \14\ See Notice, supra note 4, at 86. The Cessation of Operations Filing stated that the Exchange shall file a proposed rule change pursuant to Rule 19b-4 of the Act prior to any resumption of trading on the Exchange pursuant to Chapter XI (Trading Rules) of the Exchange Rules. See Notice, supra note 4, at 86, n.11. \15\ See Notice, supra note 4, at 86. \16\ See Notice, supra note 4, at 86. --------------------------------------------------------------------------- The ownership of NSX Holdings, as the new holding company of the Exchange, will be divided among two categories of shareholders.\17\ The first category of shareholders will be comprised of 12 individual investors who, in the aggregate, will own approximately 64% of the outstanding shares of NSX Holdings.\18\ At the time of the closing of the Transaction, the Exchange has represented that one individual investor may own in the aggregate more than 40% of the outstanding shares of NSX Holdings.\19\ According to the Exchange, four of the 12 individual investors in NSX Holdings, owning in the aggregate approximately 60% of the outstanding shares, are securities industry and technology professionals with senior executive managerial experience in areas including capital markets and investment management, exchange operations, electronic trading, and systems architecture and development.\20\ The Exchange anticipates that these four individuals will assume senior executive roles in the Exchange's management upon completion of the Transaction.\21\ The remaining eight individual shareholders of NSX Holdings own shares in amounts ranging from approximately 0.063% to 1.269%.\22\ --------------------------------------------------------------------------- \17\ See Notice, supra note 4, at 87. \18\ The Exchange has represented that, pursuant to Rule 6a-2 under the Act, within 10 days of the Closing, the Exchange will amend its Form 1 filed with the Commission. Exhibit K of Form 1, which is applicable only to ``exchanges that have one or more owners, shareholders, or partners that are not also members of the exchange . . .'', requires the Exchange to provide a list of each shareholder that directly owns 5% or more of a class of a voting security of the Exchange. As discussed above, the Exchange has proposed that 100% of the issued and outstanding shares of NSX be directly owned by NSX Holdings. See Notice, supra note 4, at 87, n.16. \19\ See discussion infra at 8 regarding exemption from the Concentration Limitation. \20\ See Notice, supra note 4, at 87. \21\ See Notice, supra note 4, at 87. \22\ See Notice, supra note 4, at 87, n.17. --------------------------------------------------------------------------- The second category of shareholders of NSX Holdings consists of two affiliated entities: Thor Investment Holdings LLC (``Thor'') and TIP-1 LLC (``TIP-1''), each a Delaware limited liability company.\23\ Thor will own approximately 16% of the outstanding equity of NSX Holdings, and TIP-1 will own approximately 20% of the outstanding equity of NSX Holdings.\24\ --------------------------------------------------------------------------- \23\ See Notice, supra note 4, at 87. \24\ See Notice, supra note 4, at 87. Thor will also have an ownership interest in TIP-1 and will act as its managing member. Thor's management will be vested in a managing member, Thor Managing Member LLC (``Thor MM''), which will have no ownership interest in either Thor or TIP-1. There are three individual members of Thor MM, all of whom are also members of Thor. There are also currently nine individuals who are members of Thor. The Exchange anticipates there will be six members of TIP-1, including Thor. Each such member thereby has an ownership interest in the respective entities' share of the outstanding equity of NSX Holdings. See Notice, supra note 4, at 87. --------------------------------------------------------------------------- The Exchange notes that there is no commonality or overlap between the 12 individual investors owning approximately 64% of the outstanding shares of NSX Holdings and the individual members of Thor and TIP-1 which own the remaining approximately 36% of the outstanding equity of NSX Holdings.\25\ No individual has an ownership interest in both Thor and TIP-1.\26\ Furthermore, none of the individual members of Thor or TIP-1 will become an employee of the Exchange, and none of these individual members will have any role in the day-to-day management or operation of the Exchange.\27\ --------------------------------------------------------------------------- \25\ See Notice, supra note 4, at 87. \26\ See Notice, supra note 4, at 87. \27\ See Notice, supra note 4, at 87. --------------------------------------------------------------------------- With respect to voting rights, Thor will have the ability to exercise TIP-1's voting rights in NSX Holdings, such that Thor will have the ability to exercise an approximately 36% voting interest of NSX Holdings (Thor's approximately 16% plus TIP-1's approximately 20%).\28\ However, Thor will not be able to exercise its voting interest in excess of the 20% voting limitation because of voting limitations contained in the NSX Holdings A&R Certificate.\29\ --------------------------------------------------------------------------- \28\ See Notice, supra note 4, at 87. \29\ See Notice, supra note 4, at 87. --------------------------------------------------------------------------- The Exchange currently has one affiliated entity, NSX Securities LLC (``NSX Securities''). Pursuant to Exchange Rule 2.11(a), NSX Securities provides the outbound routing of orders from the Exchange to other trading centers. NSX Securities operates as a facility (as defined in section 3(a)(2) of the Act) \30\ of the Exchange. The Exchange represents that upon the Closing, Exchange Rule 2.11 will remain in full force and effect and the sole change impacting NSX Securities will be the change of ownership of the Exchange (from CBSX to NSX Holdings) as NSX Securities' sole affiliate.\31\ --------------------------------------------------------------------------- \30\ 15 U.S.C. 78(c)(a)(2). \31\ See Notice, supra note 4, at 86. The Exchange further represented that it, on behalf of NSX Securities, will provide notice to and obtain any required consents from FINRA for the NSX change of ownership. See Notice, supra note 4, at 86. --------------------------------------------------------------------------- [[Page 9288]] B. Proposed Rule Changes Section 19(b) of the Act and Rule 19b-4 thereunder require an SRO to file proposed rule changes with the Commission. Although NSX Holdings is not an SRO, certain provisions of its proposed certificate of incorporation and bylaws, are rules of the Exchange, if they are stated policies, practices, or interpretations, as defined in Rule 19b- 4 under the Act, and must be filed with the Commission pursuant to section 19(b)(4) of the Act and Rule 19b-4 thereunder. Accordingly, the Exchange filed with the Commission the following documents in connection with the Transaction: (1) The proposed Second Amended and Restated Certificate of Incorporation of NSX Holdings (the ``NSX Holdings A&R Certificate''); (2) the proposed By-laws of NSX Holdings (the ``NSX Holdings By-laws''); (3) the proposed Second Amended and Restated Certificate of Incorporation of NSX (the ``Exchange A&R Certificate''); and (4) the proposed Third Amended and Restated NSX By- laws (the ``Exchange A&R By-laws''). 1. NSX Holdings Ownership and Voting Limitations The NSX Holdings A&R Certificate includes certain restrictions on the ability to own and vote shares of stock. These limitations are intended to prevent a stockholder from exercising undue control over the operation of NSX Holdings, and in turn, over the operation of the Exchange. These limitations are generally consistent with ownership and voting limits approved by the Commission for other SROs,\32\ and are designed to assure that the Exchange and the Commission are able to carry out their regulatory obligations under the Act. --------------------------------------------------------------------------- \32\ These provisions are generally consistent with ownership and voting limits approved by the Commission for other SROs. See e.g., Securities Exchange Act Release Nos. 71375 (January 23, 2014) 79 FR 4771 (January 29, 2014) (SR-BATS-2013-059; SR-BYX-2013-039) (order approving proposed business combination involving BATS Global Markets, Inc. and Direct Edge Holdings LLC); 70210 (August 15, 2013), 78 FR 51758 (August 21, 2013) (SR-NYSE-2013-42, SRNYSEMKT- 2013-50 and SR-NYSEArca-2013-62) (order approving proposed transaction in which NYSE Euronext will become a wholly owned subsidiary of Intercontinental Exchange Group, Inc.); 62716 (August 13, 2010), 75 FR 51295 (August 19, 2010) (File No. 10-198) (order approving registration application of BYX as a national securities exchange); 61698 (March 12, 2010), 75 FR 13151 (March 18, 2010) (File Nos. 10-194 and 10-196) (order approving registration application of EDGX Exchange, Inc. and EDGA Exchange, Inc.); 58375 (August 18, 2008), 73 FR 49498 (August 21, 2008) (File No. 10-182) (order approving registration of BATS as a national securities exchange); 55293 (February 14, 2007), 72 FR 8033 (February 22, 2007) (SR-NYSE-2006-120) (order approving proposed combination between NYSE Group, Inc. and Euronext N.V.); 53382 (February 27, 2006), 71 FR 11251 (March 6, 2006) (SR-NYSE-2005-77) (order approving merger of New York Stock Exchange, Inc. and Archipelago, and demutualization of New York Stock Exchange, Inc.); 53963 (June 8, 2006), 71 FR 34660 (June 15, 2006) (File No. SR-NSX-2006-03); 53128 (January 13, 2006), 71 FR 3550 (File No. 10-131) (order approving registration application of NASDAQ as a national securities exchange); 51149 (February 8, 2005), 70 FR 7531 (February 14, 2005) (SR-CHX-2004-26); and 49098 (January 16, 2004), 69 FR 3974 (January 27, 2004) (SR-Phlx-2003-73). --------------------------------------------------------------------------- For example, the NSX Holdings A&R Certificate provides that, subject to certain exceptions, no Person,\33\ either alone or with its Related Persons \34\ shall be allowed at any time to own beneficially shares of stock of NSX Holdings representing in the aggregate more than 40% of the then outstanding votes entitled to be cast on any matter (``Concentration Limitation'').\35\ --------------------------------------------------------------------------- \33\ See NSX Holdings A&R Certificate, Article Fourth, section B (defining ``Person''). \34\ See NSX Holdings A&R Certificate, Article Fourth, section B (defining ``Related Persons''). \35\ See NSX Holdings A&R Certificate, Article Fourth, section C(i). --------------------------------------------------------------------------- Because the Exchange anticipates that one shareholder will own beneficially more than 40% of the outstanding shares of NSX Holdings at the Closing, the Exchange has proposed that a Person (either alone or with their Related Persons) who exceeds the Concentration Limitation as of the filing date of the NSX Holdings A&R Certificate shall be exempt from the Concentration Limitation. The exemption shall not extend beyond May 19, 2015.\36\ The Commission believes that the proposed exemption is consistent with the requirements of section 6(b) of the Act.\37\ The Commission believes that an exemption for this specific period of time should allow a shareholder sufficient time after the Closing to reduce his or her ownership percentage in order to comply with the Concentration Limitation. --------------------------------------------------------------------------- \36\ See NSX Holdings A&R Certificate, Article Fourth, section C(i). See also Notice, supra note 4, at 87. \37\ The Commission previously has approved a period of time for the reduction of share ownership concentration. See Securities Exchange Act Release No. 45803 (April 23, 2002), 67 FR 21306 (April 30, 2002) (SR-ISE-2002-01) (allowing a temporary exemption, not to extend past a date certain, from ownership concentration limits). --------------------------------------------------------------------------- Pursuant to NSX Holdings A&R Certificate, Article Fourth, section C(i)(a), the Concentration Limitation applies unless and until: (i) A Person (either alone or with its Related Persons) intending to acquire such ownership shall have delivered to the Board of Directors of NSX Holdings (the ``Holdings Board'') a notice in writing, not less than 45 days (or such shorter period as the Holdings Board shall expressly consent to) prior to the acquisition of any shares that would cause such Person (either alone or with its Related Persons) to exceed the Concentration Limitation, of its intention to acquire such ownership; (ii) the Holdings Board shall have resolved to expressly permit such ownership; and (iii) such resolution shall have been filed with the Commission under section 19(b) of the Act and shall have become effective thereunder.\38\ --------------------------------------------------------------------------- \38\ See NSX Holdings A&R Certificate, Article Fourth, section C(i)(a). --------------------------------------------------------------------------- The Exchange has provided for additional safeguards that must be satisfied in the event a Person alone or with their Related Persons seeks an exemption from the Concentration Limitation. For example, the Holdings Board shall not adopt any resolution permitting an exemption from the Concentration Limitation unless the Holdings Board first determines that such acquisition of beneficial ownership by such Person (either alone or with its Related Persons) (i) will not impair any of NSX Holdings' or NSX's ability to discharge its responsibilities under the Act and the rules and regulations thereunder, and is otherwise in the best interests of NSX Holdings and its stockholders; (ii) such acquisition of beneficial ownership by such Person (either alone or with its Related Persons) will not impair the Commission's ability to enforce the Act; and (iii) neither such Person nor any of its Related Persons is subject to any statutory disqualification as defined in section 3(a)(39) of the Act.\39\ --------------------------------------------------------------------------- \39\ See NSX Holdings A&R Certificate, Article Fourth, section C(i)(b). --------------------------------------------------------------------------- The NSX Holdings A&R Certificate further provides that, in making such determinations, the Holdings Board may impose such conditions and restrictions on a Person and its Related Persons owning any shares of stock of NSX Holdings entitled to vote on any matter as it may in its sole discretion deem necessary, appropriate or desirable in furtherance of the objectives of the Act and the governance of NSX Holdings.\40\ In the event that a Person (either alone or with its Related Persons) at any time owns beneficially shares of stock of NSX Holdings in excess of the Concentration Limitation without having first satisfied the requirement of providing timely written notice to the Holdings Board, and the Holdings Board expressly permits such ownership and files the resolution with the Commission pursuant to section 19(b) of the Act, [[Page 9289]] NSX Holdings must call from such Person and its Related Persons that number of shares of stock of NSX Holdings entitled to vote on any matter that exceeds the Concentration Limitation at a price equal to the par value of such shares of stock.\41\ --------------------------------------------------------------------------- \40\ See NSX Holdings A&R Certificate, Article Fourth, section C(i)(b). \41\ See NSX Holdings A&R Certificate, Article Fourth, section C(i)(c). --------------------------------------------------------------------------- The NSX Holdings A&R Certificate also provides for limitations on ownership of shares by ETP Holders of NSX.\42\ As long as NSX remains registered as a national securities exchange under section 6 of the Act, no ETP Holder (either alone or with its Related Persons) shall be permitted to own beneficially shares of stock of NSX Holdings representing in the aggregate more than 20% of the then outstanding votes of NSX Holdings stock entitled to be cast on any matter.\43\ If any ETP Holder (either alone or with its Related Persons) at any time owns beneficially shares of stock in excess of such 20% limitation, NSX Holdings shall call from such ETP Holder and its Related Persons that number of shares of stock of NSX Holdings entitled to vote on any matter that exceeds such 20% limitation at a price equal to the par value of such shares of stock.\44\ --------------------------------------------------------------------------- \42\ See Exchange Rule 1.1E.(1) for definition of the term ``ETP.'' \43\ See NSX Holdings A&R Certificate, Article Fourth, section C(ii). \44\ See NSX Holdings A&R Certificate, Article Fourth, section C(ii). --------------------------------------------------------------------------- With respect to voting limitations, Article Fourth, section B(i) of the NSX Holdings A&R Certificate provides that, notwithstanding any other provisions of that document, no Person (either alone or with its Related Persons) as of any record date for the determination of stockholders entitled to vote on any matter, shall be entitled to vote or cause the voting of shares of stock of NSX Holdings, in person or by proxy or through any voting agreement or other arrangement, to the extent such shares represent in the aggregate more than 20% of the then outstanding votes entitled to be cast on such matter (the ``Voting Limitation''). If votes have been cast, in person or by proxy or through any voting agreement or other arrangement, by any Person (either alone or with its Related Persons) in excess of the Voting Limitation, NSX Holdings shall disregard such votes in excess of the Voting Limitation.\45\ The Voting Limitation (or Nonvoting Agreement Prohibition) shall apply unless and until a Person (and its Related Persons) owning any shares of stock of NSX Holdings entitled to vote on such matter shall have delivered to the Holdings Board a notice in writing, not less than 45 days (or such shorter period as the Holdings Board shall expressly consent to) prior to any vote, of its intention to cast more than 20% of the votes entitled to be cast on such matter or to enter into an agreement, plan or other arrangement that would violate the Nonvoting Agreement Prohibition, as applicable; the Holdings Board shall have resolved to expressly permit such exercise or the entering into of such agreement, plan or other arrangement, as applicable, and such resolution shall have been filed with the Commission pursuant to section 19(b) of the Act and shall have become effective thereunder.\46\ --------------------------------------------------------------------------- \45\ NSX Holdings A&R Certificate, Article Fourth, section B(i) prohibits ``Nonvoting Agreements'' by or among Persons and their Related Persons that would result in shares of stock that would be subject to such agreement not being voted on any matter, or the withholding of any proxy relating to those shares, where the effect of such an agreement would be to enable any Person, either alone or with its Related Persons, to vote or cause the voting of shares representing in the aggregate more than 20% of the then outstanding votes entitled to be cast (the ``Nonvoting Agreement Prohibition''). Any share owner seeking a waiver of the Nonvoting Agreement Prohibition so as to be able to enter into such an agreement would also be required to obtain express permission of the Holdings Board through a duly authorized written resolution that is filed with and approved by the Commission pursuant to section 19(b) of the Act. See NSX Holdings A&R Certificate, Article Fourth, section B(i). \46\ See NSX Holdings A&R Certificate, Article Fourth, section B(ii). --------------------------------------------------------------------------- The Commission believes that the proposed restrictions on the ownership and voting of members are consistent with the requirements of section 6(b) of the Act. These restrictions are generally consistent with ownership and voting limits approved by the Commission for other SROs.\47\ Moreover, the Commission believes that the proposed ownership and voting limits should reduce the potential that the control of the Exchange by one or a few shareholders would impair the Exchange's ability to carry out its self-regulatory obligations. --------------------------------------------------------------------------- \47\ See note 32, supra. --------------------------------------------------------------------------- 2. Jurisdiction; Books and Records; Due Regard As described above, following the Closing, NSX Holdings will be the sole stockholder of the Exchange. Although NSX Holdings will not carry out any regulatory functions, its activities with respect to the operation of the Exchange must be consistent with, and must not interfere with, the self-regulatory obligations of the Exchange. The NSX Holdings A&R Certificate and the NSX Holdings By-laws therefore include certain provisions that are designed to maintain the independence of the Exchange's self-regulatory functions, enable the Exchange to operate in a manner that complies with the federal securities laws, including the objectives of sections 6(b) \48\ and 19(g) \49\ of the Act, and facilitate the ability of the Exchange and the Commission to fulfill their regulatory and oversight obligations under the Act.\50\ --------------------------------------------------------------------------- \48\ 15 U.S.C. 78f(b). \49\ 15 U.S.C. 78s(g). \50\ See e.g., NSX Holdings A&R Certificate, Articles Twelfth through Sixteenth and NSX Holdings By-laws, Article VI. --------------------------------------------------------------------------- For example, Article VI of the NSX Holdings By-laws, entitled ``SRO Functions of NSX,'' governs the conduct of NSX Holdings as the holding company for the Exchange with respect to NSX's status and obligations as a registered national securities exchange and an SRO.\51\ Among the key provisions are requirements that, for so long as NSX Holdings shall, directly or indirectly, control NSX, the directors, officers, employees and agents of NSX Holdings shall give due regard to the preservation of the independence of the self-regulatory function of NSX and to its obligations to investors and the general public and shall not take actions which would interfere with the effectuation of decisions by the Exchange Board of Directors relating to NSX's regulatory functions (including disciplinary matters) or which would interfere with the Exchange's ability to carry out its responsibilities under the Exchange Act.\52\ --------------------------------------------------------------------------- \51\ Articles Twelfth through Sixteenth of the NSX Holdings A&R Certificate contain substantially the same provisions with respect to NSX Holdings' obligations as the controlling entity for the Exchange. See Notice, supra note 4, at 88, n.34. \52\ See NSX Holdings By-laws, Article VI, section 6.1. --------------------------------------------------------------------------- Further, NSX Holdings is required to comply with the federal securities laws, and the rules and regulations thereunder, and must cooperate with the Commission and with NSX pursuant to and to the extent of their respective regulatory authority.\53\ In addition, the NSX Holdings A&R Certificate and the NSX Holdings By-laws provide that the officers, directors, employees and agents of NSX Holdings, by virtue of their acceptance of such position, shall comply with the federal securities laws and the rules and regulations thereunder; and shall be deemed to agree to cooperate with the Commission and the Exchange in respect of the Commission's oversight responsibilities regarding NSX and the self-regulatory functions and responsibilities of NSX, and NSX Holdings will take reasonable [[Page 9290]] steps necessary to cause its officers, directors, employees and agents to so cooperate.\54\ Furthermore, NSX Holdings and its officers, directors, employees and agents by virtue of their acceptance of such positions, shall be deemed to irrevocably submit to the jurisdiction of the United States federal courts, the Commission and NSX for the purposes of any suit, action or proceeding pursuant to the United States federal securities laws, and the rules or regulations thereunder, arising out of, or relating to, the activities of NSX, and by virtue of their acceptance of any such position, shall be deemed to waive, and agree not to assert by way of motion, as a defense or otherwise in any such suit, action or proceeding, any claims that it or they are not personally subject to the jurisdiction of the United States federal courts, the Commission or the Exchange, that the suit, action or proceeding is an inconvenient forum or that the venue of the suit, action or proceeding is improper, or that the subject matter of that suit, action or proceeding may not be enforced in or by such courts or agency.\55\ NSX Holdings and its officers, directors, employees and agents also agree that they will maintain an agent in the United States for the service of process of a claim arising out of, or relating to, the activities of the Exchange.\56\ --------------------------------------------------------------------------- \53\ See NSX Holdings A&R Certificate, Article Fifteenth; NSX Holdings By-laws, Article VI, section 6.6. \54\ See NSX Holdings A&R Certificate, Articles Twelfth and Fifteenth; NSX Holdings By-laws, Article VI, section 6.6. \55\ See NSX Holdings A&R Certificate, Article Twelfth; NSX Holdings By-laws, Article VI, section 6.7. Additionally, as noted, no individual who is subject to any statutory disqualification as defined in section 3(a)(39) of the Exchange Act may serve as a director or officer of NSX Holdings. See Notice, supra note 4, at 89, n.39. \56\ See NSX Holdings A&R Certificate, Article Twelfth; NSX Holdings By-laws, Article VI, section 6.7. --------------------------------------------------------------------------- In addition, for so long as NSX remains a registered national securities exchange, the books, records, premises, officers, directors, employees and agents of NSX Holdings shall be deemed to be the books, records, premises, officers, directors, employees and agents of NSX for purposes of and subject to oversight pursuant to the Act.\57\ --------------------------------------------------------------------------- \57\ See NSX Holdings A&R Certificate, Article Fourteenth. --------------------------------------------------------------------------- The NSX Holdings By-laws further provide that NSX Holdings' books and records shall be maintained within the United States and shall be at all times subject to inspection and copying by the Commission and by the Exchange, to the extent that such books and records are related to the administration and operation of the Exchange.\58\ --------------------------------------------------------------------------- \58\ See NSX Holdings By-laws, Article VI, sections 6.4 and 6.5. --------------------------------------------------------------------------- The NSX Holdings A&R Certificate and the NSX Holdings By-laws provide that, to the extent that NSX continues to be controlled, directly or indirectly, by NSX Holdings and to the fullest extent permitted by applicable law, all books and records of the Exchange reflecting confidential information pertaining to the self-regulatory function of the Exchange or its successors (including but not limited to disciplinary matters, trading data, trading practices and audit information) that shall come into the possession of NSX Holdings, shall not be made available other than to those officers, directors, employees and agents of NSX Holdings that have a reasonable need to know the contents thereof, and shall be retained in confidence by NSX Holdings, and the officers, directors, employees and agents of NSX Holdings, and not used for any non-regulatory purposes.\59\ The NSX Holdings A&R Certificate and the NSX Holdings By-laws, however, specify that the NSX Holdings A&R Certificate and NSX Holdings By-laws, respectively, (including these confidentiality provisions) shall not be interpreted so as to limit or impede the rights of the Commission or the Exchange to access and examine such NSX confidential information pursuant to the federal securities laws and the rules and regulations thereunder, or to limit or impede the ability of any officers, directors, employees or agents of NSX Holdings to disclose NSX confidential information to the Commission or the Exchange.\60\ --------------------------------------------------------------------------- \59\ See NSX Holdings A&R Certificate, Article Thirteenth and NSX Holdings By-laws, section 6.2. \60\ See NSX Holdings A&R Certificate, Article Thirteenth and NSX Holdings By-laws, section 6.3. --------------------------------------------------------------------------- The NSX Holdings A&R Certificate and the NSX Holdings By-laws provide that, for so long as NSX remains a registered national securities exchange, before any amendment to or repeal of any provision of the NSX Holdings A&R Certificate or the NSX Holdings By-laws may be effective, those changes must be submitted to the Exchange Board of Directors, and if the amendment is required to be filed with, or filed with and approved by the Commission pursuant to section 19(b) of the Act,\61\ such change shall not be effective until filed with, or filed with and approved by, the Commission.\62\ --------------------------------------------------------------------------- \61\ 15 U.S.C. 78s(b). \62\ See NSX Holdings A&R Certificate, Article Sixteenth and NSX Holdings By-laws, section 7.7(b). --------------------------------------------------------------------------- The Exchange submits that the NSX Holdings A&R Certificate and the NSX Holdings By-laws establish an organizational framework that assures that the Commission and NSX will have regulatory jurisdiction and authority over NSX Holdings and its directors, officers, employees and agents, and will preserve the independence and effectiveness of the Exchange in discharging its self-regulatory responsibilities pursuant to the Act.\63\ Further, the Exchange represents that these provisions of the NSX Holdings corporate documents will not impair the ability of the Exchange to carry out its functions and responsibilities as a national securities exchange under the Act and the rules and regulations promulgated thereunder, or the ability of the Commission to enforce the Act and the rules and regulations promulgated thereunder.\64\ The Exchange further states that it will continue to enforce the Act, the Commission's rules thereunder, and the Exchange's own rules, in the same manner as prior to the Transaction, and notes that the Commission will continue to have plenary regulatory authority over NSX.\65\ --------------------------------------------------------------------------- \63\ See Notice, supra note 4, at 89. \64\ See Notice, supra note 4, at 89. \65\ See Notice, supra note 4, at 89. --------------------------------------------------------------------------- The Commission finds that these provisions are consistent with the Act, and that they are intended to assist the Exchange in fulfilling its self-regulatory obligations and in administering and complying with the requirements of the Act. The Commission also notes that, even in the absence of these provisions, under section 20(a) of the Act,\66\ any person with a controlling interest in the Exchange shall be jointly and severally liable with and to the same extent the Exchange is liable under any provision of the Act, unless the controlling person acted in good faith and did not directly or indirectly induce the act or acts constituting the violation or cause of action. In addition, section 20(e) of the Act \67\ creates aiding and abetting liability for any person who knowingly provides substantial assistance to another person in violation of any provision of the Act or rule thereunder. Further, section 21C of the Act \68\ authorizes the Commission to enter a cease- and-desist order against any person who has been ``a cause of'' a violation of any provision of the Act through an act or omission that the person knew or should have known would contribute to the violation. --------------------------------------------------------------------------- \66\ 15 U.S.C. 78t(a). \67\ 15 U.S.C. 78t(e). \68\ 15 U.S.C. 78u-3. --------------------------------------------------------------------------- 3. Board Composition; Committees Following the completion of the Transaction, the board of directors of the Exchange will continue to be the [[Page 9291]] governing body of the Exchange and possess all of the powers necessary for the management of its business and affairs and the execution of its responsibilities as an SRO. In particular, the Exchange A&R By-laws will continue to provide that the Exchange Board shall consist of no fewer than seven or more than 25 directors.\69\ In addition, the Exchange Board's composition at all times shall include the Chief Executive Officer of the Exchange, at least 50% Non-Industry Directors \70\ (at least one of whom shall be an Independent Director \71\) and such number of ETP Holder Directors \72\ as is necessary to comprise at least 20% of the Exchange Board.\73\ --------------------------------------------------------------------------- \69\ See Exchange A&R By-laws, Article III, section 3.2(a). \70\ The term ``Non-Industry Director'' is defined in Article I, section 1.1, para. N of the Exchange A&R By-laws as ``a member of the [NSX] Board who is (i) an Independent Director; or (ii) any other individual who would not be an Industry Director.'' \71\ The term ``Independent Director'' is defined in Article I, section 1.1, para. I of the Exchange A&R By-laws as ``a member of the [NSX] Board that the [NSX] Board has determined to have no material relationship with the Exchange or any affiliate of the Exchange, or any ETP Holder or any affiliate of any such ETP Holder, other than as a member of the Board.'' \72\ The term ``ETP Holder Director'' is defined in Article I, section 1.1, para. E(2) of the Exchange A&R By-laws as ``a director who is an ETP Holder or a director, officer, managing member or partner of an entity that is, or is an affiliate of, an ETP Holder.'' \73\ See Exchange A&R By-laws, Article III, section 3.2(b). --------------------------------------------------------------------------- In connection with the Closing, the steps to transition the membership on the Exchange Board from the current directors to the post-Closing directors will conform to the requirements set forth in Article III, section 3.7 of the Exchange A&R By-laws. Furthermore, the Exchange A&R By-laws provides that any vacancy occurring in a committee shall be filled by the Chairman of the Board for the remainder of the term, with the approval of the Exchange Board.\74\ Each committee shall be comprised of at least three people and may include persons who are not members of the Board; provided, however, that such committee members who are not also members of the Board shall only participate in committee actions to the extent permitted by law.\75\ --------------------------------------------------------------------------- \74\ See Exchange A&R By-laws, Article V, section 5.2. \75\ See Exchange A&R By-laws, Article V, section 5.2. --------------------------------------------------------------------------- The Commission finds that these provisions are consistent with the Act, and that they are intended to assist the Exchange in fulfilling its self-regulatory obligations and in administering and complying with the requirements of the Act. 4. Changes to the Exchange Organizational Documents In connection with the completion of the Transaction, the Exchange proposes certain amendments in the Exchange A&R Certificate and the Exchange A&R By-laws. In particular, the Exchange proposes to delete the language in Paragraph Fourth of the Exchange A&R Certificate that provides that the Exchange shall at all times be wholly owned by CBSX and replace that provision with one requiring that the Exchange at all times be wholly owned by NSX Holdings.\76\ --------------------------------------------------------------------------- \76\ See Notice, supra note 4, at 89. --------------------------------------------------------------------------- In addition, with respect to the Exchange A&R By-laws, the Exchange proposes to replace all references to ``CBSX'' with references to ``NSX Holdings.'' \77\ Specifically, Article III, section 3.2(c) of the Exchange A&R By-laws will be amended to eliminate any requirements relating to CBSX and will provide that no two or more directors of the Exchange may be partners, officers or directors of the same person or be affiliated with the same person (or affiliated with the same person), unless such affiliation is with a national securities exchange or NSX Holdings.\78\ In addition, the Exchange proposes to replace references to CBSX with references to NSX Holdings in section 10.2 of the Exchange A&R By-laws. The provision would provide that no members of the Holdings Board who are not also members of the Exchange Board, or any officers, staff, counsel or advisors of NSX Holdings who are not also officers, staff, counsel or advisors of the Exchange (or any committees of the Exchange), shall be allowed to participate in any meetings of the Exchange Board or any Exchange committee pertaining to the self-regulatory function of the Exchange, including disciplinary matters.\79\ The Exchange states that these amendments are intended to prevent any undue influence or any perception of undue influence over the Exchange's self-regulatory functions by NSX Holdings.\80\ --------------------------------------------------------------------------- \77\ See Notice, supra note 4, at 89. \78\ See Notice, supra note 4, at 89. \79\ See Notice, supra note 4, at 90. \80\ See Notice, supra note 4, at 90. --------------------------------------------------------------------------- In addition, the Exchange proposes to delete section 10.1(b) in the Exchange A&R By-laws, which requires that for so long as CBSX controls the Exchange, the Exchange shall promptly inform the CBSX board of directors, in writing, in the event that the Exchange has, or experiences, a deficiency related to its ability to carry out its obligations as a national securities exchange under the Act, including if the Exchange does not have or is not appropriately allocating such financial, technological, technical and personnel resources as may be necessary or appropriate for the Exchange to meet its obligations under the Act.\81\ According to the Exchange, upon the completion of the Transaction, such requirements will no longer apply because CBSX will have no ownership interest in the Exchange.\82\ --------------------------------------------------------------------------- \81\ See Notice, supra note 4, at 89. \82\ See Notice, supra note 4, at 89-90. --------------------------------------------------------------------------- Finally, the Exchange is proposing certain clarifying amendments, and other non-substantive conforming amendments to the Exchange A&R By- laws that are consistent with the changes described above.\83\ --------------------------------------------------------------------------- \83\ For a more detailed description of the non-substantive conforming amendments, see Notice, supra note 4, at 90 and Exhibit 5D to SR-NSX-2014-017. --------------------------------------------------------------------------- The Commission believes that the proposed changes to the organizational documents of the Exchange are consistent with the Act, and that they are intended to align the Exchange's governance and organizational structure with the proposed ownership by NSX Holdings. III. Conclusion For the foregoing reasons, 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. It is therefore ordered, pursuant to section 19(b)(2) of the Act \84\ that the proposed rule change (SR-NSX-2014-017), be, and hereby is, approved. --------------------------------------------------------------------------- \84\ 15 U.S.C. 78s(b)(2). For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.\85\ --------------------------------------------------------------------------- \85\ 17 CFR 200.30-3(a)(12). --------------------------------------------------------------------------- Jill M. Peterson, Assistant Secretary. [FR Doc. 2015-03515 Filed 2-19-15; 8:45 am] BILLING CODE 8011-01-P
![9286 Federal Register / Vol. 80, No. 34 / Friday, February 20, 2015 / Notices
investors and the public interest and are determination and the reasons for the of 1934 (‘‘Act’’),2 and Rule 19b–4
not designed to permit unfair denial. thereunder,3 a proposed rule change to
discrimination between customers, As described above, the proposal will make certain amendments to its
issuers, brokers, or dealers. also clarify in Nasdaq’s rules that a corporate governance documents in
The Commission notes that full and company may withdraw its application order to effectuate a proposed
fair disclosure of information by for initial listing at any time during the transaction (the ‘‘Transaction’’) in
companies is of critical importance to review process.13 The decision to seek which the Exchange will become a
financial markets and the investing listing and submit a listing application wholly-owned subsidiary of National
public. According to the Exchange, is generally a voluntary decision by a Stock Exchange Holdings, Inc., a
investors view a company’s decision to company. Consistent with this, it is our Delaware corporation (‘‘NSX
seek initial listing on the Exchange as a understanding that companies seeking Holdings’’). The proposed rule change
positive development, and companies listing on Nasdaq are allowed to was published for comment in the
often publicize their intention to apply withdraw their voluntary application at Federal Register on January 2, 2015.4
for listing. The listing of a company on any time during the process. The The Commission received no comments
a national securities exchange such as clarification in Nasdaq’s proposal on the proposal.
Nasdaq provides benefits including, codifies this concept in Nasdaq’s rules. The Commission has reviewed
among others, potential for increased The Commission also believes that for, carefully the proposed rule change and
stock liquidity and capital raising the same reasons noted above, finds that the proposed rule change is
benefits.10 However, there appears to be companies should consider any consistent with the requirements of the
no Exchange requirement for the applicable disclosure requirements Act and the rules and regulations
company to publicize when its listing under the federal securities laws if a thereunder applicable to a national
application has been denied and company withdraws its listing securities exchange.5 In particular, the
therefore that the company will not be application with Nasdaq for any reason. Commission finds that the proposed
receiving the benefits of an exchange rule change is consistent with sections
listing. IV. Conclusion
6(b)(1) and (3) of the Act,6 which,
The Commission believes that the It is therefore ordered pursuant to among other things, require a national
public, including potential future section 19(b)(2) of the Act,14 that the securities exchange to be so organized
investors, would find a denial of a proposed rule change (SR–NASDAQ– and have the capacity to be able to carry
company’s listing application, just as 2014–102) be, and it hereby is, out the purposes of the Act, and to
important as the decision to seek an approved. enforce compliance by its members and
exchange listing which, as noted by persons associated with its members
For the Commission, by the Division of
Nasdaq, is often publicized. The Trading and Markets, pursuant to delegated with the provisions of the Act, the rules
significance of a denial of listing is also authority.15 and regulations thereunder, and the
underscored by the existence of both the Jill M. Peterson, rules of the exchange, and assure the
right to appeal the denial on Nasdaq and fair representation of its members in the
Assistant Secretary.
the right to obtain Commission review selection of its directors and
[FR Doc. 2015–03518 Filed 2–19–15; 8:45 am]
of such appeals. Nasdaq rules provide, administration of its affairs, and provide
BILLING CODE 8011–01–P
as noted above, for due process to that one or more directors shall be
appeal a denial of listing.11 Denial of representative of issuers and investors
listings have also been subject to and not be associated with a member of
SECURITIES AND EXCHANGE
Commission review under section 19(d) the exchange, broker, or dealer. The
COMMISSION
of the Exchange Act.12 Commission also finds that the proposal
The Commission therefore believes is consistent with section 6(b)(5) of the
[Release No. 34–74270; File No. SR–NSX–
that the proposed rule change will help Act,7 which requires that the rules of the
2014–017]
provide transparency to future, as well
exchange be designed to promote just
as existing, investors about the status of Self-Regulatory Organizations; and equitable principles of trade, to
a company’s listing application. The National Stock Exchange, Inc.; Order remove impediments to and perfect the
Commission also believes that Nasdaq’s Granting Approval of Proposed Rule mechanism of a free and open market
proposal to require that such disclosure Change in Connection With a and a national market system, and, in
be made by press release, or other Proposed Transaction in Which general, to protect investors and the
Regulation FD compliant manner, will National Stock Exchange Holdings, public interest.
permit companies to disseminate this Inc. Will Acquire Ownership of the
important information to the public in Exchange From the CBOE Stock II. Discussion
a broad and inclusive manner and Exchange, LLC A. Corporate Structure and Proposed
should help to ensure for broad public
February 13, 2015.
Transaction
access to the denial of listing
I. Introduction Currently, the Exchange is a wholly-
10 Section 18 of the Securities Act of 1933 owned subsidiary of the CBOE Stock
(‘‘Securities Act’’) provides federal preemption of On December 16, 2014, National
state blue sky laws for securities listed on certain Stock Exchange, Inc. (‘‘NSX’’ or the 2 15
national securities exchanges. 15 U.S.C. 77r. See U.S.C. 78a.
also 17 CFR 230.146.
‘‘Exchange’’) filed with the Securities 3 17 CFR 240.19b–4.
TKELLEY on DSK3SPTVN1PROD with NOTICES
11 These appeal provisions have been adopted in and Exchange Commission 4 See Securities Exchange Act Release No. 73944
accordance with section 6(b)(7) of the Act. 15 U.S.C. (‘‘Commission’’), pursuant to section (December 24, 2014), 80 FR 85 (SR–NSX–2014–017)
78f(b)(7). 19(b)(1) 1 of the Securities Exchange Act (‘‘Notice’’).
12 Section 19(d) of the Act provides, among other 5 In approving the proposed rule change, the
things, for Commission review of any action self- Commission has considered its impact on
13 See Notice, supra note 3.
regulatory organization that, among other things, efficiency, competition and capital formation. See
14 15 U.S.C. 78s(b)(2). 15 U.S.C. 78c(f).
prohibits or limits any person in respect to access
15 17 CFR 200.30–3(a)(12). 6 15 U.S.C. 78f(b)(1) and (b)(3).
to service offered by such organization. See U.S.C.
78s(d). 1 15 U.S.C. 78s(b)(1). 7 15 U.S.C. 78f(b)(5).
VerDate Sep<11>2014 17:07 Feb 19, 2015 Jkt 235001 PO 00000 Frm 00027 Fmt 4703 Sfmt 4703 E:\FR\FM\20FEN1.SGM 20FEN1](https://thefederalregister.org/doc/80_FR_9320/page/1.svg)
![Federal Register / Vol. 80, No. 34 / Friday, February 20, 2015 / Notices 9291
governing body of the Exchange and 4. Changes to the Exchange have or is not appropriately allocating
possess all of the powers necessary for Organizational Documents such financial, technological, technical
the management of its business and In connection with the completion of and personnel resources as may be
affairs and the execution of its the Transaction, the Exchange proposes necessary or appropriate for the
responsibilities as an SRO. In particular, certain amendments in the Exchange Exchange to meet its obligations under
the Exchange A&R By-laws will A&R Certificate and the Exchange A&R the Act.81 According to the Exchange,
continue to provide that the Exchange By-laws. In particular, the Exchange upon the completion of the Transaction,
Board shall consist of no fewer than proposes to delete the language in such requirements will no longer apply
seven or more than 25 directors.69 In Paragraph Fourth of the Exchange A&R because CBSX will have no ownership
addition, the Exchange Board’s Certificate that provides that the interest in the Exchange.82
composition at all times shall include Exchange shall at all times be wholly Finally, the Exchange is proposing
the Chief Executive Officer of the owned by CBSX and replace that certain clarifying amendments, and
Exchange, at least 50% Non-Industry provision with one requiring that the other non-substantive conforming
Directors 70 (at least one of whom shall Exchange at all times be wholly owned amendments to the Exchange A&R By-
be an Independent Director 71) and such by NSX Holdings.76 laws that are consistent with the
number of ETP Holder Directors 72 as is In addition, with respect to the changes described above.83
necessary to comprise at least 20% of Exchange A&R By-laws, the Exchange The Commission believes that the
the Exchange Board.73 proposes to replace all references to proposed changes to the organizational
In connection with the Closing, the ‘‘CBSX’’ with references to ‘‘NSX documents of the Exchange are
steps to transition the membership on Holdings.’’ 77 Specifically, Article III, consistent with the Act, and that they
the Exchange Board from the current section 3.2(c) of the Exchange A&R By- are intended to align the Exchange’s
directors to the post-Closing directors laws will be amended to eliminate any governance and organizational structure
will conform to the requirements set requirements relating to CBSX and will with the proposed ownership by NSX
forth in Article III, section 3.7 of the provide that no two or more directors of Holdings.
Exchange A&R By-laws. Furthermore, the Exchange may be partners, officers
the Exchange A&R By-laws provides or directors of the same person or be III. Conclusion
that any vacancy occurring in a affiliated with the same person (or For the foregoing reasons, the
committee shall be filled by the affiliated with the same person), unless Commission finds that the proposed
Chairman of the Board for the remainder such affiliation is with a national rule change is consistent with the Act
of the term, with the approval of the securities exchange or NSX Holdings.78 and the rules and regulations
Exchange Board.74 Each committee shall In addition, the Exchange proposes to thereunder applicable to a national
be comprised of at least three people replace references to CBSX with securities exchange.
and may include persons who are not references to NSX Holdings in section It is therefore ordered, pursuant to
members of the Board; provided, 10.2 of the Exchange A&R By-laws. The section 19(b)(2) of the Act 84 that the
however, that such committee members provision would provide that no proposed rule change (SR–NSX–2014–
who are not also members of the Board members of the Holdings Board who are 017), be, and hereby is, approved.
shall only participate in committee not also members of the Exchange
For the Commission, by the Division of
actions to the extent permitted by law.75 Board, or any officers, staff, counsel or Trading and Markets, pursuant to delegated
The Commission finds that these advisors of NSX Holdings who are not authority.85
provisions are consistent with the Act, also officers, staff, counsel or advisors of Jill M. Peterson,
and that they are intended to assist the the Exchange (or any committees of the
Assistant Secretary.
Exchange in fulfilling its self-regulatory Exchange), shall be allowed to
[FR Doc. 2015–03515 Filed 2–19–15; 8:45 am]
obligations and in administering and participate in any meetings of the
complying with the requirements of the Exchange Board or any Exchange BILLING CODE 8011–01–P
Act. committee pertaining to the self-
regulatory function of the Exchange,
69 See Exchange A&R By-laws, Article III, section including disciplinary matters.79 The SECURITIES AND EXCHANGE
3.2(a). Exchange states that these amendments COMMISSION
70 The term ‘‘Non-Industry Director’’ is defined in
are intended to prevent any undue
Article I, section 1.1, para. N of the Exchange A&R
influence or any perception of undue [Release No. 34–74272; File No. SR–Phlx–
By-laws as ‘‘a member of the [NSX] Board who is
(i) an Independent Director; or (ii) any other influence over the Exchange’s self- 2015–15]
individual who would not be an Industry Director.’’ regulatory functions by NSX Holdings.80
71 The term ‘‘Independent Director’’ is defined in
In addition, the Exchange proposes to Self-Regulatory Organizations;
Article I, section 1.1, para. I of the Exchange A&R delete section 10.1(b) in the Exchange NASDAQ OMX PHLX LLC; Notice of
By-laws as ‘‘a member of the [NSX] Board that the Filing and Immediate Effectiveness of
[NSX] Board has determined to have no material A&R By-laws, which requires that for so
relationship with the Exchange or any affiliate of long as CBSX controls the Exchange, the Proposed Rule Change Relating to
the Exchange, or any ETP Holder or any affiliate of Exchange shall promptly inform the Remote Streaming Quote Traders
any such ETP Holder, other than as a member of CBSX board of directors, in writing, in
the Board.’’ February 13, 2015.
the event that the Exchange has, or
72 The term ‘‘ETP Holder Director’’ is defined in Pursuant to section 19(b)(1) of the
Article I, section 1.1, para. E(2) of the Exchange experiences, a deficiency related to its
Securities Exchange Act of 1934 (the
A&R By-laws as ‘‘a director who is an ETP Holder ability to carry out its obligations as a
TKELLEY on DSK3SPTVN1PROD with NOTICES
or a director, officer, managing member or partner national securities exchange under the 81 See Notice, supra note 4, at 89.
of an entity that is, or is an affiliate of, an ETP
Holder.’’
Act, including if the Exchange does not 82 See Notice, supra note 4, at 89–90.
73 See Exchange A&R By-laws, Article III, section 83 For a more detailed description of the non-
76 See Notice, supra note 4, at 89.
3.2(b). substantive conforming amendments, see Notice,
77 See Notice, supra note 4, at 89.
74 See Exchange A&R By-laws, Article V, section supra note 4, at 90 and Exhibit 5D to SR–NSX–
78 See Notice, supra note 4, at 89. 2014–017.
5.2.
75 See Exchange A&R By-laws, Article V, section 79 See Notice, supra note 4, at 90. 84 15 U.S.C. 78s(b)(2).
5.2. 80 See Notice, supra note 4, at 90. 85 17 CFR 200.30–3(a)(12).
VerDate Sep<11>2014 17:07 Feb 19, 2015 Jkt 235001 PO 00000 Frm 00032 Fmt 4703 Sfmt 4703 E:\FR\FM\20FEN1.SGM 20FEN1](https://thefederalregister.org/doc/80_FR_9320/page/6.svg)
Document Created: 2015-12-18 13:02:00
Document Modified: 2015-12-18 13:02:00
| 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 | |
| Action | (1) The proposed Second Amended and Restated Certificate of Incorporation of NSX Holdings (the ``NSX Holdings A&R Certificate''); (2) the proposed By-laws of NSX Holdings (the ``NSX Holdings By-laws''); (3) the proposed Second Amended and Restated Certificate of Incorporation of NSX (the ``Exchange A&R Certificate''); and (4) the proposed Third Amended and Restated NSX By- laws (the ``Exchange A&R By-laws''). 1. NSX Holdings Ownership and Voting Limitations | |
| FR Citation | 80 FR 9286 |
2024 Federal Register | Disclaimer | Privacy Policy
USC | CFR | eCFR