82 FR 20506 - Self-Regulatory Organizations; Bats BZX Exchange, Inc.; Order Granting Approval of a Proposed Rule Change, as Modified by Amendment Nos. 3 and 5, To List and Trade Shares of the Amplify YieldShares Oil Hedged MLP Fund, a Series of the Amplify ETF Trust, Under BZX Rule 14.11(i), Managed Fund Shares
SECURITIES AND EXCHANGE COMMISSION Federal Register Volume 82, Issue 83 (May 2, 2017)
Federal Register Volume 82, Issue 83 (May 2, 2017)
| Page Range | 20506-20508 | |
| FR Document | 2017-08812 |
[Federal Register Volume 82, Number 83 (Tuesday, May 2, 2017)] [Notices] [Pages 20506-20508] From the Federal Register Online [www.thefederalregister.org] [FR Doc No: 2017-08812] ----------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION [Release No. 34-80529; File No. SR-BatsBZX-2017-14] Self-Regulatory Organizations; Bats BZX Exchange, Inc.; Order Granting Approval of a Proposed Rule Change, as Modified by Amendment Nos. 3 and 5, To List and Trade Shares of the Amplify YieldShares Oil Hedged MLP Fund, a Series of the Amplify ETF Trust, Under BZX Rule 14.11(i), Managed Fund Shares April 26, 2017. I. Introduction On February 17, 2017, Bats BZX Exchange, Inc. (``Exchange'' or ``BZX'') filed with the Securities and Exchange Commission (``Commission''), pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (``Act'' or ``Exchange Act'') \1\ and Rule 19b-4 thereunder,\2\ a proposed rule change to list and trade shares (``Shares'') of the Amplify YieldShares Oil Hedged MLP Fund (``Fund''), a series of the Amplify ETF Trust (``Trust''). The proposed rule change was published for comment in the Federal Register on March 7, 2017.\3\ On March 30, 2017, the Exchange filed Amendment No. 2 to the proposed rule change.\4\ On April 7, 2017, the Exchange filed Amendment No. 3 to the proposed rule change,\5\ and on April 24, 2017, the Exchange filed Amendment No. 5 to the proposed rule change.\6\ The Commission received no comments on the proposed rule change. This order approves the proposed rule change, as modified by Amendment Nos. 3 and 5. --------------------------------------------------------------------------- \1\ 15 U.S.C. 78s(b)(1). \2\ 17 CFR 240.19b-4. \3\ See Securities Exchange Act Release No. 34-80136 (March 1, 2017), 82 FR 12860. \4\ The Exchange filed and withdrew Amendment No. 1 on March 30, 2017. Amendment No. 2 replaced the original filing in its entirety. \5\ In Amendment No. 3, which amended and replaced the proposed rule change, as modified by Amendment No. 2, in its entirety, the Exchange: (a) Added representations clarifying that the proposed rule change will constitute continued listing requirements for listing Shares on the Exchange; (b) added representations that the Fund will conform with certain requirements applicable to Managed Fund Shares; and (c) made other technical and clarifying amendments. Because Amendment No. 3 does not materially alter the substance of the proposed rule change or raise unique or novel regulatory issues, it is not subject to notice and comment. Amendment No. 3 is available at https://www.sec.gov/comments/sr-batsbzx-2017-14/batsbzx201714-1692102-149689.pdf. \6\ The Exchange filed Amendment No. 4 on April 19, 2017, and withdrew it on April 24, 2017. In Amendment No. 5, the Exchange: (1) Clarified how the composition of the Fund's holdings would be calculated; and (2) provided additional detail regarding the historical average daily contract volume for WTI Crude Oil Futures (as defined below). Because Amendment No. 5 does not materially alter the substance of the proposed rule change or raise unique or novel regulatory issues, it is not subject to notice and comment. Amendment No. 5 is available at https://www.sec.gov/comments/sr-batsbzx-2017-14/batsbzx201714-1719288-150433.pdf. --------------------------------------------------------------------------- II. Exchange's Description of the Proposal The Exchange proposes to list and trade the Shares under BZX Rule 14.11(i), which governs the listing and trading of Managed Fund Shares on the Exchange. The Shares will be offered by the Trust, which is registered with the Commission as an investment company and has filed a Registration Statement on Form N-1A with the Commission.\7\ --------------------------------------------------------------------------- \7\ See Post-Effective Amendment No. 27 to Registration Statement on Form N-1A for the Trust, dated January 6, 2017 (File Nos. 333-207937 and 811-23108). --------------------------------------------------------------------------- The Exchange states that the Fund will invest in equity securities of energy master limited partnerships (``MLPs'') and selectively hedge its positions to limit the correlation of its performance to the price of West Texas Intermediate Crude Oil (``WTI Crude Oil''). WTI Crude Oil, also known as Texas light sweet, is a grade of crude oil used as a benchmark in oil futures contracts pricing. According to the Exchange, the Fund will seek to exceed the performance of the Oil Hedged MLP Index (``Benchmark'') \8\ by actively selecting its investments from the underlying components of the Benchmark. The Exchange represents that the Fund is not an index tracking exchange-traded fund and is not required to invest in all of the components of the Benchmark. However, the Exchange states that generally, the Fund will seek to hold similar instruments to those in the Benchmark and will therefore invest in MLPs and short exposure oil futures contracts included in the Benchmark. --------------------------------------------------------------------------- \8\ The Benchmark is developed, maintained, and sponsored by ETP Ventures LLC. --------------------------------------------------------------------------- The Exchange represents that it submitted the proposal in order to allow the Fund to hold listed derivatives, specifically WTI Crude Oil futures traded on the New York Mercantile Exchange and ICE Futures Europe (``WTI Crude Oil Futures''), in a manner that would exceed the limitations of BZX Rule 14.11(i)(4)(C)(iv)(b), which prevents, among other things, a series of Managed Fund Shares from holding listed derivatives based on any single underlying reference asset in excess of 30 percent of the weight of its portfolio (including gross notional exposures) (``30% Limitation'').\9\ Namely, the [[Page 20507]] Exchange proposes to allow the Fund to hold up to 50 percent of the weight of its portfolio (including gross notional exposures) in WTI Crude Oil Futures. Notwithstanding this, the Exchange also states that, in order to achieve its investment objective, under Normal Market Conditions,\10\ the Fund will invest at least 80 percent of its total assets in equity securities of MLPs and up to 20 percent of its total assets in fixed income securities, cash, and the cash value \11\ of futures positions.\12\ The Exchange notes that this is different than the calculation used to measure the Fund's holdings in WTI Crude Oil Futures as it relates to the Fund holding up to 50 percent of the weight of its portfolio, which includes gross notional exposures gained through the WTI Crude Oil Futures in both the numerator and denominator, which is consistent with the derivatives exposure calculation under BZX Rule 14.11(i)(4)(C)(iv). --------------------------------------------------------------------------- \9\ BZX Rule 14.11(i)(4)(C)(iv)(b) requires that the aggregate gross notional value of listed derivatives based on any five or fewer underlying reference assets to not exceed 65% of the weight of the portfolio (including gross notional exposures), and the aggregate gross notional value of listed derivatives based on any single underlying reference asset to not exceed 30% of the weight of the portfolio (including gross notional exposures). The Exchange states that the proposal is to allow the Fund to exceed the specific requirement of BZX Rule 14.11(i)(4)(C)(iv)(b) that prevents the aggregate gross notional value of listed derivatives based on any single underlying reference asset from exceeding 30% of the weight of the portfolio (including gross notional exposures). According to the Exchange, the Fund will meet the other requirement of BZX Rule 14.11(i)(4)(C)(iv)(b). \10\ As defined in BZX Rule 14.11(i)(3)(E), the term ``Normal Market Conditions'' includes, but is not limited to, the absence of trading halts in the applicable financial markets generally; operational issues causing dissemination of inaccurate market information or system failures; or force majeure type events, such as natural or man-made disaster, act of God, armed conflict, act of terrorism, riot or labor disruption, or any similar intervening circumstance. \11\ The Exchange states that the cash value of futures positions is based on the value of the Fund's daily margin account with the applicable futures exchange(s). \12\ The Exchange states that the combination of MLPs, fixed income securities, cash, and the cash value of futures positions will constitute the entirety of the Fund's holdings. --------------------------------------------------------------------------- According to the Exchange, allowing the Fund to hold a greater portion of its portfolio in WTI Crude Oil Futures than would be permitted under the 30% Limitation would reduce the Fund's operational burden, mitigate the Fund's dependency on holding over-the-counter (``OTC'') instruments, and reduce counter-party risk associated with holding OTC instruments. The Exchange notes that the Fund may also hold certain fixed income securities and cash and cash equivalents in compliance with BZX Rules 14.11(i)(4)(C)(ii) and (iii) in order to collateralize its derivatives positions. The Exchange represents that, except for the 30% Limitation, the Fund's proposed investments will satisfy, on an initial and continued listing basis, all of the generic listing standards under BZX Rule 14.11(i)(4)(C) and all other applicable requirements for Managed Fund Shares under BZX Rule 14.11(i). III. Discussion and Commission Findings After careful review, the Commission finds that the Exchange's proposal to list and trade the Shares, as modified by Amendment Nos. 3 and 5, is consistent with the Exchange Act and the rules and regulations thereunder applicable to a national securities exchange.\13\ In particular, the Commission finds that the proposed rule change is consistent with Section 6(b)(5) of the Exchange Act,\14\ which requires, among other things, that the Exchange's rules be designed to prevent fraudulent and manipulative acts and practices, to promote just and equitable principles of trade, to remove impediments to and perfect the mechanism of a free and open market and a national market system, and, in general, to protect investors and the public interest. --------------------------------------------------------------------------- \13\ In approving this proposed rule change, the Commission has considered the proposed rule's impact on efficiency, competition, and capital formation. See 15 U.S.C. 78c(f). \14\ 15 U.S.C. 78f(b)(5). --------------------------------------------------------------------------- The Commission notes that, according to the Exchange, the Shares will meet each of the initial and continued listing criteria in BZX Rule 14.11(i), with the exception of the 30% Limitation. According to the Exchange, the liquidity in the WTI Crude Oil Futures mitigates the concerns that Rule 14.11(i)(4)(C)(iv)(b) is intended to address and that such liquidity would prevent the Shares from being susceptible to manipulation.\15\ In addition, the Exchange represents that its surveillance procedures are adequate to properly monitor the trading of the Shares on the Exchange during all trading sessions and to deter and detect violations of Exchange rules and the applicable federal securities laws. The Exchange further represents that all of the futures contracts held by the Fund will trade on markets that are members of the Intermarket Surveillance Group (``ISG'') or affiliated with a member of ISG or with which the Exchange has in place a comprehensive surveillance sharing agreement. Moreover, the Exchange represents that it may obtain information regarding trading in the Shares and the underlying futures contracts held by the Fund via the ISG from other exchanges who are members or affiliates of the ISG or with which the Exchange has entered into a comprehensive surveillance sharing agreement.\16\ --------------------------------------------------------------------------- \15\ According to the Exchange, as of January 31, 2017, the average daily contract volume combined on the New York Mercantile Exchange and ICE Futures Europe over the last year was 558,353, 307,289, and 110,208, respectively, for the front, second, and third month WTI Crude Oil Futures contracts. At today's price levels, that equates to an average daily traded notional of approximately $29.4 billion, $16.2 billion, and $5.8 billion for the first, second, and third month contracts, respectively. \16\ For a list of the current members and affiliate members of ISG, see www.isgportal.com. The Exchange notes that not all components of the Disclosed Portfolio for the Fund may trade on markets that are members of ISG or with which the Exchange has in place a comprehensive surveillance sharing agreement. --------------------------------------------------------------------------- The Exchange states that the Trust is required to comply with Rule 10A-3 under the Act for the initial and continued listing of the Shares of the Fund. The Exchange further represents that the Shares of the Fund will comply with all other requirements applicable to Managed Fund Shares including, but not limited to, requirements relating to the dissemination of key information such as the Disclosed Portfolio,\17\ net asset value, and the Intraday Indicative Value,\18\ and rules governing the trading of equity securities, trading hours, trading halts, surveillance, and the information circular, as set forth in Exchange rules applicable to Managed Fund Shares and the orders approving such rules. --------------------------------------------------------------------------- \17\ See BZX Rule 14.11(i)(4)(B)(ii). \18\ See BZX Rule 14.11(i)(4)(B)(i). --------------------------------------------------------------------------- The Exchange represents that all statements and representations made in the filing regarding (a) the description of the portfolio, (b) limitations on portfolio holdings or reference assets, or (c) the applicability of Exchange rules shall constitute continued listing requirements for listing the Shares on the Exchange. The issuer has represented to the Exchange that it will advise the Exchange of any failure by the Fund or the Shares to comply with the continued listing requirements, and, pursuant to its obligations under Section 19(g)(1) of the Act, the Exchange will surveil for compliance with the continued listing requirements. If the Fund or the Shares are not in compliance with the applicable listing requirements, the Exchange will commence delisting procedures under BZX Rule 14.12. This approval order is based on all of the Exchange's representations and description of the Fund, including those set forth above and in Amendment Nos. 3 and 5 to the proposed rule change. [[Page 20508]] The Commission notes that the Shares must comply with the requirements of BZX Rule 14.11(i), other than the 30% Limitation, to be listed and traded on the Exchange on an initial and continuing basis. For the foregoing reasons, the Commission finds that the proposed rule change, as modified by Amendment Nos. 3 and 5, is consistent with Section 6(b)(5) of the Exchange Act \19\ and the rules and regulations thereunder applicable to a national securities exchange. --------------------------------------------------------------------------- \19\ 15 U.S.C. 78f(b)(5). --------------------------------------------------------------------------- IV. Conclusion It is therefore ordered, pursuant to Section 19(b)(2) of the Exchange Act,\20\ that the proposed rule change (SR-BatsBZX-2017-14), as modified by Amendment Nos. 3 and 5, be, and it hereby is, approved. --------------------------------------------------------------------------- \20\ 15 U.S.C. 78s(b)(2). For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.\21\ --------------------------------------------------------------------------- \21\ 17 CFR 200.30-3(a)(12). --------------------------------------------------------------------------- Eduardo A. Aleman, Assistant Secretary. [FR Doc. 2017-08812 Filed 5-1-17; 8:45 am] BILLING CODE 8011-01-P
![20506 Federal Register / Vol. 82, No. 83 / Tuesday, May 2, 2017 / Notices
other things, are clear and transparent SECURITIES AND EXCHANGE received no comments on the proposed
and specify clear and direct lines of COMMISSION rule change. This order approves the
responsibility. According to OCC, the proposed rule change, as modified by
[Release No. 34–80529; File No. SR–
proposed amendments to OCC’s By- BatsBZX–2017–14]
Amendment Nos. 3 and 5.
Laws, Rules, charters and policies will II. Exchange’s Description of the
provide clear and transparent Self-Regulatory Organizations; Bats Proposal
statements of the responsibilities of its BZX Exchange, Inc.; Order Granting
Executive Chairman/CEO, COO and Approval of a Proposed Rule Change, The Exchange proposes to list and
as Modified by Amendment Nos. 3 and trade the Shares under BZX Rule
CAO within the overall management
5, To List and Trade Shares of the 14.11(i), which governs the listing and
structure of OCC. In addition, the
Amplify YieldShares Oil Hedged MLP trading of Managed Fund Shares on the
proposed amendments support clarity
Fund, a Series of the Amplify ETF Exchange. The Shares will be offered by
and transparency by reflecting in OCC’s the Trust, which is registered with the
By-Laws and Rules organizational Trust, Under BZX Rule 14.11(i),
Managed Fund Shares Commission as an investment company
changes to provide that the President and has filed a Registration Statement
will no longer be a recognized officer of April 26, 2017. on Form N–1A with the Commission.7
OCC, to provide that the Board will The Exchange states that the Fund
appoint the COO and CAO, and to I. Introduction
will invest in equity securities of energy
separate the positions of Treasurer and On February 17, 2017, Bats BZX master limited partnerships (‘‘MLPs’’)
CFO. Finally, the proposed changes, in Exchange, Inc. (‘‘Exchange’’ or ‘‘BZX’’) and selectively hedge its positions to
specifying the responsibilities of the filed with the Securities and Exchange limit the correlation of its performance
Chairman/CEO, COO and CAO, support Commission (‘‘Commission’’), pursuant to the price of West Texas Intermediate
the requirement that OCC provide for to Section 19(b)(1) of the Securities Crude Oil (‘‘WTI Crude Oil’’). WTI
governance arrangements that specify Exchange Act of 1934 (‘‘Act’’ or Crude Oil, also known as Texas light
clear and direct lines of responsibility, ‘‘Exchange Act’’) 1 and Rule 19b–4 sweet, is a grade of crude oil used as a
helping to clarify the roles that each thereunder,2 a proposed rule change to benchmark in oil futures contracts
individual will fulfill and fostering list and trade shares (‘‘Shares’’) of the pricing. According to the Exchange, the
Amplify YieldShares Oil Hedged MLP Fund will seek to exceed the
accountability at OCC.
Fund (‘‘Fund’’), a series of the Amplify performance of the Oil Hedged MLP
III. Conclusion ETF Trust (‘‘Trust’’). The proposed rule Index (‘‘Benchmark’’) 8 by actively
change was published for comment in selecting its investments from the
On the basis of the foregoing, the the Federal Register on March 7, 2017.3 underlying components of the
Commission finds that the proposed On March 30, 2017, the Exchange filed Benchmark. The Exchange represents
change is consistent with the Amendment No. 2 to the proposed rule that the Fund is not an index tracking
requirements of the Act, and in change.4 On April 7, 2017, the Exchange exchange-traded fund and is not
particular, with the requirements of filed Amendment No. 3 to the proposed required to invest in all of the
Section 17A of the Act 21 and the rules rule change,5 and on April 24, 2017, the components of the Benchmark.
and regulations thereunder. Exchange filed Amendment No. 5 to the However, the Exchange states that
It is therefore ordered, pursuant to proposed rule change.6 The Commission generally, the Fund will seek to hold
Section 19(b)(2) of the Exchange Act,22 similar instruments to those in the
1 15 U.S.C. 78s(b)(1).
that the proposed rule change (SR– 2 17
Benchmark and will therefore invest in
CFR 240.19b–4.
OCC–2017–002) be, and it hereby is, 3 See Securities Exchange Act Release No. 34–
MLPs and short exposure oil futures
approved. 80136 (March 1, 2017), 82 FR 12860. contracts included in the Benchmark.
4 The Exchange filed and withdrew Amendment The Exchange represents that it
For the Commission, by the Division of No. 1 on March 30, 2017. Amendment No. 2 submitted the proposal in order to allow
Trading and Markets, pursuant to delegated replaced the original filing in its entirety. the Fund to hold listed derivatives,
authority.23 5 In Amendment No. 3, which amended and
specifically WTI Crude Oil futures
Eduardo A. Aleman, replaced the proposed rule change, as modified by
Amendment No. 2, in its entirety, the Exchange: (a) traded on the New York Mercantile
Assistant Secretary. Added representations clarifying that the proposed Exchange and ICE Futures Europe
[FR Doc. 2017–08814 Filed 5–1–17; 8:45 am] rule change will constitute continued listing (‘‘WTI Crude Oil Futures’’), in a manner
requirements for listing Shares on the Exchange; (b) that would exceed the limitations of
BILLING CODE 8011–01–P added representations that the Fund will conform
with certain requirements applicable to Managed BZX Rule 14.11(i)(4)(C)(iv)(b), which
Fund Shares; and (c) made other technical and prevents, among other things, a series of
clarifying amendments. Because Amendment No. 3 Managed Fund Shares from holding
does not materially alter the substance of the listed derivatives based on any single
proposed rule change or raise unique or novel
regulatory issues, it is not subject to notice and underlying reference asset in excess of
comment. Amendment No. 3 is available at https:// 30 percent of the weight of its portfolio
www.sec.gov/comments/sr-batsbzx-2017-14/ (including gross notional exposures)
batsbzx201714-1692102-149689.pdf. (‘‘30% Limitation’’).9 Namely, the
6 The Exchange filed Amendment No. 4 on April
19, 2017, and withdrew it on April 24, 2017. In
Amendment No. 5, the Exchange: (1) Clarified how www.sec.gov/comments/sr-batsbzx-2017-14/
sradovich on DSK3GMQ082PROD with NOTICES
the composition of the Fund’s holdings would be batsbzx201714-1719288-150433.pdf.
7 See Post-Effective Amendment No. 27 to
calculated; and (2) provided additional detail
21 In approving this proposed rule change, the regarding the historical average daily contract Registration Statement on Form N–1A for the Trust,
volume for WTI Crude Oil Futures (as defined dated January 6, 2017 (File Nos. 333–207937 and
Commission has considered the proposed rule’s 811–23108).
below). Because Amendment No. 5 does not
impact on efficiency, competition, and capital 8 The Benchmark is developed, maintained, and
materially alter the substance of the proposed rule
formation. See 15 U.S.C. 78c(f). sponsored by ETP Ventures LLC.
change or raise unique or novel regulatory issues,
22 15 U.S.C. 78s(b)(2).
it is not subject to notice and comment. 9 BZX Rule 14.11(i)(4)(C)(iv)(b) requires that the
23 17 CFR 200.30–3(a)(12). Amendment No. 5 is available at https:// aggregate gross notional value of listed derivatives
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![20508 Federal Register / Vol. 82, No. 83 / Tuesday, May 2, 2017 / Notices
The Commission notes that the Shares I. Self-Regulatory Organization’s membership rosters, and listings,
must comply with the requirements of Statement of the Terms of Substance of distinct from the rules, membership
BZX Rule 14.11(i), other than the 30% the Proposed Rule Change rosters, and listings of the Nasdaq
Limitation, to be listed and traded on The Exchange proposes to a rule Exchanges as well as from ISE Gemini
the Exchange on an initial and change (the ‘‘Proposed Rule Change’’) in and ISE Mercury. The Exchange now
continuing basis. connection with the proposed merger proposes to harmonize the corporate
governance framework of the Exchange
For the foregoing reasons, the (the ‘‘Merger’’) with a newly-formed
with that of the Nasdaq Exchanges, and
Commission finds that the proposed Delaware limited liability company
submits this Proposed Rule Change to
rule change, as modified by Amendment under the Exchange’s ultimate parent,
seek the Commission’s approval of
Nos. 3 and 5, is consistent with Section Nasdaq, Inc., resulting in the Exchange
various changes to the Exchange’s
6(b)(5) of the Exchange Act 19 and the as the surviving entity. Following the
organizational documents and Rules
rules and regulations thereunder Merger, the Exchange’s board and
that are necessary in connection with
applicable to a national securities committee structure, and all related
the Merger, as described below.
exchange. corporate governance processes, will be The proposed changes consist of: (1)
harmonized with that of the three other Deleting the Exchange’s current Third
IV. Conclusion registered national securities exchanges Amended and Restated Limited
and self-regulatory organizations owned Liability Company Agreement (the
It is therefore ordered, pursuant to
by Nasdaq, Inc., namely: The NASDAQ ‘‘Current LLC Agreement’’) in its
Section 19(b)(2) of the Exchange Act,20
Stock Market LLC (‘‘NSM’’), NASDAQ entirety and replacing it with a new
that the proposed rule change (SR- PHLX LLC (‘‘Phlx’’), and NASDAQ BX,
BatsBZX–2017–14), as modified by limited liability company agreement
Inc. (‘‘BX’’ and together with NSM and (the ‘‘LLC Agreement’’) that is based on
Amendment Nos. 3 and 5, be, and it Phlx, the ‘‘Nasdaq Exchanges’’).
hereby is, approved. the limited liability company agreement
The text of the proposed rule change of NSM, (2) deleting the Exchange’s
For the Commission, by the Division of is available on the Exchange’s Web site current Second Amended and Restated
Trading and Markets, pursuant to delegated at www.ise.com, at the principal office Constitution (‘‘Current Constitution’’
authority.21 of the Exchange, and at the and together with the Current LLC
Eduardo A. Aleman, Commission’s Public Reference Room. Agreement, the ‘‘Current Governing
Assistant Secretary. II. Self-Regulatory Organization’s Documents’’) in its entirety and
[FR Doc. 2017–08812 Filed 5–1–17; 8:45 am] Statement of the Purpose of, and replacing it with a new set of by-laws
BILLING CODE 8011–01–P Statutory Basis for, the Proposed Rule (the ‘‘Bylaws’’ and together with the
Change LLC Agreement, the ‘‘New Governing
Documents’’) that is based on the by-
In its filing with the Commission, the laws of NSM, and (3) amending certain
SECURITIES AND EXCHANGE Exchange included statements
COMMISSION rules to reflect the changes to its
concerning the purpose of and basis for constituent documents through the
the proposed rule change and discussed adoption of the New Governing
[Release No. 34–80530; File No. SR–ISE– any comments it received on the Documents to replace the Current
2017–32] proposed rule change. The text of these Governing Documents.4
statements may be examined at the All of the proposed changes are
Self-Regulatory Organizations; Nasdaq places specified in Item IV below. The designed to align the Exchange’s
ISE, LLC; Notice of Filing of Proposed Exchange has prepared summaries, set corporate governance framework to the
Rule Change To Harmonize the forth in sections A, B, and C below, of existing structure at the Nasdaq
Corporate Governance Framework the most significant aspects of such Exchanges, particularly as it relates to
With That of the NASDAQ Stock Market statements. board and committee structure,
LLC, NASDAQ PHLX LLC, and nomination and election processes, and
NASDAQ BX, Inc. A. Self-Regulatory Organization’s
Statement of the Purpose of, and related governance practices.5 The
April 26, 2017. Statutory Basis for, the Proposed Rule Exchange is not proposing any
Change amendments to its ownership structure
Pursuant to Section 19(b)(1) of the and International Securities Exchange
Securities Exchange Act of 1934 (the 1. Purpose Holdings, Inc. (‘‘ISE Holdings’’) will
‘‘Act’’),1 and Rule 19b–4 thereunder,2 The Exchange was recently acquired remain as the Exchange’s sole limited
notice is hereby given that on April 11, by Nasdaq, Inc. (‘‘HoldCo’’).3 Following liability company member (‘‘Sole LLC
2017, Nasdaq ISE, LLC (‘‘ISE’’ or the acquisition, the Exchange has Member’’) and owner of 100% of the
‘‘Exchange’’) filed with the Securities continued to operate as a separate self- Exchange’s limited liability company
and Exchange Commission (‘‘SEC’’ or regulatory organization (‘‘SRO’’) and
‘‘Commission’’) the proposed rule continues to have separate rules,
4 The Exchange’s affiliates, ISE Gemini and ISE
Mercury, will submit nearly identical proposed rule
change as described in Items I, II, and changes.
III below, which Items have been 3 On June 30, 2016, HoldCo acquired all of the 5 The new LLC Agreement and Bylaws are based
prepared by the Exchange. The capital stock of U.S. Exchange Holdings, Inc., the in form and substance on The NASDAQ Stock
Commission is publishing this notice to Exchange’s indirect parent company (the Market LLC’s Second Amended Limited Liability
‘‘Acquisition’’). As a result, the Exchange, in
sradovich on DSK3GMQ082PROD with NOTICES
Company Agreement (the ‘‘NSM LLC Agreement’’)
solicit comments on the proposed rule addition to its affiliates Nasdaq GEMX, LLC (‘‘ISE and By-Laws (the ‘‘NSM Bylaws’’). Additionally,
change from interested persons. Gemini’’) and Nasdaq MRX, LLC (‘‘ISE Mercury’’), the majority of provisions in the organizational
became a wholly-owned subsidiary of HoldCo, and documents of Phlx and BX were also based on those
19 15 also became an affiliate of NSM, Phlx, and BX of NSM with differences that relate mainly to
U.S.C. 78f(b)(5).
20 15
through common, ultimate ownership by HoldCo. disciplinary processes (for Phlx) or to corporate
U.S.C. 78s(b)(2). HoldCo is the ultimate parent of the Exchange. See structure (for BX). Notwithstanding, the vast
21 17 CFR 200.30–3(a)(12).
Securities Exchange Act Release No. 78119 (June majority of the new governance framework and
1 15 U.S.C. 78s(b)(1).
21, 2016), 81 FR 41611 (June 27, 2016) (SR–ISE– processes proposed herein are materially identical
2 17 CFR 240.19b–4. 2016–11). to those of all three Nasdaq Exchanges.
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Document Created: 2017-05-02 00:04:36
Document Modified: 2017-05-02 00:04:36
| 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 | 82 FR 20506 |
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