82 FR 9251 - Self-Regulatory Organizations; New York Stock Exchange LLC; NYSE Arca, Inc.; NYSE MKT LLC; Order Approving Proposed Rule Changes, Each as Modified by Amendment No. 1 Thereto, in Connection With the Proposed Acquisition of National Stock Exchange, Inc. by the NYSE Group, Inc.
SECURITIES AND EXCHANGE COMMISSION Federal Register Volume 82, Issue 22 (February 3, 2017)
Federal Register Volume 82, Issue 22 (February 3, 2017)
| Page Range | 9251-9256 | |
| FR Document | 2017-02262 |
[Federal Register Volume 82, Number 22 (Friday, February 3, 2017)] [Notices] [Pages 9251-9256] From the Federal Register Online [www.thefederalregister.org] [FR Doc No: 2017-02262] ----------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION [Release No. 34-79901; File Nos. SR-NYSE-2016-90; SR-NYSEArca-2016-167; SR-NYSEMKT-2016-122] Self-Regulatory Organizations; New York Stock Exchange LLC; NYSE Arca, Inc.; NYSE MKT LLC; Order Approving Proposed Rule Changes, Each as Modified by Amendment No. 1 Thereto, in Connection With the Proposed Acquisition of National Stock Exchange, Inc. by the NYSE Group, Inc. January 30, 2017. I. Introduction On December 16, 2016, the New York Stock Exchange LLC (``NYSE''), NYSE Arca, Inc. (``NYSE Arca''), and NYSE MKT LLC (``NYSE MKT'') (collectively, the ``Exchanges'') filed with the Securities and Exchange Commission (``Commission''), pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (``Exchange Act''),\1\ and Rule 19b-4 thereunder,\2\ proposed rule changes in connection with the acquisition of National Stock Exchange, Inc. (``NSX'') by the Exchanges' parent company, the NYSE Group, Inc. (``NYSE Group''). The proposed rule changes were published for comment in the Federal Register on December 28, 2016.\3\ On January 23, 2017, the Exchanges each filed Amendment No. 1 to their respective proposed rule changes.\4\ The Commission received no comment letters on the proposed rule changes. This order approves the proposed rule changes. --------------------------------------------------------------------------- \1\ 15 U.S.C. 78s(b)(1). \2\ 17 CFR 240.19b-4. \3\ See Securities Exchange Act Release Nos. 79671 (December 22, 2016), 81 FR 96128 (``NYSE Notice''); 79678 (December 22, 2016), 81 FR 96102 (May 16, 2016) (``NYSE Arca Notice''); and 79675 (December 22, 2016), 81 FR 96128 (May 16, 2016) (``NYSE MKT Notice''). \4\ In Amendment No. 1, the Exchanges updated an incorrect reference in the proposed amendment to the Sixth Amended and Restated Bylaws of the Intercontinental Exchange, Inc. Amendment No. 1 was technical in nature and therefore does not need to be published for comment. See letters from Martha Redding, Associate General Counsel, Assistant Secretary, NYSE, to Brent J. Fields, Secretary, Commission, dated January 23, 2017. --------------------------------------------------------------------------- The Commission has reviewed carefully the proposed rule changes and finds that the proposed rule changes are consistent with the requirements of the [[Page 9252]] Act and the rules and regulations thereunder applicable to a national securities exchange.\5\ In particular, the Commission finds that the proposed rule changes are 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 proposals are consistent with Section 6(b)(5) of the Act,\7\ which requires that the rules of an 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 changes, the Commission has considered their 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. Background Currently, the Exchanges are wholly owned subsidiaries of NYSE Group. NYSE Group, in turn, is a wholly owned subsidiary of NYSE Holdings LLC (``NYSE Holdings''), which is wholly owned by Intercontinental Exchange Holdings, Inc. (``ICE Holdings'').\8\ On December 14, 2016, ICE entered into an agreement with NSX, pursuant to which NYSE Group would acquire all of the outstanding capital stock of NSX (the ``Acquisition'').\9\ As a result of the Acquisition, NSX will be renamed NYSE National, Inc. (``NYSE National'') and will be operated as a wholly-owned subsidiary of NYSE Group.\10\ --------------------------------------------------------------------------- \8\ Intercontinental Exchange, Inc. (``ICE''), a public company listed on the NYSE, owns 100% of ICE Holdings. See NYSE Notice, supra note 3 at 96124; NYSE Arca Notice, supra note 3, at 96102; and NYSE MKT Notice, supra note 3, at 96129. \9\ See id. \10\ See id. --------------------------------------------------------------------------- In order to consummate the Acquisition and reflect NYSE Group's proposed ownership of NYSE National, the Exchanges propose to amend certain organizational documents of NYSE Group and its intermediary and ultimate parent entities. In particular, as described below, the Exchanges propose to amend the (1) Sixth Amended and Restated Bylaws of ICE (``ICE Bylaws''), (2) Seventh Amended and Restated Certificate of Incorporation of ICE Holdings (``ICE Holdings COI''), (3) Fourth Amended and Restated Bylaws of ICE Holdings (``ICE Holdings Bylaws''), (4) Independence Policy of the Board of Directors of ICE (``ICE Independence Policy''), (5) Seventh Amended and Restated Limited Liability Company Agreement of NYSE Holdings (``NYSE Holdings LLC Agreement''), (6) Fourth Amended and Restated Certificate of Incorporation of NYSE Group (``NYSE Group COI''), and (7) Second Amended and Restated Bylaws of NYSE Group (``NYSE Group Bylaws''). The Exchanges represent that the current organizational documents of ICE and its wholly-owned subsidiaries, provide certain protections to the NYSE Exchanges that are designed to protect and facilitate their self-regulatory functions, including certain restrictions on the ability to vote and own shares of ICE.\11\ The Exchanges also represent that the proposed amendments are designed to provide similar protections to NYSE National as are currently provided to the Exchanges under those organizational documents.\12\ Moreover, the Exchanges represent that the proposed changes to the organizational documents consist of technical and conforming amendments to reflect the proposed new ownership of NYSE National by the NYSE Group, and, indirectly, ICE.\13\ --------------------------------------------------------------------------- \11\ See id. \12\ See id. \13\ See NYSE Notice, supra note 3 at 96124; NYSE Arca Notice, supra note 3, at 96102; and NYSE MKT Notice, supra note 3, at 96129. --------------------------------------------------------------------------- B. ICE Bylaws The ICE Bylaws will be amended to reflect the Acquisition and incorporate NYSE National into the ICE Bylaws' existing (i) voting and ownership restrictions, (ii) provisions relating to the qualifications of directors and officers and their submission to jurisdiction, (iii) compliance with the federal securities laws, (iv) access to books and records, and (v) other matters related to ICE's control of its registered national securities exchanges. Specifically, the ICE Bylaws will be amended as follows:Update the heading to reflect that the bylaws will be the seventh amendment and restatement. Amend the definition of ``U.S. Regulated Subsidiaries'' in Article III (Directors), Section 3.15, which currently includes the NYSE, NYSE Market (DE), Inc. (``NYSE Market''), NYSE Regulation, Inc. (``NYSE Regulation''), NYSE Arca, LLC, NYSE Arca, NYSE Arca Equities, Inc. (``NYSE Arca Equities''), and NYSE MKT, to include NYSE National, and to delete obsolete references to NYSE Market and NYSE Regulation.\14\ --------------------------------------------------------------------------- \14\ According to the Exchanges, NYSE Market and NYSE Regulation were previously parties to a Delegation Agreement whereby the NYSE delegated certain regulatory functions to NYSE Regulation and certain market functions to NYSE Market (DE). See NYSE Notice, supra note 3 at 96124, n.7; NYSE Arca Notice, supra note 3, at 96103, n.7; and NYSE MKT Notice, supra note 3, at 96129, n.7. The Delegation Agreement was terminated when the NYSE re-integrated its regulatory and market functions and the two entities ceased being regulated subsidiaries. Id. NYSE Regulation has since been merged out of existence. Id. --------------------------------------------------------------------------- Article VIII (Confidential Information), Section 8.1, provides that, for so long as ICE controls any of the U.S. Regulated Subsidiaries, all confidential information that shall come into the possession of ICE pertaining to any of the U.S. Regulated Subsidiaries contained in the books and records of any of the U.S. Regulated Subsidiaries shall (x) not be made available to any persons (other than as provided in Sections 8.2 and 8.3 of the ICE Bylaws) other than to those officers, directors, employees and agents of ICE that have a reasonable need to know the contents thereof; (y) be retained in confidence by ICE and the officers, directors, employees and agents of ICE; and (z) not be used for any commercial purposes. Section 8.1 will be amended to include NYSE National and to delete the obsolete references to NYSE Market and NYSE Regulation. Article XI (Amendments to the Bylaws), Section 11.3, provides that, for so long as ICE controls any of the U.S. Regulated Subsidiaries, any amendment to or repeal of the ICE Bylaws must either be (i) filed with or filed with and approved by the Commission under Section 19 of the Exchange Act and the rules promulgated thereunder, or (ii) submitted to the boards of directors of the U.S. Regulated Subsidiaries or the boards of directors of their successors, in each case, only to the extent that such entity continues to be controlled directly or indirectly by ICE. Section 11.3 will be amended to include NYSE National, and to delete the obsolete references to NYSE Market and NYSE Regulation. The Exchanges also propose to add Article XII (Voting and Ownership Limitations) to the ICE Bylaws. Specifically, proposed Section 12.1(a) of Article XII will provide that, subject to [[Page 9253]] its fiduciary obligations under applicable law, for so long as ICE directly or indirectly controls NYSE National (or its successor), the board of directors of ICE shall not adopt any resolution pursuant to clause (b) of Section A.2 of Article V of the certificate of incorporation of ICE,\15\ unless the board of directors of ICE shall have determined that: --------------------------------------------------------------------------- \15\ Section A.2(b) of Article V (Limitations on Voting and Ownership) of the certificate of incorporation of ICE relates to ICE board of directors approval of voting of ICE capital stock by a person together with its related persons in excess of ``10%'' [sic] of the then outstanding votes entitled to be cast. --------------------------------------------------------------------------- In the case of a resolution to approve the exercise of voting rights in excess of 20% of the then outstanding votes entitled to be cast on such matter, neither such Person \16\ nor any of its Related Persons \17\ is an ETP Holder (as defined in the bylaws of NYSE National, as such bylaws may be in effect from time to time) of NYSE National (any such Person that is a Related Person of an ETP Holder shall hereinafter also be deemed to be an ``ETP Holder'' for purposes of these bylaws, as the context may require); --------------------------------------------------------------------------- \16\ For the purpose of new Section 12.1, ``Person'' has the meaning assigned in the certificate of incorporation of ICE, as it shall be in effect from time to time. \17\ For the purpose of new Section 12.1, ``Related Person'' has the meaning assigned by the certificate of incorporation of ICE, as it shall be in effect from time to time. --------------------------------------------------------------------------- in the case of a resolution to approve entering into an agreement, plan or other arrangement under circumstances that would result in shares of stock of ICE that would be subject to such agreement, plan or other arrangement not being voted on any matter, or the withholding of any proxy relating thereto, where the effect of such agreement, plan or other arrangement would be to enable any person, but for Article V of the certificate of incorporation of ICE, either alone or together with its Related Persons, to vote, possess the right to vote or cause the voting of shares of stock of ICE that would exceed 20% of the then outstanding votes entitled to be cast on such matter (assuming that all shares of stock of ICE that are subject to such agreement, plan or other arrangement are not outstanding votes entitled to be cast on such matter), neither such Person nor any of its Related Persons is, with respect to NYSE National, an ETP Holder. Proposed Section 12.1(b) will provide that, subject to its fiduciary obligations under applicable law, for so long as ICE directly or indirectly controls NYSE National (or its successor), the board of directors of ICE shall not adopt any resolution pursuant to clause (b) of Section B.2 of Article V of the ICE's certificate of incorporation,\18\ unless the board of directors of ICE shall have determined that neither such Person nor any of its Related Persons is an ETP Holder. --------------------------------------------------------------------------- \18\ Section B.2(b) of Article V (Limitations on Voting and Ownership) of the certificate of incorporation of ICE relates to ICE board of directors approval of ownership of ICE capital stock by a person together with its related persons in excess of 20% of the then outstanding votes entitled to be cast. --------------------------------------------------------------------------- Proposed Section 12.2 will provide that, for so long as ICE shall control, directly or indirectly, NYSE National (or its successor), the ICE board of directors shall not adopt any resolution to repeal or amend any provision of the certificate of incorporation of ICE unless such amendment or repeal shall either be (a) filed with or filed with and approved by the Commission under Section 19 of the Exchange Act and the rules promulgated thereunder or (b) submitted to the board of directors of NYSE National (or the board of directors of its successor), and if such board of directors determines that such amendment or repeal must be filed with or filed with and approved by the Commission under Section 19 of the Exchange Act and the rules promulgated thereunder before such amendment or repeal may be effectuated, then such amendment or repeal shall not be effectuated until filed with or filed with and approved by the Commission, as the case may be. The Commission believes that the proposed changes to the ICE Bylaws are consistent with the requirements of Section 6(b) of the Exchange Act. The Commission also believes that the proposed provisions in the ICE Bylaws are reasonably designed to ensure that the Exchanges are able to carry out their self-regulatory obligations under the Exchange Act and thereby should minimize the potential that a person could improperly interfere with or restrict the ability of the Commission or the Exchanges to effectively carry out their respective regulatory oversight responsibilities under the Exchange Act. Furthermore, the Commission believes that it is appropriate to remove the obsolete references and add references to NYSE National in the ICE Bylaws so that the Bylaws will reflect the proposed ownership structure of NYSE National following the closing of the Acquisition. C. ICE Holdings COI The ICE Holdings COI will be amended as follows: Update the heading and paragraphs (2)-(5) to reflect that the certificate of incorporation will be the eighth amendment and restatement, including replacing an incorrect reference to ``Sixth'' before ``Amended'' in paragraph (3). The date of the ICE Holdings COI will also be updated in the preamble. Amend subsection A.3(c)(ii) of Article V (Limitations on Voting and Ownership) to define an ETP Holder of NYSE Arca Equities as an ``NYSE Arca Equities ETP Holder,'' to distinguish between the ETP Holders of NYSE Arca Equities and those of NYSE National. The obsolete references to NYSE Market and NYSE Regulation will be deleted. Amend Subsection A.3(c) of Article V to add subsection (v), similar to those in place for the Exchanges, which will provide that, for so long as the ICE Holdings directly or indirectly controls NYSE National (or its successor), no person nor any of its related persons (as those terms are defined therein) is an ETP Holder (as defined in the bylaws of NYSE National, as such bylaws may be in effect from time to time) of NYSE National. Amend Subsection A.3(d) of Article V to add ``NYSE Arca'' before ``ETP Holder'' in one place to distinguish between the NYSE Arca Equities ETP Holders and those of NYSE National. Amend Subsection A.3(d) of Article V to add subsection (v) similar to those in place for the Exchanges. Proposed subsection (v) will incorporate NYSE National into an existing restriction, such that the board of directors of ICE Holdings will not be able to adopt a resolution to approve the exercise of voting rights that would exceed 20% of the then outstanding votes entitled to be cast on such matter, where neither such person nor any of its related persons is, with respect to NYSE National, an NYSE National ETP Holder. Amend Subsection B.3(d) of Article V to add ``NYSE Arca'' before ``ETP Holder'' to distinguish between the NYSE Arca Equities ETP Holders and those of NYSE National. Amend subsection B.3 of Article V to add subsection (g) similar to those in place for the Exchanges, incorporating NYSE National into the restriction on the ICE Holdings board of directors from adopting any resolution pursuant to clause (b) of Section B.2 of Article V of the ICE Holdings COI \19\ unless the NYSE Holdings board of directors determines that, for so long as ICE Holdings controls NYSE National, [[Page 9254]] neither such person nor any of its related persons is an NYSE National ETP Holder. --------------------------------------------------------------------------- \19\ Section B.2(b) of Article V (Limitations on Voting and Ownership) of the ICE Holdings COI relates to ICE Holdings board of directors approval of ownership of ICE Holdings capital stock by a person together with its related persons in excess of 20% of the then outstanding votes entitled to be cast. --------------------------------------------------------------------------- Amend Article X (Amendments) which provides that, for so long as ICE Holdings shall control, directly or indirectly, any of the U.S. Regulated Subsidiaries, before any amendment or repeal of any provision of the ICE Holdings COI shall be effective, the amendment or repeal must be submitted to the boards of directors of NYSE, NYSE Market, NYSE Regulation, NYSE Arca, NYSE Arca Equities, and NYSE MKT (or the boards of directors of their successors), to add the board of directors of NYSE National to the list of those exchanges that would receive any amendment or repeal of any provision of the ICE Holdings COI. The obsolete references to NYSE Market and NYSE Regulation will be deleted. The Commission believes that the proposed changes to the ICE Holdings COI are consistent with the Exchange Act in that they are reasonably designed to facilitate the Exchanges' ability to fulfill their self-regulatory obligations under the Exchange Act. Additionally, the Commission believes that the proposed changes should minimize the potential that a person could improperly interfere with or restrict the ability of the Commission or the Exchanges to effectively carry out their respective regulatory oversight responsibilities under the Exchange Act. Furthermore, the Commission believes it is appropriate to replace outdated or obsolete references in the ICE Holdings COI following the closing of the Acquisition. D. ICE Holdings Bylaws The cover page and heading on the first page of the ICE Holdings Bylaws will be amended to reflect that the bylaws will be the fifth amendment and restatement. The effective date on the cover page will also be updated. Additionally, similar to the ICE Bylaws discussed above, the ICE Holdings Bylaws will be amended to include ``NYSE National, Inc.'' in: (1) The definition of ``U.S. Regulated Subsidiaries'' in Article III (Directors), Section 3.15; \20\ (2) Article VIII (Confidential Information), Section 8.1, which will be amended to extend the same protection to confidential information relating to the self-regulatory function of NYSE National or its successor; \21\ and (3) Article XI (Amendment to the Bylaws), Section 11.3, which provides that, for so long as ICE Holdings controls any of the U.S. Regulated Subsidiaries, any amendment to or repeal of the ICE Holdings Bylaws must either be (i) filed with or filed with and approved by the Commission under Section 19 of the Exchange Act and the rules promulgated thereunder, or (ii) submitted to the boards of directors of the U.S. Regulated Subsidiaries or the boards of directors of their successors, in each case only to the extent that such entity continues to be controlled directly or indirectly by ICE Holdings.\22\ --------------------------------------------------------------------------- \20\ Article VIII, Section 3.15 will also be amended to delete obsolete references to NYSE Market and NYSE Regulation. \21\ Article VIII, Section 8.1 will also be amended to delete obsolete references to NYSE Market and NYSE Regulation. \22\ Article XI, Section 11.3 will also be amended to delete obsolete references to NYSE Market and NYSE Regulation. --------------------------------------------------------------------------- The Commission believes that these proposed changes are consistent with the Exchange Act in that they are intended to align the Exchanges' upstream ownership governance documents with the proposed ownership structure of NYSE National following the closing of the Acquisition. E. ICE Independence Policy The ICE Independence Policy will be amended to add NYSE National to the section describing ``Independence Qualifications.'' In particular, NYSE National will be added to categories 1.b. and c. that refer to ``members,'' as defined in Section 3(a)(3)(A)(i)-(iv) of the Exchange Act.\23\ The clause ``and `Person Associated with an ETP Holder' (as defined in Rule 1.5 of NYSE National, Inc.)'' will also be added to category 1.b. Additionally, NYSE National will be added to subsections 4. and 5. of the ``Independence Qualifications'' section. Obsolete references to NYSE Market and NYSE Regulation will be deleted.\24\ --------------------------------------------------------------------------- \23\ See 15 U.S.C. 78c(a)(3)(a). \24\ The Exchanges also propose to update the Web site link in footnote 2 to the NYSE Listed Company Manual and commentary. --------------------------------------------------------------------------- The Commission believes that these changes should reduce confusion caused by obsolete references and align the Exchanges' upstream ownership governance documents with the proposed ownership structure of NYSE National following the closing of the Acquisition. F. NYSE Holdings LLC Agreement The Exchanges propose to amend the NYSE Holdings LLC Agreement as follows: The heading and preamble will be amended to reflect that the LLC agreement will be the eighth amendment and restatement. The effective date will also be updated. In addition, a new clause will be added in the second full sentence that states the proposed amended NYSE Holdings LLC Agreement amends and restates the Seventh Amended and Restated Limited Liability Company Agreement, dated as of May 22, 2015. The current penultimate WHEREAS clause will be amended by adding ``in May 2015'' before ``the Company'' and the phrase ``now desires to amend and restate'' immediately following will be replaced with ``amended and restated.'' The words ``have'' and ``are'' will be changed to the past tense ``had'' and ``were'' in the final sentence. The following new WHEREAS clause will be added immediately above the current last WHEREAS clause: ``WHEREAS, the Company now desires to amend and restate the Seventh Amended and Restated Agreement to reflect the acquisition of NYSE National, Inc. by the Company's wholly-owned subsidiary NYSE Group, Inc.;''. The definition of ``ETP Holder'' in Article I (Interpretation), Section 1.1 will be deleted and new definitions of an ``NYSE Arca ETP Holder'' and ``NYSE National ETP Holder'' will be added to the definitions section. The Exchanges will also add a definition for ``NYSE National.'' The obsolete definition of NYSE Market will be deleted. Article IX (Voting and Ownership Limitations), Section 9.1(a)3.C will be amended to add ``NYSE Arca'' before ``ETP Holder'' and the defined term ``NYSE Arca ETP Holder'' to distinguish between the ETP Holders of NYSE Arca Equities and those of NYSE National. An obsolete reference to NYSE Market will be deleted from Section 9.1(a)3.C. Clause (v) will be added to Section 9.1(a)3.C. similar to those in place for the Exchanges. Clause (v) will incorporate NYSE National into the existing restriction, such that the NYSE Holdings board of directors will not be able to adopt a resolution pursuant to clause (b) of Section 9.1(a)2 unless the NYSE Holdings board of directors determines that, for so long as NYSE Holdings directly or indirectly controls NYSE National (or its successor), neither such person nor any of its related persons is an ETP Holder (as defined in the bylaws of NYSE National, as such bylaws may be in effect from time to time) of NYSE National (``NYSE National ETP Holder''). The clause will also provide that any such person that is a related person of an ETP Holder shall hereinafter also be deemed to be an ``NYSE National ETP Holder'' for purposes of the NYSE Holdings LLC Agreement, as the context may require. Article IX (Voting and Ownership Limitations), Section 9.1(a)3.D will be amended to add ``NYSE Arca'' before [[Page 9255]] ``ETP Holder'' in one place to distinguish between the NYSE Arca Equities ETP Holders and those of NYSE National. An outdated reference to NYSE Market will be deleted. Clause (v) will be added to Section 9.1(a)3.D to incorporate NYSE National into the existing restriction on the NYSE Holdings Board of Directors, such that it will not be able to adopt a resolution to approve the exercise of voting rights that would exceed 20% of the then outstanding votes entitled to be cast on such matter for so long as NYSE Holdings controls NYSE National. The clause will provide that ``for so long as the Corporation directly or indirectly controls NYSE National, neither such person nor any of its Related Persons is an NYSE National ETP Holder.'' Article IX, Section 9.1(b)3 will be amended to add subpart G. to incorporate NYSE National into the existing restriction on the NYSE Holdings Board of Directors, so that it will provide that, subject to its fiduciary obligations under applicable law, for so long as NYSE Holdings directly or indirectly controls NYSE National (or its successor), the board of directors of NYSE Holdings shall not adopt any resolution pursuant to (b) of Section 9.1(b)(2) of the NYSE Holdings LLC Agreement, unless the board of directors of NYSE Holdings shall have determined that neither such person nor any of its related persons is an NYSE National ETP Holder. The Commission believes that the proposed changes to the NYSE Holdings LLC Agreement are consistent with the Exchange Act in that they are reasonably designed to facilitate the Exchanges'ability to fulfill their self-regulatory obligations under the Exchange Act. Additionally, the Commission believes that the proposed changes should minimize the potential that a person could improperly interfere with or restrict the ability of the Commission or the Exchanges to effectively carry out their respective regulatory oversight responsibilities under the Exchange Act. Furthermore, the Commission believes that the replacement of outdated or obsolete references may reduce confusion that could result from having these references in the NYSE Holdings LLC Agreement following the closing of the Acquisition. G. NYSE Group COI The Exchanges propose to amend the NYSE Group COI as follows: The heading and recitations will be amended to reflect that the certificate of incorporation will be the fifth amendment and restatement. NYSE National will be added to the list of ``Regulated Subsidiaries'' in Article IV (Stock), Section 4(b)(1), and the obsolete references to NYSE Market and NYSE Regulation will be deleted. Section 4(b)(1)(y) of Article IV (Stock) will be amended to define an ETP Holder of NYSE Arca Equities as an ``NYSE Arca Equities ETP Holder,'' to distinguish between the ETP Holders of NYSE Arca Equities and those of NYSE National, An outdated reference to NYSE Market will be deleted. Section 4(b)(1)(y) will also be amended to add a provision similar to those in place for the Exchanges providing that, for so long as NYSE Group directly or indirectly controls NYSE National (or its successor), neither such person nor any of its related persons is an ETP Holder (as defined in the rules of NYSE National, as such rules may be in effect from time to time) of NYSE National (defined as an ``NYSE National ETP Holder'') and that any such person that is a related person of an NYSE National ETP Holder shall hereinafter also be deemed to be an ``NYSE National ETP Holder'' for purposes of the NYSE Group COI, as the context may require. Section 4(b)(1)(z) of Article IV will be amended to define an ETP Holder of NYSE Arca Equities as an ``NYSE Arca Equities ETP Holder'' and delete an outdated reference to NYSE Market. Section 4(b)(1)(z) will also be amended to incorporate NYSE National into the existing restriction on the NYSE Group Board of Directors, such that it will not be able to adopt a resolution to approve the exercise of voting rights that would exceed 20% of the then outstanding votes entitled to be cast on such matter, where neither such person nor any of its related persons is, with respect to NYSE National, an NYSE National ETP Holder. Section 4(b)(1)(z)(iv) of Article IV will be amended to add ``NYSE Arca'' before ``ETP Holder'' to distinguish between the NYSE Arca Equities ETP Holders and those of NYSE National. Subpart (vii) will be added to Section 4(b)(2)(C) of Article IV to incorporate NYSE National into the existing restriction on the NYSE Group Board of Directors, such that it will not be able to adopt a resolution to approve the exercise of voting rights that would exceed 20% of the then outstanding votes entitled to be cast on such matter, where neither such person nor any of its related persons is, with respect to NYSE National, an NYSE National ETP Holder.\25\ --------------------------------------------------------------------------- \25\ An obsolete reference to NYSE Market will be deleted from Article IV (Stock), Section 4(b)(2)(C)(v). --------------------------------------------------------------------------- Article X (Confidential Information) will be amended to extend the same protection to confidential information relating to the self-regulatory function of NYSE National or its successor and delete obsolete references to NYSE Market and NYSE Regulation. Article XII (Amendments to Certificate of Incorporation) provides that, for so long as NYSE Group controls the Regulated Subsidiaries, before any amendment or repeal of any provision of the NYSE Group COI shall be effective, such amendment or repeal shall either (a) be filed with or filed with and approved by the Commission under Section 19 of the Exchange Act and the rules promulgated thereunder or (b) be submitted to the boards of directors of NYSE, NYSE Market, NYSE Regulation, NYSE Arca, NYSE Arca Equities, and NYSE MKT or the boards of directors of their successors. Article XII will be amended to add NYSE National to subsection (b) and delete obsolete references to NYSE Market and NYSE Regulation. The Commission believes that the proposed changes to the NYSE Group COI are consistent with the Exchange Act in that they are reasonably designed to facilitate the Exchanges' ability to fulfill their self- regulatory obligations under the Exchange Act. Additionally, the Commission believes that the proposed changes should minimize the potential that a person could improperly interfere with or restrict the ability of the Commission or the Exchanges to effectively carry out their respective regulatory oversight responsibilities under the Exchange Act. Furthermore, the Commission believes that the replacement of outdated or obsolete references will reduce confusion that might result from having these references in the NYSE Group COI following the closing of the Acquisition. H. NYSE Group Bylaws The heading of the NYSE Group Bylaws will be amended to reflect that the bylaws will be the third amendment and restatement. Additionally, Article VII (Miscellaneous), Section 7.9(A)(b) will be amended to (1) delete obsolete references to NYSE Market and NYSE Regulation, (2) replace the outdated reference to ``NYSE Alternext US LLC'' with ``NYSE MKT LLC,'' and (3) add NYSE National to the list of those exchanges that would receive any [[Page 9256]] amendment or repeal of any provision of the NYSE Group Bylaws.\26\ --------------------------------------------------------------------------- \26\ Article VII (Miscellaneous), Section 7.9(A)(b) currently provides that, for so long as NYSE Group controls, directly or indirectly, any of the Exchanges, before any amendment or repeal of any provision of the NYSE Group Bylaws shall be effective, such amendment or repeal must either be (i) filed with or filed with and approved by the Commission under Section 19 of the Exchange Act and the rules promulgated thereunder, or (ii) submitted to the boards of directors of the NYSE, NYSE Market, NYSE Regulation, NYSE Arca, NYSE Arca Equities, and NYSE Alternext US LLC or the boards of directors of their successors, in each case only to the extent that such entity continues to be controlled directly or indirectly by NYSE Group. --------------------------------------------------------------------------- The Commission believes that the proposed changes to the NYSE Group Bylaws are consistent with the Exchange Act in that they are intended to eliminate confusion that may result from having outdated or obsolete references and reflect the proposed new ownership of NYSE National by the NYSE Group. III. Conclusion It is therefore ordered, pursuant to Section 19(b)(2) of the Act \27\ that the proposed rule changes (SR-NYSE-2016-90; SR-NYSEArca-2016- 167; and SR-NYSEMKT-2016-122), as modified by their respective Amendment No. 1, be, and hereby are, approved. --------------------------------------------------------------------------- \27\ 15 U.S.C. 78f(b)(2). For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.\28\ --------------------------------------------------------------------------- \28\ 17 CFR 200.30-3(a)(12). --------------------------------------------------------------------------- Eduardo A. Aleman, Assistant Secretary. [FR Doc. 2017-02262 Filed 2-2-17; 8:45 am] BILLING CODE 8011-01-P
![Federal Register / Vol. 82, No. 22 / Friday, February 3, 2017 / Notices 9251
provides that any Person 8 approved by interest, for the protection of investors By the Commission.
the Commission as a national securities or the maintenance of fair and orderly Eduardo A. Aleman,
exchange or national securities markets, to remove impediments to, and Assistant Secretary.
association under the Exchange Act may perfect the mechanisms of, a national [FR Doc. 2017–02267 Filed 2–2–17; 8:45 am]
become a Participant by submitting to market system or otherwise in BILLING CODE 8011–01–P
the Company a completed application furtherance of the purposes of the Act.
in the form provided by the Company.9
As a condition to admission as a III. Solicitation of Comments SECURITIES AND EXCHANGE
Participant, said Person shall: (i) Interested persons are invited to COMMISSION
Execute a counterpart of the CAT NMS submit written data, views and [Release No. 34–79901; File Nos. SR–NYSE–
Plan, at which time Exhibit A shall be
arguments concerning the foregoing, 2016–90; SR–NYSEArca–2016–167; SR–
amended to reflect the status of said NYSEMKT–2016–122]
including whether the amendment is
Person as a Participant (including said
consistent with the Act. Comments may
Person’s address for purposes of notices Self-Regulatory Organizations; New
be submitted by any of the following
delivered pursuant to the CAT NMS York Stock Exchange LLC; NYSE Arca,
Plan); and (ii) pay a fee to the Company methods:
Inc.; NYSE MKT LLC; Order Approving
as set forth in the Plan (the Electronic Comments Proposed Rule Changes, Each as
‘‘Participation Fee’’).10 The amendment Modified by Amendment No. 1 Thereto,
to the Plan reflecting the admission of • Use the Commission’s Internet in Connection With the Proposed
a new Participant shall be effective only comment form (http://www.sec.gov/ Acquisition of National Stock
when: (x) It is approved by the rules/sro.shtml); or Exchange, Inc. by the NYSE Group,
Commission in accordance with Rule • Send an email to rule-comments@ Inc.
608 or otherwise becomes effective sec.gov. Please include File Number 4–
pursuant to Rule 608; and (y) the January 30, 2017.
698 on the subject line.
prospective Participant pays the I. Introduction
Participation Fee.11 Paper Comments
MIAX PEARL has executed a copy of On December 16, 2016, the New York
the current CAT NMS Plan, amended to • Send paper comments in triplicate Stock Exchange LLC (‘‘NYSE’’), NYSE
include MIAX PEARL in the List of to Brent J. Fields, Secretary, Securities Arca, Inc. (‘‘NYSE Arca’’), and NYSE
Parties (including the address of MIAX and Exchange Commission, 100 F Street MKT LLC (‘‘NYSE MKT’’) (collectively,
PEARL), paid the applicable NE., Washington, DC 20549–1090. the ‘‘Exchanges’’) filed with the
Participation Fee and provided each Securities and Exchange Commission
All submissions should refer to File (‘‘Commission’’), pursuant to Section
current Plan Participant with a copy of Number 4–698. This file number should
the executed and amended Plan.12 19(b)(1) of the Securities Exchange Act
be included on the subject line if email of 1934 (‘‘Exchange Act’’),1 and Rule
II. Effectiveness of the CAT NMS Plan is used. To help the Commission 19b–4 thereunder,2 proposed rule
Amendment process and review your comments changes in connection with the
The foregoing Plan amendment has more efficiently, please use only one acquisition of National Stock Exchange,
become effective pursuant to Rule method. The Commission will post all Inc. (‘‘NSX’’) by the Exchanges’ parent
608(b)(3)(iii) 13 because it involves comments on the Commission’s Internet company, the NYSE Group, Inc. (‘‘NYSE
solely technical or ministerial matters. Web site (http://www.sec.gov/rules/ Group’’). The proposed rule changes
At any time within sixty days of the sro.shtml). Copies of the submission, all were published for comment in the
filing of this amendment, the subsequent amendments, all written Federal Register on December 28,
Commission may summarily abrogate statements with respect to the proposed 2016.3 On January 23, 2017, the
the amendment and require that it be rule change that are filed with the Exchanges each filed Amendment No. 1
refiled pursuant to paragraph (a)(1) of Commission, and all written to their respective proposed rule
Rule 608,14 if it appears to the communications relating to the changes.4 The Commission received no
Commission that such action is amendment between the Commission comment letters on the proposed rule
necessary or appropriate in the public and any person, other than those that changes. This order approves the
may be withheld from the public in proposed rule changes.
that the Participants shall comprise the ‘‘members’’ accordance with the provisions of 5 The Commission has reviewed
of the Company (as the term ‘‘member’’ is defined U.S.C. 552, will be available for Web carefully the proposed rule changes and
in Section 18–101(11) of the Delaware Act)). As site viewing and printing in the
defined in the CAT NMS Plan, the name of the
finds that the proposed rule changes are
‘‘Company’’ is CAT NMS, LLC. Commission’s Public Reference Room, consistent with the requirements of the
8 See Section 1.1 of the CAT NMS Plan. The term 100 F Street NE., Washington, DC
‘‘Person’’ is defined as means any individual, 20549, on official business days 1 15 U.S.C. 78s(b)(1).
partnership, limited liability company, corporation, 2 17 CFR 240.19b–4.
joint venture, trust, business trust, cooperative or
between the hours of 10:00 a.m. and
3 See Securities Exchange Act Release Nos. 79671
association and any heirs, executors, 3:00 p.m. Copies of such filing also will
(December 22, 2016), 81 FR 96128 (‘‘NYSE Notice’’);
administrators, legal representatives, successors and be available for inspection and copying 79678 (December 22, 2016), 81 FR 96102 (May 16,
assigns of such Person where the context so at the principal office of MIAX PEARL. 2016) (‘‘NYSE Arca Notice’’); and 79675 (December
permits.
All comments received will be posted 22, 2016), 81 FR 96128 (May 16, 2016) (‘‘NYSE
asabaliauskas on DSK3SPTVN1PROD with NOTICES
9 See Section 3.3 of the CAT NMS Plan. MIAX
without change; the Commission does MKT Notice’’).
PEARL was approved as a national securities 4 In Amendment No. 1, the Exchanges updated an
exchange on December 13, 2016. See Securities and not edit personal identifying incorrect reference in the proposed amendment to
Exchange Act Release No. 79543, 81 FR 92901 (Dec. information from submissions. You the Sixth Amended and Restated Bylaws of the
20, 2016) (File No. 10–227).
10 See Section 3.3 of the CAT NMS Plan.
should submit only information that Intercontinental Exchange, Inc. Amendment No. 1
11 Id. you wish to make available publicly. All was technical in nature and therefore does not need
to be published for comment. See letters from
12 See supra note 6. submissions should refer to File Martha Redding, Associate General Counsel,
13 17 CFR 242.608(b)(3)(iii). Number 4–698 and should be submitted Assistant Secretary, NYSE, to Brent J. Fields,
14 17 CFR 242.608(a)(1). on or before February 24, 2017. Secretary, Commission, dated January 23, 2017.
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![Federal Register / Vol. 82, No. 22 / Friday, February 3, 2017 / Notices 9253
its fiduciary obligations under directors of ICE shall not adopt any incorporation will be the eighth
applicable law, for so long as ICE resolution pursuant to clause (b) of amendment and restatement, including
directly or indirectly controls NYSE Section B.2 of Article V of the ICE’s replacing an incorrect reference to
National (or its successor), the board of certificate of incorporation,18 unless the ‘‘Sixth’’ before ‘‘Amended’’ in paragraph
directors of ICE shall not adopt any board of directors of ICE shall have (3). The date of the ICE Holdings COI
resolution pursuant to clause (b) of determined that neither such Person nor will also be updated in the preamble.
Section A.2 of Article V of the certificate any of its Related Persons is an ETP • Amend subsection A.3(c)(ii) of
of incorporation of ICE,15 unless the Holder. Article V (Limitations on Voting and
board of directors of ICE shall have Proposed Section 12.2 will provide Ownership) to define an ETP Holder of
determined that: that, for so long as ICE shall control, NYSE Arca Equities as an ‘‘NYSE Arca
• In the case of a resolution to directly or indirectly, NYSE National (or Equities ETP Holder,’’ to distinguish
approve the exercise of voting rights in its successor), the ICE board of directors between the ETP Holders of NYSE Arca
excess of 20% of the then outstanding shall not adopt any resolution to repeal Equities and those of NYSE National.
votes entitled to be cast on such matter, or amend any provision of the certificate The obsolete references to NYSE Market
neither such Person 16 nor any of its of incorporation of ICE unless such and NYSE Regulation will be deleted.
Related Persons 17 is an ETP Holder (as amendment or repeal shall either be (a) • Amend Subsection A.3(c) of Article
defined in the bylaws of NYSE National, filed with or filed with and approved by V to add subsection (v), similar to those
as such bylaws may be in effect from the Commission under Section 19 of the in place for the Exchanges, which will
time to time) of NYSE National (any Exchange Act and the rules promulgated provide that, for so long as the ICE
such Person that is a Related Person of thereunder or (b) submitted to the board Holdings directly or indirectly controls
an ETP Holder shall hereinafter also be of directors of NYSE National (or the NYSE National (or its successor), no
deemed to be an ‘‘ETP Holder’’ for board of directors of its successor), and person nor any of its related persons (as
purposes of these bylaws, as the context if such board of directors determines those terms are defined therein) is an
may require); that such amendment or repeal must be ETP Holder (as defined in the bylaws of
• in the case of a resolution to filed with or filed with and approved by NYSE National, as such bylaws may be
approve entering into an agreement, the Commission under Section 19 of the in effect from time to time) of NYSE
plan or other arrangement under Exchange Act and the rules promulgated National.
circumstances that would result in thereunder before such amendment or • Amend Subsection A.3(d) of Article
shares of stock of ICE that would be repeal may be effectuated, then such V to add ‘‘NYSE Arca’’ before ‘‘ETP
subject to such agreement, plan or other amendment or repeal shall not be Holder’’ in one place to distinguish
arrangement not being voted on any effectuated until filed with or filed with between the NYSE Arca Equities ETP
matter, or the withholding of any proxy and approved by the Commission, as the Holders and those of NYSE National.
relating thereto, where the effect of such case may be. • Amend Subsection A.3(d) of Article
agreement, plan or other arrangement The Commission believes that the V to add subsection (v) similar to those
would be to enable any person, but for proposed changes to the ICE Bylaws are in place for the Exchanges. Proposed
Article V of the certificate of consistent with the requirements of subsection (v) will incorporate NYSE
incorporation of ICE, either alone or Section 6(b) of the Exchange Act. The National into an existing restriction,
together with its Related Persons, to Commission also believes that the such that the board of directors of ICE
vote, possess the right to vote or cause proposed provisions in the ICE Bylaws Holdings will not be able to adopt a
the voting of shares of stock of ICE that are reasonably designed to ensure that resolution to approve the exercise of
would exceed 20% of the then the Exchanges are able to carry out their voting rights that would exceed 20% of
outstanding votes entitled to be cast on self-regulatory obligations under the the then outstanding votes entitled to be
such matter (assuming that all shares of Exchange Act and thereby should cast on such matter, where neither such
stock of ICE that are subject to such minimize the potential that a person person nor any of its related persons is,
agreement, plan or other arrangement could improperly interfere with or with respect to NYSE National, an
are not outstanding votes entitled to be restrict the ability of the Commission or NYSE National ETP Holder.
cast on such matter), neither such the Exchanges to effectively carry out • Amend Subsection B.3(d) of Article
Person nor any of its Related Persons is, their respective regulatory oversight V to add ‘‘NYSE Arca’’ before ‘‘ETP
with respect to NYSE National, an ETP responsibilities under the Exchange Act. Holder’’ to distinguish between the
Holder. Furthermore, the Commission believes NYSE Arca Equities ETP Holders and
Proposed Section 12.1(b) will provide that it is appropriate to remove the those of NYSE National.
that, subject to its fiduciary obligations obsolete references and add references • Amend subsection B.3 of Article V
under applicable law, for so long as ICE to NYSE National in the ICE Bylaws so to add subsection (g) similar to those in
directly or indirectly controls NYSE that the Bylaws will reflect the proposed place for the Exchanges, incorporating
National (or its successor), the board of ownership structure of NYSE National NYSE National into the restriction on
following the closing of the Acquisition. the ICE Holdings board of directors from
15 Section A.2(b) of Article V (Limitations on adopting any resolution pursuant to
Voting and Ownership) of the certificate of
C. ICE Holdings COI clause (b) of Section B.2 of Article V of
incorporation of ICE relates to ICE board of The ICE Holdings COI will be the ICE Holdings COI 19 unless the
directors approval of voting of ICE capital stock by amended as follows: NYSE Holdings board of directors
a person together with its related persons in excess
• Update the heading and paragraphs
asabaliauskas on DSK3SPTVN1PROD with NOTICES
of ‘‘10%’’ [sic] of the then outstanding votes determines that, for so long as ICE
entitled to be cast. (2)–(5) to reflect that the certificate of Holdings controls NYSE National,
16 For the purpose of new Section 12.1, ‘‘Person’’
has the meaning assigned in the certificate of 18 Section B.2(b) of Article V (Limitations on 19 Section B.2(b) of Article V (Limitations on
incorporation of ICE, as it shall be in effect from Voting and Ownership) of the certificate of Voting and Ownership) of the ICE Holdings COI
time to time. incorporation of ICE relates to ICE board of relates to ICE Holdings board of directors approval
17 For the purpose of new Section 12.1, ‘‘Related directors approval of ownership of ICE capital stock of ownership of ICE Holdings capital stock by a
Person’’ has the meaning assigned by the certificate by a person together with its related persons in person together with its related persons in excess
of incorporation of ICE, as it shall be in effect from excess of 20% of the then outstanding votes entitled of 20% of the then outstanding votes entitled to be
time to time. to be cast. cast.
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![9256 Federal Register / Vol. 82, No. 22 / Friday, February 3, 2017 / Notices
amendment or repeal of any provision or ‘‘NYSE MKT’’) filed with the offerings, and to delete obsolete and
of the NYSE Group Bylaws.26 Securities and Exchange Commission outdated rules.4
The Commission believes that the (‘‘Commission’’) the proposed rule
proposed changes to the NYSE Group Elimination of Price Improving Orders
change as described in Items I, II, and
Bylaws are consistent with the and Quotes
III below, which Items have been
Exchange Act in that they are intended prepared by the self-regulatory The Exchange proposes to eliminate,
to eliminate confusion that may result organization. The Commission is and thus delete from its rules, Price
from having outdated or obsolete publishing this notice to solicit Improving Orders and Quotes, as
references and reflect the proposed new comments on the proposed rule change defined in Rule 900.3NY(r).
ownership of NYSE National by the from interested persons. A Price Improving Order or Price
NYSE Group. Improving Quote is an order or quote to
I. Self-Regulatory Organization’s
III. Conclusion Statement of the Terms of Substance of buy or sell an option at a specified price
the Proposed Rule Change at an increment smaller than the
It is therefore ordered, pursuant to minimum price variation in the
Section 19(b)(2) of the Act 27 that the The Exchange proposes to amend security. Price Improving Orders and
proposed rule changes (SR–NYSE– Rule 900.3NY to eliminate Price Quotes may be entered in increments as
2016–90; SR–NYSEArca–2016–167; and Improving Orders and Quotes, amend small as one cent. Because the Exchange
SR–NYSEMKT–2016–122), as modified Rule 961NY to eliminate the electronic has not implemented this functionality,
by their respective Amendment No. 1, and open outcry bidding and offering the Exchange believes it is appropriate
be, and hereby are, approved. requirements associated with a Price to delete the functionality from its
For the Commission, by the Division of Improving Order or Quote, and make a rules.5
Trading and Markets, pursuant to delegated conforming change to Rule 935NY, and To reflect this elimination, the
authority.28 (2) eliminate Section 910–AEMI of the Exchange proposes to delete all
Eduardo A. Aleman, AEMI Rules, and Sections 910 and 910– references to Price Improving Orders
Assistant Secretary. AEMI of the NYSE MKT Company and Quotes in Rule 900.3NY(r), and to
[FR Doc. 2017–02262 Filed 2–2–17; 8:45 am] Guide. The proposed rule change is the electronic and open outcry bidding
BILLING CODE 8011–01–P available on the Exchange’s Web site at and offering requirements associated
www.nyse.com, at the principal office of with a Price Improving Order or Quote
the Exchange, and at the Commission’s in the second introductory paragraph of
SECURITIES AND EXCHANGE Public Reference Room. Rule 961NY and in Rules 961NY(a),
COMMISSION 961NY(b) and 961NY(c), and to delete
II. Self-Regulatory Organization’s
[Release No. 34–79895; File No. SR– Statement of the Purpose of, and in the Commentary to Rule 935NY a
NYSEMKT–2017–03] Statutory Basis for, the Proposed Rule reference to Rule 900.3NY(r),6 as
Change follows:
Self-Regulatory Organizations; NYSE • Delete Rule 900.3NY(r), which
MKT LLC; Notice of Filing and In its filing with the Commission, the defines Price Improving Orders and
Immediate Effectiveness of Proposed self-regulatory organization included Quotes;
Rule Change Amending Rules statements concerning the purpose of,
• delete the second introductory
900.3NY, Rule 961NY, Make a and basis for, the proposed rule change
paragraph of Rule 961NY, which
Conforming Change to Rule 935NY, and discussed any comments it received
describes which options may be
and Eliminate Section 910–AEMI of the on the proposed rule change. The text
AEMI Rules, and Sections 910 and of those statements may be examined at 4 See e.g., Mary Jo White, Chair, Securities and
910–AEMI of the NYSE MKT Company the places specified in Item IV below. Exchange Commission, Speech at the Sandler
Guide The Exchange has prepared summaries, O’Neill & Partners, L.P. Global Exchange and
set forth in sections A, B, and C below, Brokerage Conference (June 5, 2014) (available at
January 30, 2017. of the most significant parts of such www.sec.gov/News/Speech/Detail/Speech/
Pursuant to Section 19(b)(1) 1 of the 1370542004312#.U5HI-fmwJiw) (‘‘I am asking the
statements. exchanges to conduct a comprehensive review of
Securities Exchange Act of 1934 their order types and how they operate in practice.
(‘‘Act’’) 2 and Rule 19b–4 thereunder,3 A. Self-Regulatory Organization’s
As part of this review, I expect that the exchanges
notice is hereby given that on January Statement of the Purpose of, and the will consider appropriate rule changes to help
18, 2017, NYSE MKT LLC (‘‘Exchange’’ Statutory Basis for, the Proposed Rule clarify the nature of their order types and how they
Change interact with each other, and how they support fair,
26 Article VII (Miscellaneous), Section 7.9(A)(b)
orderly, and efficient markets.’’ Id.).
1. Purpose 5 Though originally adopted as a competitive
currently provides that, for so long as NYSE Group
response to another options market introducing
controls, directly or indirectly, any of the The Exchange proposes to (1) amend price improving orders, the Exchange never
Exchanges, before any amendment or repeal of any Rule 900.3NY to eliminate Price implemented this functionality for a variety of
provision of the NYSE Group Bylaws shall be
effective, such amendment or repeal must either be Improving Orders and Quotes, amend reasons, including technology and because most
Rule 961NY to eliminate the electronic options volume was concentrated in Penny Pilot
(i) filed with or filed with and approved by the
issues where price improving orders would be of
Commission under Section 19 of the Exchange Act and open outcry bidding and offering little or no value.
and the rules promulgated thereunder, or (ii) requirements associated with a Price 6 See Securities Exchange Act Release No. 59472
submitted to the boards of directors of the NYSE,
Improving Order or Quote, and make a
asabaliauskas on DSK3SPTVN1PROD with NOTICES
NYSE Market, NYSE Regulation, NYSE Arca, NYSE (February 27, 2009), 74 FR 9843 (March 6, 2009)
Arca Equities, and NYSE Alternext US LLC or the conforming change to Rule 935NY, and (SR–NYSEALTR–2008–14) (order granting
accelerated approval of proposed rule change
boards of directors of their successors, in each case (2) eliminate Section 910–AEMI of the establishing rules for the trading of listed options
only to the extent that such entity continues to be AEMI Rules, and Sections 910 and 910–
controlled directly or indirectly by NYSE Group. including order exposure requirements in
27 15 U.S.C. 78f(b)(2). AEMI of the NYSE MKT Company connection with Price Improving Orders and
28 17 CFR 200.30–3(a)(12). Guide. The Exchange proposes to Quotes, designation of options eligible for Penny
Price Improvement, the manner of bidding or
1 15 U.S.C. 78s(b)(1). eliminate these order types in order to offering in open outcry for Penny Pricing, and the
2 15 U.S.C. 78a. streamline its rules and reduce required ‘‘sweep’’ of any Penny Pricing interest in
3 17 CFR 240.19b–4. complexity among its order type the System).
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Document Created: 2018-02-01 14:34:39
Document Modified: 2018-02-01 14:34:39
| 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 9251 |
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