Self-Regulatory Organizations; NYSE Arca, Inc.; Order Granting Approval of Proposed Rule Changes Amending NYSE Arca, Inc. Rules 3.2 and 3.3 and NYSE Arca Equities, Inc. Rules 3.2 and 3.3 To Expand the Eligibility Requirements for Service on Certain Boards of Directors and Committees, 69677-69679 [2012-28192]

Download as PDF Federal Register / Vol. 77, No. 224 / Tuesday, November 20, 2012 / Notices cancellation fee of $0.30/order cancellation. 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. III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action The proposed rule change is to take effect pursuant to Section 19(b)(3)(A)(ii) of the Act 23 and subparagraph (f)(2) of Rule 19b-4 thereunder 24 because it establishes or changes a due, fee or other charge applicable to the Exchange’s members and non-members, which renders the proposed rule change effective upon filing. At any time within 60 days of the filing of the 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 rulecomments@sec.gov. Please include File Number SR–CHX–2012–15 on the subject line. wreier-aviles on DSK5TPTVN1PROD with 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–CHX–2012–15. This file 23 15 24 17 U.S.C. 78s(b)(3)(A)(ii). CFR 240.19b–4(f)(2). VerDate Mar<15>2010 15:12 Nov 19, 2012 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 on official business days between the hours of 10:00 a.m. and 3:00 p.m. Copies of such filing also will be available for inspection and copying at the principal offices of CHX. 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–CHX–2012–15, and should be submitted on or before December 11, 2012. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.25 Kevin M. O’Neill, Deputy Secretary. [FR Doc. 2012–28135 Filed 11–19–12; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–68233; File No. SR– NYSEArca–2012–103] Self-Regulatory Organizations; NYSE Arca, Inc.; Order Granting Approval of Proposed Rule Changes Amending NYSE Arca, Inc. Rules 3.2 and 3.3 and NYSE Arca Equities, Inc. Rules 3.2 and 3.3 To Expand the Eligibility Requirements for Service on Certain Boards of Directors and Committees November 14, 2012. I. Introduction On September 18, 2012, NYSE Arca, Inc. (‘‘NYSE Arca’’) filed with the Securities and Exchange Commission (‘‘Commission’’), pursuant to Section 25 17 Jkt 229001 PO 00000 CFR 200.30–3(a)(12). Frm 00088 Fmt 4703 Sfmt 4703 69677 19(b)(1) 1 of the Securities Exchange Act of 1934 (‘‘Act’’),2 and Rule 19b–4 thereunder,3 proposed rule changes to amend NYSE Arca Rules 3.2 and 3.3 and NYSE Arca Equities, Inc. (‘‘NYSE Arca Equities’’) Rules 3.2 and 3.3 to expand the eligibility requirements for service on the Board of Directors of NYSE Arca (‘‘NYSE Arca Board’’) and certain committees of NYSE Arca and NYSE Arca Equities. The proposed rule changes were published for comment in the Federal Register on October 1, 2012.4 The Commission received no comment letters on the proposal. II. Background Amendments to NYSE Arca Rules 3.2 and 3.3 NYSE Arca Rule 3.2(a) sets forth the general provisions for Options Committees. Specifically, NYSE Arca Rule 3.2(a)(8) states that any OTP Holder 5 of the Exchange in good standing, Allied Person 6 of an OTP Firm,7 or person from the public is eligible for appointment or election to various Options Committees. NYSE Arca Rule 3.2(b) sets forth the eligibility requirements for three specific Options Committees: The Ethics and Business Conduct Committee (the ‘‘EBCC Committee’’), the Nominating Committee, and the OTP Advisory Committee.8 NYSE Arca Rule 3.3(a) sets forth the eligibility requirements for the Board Appeals Committee and Appeals 1 15 U.S.C. 78s(b)(1). U.S.C. 78a. 3 17 CFR 240.19b–4. 4 See Securities Exchange Act Release No. 67923 (September 25, 2012), 77 FR 59995 (SR–NYSEArca– 2012–103) (the ‘‘Notice’’). 5 An ‘‘OTP Holder’’ is a natural person, in good standing, who has been issued an Options Trading Permit (‘‘OTP’’), or has been named as a nominee. See NYSE Arca Rule 1.1(q). 6 An ‘‘Allied Person’’ (for purposes of NYSE Arca Rules) is an individual who is (1) an employee of an OTP Firm who controls such firm, (2) an employee of an OTP Firm corporation who is a director or a principal executive officer of such corporation, (3) an employee of an OTP Firm limited liability company who is a manager or a principal executive officer of such limited liability company, or (4) a general partner in an OTP Firm partnership. Each of these persons must be approved by the Exchange as an Allied Person. See NYSE Arca Rule 1.1(b). 7 ‘‘OTP Firm’’ means a sole proprietorship, partnership, corporation, limited liability company, or other organization in good standing who holds an OTP or upon whom an individual OTP Holder has conferred trading privileges on the Exchange’s trading facilities. See NYSE Arca Rule 1.1(r). 8 The EBCC currently consists primarily of OTP Holders and Allied Persons of an OTP Firm. See NYSE Arca Rule 3.2(b)(1)(A). The Nominating Committee currently consists of six OTP Holders. See NYSE Arca Rule 3.2(b)(2)(A). The OTP Advisory Committee currently consists of OTP Holders. See NYSE Arca Rule 3.2(b)(3)(A). 2 15 E:\FR\FM\20NON1.SGM 20NON1 69678 Federal Register / Vol. 77, No. 224 / Tuesday, November 20, 2012 / Notices Panel.9 The Exchange proposes to amend its rules to expand the eligibility requirements to serve on these various committees and panels to include OTP Holders, Allied Persons of OTP Firms and Associated Persons 10 of OTP Firms. The Exchange also proposes to expand the eligibility for its fair representation directors.11 Currently, the Nominating Committee publishes the name of one OTP Holder or Allied Person of an OTP Firm as its nominee for the NYSE Arca Board.12 The Exchange proposes to expand the eligibility for fair representation directors by amending this rule to allow the Nominating Committee to publish the name of an Associated Person of an OTP Firm as well. wreier-aviles on DSK5TPTVN1PROD with Amendments to NYSE Arca Equities Rules The Exchange proposes to make parallel changes to the NYSE Arca Equities Rules. NYSE Arca Equities Rule 3.2(a) sets forth general provisions for various Equities Committees. Specifically, NYSE Arca Equities Rule 3.2(a)(8) states that any ETP Holder 13 of the Exchange in good standing or Allied Person 14 of an ETP Holder,15 or person 9 Each Appeals Panel is made up of no less than three (3) but no more than five (5) individuals, at least one of whom is a director that is an OTP Holder or Allied Person of an OTP Firm. See NYSE Arca Rule 3.3(a)(1)(B). 10 ‘‘Associated Person’’ is person who is a partner, officer, director, member of a limited liability company, trustee of a business trust, employee of an OTP Firm, or any person directly or indirectly controlling, controlled by or under common control with an OTP Firm. See NYSE Arca Rule 1.1(d). 11 Under Section 3.02(a) of the Bylaws of NYSE Arca, the NYSE Arca Board must have 8–12 directors, and at least 20 percent of the directors must be individuals nominated by trading permit holders, with at least one director nominated by the Equities Trading Permit Holders (‘‘ETP Holders’’) of NYSE Arca Equities, and at least one director nominated by the OTP Holders of the Exchange. In addition, at least 50 percent of the directors must be directors who represent the public. The exact number of the directors nominated by the ETP Holders and OTP Holders is determined from time to time by the NYSE Arca Board, subject to the percentage restrictions described above. 12 See NYSE Arca Rule 3.2(b)(2)(C)(ii). 13 An ‘‘ETP Holder’’ is a sole proprietorship, partnership, corporation, limited liability company or other organization in good standing that has been issued an Equities Trading Permit. See NYSE Arca Equities Rule 1.1(n). 14 An ‘‘Allied Person’’ (for purposes of NYSE Arca Equities Rules) is an individual who is (1) an employee of an ETP Holder who controls such firm, (2) an employee of an ETP Holder corporation who is a director or a principal executive officer of such corporation, (3) an employee of an ETP Holder limited liability company who is a manager or a principal executive officer of such limited liability company, or (4) a general partner in an ETP Holder partnership; each of these persons must be approved by NYSE Arca Equities as an Allied Person. See NYSE Arca Equities Rule 1.1(c). 15 ETP Firm means a sole proprietorship, partnership, corporation, limited liability company, VerDate Mar<15>2010 15:12 Nov 19, 2012 Jkt 229001 from the public is eligible for appointment or election to Equities Committees. NYSE Arca Equities Rule 3.2(b) sets forth provisions for two specific Equities Committees: The Business Conduct Committee (the ‘‘BCC Committee’’) and the Nominating Committee (the ‘‘Equities Nominating Committee’’).16 NYSE Arca Rule 3.3(a) sets forth the eligibility requirements for the Board Appeals Committee.17 The Exchange proposes to amend the rules of NYSE Arca Equities so to expand the eligibility requirements to serve on these various committees and panels to include ETP Holders, Allied Persons of ETP Firms and Associated Persons 18 of ETP Firms. In addition to amending the composition requirements of the Equities Nominating Committee, the Exchange also proposes to amend NYSE Arca Rules 3.2(b)(2)(C)(i) to expand the eligibility for fair representation directors. Currently, the Equities Nominating Committee may nominate ETP Holders or Allied Persons of ETP Holders to serve on the NYSE Arca Board. The Exchange proposes to expand the eligibility for fair representation directors by amending this rule to allow the Equities Nominating Committee to publish the name of an Associated Person of an ETP Firm as well. III. Discussion and Commission Findings The Commission has reviewed carefully the proposed rule changes and finds that the proposed rule changes are consistent with the requirements of the Act and the rules and regulations thereunder applicable to a national securities exchange.19 In particular, the Commission finds that the proposed rule changes are consistent with Section or other organization in good standing who holds an OTP or upon whom an individual OTP Holder has conferred trading privileges on the Exchange’s trading facilities. See NYSE Arca Rule 1.1(r). 16 The BCC currently consists of a minimum of one ETP Holder or Allied Persons of an ETP Holder. See NYSE Arca Equities Rule 3.2(b)(1)(A). The Nominating Committee currently consists of six ETP Holders. See NYSE Arca Equities Rule 3.2(b)(2)(A). 17 Each Appeals Committee currently consists of at least one public director and at least one director that is an ETP Holder or Allied Person of an ETP Firm. See NYSE Arca Equities Rule 3.3(a)(1)(A). 18 ‘‘Associated Person’’ is person who is a partner, officer, director, member of a limited liability company, trustee of a business trust, employee of an ETP Holder, or any person directly or indirectly controlling, controlled by or under common control with an ETP Holder. See NYSE Arca Equities Rule 1.1(f). 19 In approving the proposed rule changes, the Commission has considered their impact on efficiency, competition, and capital formation. See 15 U.S.C. 78c(f). PO 00000 Frm 00089 Fmt 4703 Sfmt 4703 6(b)(3) of the Act,20 which, among other things, requires that the rules of an exchange assure a fair representation of its members in the selection of its directors and administration of its affairs and provides that one or more directors shall be representative of issuers and investors and not be associated with a member of the exchange, broker or dealer. As the Exchange notes, the proposed rule changes are consistent with the composition requirements set forth in the governing documents of other selfregulatory organizations.21 The Exchange is not proposing to alter the number of fair representation candidates on the boards or any other aspect of the NYSE Arca Board’s composition or nomination process. The proposed rule change also furthers the objectives of Section 6(b)(6) of the Act,22 because it provides for appropriate discipline for violations of Exchange rules and regulations. The Commission believes that the proposed rule change will expand the available candidates with industry knowledge that are eligible for membership on the Options and Equities Committees that are involved in reviewing disciplinary actions against OTP Holders, OTP Firms, and ETP Holders and advising on rule changes related to disciplinary matters and trading rules. The Commission also believes that the proposed rule change furthers the objectives of Section 6(b)(5) of the Act 23 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 regulating, clearing, settling, processing information with respect to, and facilitating transactions in securities, to remove impediments to and perfect the mechanism of a free and open market and a national market system, and, in general, to protect investors and the public interest. Specifically, the Commission believes the proposed rule change would expand the pool of candidates eligible for membership on the NYSE Arca Board and committees of NYSE Arca and NYSE Arca Equities and thereby increase the breadth of industry knowledge that would be available to these entities, which should benefit the public interest. 20 15 U.S.C. 78f(b)(3). Notice, supra note 3 at 59995–59997. 22 15 U.S.C. 78f(b)(6). 23 15 U.S.C. 78f(b)(5). 21 See E:\FR\FM\20NON1.SGM 20NON1 Federal Register / Vol. 77, No. 224 / Tuesday, November 20, 2012 / Notices IV. Conclusion For the foregoing reasons, the Commission finds that the proposed rule changes are consistent with the Act and the rules and regulations thereunder applicable to a national securities exchange. It is therefore ordered, pursuant to Section 19(b)(2) of the Act 24 that the proposed rule changes (SR–NYSEArca– 2012–103), are approved. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.25 Kevin M. O’Neill, Deputy Secretary. [FR Doc. 2012–28192 Filed 11–19–12; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–68227; File No. SR– NYSEArca–2012–123] Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Change the Monthly Fees for the Use of Ports November 14, 2012. 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 November 1, 2012, NYSE Arca, Inc. (the ‘‘Exchange’’ or ‘‘NYSE Arca’’) 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. wreier-aviles on DSK5TPTVN1PROD with I. Self-Regulatory Organization’s Statement of the Terms of Substance of the Proposed Rule Change The Exchange proposes to amend the NYSE Arca Equities Schedule of Fees and Charges for Exchange Services (the ‘‘Fee Schedule’’) to change the monthly fees for the use of ports. The text of the proposed rule change is available on the Exchange’s Web site at www.nyse.com, at the principal office of the Exchange, and at the Commission’s Public Reference Room. 24 15 U.S.C. 78s(b)(2). CFR 200.30–3(a)(12). 1 15 U.S.C.78s(b)(1). 2 15 U.S.C. 78a. 3 17 CFR 240.19b–4. 25 17 VerDate Mar<15>2010 15:12 Nov 19, 2012 Jkt 229001 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 the Statutory Basis for, the Proposed Rule Change 1. Purpose The Exchange proposes to amend the Fee Schedule to change the monthly fees for the use of ports that provide connectivity to the Exchange’s trading systems (i.e., ports for entry of orders and/or quotes (‘‘order/quote entry ports’’)) and to implement a fee for ports that allow for the receipt of ‘‘drop copies’’ of order or transaction information (‘‘drop copy ports’’ and, together with order/quote entry ports, ‘‘ports’’).4 The Exchange proposes to implement the fee changes on November 1, 2012. Order/Quote Entry Ports The Exchange currently makes order/ quote entry ports available for connectivity to its trading systems and charges $300 per port pair per month for up to five pairs of ports, then $1,500 per month for each additional five pairs of ports.5 The Exchange proposes to change the current methodology for order/quote entry port billing, such that order/quote 4 Firms receive confirmations of their orders and receive execution reports via the order/quote entry port that is used to enter the order or quote. A ‘‘drop copy’’ contains redundant information that a firm chooses to have ‘‘dropped’’ to another destination (e.g., to allow the firm’s back office and/or compliance department, or another firm—typically the firm’s clearing broker—to have immediate access to the information). Such drop copies can only be sent via a drop copy port. Drop copy ports cannot be used to enter orders and/or quotes. 5 See Securities Exchange Act Release No. 63056 (October 6, 2010), 75 FR 63233 (October 14, 2010) (SR–NYSEArca–2010–87) (the port fee ‘‘Adopting Release’’). See also Securities Exchange Act Release No. 66110 (January 5, 2012), 77 FR 1766 (January 11, 2012) (SR–NYSEArca–2012–01) (the port fee ‘‘Amending Release’’). For example, the current fee for six pairs of ports would be $3,000 total per month (i.e., $1,500 total for the first five pairs and $1,500 for the sixth pair). The fee would remain $3,000 for pairs seven through 10. The fee would increase by $1,500, to $4,500 total, for pairs 11 through 15. PO 00000 Frm 00090 Fmt 4703 Sfmt 4703 69679 entry ports would be charged on a per port basis, without billing in groups of five and without requiring that ports be in pairs.6 More specifically, the Exchange proposes to charge $200 per port per month for order/quote entry ports, which are currently charged $300 per pair per month for activity on NYSE Arca Equities; 7 provided, however, that (i) users of the Exchange’s Risk Management Gateway service (‘‘RMG’’) would not be charged for order/quote entry ports if such ports are designated as being used for RMG purposes, and (ii) unutilized order/quote entry ports that connect to the Exchange via its backup datacenter would be considered established for backup purposes and not charged port fees.8 The Exchange proposes that users of RMG would not be charged for order/ quote entry ports if such ports are designated as being used for RMG purposes. RMG enables Sponsoring ETP Holders to verify whether a Sponsored Participant’s orders comply with order criteria established by the Sponsoring ETP Holder for the Sponsored Participant, including, among other things, criteria related to order size (per order or daily quantity limits), credit limits (per order or daily value), specific symbols or end users.9 Currently, users of RMG are required to pay the existing order/quote entry port fees for connectivity to the Exchange’s trading systems, in addition to the RMG 6 The Exchange stated in the Adopting Release that the port fee is charged per participant. The Exchange later clarified that ‘‘per participant’’ means per ETP ID for purposes of the port fees, since an ETP Holder may have more than one unique ETP ID. See Amending Release, at 1766– 1767. The proposed fee change would change the current methodology such that ports would not be charged on a per ETP ID basis. Accordingly, reference to per ETP ID would be removed from the Fee Schedule related to port fees. 7 The Exchange does not currently charge for order/quote entry ports related to option activity on NYSE Arca Options. However, via a separate proposed rule change, the Exchange is proposing to implement port fees applicable to option activity on NYSE Arca Options. See SR–NYSEArca–2012–122. In this regard, separate port fees would be charged for an order/quote entry port that is authorized for both equity and option order/quote entry. 8 Since the Adopting Release, the Exchange has not charged for order/quote entry ports that connect to the Exchange through its backup datacenter, which is currently located in Chicago, Illinois, irrespective of whether activity was conducted through such ports. 9 See Securities Exchange Act Release No. 60607 (September 1, 2009), 74 FR 46275 (September 8, 2009) (SR–NYSEArca–2009–80) (order approving RMG). See also Securities Exchange Act Release No. 60664 (September 14, 2009), 74 FR 48110 (September 21, 2009) (SR–NYSEArca–2009–81) (establishing RMG fees). The Exchange proposes a non-substantive change to the Fee Schedule to move the first instance of Risk Management Gateway being defined as ‘‘RMG.’’ E:\FR\FM\20NON1.SGM 20NON1

Agencies

[Federal Register Volume 77, Number 224 (Tuesday, November 20, 2012)]
[Notices]
[Pages 69677-69679]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2012-28192]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-68233; File No. SR-NYSEArca-2012-103]


Self-Regulatory Organizations; NYSE Arca, Inc.; Order Granting 
Approval of Proposed Rule Changes Amending NYSE Arca, Inc. Rules 3.2 
and 3.3 and NYSE Arca Equities, Inc. Rules 3.2 and 3.3 To Expand the 
Eligibility Requirements for Service on Certain Boards of Directors and 
Committees

November 14, 2012.

I. Introduction

    On September 18, 2012, NYSE Arca, Inc. (``NYSE Arca'') filed with 
the Securities and Exchange Commission (``Commission''), pursuant to 
Section 19(b)(1) \1\ of the Securities Exchange Act of 1934 
(``Act''),\2\ and Rule 19b-4 thereunder,\3\ proposed rule changes to 
amend NYSE Arca Rules 3.2 and 3.3 and NYSE Arca Equities, Inc. (``NYSE 
Arca Equities'') Rules 3.2 and 3.3 to expand the eligibility 
requirements for service on the Board of Directors of NYSE Arca (``NYSE 
Arca Board'') and certain committees of NYSE Arca and NYSE Arca 
Equities. The proposed rule changes were published for comment in the 
Federal Register on October 1, 2012.\4\ The Commission received no 
comment letters on the proposal.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 15 U.S.C. 78a.
    \3\ 17 CFR 240.19b-4.
    \4\ See Securities Exchange Act Release No. 67923 (September 25, 
2012), 77 FR 59995 (SR-NYSEArca-2012-103) (the ``Notice'').
---------------------------------------------------------------------------

II. Background

Amendments to NYSE Arca Rules 3.2 and 3.3

    NYSE Arca Rule 3.2(a) sets forth the general provisions for Options 
Committees. Specifically, NYSE Arca Rule 3.2(a)(8) states that any OTP 
Holder \5\ of the Exchange in good standing, Allied Person \6\ of an 
OTP Firm,\7\ or person from the public is eligible for appointment or 
election to various Options Committees. NYSE Arca Rule 3.2(b) sets 
forth the eligibility requirements for three specific Options 
Committees: The Ethics and Business Conduct Committee (the ``EBCC 
Committee''), the Nominating Committee, and the OTP Advisory 
Committee.\8\ NYSE Arca Rule 3.3(a) sets forth the eligibility 
requirements for the Board Appeals Committee and Appeals

[[Page 69678]]

Panel.\9\ The Exchange proposes to amend its rules to expand the 
eligibility requirements to serve on these various committees and 
panels to include OTP Holders, Allied Persons of OTP Firms and 
Associated Persons \10\ of OTP Firms.
---------------------------------------------------------------------------

    \5\ An ``OTP Holder'' is a natural person, in good standing, who 
has been issued an Options Trading Permit (``OTP''), or has been 
named as a nominee. See NYSE Arca Rule 1.1(q).
    \6\ An ``Allied Person'' (for purposes of NYSE Arca Rules) is an 
individual who is (1) an employee of an OTP Firm who controls such 
firm, (2) an employee of an OTP Firm corporation who is a director 
or a principal executive officer of such corporation, (3) an 
employee of an OTP Firm limited liability company who is a manager 
or a principal executive officer of such limited liability company, 
or (4) a general partner in an OTP Firm partnership. Each of these 
persons must be approved by the Exchange as an Allied Person. See 
NYSE Arca Rule 1.1(b).
    \7\ ``OTP Firm'' means a sole proprietorship, partnership, 
corporation, limited liability company, or other organization in 
good standing who holds an OTP or upon whom an individual OTP Holder 
has conferred trading privileges on the Exchange's trading 
facilities. See NYSE Arca Rule 1.1(r).
    \8\ The EBCC currently consists primarily of OTP Holders and 
Allied Persons of an OTP Firm. See NYSE Arca Rule 3.2(b)(1)(A). The 
Nominating Committee currently consists of six OTP Holders. See NYSE 
Arca Rule 3.2(b)(2)(A). The OTP Advisory Committee currently 
consists of OTP Holders. See NYSE Arca Rule 3.2(b)(3)(A).
    \9\ Each Appeals Panel is made up of no less than three (3) but 
no more than five (5) individuals, at least one of whom is a 
director that is an OTP Holder or Allied Person of an OTP Firm. See 
NYSE Arca Rule 3.3(a)(1)(B).
    \10\ ``Associated Person'' is person who is a partner, officer, 
director, member of a limited liability company, trustee of a 
business trust, employee of an OTP Firm, or any person directly or 
indirectly controlling, controlled by or under common control with 
an OTP Firm. See NYSE Arca Rule 1.1(d).
---------------------------------------------------------------------------

    The Exchange also proposes to expand the eligibility for its fair 
representation directors.\11\ Currently, the Nominating Committee 
publishes the name of one OTP Holder or Allied Person of an OTP Firm as 
its nominee for the NYSE Arca Board.\12\ The Exchange proposes to 
expand the eligibility for fair representation directors by amending 
this rule to allow the Nominating Committee to publish the name of an 
Associated Person of an OTP Firm as well.
---------------------------------------------------------------------------

    \11\ Under Section 3.02(a) of the Bylaws of NYSE Arca, the NYSE 
Arca Board must have 8-12 directors, and at least 20 percent of the 
directors must be individuals nominated by trading permit holders, 
with at least one director nominated by the Equities Trading Permit 
Holders (``ETP Holders'') of NYSE Arca Equities, and at least one 
director nominated by the OTP Holders of the Exchange. In addition, 
at least 50 percent of the directors must be directors who represent 
the public. The exact number of the directors nominated by the ETP 
Holders and OTP Holders is determined from time to time by the NYSE 
Arca Board, subject to the percentage restrictions described above.
    \12\ See NYSE Arca Rule 3.2(b)(2)(C)(ii).
---------------------------------------------------------------------------

Amendments to NYSE Arca Equities Rules

    The Exchange proposes to make parallel changes to the NYSE Arca 
Equities Rules. NYSE Arca Equities Rule 3.2(a) sets forth general 
provisions for various Equities Committees. Specifically, NYSE Arca 
Equities Rule 3.2(a)(8) states that any ETP Holder \13\ of the Exchange 
in good standing or Allied Person \14\ of an ETP Holder,\15\ or person 
from the public is eligible for appointment or election to Equities 
Committees. NYSE Arca Equities Rule 3.2(b) sets forth provisions for 
two specific Equities Committees: The Business Conduct Committee (the 
``BCC Committee'') and the Nominating Committee (the ``Equities 
Nominating Committee'').\16\ NYSE Arca Rule 3.3(a) sets forth the 
eligibility requirements for the Board Appeals Committee.\17\ The 
Exchange proposes to amend the rules of NYSE Arca Equities so to expand 
the eligibility requirements to serve on these various committees and 
panels to include ETP Holders, Allied Persons of ETP Firms and 
Associated Persons \18\ of ETP Firms.
---------------------------------------------------------------------------

    \13\ An ``ETP Holder'' is a sole proprietorship, partnership, 
corporation, limited liability company or other organization in good 
standing that has been issued an Equities Trading Permit. See NYSE 
Arca Equities Rule 1.1(n).
    \14\ An ``Allied Person'' (for purposes of NYSE Arca Equities 
Rules) is an individual who is (1) an employee of an ETP Holder who 
controls such firm, (2) an employee of an ETP Holder corporation who 
is a director or a principal executive officer of such corporation, 
(3) an employee of an ETP Holder limited liability company who is a 
manager or a principal executive officer of such limited liability 
company, or (4) a general partner in an ETP Holder partnership; each 
of these persons must be approved by NYSE Arca Equities as an Allied 
Person. See NYSE Arca Equities Rule 1.1(c).
    \15\ ETP Firm means a sole proprietorship, partnership, 
corporation, limited liability company, or other organization in 
good standing who holds an OTP or upon whom an individual OTP Holder 
has conferred trading privileges on the Exchange's trading 
facilities. See NYSE Arca Rule 1.1(r).
    \16\ The BCC currently consists of a minimum of one ETP Holder 
or Allied Persons of an ETP Holder. See NYSE Arca Equities Rule 
3.2(b)(1)(A). The Nominating Committee currently consists of six ETP 
Holders. See NYSE Arca Equities Rule 3.2(b)(2)(A).
    \17\ Each Appeals Committee currently consists of at least one 
public director and at least one director that is an ETP Holder or 
Allied Person of an ETP Firm. See NYSE Arca Equities Rule 
3.3(a)(1)(A).
    \18\ ``Associated Person'' is person who is a partner, officer, 
director, member of a limited liability company, trustee of a 
business trust, employee of an ETP Holder, or any person directly or 
indirectly controlling, controlled by or under common control with 
an ETP Holder. See NYSE Arca Equities Rule 1.1(f).
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    In addition to amending the composition requirements of the 
Equities Nominating Committee, the Exchange also proposes to amend NYSE 
Arca Rules 3.2(b)(2)(C)(i) to expand the eligibility for fair 
representation directors. Currently, the Equities Nominating Committee 
may nominate ETP Holders or Allied Persons of ETP Holders to serve on 
the NYSE Arca Board. The Exchange proposes to expand the eligibility 
for fair representation directors by amending this rule to allow the 
Equities Nominating Committee to publish the name of an Associated 
Person of an ETP Firm as well.

III. Discussion and Commission Findings

    The Commission has reviewed carefully the proposed rule changes and 
finds that the proposed rule changes are consistent with the 
requirements of the Act and the rules and regulations thereunder 
applicable to a national securities exchange.\19\ In particular, the 
Commission finds that the proposed rule changes are consistent with 
Section 6(b)(3) of the Act,\20\ which, among other things, requires 
that the rules of an exchange assure a fair representation of its 
members in the selection of its directors and administration of its 
affairs and provides that one or more directors shall be representative 
of issuers and investors and not be associated with a member of the 
exchange, broker or dealer. As the Exchange notes, the proposed rule 
changes are consistent with the composition requirements set forth in 
the governing documents of other self-regulatory organizations.\21\ The 
Exchange is not proposing to alter the number of fair representation 
candidates on the boards or any other aspect of the NYSE Arca Board's 
composition or nomination process.
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    \19\ In approving the proposed rule changes, the Commission has 
considered their impact on efficiency, competition, and capital 
formation. See 15 U.S.C. 78c(f).
    \20\ 15 U.S.C. 78f(b)(3).
    \21\ See Notice, supra note 3 at 59995-59997.
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    The proposed rule change also furthers the objectives of Section 
6(b)(6) of the Act,\22\ because it provides for appropriate discipline 
for violations of Exchange rules and regulations. The Commission 
believes that the proposed rule change will expand the available 
candidates with industry knowledge that are eligible for membership on 
the Options and Equities Committees that are involved in reviewing 
disciplinary actions against OTP Holders, OTP Firms, and ETP Holders 
and advising on rule changes related to disciplinary matters and 
trading rules.
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    \22\ 15 U.S.C. 78f(b)(6).
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    The Commission also believes that the proposed rule change furthers 
the objectives of Section 6(b)(5) of the Act \23\ 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 regulating, clearing, 
settling, processing information with respect to, and facilitating 
transactions in securities, to remove impediments to and perfect the 
mechanism of a free and open market and a national market system, and, 
in general, to protect investors and the public interest. Specifically, 
the Commission believes the proposed rule change would expand the pool 
of candidates eligible for membership on the NYSE Arca Board and 
committees of NYSE Arca and NYSE Arca Equities and thereby increase the 
breadth of industry knowledge that would be available to these 
entities, which should benefit the public interest.
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    \23\ 15 U.S.C. 78f(b)(5).

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[[Page 69679]]

IV. Conclusion

    For the foregoing reasons, the Commission finds that the proposed 
rule changes are consistent with the Act and the rules and regulations 
thereunder applicable to a national securities exchange.
    It is therefore ordered, pursuant to Section 19(b)(2) of the Act 
\24\ that the proposed rule changes (SR-NYSEArca-2012-103), are 
approved.
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    \24\ 15 U.S.C. 78s(b)(2).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\25\
Kevin M. O'Neill,
Deputy Secretary.
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    \25\ 17 CFR 200.30-3(a)(12).
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[FR Doc. 2012-28192 Filed 11-19-12; 8:45 am]
BILLING CODE 8011-01-P
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