Self-Regulatory Organizations; American Stock Exchange LLC; Order Approving the Adoption of New Rule 478T To Set Forth the Temporary Procedures That Will Apply To Disciplinary Proceedings Pending as of the Closing Date of the Acquisition of Amex by NYSE Euronext, 57705-57707 [E8-23314]
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Federal Register / Vol. 73, No. 193 / Friday, October 3, 2008 / Notices
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least one year following the date of the
SAI), if any, that are expected to prevent
the delivery of redemption proceeds in
seven calendar days, and the maximum
number of days needed to deliver the
proceeds for the relevant International
Fund.
Sections 17(a)(1) and (2) of the Act
9. Sections 17(a)(1) and (2) of the Act
generally prohibit an affiliated person of
a registered investment company, or an
affiliated person of such a person
(‘‘second tier affiliate’’), from selling any
security to or purchasing any security
from the company. Section 2(a)(3) of the
Act defines ‘‘affiliated person’’ to
include any person directly or indirectly
owning, controlling, or holding with
power to vote 5% or more of the
outstanding voting securities of the
other person and any person directly or
indirectly controlling, controlled by, or
under common control with, the other
person. Section 2(a)(9) of the Act
provides that a control relationship will
be presumed where one person owns
more than 25% of another person’s
voting securities. The Funds may be
deemed to be controlled by the Advisor
or an entity controlling, controlled by or
under common control with the Advisor
and hence affiliated persons of each
other. In addition, the Funds may be
deemed to be under common control
with any other registered investment
company (or series thereof) advised by
the Advisor or an entity controlling,
controlled by or under common control
with the Advisor (an ‘‘Affiliated Fund’’).
10. Applicants request an exemption
from section 17(a), under sections 6(c)
and 17(b), to permit in-kind purchases
and redemptions by persons that are
affiliated persons or second tier
affiliates of the Funds solely by virtue
of one or more of the following: (1)
holding 5% or more, or more than 25%,
of the outstanding Shares of the
respective Trust or one or more Funds;
(2) an affiliation with a person with an
ownership interest described in (1); or
(3) holding 5% or more, or more than
25%, of the shares of one or more
Affiliated Funds.
11. Applicants contend that no useful
purpose would be served by prohibiting
these affiliated persons or second tier
affiliates of a Fund from purchasing or
redeeming Creation Units through ‘‘inkind’’ transactions. The deposit
procedure for in-kind purchases and the
redemption procedure for in-kind
redemptions will be the same for all
purchases and redemptions. Deposit
Securities and Fund Securities will be
valued under the same objective
standards applied to valuing Portfolio
Securities. Therefore, applicants state
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23:33 Oct 02, 2008
Jkt 217001
that in-kind purchases and redemptions
will afford no opportunity for the
affiliated persons and second tier
affiliates described above to effect a
transaction detrimental to the other
holders of Shares. Applicants also
believe that in-kind purchases and
redemptions will not result in abusive
self-dealing or overreaching by these
persons of the Fund.
Applicants’ Conditions
The applicants agree that any order of
the Commission granting the requested
relief will be subject to the following
conditions:
1. Each Prospectus will clearly
disclose that, for purposes of the Act,
Shares are issued by the Fund, which is
a registered investment company and
that the acquisition of Shares by
investment companies and companies
relying on sections 3(c)(1) or 3(c)(7) of
the Act is subject to the restrictions of
section 12(d)(1) of the Act, except as
permitted by an exemptive order that
permits registered investment
companies to invest in a Fund beyond
the limits in section 12(d)(1), subject to
certain terms and conditions, including
that the registered investment company
enter into an agreement with the Fund
regarding the terms of the investment.
2. As long as the Funds operate in
reliance on the requested order, the
Shares of the Funds will be listed on a
Stock Exchange.
3. Neither the Trusts nor any Fund
will be advertised or marketed as an
open-end investment company or a
mutual fund. Each Fund’s Prospectus
will prominently disclose that the Fund
is an actively managed exchange-traded
fund. Each Prospectus will prominently
disclose that the Shares are not
individually redeemable shares and will
disclose that the owners of the Shares
may acquire those Shares from the Fund
and tender those Shares for redemption
to the Fund in Creation Units only. Any
advertising material that describes the
purchase or sale of Creation Units or
refers to redeemability will prominently
disclose that the Shares are not
individually redeemable and that
owners of the Shares may acquire those
Shares from the Fund and tender those
Shares for redemption to the Fund in
Creation Units only.
4. The Web site for the Funds, which
is and will be publicly accessible at no
charge, will contain the following
information, on a per Share basis, for
each Fund: (a) the prior Business Day’s
NAV and the Bid/Ask Price, and a
calculation of the premium or discount
of the Bid/Ask Price against the NAV;
and (b) data in chart format displaying
the frequency distribution of discounts
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Sfmt 4703
57705
and premiums of the daily Bid/Ask
Price against the NAV, within
appropriate ranges, for each of the four
previous calendar quarters (or for the
life of the Fund, if shorter).
5. The Prospectus and annual report
for each Fund will also include: (a) the
information listed in condition 4(b), (i)
in the case of the Prospectus, for the
most recently completed year (and the
most recently completed quarter or
quarters, as applicable) and (ii) in the
case of the annual report, for the
immediately preceding five years (or for
the life of the Fund, if shorter), and (b)
calculated on a per Share basis for
one-, five- and ten-year periods (or for
the life of the Fund, if shorter), the
cumulative total return and the average
annual total return based on NAV and
Bid/Ask Price.
6. On each Business Day, before
commencement of trading in Shares on
the Stock Exchange, the Fund will
disclose on its Web site the identities
and quantities of the Portfolio Securities
and other assets held by the Fund that
will form the basis for the Fund’s
calculation of NAV at the end of the
Business Day.
7. The Advisor or Subadvisor, directly
or indirectly, will not cause any
Authorized Participant (or any investor
on whose behalf an Authorized
Participant may transact with the Fund)
to acquire any Deposit Security for the
Fund through a transaction in which the
Fund could not engage directly.
8. The requested order will expire on
the effective date of any Commission
rule under the Act that provides relief
permitting the operation of actively
managed exchange-traded funds.
For the Commission, by the Division of
Investment Management, pursuant to
delegated authority.
Florence E. Harmon,
Acting Secretary.
[FR Doc. E8–23366 Filed 10–2–08; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–58678; File No. SR–Amex–
2008–64]
Self-Regulatory Organizations;
American Stock Exchange LLC; Order
Approving the Adoption of New Rule
478T To Set Forth the Temporary
Procedures That Will Apply To
Disciplinary Proceedings Pending as
of the Closing Date of the Acquisition
of Amex by NYSE Euronext
September 29, 2008.
On July 28, 2008, American Stock
Exchange LLC, a Delaware limited
E:\FR\FM\03OCN1.SGM
03OCN1
57706
Federal Register / Vol. 73, No. 193 / Friday, October 3, 2008 / Notices
liability company (‘‘Amex’’ or
‘‘Exchange’’), filed with the Securities
and Exchange Commission
(‘‘Commission’’), pursuant to Section
19(b)(1) of the Securities Exchange Act
of 1934 (‘‘Act’’) 1 and Rule 19b–4
thereunder,2 a proposed rule change to
adopt a new rule to set forth the
temporary procedures that would apply
to the disciplinary proceedings pending
with the Exchange as of the closing date
of the acquisition of Amex by NYSE
Euronext (‘‘Transaction Date’’). On
August 7, 2008, the proposed rule
change was published for comment in
the Federal Register.3 The Commission
received no comments on the proposed
rule change. This order grants approval
to the proposed rule change.
Pursuant to an agreement dated
January 17, 2008, NYSE Euronext, the
ultimate parent company of NYSE, Inc.
(‘‘NYSE’’) and NYSE Arca, Inc. (‘‘NYSE
Arca’’), is acquiring Amex, through a
series of mergers (‘‘Mergers’’).4 Upon
completion of the Mergers and Related
Transactions, Amex will continue to
operate as a national securities exchange
under Section 6 of the Act and will be
renamed NYSE Alternext US LLC
(‘‘NYSE Alternext US’’).
In a separate proposed rule change
adopting various rules in connection
with the Mergers and Related
Transactions, Amex proposes to adopt
new NYSE Alternext US Rules 475, 476
and 477 as its disciplinary rules, which
are substantially similar to the existing
NYSE disciplinary rules.5 To avoid any
potential confusion to respondents in
disciplinary matters that had been
commenced by Amex and still pending
as of the Transaction Date (each, a
‘‘Legacy Disciplinary Proceeding’’),6
Amex proposes applying rules that are
substantially similar to the current
procedures governing Amex
1 15
U.S.C. 78s(b)(1).
CFR 240.19b–4.
3 See Securities Exchange Act Release No. 58286
(August 1, 2008), 73 FR 46097 (‘‘Amex Notice’’).
4 Immediately following the Mergers, NYSE
Euronext plans to effectuate certain related
transactions, as a result of which NYSE Alternext
US will become a direct wholly-owned subsidiary
of NYSE Group, Inc. (‘‘NYSE Group’’), the whollyowned subsidiary of NYSE Euronext (‘‘Related
Transactions’’). For a detailed description of the
Mergers and Related Transactions, see Securities
Exchange Act Release No. 58284 (August 1, 2008),
73 FR 46086 (SR–Amex–2008–62) (‘‘Amex Merger
Notice’’).
5 See Amex Merger Notice, supra note 4 and
Securities Exchange Act Release No. 58673
(September 29, 2009) (order approving SR–Amex–
2008–62).
6 Paragraph (a) of proposed NYSE Alternext US
Rule 478T(c) defines ‘‘Legacy Disciplinary
Proceedings’’ to include disciplinary charges,
executed (but not yet approved) stipulations and
consents, suspensions, summary proceedings, and
summary fine notices for minor rule violations.
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2 17
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23:33 Oct 02, 2008
Jkt 217001
disciplinary proceedings to such Legacy
Disciplinary Proceedings. Accordingly,
Amex proposes to adopt new Rule 478T
to set forth the temporary procedures
that will apply to such Legacy
Disciplinary Proceedings. This rule will
become operative as of the closing of the
Mergers and Related Transactions.
Currently, the procedural rules
governing Amex disciplinary
proceedings are set forth in portions of
the Amex Constitution, Amex Rule 345,
and the Rules of Procedure in
Disciplinary Matters (collectively, the
‘‘Legacy Disciplinary Procedural
Rules’’). Proposed NYSE Alternext US
Rule 478T will effectively ‘‘grandfather’’
the substance of these Legacy
Disciplinary Procedural Rules with
respect to resolution of disciplinary
matters by means of a settlement (i.e.,
stipulation and consent) or hearing at
NYSE Alternext US. The Legacy
Disciplinary Procedural Rules, as
incorporated in proposed Rule 478T(c),
have been modified in certain respects
from their current form, to account for
certain changes in the disciplinary
structures and processes at NYSE
Alternext US that are expected as a
consequence of the Mergers and Related
Transactions.7
Amex proposes to replace the Amex
roster of appointed hearing officers and
hearing board members from which the
chairman and members of individuallyconstituted disciplinary hearing panels
are selected, with a new roster
appointed by the Chairman of the NYSE
Alternext US Board of Directors (‘‘NYSE
Alternext US Board’’) pursuant to
proposed NYSE Alternext US Rule
476(b). Notwithstanding the change in
the manner in which the roster of
hearing officers and hearing board
members is assembled, the process of
selection of hearing officers and hearing
board members from that roster to serve
on an individual hearing panel will not
change.8
In addition, appeals from disciplinary
determinations will be governed solely
by the proposed NYSE Alternext US
rules pertaining to appeals.9
Specifically, Amex proposes to
eliminate the Amex Adjudicatory
Council (‘‘AAC’’), a body which
currently hears appeals from
determinations of Amex disciplinary
panels, and whose decisions, in turn,
7 See paragraph (c) of proposed NYSE Alternext
US Rule 478T(c).
8 Amex notes that the proposed NYSE Alternext
US roster of appointed hearing officers and hearing
board members would be substantially similar to
that of the NYSE.
9 See proposed NYSE Alternext US Rules 475(c)
and (j) and 476(e)–(g), and Amex Merger Notice,
supra note 4.
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Frm 00119
Fmt 4703
Sfmt 4703
can be further appealed to Amex’s
Board of Governors. Instead, these
functions of the AAC will be performed
by the NYSE Alternext US Board or by
an official standing committee of NYSE
Regulation (the ‘‘NYSE Regulation
Committee’’), in the sole discretion of
the NYSE Alternext US Board.10 The
NYSE Regulation Committee will be
charged with the responsibility to
review determinations in Legacy
Disciplinary Proceedings 11 and render
advisory opinions to the NYSE
Alternext US Board, which will have
the ultimate responsibility to rule on
such appeals.12 The NYSE Regulation
Committee will be expanded to include
at least four individuals who are
associated with member organizations
of NYSE Alternext US.13
10 See paragraph (b) of proposed NYSE Alternext
US Rule 478T(c).
11 Section 3(f) of Legacy Article V of the Amex
Constitution and Section 5(a) of Legacy Article IV
of the Amex Constitution hold open the possibility
that the NYSE Regulation Committee may also be
charged with the responsibility to hear: (i) Appeals
from suspensions of members and member
organizations in view of their financial and/or
operating condition and (ii) applications for
reinstatement following such suspensions.
12 Specifically, any review of a disciplinary
decision shall be conducted by the NYSE Alternext
US Board or the NYSE Regulation Committee, in
the sole discretion of the NYSE Alternext US Board.
Upon review, and with the advice of the NYSE
Regulation Committee, the NYSE Alternext US
Board, by the affirmative vote of a majority of the
NYSE Alternext US Board then in office, may
sustain any determination or penalty imposed, or
both, may modify or reverse any such
determination, and may increase, decrease or
eliminate any such penalty, or impose any penalty
permitted under the provisions of Rule 476. Unless
the NYSE Alternext US Board otherwise
specifically directs, the determination and penalty,
if any, of the NYSE Alternext US Board after review
shall be final and conclusive subject to the
provisions for review of the Act.
13 These new members of the NYSE Regulation
Committee must include at least one of each of the
following: (1) An individual associated with a
member organization of NYSE Alternext US that
engages in a business involving substantial direct
contact with securities customers; (2) An individual
associated with an member organization of NYSE
Alternext US that is registered as a specialist and
spends a substantial part of his or her time on the
trading floor of NYSE Alternext US; (3) an
individual associated with a member organization
of NYSE Alternext US not registered as a specialist
that spends a majority of his or her time on the
trading floor of NYSE Alternext US and has as a
substantial part of his business the execution of
transactions on the trading floor of NYSE Alternext
US for other than his or her own account or the
account of his NYSE Alternext US member
organization; and (4) an individual associated with
a NYSE Alternext US Member Organization not
registered as a specialist that spends a majority of
his or her time on the trading floor of NYSE
Alternext US and has as a substantial part of his or
her business the execution of transactions on the
trading floor of NYSE Alternext US for his own
account or the account of his or her NYSE Alternext
US Member Organization. See Securities Exchange
Act Release No. 58285 (August 1, 2008), 73 FR
46117 (SR–NYSE–2008–60).
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Federal Register / Vol. 73, No. 193 / Friday, October 3, 2008 / Notices
After careful review, the Commission
finds that the proposed rule change is
consistent with the requirements of the
Act and the rules and regulation
thereunder applicable to a national
securities exchange.14 In particular, the
Commission finds that the proposed
rule change is consistent with Sections
6(b)(6) and 6(b)(7) of the Act 15 in that
it provides a fair procedure for the
discipline of members and persons
associated with members. The
Commission further finds that the
proposed rule change provides NYSE
Alternext US with the ability to comply,
and with the authority to enforce
compliance by its members and persons
associated with its members, with the
provisions of the Act, the rules or
regulations thereunder, or the rules of
NYSE Alternext US.
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, that the
proposed rule change (SR–Amex–2008–
64), be and hereby is approved.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.16
Florence E. Harmon,
Acting Secretary.
[FR Doc. E8–23314 Filed 10–2–08; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–58673; File Nos. SR–Amex–
2008–62 and SR–NYSE–2008–60]
Self-Regulatory Organizations;
American Stock Exchange LLC; Notice
of Filing of Amendment No. 4 and
Order Granting Accelerated Approval
to a Proposed Rule Change, as
Modified by Amendments No. 1 and 4
Thereto, Relating to the Acquisition of
the Amex by NYSE Euronext; SelfRegulatory Organizations; New York
Stock Exchange LLC; Order Granting
Approval to a Proposed Rule Change,
as Modified by Amendment No. 1
Thereto, Relating to the Acquisition of
the Amex by NYSE Euronext
September 29, 2008.
I. Introduction
On July 23, 2008, American Stock
Exchange LLC, a Delaware limited
liability company (‘‘Amex’’), filed with
the Securities and Exchange
Commission (‘‘Commission’’), pursuant
to Section 19(b)(1) of the Securities
Exchange Act of 1934 (‘‘Act’’) 1 and Rule
19b–4 thereunder,2 a proposed rule
change in connection with the
acquisition of Amex by NYSE Euronext,
a Delaware Corporation (‘‘NYSE
Euronext’’). On July 30, 2008, Amex
filed Amendment No. 1 to the proposed
rule change. On August 7, 2008, the
proposed rule change, as amended, was
published for comment in the Federal
Register.3 Amex filed Amendment No. 2
to the proposed rule change on
September 3, 2008, and withdrew
Amendment No. 2 on September 4,
2008. Amex filed Amendment No. 3 on
September 4, 2008, and withdrew
Amendment No. 3 on September 5,
2008. Amex filed Amendment No. 4 on
September 5, 2008.4 The Commission
1 15
U.S.C. 78s(b)(1).
CFR 240.19b–4.
3 See Securities Exchange Act Release No. 58284
(August 1, 2008), 73 FR 46086 (‘‘Amex Notice’’).
4 In Amendment No. 4, Amex: (1) Made several
technical, non-substantive clarifying changes to the
proposed NYSE Alternext US LLC rules; (2)
amended the proposed NYSE Alternext US LLC
rules to provide for other Amex proposed rule
changes that have been approved since this
proposal was filed; (3) modified the description of
Arca Securities, LLC (‘‘Arca Securities) to include,
among other things, a representation that, with
respect to its oversight of Arca Securities, which
will be an affiliated member of NYSE Alternext US
LLC after the Mergers and Related Transactions (as
described herein), NYSE Regulation, Inc. (‘‘NYSE
Regulation’’) has agreed with Amex that it will
provide a report to NYSE Alternext US LLC’s Chief
Regulatory Officer on a quarterly basis that: (a)
Quantifies all open alerts (of which NYSE
Regulation is aware) that identify Arca Securities as
a participant that has potentially violated NYSE
Alternext US LLC or Commission rules and (b)
mstockstill on PROD1PC66 with NOTICES
2 17
14 In approving the proposal, the Commission has
considered the proposed rules’ impact on
efficiency, competition, and capital formation. See
15 U.S.C. 78c(f).
15 15 U.S.C. 78f(b)(6) and 15 U.S.C. 78f(b)(7).
16 17 CFR 200.30–3(a)(12).
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23:33 Oct 02, 2008
Jkt 217001
PO 00000
Frm 00120
Fmt 4703
Sfmt 4703
57707
received no comments on the proposed
rule change. This order provides notice
of filing of Amendment No. 4 to the
proposed rule change, and grants
accelerated approval to the proposed
rule change, as modified by
Amendments No. 1 and 4.
On July 23, 2008, the New York Stock
Exchange LLC (‘‘NYSE’’), a New York
limited liability company, filed with the
Commission, pursuant to Section
19(b)(1) of the Act 5 and Rule 19b–4
thereunder,6 a proposed rule change in
connection with the acquisition of
Amex by NYSE Euronext. On July 30,
2008, the NYSE filed Amendment No. 1
to the proposed rule change. On August
7, 2008, the proposed rule change, as
amended, was published for comment
in the Federal Register.7 The
Commission received no comments on
the proposed rule change. This order
grants approval to the proposed rule
change, as modified by Amendment No.
1.
II. Background
On January 17, 2008, NYSE Euronext,
Amex, Amex’s parent companies (The
Amex Membership Corporation (‘‘MC’’)
and its direct wholly-owned subsidiary,
AMC Acquisition Sub, Inc.), and several
other entities created by NYSE Euronext
and Amex in connection with the
Mergers entered into an agreement
(‘‘Merger Agreement’’) to effect a series
of mergers (‘‘Mergers’’) as a result of
which the successor to Amex, to be
renamed ‘‘NYSE Alternext US LLC’’
(‘‘NYSE Alternext US’’), will become a
quantifies the number of all open investigations that
identify Arca Securities as a participant that has
potentially violated NYSE Alternext US LLC or
Commission rules; (4) revised the rule filing to
reflect that the parties to a multi-party regulatory
services agreement (as described herein) have been
modified to include NYSE Alternext US LLC, NYSE
Group, Inc., NYSE Regulation, and Financial
Industry Regulatory Authority (‘‘FINRA’’); (5)
revised the rule filing to reflect a change to the
Mergers and Related Transactions, which will not
affect the final outcome of the Mergers and Related
Transactions (as described herein) through which
NYSE Alternext US LLC will become a subsidiary
of NYSE Euronext; and (6) clarified that Arca
Securities will not provide ‘‘outbound’’ routing
services for NYSE Alternext US LLC until the
relocation of the NYSE Alternext US LLC equities
and options trading facilities to the NYSE trading
floor or the electronic trading platform of NYSE or
NYSE Arca, Inc., as applicable, and that, at a later
time, NYSE Alternext US LLC will submit a
separate rule filing to the Commission seeking
approval to provide such outbound routing services
to NYSE Alternext US LLC.
5 15 U.S.C. 78s(b)(1).
6 17 CFR 240.19b–4.
7 See Securities Exchange Act Release No. 58285
(August 1, 2008,) 73 FR 46117 (SR–NYSE–2008–60)
(‘‘NYSE Notice’’).
E:\FR\FM\03OCN1.SGM
03OCN1
]]>Agencies
[Federal Register Volume 73, Number 193 (Friday, October 3, 2008)]
[Notices]
[Pages 57705-57707]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E8-23314]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-58678; File No. SR-Amex-2008-64]
Self-Regulatory Organizations; American Stock Exchange LLC; Order
Approving the Adoption of New Rule 478T To Set Forth the Temporary
Procedures That Will Apply To Disciplinary Proceedings Pending as of
the Closing Date of the Acquisition of Amex by NYSE Euronext
September 29, 2008.
On July 28, 2008, American Stock Exchange LLC, a Delaware limited
[[Page 57706]]
liability company (``Amex'' or ``Exchange''), filed with the Securities
and Exchange Commission (``Commission''), pursuant to Section 19(b)(1)
of the Securities Exchange Act of 1934 (``Act'') \1\ and Rule 19b-4
thereunder,\2\ a proposed rule change to adopt a new rule to set forth
the temporary procedures that would apply to the disciplinary
proceedings pending with the Exchange as of the closing date of the
acquisition of Amex by NYSE Euronext (``Transaction Date''). On August
7, 2008, the proposed rule change was published for comment in the
Federal Register.\3\ The Commission received no comments on the
proposed rule change. This order grants approval to the proposed rule
change.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
\3\ See Securities Exchange Act Release No. 58286 (August 1,
2008), 73 FR 46097 (``Amex Notice'').
---------------------------------------------------------------------------
Pursuant to an agreement dated January 17, 2008, NYSE Euronext, the
ultimate parent company of NYSE, Inc. (``NYSE'') and NYSE Arca, Inc.
(``NYSE Arca''), is acquiring Amex, through a series of mergers
(``Mergers'').\4\ Upon completion of the Mergers and Related
Transactions, Amex will continue to operate as a national securities
exchange under Section 6 of the Act and will be renamed NYSE Alternext
US LLC (``NYSE Alternext US'').
---------------------------------------------------------------------------
\4\ Immediately following the Mergers, NYSE Euronext plans to
effectuate certain related transactions, as a result of which NYSE
Alternext US will become a direct wholly-owned subsidiary of NYSE
Group, Inc. (``NYSE Group''), the wholly-owned subsidiary of NYSE
Euronext (``Related Transactions''). For a detailed description of
the Mergers and Related Transactions, see Securities Exchange Act
Release No. 58284 (August 1, 2008), 73 FR 46086 (SR-Amex-2008-62)
(``Amex Merger Notice'').
---------------------------------------------------------------------------
In a separate proposed rule change adopting various rules in
connection with the Mergers and Related Transactions, Amex proposes to
adopt new NYSE Alternext US Rules 475, 476 and 477 as its disciplinary
rules, which are substantially similar to the existing NYSE
disciplinary rules.\5\ To avoid any potential confusion to respondents
in disciplinary matters that had been commenced by Amex and still
pending as of the Transaction Date (each, a ``Legacy Disciplinary
Proceeding''),\6\ Amex proposes applying rules that are substantially
similar to the current procedures governing Amex disciplinary
proceedings to such Legacy Disciplinary Proceedings. Accordingly, Amex
proposes to adopt new Rule 478T to set forth the temporary procedures
that will apply to such Legacy Disciplinary Proceedings. This rule will
become operative as of the closing of the Mergers and Related
Transactions.
---------------------------------------------------------------------------
\5\ See Amex Merger Notice, supra note 4 and Securities Exchange
Act Release No. 58673 (September 29, 2009) (order approving SR-Amex-
2008-62).
\6\ Paragraph (a) of proposed NYSE Alternext US Rule 478T(c)
defines ``Legacy Disciplinary Proceedings'' to include disciplinary
charges, executed (but not yet approved) stipulations and consents,
suspensions, summary proceedings, and summary fine notices for minor
rule violations.
---------------------------------------------------------------------------
Currently, the procedural rules governing Amex disciplinary
proceedings are set forth in portions of the Amex Constitution, Amex
Rule 345, and the Rules of Procedure in Disciplinary Matters
(collectively, the ``Legacy Disciplinary Procedural Rules''). Proposed
NYSE Alternext US Rule 478T will effectively ``grandfather'' the
substance of these Legacy Disciplinary Procedural Rules with respect to
resolution of disciplinary matters by means of a settlement (i.e.,
stipulation and consent) or hearing at NYSE Alternext US. The Legacy
Disciplinary Procedural Rules, as incorporated in proposed Rule
478T(c), have been modified in certain respects from their current
form, to account for certain changes in the disciplinary structures and
processes at NYSE Alternext US that are expected as a consequence of
the Mergers and Related Transactions.\7\
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\7\ See paragraph (c) of proposed NYSE Alternext US Rule
478T(c).
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Amex proposes to replace the Amex roster of appointed hearing
officers and hearing board members from which the chairman and members
of individually-constituted disciplinary hearing panels are selected,
with a new roster appointed by the Chairman of the NYSE Alternext US
Board of Directors (``NYSE Alternext US Board'') pursuant to proposed
NYSE Alternext US Rule 476(b). Notwithstanding the change in the manner
in which the roster of hearing officers and hearing board members is
assembled, the process of selection of hearing officers and hearing
board members from that roster to serve on an individual hearing panel
will not change.\8\
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\8\ Amex notes that the proposed NYSE Alternext US roster of
appointed hearing officers and hearing board members would be
substantially similar to that of the NYSE.
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In addition, appeals from disciplinary determinations will be
governed solely by the proposed NYSE Alternext US rules pertaining to
appeals.\9\ Specifically, Amex proposes to eliminate the Amex
Adjudicatory Council (``AAC''), a body which currently hears appeals
from determinations of Amex disciplinary panels, and whose decisions,
in turn, can be further appealed to Amex's Board of Governors. Instead,
these functions of the AAC will be performed by the NYSE Alternext US
Board or by an official standing committee of NYSE Regulation (the
``NYSE Regulation Committee''), in the sole discretion of the NYSE
Alternext US Board.\10\ The NYSE Regulation Committee will be charged
with the responsibility to review determinations in Legacy Disciplinary
Proceedings \11\ and render advisory opinions to the NYSE Alternext US
Board, which will have the ultimate responsibility to rule on such
appeals.\12\ The NYSE Regulation Committee will be expanded to include
at least four individuals who are associated with member organizations
of NYSE Alternext US.\13\
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\9\ See proposed NYSE Alternext US Rules 475(c) and (j) and
476(e)-(g), and Amex Merger Notice, supra note 4.
\10\ See paragraph (b) of proposed NYSE Alternext US Rule
478T(c).
\11\ Section 3(f) of Legacy Article V of the Amex Constitution
and Section 5(a) of Legacy Article IV of the Amex Constitution hold
open the possibility that the NYSE Regulation Committee may also be
charged with the responsibility to hear: (i) Appeals from
suspensions of members and member organizations in view of their
financial and/or operating condition and (ii) applications for
reinstatement following such suspensions.
\12\ Specifically, any review of a disciplinary decision shall
be conducted by the NYSE Alternext US Board or the NYSE Regulation
Committee, in the sole discretion of the NYSE Alternext US Board.
Upon review, and with the advice of the NYSE Regulation Committee,
the NYSE Alternext US Board, by the affirmative vote of a majority
of the NYSE Alternext US Board then in office, may sustain any
determination or penalty imposed, or both, may modify or reverse any
such determination, and may increase, decrease or eliminate any such
penalty, or impose any penalty permitted under the provisions of
Rule 476. Unless the NYSE Alternext US Board otherwise specifically
directs, the determination and penalty, if any, of the NYSE
Alternext US Board after review shall be final and conclusive
subject to the provisions for review of the Act.
\13\ These new members of the NYSE Regulation Committee must
include at least one of each of the following: (1) An individual
associated with a member organization of NYSE Alternext US that
engages in a business involving substantial direct contact with
securities customers; (2) An individual associated with an member
organization of NYSE Alternext US that is registered as a specialist
and spends a substantial part of his or her time on the trading
floor of NYSE Alternext US; (3) an individual associated with a
member organization of NYSE Alternext US not registered as a
specialist that spends a majority of his or her time on the trading
floor of NYSE Alternext US and has as a substantial part of his
business the execution of transactions on the trading floor of NYSE
Alternext US for other than his or her own account or the account of
his NYSE Alternext US member organization; and (4) an individual
associated with a NYSE Alternext US Member Organization not
registered as a specialist that spends a majority of his or her time
on the trading floor of NYSE Alternext US and has as a substantial
part of his or her business the execution of transactions on the
trading floor of NYSE Alternext US for his own account or the
account of his or her NYSE Alternext US Member Organization. See
Securities Exchange Act Release No. 58285 (August 1, 2008), 73 FR
46117 (SR-NYSE-2008-60).
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[[Page 57707]]
After careful review, the Commission finds that the proposed rule
change is consistent with the requirements of the Act and the rules and
regulation thereunder applicable to a national securities exchange.\14\
In particular, the Commission finds that the proposed rule change is
consistent with Sections 6(b)(6) and 6(b)(7) of the Act \15\ in that it
provides a fair procedure for the discipline of members and persons
associated with members. The Commission further finds that the proposed
rule change provides NYSE Alternext US with the ability to comply, and
with the authority to enforce compliance by its members and persons
associated with its members, with the provisions of the Act, the rules
or regulations thereunder, or the rules of NYSE Alternext US.
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\14\ In approving the proposal, the Commission has considered
the proposed rules' impact on efficiency, competition, and capital
formation. See 15 U.S.C. 78c(f).
\15\ 15 U.S.C. 78f(b)(6) and 15 U.S.C. 78f(b)(7).
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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,
that the proposed rule change (SR-Amex-2008-64), be and hereby is
approved.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\16\
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\16\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Acting Secretary.
[FR Doc. E8-23314 Filed 10-2-08; 8:45 am]
BILLING CODE 8011-01-P
