Self-Regulatory Organizations; ISE Gemini, LLC; Notice of Filing of Proposed Rule Change Relating to a Corporate Transaction Involving Its Indirect Parent, 71876-71879 [2015-29215]

Download as PDF 71876 Federal Register / Vol. 80, No. 221 / Tuesday, November 17, 2015 / Notices 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 also will be available for inspection and copying at the principal office of the Exchange. All comments received will be posted without change; the Commission does not edit personal identifying information from submissions. You should submit only information that you wish to make available publicly. All submissions should refer to File Number SR–C2– 2015–027 and should be submitted on or before December 8, 2015. 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. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.20 Robert W. Errett, Deputy Secretary. II. Self-Regulatory Organization’s Statement of the Purpose of, and the Statutory Basis for, the Proposed Rule Change [FR Doc. 2015–29224 Filed 11–16–15; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–76416; File No. SR– ISEGemini–2015–24] Self-Regulatory Organizations; ISE Gemini, LLC; Notice of Filing of Proposed Rule Change Relating to a Corporate Transaction Involving Its Indirect Parent mstockstill on DSK4VPTVN1PROD with NOTICES 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, ISE Gemini, LLC (the ‘‘Exchange’’ or the ‘‘ISE Gemini’’) filed with the Securities and Exchange Commission (‘‘Commission’’) the 20 17 CFR 200.30–3(a)(12). U.S.C. 78s(b)(1). 2 17 CFR 240.19b–4. 1 15 VerDate Sep<11>2014 18:14 Nov 16, 2015 Jkt 238001 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. 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, International Securities Exchange, LLC (‘‘ISE’’), has submitted a nearly identical proposed rule change. See SR–ISE–2015– 36. The Commission granted the Exchange’s application for registration as a national securities PO 00000 Frm 00107 Fmt 4703 Sfmt 4703 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. 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.4 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.5 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.6 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.7 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.8 U.S. Exchange exchange on July 26, 2013. See Securities Exchange Act Release No. 70050 (July 26, 2013), 78 FR 46622 (File No. 10–209). The Exchange was originally named ‘‘Topaz Exchange, LLC.’’ 4 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 File No. 10–209, supra note 3. 5 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. 73861 (December 17, 2014), 79 FR 77064 (December 23, 2014) (SR–ISEGemini–2014–24). 6 See infra notes 14 and 15. 7 As 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 4. 8 In connection with each of their ownership ¨ interests in the Exchange, Deutsche Borse, Eurex Frankfurt, U.S. Exchange Holdings, ISE Holdings and ISE became parties to an agreement to provide for adequate funding for the Exchange’s regulatory responsibilities. The Exchange subsequently became a party to the agreement. ISE Gemini subsequently became a party to the agreement. Following the completion of the Transaction, Eurex E:\FR\FM\17NON1.SGM 17NON1 Federal Register / Vol. 80, No. 221 / Tuesday, November 17, 2015 / Notices 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 9 mstockstill on DSK4VPTVN1PROD with NOTICES The Trust Agreement serves four general purposes: (i) To accept, hold and dispose of Trust Shares 10 on the terms and subject to the conditions set forth therein; (ii) to determine whether a Material Compliance Event 11 has occurred or is continuing; (iii) to determine whether the occurrence and continuation of a Material Compliance Event requires the exercise of the Call Option; 12 and (iv) to transfer Deposited Shares from the Trust to the Trust Beneficiary 13 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 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. 9 The Trust Agreement exists among ISE Holdings, U.S. Exchange Holdings, and the Trustees (as defined therein). 10 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. 11 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 4) in any material respect. 12 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. 13 Under the Trust Agreement, the term ‘‘Trust Beneficiary’’ means U.S. Exchange Holdings. VerDate Sep<11>2014 18:14 Nov 16, 2015 Jkt 238001 Trust Agreement.14 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 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.15 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 14 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. 15 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. PO 00000 Frm 00108 Fmt 4703 Sfmt 4703 71877 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.16 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.17 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 16 See supra note 4. See also File No. 10–209, supra note 3. 17 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 board members, officers, employees, and agents (as applicable). E:\FR\FM\17NON1.SGM 17NON1 71878 Federal Register / Vol. 80, No. 221 / Tuesday, November 17, 2015 / Notices mstockstill on DSK4VPTVN1PROD with NOTICES 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,18 in general, and furthers the objectives of Section 6(b)(1) of the Act,19 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) 20 of the Act because the proposed rule change would be consistent with and facilitate a governance and regulatory structure that 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. 18 15 U.S.C. 78s(b). U.S.C. 78s(b)(1). 20 15 U.S.C. 78f(b)(5). 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 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,21 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 19 15 VerDate Sep<11>2014 18:14 Nov 16, 2015 21 15 Jkt 238001 PO 00000 U.S.C. 78f(b)(8). Frm 00109 Fmt 4703 Sfmt 4703 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. 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 rulecomments@sec.gov. Please include File Number SR–ISEGemini-2015–24 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–ISEGemini–2015–24. 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 E:\FR\FM\17NON1.SGM 17NON1 Federal Register / Vol. 80, No. 221 / Tuesday, November 17, 2015 / Notices 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– ISEGemini-2015–24, and should be submitted on or before December 8, 2015. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.22 Robert W. Errett, Deputy Secretary. [FR Doc. 2015–29215 Filed 11–16–15; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–76418; File No. SR–BYX– 2015–47] Self-Regulatory Organizations; BATS Y-Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change Related to Fees mstockstill on DSK4VPTVN1PROD with NOTICES 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 November 2, 2015, BATS Y-Exchange, Inc. (the ‘‘Exchange’’ or ‘‘BYX’’) 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. 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 3 and Rule 19b–4(f)(2) 22 17 CFR 200.30–3(a)(12). U.S.C. 78s(b)(1). 2 17 CFR 240.19b–4. 3 15 U.S.C. 78s(b)(3)(A)(ii). 1 15 VerDate Sep<11>2014 18:14 Nov 16, 2015 Jkt 238001 thereunder,4 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 the fees and rebates applicable to Members 5 and non-members of the Exchange pursuant to Rule 15.1(a) and (c) (‘‘Fee Schedule’’). 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. 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 increase the fee for orders yielding fee code D, which results from an order routed to the New York Stock Exchange (‘‘NYSE’’) using Destination Specific, RDOT, RDOX, TRIM or SLIM routing strategy. The Exchange has previously provided a discounted fee for certain orders routed to the largest market centers measured by volume (NYSE, NYSE Arca and NASDAQ), which, in each instance has been $0.0001 less per share for orders routed to such market centers by the Exchange than such market centers currently charge for removing liquidity (referred to by the Exchange as ‘‘One Under’’ pricing). NYSE is implementing CFR 240.19b–4(f)(2). 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 [sic]. 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). 71879 certain pricing changes effective November 2, 2015, including modification from a fee to remove liquidity of $0.0027 per share to a fee of $0.00275 per share.6 Based on the changes in pricing at NYSE, the Exchange is proposing to increase its fee for orders executed at NYSE that yield fee code D so that the fee remains $0.0001 less per share for orders routed to NYSE. Specifically, the Exchange proposes to increase the fee charged for such orders from $0.0026 per share to $0.00265 per share. In addition to the change proposed above, the Exchange proposes to change certain references on the Fee Schedule in connection with the launch of the options exchange operated by the Exchange’s affiliate, EDGX Exchange, Inc. (‘‘EDGX Options’’). First, the Exchange propose [sic] to modify references in the Unicast Access section under BATS Connect fees to refer to ‘‘BZX Options’’ instead of ‘‘BATS Options’’. Second, the Exchange proposes to add reference to EDGX Options in the list of Exchange affiliates to which such fees do not apply. Implementation Date The Exchange proposes to implement these amendments to its Fee Schedule immediately. 2. Statutory Basis The Exchange believes that the proposed rule change is consistent with the objectives of Section 6 of the Act,7 in general, and furthers the objectives of Section 6(b)(4),8 in particular, as it is designed to provide for the equitable allocation of reasonable dues, fees and other charges among its Members and other persons using its facilities. The Exchange believes that its proposal to increase the fee for Members’ orders that yield fee code D from $0.0026 per share to $0.00265 per share represents an equitable allocation of reasonable dues, fees, and other charges among Members and other persons using its facilities in that they are designed to provide a reduced fee for orders routed to NYSE through Exchange routing strategies as compared to applicable fees for executions if such routed orders were instead executed directly by the Member at NYSE. Furthermore, the Exchange notes that routing through the Exchange is voluntary. Lastly, the Exchange also believes that the 4 17 5 The PO 00000 Frm 00110 Fmt 4703 Sfmt 4703 6 See NYSE Trader Update, Fee Changes Effective November 2, dated October 30, 2015, available at https://www.nyse.com/publicdocs/nyse/markets/ nyse/NYSE_Client_Notice_Fee_Change_11_ 2015.pdf. 7 15 U.S.C. 78f. 8 15 U.S.C. 78f(b)(4). E:\FR\FM\17NON1.SGM 17NON1

Agencies

[Federal Register Volume 80, Number 221 (Tuesday, November 17, 2015)]
[Notices]
[Pages 71876-71879]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2015-29215]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-76416; File No. SR-ISEGemini-2015-24]


Self-Regulatory Organizations; ISE Gemini, 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, ISE Gemini, LLC (the ``Exchange'' or the 
``ISE Gemini'') 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.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
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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\
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    \3\ The Exchange's affiliate, International Securities Exchange, 
LLC (``ISE''), has submitted a nearly identical proposed rule 
change. See SR-ISE-2015-36. The Commission granted the Exchange's 
application for registration as a national securities exchange on 
July 26, 2013. See Securities Exchange Act Release No. 70050 (July 
26, 2013), 78 FR 46622 (File No. 10-209). The Exchange was 
originally named ``Topaz Exchange, LLC.''
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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. 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.\4\ Deutsche B[ouml]rse therefore owns 100% of U.S. 
Exchange Holdings through its aggregate direct and indirect ownership.
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    \4\ 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 File No. 10-209, 
supra note 3.
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The Transaction
    The Transaction is designed to simplify the indirect ownership 
structure of the Exchange.\5\ 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.\6\ 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.\7\ 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.\8\ 
U.S. Exchange

[[Page 71877]]

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.
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    \5\ 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. 
73861 (December 17, 2014), 79 FR 77064 (December 23, 2014) (SR-
ISEGemini-2014-24).
    \6\ See infra notes 14 and 15.
    \7\ 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 4.
    \8\ In connection with each of their ownership interests in the 
Exchange, Deutsche B[ouml]rse, Eurex Frankfurt, U.S. Exchange 
Holdings, ISE Holdings and ISE became parties to an agreement to 
provide for adequate funding for the Exchange's regulatory 
responsibilities. The Exchange subsequently became a party to the 
agreement. 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.
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    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 \9\
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    \9\ The Trust Agreement exists among ISE Holdings, U.S. Exchange 
Holdings, and the Trustees (as defined therein).
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    The Trust Agreement serves four general purposes: (i) To accept, 
hold and dispose of Trust Shares \10\ on the terms and subject to the 
conditions set forth therein; (ii) to determine whether a Material 
Compliance Event \11\ has occurred or is continuing; (iii) to determine 
whether the occurrence and continuation of a Material Compliance Event 
requires the exercise of the Call Option; \12\ and (iv) to transfer 
Deposited Shares from the Trust to the Trust Beneficiary \13\ as 
provided in Section 4.2(h) therein.
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    \10\ 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.
    \11\ 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 4) in any material respect.
    \12\ 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.
    \13\ Under the Trust Agreement, the term ``Trust Beneficiary'' 
means U.S. Exchange Holdings.
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    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.\14\ 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.
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    \14\ 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.
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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.\15\
---------------------------------------------------------------------------

    \15\ 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.\16\ 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.
---------------------------------------------------------------------------

    \16\ See supra note 4. See also File No. 10-209, supra note 3.
---------------------------------------------------------------------------

    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.\17\
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    \17\ 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

[[Page 71878]]

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,\18\ in general, and furthers the objectives of Section 
6(b)(1) of the Act,\19\ 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.
---------------------------------------------------------------------------

    \18\ 15 U.S.C. 78s(b).
    \19\ 15 U.S.C. 78s(b)(1).
---------------------------------------------------------------------------

    The Exchange also believes that this filing furthers the objectives 
of Section 6(b)(5) \20\ of the Act because the proposed rule change 
would be consistent with and facilitate a governance and regulatory 
structure that 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.
---------------------------------------------------------------------------

    \20\ 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,\21\ 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.
---------------------------------------------------------------------------

    \21\ 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-ISEGemini-2015-24 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-ISEGemini-2015-24. 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

[[Page 71879]]

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-ISEGemini-2015-24, and should be submitted on or before December 8, 
2015.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\22\
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    \22\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Robert W. Errett,
Deputy Secretary.
[FR Doc. 2015-29215 Filed 11-16-15; 8:45 am]
 BILLING CODE 8011-01-P
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