Self-Regulatory Organizations; International Securities Exchange, LLC; Notice of Filing of Proposed Rule Change Relating to a Corporate Transaction Involving Its Indirect Parent, 71864-71866 [2015-29214]

Download as PDF 71864 Federal Register / Vol. 80, No. 221 / Tuesday, November 17, 2015 / Notices SECURITIES AND EXCHANGE COMMISSION [Release No. 34–76415; File No. SR–ISE– 2015–36] Self-Regulatory Organizations; International Securities Exchange, LLC; Notice of Filing of Proposed Rule Change Relating to a Corporate Transaction Involving Its Indirect Parent November 10, 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 October 30, 2015, the International Securities Exchange, LLC (the ‘‘Exchange’’ or the ‘‘ISE’’) 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 selfregulatory organization. The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons. mstockstill on DSK4VPTVN1PROD with NOTICES I. Self-Regulatory Organization’s Statement of the Terms of the Substance of the Proposed Rule Change The Exchange proposes to remove Eurex Frankfurt AG (‘‘Eurex Frankfurt’’) as an indirect, non-U.S. upstream owner of the Exchange (the ‘‘Transaction’’). In order to consummate the Transaction, the Exchange proposes to: (i) Amend and restate the Third Amended and Restated Trust Agreement (the ‘‘Trust Agreement’’) that exists among International Securities Exchange Holdings, Inc. (‘‘ISE Holdings’’), U.S. Exchange Holdings, Inc. (‘‘U.S. Exchange Holdings’’), and the Trustees (as defined therein) in order to remove references to Eurex Frankfurt; and (ii) amend and restate the Third Amended and Restated Certificate of Incorporation of U.S. Exchange Holdings (‘‘U.S. Exchange Holdings COI’’) to update a reference therein to the Trust Agreement. The text of the proposed rule change is available at the Commission’s Public Reference Room and on the Exchange’s Internet Web site at https://www.ise.com. II. Self-Regulatory Organization’s Statement of the Purpose of, and the Statutory Basis for, the Proposed Rule Change In its filing with the Commission, the self-regulatory organization included statements concerning the purpose of, and basis for, the proposed rule change 1 15 2 17 U.S.C. 78s(b)(1). CFR 240.19b–4. VerDate Sep<11>2014 18:14 Nov 16, 2015 Jkt 238001 and discussed any comments it received on the proposed rule change. The text of these statements may be examined at the places specified in Item IV below. The self-regulatory organization has prepared summaries, set forth in sections A, B and C below, of the most significant aspects of such statements. A. Self-Regulatory Organization’s Statement of the Purpose of, and the Statutory Basis for, the Proposed Rule Change 1. Purpose The purpose of the proposal is to remove Eurex Frankfurt as an indirect, non-U.S. upstream owner of the Exchange.3 Background On December 17, 2007, ISE Holdings, the sole, direct parent of the Exchange, became a direct, wholly-owned subsidiary of U.S. Exchange Holdings.4 U.S. Exchange Holdings is 85% directly owned by Eurex Frankfurt and 15% ¨ directly owned by Deutsche Borse AG ¨ (‘‘Deutsche Borse’’). Eurex Frankfurt is a wholly-owned, direct subsidiary of ¨ ¨ Deutsche Borse.5 Deutsche Borse therefore owns 100% of U.S. Exchange Holdings through its aggregate direct and indirect ownership. The Transaction The Transaction is designed to simplify the indirect ownership structure of the Exchange.6 The Transaction will not have any effect on ISE Holdings’ direct ownership of the Exchange or the operations of the Exchange. Consummation of the Transaction is subject to approval of this 3 The Exchange’s affiliate, ISE Gemini, LLC (‘‘ISE Gemini’’), has submitted a nearly identical proposed rule change. See SR–ISEGemini–2015–24. 4 See Securities Exchange Act Release No. 56955 (December 13, 2007), 72 FR 71979 (December 19, 2007) (SR–ISE–2007–101). 5 See Securities Exchange Act Release No. 66834 (April 19, 2012), 77 FR 24752 (April 25, 2012) (SR– ¨ ISE–2012–21). Each of Deutsche Borse and Eurex Frankfurt is referred to as a ‘‘Non-U.S. Upstream Owner’’ and collectively as the ‘‘Non-U.S. Upstream Owners.’’ Each of the Non-U.S. Upstream Owners has previously taken appropriate steps to incorporate provisions regarding ownership, jurisdiction, books and records, and other issues related to their control of the Exchange. Specifically, each of the Non-U.S. Upstream Owners has adopted resolutions, which were previously approved by the Commission, to incorporate these concepts with respect to itself, as well as its board members, officers, employees, and agents (as applicable), to the extent that they are involved in the activities of the Exchange. See also SR–ISE–2007–101, supra note 4. 6 In 2014 the Exchange submitted a proposed rule change with the Commission to similarly simplify the indirect ownership structure of the Exchange. See Securities Exchange Act Release No. 73860 (December 17, 2014), 79 FR 77066 (December 23, 2014) (SR–ISE–2014–44). PO 00000 Frm 00095 Fmt 4703 Sfmt 4703 proposed rule change by the Commission.7 In order to effectuate the Transaction, on or about December 31, 2015, Eurex Frankfurt will transfer its 85% ownership in U.S. Exchange ¨ Holdings to Deutsche Borse.8 As a result of the Transaction, Eurex Frankfurt will cease to be a Non-U.S. Upstream Owner ¨ of the Exchange, as Deutsche Borse will be the sole, direct owner of U.S. Exchange Holdings.9 U.S. Exchange Holdings will remain the sole, direct owner of ISE Holdings. ISE Holdings will also remain the sole, direct owner of the Exchange. The Transaction will not result in any additional person or entity acquiring direct or indirect ownership in the Exchange. In order to consummate the Transaction in the manner described above, certain administrative amendments will need to be made to the Trust Agreement and the U.S. Exchange Holdings COI. The proposed amendments to such documents are described below. Trust Agreement 10 The Trust Agreement serves four general purposes: (i) To accept, hold and dispose of Trust Shares 11 on the terms and subject to the conditions set forth therein; (ii) to determine whether a Material Compliance Event 12 has 7 See infra notes 15 and 16. ¨ referenced above, Deutsche Borse is already the 100% indirect owner of Eurex Frankfurt. In ¨ addition, Deutsche Borse also is already an approved Non-U.S. Upstream Owner of the Exchange. See supra note 5. 9 In connection with each of their ownership ¨ interests in the Exchange, Deutsche Borse, Eurex Frankfurt, U.S. Exchange Holdings, ISE Holdings and the Exchange became parties to an agreement to provide for adequate funding for the Exchange’s regulatory responsibilities. ISE Gemini subsequently became a party to the agreement. Following the completion of the Transaction, Eurex Frankfurt will cease to be a Non-U.S. Upstream Owner of the Exchange, and as such, will no longer be a party to such agreement. 10 The Trust Agreement exists among ISE Holdings, U.S. Exchange Holdings, and the Trustees (as defined therein). 11 Under the Trust Agreement, the term ‘‘Trust Shares’’ means either Excess Shares or Deposited Shares, or both, as the case may be. The term ‘‘Excess Shares’’ means that a Person obtained an ownership or voting interest in ISE Holdings in excess of certain ownership and voting restrictions pursuant to Article FOURTH of the ISE Holdings COI, through, for example, ownership of one of the Non-U.S. Upstream Owners or U.S. Exchange Holdings, without obtaining the approval of the Commission. The term ‘‘Deposited Shares’’ means shares that are transferred to the Trust pursuant to the Trust’s exercise of the Call Option. 12 Under the Trust Agreement, the term ‘‘Material Compliance Event’’ means, with respect to a NonU.S. Upstream Owner, any state of facts, development, event, circumstance, condition, occurrence or effect that results in the failure of any of the Non-U.S. Upstream Owners to adhere to their respective commitments under the resolutions (i.e., as referenced in note 5) in any material respect. 8 As E:\FR\FM\17NON1.SGM 17NON1 Federal Register / Vol. 80, No. 221 / Tuesday, November 17, 2015 / Notices occurred or is continuing; (iii) to determine whether the occurrence and continuation of a Material Compliance Event requires the exercise of the Call Option; 13 and (iv) to transfer Deposited Shares from the Trust to the Trust Beneficiary 14 as provided in Section 4.2(h) therein. The Exchange proposes to amend certain provisions of the Trust Agreement in connection with the Transaction. Specifically, the Exchange proposes to: (i) Update the recitals of the Trust Agreement with respect to the Transaction; and (ii) remove references to Eurex Frankfurt from the definition of ‘‘Affected Affiliate’’ in Section 1.1 of the Trust Agreement.15 The proposed amendments to the Trust Agreement are strictly administrative changes to reflect the updated corporate structure resulting from the Transaction and will not affect the mechanisms established by the Trust Agreement for the benefit of the Trust Beneficiary. U.S. Exchange Holdings COI mstockstill on DSK4VPTVN1PROD with NOTICES The Exchange proposes to make a non-substantive, administrative change to the U.S. Exchange Holdings COI to update a reference therein to the Trust Agreement. Article THIRTEENTH of the U.S. Exchange Holdings COI contains references to (i) the ‘‘Third Amended and Restated’’ Trust Agreement, which, as discussed herein, will become the ‘‘Fourth Amended and Restated’’ Trust Agreement; and (ii) the effective date of the Trust Agreement, which, as discussed herein, will change to a date in December 2015 that corresponds to the effective closing date of the Transaction. The Exchange proposes to update these references. The Exchange also proposes to retitle the document as the ‘‘Fourth’’ Amended and Restated Certificate of Incorporation of U.S. 13 Under the Trust Agreement, the term ‘‘Call Option’’ means the option granted by the Trust Beneficiary to the Trust to call the Voting Shares as set forth in Section 4.2 therein. 14 Under the Trust Agreement, the term ‘‘Trust Beneficiary’’ means U.S. Exchange Holdings. 15 The proposed, amended Trust Agreement is attached hereto as Exhibit 5A. Section 8.2 of the Trust Agreement provides, in part, that, for so long as ISE Holdings controls, directly or indirectly, the Exchange, before any amendment or repeal of any provision of the Trust Agreement shall be effective, such amendment or repeal shall be submitted to the board of directors of the Exchange, as applicable, and if such amendment or repeal must be filed with or filed with and approved by the Commission under Section 19 of the Securities Exchange Act of 1934 (the ‘‘Act’’) and the rules promulgated thereunder before such amendment or repeal may be effectuated, then such amendment or repeal shall not be effectuated until filed with or filed with and approved by the Commission, as the case may be. The Exchange also proposes to retitle the Trust Agreement as the ‘‘Fourth’’ Amended and Restated Trust Agreement and update the date thereof. VerDate Sep<11>2014 18:14 Nov 16, 2015 Jkt 238001 Exchange Holdings and update the effective date thereof.16 Certain Resolutions As described above, each of the NonU.S. Upstream Owners, including Eurex Frankfurt, has previously taken appropriate steps to incorporate provisions regarding ownership, jurisdiction, books and records, and other issues related to their control of the Exchange. Specifically, each of such Non-U.S. Upstream Owners has adopted resolutions, which were previously approved by the Commission, to incorporate these concepts with respect to itself, as well as its board members, officers, employees, and agents (as applicable), to the extent that they are involved in the activities of the Exchange.17 For example, the resolution of each of such Non-U.S. Upstream Owners provides that it shall comply with the U.S. federal securities laws and the rules and regulations thereunder and shall cooperate with the Commission and with the Exchange. In addition, the resolution of each of such Non-U.S. Upstream Owners provides that the board members, including each person who becomes a board member, would so consent to comply and cooperate and the particular Non-U.S. Upstream Owner would take reasonable steps to cause its officers, employees, and agents to also comply and cooperate, to the extent that he or she is involved in the activities of the Exchange. As Eurex Frankfurt will cease to be a Non-U.S. Upstream Owner of the Exchange after the Transaction, the Exchange proposes that the resolutions of Eurex Frankfurt, as referenced above, will cease to be rules of the Exchange as of a date in December 2015 that corresponds to the effective closing date of the Transaction.18 16 The proposed, amended U.S. Exchange Holdings COI is attached hereto as Exhibit 5B. Article SIXTEENTH of the U.S. Exchange Holdings COI provides that, for so long as U.S. Exchange Holdings shall control, directly or indirectly, the Exchange, or facility thereof, before any amendment to or repeal of any provision of the U.S. Exchange Holdings COI shall be effective, the same shall be submitted to the board of directors of the Exchange, and if the same must be filed with, or filed with and approved by, the Commission before the same may be effective, under Section 19 of the Act and the rules promulgated thereunder, then the same shall not be effective until filed with, or filed with and approved by, the Commission, as the case may be. 17 See supra notes 4 and 5. See also SR–ISE– 2007–101, supra note 4; SR–ISE–2012–21, supra note 5. 18 As referenced above, resolutions in relation to board members, officers, employees, and agents (as applicable) of Eurex Frankfurt also would cease accordingly. This proposed change would have no ¨ impact on the resolutions of Deutsche Borse or its PO 00000 Frm 00096 Fmt 4703 Sfmt 4703 71865 Summary Upon the consummation of the Transaction the Exchange will continue to operate and regulate its market and members in the same exact manner as it did prior to the Transactions. The Transaction will not impair the ability of ISE Holdings, the Exchange, or any facility thereof, to carry out their respective functions and responsibilities under the Act. Moreover, the Transaction will not impair the ability of the Commission to enforce the Act with respect to the Exchange and its Non-U.S. Upstream Owners (which will ¨ solely be Deutsche Borse after the Transaction), including each of their directors, officers, employees and agents, to the extent they are involved in the activities of the Exchange. As such, the Commission’s plenary regulatory authority over the Exchange will not be affected by the approval of this proposed rule change. 2. Statutory Basis The Exchange believes that this proposal is consistent with Section 6(b)of the Act,19 in general, and furthers the objectives of Section 6(b)(1) of the Act,20 in particular, in that it enables the Exchange to be so organized as to have the capacity to be able to carry out the purposes of the Act and to comply, and to enforce compliance by its exchange members and persons associated with its exchange members, with the provisions of the Act, the rules and regulations thereunder, and the rules of the Exchange. The Exchange will operate in the same manner following the Transaction as it operates today. Thus, the Commission will continue to have plenary regulatory authority over the Exchange, as is the case currently with the Exchange. The proposed rule change is consistent with and will facilitate an ownership structure that will continue to provide the Commission with appropriate oversight tools to ensure that the Commission will have the ability to enforce the Act with respect to the Exchange and its NonU.S. Upstream Owners, including their directors, officers, employees and agents, to the extent they are involved in the activities of the Exchange. The Exchange also believes that this filing furthers the objectives of Section 6(b)(5) 21 of the Act because the proposed rule change would be consistent with and facilitate a governance and regulatory structure that board members, officers, employees, and agents (as applicable). 19 15 U.S.C. 78s(b). 20 15 U.S.C. 78s(b)(1). 21 15 U.S.C. 78f(b)(5). E:\FR\FM\17NON1.SGM 17NON1 mstockstill on DSK4VPTVN1PROD with NOTICES 71866 Federal Register / Vol. 80, No. 221 / Tuesday, November 17, 2015 / Notices is designed to prevent fraudulent and manipulative acts and practices, to promote just and equitable principles of trade, to foster cooperation and coordination with persons engaged in regulating, clearing, settling, processing information with respect to, and facilitating transactions in securities, to remove impediments to, and perfect the mechanism of a free and open market and a national market system and, in general, to protect investors and the public interest. Specifically, the Exchange believes that the proposed rule change will continue to provide the Commission and the Exchange with access to necessary information that will allow the Exchange to efficiently and effectively enforce compliance with the Act, as well as allow the Commission to provide proper oversight, which will ultimately promote just and equitable principles of trade and protect investors. In addition, the Exchange believes that the proposed rule change will continue to preserve the independence of the Exchange’s self-regulatory function and ensure that the Exchange will be able to obtain any information it needs in order to detect and deter any fraudulent and manipulative acts in its marketplace and carry out its regulatory responsibilities under the Act. Approval of this proposed rule change will enable ISE Holdings to continue its operations and the Exchange to continue its orderly discharge of regulatory duties to prevent fraudulent and manipulative acts and practices, to promote just and equitable principles of trade, to foster cooperation and coordination with persons engaged in regulating, clearing, settling, processing information with respect to, and facilitating transactions in securities, to remove impediments to and perfect the mechanism of a free and open market and a national market system, and, in general, to protect investors and the public interest. Finally, the Exchange is not proposing any significant or novel regulatory issues, nor is it proposing any changes to the Exchange’s operational or trading structure in connection with the Transaction. Instead, the Exchange represents that the proposed rule change consists of administrative amendments to the Trust Agreement and the U.S. Exchange Holdings COI and addresses certain resolutions in relation to Eurex Frankfurt, which currently is a Non-U.S. Upstream Owner of the Exchange, but whose status as such will cease as a result of the Transaction, such that the resolutions will cease to be rules of the Exchange as they relate to Eurex Frankfurt, and that no changes will be made to other aspects of the Exchange’s VerDate Sep<11>2014 18:14 Nov 16, 2015 Jkt 238001 organizational documents that were previously approved by the Commission. • Send an email to rule-comments@ sec.gov. Please include File Number SR– ISE–2015–36 on the subject line. B. Self-Regulatory Organization’s Statement on Burden on Competition In accordance with Section 6(b)(8) of the Act,22 the Exchange believes that the proposed rule change 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 rule change implicates any competitive issues. Rather, the Transaction merely represents a restructuring of indirect ownership interests of the Exchange, and will not involve the introduction of any new direct or indirect owners or any entity or individual that would have the right to direct the actions of the Exchange or vote the shares of the Exchange. As such, the Exchange believes that the proposal is consistent with the Act. Paper Comments 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. III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action Within 45 days of the date of publication of this notice in the Federal Register or within such longer period up to 90 days (i) as the Commission may designate if it finds such longer period to be appropriate and publishes its reasons for so finding or (ii) as to which the self-regulatory organization consents, the Commission will: (A) by order approve or disapprove such proposed rule change; or (B) institute proceedings to determine whether the proposed rule change should be 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: • 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–ISE–2015–36. 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 on official business days between the hours of 10:00 a.m. and 3:00 p.m. Copies of such filing also will be available for inspection and copying at the principal offices of 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–ISE– 2015–36, and should be submitted on or before December 8, 2015. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.23 Robert W. Errett, Deputy Secretary. [FR Doc. 2015–29214 Filed 11–16–15; 8:45 am] BILLING CODE 8011–01–P Electronic Comments • Use the Commission’s Internet comment form (https://www.sec.gov/ rules/sro.shtml); or 22 15 PO 00000 U.S.C. 78f(b)(8). Frm 00097 Fmt 4703 23 17 Sfmt 9990 E:\FR\FM\17NON1.SGM CFR 200.30–3(a)(12). 17NON1

Agencies

SECURITIES AND EXCHANGE COMMISSION

[Federal Register Volume 80, Number 221 (Tuesday, November 17, 2015)]
[Notices]
[Pages 71864-71866]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2015-29214]

[[Page 71864]]

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

SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-76415; File No. SR-ISE-2015-36]

Self-Regulatory Organizations; International Securities Exchange,
LLC; Notice of Filing of Proposed Rule Change Relating to a Corporate
Transaction Involving Its Indirect Parent

November 10, 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 October 30, 2015, the International Securities Exchange, LLC
(the ``Exchange'' or the ``ISE'') 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 self-regulatory organization. The Commission is publishing this
notice to solicit comments on the proposed rule change from interested
persons.
---------------------------------------------------------------------------

\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------

I. Self-Regulatory Organization's Statement of the Terms of the
Substance of the Proposed Rule Change

The Exchange proposes to remove Eurex Frankfurt AG (``Eurex
Frankfurt'') as an indirect, non-U.S. upstream owner of the Exchange
(the ``Transaction''). In order to consummate the Transaction, the
Exchange proposes to: (i) Amend and restate the Third Amended and
Restated Trust Agreement (the ``Trust Agreement'') that exists among
International Securities Exchange Holdings, Inc. (``ISE Holdings''),
U.S. Exchange Holdings, Inc. (``U.S. Exchange Holdings''), and the
Trustees (as defined therein) in order to remove references to Eurex
Frankfurt; and (ii) amend and restate the Third Amended and Restated
Certificate of Incorporation of U.S. Exchange Holdings (``U.S. Exchange
Holdings COI'') to update a reference therein to the Trust Agreement.
The text of the proposed rule change is available at the
Commission's Public Reference Room and on the Exchange's Internet Web
site at https://www.ise.com.

II. Self-Regulatory Organization's Statement of the Purpose of, and the
Statutory Basis for, the Proposed Rule Change

In its filing with the Commission, the self-regulatory organization
included statements concerning the purpose of, and basis for, the
proposed rule change and discussed any comments it received on the
proposed rule change. The text of these statements may be examined at
the places specified in Item IV below. The self-regulatory organization
has prepared summaries, set forth in sections A, B and C below, of the
most significant aspects of such statements.

A. Self-Regulatory Organization's Statement of the Purpose of, and the
Statutory Basis for, the Proposed Rule Change

1. Purpose
The purpose of the proposal is to remove Eurex Frankfurt as an
indirect, non-U.S. upstream owner of the Exchange.\3\
---------------------------------------------------------------------------

\3\ The Exchange's affiliate, ISE Gemini, LLC (``ISE Gemini''),
has submitted a nearly identical proposed rule change. See SR-
ISEGemini-2015-24.
---------------------------------------------------------------------------

Background
On December 17, 2007, ISE Holdings, the sole, direct parent of the
Exchange, became a direct, wholly-owned subsidiary of U.S. Exchange
Holdings.\4\ U.S. Exchange Holdings is 85% directly owned by Eurex
Frankfurt and 15% directly owned by Deutsche B[ouml]rse AG (``Deutsche
B[ouml]rse''). Eurex Frankfurt is a wholly-owned, direct subsidiary of
Deutsche B[ouml]rse.\5\ Deutsche B[ouml]rse therefore owns 100% of U.S.
Exchange Holdings through its aggregate direct and indirect ownership.
---------------------------------------------------------------------------

\4\ See Securities Exchange Act Release No. 56955 (December 13,
2007), 72 FR 71979 (December 19, 2007) (SR-ISE-2007-101).
\5\ See Securities Exchange Act Release No. 66834 (April 19,
2012), 77 FR 24752 (April 25, 2012) (SR-ISE-2012-21). Each of
Deutsche B[ouml]rse and Eurex Frankfurt is referred to as a ``Non-
U.S. Upstream Owner'' and collectively as the ``Non-U.S. Upstream
Owners.'' Each of the Non-U.S. Upstream Owners has previously taken
appropriate steps to incorporate provisions regarding ownership,
jurisdiction, books and records, and other issues related to their
control of the Exchange. Specifically, each of the Non-U.S. Upstream
Owners has adopted resolutions, which were previously approved by
the Commission, to incorporate these concepts with respect to
itself, as well as its board members, officers, employees, and
agents (as applicable), to the extent that they are involved in the
activities of the Exchange. See also SR-ISE-2007-101, supra note 4.
---------------------------------------------------------------------------

The Transaction
The Transaction is designed to simplify the indirect ownership
structure of the Exchange.\6\ The Transaction will not have any effect
on ISE Holdings' direct ownership of the Exchange or the operations of
the Exchange. Consummation of the Transaction is subject to approval of
this proposed rule change by the Commission.\7\ In order to effectuate
the Transaction, on or about December 31, 2015, Eurex Frankfurt will
transfer its 85% ownership in U.S. Exchange Holdings to Deutsche
B[ouml]rse.\8\ As a result of the Transaction, Eurex Frankfurt will
cease to be a Non-U.S. Upstream Owner of the Exchange, as Deutsche
B[ouml]rse will be the sole, direct owner of U.S. Exchange Holdings.\9\
U.S. Exchange Holdings will remain the sole, direct owner of ISE
Holdings. ISE Holdings will also remain the sole, direct owner of the
Exchange. The Transaction will not result in any additional person or
entity acquiring direct or indirect ownership in the Exchange.
---------------------------------------------------------------------------

\6\ In 2014 the Exchange submitted a proposed rule change with
the Commission to similarly simplify the indirect ownership
structure of the Exchange. See Securities Exchange Act Release No.
73860 (December 17, 2014), 79 FR 77066 (December 23, 2014) (SR-ISE-
2014-44).
\7\ See infra notes 15 and 16.
\8\ As referenced above, Deutsche B[ouml]rse is already the 100%
indirect owner of Eurex Frankfurt. In addition, Deutsche B[ouml]rse
also is already an approved Non-U.S. Upstream Owner of the Exchange.
See supra note 5.
\9\ In connection with each of their ownership interests in the
Exchange, Deutsche B[ouml]rse, Eurex Frankfurt, U.S. Exchange
Holdings, ISE Holdings and the Exchange became parties to an
agreement to provide for adequate funding for the Exchange's
regulatory responsibilities. ISE Gemini subsequently became a party
to the agreement. Following the completion of the Transaction, Eurex
Frankfurt will cease to be a Non-U.S. Upstream Owner of the
Exchange, and as such, will no longer be a party to such agreement.
---------------------------------------------------------------------------

In order to consummate the Transaction in the manner described
above, certain administrative amendments will need to be made to the
Trust Agreement and the U.S. Exchange Holdings COI. The proposed
amendments to such documents are described below.
Trust Agreement \10\
---------------------------------------------------------------------------

\10\ The Trust Agreement exists among ISE Holdings, U.S.
Exchange Holdings, and the Trustees (as defined therein).
---------------------------------------------------------------------------

The Trust Agreement serves four general purposes: (i) To accept,
hold and dispose of Trust Shares \11\ on the terms and subject to the
conditions set forth therein; (ii) to determine whether a Material
Compliance Event \12\ has

[[Page 71865]]

occurred or is continuing; (iii) to determine whether the occurrence
and continuation of a Material Compliance Event requires the exercise
of the Call Option; \13\ and (iv) to transfer Deposited Shares from the
Trust to the Trust Beneficiary \14\ as provided in Section 4.2(h)
therein.
---------------------------------------------------------------------------

\11\ Under the Trust Agreement, the term ``Trust Shares'' means
either Excess Shares or Deposited Shares, or both, as the case may
be. The term ``Excess Shares'' means that a Person obtained an
ownership or voting interest in ISE Holdings in excess of certain
ownership and voting restrictions pursuant to Article FOURTH of the
ISE Holdings COI, through, for example, ownership of one of the Non-
U.S. Upstream Owners or U.S. Exchange Holdings, without obtaining
the approval of the Commission. The term ``Deposited Shares'' means
shares that are transferred to the Trust pursuant to the Trust's
exercise of the Call Option.
\12\ Under the Trust Agreement, the term ``Material Compliance
Event'' means, with respect to a Non-U.S. Upstream Owner, any state
of facts, development, event, circumstance, condition, occurrence or
effect that results in the failure of any of the Non-U.S. Upstream
Owners to adhere to their respective commitments under the
resolutions (i.e., as referenced in note 5) in any material respect.
\13\ Under the Trust Agreement, the term ``Call Option'' means
the option granted by the Trust Beneficiary to the Trust to call the
Voting Shares as set forth in Section 4.2 therein.
\14\ Under the Trust Agreement, the term ``Trust Beneficiary''
means U.S. Exchange Holdings.
---------------------------------------------------------------------------

The Exchange proposes to amend certain provisions of the Trust
Agreement in connection with the Transaction. Specifically, the
Exchange proposes to: (i) Update the recitals of the Trust Agreement
with respect to the Transaction; and (ii) remove references to Eurex
Frankfurt from the definition of ``Affected Affiliate'' in Section 1.1
of the Trust Agreement.\15\ The proposed amendments to the Trust
Agreement are strictly administrative changes to reflect the updated
corporate structure resulting from the Transaction and will not affect
the mechanisms established by the Trust Agreement for the benefit of
the Trust Beneficiary.
---------------------------------------------------------------------------

\15\ The proposed, amended Trust Agreement is attached hereto as
Exhibit 5A. Section 8.2 of the Trust Agreement provides, in part,
that, for so long as ISE Holdings controls, directly or indirectly,
the Exchange, before any amendment or repeal of any provision of the
Trust Agreement shall be effective, such amendment or repeal shall
be submitted to the board of directors of the Exchange, as
applicable, and if such amendment or repeal must be filed with or
filed with and approved by the Commission under Section 19 of the
Securities Exchange Act of 1934 (the ``Act'') and the rules
promulgated thereunder before such amendment or repeal may be
effectuated, then such amendment or repeal shall not be effectuated
until filed with or filed with and approved by the Commission, as
the case may be. The Exchange also proposes to retitle the Trust
Agreement as the ``Fourth'' Amended and Restated Trust Agreement and
update the date thereof.
---------------------------------------------------------------------------

U.S. Exchange Holdings COI
The Exchange proposes to make a non-substantive, administrative
change to the U.S. Exchange Holdings COI to update a reference therein
to the Trust Agreement. Article THIRTEENTH of the U.S. Exchange
Holdings COI contains references to (i) the ``Third Amended and
Restated'' Trust Agreement, which, as discussed herein, will become the
``Fourth Amended and Restated'' Trust Agreement; and (ii) the effective
date of the Trust Agreement, which, as discussed herein, will change to
a date in December 2015 that corresponds to the effective closing date
of the Transaction. The Exchange proposes to update these references.
The Exchange also proposes to retitle the document as the ``Fourth''
Amended and Restated Certificate of Incorporation of U.S. Exchange
Holdings and update the effective date thereof.\16\
---------------------------------------------------------------------------

\16\ The proposed, amended U.S. Exchange Holdings COI is
attached hereto as Exhibit 5B. Article SIXTEENTH of the U.S.
Exchange Holdings COI provides that, for so long as U.S. Exchange
Holdings shall control, directly or indirectly, the Exchange, or
facility thereof, before any amendment to or repeal of any provision
of the U.S. Exchange Holdings COI shall be effective, the same shall
be submitted to the board of directors of the Exchange, and if the
same must be filed with, or filed with and approved by, the
Commission before the same may be effective, under Section 19 of the
Act and the rules promulgated thereunder, then the same shall not be
effective until filed with, or filed with and approved by, the
Commission, as the case may be.
---------------------------------------------------------------------------

Certain Resolutions
As described above, each of the Non-U.S. Upstream Owners, including
Eurex Frankfurt, has previously taken appropriate steps to incorporate
provisions regarding ownership, jurisdiction, books and records, and
other issues related to their control of the Exchange. Specifically,
each of such Non-U.S. Upstream Owners has adopted resolutions, which
were previously approved by the Commission, to incorporate these
concepts with respect to itself, as well as its board members,
officers, employees, and agents (as applicable), to the extent that
they are involved in the activities of the Exchange.\17\ For example,
the resolution of each of such Non-U.S. Upstream Owners provides that
it shall comply with the U.S. federal securities laws and the rules and
regulations thereunder and shall cooperate with the Commission and with
the Exchange. In addition, the resolution of each of such Non-U.S.
Upstream Owners provides that the board members, including each person
who becomes a board member, would so consent to comply and cooperate
and the particular Non-U.S. Upstream Owner would take reasonable steps
to cause its officers, employees, and agents to also comply and
cooperate, to the extent that he or she is involved in the activities
of the Exchange.
---------------------------------------------------------------------------

\17\ See supra notes 4 and 5. See also SR-ISE-2007-101, supra
note 4; SR-ISE-2012-21, supra note 5.
---------------------------------------------------------------------------

As Eurex Frankfurt will cease to be a Non-U.S. Upstream Owner of
the Exchange after the Transaction, the Exchange proposes that the
resolutions of Eurex Frankfurt, as referenced above, will cease to be
rules of the Exchange as of a date in December 2015 that corresponds to
the effective closing date of the Transaction.\18\
---------------------------------------------------------------------------

\18\ As referenced above, resolutions in relation to board
members, officers, employees, and agents (as applicable) of Eurex
Frankfurt also would cease accordingly. This proposed change would
have no impact on the resolutions of Deutsche B[ouml]rse or its
board members, officers, employees, and agents (as applicable).
---------------------------------------------------------------------------

Summary
Upon the consummation of the Transaction the Exchange will continue
to operate and regulate its market and members in the same exact manner
as it did prior to the Transactions. The Transaction will not impair
the ability of ISE Holdings, the Exchange, or any facility thereof, to
carry out their respective functions and responsibilities under the
Act. Moreover, the Transaction will not impair the ability of the
Commission to enforce the Act with respect to the Exchange and its Non-
U.S. Upstream Owners (which will solely be Deutsche B[ouml]rse after
the Transaction), including each of their directors, officers,
employees and agents, to the extent they are involved in the activities
of the Exchange. As such, the Commission's plenary regulatory authority
over the Exchange will not be affected by the approval of this proposed
rule change.
2. Statutory Basis
The Exchange believes that this proposal is consistent with Section
6(b)of the Act,\19\ in general, and furthers the objectives of Section
6(b)(1) of the Act,\20\ in particular, in that it enables the Exchange
to be so organized as to have the capacity to be able to carry out the
purposes of the Act and to comply, and to enforce compliance by its
exchange members and persons associated with its exchange members, with
the provisions of the Act, the rules and regulations thereunder, and
the rules of the Exchange. The Exchange will operate in the same manner
following the Transaction as it operates today. Thus, the Commission
will continue to have plenary regulatory authority over the Exchange,
as is the case currently with the Exchange. The proposed rule change is
consistent with and will facilitate an ownership structure that will
continue to provide the Commission with appropriate oversight tools to
ensure that the Commission will have the ability to enforce the Act
with respect to the Exchange and its Non-U.S. Upstream Owners,
including their directors, officers, employees and agents, to the
extent they are involved in the activities of the Exchange.
---------------------------------------------------------------------------

\19\ 15 U.S.C. 78s(b).
\20\ 15 U.S.C. 78s(b)(1).
---------------------------------------------------------------------------

The Exchange also believes that this filing furthers the objectives
of Section 6(b)(5) \21\ of the Act because the proposed rule change
would be consistent with and facilitate a governance and regulatory
structure that

[[Page 71866]]

is designed to prevent fraudulent and manipulative acts and practices,
to promote just and equitable principles of trade, to foster
cooperation and coordination with persons engaged in regulating,
clearing, settling, processing information with respect to, and
facilitating transactions in securities, to remove impediments to, and
perfect the mechanism of a free and open market and a national market
system and, in general, to protect investors and the public interest.
Specifically, the Exchange believes that the proposed rule change will
continue to provide the Commission and the Exchange with access to
necessary information that will allow the Exchange to efficiently and
effectively enforce compliance with the Act, as well as allow the
Commission to provide proper oversight, which will ultimately promote
just and equitable principles of trade and protect investors. In
addition, the Exchange believes that the proposed rule change will
continue to preserve the independence of the Exchange's self-regulatory
function and ensure that the Exchange will be able to obtain any
information it needs in order to detect and deter any fraudulent and
manipulative acts in its marketplace and carry out its regulatory
responsibilities under the Act.
---------------------------------------------------------------------------

\21\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

Approval of this proposed rule change will enable ISE Holdings to
continue its operations and the Exchange to continue its orderly
discharge of regulatory duties to prevent fraudulent and manipulative
acts and practices, to promote just and equitable principles of trade,
to foster cooperation and coordination with persons engaged in
regulating, clearing, settling, processing information with respect to,
and facilitating transactions in securities, to remove impediments to
and perfect the mechanism of a free and open market and a national
market system, and, in general, to protect investors and the public
interest.
Finally, the Exchange is not proposing any significant or novel
regulatory issues, nor is it proposing any changes to the Exchange's
operational or trading structure in connection with the Transaction.
Instead, the Exchange represents that the proposed rule change consists
of administrative amendments to the Trust Agreement and the U.S.
Exchange Holdings COI and addresses certain resolutions in relation to
Eurex Frankfurt, which currently is a Non-U.S. Upstream Owner of the
Exchange, but whose status as such will cease as a result of the
Transaction, such that the resolutions will cease to be rules of the
Exchange as they relate to Eurex Frankfurt, and that no changes will be
made to other aspects of the Exchange's organizational documents that
were previously approved by the Commission.

B. Self-Regulatory Organization's Statement on Burden on Competition

In accordance with Section 6(b)(8) of the Act,\22\ the Exchange
believes that the proposed rule change 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
rule change implicates any competitive issues. Rather, the Transaction
merely represents a restructuring of indirect ownership interests of
the Exchange, and will not involve the introduction of any new direct
or indirect owners or any entity or individual that would have the
right to direct the actions of the Exchange or vote the shares of the
Exchange. As such, the Exchange believes that the proposal is
consistent with the Act.
---------------------------------------------------------------------------

\22\ 15 U.S.C. 78f(b)(8).
---------------------------------------------------------------------------

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.

III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action

Within 45 days of the date of publication of this notice in the
Federal Register or within such longer period up to 90 days (i) as the
Commission may designate if it finds such longer period to be
appropriate and publishes its reasons for so finding or (ii) as to
which the self-regulatory organization consents, the Commission will:
(A) by order approve or disapprove such proposed rule change; or
(B) institute proceedings to determine whether the proposed rule
change should be 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 (https://www.sec.gov/rules/sro.shtml); or
Send an email to rule-comments@sec.gov. Please include
File Number SR-ISE-2015-36 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-ISE-2015-36. 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 on
official business days between the hours of 10:00 a.m. and 3:00 p.m.
Copies of such filing also will be available for inspection and copying
at the principal offices of 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-ISE-2015-36, and should be submitted on
or before December 8, 2015.

For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\23\
---------------------------------------------------------------------------

\23\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Robert W. Errett,
Deputy Secretary.
[FR Doc. 2015-29214 Filed 11-16-15; 8:45 am]
BILLING CODE 8011-01-P

This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.