Self-Regulatory Organizations; Notice of Filing of Proposed Rule Change, as Modified by Amendment No. 1, by International Securities Exchange, LLC Relating to Changes to the Third Amended and Restated Limited Liability Company Operating Agreement of Direct Edge Holdings LLC, 10322-10324 [E9-4962]
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10322
Federal Register / Vol. 74, No. 45 / Tuesday, March 10, 2009 / Notices
not adversely affect the safeguarding of
securities and funds in the custody or
control of the clearing agency or for
which it is responsible and does not
significantly affect the respective rights
or obligations of the clearing agency or
persons using the service. At any time
within 60 days of the filing of the
proposed rule change, the Commission
may summarily abrogate such rule
change if it appears to the Commission
that such action is necessary or
appropriate in the public interest, for
the protection of investors, or otherwise
in furtherance of the purposes of the
Act.
IV. Solicitation of Comments
Interested persons are invited to
submit written data, views and
arguments concerning the foregoing,
including whether the proposed rule
change is consistent with the Act.
Comments may be submitted by any of
the following methods:
Electronic Comments
• Use the Commission’s Internet
comment form (https://www.sec.gov/
rules/sro.shtml); or
• Send an e-mail to rulecomments@sec.gov. Please include File
No. SR–FICC–2009–01 on the subject
line.
Paper Comments
• Send paper comments in triplicate
to Elizabeth M. Murphy, Secretary,
Securities and Exchange Commission,
Station Place, 100 F Street, NE.,
Washington, DC 20549–1090.
All submissions should refer to File No.
SR–FICC–2009–01. This file number
should be included on the subject line
if e-mail is used. To help the
Commission process and review your
comments more efficiently, please use
only one method. The Commission will
post all comments on the Commission’s
Internet Web site (https://www.sec.gov/
rules/sro.shtml). Copies of the
submission, all subsequent
amendments, all written statements
with respect to the proposed rule
change that are filed with the
Commission, and all written
communications relating to the
proposed rule change between the
Commission and any person, other than
those that may be withheld from the
public in accordance with the
provisions of 5 U.S.C. 552, will be
available for inspection and copying in
the Commission’s Public Reference
Room, 450 Fifth Street, NW.,
Washington, DC 20549, on official
business days between the hours of 10
a.m. and 3 p.m. Copies of such filing
also will be available for inspection and
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copying at FICC’s principal office and
on FICC’s Web site at https://ficc.com/
gov/gov.docs.jsp?NS-query=#rf. All
comments received will be posted
without change; the Commission does
not edit personal identifying
information from submissions. You
should submit only information that
you wish to make available publicly. All
submissions should refer to File No.
SR–FICC–2009–01 and should be
submitted on or before March 31, 2009.
For the Commission by the Division of
Trading and Markets, pursuant to delegated
authority.8
Florence E. Harmon,
Deputy Secretary.
[FR Doc. E9–5057 Filed 3–9–09; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–59492; File No. SR–ISE–
2009–08]
Self-Regulatory Organizations; Notice
of Filing of Proposed Rule Change, as
Modified by Amendment No. 1, by
International Securities Exchange, LLC
Relating to Changes to the Third
Amended and Restated Limited
Liability Company Operating
Agreement of Direct Edge Holdings
LLC
March 3, 2009.
Pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934 (the
‘‘Act’’),1 and Rule 19b–4 thereunder,2
notice is hereby given that on February
27, 2009, the International Securities
Exchange, LLC (the ‘‘Exchange’’ or the
‘‘ISE’’) filed with the Securities and
Exchange Commission (‘‘Commission’’)
the proposed rule change, as described
in Items I, II, and III below, which items
have been prepared by the selfregulatory organization. On March 3,
2009, the Exchange filed Amendment
No. 1 to the proposed rule change. The
Commission is publishing this notice to
solicit comments on the proposed rule
change, as modified by Amendment No.
1, from interested persons.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The Exchange proposes to make
changes to the Third Amended and
Restated Limited Liability Company
Operating Agreement of Direct Edge
Holdings LLC (‘‘Third Amended and
Restated DE Operating Agreement’’) to
8 17
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
1 15
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preserve the right of the DB US
Financial Markets Holding Corporation,
LabMorgan Corporation, Merrill Lynch
L.P. Holdings, Inc., Nomura Securities
International, Inc., and Sun Partners
LLC (together, the ‘‘ISE Stock Exchange
Consortium Members’’), who were
formerly minority unitholders of the ISE
Stock Exchange, LLC, as defined below,
to retain the right to designate a
Manager to Direct Edge Holdings Board
of Managers 3 on an ongoing basis. The
text of the proposed rule change is
available on the Exchange’s Web site
https://www.ise.com, at the principal
office of the Exchange, and at the
Commission’s Public Reference Room.
II. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
In its filing with the Commission, the
Exchange included statements
concerning the purpose of, and basis for,
the proposed rule change and discussed
any comments it received on the
proposed rule change. The text of these
statements may be examined at the
places specified in Item IV below. The
self-regulatory organization has
prepared summaries, set forth in
Sections A, B and C below, of the most
significant aspects of such statements.
A. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
1. Purpose
On December 23, 2008, the ISE closed
a transaction whereby, among other
things, ISE Stock Exchange, LLC (‘‘ISE
Stock Exchange’’), a Delaware limited
liability company, merged with and into
Maple Merger Sub, LLC (‘‘Maple Merger
Sub’’), a Delaware limited liability
company and a wholly owned
subsidiary of Direct Edge Holdings LLC
(‘‘Direct Edge’’), with Maple Merger Sub
being the surviving entity.4 As part of
the same transaction, ISE Holdings
purchased equity interests in Direct
Edge such that subsequent to
completing the transaction, ISE
Holdings owns a 31.54% equity interest
in Direct Edge. Following the closing of
the transaction and the merger of ISE
3 Pursuant to Section 7.1(a) of the Third Amended
and Restated DE Operating Agreement, each
Manager is designated as a ‘‘manager’’ of Direct
Edge within the meaning of the Securities and [sic]
Exchange Act of 1934 (the ‘‘Exchange Act’’).
4 See Exchange Act Release No. 59135 (December
22, 2008), 73 FR 79954 (December 30, 2008)(SR–
ISE–2008–85)(Order approving a proposed rule
change, as modified by amendment no. 1, relating
to the purchase by International Securities
Exchange Holdings, Inc. (‘‘ISE Holdings’’) of an
ownership interest in Direct Edge).
E:\FR\FM\10MRN1.SGM
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Federal Register / Vol. 74, No. 45 / Tuesday, March 10, 2009 / Notices
Stock Exchange into Maple Merger Sub,
Maple Merger Sub now owns and
operates the marketplace for the trading
of U.S. cash equities by Equity
Electronic Access Members (‘‘Equity
EAMs’’) of ISE under the rules of ISE,
as a facility, as that term is defined in
Section 3(a)(2) of the Exchange Act 5 of
ISE (the ‘‘Facility’’ or ‘‘ISE Stock’’).6
ISE is a registered national securities
exchange under Section 6 of the
Exchange Act and a self-regulatory
organization (‘‘SRO’’). As a facility of
ISE, the Facility is subject to regulation
by ISE and oversight by the Securities
and Exchange Commission
(‘‘Commission’’ or ‘‘SEC’’).
The Third Amended and Restated DE
Operating Agreement contains
provisions designed to ensure that any
changes to the Third Amended and
Restated DE Operating Agreement be
first reviewed by ISE to determine
whether such change must be filed with
the SEC. For example, Section 15.2 of
the Third Amended and Restated DE
Operating Agreement provides that
before any amendment to any provision
of the Third Amended and Restated DE
Operating Agreement shall be effective,
such amendment shall be submitted to
ISE and if ISE determines that such
amendment must be filed with, or filed
with and approved by, the SEC before
the amendment may be effective under
Section 19 of the Exchange Act and the
rules promulgated under the Exchange
Act or otherwise, then the proposed
amendment to the Third Amended and
Restated DE Operating Agreement shall
not be effective until filed with, or filed
with and approved by, the SEC, as the
case may be.
Direct Edge is now proposing to
amend and restate the Third Amended
and Restated DE Operating Agreement
to preserve the right of the ISE Stock
Exchange Consortium Members to retain
the right to designate a manager to
Direct Edge’s Board of Managers so long
as such ISE Stock Exchange Consortium
Members own at least 5% in Direct
Edge. Currently the ISE Stock Exchange
Consortium Members have a collective
ownership interest of 8.76% in Direct
Edge. The ISE Stock Exchange
Consortium Members have a right,
pursuant to Section 7.1(a)(2) of the
Third Amended and Restated DE
Operating Agreement, to appoint a
Manager provided that their Percentage
5 15
U.S.C. 78c(a)(2).
Edge is planning to file two Form 1
Applications to own and operate two national
securities exchanges. If the Commission approves
the Form 1 Applications, the Facility will cease
operations.
6 Direct
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15:20 Mar 09, 2009
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Interest 7 does not fall below 7.5%. The
ISE Stock Exchange Consortium
Members expressed concern that their
Percentage Interest could be diluted
below the 7.5% threshold for appointing
a Manager and that potential sales by
ISE Stock Exchange Consortium
Members to parties who are not ISE
Stock Exchange Consortium Members
could also have an unintended dilutive
effect. Accordingly, Direct Edge is now
proposing to amend and restate the
Third Amended and Restated DE
Operating Agreement to mitigate the
potential for such dilutive events.
Specifically, Direct Edge is seeking to
amend Section 7.2(a)(2) by: (i) Lowering
the ownership threshold for appointing
a Manager from 7.5% Percentage
Interest to a 5% Percentage Interest; and
(ii) providing a right of first refusal to
the ISE Stock Exchange Consortium
Members with respect to certain sales of
other ISE Stock Exchange Consortium
Members to parties who are not ISE
Stock Exchange Consortium Members.
Consistent with the requirements set
forth in Section 15.2, the ISE has
reviewed the proposed changes to the
Third Amended and Restated DE
Operating Agreement and has
determined that such changes shall not
be effective until filed with and
approved by the SEC. Accordingly, ISE
hereby submits the proposed changes
and seeks Commission approval of such
changes so that Direct Edge may execute
the Fourth Amended and Restated
Limited Liability Company Operating
Agreement of Direct Edge Holdings LLC
(‘‘Fourth Amended and Restated DE
Operating Agreement’’).
Additionally, Direct Edge proposes to
make other non-substantive clean-up
changes necessary to reflect that this
agreement has been changed from the
Third Amended and Restated DE
Operating Agreement to the Fourth
Amended and Restated Operating
Agreement.
2. Statutory Basis
The Exchange believes that the
proposed rule change is consistent with
the provisions of Section 6 of the
Exchange Act,8 in general, and with
Sections 6(b)(1) and (b)(5) of the
Exchange Act,9 in particular, in that the
proposal enables the Exchange and the
Facility to be so organized as to have the
capacity to be able to carry out the
purposes of the Exchange Act and to
comply with and enforce compliance by
7 ‘‘Percentage Interest’’ means, with respect to a
member, the ratio of the number of Units held by
the member to the total of all of the issued and
outstanding Units, expressed as a percentage.
8 15 U.S.C. 78f.
9 15 U.S.C. 78f(b)(1), (5).
PO 00000
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Fmt 4703
Sfmt 4703
10323
members and persons associated with
members with provisions of the
Exchange Act, the rules and regulations
thereunder, and SRO rules, and is
designed to prevent fraudulent and
manipulative acts and practices, to
promote just and equitable principles of
trade, to foster cooperation and
coordination with persons engaged in
regulating, clearing, settling, processing
information with respect to, and
facilitating transactions in securities, 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.
B. Self-Regulatory Organization’s
Statement on Burden on Competition
The proposed rule change does not
impose any burden on competition that
is not necessary or appropriate in
furtherance of the purposes of the Act.
C. Self-Regulatory Organization’s
Statement on Comments on the
Proposed Rule Change Received From
Members, Participants or Others
The Exchange has not solicited, and
does not intend to solicit, comments on
this proposed rule change. The
Exchange has not received any
unsolicited written comments from
members or other interested parties.
III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
Within 35 days of the date of
publication of this notice in the Federal
Register or within such longer period (i)
as the Commission may designate up to
90 days of such date if it finds such
longer period to be appropriate and
publishes its reasons for so finding or
(ii) as to which the self-regulatory
organization consents, the Commission
will:
(a) By order approve such proposed
rule change; or
(b) institute proceedings to determine
whether the proposed rule change
should be disapproved.
IV. Solicitation of Comments
Interested persons are invited to
submit written data, views and
arguments concerning the foregoing,
including whether the proposed rule
change is consistent with the Act.
Comments may be submitted by any of
the following methods:
Electronic Comments
• Use the Commission’s Internet
comment form (https://www.sec.gov/
rules.sro.shtml ); or
E:\FR\FM\10MRN1.SGM
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10324
Federal Register / Vol. 74, No. 45 / Tuesday, March 10, 2009 / Notices
• Send an e-mail to rulecomments@sec.gov. Please include File
Number SR–ISE–2009–08 on the subject
line.
Paper Comments
• Send paper comments in triplicate
to Elizabeth M. Murphy, Secretary,
Securities and Exchange Commission,
100 F Street, NE., Washington, DC
20549–1090.
All submissions should refer to File
Number SR–ISE–2009–08. This file
number should be included on the
subject line if e-mail is used. To help the
Commission process and review your
comments more efficiently, please use
only one method. The Commission will
post all comments on the Commission’s
Internet Web site (https://www.sec.gov/
rules/sro.shtml ). Copies of the
submission, all subsequent
amendments, all written statements
with respect to the proposed rule
change that are filed with the
Commission, and all written
communications relating to the
proposed rule change between the
Commission and any person, other than
those that may be withheld from the
public in accordance with the
provisions of 5 U.S.C. 552, will be
available for inspection and copying in
the Commission’s Public Reference
Room, on business days between the
hours of 10 a.m. and 3 p.m., located at
100 F Street, NE., Washington, DC
20549. Copies of such filing also will be
available for inspection and copying at
the principal office of the Exchange. All
comments received will be posted
without change; the Commission does
not edit personal identifying
information from submissions. You
should submit only information that
you wish to make available publicly. All
submissions should refer to File
Number SR–ISE–2009–08 and should be
submitted on or before March 31, 2009.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.10
Florence E. Harmon,
Deputy Secretary.
[FR Doc. E9–4962 Filed 3–9–09; 8:45 am]
BILLING CODE 8011–01–P
[Release No. 34–59485; File No. SR–
Nasdaq–2009–016]
Self-Regulatory Organizations; Notice
of Filing and Immediate Effectiveness
of Proposed Rule Change by The
NASDAQ Stock Market LLC To
Eliminate the $3 Price Requirement for
Continued Approval for an Underlying
Security and Listing Additional Series
of Options
comments it received on the proposed
rule change. The text of these statements
may be examined at the places specified
in Item IV below. Nasdaq has prepared
summaries, set forth in sections A, B,
and C below, of the most significant
aspects of such statements.
A. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
SECURITIES AND EXCHANGE
COMMISSION
March 2, 2009.
Pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934
(‘‘Act’’) 1 and Rule 19b–4 thereunder,2
notice is hereby given that on February
27, 2009, The NASDAQ Stock Market
LLC (‘‘Nasdaq’’ or ‘‘Exchange’’) filed
with the Securities and Exchange
Commission (‘‘Commission’’) the
proposed rule change as described in
Items I and II below, which Items have
been prepared by the Exchange. Nasdaq
has designated the proposed rule change
as constituting a non-controversial rule
change under Rule 19b–4(f)(6) under the
Act,3 which renders the proposal
effective upon filing with the
Commission. The Commission is
publishing this notice to solicit
comments on the proposed rule change
from interested persons.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
Nasdaq proposes for NOM to modify
Chapter IV, Section 4 (Securities Traded
on NOM) of its options rules to
eliminate the $3 market price per share
requirement for continued approval for
an underlying security. Nasdaq also
proposes to modify Section 4 by
eliminating the prohibition against
listing additional series of options on an
underlying security at any time when
the price per share of such underlying
security is less than $3.
The text of the proposed rule change
is available from Nasdaq’s website at
https://nasdaq.cchwallstreet.com, at
Nasdaq’s principal office, and at the
Commission’s Public Reference Room.
II. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
In its filing with the Commission,
Nasdaq included statements concerning
the purpose of and basis for the
proposed rule change and discussed any
U.S.C. 78s(b)(1).
CFR 240.19b–4.
3 17 CFR 240.19b–4(f)(6).
1. Purpose
The purpose of this proposed rule
change is to eliminate the $3 market
price per share requirement for
continued approval for an underlying
security from Chapter IV, Section 4 of
NOM options rules. This proposed rule
change also eliminates the prohibition
against listing additional series or
options on an underlying security at any
time when the price per share of such
underlying security is less than $3.
NOM’s rules require that the market
price for a security be at least $3 on the
previous trading day for the continued
listing of options on that underlying
security. If the price of an underlying
security falls below $3, Nasdaq can
continue to trade then-listed series on
that underlying security, but is unable
to list new series of options. Nasdaq
believes that the current $3 market price
per share requirement could have a
negative effect on investors. For
example, in the current volatile market
environment in which the market price
for a large number of securities has
fallen below $3, Nasdaq is currently
unable to list new series on underlying
securities trading below $3. If there is
market demand for series below $3,
Nasdaq would be unable to
accommodate such requests and
investors would be unable to hedge
their positions with options series with
strikes below $3.
Nasdaq believes that the $3 market
price per share requirement is no longer
necessary or appropriate, and therefore
proposes that underlying securities
meeting the remaining continued listing
criteria set forth in Chapter IV, Section
4 will be eligible for continued listing
and the listing of additional options
series.
2. Statutory Basis
Nasdaq believes that the proposed
rule change is consistent with the
provisions of Section 6 of the Act,4 in
general and with Section 6(b)(5) of the
Act,5 in particular, in that it is designed
to prevent fraudulent and manipulative
acts and practices, remove impediments
1 15
2 17
10 17
CFR 200.30–3(a)(12).
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4 15
5 15
Sfmt 4703
U.S.C. 78f.
U.S.C. 78f(b)(5).
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]]>Agencies
[Federal Register Volume 74, Number 45 (Tuesday, March 10, 2009)]
[Notices]
[Pages 10322-10324]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E9-4962]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-59492; File No. SR-ISE-2009-08]
Self-Regulatory Organizations; Notice of Filing of Proposed Rule
Change, as Modified by Amendment No. 1, by International Securities
Exchange, LLC Relating to Changes to the Third Amended and Restated
Limited Liability Company Operating Agreement of Direct Edge Holdings
LLC
March 3, 2009.
Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(the ``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given
that on February 27, 2009, the International Securities Exchange, LLC
(the ``Exchange'' or the ``ISE'') filed with the Securities and
Exchange Commission (``Commission'') the proposed rule change, as
described in Items I, II, and III below, which items have been prepared
by the self-regulatory organization. On March 3, 2009, the Exchange
filed Amendment No. 1 to the proposed rule change. The Commission is
publishing this notice to solicit comments on the proposed rule change,
as modified by Amendment No. 1, from interested persons.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------
I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Exchange proposes to make changes to the Third Amended and
Restated Limited Liability Company Operating Agreement of Direct Edge
Holdings LLC (``Third Amended and Restated DE Operating Agreement'') to
preserve the right of the DB US Financial Markets Holding Corporation,
LabMorgan Corporation, Merrill Lynch L.P. Holdings, Inc., Nomura
Securities International, Inc., and Sun Partners LLC (together, the
``ISE Stock Exchange Consortium Members''), who were formerly minority
unitholders of the ISE Stock Exchange, LLC, as defined below, to retain
the right to designate a Manager to Direct Edge Holdings Board of
Managers \3\ on an ongoing basis. The text of the proposed rule change
is available on the Exchange's Web site https://www.ise.com, at the
principal office of the Exchange, and at the Commission's Public
Reference Room.
---------------------------------------------------------------------------
\3\ Pursuant to Section 7.1(a) of the Third Amended and Restated
DE Operating Agreement, each Manager is designated as a ``manager''
of Direct Edge within the meaning of the Securities and [sic]
Exchange Act of 1934 (the ``Exchange Act'').
---------------------------------------------------------------------------
II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
In its filing with the Commission, the Exchange included statements
concerning the purpose of, and basis for, the proposed rule change and
discussed any comments it received on the proposed rule change. The
text of these statements may be examined at the places specified in
Item IV below. The self-regulatory organization has prepared summaries,
set forth in Sections A, B and C below, of the most significant aspects
of such statements.
A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
1. Purpose
On December 23, 2008, the ISE closed a transaction whereby, among
other things, ISE Stock Exchange, LLC (``ISE Stock Exchange''), a
Delaware limited liability company, merged with and into Maple Merger
Sub, LLC (``Maple Merger Sub''), a Delaware limited liability company
and a wholly owned subsidiary of Direct Edge Holdings LLC (``Direct
Edge''), with Maple Merger Sub being the surviving entity.\4\ As part
of the same transaction, ISE Holdings purchased equity interests in
Direct Edge such that subsequent to completing the transaction, ISE
Holdings owns a 31.54% equity interest in Direct Edge. Following the
closing of the transaction and the merger of ISE
[[Page 10323]]
Stock Exchange into Maple Merger Sub, Maple Merger Sub now owns and
operates the marketplace for the trading of U.S. cash equities by
Equity Electronic Access Members (``Equity EAMs'') of ISE under the
rules of ISE, as a facility, as that term is defined in Section 3(a)(2)
of the Exchange Act \5\ of ISE (the ``Facility'' or ``ISE Stock'').\6\
---------------------------------------------------------------------------
\4\ See Exchange Act Release No. 59135 (December 22, 2008), 73
FR 79954 (December 30, 2008)(SR-ISE-2008-85)(Order approving a
proposed rule change, as modified by amendment no. 1, relating to
the purchase by International Securities Exchange Holdings, Inc.
(``ISE Holdings'') of an ownership interest in Direct Edge).
\5\ 15 U.S.C. 78c(a)(2).
\6\ Direct Edge is planning to file two Form 1 Applications to
own and operate two national securities exchanges. If the Commission
approves the Form 1 Applications, the Facility will cease
operations.
---------------------------------------------------------------------------
ISE is a registered national securities exchange under Section 6 of
the Exchange Act and a self-regulatory organization (``SRO''). As a
facility of ISE, the Facility is subject to regulation by ISE and
oversight by the Securities and Exchange Commission (``Commission'' or
``SEC'').
The Third Amended and Restated DE Operating Agreement contains
provisions designed to ensure that any changes to the Third Amended and
Restated DE Operating Agreement be first reviewed by ISE to determine
whether such change must be filed with the SEC. For example, Section
15.2 of the Third Amended and Restated DE Operating Agreement provides
that before any amendment to any provision of the Third Amended and
Restated DE Operating Agreement shall be effective, such amendment
shall be submitted to ISE and if ISE determines that such amendment
must be filed with, or filed with and approved by, the SEC before the
amendment may be effective under Section 19 of the Exchange Act and the
rules promulgated under the Exchange Act or otherwise, then the
proposed amendment to the Third Amended and Restated DE Operating
Agreement shall not be effective until filed with, or filed with and
approved by, the SEC, as the case may be.
Direct Edge is now proposing to amend and restate the Third Amended
and Restated DE Operating Agreement to preserve the right of the ISE
Stock Exchange Consortium Members to retain the right to designate a
manager to Direct Edge's Board of Managers so long as such ISE Stock
Exchange Consortium Members own at least 5% in Direct Edge. Currently
the ISE Stock Exchange Consortium Members have a collective ownership
interest of 8.76% in Direct Edge. The ISE Stock Exchange Consortium
Members have a right, pursuant to Section 7.1(a)(2) of the Third
Amended and Restated DE Operating Agreement, to appoint a Manager
provided that their Percentage Interest \7\ does not fall below 7.5%.
The ISE Stock Exchange Consortium Members expressed concern that their
Percentage Interest could be diluted below the 7.5% threshold for
appointing a Manager and that potential sales by ISE Stock Exchange
Consortium Members to parties who are not ISE Stock Exchange Consortium
Members could also have an unintended dilutive effect. Accordingly,
Direct Edge is now proposing to amend and restate the Third Amended and
Restated DE Operating Agreement to mitigate the potential for such
dilutive events.
---------------------------------------------------------------------------
\7\ ``Percentage Interest'' means, with respect to a member, the
ratio of the number of Units held by the member to the total of all
of the issued and outstanding Units, expressed as a percentage.
---------------------------------------------------------------------------
Specifically, Direct Edge is seeking to amend Section 7.2(a)(2) by:
(i) Lowering the ownership threshold for appointing a Manager from 7.5%
Percentage Interest to a 5% Percentage Interest; and (ii) providing a
right of first refusal to the ISE Stock Exchange Consortium Members
with respect to certain sales of other ISE Stock Exchange Consortium
Members to parties who are not ISE Stock Exchange Consortium Members.
Consistent with the requirements set forth in Section 15.2, the ISE has
reviewed the proposed changes to the Third Amended and Restated DE
Operating Agreement and has determined that such changes shall not be
effective until filed with and approved by the SEC. Accordingly, ISE
hereby submits the proposed changes and seeks Commission approval of
such changes so that Direct Edge may execute the Fourth Amended and
Restated Limited Liability Company Operating Agreement of Direct Edge
Holdings LLC (``Fourth Amended and Restated DE Operating Agreement'').
Additionally, Direct Edge proposes to make other non-substantive
clean-up changes necessary to reflect that this agreement has been
changed from the Third Amended and Restated DE Operating Agreement to
the Fourth Amended and Restated Operating Agreement.
2. Statutory Basis
The Exchange believes that the proposed rule change is consistent
with the provisions of Section 6 of the Exchange Act,\8\ in general,
and with Sections 6(b)(1) and (b)(5) of the Exchange Act,\9\ in
particular, in that the proposal enables the Exchange and the Facility
to be so organized as to have the capacity to be able to carry out the
purposes of the Exchange Act and to comply with and enforce compliance
by members and persons associated with members with provisions of the
Exchange Act, the rules and regulations thereunder, and SRO rules, and
is designed to prevent fraudulent and manipulative acts and practices,
to promote just and equitable principles of trade, to foster
cooperation and coordination with persons engaged in regulating,
clearing, settling, processing information with respect to, and
facilitating transactions in securities, 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.
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\8\ 15 U.S.C. 78f.
\9\ 15 U.S.C. 78f(b)(1), (5).
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B. Self-Regulatory Organization's Statement on Burden on Competition
The proposed rule change does not impose any burden on competition
that is not necessary or appropriate in furtherance of the purposes of
the Act.
C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants or Others
The Exchange has not solicited, and does not intend to solicit,
comments on this proposed rule change. The Exchange has not received
any unsolicited written comments from members or other interested
parties.
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
Within 35 days of the date of publication of this notice in the
Federal Register or within such longer period (i) as the Commission may
designate up to 90 days of such date if it finds such longer period to
be appropriate and publishes its reasons for so finding or (ii) as to
which the self-regulatory organization consents, the Commission will:
(a) By order approve such proposed rule change; or
(b) institute proceedings to determine whether the proposed rule
change should be disapproved.
IV. Solicitation of Comments
Interested persons are invited to submit written data, views and
arguments concerning the foregoing, including whether the proposed rule
change is consistent with the Act. Comments may be submitted by any of
the following methods:
Electronic Comments
Use the Commission's Internet comment form (https://
www.sec.gov/rules.sro.shtml ); or
[[Page 10324]]
Send an e-mail to rule-comments@sec.gov. Please include
File Number SR-ISE-2009-08 on the subject line.
Paper Comments
Send paper comments in triplicate to Elizabeth M. Murphy,
Secretary, Securities and Exchange Commission, 100 F Street, NE.,
Washington, DC 20549-1090.
All submissions should refer to File Number SR-ISE-2009-08. This file
number should be included on the subject line if e-mail is used. To
help the Commission process and review your comments more efficiently,
please use only one method. The Commission will post all comments on
the Commission's Internet Web site (https://www.sec.gov/rules/sro.shtml
). Copies of the submission, all subsequent amendments, all written
statements with respect to the proposed rule change that are filed with
the Commission, and all written communications relating to the proposed
rule change between the Commission and any person, other than those
that may be withheld from the public in accordance with the provisions
of 5 U.S.C. 552, will be available for inspection and copying in the
Commission's Public Reference Room, on business days between the hours
of 10 a.m. and 3 p.m., located at 100 F Street, NE., Washington, DC
20549. Copies of such filing also will be available for inspection and
copying at the principal office of the Exchange. All comments received
will be posted without change; the Commission does not edit personal
identifying information from submissions. You should submit only
information that you wish to make available publicly. All submissions
should refer to File Number SR-ISE-2009-08 and should be submitted on
or before March 31, 2009.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\10\
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\10\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. E9-4962 Filed 3-9-09; 8:45 am]
BILLING CODE 8011-01-P
