Self-Regulatory Organizations; NYSE MKT LLC; Order Approving Proposed Rule Change To Amend the Sixth Amended and Restated Operating Agreement of the Exchange, 34751-34753 [2015-14822]
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Federal Register / Vol. 80, No. 116 / Wednesday, June 17, 2015 / Notices
(B) Self-Regulatory Organization’s
Statement on Burden on Competition
The Exchange believes its proposed
amendments to its Fee Schedule would
not impose any burden on competition
that is not necessary or appropriate in
furtherance of the purposes of the Act.
The Exchange does not believe that the
proposed change represents a significant
departure from previous pricing offered
by the Exchange or pricing offered by
the Exchange’s competitors.
Additionally, Members may opt to
disfavor the Exchange’s pricing if they
believe that alternatives offer them
better value. Accordingly, the Exchange
does not believe that the proposed
change will impair the ability of
Members or competing venues to
maintain their competitive standing in
the financial markets.
Fee Code A
The Exchange believes that its
proposal to pass through a rebate of
$0.0015 per share for Members’ orders
that yield fee code A would increase
intermarket competition because it
offers customers an alternative means to
route to Nasdaq for a similar rate as
entering orders in certain symbols on
Nasdaq directly. The Exchange believes
that its proposal would not burden
intramarket competition because the
proposed rate would apply uniformly to
all Members.
BATS Connect
asabaliauskas on DSK5VPTVN1PROD with NOTICES
The Exchange does not believe the
proposed fees for BATS Connect will
result in any burden on competition.
The proposed rule change is designed to
provide subscribers with an alternative
means to access other market centers on
the Exchange’s network if they choose
or in the event of a market disruption
where other alternative connection
methods become unavailable. BATS
Connect is not the exclusive method to
connect to these market centers and
subscribers may utilize alternative
methods to connect to the product if
they believe the Exchange’s proposed
pricing is unreasonable or otherwise.
Therefore, the Exchange does not
believe the proposed rule change will
have any effect on competition.
(C) Self-Regulatory Organization’s
Statement on Comments on the
Proposed Rule Change Received From
Members, Participants or Others
The Exchange has not solicited, and
does not intend to solicit, comments on
this proposed rule change. The
Exchange has not received any
unsolicited written comments from
Members or other interested parties.
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III. Date of Effectiveness of the
Proposed Rule Change and Timing for
Commission Action
The foregoing rule change has become
effective pursuant to Section 19(b)(3)(A)
of the Act 19 and paragraph (f) of Rule
19b–4 thereunder.20 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 rule-comments@
sec.gov. Please include File Number SR–
BATS–2015–44 on the subject line.
Paper Comments
• Send paper comments in triplicate
to Brent J. Fields, Secretary, Securities
and Exchange Commission, 100 F Street
NE., Washington, DC 20549–1090.
All submissions should refer to File
Number SR–BATS–2015–44. This file
number should be included on the
subject line if email is used. To help the
Commission process and review your
comments more efficiently, please use
only one method. The Commission will
post all comments on the Commission’s
Internet Web site (https://www.sec.gov/
rules/sro.shtml). Copies of the
submission, all subsequent
amendments, all written statements
with respect to the proposed rule
change that are filed with the
Commission, and all written
communications relating to the
proposed rule change between the
Commission and any person, other than
those that may be withheld from the
public in accordance with the
provisions of 5 U.S.C. 552, will be
available for Web site viewing and
printing in the Commission’s Public
Reference Room, 100 F Street NE.,
Washington, DC 20549, on official
business days between the hours of
10:00 a.m. and 3:00 p.m. Copies of the
filing will also be available for
19 15
20 17
PO 00000
U.S.C. 78s(b)(3)(A).
CFR 240.19b–4(f).
Frm 00146
Fmt 4703
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34751
inspection and copying at the principal
office of the Exchange. All comments
received will be posted without change;
the Commission does not edit personal
identifying information from
submissions. You should submit only
information that you wish to make
available publicly. All submissions
should refer to File Number SR–BATS–
2015–44 and should be submitted on or
before July 8, 2015.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.21
Robert W. Errett,
Deputy Secretary.
[FR Doc. 2015–14831 Filed 6–16–15; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–75148; File No. SR–
NYSEMKT–2015–27]
Self-Regulatory Organizations; NYSE
MKT LLC; Order Approving Proposed
Rule Change To Amend the Sixth
Amended and Restated Operating
Agreement of the Exchange
June 11, 2015.
I. Introduction
On April 17, 2015, NYSE MKT LLC
(‘‘Exchange’’ or ‘‘NYSE MKT’’) 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 a proposed rule
change to amend the Sixth Amended
and Restated Operating Agreement
(‘‘Operating Agreement’’) of the
Exchange. The proposed rule change
was published for comment in the
Federal Register on May 4, 2015.4 The
Commission received no comment
letters on the proposed rule change.
This order approves the proposed rule
change.
II. Description of the Proposal
NYSE MKT proposes to amend the
Exchange’s Operating Agreement to (1)
establish a Regulatory Oversight
Committee (‘‘ROC’’), and (2) remove the
requirement that the independent
directors who make up the majority of
the board of directors of the Exchange
(‘‘Board’’) also be directors of
21 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 No. 74825
(April 28, 2015), 80 FR 25341 (‘‘Notice’’).
1 15
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34752
Federal Register / Vol. 80, No. 116 / Wednesday, June 17, 2015 / Notices
asabaliauskas on DSK5VPTVN1PROD with NOTICES
Intercontinental Exchange, Inc. (‘‘ICE’’),
the Exchange’s parent company.
A. Creation of a ROC
The Exchange proposes to add
subsection (ii) to Section 2.03(h) of the
Operating Agreement to establish a ROC
and to delineate its composition and
functions. The ROC would have the
responsibility to independently monitor
the Exchange’s regulatory operations.5
In particular, pursuant to Section
2.03(h)(ii), the ROC would:
• Oversee the Exchange’s regulatory
and self-regulatory organization
responsibilities and evaluate the
adequacy and effectiveness of the
Exchange’s regulatory and selfregulatory organization responsibilities;
• assess the Exchange’s regulatory
performance; and
• advise and make recommendations
to the Board or other committees of the
Board about the Exchange’s regulatory
compliance, effectiveness and plans.
In furtherance of these functions, the
Exchange proposes that the ROC shall
have the authority and obligation to: (i)
Review the regulatory budget of the
Exchange and specifically inquire into
the adequacy of resources available in
the budget for regulatory activities; (ii)
meet regularly with the Chief Regulatory
Officer (‘‘CRO’’) in executive session;
(iii) in consultation with the Exchange’s
Chief Executive Officer, establish the
goals, assess the performance, and
recommend the CRO’s compensation;
and (iv) keep the Board informed with
respect to the foregoing matters.
With respect to the ROC’s
composition, Section 2.03(h)(ii) would
provide that the ROC shall consist of at
least three members, each of whom shall
be a director of either the Exchange or
of NYSE Regulation, Inc. (‘‘NYSE
Regulation’’), and who satisfy the
independence requirements of the
Exchange.6 The Exchange represents
that it believes that a ROC comprised of
at least three independent members has
been recognized as one of several
measures that can help ensure the
independence of the regulatory function
from the market operations and
commercial interests of a national
securities exchange.7
In addition, Section 2.03(h)(ii) of the
Operating Agreement would provide
that the Board, on affirmative vote of a
5 See
Notice, 80 FR at 25342.
Exchange’s independence requirements are
set forth in the Company Director Independence
Policy of the Exchange. See Securities Exchange Act
Release No. 67564 (August 1, 2012), 77 FR 47151
(August 7, 2012) (SR–NYSE–2012–17) (approving,
among other things, the Exchange’s Company
Director Independence Policy).
7 See Notice, 80 FR at 25342.
6 The
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majority of directors, at any time may
remove a member of the ROC for cause,
and also would provide that a failure of
the ROC member to qualify as
independent under the Company
Director Independence Policy would
constitute a basis to remove a member
of the ROC for cause. If the term of
office of a ROC member terminates, and
the remaining term of office of such
member at the time of termination is not
more than three months, Section
2.03(h)(ii) would provide that during
the period of vacancy, the ROC would
not be deemed to be in violation of its
compositional requirements by virtue of
the vacancy. To clarify the process for
filling vacancies on any committee of
the Exchange, including the ROC, the
Exchange also proposes to amend
Section 2.03(h) of the Operating
Agreement to provide that vacancies in
the membership of any committee shall
be filled by the Board. The Exchange
represents that it believes that the
proposed adoption of a ROC would
ensure the continued independence of
the regulatory process.8
B. Exchange Independent Directors
Currently, Section 2.03(a)(i) of the
Operating Agreement, which governs
the Board’s composition, provides that a
majority of the Exchange’s directors
shall be U.S. persons who are members
of the board of directors of ICE and who
satisfy the Exchange’s Company
Director Independence Policy. Each
such director is defined as an ‘‘ICE
Independent Director’’ in Section
2.03(a)(i) of the Operating Agreement.
The Exchange proposes to amend
Section 2.03(a)(i) to remove the
requirement that the independent
directors, who must comprise the
majority of the Board also be directors
of ICE, by amending the definition of
‘‘ICE Independent Director’’ to remove
the reference to ICE, and to make
conforming changes in both subsections
(i) and (ii) of Section 2.03(a).
The Exchange represents that, under
this modification to its Operating
Agreement, a majority of the directors of
the Board would continue to satisfy the
Company Director Independence
Policy.9 The Exchange also notes that it
believes that eliminating the
requirement that the independent
directors of the Exchange also be
directors of ICE would allow the
Exchange to broaden the pool of
potential Board members, resulting in a
more diversified Board membership
while still ensuring the directors’
8 See
9 See
PO 00000
Notice, 80 FR at 25343.
Notice, 80 FR at 25343.
Frm 00147
Fmt 4703
Sfmt 4703
independence.10 The Exchange states
that eliminating the requirement that
the independent directors of the
Exchange also be directors of ICE would
result in the Exchange’s Board
composition requirements being
commensurate with the board
requirements of its affiliate, NYSE Arca,
Inc., which does not require any of its
directors to be directors of ICE.11
III. Discussion and Commission
Findings
After careful review, 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.12 In
particular, the Commission finds that
the proposed rule change is consistent
with Section 6(b)(1) of the Act,13 which
requires an exchange to be so organized
and have the capacity to carry out the
purposes of the Act and to comply, and
to enforce compliance by its members
and persons associated with its
members, with the Act, the rules and
regulations thereunder, and the rules of
the exchange. The Commission also
finds that the proposed rule change is
consistent with Section 6(b)(5) of the
Act,14 which requires that the rules of
the exchange be designed, among other
things, to prevent fraudulent and
manipulative acts and practices, 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.
The Commission believes that the
Exchange’s creation of a ROC as an
independent committee to oversee the
adequacy and effectiveness of the
Exchange’s regulatory responsibilities,
compliance and plans, is appropriate
and should help the Exchange to fulfill
its self-regulatory obligations. The
Commission notes that, under proposed
Section 2.03(h)(ii) of the Operating
Agreement, the responsibilities,
enumerated functions, and authority of
the ROC are substantially similar to
those of other exchanges.15 In addition,
the Commission believes that the
10 Id.
11 Id.
12 In approving this proposed rule change, the
Commission notes that it has considered the
proposed rule’s impact on efficiency, competition,
and capital formation. See 15 U.S.C. 78c(f).
13 15 U.S.C. 78(b)(1).
14 15 U.S.C. 78(b)(5).
15 See, e.g., Bylaws of NASDAQ Stock Market
LLC, Article III, Section 5(c); Third Amended and
Restated Bylaws of BATS Exchange, Inc., Article V,
Section 6(c); Amended and Restated Bylaws of
Miami International Securities Exchange, LLC,
Article IV, Section 4.5(c).
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Federal Register / Vol. 80, No. 116 / Wednesday, June 17, 2015 / Notices
proposed requirement that the members
of the ROC consist of either directors of
the Exchange or directors of NYSE
Regulation who satisfy the
independence requirements of the
Exchange’s Company Director
Independence Policy, and the
provisions relating to the removal of a
member of the ROC either for cause or
for failing to qualify as independent,
should help ensure the continued
independence of the members of the
ROC. The proposal to establish a ROC
should assist the Exchange in meeting
its statutory obligations to comply, and
to enforce compliance by its members
and persons associated with its
members, with the Act, the rules and
regulations thereunder, and the rules of
the Exchange.
The Commission notes that, while the
proposal removes the requirement that
the independent directors who make up
the majority of the Board also be ICE
directors, it does not alter the
requirement under the Operating
Agreement that a majority of the Board
must satisfy the Exchange’s Company
Director Independence Policy.16 Thus,
the majority of directors on the
Exchange’s Board must still qualify as
independent directors under the
Exchange’s Company Director
Independence Policy. Moreover,
removing the requirement that the
independent directors on the
Exchange’s Board also be directors of
ICE may result in a more diversified
Board composition as candidates for
membership on the Board who qualify
as independent under the Company
Director Independence Policy need not
be limited to those candidates who also
serve on the board of directors of ICE.
Accordingly, the Commission finds
that the proposed rule change is
consistent with the Act.
IV. Conclusion
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It is therefore ordered, pursuant to
Section 19(b)(2) of the Act, that the
proposed rule change (SR–NYSEMKT–
2015–27) is approved.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.17
Robert W. Errett,
Deputy Secretary.
[FR Doc. 2015–14822 Filed 6–16–15; 8:45 am]
BILLING CODE 8011–01–P
16 See
17 17
supra note 6.
CFR 200.30–3(a)(12).
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SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–75147; File No. SR–EDGA–
2015–24]
Self-Regulatory Organizations; EDGA
Exchange, Inc.; Notice of Filing and
Immediate Effectiveness of a Proposed
Rule Change Related to Fees for Use
of EDGA Exchange, Inc.
June 11, 2015.
Pursuant to Section 19(b)(1) of the
Securities Exchange Act of 1934 (the
‘‘Act’’),1 and Rule 19b–4 thereunder,2
notice is hereby given that on June 9,
2015, EDGA Exchange, Inc. (the
‘‘Exchange’’ or ‘‘EDGA’’) filed with the
Securities and Exchange Commission
(‘‘Commission’’) the proposed rule
change as described in Items I, II and III
below, which Items have been prepared
by the Exchange.3 The Exchange has
designated the proposed rule change as
one establishing or changing a member
due, fee, or other charge imposed by the
Exchange under Section 19(b)(3)(A)(ii)
of the Act 4 and Rule 19b–4(f)(2)
thereunder,5 which renders the
proposed rule change effective upon
filing with the Commission. The
Commission is publishing this notice to
solicit comments on the proposed rule
change from interested persons.
I. Self-Regulatory Organization’s
Statement of the Terms of Substance of
the Proposed Rule Change
The Exchange filed a proposal to
amend its fees and rebates applicable to
Members 6 of the Exchange pursuant to
EDGA Rule 15.1(a) and (c) (‘‘Fee
Schedule’’) to: (i) Increase the rebate
from $0.00040 per share to $0.00150 per
share for orders that yield fee code A,
which routes to the Nasdaq Stock
Market LLC (‘‘Nasdaq’’) and adds
liquidity; and (ii) adopt fees for the use
of a communication and routing service
known as BATS Connect.
The text of the proposed rule change
is available at the Exchange’s Web site
at www.batstrading.com, at the
principal office of the Exchange, and at
the Commission’s Public Reference
Room.
1 15
U.S.C. 78s(b)(1).
CFR 240.19b–4.
3 The Commission notes that a previous version
of the proposal was filed as SR–EDGA–2015–21.
The proposal was withdrawn on June 9, 2015.
4 15 U.S.C. 78s(b)(3)(A)(ii).
5 17 CFR 240.19b–4(f)(2).
6 The term ‘‘Member’’ is defined as ‘‘any
registered broker or dealer, or any person associated
with a registered broker or dealer, that has been
admitted to membership in the Exchange. A
Member will have the status of a ‘‘member’’ of the
Exchange as that term is defined in Section 3(a)(3)
of the Act.’’ See Exchange Rule 1.5(n).
2 17
PO 00000
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34753
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
Exchange included statements
concerning the purpose of and basis for
the proposed rule change and discussed
any comments it received on the
proposed rule change. The text of these
statements may be examined at the
places specified in Item IV below. The
Exchange has prepared summaries, set
forth in Sections A, B, and C below, of
the most significant parts of such
statements.
(A) Self-Regulatory Organization’s
Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule
Change
1. Purpose
The Exchange proposes to: (i) Increase
the rebate from $0.00040 per share to
$0.00150 per share for orders that yield
fee code A, which routes to Nasdaq and
adds liquidity; and (ii) adopt fees for the
use of a communication and routing
service known as BATS Connect.
Fee Code A
In securities priced at or above $1.00,
the Exchange currently provides a
rebate of $0.00040 per share for
Members’ orders that yield fee code A,
which routes to Nasdaq and adds
liquidity. The Exchange proposes to
amend its Fee Schedule to increase this
rebate to $0.00150 per share for
Members’ orders that yield fee code A.
The proposed change represents a pass
through of the rate that BATS Trading,
Inc. (‘‘BATS Trading’’), the Exchange’s
affiliated routing broker-dealer, is
rebated for routing orders to Nasdaq
when it does not qualify for a volume
tiered rebate. When BATS Trading
routes to Nasdaq, it is rebated a standard
rate of $0.00150 per share.7 BATS
Trading will pass through this rate on
Nasdaq to the Exchange and the
Exchange, in turn, will pass through this
rate to its Members. The Exchange notes
that the proposed change is in response
to Nasdaq’s June 2015 fee change where
Nasdaq will no longer offer a rebate of
$0.00040 per share for orders in select
symbols (‘‘Nasdaq’s Select Symbol
Program’’) to its customers, such as
7 The Exchange notes that to the extent BATS
Trading does or does not achieve any volume tiered
discount on Nasdaq or routes an order to Nasdaq
in a symbol that is not included in Nasdaq’s Select
Symbol Program to receive a rebate of $0.00150 per
share, its rate for fee code A will not change. The
Exchange further notes that, due to billing system
limitations that do not allow for separate rates by
tape, it will pass through the lesser rebate of
$0.00150 per share for all Tapes A, B & C securities.
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]]>Agencies
[Federal Register Volume 80, Number 116 (Wednesday, June 17, 2015)]
[Notices]
[Pages 34751-34753]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2015-14822]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-75148; File No. SR-NYSEMKT-2015-27]
Self-Regulatory Organizations; NYSE MKT LLC; Order Approving
Proposed Rule Change To Amend the Sixth Amended and Restated Operating
Agreement of the Exchange
June 11, 2015.
I. Introduction
On April 17, 2015, NYSE MKT LLC (``Exchange'' or ``NYSE MKT'')
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\ a proposed rule change to
amend the Sixth Amended and Restated Operating Agreement (``Operating
Agreement'') of the Exchange. The proposed rule change was published
for comment in the Federal Register on May 4, 2015.\4\ The Commission
received no comment letters on the proposed rule change. This order
approves the proposed rule change.
---------------------------------------------------------------------------
\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. 74825 (April 28,
2015), 80 FR 25341 (``Notice'').
---------------------------------------------------------------------------
II. Description of the Proposal
NYSE MKT proposes to amend the Exchange's Operating Agreement to
(1) establish a Regulatory Oversight Committee (``ROC''), and (2)
remove the requirement that the independent directors who make up the
majority of the board of directors of the Exchange (``Board'') also be
directors of
[[Page 34752]]
Intercontinental Exchange, Inc. (``ICE''), the Exchange's parent
company.
A. Creation of a ROC
The Exchange proposes to add subsection (ii) to Section 2.03(h) of
the Operating Agreement to establish a ROC and to delineate its
composition and functions. The ROC would have the responsibility to
independently monitor the Exchange's regulatory operations.\5\ In
particular, pursuant to Section 2.03(h)(ii), the ROC would:
---------------------------------------------------------------------------
\5\ See Notice, 80 FR at 25342.
---------------------------------------------------------------------------
Oversee the Exchange's regulatory and self-regulatory
organization responsibilities and evaluate the adequacy and
effectiveness of the Exchange's regulatory and self-regulatory
organization responsibilities;
assess the Exchange's regulatory performance; and
advise and make recommendations to the Board or other
committees of the Board about the Exchange's regulatory compliance,
effectiveness and plans.
In furtherance of these functions, the Exchange proposes that the ROC
shall have the authority and obligation to: (i) Review the regulatory
budget of the Exchange and specifically inquire into the adequacy of
resources available in the budget for regulatory activities; (ii) meet
regularly with the Chief Regulatory Officer (``CRO'') in executive
session; (iii) in consultation with the Exchange's Chief Executive
Officer, establish the goals, assess the performance, and recommend the
CRO's compensation; and (iv) keep the Board informed with respect to
the foregoing matters.
With respect to the ROC's composition, Section 2.03(h)(ii) would
provide that the ROC shall consist of at least three members, each of
whom shall be a director of either the Exchange or of NYSE Regulation,
Inc. (``NYSE Regulation''), and who satisfy the independence
requirements of the Exchange.\6\ The Exchange represents that it
believes that a ROC comprised of at least three independent members has
been recognized as one of several measures that can help ensure the
independence of the regulatory function from the market operations and
commercial interests of a national securities exchange.\7\
---------------------------------------------------------------------------
\6\ The Exchange's independence requirements are set forth in
the Company Director Independence Policy of the Exchange. See
Securities Exchange Act Release No. 67564 (August 1, 2012), 77 FR
47151 (August 7, 2012) (SR-NYSE-2012-17) (approving, among other
things, the Exchange's Company Director Independence Policy).
\7\ See Notice, 80 FR at 25342.
---------------------------------------------------------------------------
In addition, Section 2.03(h)(ii) of the Operating Agreement would
provide that the Board, on affirmative vote of a majority of directors,
at any time may remove a member of the ROC for cause, and also would
provide that a failure of the ROC member to qualify as independent
under the Company Director Independence Policy would constitute a basis
to remove a member of the ROC for cause. If the term of office of a ROC
member terminates, and the remaining term of office of such member at
the time of termination is not more than three months, Section
2.03(h)(ii) would provide that during the period of vacancy, the ROC
would not be deemed to be in violation of its compositional
requirements by virtue of the vacancy. To clarify the process for
filling vacancies on any committee of the Exchange, including the ROC,
the Exchange also proposes to amend Section 2.03(h) of the Operating
Agreement to provide that vacancies in the membership of any committee
shall be filled by the Board. The Exchange represents that it believes
that the proposed adoption of a ROC would ensure the continued
independence of the regulatory process.\8\
---------------------------------------------------------------------------
\8\ See Notice, 80 FR at 25343.
---------------------------------------------------------------------------
B. Exchange Independent Directors
Currently, Section 2.03(a)(i) of the Operating Agreement, which
governs the Board's composition, provides that a majority of the
Exchange's directors shall be U.S. persons who are members of the board
of directors of ICE and who satisfy the Exchange's Company Director
Independence Policy. Each such director is defined as an ``ICE
Independent Director'' in Section 2.03(a)(i) of the Operating
Agreement. The Exchange proposes to amend Section 2.03(a)(i) to remove
the requirement that the independent directors, who must comprise the
majority of the Board also be directors of ICE, by amending the
definition of ``ICE Independent Director'' to remove the reference to
ICE, and to make conforming changes in both subsections (i) and (ii) of
Section 2.03(a).
The Exchange represents that, under this modification to its
Operating Agreement, a majority of the directors of the Board would
continue to satisfy the Company Director Independence Policy.\9\ The
Exchange also notes that it believes that eliminating the requirement
that the independent directors of the Exchange also be directors of ICE
would allow the Exchange to broaden the pool of potential Board
members, resulting in a more diversified Board membership while still
ensuring the directors' independence.\10\ The Exchange states that
eliminating the requirement that the independent directors of the
Exchange also be directors of ICE would result in the Exchange's Board
composition requirements being commensurate with the board requirements
of its affiliate, NYSE Arca, Inc., which does not require any of its
directors to be directors of ICE.\11\
---------------------------------------------------------------------------
\9\ See Notice, 80 FR at 25343.
\10\ Id.
\11\ Id.
---------------------------------------------------------------------------
III. Discussion and Commission Findings
After careful review, 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.\12\ In
particular, the Commission finds that the proposed rule change is
consistent with Section 6(b)(1) of the Act,\13\ which requires an
exchange to be so organized and have the capacity to carry out the
purposes of the Act and to comply, and to enforce compliance by its
members and persons associated with its members, with the Act, the
rules and regulations thereunder, and the rules of the exchange. The
Commission also finds that the proposed rule change is consistent with
Section 6(b)(5) of the Act,\14\ which requires that the rules of the
exchange be designed, among other things, to prevent fraudulent and
manipulative acts and practices, 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.
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\12\ In approving this proposed rule change, the Commission
notes that it has considered the proposed rule's impact on
efficiency, competition, and capital formation. See 15 U.S.C.
78c(f).
\13\ 15 U.S.C. 78(b)(1).
\14\ 15 U.S.C. 78(b)(5).
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The Commission believes that the Exchange's creation of a ROC as an
independent committee to oversee the adequacy and effectiveness of the
Exchange's regulatory responsibilities, compliance and plans, is
appropriate and should help the Exchange to fulfill its self-regulatory
obligations. The Commission notes that, under proposed Section
2.03(h)(ii) of the Operating Agreement, the responsibilities,
enumerated functions, and authority of the ROC are substantially
similar to those of other exchanges.\15\ In addition, the Commission
believes that the
[[Page 34753]]
proposed requirement that the members of the ROC consist of either
directors of the Exchange or directors of NYSE Regulation who satisfy
the independence requirements of the Exchange's Company Director
Independence Policy, and the provisions relating to the removal of a
member of the ROC either for cause or for failing to qualify as
independent, should help ensure the continued independence of the
members of the ROC. The proposal to establish a ROC should assist the
Exchange in meeting its statutory obligations to comply, and to enforce
compliance by its members and persons associated with its members, with
the Act, the rules and regulations thereunder, and the rules of the
Exchange.
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\15\ See, e.g., Bylaws of NASDAQ Stock Market LLC, Article III,
Section 5(c); Third Amended and Restated Bylaws of BATS Exchange,
Inc., Article V, Section 6(c); Amended and Restated Bylaws of Miami
International Securities Exchange, LLC, Article IV, Section 4.5(c).
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The Commission notes that, while the proposal removes the
requirement that the independent directors who make up the majority of
the Board also be ICE directors, it does not alter the requirement
under the Operating Agreement that a majority of the Board must satisfy
the Exchange's Company Director Independence Policy.\16\ Thus, the
majority of directors on the Exchange's Board must still qualify as
independent directors under the Exchange's Company Director
Independence Policy. Moreover, removing the requirement that the
independent directors on the Exchange's Board also be directors of ICE
may result in a more diversified Board composition as candidates for
membership on the Board who qualify as independent under the Company
Director Independence Policy need not be limited to those candidates
who also serve on the board of directors of ICE.
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\16\ See supra note 6.
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Accordingly, the Commission finds that the proposed rule change is
consistent with the Act.
IV. Conclusion
It is therefore ordered, pursuant to Section 19(b)(2) of the Act,
that the proposed rule change (SR-NYSEMKT-2015-27) is approved.
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\17\
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\17\ 17 CFR 200.30-3(a)(12).
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Robert W. Errett,
Deputy Secretary.
[FR Doc. 2015-14822 Filed 6-16-15; 8:45 am]
BILLING CODE 8011-01-P
