Self-Regulatory Organizations; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change by NYSE Amex LLC in Connection With the Proposal of NYSE Euronext To Require That at Least Three-Fourths of Its Directors Satisfy Independence Requirements, 47838-47840 [E9-22370]
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47838
Federal Register / Vol. 74, No. 179 / Thursday, September 17, 2009 / Notices
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the scope of the rule. The proposed rule
change was published for comment in
the Federal Register on August 7, 2009.3
The Commission received no comments
on the proposal. This order approves the
proposed rule change.
The Commission finds that the
proposed rule change is consistent with
the requirements of the Act and the
rules and regulations thereunder
applicable to a national securities
association.4 In particular, the
Commission finds that the proposed
rule change is consistent with the
provisions of Section 15A(b)(6) of the
Act,5 which requires, among other
things, that FINRA rules be designed to
prevent fraudulent and manipulative
acts and practices, to promote just and
equitable principles of trade, and, in
general, to protect investors and the
public interest. The Commission
believes that the proposed rule change
should continue to protect investors and
promote the maintenance of fair, orderly
and efficient markets by modernizing
and clarifying the regulations that apply
when payments are made in connection
with the publication or circulation of
media that could have an effect on the
market price of any security. The
Commission notes that the types of
media that could have an effect on the
market price of a security have changed
since NASD Rule 3330 was last
amended. Therefore, the updating of the
list of media in proposed FINRA Rule
5230 will modernize the regulation.
The Commission also notes that
payments for the publication of
information relating to securities are
permitted in certain circumstances
under Section 17(b) of the Securities Act
and under NASD Rule 2711(h)(13).
Therefore, the Commission believes that
the amendment to the rule will clarify
that proposed FINRA Rule 5230 is
consistent with these and other
regulations where such payments are
explicitly permitted.
It is therefore ordered, pursuant to
Section 19(b)(2) of the Act,6 that the
proposed rule change (SR–FINRA–
2009–048) be, and it hereby is,
approved.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.7
Florence E. Harmon,
Deputy Secretary.
[FR Doc. E9–22371 Filed 9–16–09; 8:45 am]
BILLING CODE 8010–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–60647; File No. SR–
NYSEAmex–2009–60]
Self-Regulatory Organizations; Notice
of Filing and Immediate Effectiveness
of a Proposed Rule Change by NYSE
Amex LLC in Connection With the
Proposal of NYSE Euronext To Require
That at Least Three-Fourths of Its
Directors Satisfy Independence
Requirements
September 10, 2009.
Pursuant to Section 19(b)(1) 1 of the
Securities Exchange Act of 1934 (the
‘‘Act’’) 2 and Rule 19b–4 thereunder,3
notice is hereby given that, on
September 4, 2009, NYSE Amex LLC
(‘‘NYSE Amex’’ or the ‘‘Exchange’’) filed
with the Securities and Exchange
Commission (the ‘‘Commission’’) the
proposed rule change as described in
Items I, II and III below, which Items
have been prepared by the selfregulatory organization. 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
The Exchange is submitting this rule
filing in connection with the proposal of
its ultimate parent, NYSE Euronext (the
‘‘Corporation’’),4 to amend its bylaws
and Director Independence Policy to
require that at least three-fourths of the
members of its Board of Directors shall
satisfy the independence requirements
for directors of the Corporation.
Currently the bylaws and Director
Independence Policy require that all
members of the Board of Directors, other
than the Chief Executive Officer and the
Deputy Chief Executive Officer, shall
satisfy the independence requirements.5
7 17
CFR 200.30–3(a)(12)
U.S.C.78s(b)(1).
2 15 U.S.C. 78a.
3 17 CFR 240.19b–4.
4 NYSE Amex, a Delaware limited liability
company, is an indirect wholly owned subsidiary
of NYSE Euronext.
5 See Section 3.4 of the ‘‘Amended and Restated
Bylaws of NYSE Euronext.’’ The provisions of any
other internal policy documents of the Corporation
containing substantially equivalent language will be
1 15
3 See Securities Exchange Act Release No. 60422
(August 3, 2009), 74 FR 39725.
4 In approving this proposal, the Commission has
considered the proposed rule’s impact on
efficiency, competition and capital formation. See
15 U.S.C. 78c(f).
5 15 U.S.C. 78o–3(b)(6).
6 15 U.S.C. 78s(b)(2)
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The proposed rule change is identical to
a rule change filed by the New York
Stock Exchange LLC (‘‘NYSE’’) that was
recently approved by the Commission.6
The text of the proposed rule change is
attached hereto as Exhibit 5,7 and is
available on the Exchange’s Web site at
https://www.nyse.com, at the Exchange’s
principal office, and at the Public
Reference Room of the Commission.
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
self-regulatory organization 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 those statements may be examined at
the places specified in Item IV below.
The Exchange has prepared summaries,
set forth in sections A, B, and C below,
of the most significant parts of such
statements.
A. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
1. Purpose
Currently, the Bylaws of the
Corporation, which is the ultimate
parent company of the Exchange,
require that ‘‘all members of the Board
of Directors, other than the Chief
Executive Officer and the Deputy Chief
Executive Officer, shall satisfy the
independence requirements for
directors of the Corporation, as modified
and amended by the Board of Directors
from time to time.’’ Similarly, the
Director Independence Policy of the
Corporation states that ‘‘[e]ach Director
(other than the Chief Executive Officer
and the Deputy Chief Executive Officer),
including the Chairman of the Board
and the Deputy Chairman of the Board
if not also the Chief Executive Officer or
the Deputy Chief Executive Officer,
shall be independent within the
meaning of this Policy.’’ The
Corporation desires to amend both
documents to strike a more appropriate
balance between the independence
requirements and other qualifications of
its directors. Specifically, the
Corporation proposes to revise the
independence standard in the Bylaws to
modified to conform with the proposed Bylaw and
Director Independence Policy changes.
6 Securities Exchange Act Release No. 60542
(August 19, 2009), 74 FR 43193 (August 26, 2009)
(SR–NYSE–2009–60).
7 The Commission notes that Exhibit 5 is attached
to the rule filing filed with the Commission, but not
to this release.
E:\FR\FM\17SEN1.SGM
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Federal Register / Vol. 74, No. 179 / Thursday, September 17, 2009 / Notices
provide that, ‘‘At least three-fourths of
the members of the Board of Directors
shall satisfy the independence
requirements for directors of the
Corporation, as modified and amended
by the Board of Directors from time to
time.’’ 8 The three-fourths requirement
will still adequately protect the
independent judgment of the Board of
Directors (‘‘Board’’), which the
Corporation believes is essential to the
quality of Board oversight, while
permitting the Corporation to consider a
broader range of experienced and
knowledgeable individuals as
directors.9 The current Bylaw provision
eliminates from consideration as
potential directors of the Corporation a
substantial number of individuals who
could contribute significantly to the
deliberations of the Corporation’s Board
by virtue of their knowledge, ability and
experience. For example, an executive
of a U.S. company listed on NYSE could
not serve as a member of the Board.
Such a restriction deprives the
Corporation of the proven judgment and
valuable insights that such individuals
might contribute to the Board’s
decision-making process. There are
other categories of individuals who fail
the independence requirements for
other reasons, yet who nonetheless
could make significant contributions as
directors of the Corporation.
As noted above, the proposed rule
change is identical to a rule change filed
by the NYSE that was recently approved
by the Commission.
The proposed three-fourths standard
for independence remains higher than
the majority standard that the
Commission has accepted and approved
in comparable circumstances. For
example, the ‘‘Corporate Governance
Guidelines’’ of the NASDAQ OMX
Group, Inc., which is the parent
company of the NASDAQ Stock Market
LLC, state, ‘‘The Board of NASDAQ
OMX is comprised of a majority of
directors, who qualify as ‘independent
directors’ under the Marketplace Rules
of The NASDAQ Stock Market and
Securities and Exchange Commission
requirements.’’ 10 The NYSE’s own
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8 The
corresponding revised language in the
Director Independence Policy would state, ‘‘At least
three-fourths of the Directors shall be independent
within the meaning of this Policy.’’
9 There are currently 18 directors on the Board,
including the Chief Executive Officer and the
Deputy Chief Executive Officer. The Bylaws
currently require 16 of the directors (i.e., all but the
two aforementioned employees) to be independent.
The proposed amendment to the Bylaws would
require a minimum of 14 of the directors to be
independent.
10 See ‘‘The NASDAQ OMX Group, Inc. Corporate
Governance Guidelines,’’ Section III.B.
(Independence of Non-Employee Directors).
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14:35 Sep 16, 2009
Jkt 217001
corporate governance standards for its
listed companies provide that, ‘‘Listed
companies must have a majority of
independent directors.’’ 11 Finally, the
Commission’s own 2004 release on
‘‘Fair Administration and Governance of
Self-Regulatory Organizations’’
proposed ‘‘that the board of each
exchange and association be composed
of a majority of independent
directors.’’ 12 In the latter case, there
would be no justification for holding the
governing board of the ultimate parent
of an exchange to a higher standard that
the governing board of the exchange
itself. Consequently, there is adequate
precedent with respect to the proposed
rule change.
The proposed amendment to the
Bylaws and Director Independence
Policy will not alter or amend the
standards by which the Corporation
makes a determination regarding
whether an individual director is
independent. In addition, the proposed
amendment will not affect in any way
the independence requirements of the
Exchange with respect to its directors or
the director independence requirements
of any of the other self-regulatory
organizations for which the Corporation
is the ultimate parent or of NYSE Group,
Inc., the intermediate holding company,
including in each case the number of
required independent directors.13 The
11 See ‘‘NYSE Listed Company Manual,’’ Section
303A.01 (Independent Directors).
12 See Securities Exchange Act Release No. 50699
(November 18, 2004), 69 FR 71126 (December 8,
2004), Section II.B.2 (Board Consisting of a Majority
of Independent Directors).
13 In its 2006 release approving the NYSE’s
business combination with Archipelago Holdings,
Inc. (the ‘‘Arca Approval Release’’), the Commission
noted that it ‘‘* * * does not believe that there is
only one method to satisfy the fair representation
requirements of Section 6(b)(3) of the Act, and
reviews each SRO proposal on its own terms to
determine if it is consistent with the Act.’’ See
Securities Exchange Act Release No. 53382
(February 27, 2006), 71 FR 11251 (March 6, 2006)
(File No. SR–NYSE–2005–77), 11259, note 97. In
this regard, the ‘‘fair representation candidate’’ on
the NYSE board is required by the NYSE’s operating
agreement to be independent, and the Arca
Approval Release notes that even a fully
independent board could be consistent with the Act
and the fair representation requirement, in which
case ‘‘the candidate or candidates selected by
members would have to be independent.’’ 71 FR at
11260. Among other things, the NYSE board
oversees NYSE Regulation, Inc., a not-for-profit
independent subsidiary that conducts the
regulatory function of NYSE on its behalf pursuant
to contractual and other arrangements.
Consequently, the Commission stated its conclusion
in the Arca Approval Release that ‘‘[t]he NYSE’s
proposed requirement that 20% of the directors of
the boards of directors of New York Stock Exchange
LLC, NYSE Market, and NYSE Regulation be chosen
by members and the means by which they will be
chosen satisfies the fair representation of members
in the selection of directors and the administration
of the exchange consistent with the requirements in
Section 6(b)(3) of the Act.’’ 71 FR at 11259.
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Frm 00063
Fmt 4703
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47839
proposed amendment will also not
affect in any way the other director
qualification requirements set out in the
Bylaws of the Corporation.14
2. Statutory Basis
The proposed rule change is
consistent with Section 6(b) 15 of the
Act, in general, and furthers the
objectives of Section 6(b)(1) 16 of the
Act, which requires a national securities
exchange to be so organized and have
the capacity to carry out the purposes of
the Act and to comply, and to enforce
compliance by its members and persons
associated with its members, with the
provisions of the Act. The proposed rule
change is also consistent with, and
furthers the objectives of, Section
6(b)(5) 17 of the Act, in that it 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
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.
More specifically, the Exchange
believes that, because the proposed rule
change will permit the Corporation to
consider a broader range of experienced
and knowledgeable individuals to serve
as directors of the Corporation while
also preserving the principle that
effective boards of directors exercise
independent judgment in carrying out
their responsibilities, it will thereby
contribute to perfecting the mechanism
of a free and open market and a national
market system and is also consistent
with the protection of investors and the
public interest.
B. Self-Regulatory Organization’s
Statement on Burden on Competition
The Exchange does not believe that
the proposed rule change will 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
No written comments were solicited
or received with respect to the proposed
rule change.
14 E.g., Section 3.2 (Certain Qualifications for the
Board of Directors) of the Bylaws.
15 15 U.S.C. 78f(b).
16 15 U.S.C. 78f(b)(1).
17 15 U.S.C. 78f(b)(5).
E:\FR\FM\17SEN1.SGM
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47840
Federal Register / Vol. 74, No. 179 / Thursday, September 17, 2009 / Notices
III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
Because the foregoing proposed rule
change does not: (i) Significantly affect
the protection of investors or the public
interest; (ii) impose any significant
burden on competition; and (iii) become
operative for 30 days after the date of
the filing, or such shorter time as the
Commission may designate, if
consistent with the protection of
investors and the public interest, it has
become effective pursuant to 19(b)(3)(A)
of the Act 18 and Rule 19b–4(f)(6)
thereunder.19
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:
cprice-sewell on DSK2BSOYB1PROD with NOTICES
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
Number SR–NYSEAmex–2009–60 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–NYSEAmex–2009–60. 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
18 15
U.S.C. 78s(b)(3)(A).
CFR 240.19b–4(f)(6). In addition, Rule 19b–
4(f)(6) requires a self-regulatory organization to give
the Commission written notice of its intent to file
the proposed rule change at least five business days
prior to the date of filing of the proposed rule
change, or such shorter time as designated by the
Commission. The Exchange has satisfied this
requirement.
19 17
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14:35 Sep 16, 2009
Jkt 217001
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, 100 F Street, NE., Washington,
DC 20549, on official business days
between the hours of 10 a.m. and 3 p.m.
Copies of the 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–NYSEAmex–2009–60 and
should be submitted on or before
October 8, 2009.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.20
Florence E. Harmon,
Deputy Secretary.
[FR Doc. E9–22370 Filed 9–16–09; 8:45 am]
BILLING CODE 8010–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–60646; File No. SR–
NYSEArca–2009–82]
Self-Regulatory Organizations; Notice
of Filing and Immediate Effectiveness
of a Proposed Rule Change by NYSE
Arca, Inc. in Connection With the
Proposal of NYSE Euronext To Require
That at Least Three-Fourths of Its
Directors Satisfy Independence
Requirements
September 10, 2009.
Pursuant to Section 19(b)(1) 1 of the
Securities Exchange Act of 1934 (the
‘‘Act’’) 2 and Rule 19b–4 thereunder,3
notice is hereby given that, on
September 4, 2009, NYSE Arca, Inc.
(‘‘NYSE Arca’’ or the ‘‘Exchange’’) filed
with the Securities and Exchange
Commission (the ‘‘Commission’’) the
proposed rule change as described in
Items I, II and III below, which Items
20 17
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 15 U.S.C. 78a.
3 17 CFR 240.19b–4.
1 15
PO 00000
Frm 00064
Fmt 4703
Sfmt 4703
have been prepared by the selfregulatory organization. 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
The Exchange is submitting this rule
filing in connection with the proposal of
its ultimate parent, NYSE Euronext (the
‘‘Corporation’’),4 to amend its bylaws
and Director Independence Policy to
require that at least three-fourths of the
members of its Board of Directors shall
satisfy the independence requirements
for directors of the Corporation.
Currently the bylaws and Director
Independence Policy require that all
members of the Board of Directors, other
than the Chief Executive Officer and the
Deputy Chief Executive Officer, shall
satisfy the independence requirements.5
The proposed rule change is identical to
a rule change filed by the New York
Stock Exchange LLC (‘‘NYSE’’) that was
recently approved by the Commission.6
The text of the proposed rule change is
attached hereto as Exhibit 5,7 and is
available on the Exchange’s Web site at
https://www.nyse.com, at the Exchange’s
principal office, and at the Public
Reference Room of the Commission.
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
self-regulatory organization 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 those statements may be examined at
the places specified in Item IV below.
The Exchange has prepared summaries,
set forth in sections A, B, and C below,
of the most significant parts of such
statements.
4 NYSE Arca, a Delaware corporation, is an
indirect wholly-owned subsidiary of NYSE
Euronext.
5 See Section 3.4 of the ‘‘Amended and Restated
Bylaws of NYSE Euronext.’’ The provisions of any
other internal policy documents of the Corporation
containing substantially equivalent language will be
modified to conform with the proposed Bylaw and
Director Independence Policy changes.
6 Securities Exchange Act Release No. 60542
(August 19, 2009), 74 FR 43193 (August 26, 2009)
(SR–NYSE–2009–60).
7 The Commission notes that Exhibit 5 is attached
to the rule filing filed with the Commission, but not
to this release.
E:\FR\FM\17SEN1.SGM
17SEN1
]]>Agencies
[Federal Register Volume 74, Number 179 (Thursday, September 17, 2009)]
[Notices]
[Pages 47838-47840]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E9-22370]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-60647; File No. SR-NYSEAmex-2009-60]
Self-Regulatory Organizations; Notice of Filing and Immediate
Effectiveness of a Proposed Rule Change by NYSE Amex LLC in Connection
With the Proposal of NYSE Euronext To Require That at Least Three-
Fourths of Its Directors Satisfy Independence Requirements
September 10, 2009.
Pursuant to Section 19(b)(1) \1\ of the Securities Exchange Act of
1934 (the ``Act'') \2\ and Rule 19b-4 thereunder,\3\ notice is hereby
given that, on September 4, 2009, NYSE Amex LLC (``NYSE Amex'' or the
``Exchange'') filed with the Securities and Exchange Commission (the
``Commission'') the proposed rule change as described in Items I, II
and III below, which Items have been prepared by the self-regulatory
organization. The Commission is publishing this notice to solicit
comments on the proposed rule change from interested persons.
---------------------------------------------------------------------------
\1\ 15 U.S.C.78s(b)(1).
\2\ 15 U.S.C. 78a.
\3\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------
I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change
The Exchange is submitting this rule filing in connection with the
proposal of its ultimate parent, NYSE Euronext (the
``Corporation''),\4\ to amend its bylaws and Director Independence
Policy to require that at least three-fourths of the members of its
Board of Directors shall satisfy the independence requirements for
directors of the Corporation. Currently the bylaws and Director
Independence Policy require that all members of the Board of Directors,
other than the Chief Executive Officer and the Deputy Chief Executive
Officer, shall satisfy the independence requirements.\5\ The proposed
rule change is identical to a rule change filed by the New York Stock
Exchange LLC (``NYSE'') that was recently approved by the
Commission.\6\ The text of the proposed rule change is attached hereto
as Exhibit 5,\7\ and is available on the Exchange's Web site at https://www.nyse.com, at the Exchange's principal office, and at the Public
Reference Room of the Commission.
---------------------------------------------------------------------------
\4\ NYSE Amex, a Delaware limited liability company, is an
indirect wholly owned subsidiary of NYSE Euronext.
\5\ See Section 3.4 of the ``Amended and Restated Bylaws of NYSE
Euronext.'' The provisions of any other internal policy documents of
the Corporation containing substantially equivalent language will be
modified to conform with the proposed Bylaw and Director
Independence Policy changes.
\6\ Securities Exchange Act Release No. 60542 (August 19, 2009),
74 FR 43193 (August 26, 2009) (SR-NYSE-2009-60).
\7\ The Commission notes that Exhibit 5 is attached to the rule
filing filed with the Commission, but not to this release.
---------------------------------------------------------------------------
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 self-regulatory organization
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 those statements may be examined at
the places specified in Item IV below. The Exchange has prepared
summaries, set forth in sections A, B, and C below, of the most
significant parts of such statements.
A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change
1. Purpose
Currently, the Bylaws of the Corporation, which is the ultimate
parent company of the Exchange, require that ``all members of the Board
of Directors, other than the Chief Executive Officer and the Deputy
Chief Executive Officer, shall satisfy the independence requirements
for directors of the Corporation, as modified and amended by the Board
of Directors from time to time.'' Similarly, the Director Independence
Policy of the Corporation states that ``[e]ach Director (other than the
Chief Executive Officer and the Deputy Chief Executive Officer),
including the Chairman of the Board and the Deputy Chairman of the
Board if not also the Chief Executive Officer or the Deputy Chief
Executive Officer, shall be independent within the meaning of this
Policy.'' The Corporation desires to amend both documents to strike a
more appropriate balance between the independence requirements and
other qualifications of its directors. Specifically, the Corporation
proposes to revise the independence standard in the Bylaws to
[[Page 47839]]
provide that, ``At least three-fourths of the members of the Board of
Directors shall satisfy the independence requirements for directors of
the Corporation, as modified and amended by the Board of Directors from
time to time.'' \8\ The three-fourths requirement will still adequately
protect the independent judgment of the Board of Directors (``Board''),
which the Corporation believes is essential to the quality of Board
oversight, while permitting the Corporation to consider a broader range
of experienced and knowledgeable individuals as directors.\9\ The
current Bylaw provision eliminates from consideration as potential
directors of the Corporation a substantial number of individuals who
could contribute significantly to the deliberations of the
Corporation's Board by virtue of their knowledge, ability and
experience. For example, an executive of a U.S. company listed on NYSE
could not serve as a member of the Board. Such a restriction deprives
the Corporation of the proven judgment and valuable insights that such
individuals might contribute to the Board's decision-making process.
There are other categories of individuals who fail the independence
requirements for other reasons, yet who nonetheless could make
significant contributions as directors of the Corporation.
---------------------------------------------------------------------------
\8\ The corresponding revised language in the Director
Independence Policy would state, ``At least three-fourths of the
Directors shall be independent within the meaning of this Policy.''
\9\ There are currently 18 directors on the Board, including the
Chief Executive Officer and the Deputy Chief Executive Officer. The
Bylaws currently require 16 of the directors (i.e., all but the two
aforementioned employees) to be independent. The proposed amendment
to the Bylaws would require a minimum of 14 of the directors to be
independent.
---------------------------------------------------------------------------
As noted above, the proposed rule change is identical to a rule
change filed by the NYSE that was recently approved by the Commission.
The proposed three-fourths standard for independence remains higher
than the majority standard that the Commission has accepted and
approved in comparable circumstances. For example, the ``Corporate
Governance Guidelines'' of the NASDAQ OMX Group, Inc., which is the
parent company of the NASDAQ Stock Market LLC, state, ``The Board of
NASDAQ OMX is comprised of a majority of directors, who qualify as
`independent directors' under the Marketplace Rules of The NASDAQ Stock
Market and Securities and Exchange Commission requirements.'' \10\ The
NYSE's own corporate governance standards for its listed companies
provide that, ``Listed companies must have a majority of independent
directors.'' \11\ Finally, the Commission's own 2004 release on ``Fair
Administration and Governance of Self-Regulatory Organizations''
proposed ``that the board of each exchange and association be composed
of a majority of independent directors.'' \12\ In the latter case,
there would be no justification for holding the governing board of the
ultimate parent of an exchange to a higher standard that the governing
board of the exchange itself. Consequently, there is adequate precedent
with respect to the proposed rule change.
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\10\ See ``The NASDAQ OMX Group, Inc. Corporate Governance
Guidelines,'' Section III.B. (Independence of Non-Employee
Directors).
\11\ See ``NYSE Listed Company Manual,'' Section 303A.01
(Independent Directors).
\12\ See Securities Exchange Act Release No. 50699 (November 18,
2004), 69 FR 71126 (December 8, 2004), Section II.B.2 (Board
Consisting of a Majority of Independent Directors).
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The proposed amendment to the Bylaws and Director Independence
Policy will not alter or amend the standards by which the Corporation
makes a determination regarding whether an individual director is
independent. In addition, the proposed amendment will not affect in any
way the independence requirements of the Exchange with respect to its
directors or the director independence requirements of any of the other
self-regulatory organizations for which the Corporation is the ultimate
parent or of NYSE Group, Inc., the intermediate holding company,
including in each case the number of required independent
directors.\13\ The proposed amendment will also not affect in any way
the other director qualification requirements set out in the Bylaws of
the Corporation.\14\
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\13\ In its 2006 release approving the NYSE's business
combination with Archipelago Holdings, Inc. (the ``Arca Approval
Release''), the Commission noted that it ``* * * does not believe
that there is only one method to satisfy the fair representation
requirements of Section 6(b)(3) of the Act, and reviews each SRO
proposal on its own terms to determine if it is consistent with the
Act.'' See Securities Exchange Act Release No. 53382 (February 27,
2006), 71 FR 11251 (March 6, 2006) (File No. SR-NYSE-2005-77),
11259, note 97. In this regard, the ``fair representation
candidate'' on the NYSE board is required by the NYSE's operating
agreement to be independent, and the Arca Approval Release notes
that even a fully independent board could be consistent with the Act
and the fair representation requirement, in which case ``the
candidate or candidates selected by members would have to be
independent.'' 71 FR at 11260. Among other things, the NYSE board
oversees NYSE Regulation, Inc., a not-for-profit independent
subsidiary that conducts the regulatory function of NYSE on its
behalf pursuant to contractual and other arrangements. Consequently,
the Commission stated its conclusion in the Arca Approval Release
that ``[t]he NYSE's proposed requirement that 20% of the directors
of the boards of directors of New York Stock Exchange LLC, NYSE
Market, and NYSE Regulation be chosen by members and the means by
which they will be chosen satisfies the fair representation of
members in the selection of directors and the administration of the
exchange consistent with the requirements in Section 6(b)(3) of the
Act.'' 71 FR at 11259.
\14\ E.g., Section 3.2 (Certain Qualifications for the Board of
Directors) of the Bylaws.
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2. Statutory Basis
The proposed rule change is consistent with Section 6(b) \15\ of
the Act, in general, and furthers the objectives of Section 6(b)(1)
\16\ of the Act, which requires a national securities exchange to be so
organized and have the capacity to carry out the purposes of the Act
and to comply, and to enforce compliance by its members and persons
associated with its members, with the provisions of the Act. The
proposed rule change is also consistent with, and furthers the
objectives of, Section 6(b)(5) \17\ of the Act, in that it 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 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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\15\ 15 U.S.C. 78f(b).
\16\ 15 U.S.C. 78f(b)(1).
\17\ 15 U.S.C. 78f(b)(5).
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More specifically, the Exchange believes that, because the proposed
rule change will permit the Corporation to consider a broader range of
experienced and knowledgeable individuals to serve as directors of the
Corporation while also preserving the principle that effective boards
of directors exercise independent judgment in carrying out their
responsibilities, it will thereby contribute to perfecting the
mechanism of a free and open market and a national market system and is
also consistent with the protection of investors and the public
interest.
B. Self-Regulatory Organization's Statement on Burden on Competition
The Exchange does not believe that the proposed rule change will
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
No written comments were solicited or received with respect to the
proposed rule change.
[[Page 47840]]
III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action
Because the foregoing proposed rule change does not: (i)
Significantly affect the protection of investors or the public
interest; (ii) impose any significant burden on competition; and (iii)
become operative for 30 days after the date of the filing, or such
shorter time as the Commission may designate, if consistent with the
protection of investors and the public interest, it has become
effective pursuant to 19(b)(3)(A) of the Act \18\ and Rule 19b-4(f)(6)
thereunder.\19\
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\18\ 15 U.S.C. 78s(b)(3)(A).
\19\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)
requires a self-regulatory organization to give the Commission
written notice of its intent to file the proposed rule change at
least five business days prior to the date of filing of the proposed
rule change, or such shorter time as designated by the Commission.
The Exchange has satisfied this requirement.
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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 rule-comments@sec.gov. Please include
File Number SR-NYSEAmex-2009-60 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-NYSEAmex-2009-60. 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, 100 F Street,
NE., Washington, DC 20549, on official business days between the hours
of 10 a.m. and 3 p.m. Copies of the 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-NYSEAmex-2009-60 and should
be submitted on or before October 8, 2009.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\20\
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\20\ 17 CFR 200.30-3(a)(12).
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Florence E. Harmon,
Deputy Secretary.
[FR Doc. E9-22370 Filed 9-16-09; 8:45 am]
BILLING CODE 8010-01-P
