Self-Regulatory Organizations; BATS Exchange, Inc.; Order Approving Proposed Rule Change, as Modified by Partial Amendment No. 1, To Amend and Restate the Amended and Restated Bylaws of BATS Global Markets, Inc., 71411-71413 [2011-29674]
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Federal Register / Vol. 76, No. 222 / Thursday, November 17, 2011 / Notices
providing the rebate to Floor Brokers
does not discriminate against other QCC
orders entered into the NYSE Arca
System from on the Floor. Any
participant will be able to engage a
rebate-receiving Floor Broker in a
discussion surrounding the appropriate
level of fees that they may be charged
for entrusting the entry of the QCC order
to the Floor Broker into the Exchange
systems for validation and execution.
The additional order flow attracted by
this rebate should benefit all
participants. The rebate is meant to
assist Floor Brokers to recruit business
on an agency basis from both OTP
Holders and non-OTP Holder firms. The
Floor Broker may use all or part of the
rebate to offset the Floor Brokerage
charges billed to the Firm. For this
reason the Exchange believes the
adoption of the proposed rebate is both
equitable and not unfairly
discriminatory.
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.
jlentini on DSK4TPTVN1PROD with NOTICES
III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
The foregoing rule change is effective
upon filing pursuant to Section
19(b)(3)(A) 10 of the Act and
subparagraph (f)(2) of Rule 19b–4 11
thereunder, because it establishes a due,
fee, or other charge imposed by the
NYSE Arca.
At any time within 60 days of the
filing of such proposed rule change, the
Commission summarily may
temporarily suspend 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 email to
rule-comments@sec.gov. Please include
File Number SR–NYSEArca–2011–79 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–NYSEArca–2011–79. This
file number should be included on the
subject line if email 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 Web site viewing and
printing 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–
NYSEArca–2011–79 and should be
submitted on or before December 8,
2011.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.12
Elizabeth M. Murphy,
Secretary.
[FR Doc. 2011–29676 Filed 11–16–11; 8:45 am]
BILLING CODE 8011–01–P
10 15
U.S.C. 78s(b)(3)(A).
11 17 CFR 240.19b–4(f)(2).
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71411
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–65728, File No. SR–BATS–
2011–035]
Self-Regulatory Organizations; BATS
Exchange, Inc.; Order Approving
Proposed Rule Change, as Modified by
Partial Amendment No. 1, To Amend
and Restate the Amended and
Restated Bylaws of BATS Global
Markets, Inc.
November 10, 2011.
I. Introduction
On September 7, 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 Bylaws of the
Exchange’s sole stockholder, BATS
Global Markets, Inc. (‘‘Corporation’’), in
connection with the Corporation’s
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 26, 2011.3 On
November 3, 2011, the Exchange filed
Partial Amendment No. 1 to the
proposed rule change.4 The Commission
received no comment letters regarding
the proposal. This order approves the
proposed rule change, as modified by
Partial Amendment No. 1.
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 and to
disclose its intention to conduct an IPO
offering those shares 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 Bylaws and adopt these changes
as its Second Amended and Restated
Bylaws (‘‘New Bylaws’’). The proposal
would primarily amend and restate
various provisions of the Bylaws in a
manner that the Exchange believes
1 15
U.S.C. 78s(b)(1).
CFR 240.19b–4.
3 See Securities Exchange Act Release No. 65353
(September 19, 2011), 76 FR 59472 (September 26,
2011) (‘‘Notice’’).
4 Partial Amendment No. 1 corrects an
inconsistency between the Third Amended and
Restated Certificate of Incorporation of the
Corporation and the Corporation’s proposed
amended bylaws concerning actions of stockholders
without a meeting. This is a technical amendment
and is not subject to notice and comment as it does
not materially affect the substance of the rule filing.
2 17
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Federal Register / Vol. 76, No. 222 / Thursday, November 17, 2011 / Notices
would reflect changes to conform with
provisions that are more customary for
publicly-owned companies and also
conform the New Bylaws to the
Corporation’s Certificate of
Incorporation.5
jlentini on DSK4TPTVN1PROD with NOTICES
A. Stockholders Meetings and Actions
Without a Meeting
The Exchange has proposed to revise
the current Bylaw procedures to require
stockholders to make certain disclosures
and representations in notices to the
Corporation concerning business
proposals and director nominations to
be considered at annual meetings.6 In
addition, the Exchange would require
that all proposals and nominations
comply with applicable requirements of
the Act.7 The Exchange has represented
that the purpose of the disclosure and
representation requirements is to assure
that stockholders asked to vote on
stockholder proposals or nominations
are more fully informed and are able to
consider any proposals or nominations
along with the interests of those
stockholders or the beneficial owners on
whose behalf such proposal or
nomination is being made.8
In addition, the Exchange has
proposed that the New Bylaws would
only permit a special meeting of the
stockholders to be called by the board
of directors pursuant to a resolution
adopted by a majority of the board of
directors.9 The Exchange has also
proposed to revise certain notice
requirements with respect to written
consent from stockholders to approve
5 See Notice, supra note 3, 76 FR at 59473. The
Exchange also filed a proposed rule change to
amend the Corporation’s Certificate of
Incorporation in anticipation of its upcoming IPO,
which proposed rule change was recently approved
by the Commission. See Securities Exchange Act
Release No. 65646 (October 27, 2011), 76 FR 67783
(November 2, 2011) (SR–BATS–2011–033) (order
approving proposed rule change to amend and
restate the Second Amended and Restated
Certificate of Incorporation of BATS Global
Markets, Inc.).
6 See proposed Section 2.02 of the New Bylaws.
The New Bylaws also state that such notice
requirements would be satisfied if done in
compliance with Exchange Act Rule 14a-8. See
Notice, supra note 3, 76 FR at 59474. Additionally,
the New Bylaws requires stockholders to appear at
any meeting to present such proposals or
nominations. See id.
7 See Notice, supra note 3, 76 FR at 59474.
8 See id.
9 See proposed Section 2.03 of the New Bylaws.
Under the current Bylaws, a special meeting of the
stockholders could be called by the chairman of the
board of directors, chief executive officer, the
majority of the board of directors, or by the
stockholders entitled to vote at least ten percent of
the votes at the meeting. The Exchange also
proposed that, whenever preferred stockholders
have the right to elect directors, the preferred
stockholders may call a special meeting of preferred
stockholders pursuant to a resolution of the board.
See id.
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certain corporate actions taken without
a meeting.10 Additionally, the Exchange
has proposed to prohibit any action by
written consent following a change of
ownership, except as provided in the
Corporation’s Certificate of
Incorporation.11 The Exchange notes
that these provisions are designed to
prevent any stockholder from exercising
undue control over the operation of the
Exchange by circumventing the board of
directors of the Corporation through a
special meeting of the stockholders or
action by written consent.12
B. Board of Directors and Board
Committees
The Exchange has proposed changing
the current Bylaws to revise the process
to remove directors and board
committees. The proposed rule change
would allow the board of directors or
any director to be removed by the
affirmative vote of at least a majority of
voting power of all outstanding shares
of the Corporation.13 The Exchange has
represented that the purpose of this
change is to align these requirements
with Delaware General Corporation
Laws.14 The Exchange also has
proposed to eliminate references to
executive committees, to authorize the
board of directors to create committees,
and, so as to ensure that the full board
of directors considers significant
corporate decisions, to prohibit board
committees from (i) Approving,
adopting, or recommending to
stockholders any matter required by
Delaware law to be submitted for
stockholder approval or (ii) adopting,
amending, and repealing the New
Bylaws.15
Currently, the Corporation’s Bylaws
provide 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 a Change in
Ownership,16 stockholders may only
adopt, amend, or repeal the New Bylaws
upon the affirmative vote of at least 70%
of the total voting power of all
outstanding shares of the Corporation.17
C. Other Amendments
The proposal will also amend and
restate various other provisions such as
those relating to the registered office of
the Corporation,18 shares held by the
Corporation in a fiduciary capacity,19
form of stock certificates,20 loans to
officers,21 and indemnification of
directors,22 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.23 In
particular, the Commission finds that
the proposal is consistent with Section
6(b)(1) of the Act,24 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 Exchange has represented that
the proposed rule change relates solely
to the Bylaws of the Corporation and
that the Exchange will continue to be
governed by its existing certificate of
incorporation and by-laws.25 The
Exchange also has represented that the
Corporation will continue to directly
and solely hold the stock in, and voting
power of, the Exchange and that the
Exchange will continue to operate
pursuant to its existing governance
structure.26 The Commission also notes
that the Exchange does not propose any
new substantive changes to Article 12 of
the current Bylaws (relating to SRO
Functions of BATS Exchange, Inc. and
BAT-Y Exchange, Inc.).
The Commission, therefore, believes
that the proposed rule change is
consistent with Section 6(b)(1) of the
Exchange Act, which requires the
Exchange to have the ability to be so
organized as to 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 provisions of the
18 See
10 See
proposed Section 2.10 of the New Bylaws.
11 See Notice, supra note 3, 76 FR at 59474 n. 4
(defining a ‘‘Change of Ownership’’ as occurring at
such time as the beneficial owners of the Class B
Common Stock and Non-Voting Class B Common
Stock own, in the aggregate, less than a majority of
the total voting power of the Corporation) and
Partial Amendment 1.
12 See Notice, supra note 3, 76 FR 59474.
13 See proposed Section 3.05 of the New Bylaws.
14 See Notice, supra note 3, 76 FR at 59474.
15 See proposed Section 3.10 of the New Bylaws.
16 See supra note 11.
17 See generally proposed Section 2.10 of the New
Bylaws.
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Sfmt 4703
Notice, supra note 3, 76 FR at 59473.
Exchange also has proposed that any
shares of stock held by the Corporation would have
no voting rights, except when such shares are held
in a fiduciary capacity. See proposed Section 2.07
of the New Bylaws.
20 See Notice, supra note 3, 76 FR at 59475.
21 See id.
22 See id.
23 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).
24 15 U.S.C. 78f(b)(1).
25 See Notice, supra note 3, 76 FR at 59473.
26 See id.
19 The
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Federal Register / Vol. 76, No. 222 / Thursday, November 17, 2011 / Notices
II. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
Act, the rules and regulations
thereunder, and the rules of the
Exchange.27
IV. Conclusion
It is therefore ordered, pursuant to
Section 19(b)(2) of the Act,28 that the
proposed rule change (SR–BATS–2011–
035), as modified by Partial Amendment
No. 1, be, and hereby is, approved.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.29
Elizabeth M. Murphy,
Secretary.
[FR Doc. 2011–29674 Filed 11–16–11; 8:45 am]
A. Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
1. Purpose
[Release No. 34–65724; File No. SR–ISE–
2011–72]
Self-Regulatory Organizations;
International Securities Exchange,
LLC; Notice of Filing and Immediate
Effectiveness of Proposed Rule
Change To Amend Transaction Fees
and Rebates for Certain Complex
Orders Executed on the Exchange
November 10, 2011.
Pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934
(‘‘Exchange Act’’) 1 and Rule 19b–4
thereunder,2 notice is hereby given that,
on October 28, 2011, the International
Securities Exchange, LLC (the
‘‘Exchange’’ or the ‘‘ISE’’) filed with the
Securities and Exchange Commission
(the ‘‘Commission’’) the proposed rule
change as described in Items I and II
below, which Items have been prepared
by the Exchange. The Commission is
publishing this notice to solicit
comments on the proposed rule change
from interested persons.
jlentini on DSK4TPTVN1PROD with NOTICES
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The ISE is proposing to amend certain
transaction fees and rebates. 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.
27 15
U.S.C. 78f(b)(1).
U.S.C. 78s(b)(2).
29 17 CFR 200.30–3(a)(12).
1 15 U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
28 15
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17:25 Nov 16, 2011
Jkt 226001
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 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.
The Exchange currently assesses per
contract transaction charges and credits
to market participants that add or
remove liquidity from the Exchange
(‘‘maker/taker fees’’) in a number of
options classes (the ‘‘Select Symbols’’).3
The Exchange’s maker/taker fees are
applicable to regular and complex
orders executed in the Select Symbols.4
The fees and rebates for complex orders
in the Select Symbols also apply to all
symbols that are in the Penny Pilot
program.5
For complex orders in the Select
Symbols and in symbols that are in the
Penny Pilot program but excluding the
Designated Symbols, the Exchange
currently charges a ‘‘take’’ fee of: (i)
$0.30 per contract for ISE Market
Maker,6 Market Maker Plus,7 Firm
3 Options classes subject to maker/taker fees are
identified by their ticker symbol on the Exchange’s
Schedule of Fees.
4 The Exchange has also adopted fees and rebates
for complex orders in a subset of the Select Symbols
(‘‘Designated Symbols’’) that are different from the
fees for complex orders in the Select Symbols.
These Designated Symbols are AAPL, BAC, C, F,
GLD, INTC, IWM, JPM, QQQ, SLV, SPY and XLF.
See Exchange Act Release Nos. [sic] 65084 (August
10, 2011), 76 FR 50805 (August 16, 2011) (SR–ISE–
2011–49).
5 See Exchange Act Release Nos. 65021 (August
3, 2011), 76 FR 48933 (August 9, 2011) (SR–ISE–
2011–45); and 65550 (October 13, 2011), 76 FR
64984 (October 19, 2011) (SR–ISE–2011–65).
6 The term ‘‘Market Makers’’ refers to
‘‘Competitive Market Makers’’ and ‘‘Primary Market
Makers’’ collectively. See ISE Rule 100(a)(25).
Market Makers who remove liquidity in the Select
Symbols from the Complex Order Book by trading
with orders preferenced to them are currently
charged $0.28 per contract.
7 A Market Maker Plus is an ISE Market Maker
who is on the National Best Bid or National Best
Offer 80% of the time for series trading between
$0.03 and $5.00 (for options whose underlying
stock’s previous trading day’s last sale price was
less than or equal to $100) and between $0.10 and
$5.00 (for options whose underlying stock’s
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71413
Proprietary and Customer
(Professional) 8 orders; and (ii) $0.35 per
contract for Non-ISE Market Maker 9
orders. Priority Customer 10 orders are
not charged a ‘‘take’’ fee for complex
orders. For complex orders in these
same symbols, the Exchange currently
charges a ‘‘make’’ fee of: (i) $0.10 per
contract for ISE Market Maker, Market
Maker Plus, Firm Proprietary and
Customer (Professional) orders; and (ii)
$0.20 per contract for Non-ISE Market
Maker orders. Priority Customer orders
are not charged a ‘‘make’’ fee for
complex orders.
For complex orders in the Designated
Symbols, the Exchange currently
charges a ‘‘take’’ fee of: (i) $0.31 per
contract for ISE Market Maker, Market
Maker Plus, Firm Proprietary and
Customer (Professional) orders; and (ii)
$0.36 per contract for Non-ISE Market
Maker orders. Priority Customer orders
are not charged a ‘‘take’’ fee for complex
orders in the Designated Symbols. The
‘‘make’’ fee for complex orders in the
Designated Symbols is the same as the
‘‘make’’ fee the Exchange currently
charges for the Select Symbols and
symbols that are in the Penny Pilot
program noted above. Priority Customer
orders are not charged a ‘‘make’’ fee for
complex orders in the Designated
Symbols.
The Exchange now proposes to
increase the ‘‘take’’ fee for complex
orders in both the Select Symbols and
the Designated Symbols to (i) $0.32 per
contract for ISE Market Maker, Market
previous trading day’s last sale price was greater
than $100) in premium in each of the front two
expiration months and 80% of the time for series
trading between $0.03 and $5.00 (for options whose
underlying stock’s previous trading day’s last sale
price was less than or equal to $100) and between
$0.10 and $5.00 (for options whose underlying
stock’s previous trading day’s last sale price was
greater than $100) in premium across all expiration
months in order to receive the rebate. The Exchange
determines whether a Market Maker qualifies as a
Market Maker Plus at the end of each month by
looking back at each Market Maker’s quoting
statistics during that month. If at the end of the
month, a Market Maker meets the Exchange’s stated
criteria, the Exchange rebates $0.10 per contract for
transactions executed by that Market Maker during
that month. The Exchange provides Market Makers
a report on a daily basis with quoting statistics so
that Market Makers can determine whether or not
they are meeting the Exchange’s stated criteria.
8 A Customer (Professional) is a person who is not
a broker/dealer and is not a Priority Customer.
9 A Non-ISE Market Maker, or Far Away Market
Maker (‘‘FARMM’’), is a market maker as defined
in Section 3(a)(38) of the Securities Exchange Act
of 1934, as amended (‘‘Exchange Act’’), registered
in the same options class on another options
exchange.
10 A Priority Customer is defined in ISE Rule
100(a)(37A) as a person or entity that is not a
broker/dealer in securities, and does not place more
than 390 orders in listed options per day on average
during a calendar month for its own beneficial
account(s).
E:\FR\FM\17NON1.SGM
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]]>Agencies
[Federal Register Volume 76, Number 222 (Thursday, November 17, 2011)]
[Notices]
[Pages 71411-71413]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2011-29674]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-65728, File No. SR-BATS-2011-035]
Self-Regulatory Organizations; BATS Exchange, Inc.; Order
Approving Proposed Rule Change, as Modified by Partial Amendment No. 1,
To Amend and Restate the Amended and Restated Bylaws of BATS Global
Markets, Inc.
November 10, 2011.
I. Introduction
On September 7, 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 Bylaws of the Exchange's sole
stockholder, BATS Global Markets, Inc. (``Corporation''), in connection
with the Corporation's 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 26, 2011.\3\
On November 3, 2011, the Exchange filed Partial Amendment No. 1 to the
proposed rule change.\4\ The Commission received no comment letters
regarding the proposal. This order approves the proposed rule change,
as modified by Partial Amendment No. 1.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
\3\ See Securities Exchange Act Release No. 65353 (September 19,
2011), 76 FR 59472 (September 26, 2011) (``Notice'').
\4\ Partial Amendment No. 1 corrects an inconsistency between
the Third Amended and Restated Certificate of Incorporation of the
Corporation and the Corporation's proposed amended bylaws concerning
actions of stockholders without a meeting. This is a technical
amendment and is not subject to notice and comment as it does not
materially affect the substance of the rule filing.
---------------------------------------------------------------------------
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
and to disclose its intention to conduct an IPO offering those shares
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 Bylaws and adopt these changes as its
Second Amended and Restated Bylaws (``New Bylaws''). The proposal would
primarily amend and restate various provisions of the Bylaws in a
manner that the Exchange believes
[[Page 71412]]
would reflect changes to conform with provisions that are more
customary for publicly-owned companies and also conform the New Bylaws
to the Corporation's Certificate of Incorporation.\5\
---------------------------------------------------------------------------
\5\ See Notice, supra note 3, 76 FR at 59473. The Exchange also
filed a proposed rule change to amend the Corporation's Certificate
of Incorporation in anticipation of its upcoming IPO, which proposed
rule change was recently approved by the Commission. See Securities
Exchange Act Release No. 65646 (October 27, 2011), 76 FR 67783
(November 2, 2011) (SR-BATS-2011-033) (order approving proposed rule
change to amend and restate the Second Amended and Restated
Certificate of Incorporation of BATS Global Markets, Inc.).
---------------------------------------------------------------------------
A. Stockholders Meetings and Actions Without a Meeting
The Exchange has proposed to revise the current Bylaw procedures to
require stockholders to make certain disclosures and representations in
notices to the Corporation concerning business proposals and director
nominations to be considered at annual meetings.\6\ In addition, the
Exchange would require that all proposals and nominations comply with
applicable requirements of the Act.\7\ The Exchange has represented
that the purpose of the disclosure and representation requirements is
to assure that stockholders asked to vote on stockholder proposals or
nominations are more fully informed and are able to consider any
proposals or nominations along with the interests of those stockholders
or the beneficial owners on whose behalf such proposal or nomination is
being made.\8\
---------------------------------------------------------------------------
\6\ See proposed Section 2.02 of the New Bylaws. The New Bylaws
also state that such notice requirements would be satisfied if done
in compliance with Exchange Act Rule 14a-8. See Notice, supra note
3, 76 FR at 59474. Additionally, the New Bylaws requires
stockholders to appear at any meeting to present such proposals or
nominations. See id.
\7\ See Notice, supra note 3, 76 FR at 59474.
\8\ See id.
---------------------------------------------------------------------------
In addition, the Exchange has proposed that the New Bylaws would
only permit a special meeting of the stockholders to be called by the
board of directors pursuant to a resolution adopted by a majority of
the board of directors.\9\ The Exchange has also proposed to revise
certain notice requirements with respect to written consent from
stockholders to approve certain corporate actions taken without a
meeting.\10\ Additionally, the Exchange has proposed to prohibit any
action by written consent following a change of ownership, except as
provided in the Corporation's Certificate of Incorporation.\11\ The
Exchange notes that these provisions are designed to prevent any
stockholder from exercising undue control over the operation of the
Exchange by circumventing the board of directors of the Corporation
through a special meeting of the stockholders or action by written
consent.\12\
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\9\ See proposed Section 2.03 of the New Bylaws. Under the
current Bylaws, a special meeting of the stockholders could be
called by the chairman of the board of directors, chief executive
officer, the majority of the board of directors, or by the
stockholders entitled to vote at least ten percent of the votes at
the meeting. The Exchange also proposed that, whenever preferred
stockholders have the right to elect directors, the preferred
stockholders may call a special meeting of preferred stockholders
pursuant to a resolution of the board. See id.
\10\ See proposed Section 2.10 of the New Bylaws.
\11\ See Notice, supra note 3, 76 FR at 59474 n. 4 (defining a
``Change of Ownership'' as occurring at such time as the beneficial
owners of the Class B Common Stock and Non-Voting Class B Common
Stock own, in the aggregate, less than a majority of the total
voting power of the Corporation) and Partial Amendment 1.
\12\ See Notice, supra note 3, 76 FR 59474.
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B. Board of Directors and Board Committees
The Exchange has proposed changing the current Bylaws to revise the
process to remove directors and board committees. The proposed rule
change would allow the board of directors or any director to be removed
by the affirmative vote of at least a majority of voting power of all
outstanding shares of the Corporation.\13\ The Exchange has represented
that the purpose of this change is to align these requirements with
Delaware General Corporation Laws.\14\ The Exchange also has proposed
to eliminate references to executive committees, to authorize the board
of directors to create committees, and, so as to ensure that the full
board of directors considers significant corporate decisions, to
prohibit board committees from (i) Approving, adopting, or recommending
to stockholders any matter required by Delaware law to be submitted for
stockholder approval or (ii) adopting, amending, and repealing the New
Bylaws.\15\
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\13\ See proposed Section 3.05 of the New Bylaws.
\14\ See Notice, supra note 3, 76 FR at 59474.
\15\ See proposed Section 3.10 of the New Bylaws.
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Currently, the Corporation's Bylaws provide 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
a Change in Ownership,\16\ stockholders may only adopt, amend, or
repeal the New Bylaws upon the affirmative vote of at least 70% of the
total voting power of all outstanding shares of the Corporation.\17\
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\16\ See supra note 11.
\17\ See generally proposed Section 2.10 of the New Bylaws.
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C. Other Amendments
The proposal will also amend and restate various other provisions
such as those relating to the registered office of the Corporation,\18\
shares held by the Corporation in a fiduciary capacity,\19\ form of
stock certificates,\20\ loans to officers,\21\ and indemnification of
directors,\22\ among others.
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\18\ See Notice, supra note 3, 76 FR at 59473.
\19\ The Exchange also has proposed that any shares of stock
held by the Corporation would have no voting rights, except when
such shares are held in a fiduciary capacity. See proposed Section
2.07 of the New Bylaws.
\20\ See Notice, supra note 3, 76 FR at 59475.
\21\ See id.
\22\ See id.
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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.\23\ In particular, the Commission finds that the
proposal is consistent with Section 6(b)(1) of the Act,\24\ 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.
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\23\ 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).
\24\ 15 U.S.C. 78f(b)(1).
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The Exchange has represented that the proposed rule change relates
solely to the Bylaws of the Corporation and that the Exchange will
continue to be governed by its existing certificate of incorporation
and by-laws.\25\ The Exchange also has represented that the Corporation
will continue to directly and solely hold the stock in, and voting
power of, the Exchange and that the Exchange will continue to operate
pursuant to its existing governance structure.\26\ The Commission also
notes that the Exchange does not propose any new substantive changes to
Article 12 of the current Bylaws (relating to SRO Functions of BATS
Exchange, Inc. and BAT-Y Exchange, Inc.).
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\25\ See Notice, supra note 3, 76 FR at 59473.
\26\ See id.
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The Commission, therefore, believes that the proposed rule change
is consistent with Section 6(b)(1) of the Exchange Act, which requires
the Exchange to have the ability to be so organized as to 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 provisions of the
[[Page 71413]]
Act, the rules and regulations thereunder, and the rules of the
Exchange.\27\
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\27\ 15 U.S.C. 78f(b)(1).
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IV. Conclusion
It is therefore ordered, pursuant to Section 19(b)(2) of the
Act,\28\ that the proposed rule change (SR-BATS-2011-035), as modified
by Partial Amendment No. 1, be, and hereby is, approved.
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\28\ 15 U.S.C. 78s(b)(2).
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\29\
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\29\ 17 CFR 200.30-3(a)(12).
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Elizabeth M. Murphy,
Secretary.
[FR Doc. 2011-29674 Filed 11-16-11; 8:45 am]
BILLING CODE 8011-01-P
