Self-Regulatory Organizations; New York Stock Exchange LLC; NYSE MKT LLC; NYSE Arca, Inc.; Order Granting Approval of Proposed Rule Change Relating to a Corporate Action in Which Its Indirect Parent, NYSE Euronext Holdings LLC, Will Become a Wholly-Owned Subsidiary of IntercontinentalExchange, Inc., 15367-15371 [2014-05987]

Download as PDF Federal Register / Vol. 79, No. 53 / Wednesday, March 19, 2014 / Notices Exchange believes that the proposed change would increase competition among execution venues, encourage additional liquidity, and offer the potential for price improvement to retail investors. In this regard, the Exchange believes that the transparency and competitiveness of operating a program such as the Retail Liquidity Program on an exchange market, and the pricing related thereto, would encourage competition and result in better prices for retail investors. Finally, the Exchange notes that it operates in a highly competitive market in which market participants can readily favor competing venues if they deem fee levels at a particular venue to be excessive or rebate opportunities available at other venues to be more favorable. In such an environment, the Exchange must continually adjust its fees and rebates to remain competitive with other exchanges and with alternative trading systems that have been exempted from compliance with the statutory standards applicable to exchanges. Because competitors are free to modify their own fees and credits in response, and because market participants may readily adjust their order routing practices, the Exchange believes that the degree to which fee changes in this market may impose any burden on competition is extremely limited. As a result of all of these considerations, the Exchange does not believe that the proposed changes will impair the ability of member organizations or competing order execution venues to maintain their competitive standing in the financial markets. sroberts on DSK5TPTVN1PROD with NOTICES 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. 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) 11 of the Act and subparagraph (f)(2) of Rule 19b–4 12 thereunder, because it establishes a due, fee, or other charge imposed by the Exchange. At any time within 60 days of the filing of such proposed rule change, the Commission summarily may temporarily suspend such rule change if 11 15 12 17 U.S.C. 78s(b)(3)(A). CFR 240.19b–4(f)(2). VerDate Mar<15>2010 18:28 Mar 18, 2014 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. If the Commission takes such action, the Commission shall institute proceedings under Section 19(b)(2)(B) 13 of the Act to determine whether the proposed rule change should be approved or disapproved. IV. Solicitation of Comments Interested persons are invited to submit written data, views, and arguments concerning the foregoing, including whether the proposed rule change is consistent with the Act. Comments may be submitted by any of the following methods: Electronic Comments • Use the Commission’s Internet comment form (http://www.sec.gov/ rules/sro.shtml); or • Send an email to rule-comments@ sec.gov. Please include File Number SR– NYSE–2014–10 on the subject line. Paper Comments • Send paper comments in triplicate to Secretary, Securities and Exchange Commission, 100 F Street NE., Washington, DC 20549–1090. All submissions should refer to File Number SR–NYSE–2014–10. 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 (http://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 10:00 a.m. and 3:00 p.m. Copies of such filing also will be available for inspection and copying at the principal office of the Exchange. All comments received will be posted without change; the Commission does not edit personal identifying information from 13 15 Jkt 232001 PO 00000 submissions. You should submit only information that you wish to make available publicly. All submissions should refer to File Number SR–NYSE– 2014–10 and should be submitted on or before April 9, 2014. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.14 Kevin M. O’Neill, Deputy Secretary. [FR Doc. 2014–05984 Filed 3–18–14; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–71721; File Nos. SR–NYSE– 2014–04; SR–NYSEMKT–2014–10; SR– NYSEArca-2014–08] Self-Regulatory Organizations; New York Stock Exchange LLC; NYSE MKT LLC; NYSE Arca, Inc.; Order Granting Approval of Proposed Rule Change Relating to a Corporate Action in Which Its Indirect Parent, NYSE Euronext Holdings LLC, Will Become a Wholly-Owned Subsidiary of IntercontinentalExchange, Inc. March 13, 2014. I. Introduction On January 17, 2014, each of New York Stock Exchange LLC (‘‘Exchange’’), NYSE MKT LLC (‘‘NYSE MKT’’), and NYSE Arca, Inc. (‘‘NYSE Arca’’ and, with the Exchange and NYSE MKT, the ‘‘NYSE Exchanges’’), 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 in connection with the contribution by IntercontinentalExchange Group, Inc., a Delaware corporation (‘‘ICE Group’’), of its 100% membership interest in NYSE Euronext Holdings LLC, a Delaware limited liability company (‘‘NYX Holdings’’), which is an indirect owner of a 100% interest in the NYSE Exchanges, to IntercontinentalExchange, Inc. (‘‘ICE Inc.’’), another wholly-owned subsidiary of ICE Group, (the ‘‘Transfer’’). The proposed rule changes were published for comment in the Federal Register on January 30, 2014.4 14 17 CFR 200.30–3(a)(12). U.S.C. 78s(b)(1). 2 15 U.S.C. 78a. 3 17 CFR 240.19b–4. 4 See Securities Exchange Act Release Nos. 71393 (January 24, 2014), 79 FR 4996 (January 30, 2014) (SR–NYSE–2014–04) (‘‘Notice’’); 71395 (January 24, 2014), 79 FR 5003 (January 30, 2014)(SR– NYSEMKT–2014–10); 71394 (January 24, 2014), 79 1 15 U.S.C. 78s(b)(2)(B). Frm 00065 Fmt 4703 15367 Continued Sfmt 4703 E:\FR\FM\19MRN1.SGM 19MRN1 15368 Federal Register / Vol. 79, No. 53 / Wednesday, March 19, 2014 / Notices The Commission did not receive any comment letters on the proposal. 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.5 In particular, the Commission finds that the proposed rule changes are consistent with Section 6(b) of the Act,6 which, among other things, requires a national securities exchange to be so organized and have the capacity to be able to carry out the purposes of the Act and to enforce compliance by its members and persons associated with its members with the provisions of the Act, the rules and regulations thereunder, and the rules of the exchange, and assure the fair representation of its members in the selection of its directors and administration of its affairs, and provide 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. Section 6(b) of the Act 7 also requires that the rules of the exchange be designed to promote just and equitable principles of trade, 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. sroberts on DSK5TPTVN1PROD with NOTICES II. Discussion The Exchange, NYSE MKT and NYSE Arca have submitted their proposed rule changes in connection with the transfer by ICE Group of all membership interests in NYX Holdings to ICE Inc. NYX Holdings owns 100% of the equity interest of NYSE Group, Inc., a Delaware corporation (‘‘NYSE Group’’), which in turn directly or indirectly owns (1) 100% of the equity interest of the NYSE Exchanges and, (2) 100% of the equity interest of NYSE Market (DE), Inc. (‘‘NYSE Market’’), NYSE Regulation, Inc. (‘‘NYSE Regulation’’), NYSE Arca L.L.C., NYSE Arca Equities, Inc. (‘‘NYSE Arca Equities’’) and NYSE Amex Options LLC (‘‘NYSE Amex Options’’) (the NYSE Exchanges, together with NYSE Market, NYSE Regulation, NYSE Arca L.L.C., NYSE Arca Equities, NYSE Amex Options and any similar U.S. regulated entity acquired, owned or created after the FR 4989 (January 30, 2014) (SR–NYSEArca-2014– 08). 5 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). 6 15 U.S.C. 78f(b). 7 Id. VerDate Mar<15>2010 18:28 Mar 18, 2014 Jkt 232001 date hereof, the ‘‘U.S. Regulated Subsidiaries’’ and each, a ‘‘U.S. Regulated Subsidiary’’). ICE Inc. is a wholly-owned subsidiary of ICE Group, a public company that is listed on the Exchange. NYSE Holdings is also a direct wholly-owned subsidiary of ICE Group. Following the Transfer, ICE Inc. will remain a direct whollyowned subsidiary of ICE Group. As a result of the Transfer, ICE Group will contribute the membership interests in NYX Holdings to ICE Inc., at which point NYX Holdings will become a wholly-owned subsidiary of ICE Inc., and the U.S. Regulated Subsidiaries owned by NYX Holdings will become indirect wholly-owned subsidiaries of ICE Inc. ICE Group will continue as the ultimate parent entity of NYX Holdings through ICE Inc. The proposed rule changes are necessary to effectuate the consummation of the Transfer and will not be operative until the date of the consummation of the Transfer (the ‘‘Closing Date’’). The proposed rule changes and exhibits thereto contain modifications to the corporate governance documents of ICE Inc., NYX Holdings and ICE Group 8 that reflect the current structure of the Transfer.9 8 The NYSE Exchanges propose to add to the Amended and Restated Certificate of Incorporation of ICE Group (‘‘ICE Group Certificate’’) and the Second Amended and Restated Bylaws of ICE Group (‘‘ICE Group Bylaws’’) that directors of ICE Group must consider ICE Inc. and NYX Holdings when taking certain actions. Specifically, the provisions in the ICE Group Certificate establishing the standard for each director’s approval of ownership or voting rights in excess of the limitations in the ICE Group Certificate do not currently require a director to consider whether such approval would impair the ability of ICE Inc. and NYX Holdings to comply with the Exchange Act and the rules and regulations thereunder. See proposed ICE Group Bylaws, Section 3.15(g)(amending the definition of U.S. Regulated Subsidiary cross-referenced in the ICE Group Certificate to include NYX Holdings and ICE Inc.). Also, the provisions in the ICE Group Bylaws establishing the standards for the board’s approval of any action by ICE Group does not currently require a director to take into consideration the effect that such action would have on the ability of ICE Inc. and NYX Holdings (a) to engage in conduct that fosters and does not interfere with the ability of each such entity to prevent fraudulent and manipulative acts and practices in the securities markets; (b) to promote just and equitable principles of trade in the securities markets; (c) to foster cooperation and coordination with persons engaged in regulating, clearing, settling, processing information with respect to, and facilitating transactions in securities; (d) to remove impediments to and perfect the mechanisms of a free and open market in securities and a U.S. national securities market system; and (e) in general, to protect investors and the public interest. See proposed ICE Group Bylaws, Section 3.14(a)(3). The ICE Group Bylaws would be amended to add references to ICE Inc. and NYX Holdings in each such provision. 9 The NYSE Exchanges propose to amend the Third Amended and Restated Limited Liability PO 00000 Frm 00066 Fmt 4703 Sfmt 4703 Following the Transfer, ICE Group will continue to hold all of the equity interests in ICE Inc., and ICE Inc. will hold all the membership interests in NYX Holdings. NYX Holdings will continue to hold (1) 100% of the equity interests of NYSE Group (which, in turn, would continue to directly or indirectly hold 100% of the equity interests of the U.S. Regulated Subsidiaries) and (2) 100% of the equity interest of Euronext N.V. (‘‘Euronext’’) (which, in turn, directly or indirectly holds 100% of the equity interests of trading markets in Belgium, France, the Netherlands, Portugal and the United Kingdom). According to the NYSE Exchanges, the Transfer is part of the process pursuant to which ICE Group will prepare for the previously announced sale of the continental European cash equity platforms and the derivatives trading on them (the ‘‘Euronext Sale’’) currently owned by Euronext. According to the NYSE Exchanges, the Transfer also will facilitate the transitioning of the derivatives businesses of another current subsidiary of Euronext, Liffe Administration and Management, to ICE Futures Europe, a subsidiary of ICE Inc., and will enable ICE Inc. to continue in compliance with certain debt covenants after the Euronext Sale. The NYSE Exchanges represent that the Transfer will not affect the operation of the U.S. Regulated Subsidiaries. Other than as described herein, the NYSE Exchanges also represent that ICE Inc. will not make any changes to the regulated activities of the U.S. Regulated Subsidiaries in connection with the Transfer. If ICE Inc. determines to make any such changes to the regulated activities of any U.S. Regulated Subsidiary, it will seek the approval of the Commission. A. ICE Inc. Following the Transfer, ICE Inc. will hold all of the equity interests in NYX Holdings, which in turn, directly or indirectly holds 100 percent of the equity interests of the U.S. Regulated Subsidiaries. Section 19(b) of the Act Company Agreement of NYX Holdings (‘‘NYX Holdings Operating Agreement’’) to reflect that ICE Inc. will be the sole member of the LLC as a result of ICE Group’s transfer of the membership interest in NYX Holdings to ICE Inc. and make additional nonsubstantive conforming changes. The NYX Holdings board adopted the resolutions in order to permit ICE Group to transfer its membership interest in NYX Holdings to ICE Inc. and to amend the NYX Holdings Operating Agreement to reflect the change of ownership in Exhibit 5D–1 to the Notice. The Commission notes that, if the Transfer is not consummated, the proposed rule changes will not become effective. E:\FR\FM\19MRN1.SGM 19MRN1 Federal Register / Vol. 79, No. 53 / Wednesday, March 19, 2014 / Notices and Rule 19b–4 thereunder require a self-regulatory organization (‘‘SRO’’) to file proposed rule changes with the Commission. Although ICE Inc. is not an SRO, certain provisions of its proposed Fifth Amended and Restated Certificate of Incorporation (‘‘ICE Inc. Certificate’’) and proposed Second Amended and Restated Bylaws (‘‘ICE Inc. Bylaws’’, and together with the ICE Inc. Certificate, ‘‘the ICE Inc. Articles’’), along with other corporate documents, are rules of an exchange 10 if they are stated policies, practices, or interpretations, as defined in Rule 19b– 4 under the Act, of the exchange, and must be filed with the Commission pursuant to Section 19(b)(4) of the Act and Rule 19b–4 thereunder. Accordingly, the NYSE Exchanges have filed the proposed ICE Inc. Articles, along with other corporate documents, with the Commission. Voting and Ownership Limitations sroberts on DSK5TPTVN1PROD with NOTICES The NYSE Exchanges propose that, effective as of the completion of the Transfer, the ICE Inc. Certificate would contain voting and ownership restrictions that are substantially identical to those currently in the ICE Group Certificate and the NYX Holdings Operating Agreement previously approved by the Commission.11 These would restrict any person, either alone or together with its related persons, from having voting control over ICE Inc. shares entitling the holder thereof to cause more than 10% of the votes entitled to be cast on any matter, or beneficially owning ICE Inc. shares representing more than 20% of the outstanding votes that may be cast on any matter.12 These limitations would apply in the event that ICE Group does not own all of the issued and outstanding stock in ICE Inc.13 and only for so long as ICE Inc. directly or indirectly controls any U.S. Regulated 10 See Section 3(a)(27) of the Act, 15 U.S.C. 78c(a)(27). If ICE Inc. decides to change the ICE Inc. Articles, ICE Inc. must submit such change to the board of directors of the U.S. Regulated Subsidiaries, and if any or all of such board of directors shall determine that such amendment must be filed with or filed with and approved by the Commission pursuant to Section 19 of the Act and the rules thereunder, such change shall not be effective until filed with or filed with and approved by the Commission, as applicable. See proposed ICE Inc. Certificate, Article X; proposed ICE Inc. Bylaws, Section 11.3. 11 See Securities Exchange Act Release No. 70210 (August 15, 2013), 78 FR 51758 (August 21, 2010) (order approving proposed combination of NYSE Euronext and IntercontinentalExchange Group Inc.). 12 See proposed ICE Inc. Certificate, Article V, Sections A.1. and B.1. 13 See proposed ICE Inc. Certificate, Article V. VerDate Mar<15>2010 18:28 Mar 18, 2014 Jkt 232001 Subsidiary or any European Market Subsidiary.14 The ICE Inc. board of directors may waive the voting and ownership restrictions if it makes certain determinations and expressly resolves to permit the voting and ownership that is subject to such restrictions, and such resolutions have been filed with, and approved by, the Commission under Section 19(b) of the Act and filed with, and approved by, each European Regulator having appropriate jurisdiction and authority.15 In addition, for so long as ICE Inc. directly or indirectly controls the Exchange, NYSE Market (DE), Inc., NYSE MKT, NYSE Arca, NYSE Arca Equities Inc. or any facility of NYSE Arca or NYSE MKT, the ICE Inc. board of directors cannot waive the voting and ownership limits above the 20% threshold for any person if such person or its related persons is a member of NYSE or NYSE MKT, an ETP Holder of NYSE Arca Equities,16 or an OTP Holder or an OTP Firm of NYSE Arca.17 Further, the ICE Inc. board of directors also cannot waive the voting and ownership limits above the 20% threshold if such person or its related persons is subject to any statutory disqualification (as defined in Section 3(a)(39) of the Act) (a ‘‘U.S. Disqualified Person’’) or has been determined by a European Regulator to be in violation of laws or regulations adopted in accordance with the European Directive on Markets in Financial Instruments applicable to any European Market Subsidiary requiring such person to act fairly, honestly and professionally (a ‘‘European Disqualified Person’’).18 The Commission finds the ownership and voting restrictions in the proposed ICE Inc. Articles are consistent with the Act. B. NYX Holdings Resolutions In order to allow ICE Inc. to wholly own and vote all of NYX Holdings’ membership interests upon consummation of the Transfer, ICE Inc. delivered a written notice to the board of directors of NYX Holdings pursuant to the procedures set forth in the NYX Holdings Operating Agreement requesting approval of its ownership 14 See proposed ICE Inc. Certificate, Article V, Section A.1. and B.1. 15 See proposed ICE Inc. Certificate, Article V, Section A.2. and B.2. 16 ‘‘ETP Holder’’ is defined in NYSE Arca Equities Rule 1.1(m). ‘‘OTP Holder’’ and ‘‘OTP Firm’’ are defined, respectively, in NYSE Arca Rule 1.1(q) and 1.1(r). 17 See proposed ICE Inc. Certificate, Article V, Section A.3(c) and B.3(d)–(f). 18 See ICE Inc. Certificate, Article V Sections A.3(c)(i), A.3(d)(i) and B.3(c)(i) and (ii). PO 00000 Frm 00067 Fmt 4703 Sfmt 4703 15369 and voting NYX Holdings membership interests in excess of the NYX Holdings voting restriction and NYX Holdings ownership restriction.19 The board of directors of NYX Holdings must resolve to expressly permit ownership or voting in excess of the NYX Holdings voting restriction limitation and NYX Holdings ownership restriction. Such resolution of the NYX Holdings board of directors must be filed with and approved by the Commission under Section 19(b) of the Act, and become effective thereunder. Further, the board of directors may not approve any voting or ownership in excess of the limitations unless it determines that such ownership or exercise of voting rights (i) will not impair the ability of the U.S. Regulated Subsidiaries, NYX Holdings, and NYSE Group to discharge their respective responsibilities under the Act and the rules and regulations thereunder, (ii) will not impair the ability of any European Market Subsidiary, NYX Holdings, or Euronext to discharge their respective responsibilities under the European Exchange Regulations, (iii) is otherwise in the best interests of NYX Holdings, its members, the U.S. Regulated Subsidiaries, and the European Market Subsidiaries, and (iv) will not impair the Commission’s ability to enforce the Act or the European Regulators’ ability to enforce the European Exchange Regulations.20 For so long as NYX Holdings directly or indirectly controls the Exchange or NYSE Market, NYSE Arca, NYSE Arca Equities, any facility of NYSE Arca, or NYSE MKT, the NYX Holdings board of directors cannot waive the voting and ownership limits above the 20% threshold if such person or its related persons is a member of the Exchange or NYSE MKT, or an ETP Holder, an OTP Holder or an OTP Firm.21 Further, the NYX Holdings board of directors cannot waive the voting and ownership limits above the 20% threshold if such person or its related persons is a U.S. Disqualified Person or a European Disqualified Person.22 The board of directors of NYX Holdings adopted by written consent resolutions to permit ICE Inc., either alone or with its related persons, to 19 Prior to permitting any person to exceed the ownership limitation and voting limitation, such person must deliver notice of such person’s intention to exceed the ownership limitation or voting limitation to the NYX Holdings board of directors. See NYX Holdings Operating Agreement, Article IX, Sections 9.1(a)(2) and (b)(2). 20 See NYX Holdings Operating Agreement, Article IX, Section 9.1(a)(3)(A)–(B) and Section 9.1(b)(3)(A)–(B). 21 See NYX Holdings Operating Agreement, Article IX, Section 9.1(a)(3)(C). 22 Id. E:\FR\FM\19MRN1.SGM 19MRN1 15370 Federal Register / Vol. 79, No. 53 / Wednesday, March 19, 2014 / Notices exceed the NYX Holdings ownership restriction and the NYX Holdings voting restriction. In adopting such resolutions, the board of directors of NYX Holdings made the necessary determinations set forth above and approved the submission of the proposed rule changes to the Commission. Among other things, in this notice, ICE Inc. represented to the board of directors of NYX Holdings that neither ICE Inc., nor any of its related persons, is (1) an NYSE Member; (2) an NYSE MKT Member; (3) an ETP Holder; (4) an OTP Holder or OTP Firm; or (5) a U.S. Disqualified Person or a European Disqualified Person. The NYX Holdings board of directors also determined that ownership of NYX Holdings by ICE Inc. is in the best interests of NYX Holdings, the owners of its membership interests, the U.S. Regulated Subsidiaries, and the European Market Subsidiaries.23 The Commission believes it is consistent with the Act to allow ICE Inc. to wholly own and vote all of the membership interests of NYX Holdings. The Commission notes that ICE Inc. represents that neither ICE Inc. nor any of its related persons is subject to any statutory disqualification (as defined in Section 3(a)(39) of the Act), or is a member of the Exchange or NYSE MKT, an ETP Holder, an OTP Holder or an OTP Firm, or a European Disqualified Person. ICE Inc. has also included in its corporate documents certain provisions designed to maintain the independence of the U.S. Regulated Subsidiaries’ selfregulatory functions from ICE Group, ICE Inc., NYX Holdings and NYSE Group.24 Accordingly, the Commission believes that the acquisition of ownership and exercise of voting rights of NYX Holdings membership interests by ICE Inc. will not impair the ability of the Commission or any of the U.S. Regulated Subsidiaries to discharge their respective responsibilities under the Act. sroberts on DSK5TPTVN1PROD with NOTICES C. Relationship of ICE Inc., NYX Holdings, NYSE Group, and the U.S. Regulated Subsidiaries; Jurisdiction Over ICE Inc. ICE Inc.’s activities with respect to the operation of any of the U.S. Regulated Subsidiaries must be consistent with, and not interfere with, the U.S. Regulated Subsidiaries’ self-regulatory 23 Such resolution of the NYX Holdings board of directors was filed as part of the proposed rule changes. See Exhibit E to each of the proposed rule changes, which exhibit is available on the Commission’s Web site (http://www.sec.gov/rules/ sro.shtml), at the Commission’s Public Reference Room, at the NYSE, and on the NYSE’s Web site (http://www.nyse.com). 24 See infra note 29. VerDate Mar<15>2010 18:28 Mar 18, 2014 Jkt 232001 obligations. The proposed ICE Inc. corporate documents include certain provisions that are designed to maintain the independence of the U.S. Regulated Subsidiaries’ self-regulatory functions from ICE Inc., NYX Holdings, and NYSE Group, enable the U.S. Regulated Subsidiaries to operate in a manner that complies with the U.S. federal securities laws, including the objectives and requirements of Sections 6(b) and 19(g) of the Act,25 and facilitate the ability of the U.S. Regulated Subsidiaries and the Commission to fulfill their regulatory and oversight obligations under the Act.26 For example, under the proposed ICE Inc. Bylaws, ICE Inc. shall comply with the U.S. federal securities laws, the European Exchange Regulations, and the respective rules and regulations thereunder; shall cooperate with the Commission, the European Regulators, and the U.S. Regulated Subsidiaries.27 Each director, officer, and employee of ICE Inc., to the extent in discharging his or her responsibilities shall comply with the U.S. federal securities laws and the rules and regulations thereunder, cooperate with the Commission, and cooperate with the U.S. Regulated Subsidiaries.28 In addition, in discharging his or her responsibilities as a member of the board, each director of ICE Inc. must, to the fullest extent permitted by applicable law, take into consideration the effect that ICE Inc.’s actions would have on the ability of the U.S. Regulated Subsidiaries to carry out their responsibilities under the Act, on the ability of the European Market Subsidiaries to carry out their responsibilities under the European Exchange Regulations as operators of European Regulated Markets, and on the ability of the U.S. Regulated Subsidiaries, NYSE Group, and ICE Inc. (i) to engage in conduct that fosters and does not interfere with the ability of the U.S. Regulated Subsidiaries, NYSE Group, and ICE Inc. to prevent fraudulent and manipulative acts and practices in the securities markets; (ii) to promote just and equitable principles of trade in the securities markets; (iii) to foster cooperation and coordination with persons engaged in regulating, clearing, settling, processing information with respect to, and facilitating transactions in securities; (iv) to remove impediments to and perfect the mechanisms of a free and 25 15 U.S.C. 78f(b) and 15 U.S.C. 78s(g). proposed ICE Inc. Bylaws Article IX. 27 See proposed ICE Inc. Bylaws, Article IX, Section 9.l and 9.2. 28 See proposed ICE Inc. Bylaws, Article III, Section 3.14(b). 26 See PO 00000 Frm 00068 Fmt 4703 Sfmt 4703 open market in securities and a U.S. national securities market system; and (v) in general, to protect investors and the public interest.29 For so long as ICE Inc. directly or indirectly controls any U.S. Regulated Subsidiary, ICE Inc., its directors, officers and employees shall give due regard to the preservation of the independence of the self-regulatory function of the U.S. Regulated Subsidiaries (to the extent of each U.S. Regulated Subsidiary’s self-regulatory function) and the European Market Subsidiaries (to the extent of each European Market Subsidiaries’ selfregulatory function).30 Further, ICE Inc. agrees to keep confidential all confidential information pertaining to: (1) The self-regulatory function of the any U.S. Regulated Subsidiary (including but not limited to disciplinary matters, trading data, trading practices and audit information) contained in the books and records of any of the U.S. Regulated Subsidiaries; and (2) the self-regulatory function of the European Market Subsidiaries under the European Exchange Regulations as operator of a European Regulated Market (including but not limited to disciplinary matters, trading data, trading practices and audit information) contained in the books and records of the European Market Subsidiaries, and not use such information for any commercial 31 purposes.32 In addition, ICE Inc.’s books and records shall be subject at all times to inspection and copying by the Commission, the European Regulators, any U.S. Regulated Subsidiary (provided that such books and records are related to the activities of such U.S. Regulated Subsidiary or any other U.S. Regulated Subsidiary over which such U.S. Regulated Subsidiary has regulatory authority or oversight) and any European Market Subsidiary (provided that such books and records are related to the operation or administration of such European Market Subsidiary or any European Regulated Market over which such European Market Subsidiary has regulatory authority or oversight).33 The ICE Inc. Bylaws would provide that these obligations regarding such confidential information will not be interpreted so as 29 See proposed ICE Inc. Bylaws, Article III, Section 3.14(a)(3). 30 See proposed ICE Inc. Bylaws, Article IX, Section 9.4 and 9.5. 31 The Commission believes that any nonregulatory use of such information would be for a commercial purpose. See, e.g., NYSE-Euronext Merger Order, supra note 20, 72 FR at 8041 n. 71. 32 See proposed ICE Inc. Bylaws, Article VIII, Section 8.1. 33 See proposed ICE Inc. Bylaws, Article VIII, Section 8.3. E:\FR\FM\19MRN1.SGM 19MRN1 Federal Register / Vol. 79, No. 53 / Wednesday, March 19, 2014 / Notices sroberts on DSK5TPTVN1PROD with NOTICES to limit or impede (i) the rights of the Commission or the relevant U.S. Regulated Subsidiary to have access to and examine such confidential information pursuant to the U.S. federal securities laws and the rules and regulations thereunder; or (ii) the ability of any officers, directors, employees or agents of ICE Inc. to disclose such confidential information to the Commission or any U.S. Regulated Subsidiary.34 ICE Inc.’s books and records related to U.S. Regulated Subsidiaries shall be maintained within the United States, and ICE Inc.’s books and records related to European Market Subsidiaries shall be maintained in the home jurisdiction of one or more of the European Market Subsidiaries or of any subsidiary of ICE Inc. in Europe.35 The ICE Inc. Bylaws also provide that if and to the extent than any of ICE Inc.’s books and records may relate to both European Market Subsidiaries and U.S. Regulated Subsidiaries (each such book and record an ‘‘Overlapping Record’’), ICE Inc. shall be entitled to maintain such books and records either in the home jurisdiction of one or more European Market Subsidiaries or in the United States.36 In addition, for so long as ICE Inc. directly or indirectly controls any U.S. Regulated Subsidiary, the books, records, premises, officers, directors, and employees of ICE Inc. shall be deemed to be the books, records, premises, officers, directors, and employees of the U.S. Regulated Subsidiaries for purposes of and subject to oversight pursuant to the Act, and for so long as ICE Inc. directly or indirectly controls any European Market Subsidiary, the books, records, premises, officers, directors, and employees of ICE Inc. shall be deemed to be the books, records, premises, officers, directors, and employees of such European Market Subsidiaries for purposes of and subject to oversight pursuant to the European Exchange Regulations.37 ICE Inc. and its directors and, to the extent they are involved in the activities of the U.S. Regulated Subsidiaries, ICE Inc.’s officers and employees whose principal place of business and residence is outside of the United States irrevocably submit to the jurisdiction of the U.S. federal courts and the Commission with respect to activities 34 See proposed ICE Inc. Bylaws, Article VIII, Section 8.2. 35 See proposed ICE Inc. Bylaws, Article VIII, Sections 8.4 and 8.5. 36 See proposed ICE Inc. Bylaws, Article VIII, Section 8.6. 37 See proposed ICE Inc. Bylaws, Article VIII, Sections 8.4 and 8.5. VerDate Mar<15>2010 18:28 Mar 18, 2014 Jkt 232001 relating to the U.S. Regulated Subsidiaries, and to the jurisdiction of the European Regulators and European courts with respect to activities relating to the European Market Subsidiaries.38 The ICE Inc. Bylaws would provide that ICE Inc. will take reasonable steps necessary to cause its directors, officers and employees, prior to accepting a position as an officer, director or employee, as applicable, of ICE Inc. to agree and consent in writing to the applicability to them of these jurisdictional and oversight provisions with respect to their activities related to any U.S. Regulated Subsidiary.39 Further, ICE Inc. acknowledges that it is responsible for referring possible rule violations to the NYSE Exchanges. Finally, the proposed ICE Inc. Articles require that, for so long as ICE Inc. controls, directly or indirectly, any of the U.S. Regulated Subsidiaries, any changes to the proposed ICE Inc. Articles be submitted to the board of directors of such U.S. Regulated Subsidiaries, and if any such boards of directors determines that such amendment is required to be filed with or filed with and approved by the Commission pursuant to Section 19 of the Act 40 and the rules thereunder, such change shall not be effective until filed with or filed with and approved by, the Commission.41 The Commission finds that these provisions are consistent with the Act, and that they are intended to assist the NYSE Exchanges in fulfilling its selfregulatory obligations and in administering and complying with the requirements of the Act. With respect to the maintenance of books and records of ICE Inc., the Commission notes that while ICE Inc. has the discretion to maintain Overlapping Records in either the United States or the home jurisdiction of one or more of the European Market Subsidiaries, ICE Inc. is liable for any books and records it is required to produce for inspection and copying by the Commission that are created outside the United States and where the law of a foreign jurisdiction prohibits ICE Inc. from providing such books and records to the Commission for inspection and copying.42 Moreover, the Commission notes that NYX 38 See proposed ICE Inc. Bylaws, Article VII, Sections 7.1 and 7.2. 39 See proposed ICE Inc. Bylaws, Article IX, Section 9.3. 40 15 U.S.C. 78s. 41 See proposed ICE Inc. Bylaws, Article XI, Section 11.3; proposed ICE Inc. Certificate, Article X(C). 42 See Securities Exchange Act Release Nos. 55293 (February 14, 2007), 72 FR 8033, 8041 (February 22, 2007) (SR–NYSE–2006–120). PO 00000 Frm 00069 Fmt 4703 Sfmt 9990 15371 Holdings is under an existing obligation to make its books and records available in compliance with the requirements of Rule 17a–1(b).43 Under Section 20(a) of the Act,44 any person with a controlling interest in the U.S. Regulated Subsidiaries shall be jointly and severally liable with and to the same extent that the U.S. Regulated Subsidiaries are liable under any provision of the Act, unless the controlling person acted in good faith and did not directly or indirectly induce the act or acts constituting the violation or cause of action. In addition, Section 20(e) of the Act 45 creates aiding and abetting liability for any person who knowingly provides substantial assistance to another person in violation of any provision of the Act or rule thereunder. Further, Section 21C of the Act 46 authorizes the Commission to enter a cease-and-desist order against any person who has been ‘‘a cause of’’ a violation of any provision of the Act through an act or omission that the person knew or should have known would contribute to the violation. These provisions are applicable to ICE Inc.’s dealings with the U.S. Regulated Subsidiaries. III. Conclusion For the foregoing reasons, the Commission finds that the proposed rule change is 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 47 that the proposed rule changes (SR–NYSE–2014–04; SR– NYSEMKT–2014–10; SR–NYSEArca– 2014–08), are approved. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.48 Kevin M. O’Neill, Deputy Secretary. [FR Doc. 2014–05987 Filed 3–18–14; 8:45 am] BILLING CODE 8011–01–P 43 The Commission notes that the obligations of NYSE Euronext established in the prior orders remains in effect for its successors entity, i.e., NYX Holdings. NYX Holdings is currently required to maintain in the United States originals or copies of books and records that relate to both the U.S. Regulated Subsidiaries and its European market subsidiaries covered by Rule 17a–1(b) promptly after creation of such books and records. See id., 72 FR 8041, 8042. 44 15 U.S.C. 78t(a). 45 15 U.S.C. 78t(e). 46 15 U.S.C. 78u–3. 47 Id. 48 17 CFR 200.30–3(a)(12). E:\FR\FM\19MRN1.SGM 19MRN1

Agencies

[Federal Register Volume 79, Number 53 (Wednesday, March 19, 2014)]
[Notices]
[Pages 15367-15371]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2014-05987]


-----------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-71721; File Nos. SR-NYSE-2014-04; SR-NYSEMKT-2014-10; 
SR-NYSEArca-2014-08]


Self-Regulatory Organizations; New York Stock Exchange LLC; NYSE 
MKT LLC; NYSE Arca, Inc.; Order Granting Approval of Proposed Rule 
Change Relating to a Corporate Action in Which Its Indirect Parent, 
NYSE Euronext Holdings LLC, Will Become a Wholly-Owned Subsidiary of 
IntercontinentalExchange, Inc.

March 13, 2014.

I. Introduction

    On January 17, 2014, each of New York Stock Exchange LLC 
(``Exchange''), NYSE MKT LLC (``NYSE MKT''), and NYSE Arca, Inc. 
(``NYSE Arca'' and, with the Exchange and NYSE MKT, the ``NYSE 
Exchanges''), 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 in connection with the contribution by 
IntercontinentalExchange Group, Inc., a Delaware corporation (``ICE 
Group''), of its 100% membership interest in NYSE Euronext Holdings 
LLC, a Delaware limited liability company (``NYX Holdings''), which is 
an indirect owner of a 100% interest in the NYSE Exchanges, to 
IntercontinentalExchange, Inc. (``ICE Inc.''), another wholly-owned 
subsidiary of ICE Group, (the ``Transfer''). The proposed rule changes 
were published for comment in the Federal Register on January 30, 
2014.\4\

[[Page 15368]]

The Commission did not receive any 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 Nos. 71393 (January 24, 
2014), 79 FR 4996 (January 30, 2014) (SR-NYSE-2014-04) (``Notice''); 
71395 (January 24, 2014), 79 FR 5003 (January 30, 2014)(SR-NYSEMKT-
2014-10); 71394 (January 24, 2014), 79 FR 4989 (January 30, 2014) 
(SR-NYSEArca-2014-08).
---------------------------------------------------------------------------

    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.\5\ In particular, the 
Commission finds that the proposed rule changes are consistent with 
Section 6(b) of the Act,\6\ which, among other things, requires a 
national securities exchange to be so organized and have the capacity 
to be able to carry out the purposes of the Act and to enforce 
compliance by its members and persons associated with its members with 
the provisions of the Act, the rules and regulations thereunder, and 
the rules of the exchange, and assure the fair representation of its 
members in the selection of its directors and administration of its 
affairs, and provide 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. Section 6(b) of the Act \7\ also requires 
that the rules of the exchange be designed to promote just and 
equitable principles of trade, 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.
---------------------------------------------------------------------------

    \5\ 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).
    \6\ 15 U.S.C. 78f(b).
    \7\ Id.
---------------------------------------------------------------------------

II. Discussion

    The Exchange, NYSE MKT and NYSE Arca have submitted their proposed 
rule changes in connection with the transfer by ICE Group of all 
membership interests in NYX Holdings to ICE Inc.
    NYX Holdings owns 100% of the equity interest of NYSE Group, Inc., 
a Delaware corporation (``NYSE Group''), which in turn directly or 
indirectly owns (1) 100% of the equity interest of the NYSE Exchanges 
and, (2) 100% of the equity interest of NYSE Market (DE), Inc. (``NYSE 
Market''), NYSE Regulation, Inc. (``NYSE Regulation''), NYSE Arca 
L.L.C., NYSE Arca Equities, Inc. (``NYSE Arca Equities'') and NYSE Amex 
Options LLC (``NYSE Amex Options'') (the NYSE Exchanges, together with 
NYSE Market, NYSE Regulation, NYSE Arca L.L.C., NYSE Arca Equities, 
NYSE Amex Options and any similar U.S. regulated entity acquired, owned 
or created after the date hereof, the ``U.S. Regulated Subsidiaries'' 
and each, a ``U.S. Regulated Subsidiary'').
    ICE Inc. is a wholly-owned subsidiary of ICE Group, a public 
company that is listed on the Exchange. NYSE Holdings is also a direct 
wholly-owned subsidiary of ICE Group. Following the Transfer, ICE Inc. 
will remain a direct wholly-owned subsidiary of ICE Group.
    As a result of the Transfer, ICE Group will contribute the 
membership interests in NYX Holdings to ICE Inc., at which point NYX 
Holdings will become a wholly-owned subsidiary of ICE Inc., and the 
U.S. Regulated Subsidiaries owned by NYX Holdings will become indirect 
wholly-owned subsidiaries of ICE Inc. ICE Group will continue as the 
ultimate parent entity of NYX Holdings through ICE Inc. The proposed 
rule changes are necessary to effectuate the consummation of the 
Transfer and will not be operative until the date of the consummation 
of the Transfer (the ``Closing Date''). The proposed rule changes and 
exhibits thereto contain modifications to the corporate governance 
documents of ICE Inc., NYX Holdings and ICE Group \8\ that reflect the 
current structure of the Transfer.\9\
---------------------------------------------------------------------------

    \8\ The NYSE Exchanges propose to add to the Amended and 
Restated Certificate of Incorporation of ICE Group (``ICE Group 
Certificate'') and the Second Amended and Restated Bylaws of ICE 
Group (``ICE Group Bylaws'') that directors of ICE Group must 
consider ICE Inc. and NYX Holdings when taking certain actions. 
Specifically, the provisions in the ICE Group Certificate 
establishing the standard for each director's approval of ownership 
or voting rights in excess of the limitations in the ICE Group 
Certificate do not currently require a director to consider whether 
such approval would impair the ability of ICE Inc. and NYX Holdings 
to comply with the Exchange Act and the rules and regulations 
thereunder. See proposed ICE Group Bylaws, Section 3.15(g)(amending 
the definition of U.S. Regulated Subsidiary cross-referenced in the 
ICE Group Certificate to include NYX Holdings and ICE Inc.). Also, 
the provisions in the ICE Group Bylaws establishing the standards 
for the board's approval of any action by ICE Group does not 
currently require a director to take into consideration the effect 
that such action would have on the ability of ICE Inc. and NYX 
Holdings (a) to engage in conduct that fosters and does not 
interfere with the ability of each such entity to prevent fraudulent 
and manipulative acts and practices in the securities markets; (b) 
to promote just and equitable principles of trade in the securities 
markets; (c) to foster cooperation and coordination with persons 
engaged in regulating, clearing, settling, processing information 
with respect to, and facilitating transactions in securities; (d) to 
remove impediments to and perfect the mechanisms of a free and open 
market in securities and a U.S. national securities market system; 
and (e) in general, to protect investors and the public interest. 
See proposed ICE Group Bylaws, Section 3.14(a)(3). The ICE Group 
Bylaws would be amended to add references to ICE Inc. and NYX 
Holdings in each such provision.
    \9\ The NYSE Exchanges propose to amend the Third Amended and 
Restated Limited Liability Company Agreement of NYX Holdings (``NYX 
Holdings Operating Agreement'') to reflect that ICE Inc. will be the 
sole member of the LLC as a result of ICE Group's transfer of the 
membership interest in NYX Holdings to ICE Inc. and make additional 
nonsubstantive conforming changes. The NYX Holdings board adopted 
the resolutions in order to permit ICE Group to transfer its 
membership interest in NYX Holdings to ICE Inc. and to amend the NYX 
Holdings Operating Agreement to reflect the change of ownership in 
Exhibit 5D-1 to the Notice. The Commission notes that, if the 
Transfer is not consummated, the proposed rule changes will not 
become effective.
---------------------------------------------------------------------------

    Following the Transfer, ICE Group will continue to hold all of the 
equity interests in ICE Inc., and ICE Inc. will hold all the membership 
interests in NYX Holdings. NYX Holdings will continue to hold (1) 100% 
of the equity interests of NYSE Group (which, in turn, would continue 
to directly or indirectly hold 100% of the equity interests of the U.S. 
Regulated Subsidiaries) and (2) 100% of the equity interest of Euronext 
N.V. (``Euronext'') (which, in turn, directly or indirectly holds 100% 
of the equity interests of trading markets in Belgium, France, the 
Netherlands, Portugal and the United Kingdom).
    According to the NYSE Exchanges, the Transfer is part of the 
process pursuant to which ICE Group will prepare for the previously 
announced sale of the continental European cash equity platforms and 
the derivatives trading on them (the ``Euronext Sale'') currently owned 
by Euronext. According to the NYSE Exchanges, the Transfer also will 
facilitate the transitioning of the derivatives businesses of another 
current subsidiary of Euronext, Liffe Administration and Management, to 
ICE Futures Europe, a subsidiary of ICE Inc., and will enable ICE Inc. 
to continue in compliance with certain debt covenants after the 
Euronext Sale.
    The NYSE Exchanges represent that the Transfer will not affect the 
operation of the U.S. Regulated Subsidiaries. Other than as described 
herein, the NYSE Exchanges also represent that ICE Inc. will not make 
any changes to the regulated activities of the U.S. Regulated 
Subsidiaries in connection with the Transfer. If ICE Inc. determines to 
make any such changes to the regulated activities of any U.S. Regulated 
Subsidiary, it will seek the approval of the Commission.

A. ICE Inc.

    Following the Transfer, ICE Inc. will hold all of the equity 
interests in NYX Holdings, which in turn, directly or indirectly holds 
100 percent of the equity interests of the U.S. Regulated Subsidiaries. 
Section 19(b) of the Act

[[Page 15369]]

and Rule 19b-4 thereunder require a self-regulatory organization 
(``SRO'') to file proposed rule changes with the Commission. Although 
ICE Inc. is not an SRO, certain provisions of its proposed Fifth 
Amended and Restated Certificate of Incorporation (``ICE Inc. 
Certificate'') and proposed Second Amended and Restated Bylaws (``ICE 
Inc. Bylaws'', and together with the ICE Inc. Certificate, ``the ICE 
Inc. Articles''), along with other corporate documents, are rules of an 
exchange \10\ if they are stated policies, practices, or 
interpretations, as defined in Rule 19b-4 under the Act, of the 
exchange, and must be filed with the Commission pursuant to Section 
19(b)(4) of the Act and Rule 19b-4 thereunder. Accordingly, the NYSE 
Exchanges have filed the proposed ICE Inc. Articles, along with other 
corporate documents, with the Commission.
---------------------------------------------------------------------------

    \10\ See Section 3(a)(27) of the Act, 15 U.S.C. 78c(a)(27). If 
ICE Inc. decides to change the ICE Inc. Articles, ICE Inc. must 
submit such change to the board of directors of the U.S. Regulated 
Subsidiaries, and if any or all of such board of directors shall 
determine that such amendment must be filed with or filed with and 
approved by the Commission pursuant to Section 19 of the Act and the 
rules thereunder, such change shall not be effective until filed 
with or filed with and approved by the Commission, as applicable. 
See proposed ICE Inc. Certificate, Article X; proposed ICE Inc. 
Bylaws, Section 11.3.
---------------------------------------------------------------------------

Voting and Ownership Limitations
    The NYSE Exchanges propose that, effective as of the completion of 
the Transfer, the ICE Inc. Certificate would contain voting and 
ownership restrictions that are substantially identical to those 
currently in the ICE Group Certificate and the NYX Holdings Operating 
Agreement previously approved by the Commission.\11\ These would 
restrict any person, either alone or together with its related persons, 
from having voting control over ICE Inc. shares entitling the holder 
thereof to cause more than 10% of the votes entitled to be cast on any 
matter, or beneficially owning ICE Inc. shares representing more than 
20% of the outstanding votes that may be cast on any matter.\12\ These 
limitations would apply in the event that ICE Group does not own all of 
the issued and outstanding stock in ICE Inc.\13\ and only for so long 
as ICE Inc. directly or indirectly controls any U.S. Regulated 
Subsidiary or any European Market Subsidiary.\14\
---------------------------------------------------------------------------

    \11\ See Securities Exchange Act Release No. 70210 (August 15, 
2013), 78 FR 51758 (August 21, 2010) (order approving proposed 
combination of NYSE Euronext and IntercontinentalExchange Group 
Inc.).
    \12\ See proposed ICE Inc. Certificate, Article V, Sections A.1. 
and B.1.
    \13\ See proposed ICE Inc. Certificate, Article V.
    \14\ See proposed ICE Inc. Certificate, Article V, Section A.1. 
and B.1.
---------------------------------------------------------------------------

    The ICE Inc. board of directors may waive the voting and ownership 
restrictions if it makes certain determinations and expressly resolves 
to permit the voting and ownership that is subject to such 
restrictions, and such resolutions have been filed with, and approved 
by, the Commission under Section 19(b) of the Act and filed with, and 
approved by, each European Regulator having appropriate jurisdiction 
and authority.\15\
---------------------------------------------------------------------------

    \15\ See proposed ICE Inc. Certificate, Article V, Section A.2. 
and B.2.
---------------------------------------------------------------------------

    In addition, for so long as ICE Inc. directly or indirectly 
controls the Exchange, NYSE Market (DE), Inc., NYSE MKT, NYSE Arca, 
NYSE Arca Equities Inc. or any facility of NYSE Arca or NYSE MKT, the 
ICE Inc. board of directors cannot waive the voting and ownership 
limits above the 20% threshold for any person if such person or its 
related persons is a member of NYSE or NYSE MKT, an ETP Holder of NYSE 
Arca Equities,\16\ or an OTP Holder or an OTP Firm of NYSE Arca.\17\ 
Further, the ICE Inc. board of directors also cannot waive the voting 
and ownership limits above the 20% threshold if such person or its 
related persons is subject to any statutory disqualification (as 
defined in Section 3(a)(39) of the Act) (a ``U.S. Disqualified 
Person'') or has been determined by a European Regulator to be in 
violation of laws or regulations adopted in accordance with the 
European Directive on Markets in Financial Instruments applicable to 
any European Market Subsidiary requiring such person to act fairly, 
honestly and professionally (a ``European Disqualified Person'').\18\
---------------------------------------------------------------------------

    \16\ ``ETP Holder'' is defined in NYSE Arca Equities Rule 
1.1(m). ``OTP Holder'' and ``OTP Firm'' are defined, respectively, 
in NYSE Arca Rule 1.1(q) and 1.1(r).
    \17\ See proposed ICE Inc. Certificate, Article V, Section 
A.3(c) and B.3(d)-(f).
    \18\ See ICE Inc. Certificate, Article V Sections A.3(c)(i), 
A.3(d)(i) and B.3(c)(i) and (ii).
---------------------------------------------------------------------------

    The Commission finds the ownership and voting restrictions in the 
proposed ICE Inc. Articles are consistent with the Act.

B. NYX Holdings Resolutions

    In order to allow ICE Inc. to wholly own and vote all of NYX 
Holdings' membership interests upon consummation of the Transfer, ICE 
Inc. delivered a written notice to the board of directors of NYX 
Holdings pursuant to the procedures set forth in the NYX Holdings 
Operating Agreement requesting approval of its ownership and voting NYX 
Holdings membership interests in excess of the NYX Holdings voting 
restriction and NYX Holdings ownership restriction.\19\ The board of 
directors of NYX Holdings must resolve to expressly permit ownership or 
voting in excess of the NYX Holdings voting restriction limitation and 
NYX Holdings ownership restriction. Such resolution of the NYX Holdings 
board of directors must be filed with and approved by the Commission 
under Section 19(b) of the Act, and become effective thereunder. 
Further, the board of directors may not approve any voting or ownership 
in excess of the limitations unless it determines that such ownership 
or exercise of voting rights (i) will not impair the ability of the 
U.S. Regulated Subsidiaries, NYX Holdings, and NYSE Group to discharge 
their respective responsibilities under the Act and the rules and 
regulations thereunder, (ii) will not impair the ability of any 
European Market Subsidiary, NYX Holdings, or Euronext to discharge 
their respective responsibilities under the European Exchange 
Regulations, (iii) is otherwise in the best interests of NYX Holdings, 
its members, the U.S. Regulated Subsidiaries, and the European Market 
Subsidiaries, and (iv) will not impair the Commission's ability to 
enforce the Act or the European Regulators' ability to enforce the 
European Exchange Regulations.\20\ For so long as NYX Holdings directly 
or indirectly controls the Exchange or NYSE Market, NYSE Arca, NYSE 
Arca Equities, any facility of NYSE Arca, or NYSE MKT, the NYX Holdings 
board of directors cannot waive the voting and ownership limits above 
the 20% threshold if such person or its related persons is a member of 
the Exchange or NYSE MKT, or an ETP Holder, an OTP Holder or an OTP 
Firm.\21\ Further, the NYX Holdings board of directors cannot waive the 
voting and ownership limits above the 20% threshold if such person or 
its related persons is a U.S. Disqualified Person or a European 
Disqualified Person.\22\
---------------------------------------------------------------------------

    \19\ Prior to permitting any person to exceed the ownership 
limitation and voting limitation, such person must deliver notice of 
such person's intention to exceed the ownership limitation or voting 
limitation to the NYX Holdings board of directors. See NYX Holdings 
Operating Agreement, Article IX, Sections 9.1(a)(2) and (b)(2).
    \20\ See NYX Holdings Operating Agreement, Article IX, Section 
9.1(a)(3)(A)-(B) and Section 9.1(b)(3)(A)-(B).
    \21\ See NYX Holdings Operating Agreement, Article IX, Section 
9.1(a)(3)(C).
    \22\ Id.
---------------------------------------------------------------------------

    The board of directors of NYX Holdings adopted by written consent 
resolutions to permit ICE Inc., either alone or with its related 
persons, to

[[Page 15370]]

exceed the NYX Holdings ownership restriction and the NYX Holdings 
voting restriction. In adopting such resolutions, the board of 
directors of NYX Holdings made the necessary determinations set forth 
above and approved the submission of the proposed rule changes to the 
Commission. Among other things, in this notice, ICE Inc. represented to 
the board of directors of NYX Holdings that neither ICE Inc., nor any 
of its related persons, is (1) an NYSE Member; (2) an NYSE MKT Member; 
(3) an ETP Holder; (4) an OTP Holder or OTP Firm; or (5) a U.S. 
Disqualified Person or a European Disqualified Person. The NYX Holdings 
board of directors also determined that ownership of NYX Holdings by 
ICE Inc. is in the best interests of NYX Holdings, the owners of its 
membership interests, the U.S. Regulated Subsidiaries, and the European 
Market Subsidiaries.\23\
---------------------------------------------------------------------------

    \23\ Such resolution of the NYX Holdings board of directors was 
filed as part of the proposed rule changes. See Exhibit E to each of 
the proposed rule changes, which exhibit is available on the 
Commission's Web site (http://www.sec.gov/rules/sro.shtml), at the 
Commission's Public Reference Room, at the NYSE, and on the NYSE's 
Web site (http://www.nyse.com).
---------------------------------------------------------------------------

    The Commission believes it is consistent with the Act to allow ICE 
Inc. to wholly own and vote all of the membership interests of NYX 
Holdings. The Commission notes that ICE Inc. represents that neither 
ICE Inc. nor any of its related persons is subject to any statutory 
disqualification (as defined in Section 3(a)(39) of the Act), or is a 
member of the Exchange or NYSE MKT, an ETP Holder, an OTP Holder or an 
OTP Firm, or a European Disqualified Person. ICE Inc. has also included 
in its corporate documents certain provisions designed to maintain the 
independence of the U.S. Regulated Subsidiaries' self-regulatory 
functions from ICE Group, ICE Inc., NYX Holdings and NYSE Group.\24\ 
Accordingly, the Commission believes that the acquisition of ownership 
and exercise of voting rights of NYX Holdings membership interests by 
ICE Inc. will not impair the ability of the Commission or any of the 
U.S. Regulated Subsidiaries to discharge their respective 
responsibilities under the Act.
---------------------------------------------------------------------------

    \24\ See infra note 29.
---------------------------------------------------------------------------

C. Relationship of ICE Inc., NYX Holdings, NYSE Group, and the U.S. 
Regulated Subsidiaries; Jurisdiction Over ICE Inc.

    ICE Inc.'s activities with respect to the operation of any of the 
U.S. Regulated Subsidiaries must be consistent with, and not interfere 
with, the U.S. Regulated Subsidiaries' self-regulatory obligations. The 
proposed ICE Inc. corporate documents include certain provisions that 
are designed to maintain the independence of the U.S. Regulated 
Subsidiaries' self-regulatory functions from ICE Inc., NYX Holdings, 
and NYSE Group, enable the U.S. Regulated Subsidiaries to operate in a 
manner that complies with the U.S. federal securities laws, including 
the objectives and requirements of Sections 6(b) and 19(g) of the 
Act,\25\ and facilitate the ability of the U.S. Regulated Subsidiaries 
and the Commission to fulfill their regulatory and oversight 
obligations under the Act.\26\
---------------------------------------------------------------------------

    \25\ 15 U.S.C. 78f(b) and 15 U.S.C. 78s(g).
    \26\ See proposed ICE Inc. Bylaws Article IX.
---------------------------------------------------------------------------

    For example, under the proposed ICE Inc. Bylaws, ICE Inc. shall 
comply with the U.S. federal securities laws, the European Exchange 
Regulations, and the respective rules and regulations thereunder; shall 
cooperate with the Commission, the European Regulators, and the U.S. 
Regulated Subsidiaries.\27\ Each director, officer, and employee of ICE 
Inc., to the extent in discharging his or her responsibilities shall 
comply with the U.S. federal securities laws and the rules and 
regulations thereunder, cooperate with the Commission, and cooperate 
with the U.S. Regulated Subsidiaries.\28\ In addition, in discharging 
his or her responsibilities as a member of the board, each director of 
ICE Inc. must, to the fullest extent permitted by applicable law, take 
into consideration the effect that ICE Inc.'s actions would have on the 
ability of the U.S. Regulated Subsidiaries to carry out their 
responsibilities under the Act, on the ability of the European Market 
Subsidiaries to carry out their responsibilities under the European 
Exchange Regulations as operators of European Regulated Markets, and on 
the ability of the U.S. Regulated Subsidiaries, NYSE Group, and ICE 
Inc. (i) to engage in conduct that fosters and does not interfere with 
the ability of the U.S. Regulated Subsidiaries, NYSE Group, and ICE 
Inc. to prevent fraudulent and manipulative acts and practices in the 
securities markets; (ii) to promote just and equitable principles of 
trade in the securities markets; (iii) to foster cooperation and 
coordination with persons engaged in regulating, clearing, settling, 
processing information with respect to, and facilitating transactions 
in securities; (iv) to remove impediments to and perfect the mechanisms 
of a free and open market in securities and a U.S. national securities 
market system; and (v) in general, to protect investors and the public 
interest.\29\ For so long as ICE Inc. directly or indirectly controls 
any U.S. Regulated Subsidiary, ICE Inc., its directors, officers and 
employees shall give due regard to the preservation of the independence 
of the self-regulatory function of the U.S. Regulated Subsidiaries (to 
the extent of each U.S. Regulated Subsidiary's self-regulatory 
function) and the European Market Subsidiaries (to the extent of each 
European Market Subsidiaries' self-regulatory function).\30\ Further, 
ICE Inc. agrees to keep confidential all confidential information 
pertaining to: (1) The self-regulatory function of the any U.S. 
Regulated Subsidiary (including but not limited to disciplinary 
matters, trading data, trading practices and audit information) 
contained in the books and records of any of the U.S. Regulated 
Subsidiaries; and (2) the self-regulatory function of the European 
Market Subsidiaries under the European Exchange Regulations as operator 
of a European Regulated Market (including but not limited to 
disciplinary matters, trading data, trading practices and audit 
information) contained in the books and records of the European Market 
Subsidiaries, and not use such information for any commercial \31\ 
purposes.\32\
---------------------------------------------------------------------------

    \27\ See proposed ICE Inc. Bylaws, Article IX, Section 9.l and 
9.2.
    \28\ See proposed ICE Inc. Bylaws, Article III, Section 3.14(b).
    \29\ See proposed ICE Inc. Bylaws, Article III, Section 
3.14(a)(3).
    \30\ See proposed ICE Inc. Bylaws, Article IX, Section 9.4 and 
9.5.
    \31\ The Commission believes that any non-regulatory use of such 
information would be for a commercial purpose. See, e.g., NYSE-
Euronext Merger Order, supra note 20, 72 FR at 8041 n. 71.
    \32\ See proposed ICE Inc. Bylaws, Article VIII, Section 8.1.
---------------------------------------------------------------------------

    In addition, ICE Inc.'s books and records shall be subject at all 
times to inspection and copying by the Commission, the European 
Regulators, any U.S. Regulated Subsidiary (provided that such books and 
records are related to the activities of such U.S. Regulated Subsidiary 
or any other U.S. Regulated Subsidiary over which such U.S. Regulated 
Subsidiary has regulatory authority or oversight) and any European 
Market Subsidiary (provided that such books and records are related to 
the operation or administration of such European Market Subsidiary or 
any European Regulated Market over which such European Market 
Subsidiary has regulatory authority or oversight).\33\ The ICE Inc. 
Bylaws would provide that these obligations regarding such confidential 
information will not be interpreted so as

[[Page 15371]]

to limit or impede (i) the rights of the Commission or the relevant 
U.S. Regulated Subsidiary to have access to and examine such 
confidential information pursuant to the U.S. federal securities laws 
and the rules and regulations thereunder; or (ii) the ability of any 
officers, directors, employees or agents of ICE Inc. to disclose such 
confidential information to the Commission or any U.S. Regulated 
Subsidiary.\34\ ICE Inc.'s books and records related to U.S. Regulated 
Subsidiaries shall be maintained within the United States, and ICE 
Inc.'s books and records related to European Market Subsidiaries shall 
be maintained in the home jurisdiction of one or more of the European 
Market Subsidiaries or of any subsidiary of ICE Inc. in Europe.\35\ The 
ICE Inc. Bylaws also provide that if and to the extent than any of ICE 
Inc.'s books and records may relate to both European Market 
Subsidiaries and U.S. Regulated Subsidiaries (each such book and record 
an ``Overlapping Record''), ICE Inc. shall be entitled to maintain such 
books and records either in the home jurisdiction of one or more 
European Market Subsidiaries or in the United States.\36\
---------------------------------------------------------------------------

    \33\ See proposed ICE Inc. Bylaws, Article VIII, Section 8.3.
    \34\ See proposed ICE Inc. Bylaws, Article VIII, Section 8.2.
    \35\ See proposed ICE Inc. Bylaws, Article VIII, Sections 8.4 
and 8.5.
    \36\ See proposed ICE Inc. Bylaws, Article VIII, Section 8.6.
---------------------------------------------------------------------------

    In addition, for so long as ICE Inc. directly or indirectly 
controls any U.S. Regulated Subsidiary, the books, records, premises, 
officers, directors, and employees of ICE Inc. shall be deemed to be 
the books, records, premises, officers, directors, and employees of the 
U.S. Regulated Subsidiaries for purposes of and subject to oversight 
pursuant to the Act, and for so long as ICE Inc. directly or indirectly 
controls any European Market Subsidiary, the books, records, premises, 
officers, directors, and employees of ICE Inc. shall be deemed to be 
the books, records, premises, officers, directors, and employees of 
such European Market Subsidiaries for purposes of and subject to 
oversight pursuant to the European Exchange Regulations.\37\
---------------------------------------------------------------------------

    \37\ See proposed ICE Inc. Bylaws, Article VIII, Sections 8.4 
and 8.5.
---------------------------------------------------------------------------

    ICE Inc. and its directors and, to the extent they are involved in 
the activities of the U.S. Regulated Subsidiaries, ICE Inc.'s officers 
and employees whose principal place of business and residence is 
outside of the United States irrevocably submit to the jurisdiction of 
the U.S. federal courts and the Commission with respect to activities 
relating to the U.S. Regulated Subsidiaries, and to the jurisdiction of 
the European Regulators and European courts with respect to activities 
relating to the European Market Subsidiaries.\38\
---------------------------------------------------------------------------

    \38\ See proposed ICE Inc. Bylaws, Article VII, Sections 7.1 and 
7.2.
---------------------------------------------------------------------------

    The ICE Inc. Bylaws would provide that ICE Inc. will take 
reasonable steps necessary to cause its directors, officers and 
employees, prior to accepting a position as an officer, director or 
employee, as applicable, of ICE Inc. to agree and consent in writing to 
the applicability to them of these jurisdictional and oversight 
provisions with respect to their activities related to any U.S. 
Regulated Subsidiary.\39\ Further, ICE Inc. acknowledges that it is 
responsible for referring possible rule violations to the NYSE 
Exchanges.
---------------------------------------------------------------------------

    \39\ See proposed ICE Inc. Bylaws, Article IX, Section 9.3.
---------------------------------------------------------------------------

    Finally, the proposed ICE Inc. Articles require that, for so long 
as ICE Inc. controls, directly or indirectly, any of the U.S. Regulated 
Subsidiaries, any changes to the proposed ICE Inc. Articles be 
submitted to the board of directors of such U.S. Regulated 
Subsidiaries, and if any such boards of directors determines that such 
amendment is required to be filed with or filed with and approved by 
the Commission pursuant to Section 19 of the Act \40\ and the rules 
thereunder, such change shall not be effective until filed with or 
filed with and approved by, the Commission.\41\
---------------------------------------------------------------------------

    \40\ 15 U.S.C. 78s.
    \41\ See proposed ICE Inc. Bylaws, Article XI, Section 11.3; 
proposed ICE Inc. Certificate, Article X(C).
---------------------------------------------------------------------------

    The Commission finds that these provisions are consistent with the 
Act, and that they are intended to assist the NYSE Exchanges in 
fulfilling its self-regulatory obligations and in administering and 
complying with the requirements of the Act. With respect to the 
maintenance of books and records of ICE Inc., the Commission notes that 
while ICE Inc. has the discretion to maintain Overlapping Records in 
either the United States or the home jurisdiction of one or more of the 
European Market Subsidiaries, ICE Inc. is liable for any books and 
records it is required to produce for inspection and copying by the 
Commission that are created outside the United States and where the law 
of a foreign jurisdiction prohibits ICE Inc. from providing such books 
and records to the Commission for inspection and copying.\42\ Moreover, 
the Commission notes that NYX Holdings is under an existing obligation 
to make its books and records available in compliance with the 
requirements of Rule 17a-1(b).\43\
---------------------------------------------------------------------------

    \42\ See Securities Exchange Act Release Nos. 55293 (February 
14, 2007), 72 FR 8033, 8041 (February 22, 2007) (SR-NYSE-2006-120).
    \43\ The Commission notes that the obligations of NYSE Euronext 
established in the prior orders remains in effect for its successors 
entity, i.e., NYX Holdings. NYX Holdings is currently required to 
maintain in the United States originals or copies of books and 
records that relate to both the U.S. Regulated Subsidiaries and its 
European market subsidiaries covered by Rule 17a-1(b) promptly after 
creation of such books and records. See id., 72 FR 8041, 8042.
---------------------------------------------------------------------------

    Under Section 20(a) of the Act,\44\ any person with a controlling 
interest in the U.S. Regulated Subsidiaries shall be jointly and 
severally liable with and to the same extent that the U.S. Regulated 
Subsidiaries are liable under any provision of the Act, unless the 
controlling person acted in good faith and did not directly or 
indirectly induce the act or acts constituting the violation or cause 
of action. In addition, Section 20(e) of the Act \45\ creates aiding 
and abetting liability for any person who knowingly provides 
substantial assistance to another person in violation of any provision 
of the Act or rule thereunder. Further, Section 21C of the Act \46\ 
authorizes the Commission to enter a cease-and-desist order against any 
person who has been ``a cause of'' a violation of any provision of the 
Act through an act or omission that the person knew or should have 
known would contribute to the violation. These provisions are 
applicable to ICE Inc.'s dealings with the U.S. Regulated Subsidiaries.
---------------------------------------------------------------------------

    \44\ 15 U.S.C. 78t(a).
    \45\ 15 U.S.C. 78t(e).
    \46\ 15 U.S.C. 78u-3.
---------------------------------------------------------------------------

III. Conclusion

    For the foregoing reasons, the Commission finds that the proposed 
rule change is 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 \47\ that 
the proposed rule changes (SR-NYSE-2014-04; SR-NYSEMKT-2014-10; SR-
NYSEArca-2014-08), are approved.
---------------------------------------------------------------------------

    \47\ Id.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\48\
---------------------------------------------------------------------------

    \48\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2014-05987 Filed 3-18-14; 8:45 am]
BILLING CODE 8011-01-P