Self-Regulatory Organizations; BATS Exchange, Inc.; Order Approving Proposed Rule Change To Amend and Restate the Second Amended and Restated Certificate of Incorporation of BATS Global Markets, Inc., 67783-67784 [2011-28349]
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Federal Register / Vol. 76, No. 212 / Wednesday, November 2, 2011 / Notices
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
publicly available. All submissions
should refer to File Number SR–BX–
2011–072 and should be submitted on
or before November 23, 2011.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.18
Kevin M. O’Neill,
Deputy Secretary.
[FR Doc. 2011–28347 Filed 11–1–11; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–65646, File No. SR–BATS–
2011–033]
Self-Regulatory Organizations; BATS
Exchange, Inc.; Order Approving
Proposed Rule Change To Amend and
Restate the Second Amended and
Restated Certificate of Incorporation of
BATS Global Markets, Inc.
October 27, 2011.
I. Introduction
On August 29, 2011, BATS Exchange,
Inc. (‘‘BATS’’ 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 amend the certificate of
incorporation (‘‘Certificate of
Incorporation’’) of BATS Global
Markets, Inc. (‘‘Corporation’’) in
connection with its anticipated initial
public offering of shares of its Class A
Common Stock (the ‘‘IPO’’). The
proposed rule change was published for
comment in the Federal Register on
September 14, 2011.3 The Commission
received no comment letters regarding
the proposal. This order approves the
proposed rule change.
emcdonald on DSK5VPTVN1PROD with NOTICES
II. Description of the Proposal
On May 13, 2011, the Corporation
filed a registration statement on Form
S–1 with the Commission to register
shares of Class A Common Stock (as
18 17
CFR 200.30–3(a)(12).
U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
3 See Securities Exchange Act Release No. 65298
(September 8, 2011), 76 FR 56840 (September 14,
2011) (‘‘Notice’’).
1 15
VerDate Mar<15>2010
19:21 Nov 01, 2011
Jkt 226001
defined below) and disclose its
intention to conduct its IPO and to list
those shares for trading on the
Exchange. In connection with its IPO,
the Exchange filed this proposed rule
change to amend and restate the
Corporation’s current Second Amended
and Restated Certificate of Incorporation
and adopt a Third Amended and
Restated Certificate of Incorporation
(‘‘New Certificate of Incorporation’’).
A. Reclassification of Common Stock
and Additional Authorized Shares
The Exchange has proposed to revise
the Certificate of Incorporation to
reclassify the Corporation’s existing
common stock, ‘‘Voting Common Stock’’
and ‘‘Non-Voting Common Stock.’’ This
reclassification will result in two classes
of common stock, Class A and Class B.
Class A will be designated as either
‘‘Class A Common Stock’’ or ‘‘NonVoting Class A Common Stock.’’ Class B
will be designated as either ‘‘Class B
Common Stock’’ or ‘‘Non-Voting Class B
Common Stock.’’ In connection with
this reclassification, the Exchange has
proposed certain voting rights,4 transfer
restrictions 5 and conversion features 6
for each class. The Class A Common
Stock will have the right to one vote per
share, while the Class B Common Stock
will have the right to 21⁄2 votes per
share.
The Exchange notes that the purpose
of the reclassification of the
Corporation’s common stock is to
encourage the Corporation’s existing
strategic investors to remain strategic
investors of the Corporation after the
IPO.7 In its proposal, BATS states that
the Class B holders will in aggregate
control a meaningful, but less than
majority, percentage of the vote on
matters coming before the
stockholders.8 The Exchange also notes
that the transfer restrictions balance the
ability of existing strategic investors to
orderly sell shares in the open market,
while at the same time retaining
strategic benefits to the Corporation of
their significant ownership for a certain
period of time, through their holdings of
4 See generally proposed Section 4.04(a) of the
New Certificate of Incorporation.
5 See generally proposed Section 4.04(b) of the
New Certificate of Incorporation.
6 See generally proposed Section 4.04(c) of the
New Certificate of Incorporation. Among the
conversion features proposed, the Corporation
proposes to have Class B shares automatically
convert into Class A shares upon a Class B holder
owning less than a 4,960,491 (approximately 2%)
of the Corporation’s outstanding common stock. See
proposed Section 4.04(c)(v)(B) of the New
Certificate of Incorporation.
7 See Notice supra note 3, at 76 FR at 56841.
8 See id.
PO 00000
Frm 00116
Fmt 4703
Sfmt 4703
67783
Class B shares.9 Finally, the Exchange
notes that its automatic conversion
features are intended to ensure that only
those investors with a significant
economic investment in the company
(approximately 2%) will own the Class
B Common Stock.10
The proposed New Certificate of
Incorporation would increase the
number of shares the Corporation would
be authorized to issue and would also
give the Corporation the authority to
issue 40 million shares of Preferred
Stock, par value $0.01 per share.11
B. Limitations on Ownership and Voting
Power
As noted by the Exchange, the
proposal maintains and enhances the
limitations on aggregate ownership and
total voting power that exist under the
current Certificate of Incorporation.12
The Exchange has also proposed to
aggregate all shares of Class A Common
Stock, Non-Voting Class A Common
Stock, Class B Common Stock, NonVoting Class B Common Stock, and any
series of Preferred Stock of the
Corporation as a single class of capital
stock of the Corporation for purposes of
determining compliance with the
ownership and voting limitations. The
proposed New Certificate of
Incorporation would explicitly include
non-voting stock in the calculation of
ownership applicable to non-Member
shareholders.13
C. Bylaws and Future Amendments to
the Certificate of Incorporation
Currently, the Certificate of
Incorporation provides that either the
Board of Directors or shareholders may
adopt, amend, or repeal the Bylaws of
the Corporation. The proposal would
modify this provision so that, upon the
change in ownership,14 stockholders
9 See
id.
id.
11 See proposed Section 4.01 of the proposed New
Certificate of Incorporation. The total number of
authorized shares the Corporation has authority to
issue is 614,607,649.
12 The relevant provisions of the Certificate of
Incorporation impose a 40% ownership limit on the
amount of capital stock of the Corporation that any
person, either alone or together with its related
persons, may own, directly or indirectly, of record
or beneficially; a 20% ownership limit on the
amount of capital stock of the Corporation that any
member of the Exchange, either alone, or together
with its related persons, may own directly or
indirectly, of record or beneficially, and prohibit
any person, either alone or together with its related
persons, from having or exercising more than 20%
of the voting power of the capital stock of the
Corporation. See proposed Section 5.01(a)(i)–(iii) of
the New Certificate of Incorporation.
13 See proposed Section 5.01(b)(1) of the New
Certificate of Incorporation.
14 ‘‘Change of Ownership’’ would be defined as a
transaction or series of transactions which results
10 See
E:\FR\FM\02NON1.SGM
Continued
02NON1
67784
Federal Register / Vol. 76, No. 212 / Wednesday, November 2, 2011 / Notices
may only adopt, amend, or repeal the
Bylaws upon the affirmative vote of at
least 70% of the total voting power of
all outstanding shares of the
Corporation.15
D. Other Amendments
The proposal will amend and restate
various other provisions of the current
Certificate of Incorporation in a manner
that the Exchange believes are intended
to reflect provisions that are more
customary for publicly-owned
companies (such as those relating to the
indemnification of directors and
business combinations, among others).
III. Discussion
emcdonald on DSK5VPTVN1PROD with NOTICES
After careful review of the proposal,
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 exchange.16 In
particular, the Commission finds that
the proposal is consistent with Section
6(b)(1) of the Act,17 which requires a
national securities exchange to be so
organized and have the capacity to carry
out the purposes of the Act and to
enforce compliance by its members and
persons associated with the provisions
of the Act.
The Commission notes that the
Exchange has represented that the
proposed rule change relates solely to
the Certificate of the Incorporation of
the Corporation and that the Exchange
will continue to be governed by its
existing certificate of incorporation and
by-laws.18 The Exchange has also
represented that the Corporation will
continue to directly and solely hold all
the stock in, and voting power of, the
Exchange and that the Exchange will
continue to operate pursuant to its
existing governance structure.19
The Commission further notes that
the Exchange has represented that the
proposed rule change will maintain and
enhance the existing ownership and
voting limitations in the Certificate of
in the beneficial owners of the Class B Common
Stock and Non-Voting Class B Common Stock
owning in the aggregate less than a majority of the
total voting power of all outstanding securities of
the Corporation then entitled to vote generally in
the election of directors, voting together as a single
class. See proposed Section 6.01(b) of the New
Certificate of Incorporation.
15 See proposed Section 9.02(b) of the New
Certificate of Incorporation.
16 In approving this proposed rule change, the
Commission has considered the proposed rule’s
impact on efficiency, competition, and capital
formation. See 15 U.S.C. 78c(f).
17 15 U.S.C. 78f(b)(1).
18 See Notice, supra note 3, 76 FR at 56840.
19 See id.
VerDate Mar<15>2010
19:21 Nov 01, 2011
Jkt 226001
Incorporation.20 To this end, the
Exchange has proposed to aggregate all
classes of Common Stock and any
Preferred Stock (if issued) of the
Corporation for purposes of determining
stockholder compliance with its
ownership and voting limitations.21 The
proposed rule change would also
include non-voting common stock in the
calculations of such ownership
limitations. As a result, the Commission
believes that the proposed rule change
should effectively maintain and bolster
the ownership and voting limits
currently in place for the Corporation
consistent with Section 6(b)(1) of the
Exchange Act.
The Commission believes that the
enhanced ownership and voting
limitations should minimize the
potential that a person, including
members, could improperly interfere
with or restrict the ability of the
Commission or the Exchange to
effectively carry out their regulatory
oversight responsibilities under the
Exchange Act. In addition, these
limitations should protect against the
instance whereby a member’s interest in
an exchange or an entity controlling the
exchange becomes so large as to cast
doubt on whether the exchange can
fairly and objectively exercise its selfregulatory responsibilities with respect
to that member.
III. Conclusion
It is therefore ordered, pursuant to
Section 19(b)(2) of the Act,22 that the
proposed rule change (SR–BATS–2011–
033) be, and hereby is, approved.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.23
Kevin M. O’Neill,
Deputy Secretary.
[FR Doc. 2011–28349 Filed 11–1–11; 8:45 am]
BILLING CODE 8011–01–P
20 See supra note 12 (discussing the limitations of
ownership of capital stock of the Corporation to
40% for any Person and 20% for any member and
voting power of capital stock of the Corporation to
20% for any Person).
21 See proposed Section 5.01(b)(i) of the New
Certificate of Incorporation.
22 15 U.S.C. 78s(b)(2).
23 17 CFR 200.30–3(a)(12).
PO 00000
Frm 00117
Fmt 4703
Sfmt 4703
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–65647, File No. SR–BYX–
2011–021]
Self-Regulatory Organizations; BATS
Y–Exchange, Inc.; Order Approving
Proposed Rule Change To Amend and
Restate the Second Amended and
Restated Certificate of Incorporation of
BATS Global Markets, Inc.
October 27, 2011.
I. Introduction
On August 29, 2011, BATS Y–
Exchange, Inc. (‘‘BYX’’ 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 amend the certificate of
incorporation (‘‘Certificate of
Incorporation’’) of BATS Global
Markets, Inc. (‘‘Corporation’’) in
connection with its anticipated initial
public offering of shares of its Class A
Common Stock (the ‘‘IPO’’). The
proposed rule change was published for
comment in the Federal Register on
September 14, 2011.3 The Commission
received no comment letters regarding
the proposal. This order approves the
proposed rule change.
II. Description of the Proposal
On May 13, 2011, the Corporation
filed a registration statement on Form
S–1 with the Commission to register
shares of Class A Common Stock (as
defined below) and disclose its
intention to conduct its IPO and to list
those shares for trading on the
Exchange. In connection with its IPO,
the Exchange filed this proposed rule
change to amend and restate the
Corporation’s current Second Amended
and Restated Certificate of Incorporation
and adopt a Third Amended and
Restated Certificate of Incorporation
(‘‘New Certificate of Incorporation’’).
A. Reclassification of Common Stock
and Additional Authorized Shares
The Exchange has proposed to revise
the Certificate of Incorporation to
reclassify the Corporation’s existing
common stock, ‘‘Voting Common Stock’’
and ‘‘Non-Voting Common Stock.’’ This
reclassification will result in two classes
of common stock, Class A and Class B.
Class A will be designated as either
‘‘Class A Common Stock’’ or ‘‘Non1 15
U.S.C. 78s(b)(1).
CFR 240.19b–4.
3 See Securities Exchange Act Release No. 65299
(September 8, 2011), 76 FR 56833 (September 14,
2011) (‘‘Notice’’).
2 17
E:\FR\FM\02NON1.SGM
02NON1
]]>Agencies
[Federal Register Volume 76, Number 212 (Wednesday, November 2, 2011)]
[Notices]
[Pages 67783-67784]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2011-28349]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-65646, File No. SR-BATS-2011-033]
Self-Regulatory Organizations; BATS Exchange, Inc.; Order
Approving Proposed Rule Change To Amend and Restate the Second Amended
and Restated Certificate of Incorporation of BATS Global Markets, Inc.
October 27, 2011.
I. Introduction
On August 29, 2011, BATS Exchange, Inc. (``BATS'' 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
amend the certificate of incorporation (``Certificate of
Incorporation'') of BATS Global Markets, Inc. (``Corporation'') in
connection with its anticipated initial public offering of shares of
its Class A Common Stock (the ``IPO''). The proposed rule change was
published for comment in the Federal Register on September 14, 2011.\3\
The Commission received no comment letters regarding the proposal. This
order approves 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. 65298 (September 8,
2011), 76 FR 56840 (September 14, 2011) (``Notice'').
---------------------------------------------------------------------------
II. Description of the Proposal
On May 13, 2011, the Corporation filed a registration statement on
Form S-1 with the Commission to register shares of Class A Common Stock
(as defined below) and disclose its intention to conduct its IPO and to
list those shares for trading on the Exchange. In connection with its
IPO, the Exchange filed this proposed rule change to amend and restate
the Corporation's current Second Amended and Restated Certificate of
Incorporation and adopt a Third Amended and Restated Certificate of
Incorporation (``New Certificate of Incorporation'').
A. Reclassification of Common Stock and Additional Authorized Shares
The Exchange has proposed to revise the Certificate of
Incorporation to reclassify the Corporation's existing common stock,
``Voting Common Stock'' and ``Non-Voting Common Stock.'' This
reclassification will result in two classes of common stock, Class A
and Class B. Class A will be designated as either ``Class A Common
Stock'' or ``Non-Voting Class A Common Stock.'' Class B will be
designated as either ``Class B Common Stock'' or ``Non-Voting Class B
Common Stock.'' In connection with this reclassification, the Exchange
has proposed certain voting rights,\4\ transfer restrictions \5\ and
conversion features \6\ for each class. The Class A Common Stock will
have the right to one vote per share, while the Class B Common Stock
will have the right to 2\1/2\ votes per share.
---------------------------------------------------------------------------
\4\ See generally proposed Section 4.04(a) of the New
Certificate of Incorporation.
\5\ See generally proposed Section 4.04(b) of the New
Certificate of Incorporation.
\6\ See generally proposed Section 4.04(c) of the New
Certificate of Incorporation. Among the conversion features
proposed, the Corporation proposes to have Class B shares
automatically convert into Class A shares upon a Class B holder
owning less than a 4,960,491 (approximately 2%) of the Corporation's
outstanding common stock. See proposed Section 4.04(c)(v)(B) of the
New Certificate of Incorporation.
---------------------------------------------------------------------------
The Exchange notes that the purpose of the reclassification of the
Corporation's common stock is to encourage the Corporation's existing
strategic investors to remain strategic investors of the Corporation
after the IPO.\7\ In its proposal, BATS states that the Class B holders
will in aggregate control a meaningful, but less than majority,
percentage of the vote on matters coming before the stockholders.\8\
The Exchange also notes that the transfer restrictions balance the
ability of existing strategic investors to orderly sell shares in the
open market, while at the same time retaining strategic benefits to the
Corporation of their significant ownership for a certain period of
time, through their holdings of Class B shares.\9\ Finally, the
Exchange notes that its automatic conversion features are intended to
ensure that only those investors with a significant economic investment
in the company (approximately 2%) will own the Class B Common
Stock.\10\
---------------------------------------------------------------------------
\7\ See Notice supra note 3, at 76 FR at 56841.
\8\ See id.
\9\ See id.
\10\ See id.
---------------------------------------------------------------------------
The proposed New Certificate of Incorporation would increase the
number of shares the Corporation would be authorized to issue and would
also give the Corporation the authority to issue 40 million shares of
Preferred Stock, par value $0.01 per share.\11\
---------------------------------------------------------------------------
\11\ See proposed Section 4.01 of the proposed New Certificate
of Incorporation. The total number of authorized shares the
Corporation has authority to issue is 614,607,649.
---------------------------------------------------------------------------
B. Limitations on Ownership and Voting Power
As noted by the Exchange, the proposal maintains and enhances the
limitations on aggregate ownership and total voting power that exist
under the current Certificate of Incorporation.\12\ The Exchange has
also proposed to aggregate all shares of Class A Common Stock, Non-
Voting Class A Common Stock, Class B Common Stock, Non-Voting Class B
Common Stock, and any series of Preferred Stock of the Corporation as a
single class of capital stock of the Corporation for purposes of
determining compliance with the ownership and voting limitations. The
proposed New Certificate of Incorporation would explicitly include non-
voting stock in the calculation of ownership applicable to non-Member
shareholders.\13\
---------------------------------------------------------------------------
\12\ The relevant provisions of the Certificate of Incorporation
impose a 40% ownership limit on the amount of capital stock of the
Corporation that any person, either alone or together with its
related persons, may own, directly or indirectly, of record or
beneficially; a 20% ownership limit on the amount of capital stock
of the Corporation that any member of the Exchange, either alone, or
together with its related persons, may own directly or indirectly,
of record or beneficially, and prohibit any person, either alone or
together with its related persons, from having or exercising more
than 20% of the voting power of the capital stock of the
Corporation. See proposed Section 5.01(a)(i)-(iii) of the New
Certificate of Incorporation.
\13\ See proposed Section 5.01(b)(1) of the New Certificate of
Incorporation.
---------------------------------------------------------------------------
C. Bylaws and Future Amendments to the Certificate of Incorporation
Currently, the Certificate of Incorporation provides that either
the Board of Directors or shareholders may adopt, amend, or repeal the
Bylaws of the Corporation. The proposal would modify this provision so
that, upon the change in ownership,\14\ stockholders
[[Page 67784]]
may only adopt, amend, or repeal the Bylaws upon the affirmative vote
of at least 70% of the total voting power of all outstanding shares of
the Corporation.\15\
---------------------------------------------------------------------------
\14\ ``Change of Ownership'' would be defined as a transaction
or series of transactions which results in the beneficial owners of
the Class B Common Stock and Non-Voting Class B Common Stock owning
in the aggregate less than a majority of the total voting power of
all outstanding securities of the Corporation then entitled to vote
generally in the election of directors, voting together as a single
class. See proposed Section 6.01(b) of the New Certificate of
Incorporation.
\15\ See proposed Section 9.02(b) of the New Certificate of
Incorporation.
---------------------------------------------------------------------------
D. Other Amendments
The proposal will amend and restate various other provisions of the
current Certificate of Incorporation in a manner that the Exchange
believes are intended to reflect provisions that are more customary for
publicly-owned companies (such as those relating to the indemnification
of directors and business combinations, among others).
III. Discussion
After careful review of the proposal, 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 exchange.\16\ In particular, the Commission finds that the
proposal is consistent with Section 6(b)(1) of the Act,\17\ which
requires a national securities exchange to be so organized and have the
capacity to carry out the purposes of the Act and to enforce compliance
by its members and persons associated with the provisions of the Act.
---------------------------------------------------------------------------
\16\ In approving this proposed rule change, the Commission has
considered the proposed rule's impact on efficiency, competition,
and capital formation. See 15 U.S.C. 78c(f).
\17\ 15 U.S.C. 78f(b)(1).
---------------------------------------------------------------------------
The Commission notes that the Exchange has represented that the
proposed rule change relates solely to the Certificate of the
Incorporation of the Corporation and that the Exchange will continue to
be governed by its existing certificate of incorporation and by-
laws.\18\ The Exchange has also represented that the Corporation will
continue to directly and solely hold all the stock in, and voting power
of, the Exchange and that the Exchange will continue to operate
pursuant to its existing governance structure.\19\
---------------------------------------------------------------------------
\18\ See Notice, supra note 3, 76 FR at 56840.
\19\ See id.
---------------------------------------------------------------------------
The Commission further notes that the Exchange has represented that
the proposed rule change will maintain and enhance the existing
ownership and voting limitations in the Certificate of
Incorporation.\20\ To this end, the Exchange has proposed to aggregate
all classes of Common Stock and any Preferred Stock (if issued) of the
Corporation for purposes of determining stockholder compliance with its
ownership and voting limitations.\21\ The proposed rule change would
also include non-voting common stock in the calculations of such
ownership limitations. As a result, the Commission believes that the
proposed rule change should effectively maintain and bolster the
ownership and voting limits currently in place for the Corporation
consistent with Section 6(b)(1) of the Exchange Act.
---------------------------------------------------------------------------
\20\ See supra note 12 (discussing the limitations of ownership
of capital stock of the Corporation to 40% for any Person and 20%
for any member and voting power of capital stock of the Corporation
to 20% for any Person).
\21\ See proposed Section 5.01(b)(i) of the New Certificate of
Incorporation.
---------------------------------------------------------------------------
The Commission believes that the enhanced ownership and voting
limitations should minimize the potential that a person, including
members, could improperly interfere with or restrict the ability of the
Commission or the Exchange to effectively carry out their regulatory
oversight responsibilities under the Exchange Act. In addition, these
limitations should protect against the instance whereby a member's
interest in an exchange or an entity controlling the exchange becomes
so large as to cast doubt on whether the exchange can fairly and
objectively exercise its self-regulatory responsibilities with respect
to that member.
III. Conclusion
It is therefore ordered, pursuant to Section 19(b)(2) of the
Act,\22\ that the proposed rule change (SR-BATS-2011-033) be, and
hereby is, approved.
---------------------------------------------------------------------------
\22\ 15 U.S.C. 78s(b)(2).
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\23\
---------------------------------------------------------------------------
\23\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------
Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2011-28349 Filed 11-1-11; 8:45 am]
BILLING CODE 8011-01-P
