Self-Regulatory Organizations; BATS Y-Exchange, Inc.; Notice of Filing of a Proposed Rule Change To Amend the Certificate of Incorporation and Bylaws of the Exchange's Ultimate Parent Company, BATS Global Markets, Inc., 9052-9061 [2016-03664]

Agencies

• SECURITIES AND EXCHANGE COMMISSION

[Federal Register Volume 81, Number 35 (Tuesday, February 23, 2016)]
[Notices]
[Pages 9052-9061]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-03664]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-77156; File No. SR-BYX-2016-02]


Self-Regulatory Organizations; BATS Y-Exchange, Inc.; Notice of 
Filing of a Proposed Rule Change To Amend the Certificate of 
Incorporation and Bylaws of the Exchange's Ultimate Parent Company, 
BATS Global Markets, Inc.

February 17, 2016.
    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 February 9, 2016, 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 
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 Substance 
of the Proposed Rule Change

    The Exchange filed a proposal to amend the certificate of 
incorporation and bylaws of the Exchange's ultimate parent company, 
BATS Global Markets, Inc. (the ``Corporation'').
    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.

[[Page 9053]]

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
    On December 16, 2015, the Corporation, the ultimate parent company 
of the Exchange, filed a registration statement on Form S-1 with the 
Commission seeking to register shares of common stock and to conduct an 
initial public offering of those shares, which will be listed for 
trading on BATS Exchange, Inc. (the ``IPO''). In connection with its 
IPO, the Corporation intends to (i) amend and restate its current 
certificate of incorporation (the ``Current Certificate of 
Incorporation'') and adopt these changes as its Amended and Restated 
Certificate of Incorporation (the ``New Certificate of 
Incorporation''), and (ii) amend and restate its current bylaws (the 
``Current Bylaws'') and adopt these changes as its Amended and Restated 
Bylaws (the ``New Bylaws''). It is anticipated that the New Certificate 
of Incorporation and the New Bylaws will become effective (the 
``Effective Date'') the moment before the closing of the IPO.
    The amendments to the Current Certificate of Incorporation include, 
among other things, (i) increasing the total number of authorized 
shares of capital stock of the Corporation, (ii) effecting a conversion 
and elimination of one class of non-voting common stock and 
reclassifying the remaining class of non-voting common stock, (iii) 
establishing a classified board structure, (iv) prohibiting cumulative 
voting in the election of directors, (v) eliminating the process for 
action by written consent of stockholders, (vi) revising certain 
requirements for approval of future amendments to the New Certificate 
of Incorporation, and (vii) and changing the name of the Corporation 
from ``BATS Global Markets, Inc.'' to ``Bats Global Markets, Inc.''
    The amendments to the Current Bylaws include, among other things, 
(i) revising the procedures for stockholder proposals and nomination of 
directors, (ii) revising the authority to call special meetings of the 
stockholders, (iii) eliminating the process for action by written 
consent of stockholders, (iv) establishing a classified board 
structure, (v) revising the requirements for removal of directors, (vi) 
removing duplicative provisions relating to the indemnification of 
officers and directors that are contained in the Current Certificate of 
Incorporation (and are proposed to be maintained in the New Certificate 
of Incorporation), (vii) revising certain requirements for approval of 
future amendments to the New Bylaws, (viii) eliminating the authority 
to make loans to corporate officers, and (ix) changes to reflect the 
change of the Corporation's name. The amendments to the Corporation's 
Current Certificate of Incorporation and Current Bylaws are intended 
primarily to reflect (i) the adoption of provisions more customary for 
publicly-owned companies, (ii) changes to the Corporation's capital 
structure, specifically with respect to non-voting common stock, and 
(iii) stylistic and other non-substantive changes.\3\
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    \3\ Certain of the amendments proposed to be adopted in the New 
Certificate of Incorporation and New Bylaws were previously approved 
by the Commission in 2011 as part of proposed amendments to the 
certificate of incorporation and bylaws of the Exchange's ultimate 
parent company at the time. See Securities Exchange Act Release No. 
65647 (October 27, 2011), 76 FR 67784 (November 2, 2011) (SR-BYX-
2011-021); Securities Exchange Act Release No. 65729 (November 10, 
2011), 76 FR 71396 (November 17, 2011) (SR-BYX-2011-022). Although 
approved, these amendments were not ultimately implemented.
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    The purpose of this rule filing is to submit for Commission 
approval the New Certificate of Incorporation and the New Bylaws. The 
changes described herein relate to the certificate of incorporation and 
bylaws of the Corporation only, not to the governance of the Exchange. 
The Exchange will continue to be governed by its existing certificate 
of incorporation and bylaws. The stock in, and voting power of, the 
Exchange will continue to be directly and solely held by BATS Global 
Markets Holdings, Inc., an intermediate holding company wholly-owned by 
the Corporation.
    The Corporation was originally formed as BATS Global Markets 
Holdings, Inc. on August 22, 2013 as a new ultimate holding company for 
the Exchange as a result of a business combination involving the 
holding company of the Exchange at the time and Direct Edge Holdings 
LLC.\4\
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    \4\ In connection with the Corporation's combination with Direct 
Edge Holdings LLC, the existing holding company for the Exchange, 
BATS Global Markets, Inc., changed its name to BATS Global Markets 
Holdings, Inc., and became an intermediate holding company between 
the Exchange and BATS Global Markets, Inc. The ownership structure 
of the Exchange at the time of the business combination and the 
Current Certificate of Incorporation and Current Bylaws of the 
Corporation are further described in the Commission's order 
approving the Exchange's proposed rule changes in connection with 
the Corporation's business combination with Direct Edge Holdings 
LLC. See Securities Exchange Act Release No. 71375 (January 23, 
2014), 79 FR 4771 (January 29, 2014) (SR-BYX-2013-039; SR-BATS-2013-
059).
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1. The New Certificate of Incorporation
a. Capital Stock; Voting Rights
    The current capital structure of the Corporation is comprised of 75 
million authorized shares of Common Stock, consisting of 55 million 
shares of Voting Common Stock, 10 million shares of Class A Non-Voting 
Common Stock and 10 million shares of Class B Non-Voting Common Stock. 
Article Fourth(a)(i) of the New Certificate of Incorporation would 
revise this capital structure such that there would be 150 million 
total authorized shares of capital stock, consisting of 125 million 
shares designated as Voting Common Stock and a single class of 10 
million shares designated as Non-Voting Common Stock (together with 
Voting Common Stock, ``Common Stock''), as well as 15 million shares of 
Preferred Stock.
    The Corporation's existing Class A Non-Voting Common Stock is 
currently held by International Securities Exchange Holdings, Inc. 
(``ISE Holdings''). Pursuant to the Investor Rights Agreement dated 
January 31, 2014, among the Corporation and its stockholders signatory 
thereto (the ``Investor Rights Agreement''), and the Current 
Certificate of Incorporation, ISE Holdings' shares of Class A Non-
Voting Common Stock may convert into Voting Common Stock (i) 
automatically with respect to any shares transferred to persons other 
than related persons of ISE Holdings; (ii) upon the termination of the 
Investor Rights Agreement, with such agreement (other than with respect 
to registration rights) terminating upon the IPO; or (iii) 
automatically with respect to any shares of Class A Non-Voting Common 
Stock sold by ISE Holdings in any public offering of the stock of the 
Corporation. In addition, ISE Holdings' shares of Class A Non-Voting 
Common Stock may convert into Voting Stock at the option of ISE 
Holdings, provided that ISE Holdings furnishes to the Corporation a 
written

[[Page 9054]]

notice stating that ISE Holdings desires to convert a stated number of 
shares of Class A Non-Voting Common Stock and the certificates 
representing such shares.\5\
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    \5\ See Current Certificate of Incorporation, Art. Fourth, para. 
(c); Investor Rights Agreement, Section 2.2(j).
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    As a result of these conversion rights, the Corporation expects the 
Class A Non-Voting Common Stock to convert into Voting Common Stock at 
the time of the IPO. To effect this conversion, Article Fourth(b)(i) of 
the New Certificate of Incorporation states that, at the time that the 
New Certificate of Incorporation becomes effective (the ``Effective 
Time''),\6\ each authorized, issued and outstanding share of Class A 
Non-Voting Common Stock shall be automatically converted into one share 
of Voting Common Stock. To simplify the capital structure of the 
Corporation, Article Fourth(b)(ii) would reclassify each authorized, 
issued and outstanding share of Class B Non-Voting Common Stock into 
one share of Non-Voting Common Stock.\7\
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    \6\ It is anticipated that the Effective Time will coincide with 
the date of the closing of the IPO and will occur immediately prior 
thereto.
    \7\ The Exchange understands that the existing Class B Non-
Voting Common Stock is, and the Non-Voting Common Stock upon 
conversion will be, held by certain persons subject to restrictions 
under the Bank Holding Company Act of 1956 on the extent to which 
they are permitted to own voting stock of the Corporation or certain 
types of non-voting stock convertible into voting stock of the 
Corporation.
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    Pursuant to Article Fourth(c) of the New Certificate of 
Incorporation, as proposed to be adopted, all voting power will be 
vested in Voting Common Stock (except with regard to certain matters 
relating to the rights of holders of Preferred Stock described below). 
Specifically, each holder of Voting Common Stock will be entitled to 
one vote for each share of Voting Common Stock held of record by such 
holder on all matters on which stockholders generally are entitled to 
vote. Shares of Non-Voting Common Stock are non-voting, except with 
regard to certain matters that would adversely affect their respective 
rights as described in the proposed amendments to Article Fourth(c)(ii) 
of the New Certificate of Incorporation.
    Pursuant to Article Fourth(d) of the New Certificate of 
Incorporation, Non-Voting Common Stock will generally have the 
conversion features that previously applied to Class B Non-Voting 
Common Stock under the Current Certificate of Incorporation. Non-Voting 
Common Stock will be convertible into Voting Common Stock, on a one-to-
one basis, following a ``Qualified Transfer,'' as defined in Article 
Fourth(d)(i).\8\ Voting Common Stock will not be convertible into Non-
Voting Common Stock.
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    \8\ A ``Qualified Transfer'' is defined as a sale or other 
transfer of Non-Voting Common Stock by a holder of such shares: (A) 
In a widely distributed public offering registered pursuant to the 
Securities Act of 1933 (15 U.S.C. 77a.); (B) in a private sale or 
transfer in which the relevant transferee (together with its 
Affiliates, as defined below, and other transferees acting in 
concert with it) acquires no more than two percent of any class of 
voting shares (as defined in 12 CFR 225.2(q)(3) and determined by 
giving effect to any such permitted conversion of transferred shares 
of Non-Voting Common Stock upon such transfer pursuant to Article 
Fourth of the New Certificate of Incorporation); (C) to a transferee 
that (together with its Affiliates and other transferees acting in 
concert with it) owns or controls more than 50 percent of any class 
of voting shares (as defined in 12 CFR 225.2(q)(3)) of the 
Corporation without regard to any transfer of shares from the 
transferring holder of shares of Non-Voting Common Stock; or (D) to 
the Corporation. As used above, the term ``Affiliate'' means, with 
respect to any person, any other person directly or indirectly 
controlling, controlled by or under common control with such person, 
and ``control'' (including, with correlative meanings, the terms 
``controlled by'' and ``under common control with'') has the meaning 
set forth in 12 CFR 225.2(e)(1).
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    Except for voting rights and certain conversion features, as 
described above, Non-Voting Common Stock and Voting Common Stock will 
generally rank equally and have identical rights and privileges. 
Because the IPO is expected to be a widely distributed public offering 
registered pursuant to the Securities Act of 1933 (15 U.S.C. 77a.), the 
Corporation expects it to be a ``Qualified Transfer,'' for purposes of 
the conversion feature of the Non-Voting Common Stock,\9\ such that any 
shares of Non-Voting Common Stock sold in the IPO would convert to 
Voting Common Stock. As a result, purchasers of the Corporation's 
common stock in the IPO will receive only Voting Common Stock.
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    \9\ See New Certificate of Incorporation, Art. Fourth(d)(i).
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    Proposed Article Fourth(a)(i) of the New Certificate of 
Incorporation would increase the Corporation's authorized shares in 
order to accommodate the reclassification of Class A Non-Voting Common 
Stock and Class B Non-Voting Common Stock discussed above, while 
providing sufficient additional authorized shares for future issuances, 
such as, for example, grants of equity to employees pursuant to a 
compensation plan.
b. Board of Directors
    Article Sixth of the New Certificate of Incorporation would amend 
certain provisions relating to the Corporation's board of directors to 
add further specificity and detail, and effect a number of changes to 
the board of directors of the Corporation.
    Article Sixth(a) of the New Certificate of Incorporation would 
explicitly specify that the business and affairs of the Corporation 
shall be managed by or under the board of directors and empower the 
board of the directors to do all such acts and things as may be 
exercised or done by the Corporation. This provision is intended to 
restate the power of the Corporation's board in accordance with the 
General Corporation Law of the State of Delaware, as amended 
(``Delaware Law'').\10\
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    \10\ See Delaware Law Section 141(a).
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    Article Sixth(c) of the New Certificate of Incorporation would 
establish a ``staggered'' or classified board structure in which the 
directors would be divided into three classes of equal size, to the 
extent possible. Only one class of directors would be elected each 
year, and once elected, directors would serve a three-year term. 
Directors initially designated as Class I directors would serve for a 
term ending on the date of the 2017 annual meeting of stockholders, 
directors initially designated as Class II directors would serve for a 
term ending on the date of the 2018 annual meeting of stockholders, and 
directors initially designated as Class III directors would serve for a 
term ending on the date of the 2019 annual meeting of stockholders. The 
names and addresses of each of the directors initially classified as 
Class I, Class II and Class III directors are set forth in Article 
Sixth(c)(ii) of the New Certificate of Incorporation. The Exchange 
believes that such a classified board structure is common for publicly-
held companies, as it has the effect of making hostile takeover 
attempts more difficult.
    Pursuant to Article Sixth(d) of the New Certificate of 
Incorporation, cumulative voting in the election of directors will be 
prohibited. If the Corporation were to permit cumulative voting, 
stockholders would be entitled to as many votes as are equal to the 
number of voting shares it holds, multiplied by the number of director 
seats up for election to the board of directors, and such stockholder 
may allocate all of its votes to one or more directorial candidates, as 
the stockholder desires. In contrast, in ``regular'' or ``statutory'' 
voting (i.e., when cumulative voting is prohibited), stockholders may 
not vote more than one vote per share to any single director nominee. 
The Exchange believes that cumulative voting is inappropriate for the 
ultimate parent company of a national securities exchange, as it would 
increase the likelihood that a

[[Page 9055]]

stockholder or group of stockholders holding only a minority of voting 
shares would be able to exert an outsized influence in the election of 
directors of the Corporation, relative to its stockholdings in the 
Corporation. As a result, cumulative voting could undermine the 
limitations on concentrations of ownership or voting included in both 
the Current Certificate of Incorporation and New Certificate of 
Incorporation.\11\
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    \11\ See Current Certificate of Incorporation, Art. Fifth; New 
Certificate of Incorporation, Art. Fifth.
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c. Transfer, Ownership and Voting Restrictions
    The transfer, ownership and voting restrictions set forth in 
Article Fifth of the Corporation's Current Certificate of Incorporation 
would be retained in the New Certificate of Incorporation. Article 
Fifth of the Corporation's Current Certificate of Incorporation 
provides that for so long as the Corporation controls, directly or 
indirectly, a national securities exchange, subject to certain 
exceptions, (i) no person, either alone or together with its ``Related 
Persons'' (as defined therein), may own, directly or indirectly, of 
record or beneficially, shares constituting more than 40 percent of any 
class of the Corporation's capital stock, (ii) no member of such a 
national securities exchange, either alone or together with its Related 
Persons, may own, directly or indirectly, of record or beneficially, 
shares constituting more than 20 percent of any class of the 
Corporation's capital stock, and (iii) no person, either alone or 
together with its Related Persons, at any time, may, directly, 
indirectly or pursuant to any of various arrangements, vote or cause 
the voting of shares or give any consent or proxy with respect to 
shares representing more than 20 percent of the voting power of the 
Corporation's then issued and outstanding capital stock.
    In the case of shares of the Corporation purportedly transferred in 
violation of the limitations contained in Article Fifth, in addition to 
other remedies provided under Article Fifth(d),\12\ Article Fifth(e) of 
the Current Certificate of Incorporation provides that the Corporation 
may redeem the shares sold, transferred, assigned, pledged, or owned in 
violation of Article Fifth for a price equal to the fair market value 
of those shares.
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    \12\ Article Fifth(d) of the Current Certificate of 
Incorporation provides that purported transfers that would result in 
a violation of the ownership limitations are not recognized by the 
Corporation to the extent of any ownership in excess of the 
limitation.
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    These limitations and remedies are designed to prevent any 
stockholder from exercising undue influence over the Corporation's 
national securities exchange subsidiaries. As a result, these 
limitations and remedies would be retained in the New Certificate of 
Incorporation. However, in the case of the redemption of shares 
purportedly transferred in violation of Article Fifth, the Current 
Certificate of Incorporation does not specify the manner of determining 
the fair market value. In order to enhance this remedy and provide 
clarity in the event that it is necessary to enforce it, Article 
Fifth(e) of the New Certificate of Incorporation is proposed to be 
amended to provide that the fair market value would be determined as 
the volume-weighted average price per share of the Common Stock during 
the five business days immediately preceding the date of the 
redemption.
d. Future Amendments to the Certificate of Incorporation
    Article Twelfth of the Current Certificate of Incorporation 
requires that any proposed amendment to the Current Certificate of 
Incorporation be approved by the board of directors of the Corporation, 
submitted to the Board of Directors of the Exchange and filed with, or 
filed with and approved by, the Commission, if required under Section 
19 of the Act. Provided that these conditions are satisfied, the 
Current Certificate of Incorporation can be amended in any manner 
permitted by Delaware Law, which today generally allows for the 
amendment of a certificate of incorporation by the affirmative vote of 
the majority of the outstanding stock entitled to vote thereon. 
Pursuant to proposed Article Fourteenth(a) of the New Certificate of 
Incorporation, certain provisions of the New Certificate of 
Incorporation would only be able to be amended upon the affirmative 
vote of not less than 66\2/3\ percent of the total voting power of the 
Corporation's outstanding securities entitled to vote generally in the 
election of directors, voting together as a single class. These 
provisions include Article Fourth(c) and (d), relating to voting rights 
and conversion of Non-Voting Common Stock, and Articles Fifth through 
Thirteenth, relating to limitations on transfer, ownership and voting, 
board of directors, duration of the Corporation, adopting, amending or 
repealing bylaws, indemnification and limitation of director liability, 
meetings of stockholders, forum selection, compromise or other 
arrangement, Section 203 opt-in (discussed below), and amendments to 
the certificate of incorporation, respectively.
    The purpose of this supermajority requirement, which the Exchange 
believes is common among public companies, is to deter actions being 
taken that the Corporation believes may be detrimental to the 
Corporation, including any actions that could detrimentally affect the 
Corporation's ability to comply with its unique responsibilities under 
the Act as the ultimate parent of four registered national securities 
exchanges. The purpose for limiting the application of the 
supermajority voting requirement to certain specified provisions of the 
certificate of incorporation is to focus such requirement on the most 
critical provisions of the certificate of incorporation.
e. Other Amendments
    The New Certificate of Incorporation will amend and restate various 
other provisions of the Current Certificate of Incorporation in a 
manner that the Exchange believes are intended to reflect provisions 
that are more customary for publicly-owned companies organized under 
Delaware Law. In particular:
     Preferred Stock. Pursuant to proposed Article Fourth(a) of 
the New Certificate of Incorporation, the Corporation will have the 
authority to issue 15 million shares of Preferred Stock, par value 
$0.01 per share (the ``Preferred Stock''), which the Corporation's 
board of directors may, by resolution from time to time, issue in one 
or more classes or series by filing a certificate of designation 
pursuant to Delaware Law, fixing the terms and conditions of such class 
or series of Preferred Stock. The Preferred Stock may be used by the 
Corporation to raise capital or to act as a safety mechanism for 
unwanted takeovers. Pursuant to Article Sixth(f) of the New Certificate 
of Incorporation, should the Corporation issue Preferred Stock and the 
holders of Preferred Stock have the right to vote separately or as a 
class to elect directors, the features of such directorships shall be 
governed by the terms of the resolution adopted by the board of 
directors, rather than the features otherwise applicable under Article 
Sixth.
     Stockholder Meetings. Article Tenth of the Current 
Certificate of Incorporation permits action to be taken by the 
stockholders of the Corporation, without a meeting, by written consent 
as permitted by Delaware Law. The New Certificate of Incorporation 
would amend Article Tenth to provide that any action required or 
permitted to be taken

[[Page 9056]]

at any meeting of the stockholders may be taken only upon the vote of 
stockholders at a meeting of the stockholders in accordance with 
Delaware Law and the New Certificate of Incorporation, and may not be 
taken by written consent without a meeting, subject to the rights of 
the holders of any class or series of Preferred Stock then outstanding. 
Proposed Article Tenth(a) would establish a requirement for the 
Corporation to hold annual meetings of stockholders for director 
elections and other business, while Proposed Article Tenth(b) would 
permit special meetings to be called only upon a resolution of a 
majority of the board of directors (except that when holders of 
Preferred Stock have the right to elect directors, such holders may 
call a special meeting). Provisions providing for annual meetings and 
special meetings are currently contained only in the Current 
Bylaws.\13\
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    \13\ Current Bylaws, Sections 2.02 and 2.03.
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     Forum Selection. The New Certificate of Incorporation 
would add a new Article Eleventh, designating the Court of Chancery of 
the State of Delaware as the sole and exclusive forum for certain 
actions or proceedings, such as derivative actions brought on behalf of 
the Corporation or actions asserting a claim of breach of fiduciary 
duty owed by any director, officer or other employee of the Corporation 
to the Corporation or to its stockholders. Among other things, this 
provision prevents similar actions from being brought in multiple 
jurisdictions and helps ensure that any litigation will be handled by 
the court that is most experienced in applying Delaware Law. Article 
Eleventh also provides that any person or entity acquiring an interest 
in shares of capital stock of the Corporation shall be deemed to have 
notice of and consented to this exclusive forum provision.
     Section 203. The New Certificate of Incorporation would 
add Article Thirteenth, providing that the Corporation will be governed 
by Section 203 of Delaware Law. In general, Section 203 prohibits a 
publicly-held Delaware corporation from engaging in a business 
combination with anyone who owns at least 15 percent of its common 
stock. This prohibition lasts for a period of three years after that 
person has acquired the 15 percent ownership. The corporation may, 
however, engage in a business combination if it is approved by its 
board of directors before the person acquires the 15 percent ownership 
or later by its board of directors and two-thirds of the stockholders 
of the public corporation. The restrictions contained in Section 203 do 
not apply if, among other things, the corporation's certificate of 
incorporation contains a provision expressly electing not to be 
governed by Section 203. Unless opted-out, Section 203 provides 
Delaware corporations with a defense to unwanted corporate takeovers.
    The New Certificate of Incorporation also removes various 
references to the Investor Rights Agreement, as the provisions of that 
agreement, other than certain registration rights, is expected to 
terminate upon the occurrence of the IPO.\14\ The New Certificate of 
Incorporation additionally makes various non-substantive, stylistic 
changes throughout. For example, the New Certificate of Incorporation 
would amend the name of the Corporation from ``BATS Global Markets, 
Inc.'' to ``Bats Global Markets, Inc.''
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    \14\ See Investor Rights Agreement, Section 10 (providing that 
the rights and obligations of each stockholder party to the 
agreement shall terminate, to the extent not previously terminated, 
upon the occurrence of ``Qualified Public Offering,'' as defined 
therein, except that certain registration rights shall survive such 
termination).
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2. The New Bylaws
a. Registered Office
    Article I of the Current Bylaws designates the initial registered 
office of the Corporation in the State of Delaware as 1209 Orange 
Street in the City of Wilmington, County of New Castle, Delaware and 
the initial registered agent at that address as The Corporation Trust 
Company. Section 1.01 of the New Bylaws would amend Article I to state 
that the registered office will continue to be located at the same 
location and to further provide the board of directors with the 
authority to designate another location from time to time. This will 
provide the board of directors with the flexibility to change the 
registered office in the future if it believes that such a change is 
necessary. In addition, Section 1.01 of the New Bylaws would provide 
that the registered agent will continue to be The Corporation Trust 
Company.
b. Annual Meeting of Stockholders
    Section 2.02(a) of the Current Bylaws requires that an annual 
meeting of stockholders for the purpose of election of directors and 
for such other business as may lawfully come before the meeting occur 
on the third Tuesday of January, or such other time as the board of 
directors may designate. The New Bylaws remove the reference to the 
third Tuesday of January from Section 2.02(a) and authorize the board 
of directors to determine the place, date and time of the annual 
meeting.
    Section 2.02(b) of the Current Bylaws specifies the procedures for 
stockholders to properly bring matters before the annual meeting, 
including specifying that stockholders provide timely notice to the 
Corporation of the business desired to be brought before the meeting. 
To be considered timely, Section 2.02(b) of the Current Bylaws states 
that the stockholder's notice must be delivered to the Corporation no 
earlier than the ninetieth day or later than the sixtieth day prior to 
the first anniversary of the preceding year's annual meeting. The New 
Bylaws modify the acceptable time period so that the stockholder's 
notice must be delivered to the Corporation no earlier than the one 
hundred and fiftieth day or later than the one hundred and twentieth 
day prior to the first anniversary of the preceding year's annual 
meeting. In the event that no annual meeting was held in the previous 
year or the date of the annual meeting has been changed by more than 
thirty days, the New Bylaws generally require that the stockholder's 
notice be delivered no earlier than the one hundred and twentieth day 
or later than the seventieth day prior to such annual meeting.
    Section 2.02(b) of the Current Bylaws specifies what must be 
contained in the stockholder's notice. In addition to the requirements 
contained in the Current Bylaws, Section 2.02(b) of the New Bylaws 
would require that the stockholder's notice (i) disclose the text of 
the proposal, (ii) disclose the beneficial owner on whose behalf the 
proposal is being made, (iii) disclose all arrangements or 
understandings between the stockholder and any other person pursuant to 
which the proposal is being made, (iv) disclose all agreements, 
arrangements or understandings (including derivative positions) to 
create or mitigate loss or manage the risk or benefit of share price 
changes, or increase or decrease the voting power of the stockholder or 
any beneficial owner with respect to the securities of the Corporation, 
(v) provide a representation as to whether the stockholder or any 
beneficial owner intends, or is part of a group that intends, to 
deliver a proxy statement and/or form of proxy to holders of at least 
the percentage of the voting power of the Corporation needed to approve 
or adopt the proposal, or otherwise solicit proxies from stockholders 
in support of the proposal, and (vi) provide such other information 
relating to any proposed item of business as the Corporation may 
reasonably require to determine whether such proposed item

[[Page 9057]]

of business is a proper matter for stockholder action.
    Section 2.02(c) of the Current Bylaws specifies the procedures for 
stockholders to properly nominate persons for the board of directors, 
including that the stockholder provide timely notice to the 
Corporation. In addition to the requirements contained in the Current 
Bylaws, Section 2.02(c) of the New Bylaws would require that the 
stockholder's notice (i) disclose all agreements, arrangements or 
understandings (including derivative positions) to create or mitigate 
loss or manage the risk or benefit of share price changes, or increase 
or decrease the voting power of the stockholder, beneficial owner or 
any such nominee with respect to the securities of the Corporation, 
(ii) provide a representation that such stockholder is a stockholder 
entitled to vote at such meeting and intends to appear in person or by 
proxy at the meeting and to bring such nomination or other business 
before the meeting, and (iii) provide a representation as to whether 
the stockholder or any beneficial owner intends, or is part of a group 
that intends, to deliver a proxy statement and/or form of proxy to 
holders of at least the percentage of the voting power of the 
Corporation needed to elect each such nominee, or otherwise solicit 
proxies from stockholders in support of the nomination.
    The additional disclosure requirements being added to Sections 
2.02(b) and 2.02(c) are intended to assure that stockholders asked to 
vote on a stockholder proposal or stockholder nominee are more fully 
informed in their voting and are able to consider any proposals or 
nominations along with the interests of those stockholders or the 
beneficial owners on whose behalf such proposal or nomination is being 
made.
    The New Bylaws would further include a new Section 2.02(d), which 
would require that a stockholder proposal or a stockholder nomination 
be disregarded if the stockholder (or a qualified representative) does 
not appear at the annual or special meeting to present the proposal or 
nomination, notwithstanding that proxies may have been received and 
counted for purposes of determining a quorum. A ``qualified 
representative'' would include a duly authorized officer, manager or 
partner of the stockholder, or such other person authorized in writing 
to act as such stockholder's proxy. The purpose of this requirement is 
to assure that the stockholders' time at meetings is used efficiently 
and only serious stockholder proposals and nominations are considered.
    The New Bylaws would also add Section 2.02(e), which would require 
that a stockholder, in addition to (and in no way limiting) all 
requirements set forth in Section 2.02 with respect to proposals or 
nominations, must also comply with all applicable requirements of the 
Act and the rules and regulations promulgated thereunder.
    New Section 2.02(f) of the New Bylaws would note that, 
notwithstanding anything to the contrary in the New Bylaws, the notice 
requirements with respect to business proposals or nominations would be 
deemed satisfied if the stockholder submitted a proposal in compliance 
with Rule 14a-8 of the Act \15\ and the proposal has been included in a 
proxy statement prepared by the Corporation to solicit proxies of the 
meeting of stockholders. This provision would assure that, in addition 
to proposals that meet the requirements of Section 2.02(b) of the New 
Bylaws, the Corporation would comply with the provisions of the Act and 
the rules promulgated thereunder with respect to the inclusion of 
stockholder proposals in its proxy statement.
---------------------------------------------------------------------------

    \15\ 17 CFR 240.14a-8.
---------------------------------------------------------------------------

c. Special Meetings of Stockholders
    Section 2.03 of the Current Bylaws permits a special meeting of the 
stockholders to be called by any of (i) the chairman of the board of 
directors, (ii) the chief executive officer, (iii) the board of 
directors pursuant to a resolution passed by a majority of the board, 
or (iv) the stockholders entitled to vote at least 10 percent of the 
votes at the meeting. The New Bylaws would amend Section 2.03, 
consistent with Article Tenth(b) of the New Certificate of 
Incorporation, to only permit a special meeting of the stockholders to 
be called by the board of directors pursuant to a resolution adopted by 
the majority of the board. Additionally, whenever any holders of 
Preferred Stock have the right to elect directors pursuant to the New 
Certificate of Incorporation, such holders may call, pursuant to the 
terms of a resolution adopted by the board, a special meeting of the 
holders of such Preferred Stock. These amendments are designed to 
prevent any stockholder from exercising undue control over the 
operation of the Exchange by circumventing the board of directors of 
the Corporation through a special meeting of the stockholders.
d. Quorum; Vote Requirements
    Section 2.05 of the Current Bylaws describe the quorum and voting 
requirements for the transaction of business at all meetings of 
stockholders of the Corporation. As the New Charter establishes two 
classes of stock, voting common stock and non-voting common stock, the 
New Bylaws would amend Section 2.05 to clarify that a majority of the 
voting power (the Voting Common Stock) is generally required for a 
quorum for the transaction of business, rather than a majority of all 
outstanding shares. The New Bylaws would also amend Section 2.05 to 
conform to Section 216 of Delaware Law to track the requirement of a 
majority of votes ``present in person or represented by proxy'' for a 
quorum where a separate vote by class or classes or series is required. 
In addition, Section 2.05 of the New Bylaws would also be amended to 
clarify that abstentions and broker non-votes shall not be counted as 
votes cast. Under Delaware Law, abstentions and broker non-votes are 
not shares authorized to vote and are not considered votes cast on any 
matter.\16\ This amendment conforms the provisions of Section 2.05 to 
Delaware Law and is intended to eliminate ambiguity in the counting of 
abstentions and broker non-votes.
---------------------------------------------------------------------------

    \16\ See, e.g., Berlin v. Emerald Partners, 552 A.2d 482 (Del. 
1988).
---------------------------------------------------------------------------

e. Adjournment of Meetings
    Section 2.06 of the Current Bylaws outlines certain requirements 
relating to the adjournment of stockholder meetings, including that any 
meeting of stockholders, whether annual or special, may be adjourned 
from time to time either by the chairman of the meeting or by the vote 
of a majority of the voting power of the shares casting votes, 
excluding abstentions. The New Bylaws would amend Section 2.06 such 
that only the chairman of the meeting or the board of directors would 
be permitted to adjourn a stockholder meeting. The authority to adjourn 
a stockholder meeting resting solely with the board of directors or the 
chairman is common among publicly-held companies. Furthermore, this 
amendment would provide the Corporation with flexibility to postpone a 
stockholder vote if it determines necessary and would prevent 
stockholders from adjourning a meeting if the board of directors and 
chairman desire to continue with the meeting.
f. Voting Rights
    Section 2.07 of the Current Bylaws describes the rights of 
stockholders of

[[Page 9058]]

the Corporation to vote their shares at a meeting of stockholders. The 
New Bylaws would amend Section 2.07 to further clarify that any share 
of stock of the Corporation held by the Corporation shall have no 
voting rights, except when such shares are held in a fiduciary 
capacity. The Current Bylaws do not address voting rights with respect 
to shares of stock of the Corporation held by the Corporation. This 
amendment is consistent with Delaware Law and removes ambiguity as to 
the voting rights of shares of stock of the Corporation held by the 
Corporation.\17\
---------------------------------------------------------------------------

    \17\ See Delaware Law Section 160(c).
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g. Action Without a Meeting
    Section 2.10(a) of the Current Bylaws permits certain actions to be 
taken by written consent of stockholders if signed by the holders of 
outstanding stock representing not less than the number of votes 
necessary to authorize or take such action at a meeting where all 
shares entitled to vote were present and voted. However, Section 
2.10(c) of the Current Bylaws provides that no action by written 
consent may be taken following an initial public offering of the common 
stock of the Corporation. The New Bylaws would amend Section 2.10 to 
prohibit at all times actions taken by written consent of stockholders 
without a meeting, subject to the rights of any holders of Preferred 
Stock. This change is consistent with proposed changes contained in 
Article Tenth(c) of the New Certificate of Incorporation and would 
simplify Section 2.10 of the New Bylaws, given that the New Bylaws 
would become effective the moment before the closing of the IPO.
h. Number of Directors and Classified Board Structure
    Section 3.01 of the Current Bylaws stipulates that the board of 
directors of the Corporation shall consist of 15 members, or such other 
number of members as determined from time to time by resolution of the 
board of directors. Under the New Bylaws, Section 3.01 would be amended 
to state that the board of directors shall consist of one or more 
directors, with the exact number of directors to be determined by 
resolution adopted by the majority of the board of directors. In 
addition, Section 3.01 of the New Bylaws would, consistent with 
proposed Article Sixth(c) of the New Certificate of Incorporation, 
establish a classified board structure in which the directors would be 
divided into three classes of equal size, to the extent possible. Only 
one class of directors would be elected each year, and once elected, 
directors would serve a three-year term. The Exchange believes that 
such a classified board structure is common for publicly-held 
companies, as it has the effect of making hostile takeover attempts 
more difficult.
i. Vacancies and Resignation
    Section 3.03 of the Current Bylaws provides that vacancies on the 
board of directors resulting from death, resignation, removal or other 
causes, and any newly created directorships resulting from any increase 
in the number of directors, shall be filled by a majority vote of the 
directors then in office, even if less than a quorum, unless the board 
of directors determines by resolution that any such vacancies or newly 
created directorships should be filled by stockholders. Once elected, 
the director would hold office for the remainder of the full term of 
the director for which the vacancy was created or occurred and until 
such director's successor shall have been elected and qualified. 
Section 3.03 of the New Bylaws would adopt a substantially similar 
approach. Specifically, it would provide that vacancies or new 
directorships shall, except as otherwise required by law, be filled 
solely by a majority of the directors then in office (although less 
than a quorum) or by the sole remaining director, and each director so 
elected shall hold office for a term that shall coincide with the term 
of the class to which such director shall have been elected. The New 
Bylaws would also amend Section 3.03 to provide that if there are no 
directors in office, then an election of directors may be held in 
accordance with Delaware Law.
    Section 3.04 of the Current Bylaws addresses the resignation of 
directors. For example, Section 3.04 provides that when one or more 
directors resign from the board of directors, effective at a future 
date, a majority of the directors then in office, including those who 
have so resigned, shall have the power to fill such vacancy or 
vacancies, the vote thereon to take effect when such resignation or 
resignations shall become effective. This provision would be retained 
in the New Bylaws, but it would be moved to Section 3.03. In addition, 
as is effectively the case under Section 3.04 of the Current Bylaws, 
Section 3.03 of the New Bylaws would provide that any director so 
chosen shall hold office as provided in the filling of other vacancies.
j. Removal of Directors
    Section 3.05 of the Current Bylaws provides that the board of 
directors or any director may be removed, with or without cause, by the 
affirmative vote of at least 66\2/3\ percent of the voting power of all 
then-outstanding shares of voting stock of the Corporation. The New 
Bylaws would amend Section 3.05 to provide that directors may only be 
removed for cause with the affirmative vote of a simple majority of the 
holders of voting power of all then-outstanding securities of the 
Corporation generally entitled to vote in the election of directors, 
voting together as a single class.
    The purpose of this amendment is to align the Corporation's 
requirements for removal of directors with Section 141(k)(1) of 
Delaware Law, which generally provides that, in the case of a 
corporation with a classified board, a simple majority of stockholders 
may remove any director, but only for cause, unless the certificate of 
incorporation provides otherwise.
k. Committees of Directors
    Sections 3.10(a) and (b) of the Current Bylaws permit the board of 
directors to appoint an executive committee with certain enumerated 
powers of the board, as well as other committees permitted by law. The 
New Bylaws would amend Section 3.10(a) to eliminate specific reference 
to an executive committee and authorize the board to designate one or 
more committees that may exercise the power of the board to the extent 
permitted in the resolution designating the committee. This amendment 
would enhance the board's flexibility to create those committees it 
deems necessary and most efficient for the functioning of the board. 
Section 3.10(a) would be further amended to provide that no committee 
would have the power to (i) approve, adopt or recommend to the 
stockholders any matter required by Delaware Law to be submitted for 
stockholder approval, or (ii) adopt, amend or repeal any bylaw. These 
amendments are being made to assure that the full board of directors 
considers and passes upon these significant corporate decisions.
    Section 3.10(c) of the Current Bylaws describes the requirements 
for committee meetings. The New Bylaws would amend Section 3.10(c) to 
require that each committee keep regular minutes of its meetings and 
report the same to the board of directors of the Corporation when 
required. This amendment is being made to assure that matters addressed 
during committee meetings are recorded in the corporate records of the 
Corporation and are available to be communicated to the full board of 
directors of the Corporation.

[[Page 9059]]

l. Preferred Stock Directors
    The New Bylaws would add new Section 3.12 to clarify that whenever 
the holders of one or more classes or series of Preferred Stock have 
the right to elect one or more directors (a ``Preferred Stock 
Director''), pursuant to the New Certificate of Incorporation, the 
provisions of Article III of the New Bylaws relating to the election, 
term of office, filling of vacancies, removal, and other features of 
directorships would not apply to the Preferred Stock Directors. Rather, 
such features would be governed by the applicable provisions of the New 
Certificate of Incorporation. This amendment is consistent with 
proposed Article Sixth(f) of the New Certificate of Incorporation with 
respect to the rights of holders of Preferred Stock, should any class 
or series of Preferred Stock be issued with director voting rights in 
the future.
m. Officers
    Section 4.01 of the Current Bylaws provides that the officers of 
the Corporation shall include, if and when designated by the board of 
directors, the chairman of the board of directors, the chief executive 
officer, the president, one or more vice presidents and certain other 
employees. The New Bylaws would amend Section 4.01 to remove the 
chairman of the board of directors from the list of potential officers 
of the Corporation. Similarly, the New Bylaws would also remove Section 
4.02(b) of the Current Bylaws, which describes the duties of the 
chairman of the board of directors. These changes would be made to 
reflect the fact that the chairman of the board of directors does not 
serve in an officer role in the Corporation.
n. Form of Stock Certificates
    The New Bylaws would amend Section 6.01 of the Current Bylaws to 
state that the shares of the Corporation shall be represented by 
certificates, unless the board of directors provides by resolution that 
some or all of any class or series of stock be uncertificated. Except 
as otherwise provided by law, holders of certificated and 
uncertificated shares of the same class and series would have identical 
rights and obligations. Pursuant to Section 6.03(d) of the New Bylaws, 
the board will also have the power to make rules for issuance, transfer 
and registration of certificated or uncertificated shares, and the 
issuance of new certificates in lieu of those lost or destroyed. The 
New Bylaws further amend Section 6.01 to provide that the Corporation 
will not have the power to issue a certificate in bearer form. These 
amendments are intended to align the bylaws of the Corporation with 
standard provisions for Delaware public companies.
o. Fixing Record Dates
    Section 6.04 of the Current Bylaws provides the procedures for 
fixing a record date for determining the stockholders entitled to 
notice of or to vote at any meeting of stockholders or any adjournment 
thereof. In general, a determination of stockholders of record entitled 
to notice of or to vote at a meeting of stockholders shall apply to any 
adjournment of the meeting. However, Section 6.04(a) of the Current 
Bylaws also permits the board of directors to fix a new record date for 
the adjourned meeting. The New Bylaws would amend Section 6.04(a) to 
clarify that the board of directors may fix a new record date for 
determination of stockholders entitled to vote at the adjourned meeting 
in its discretion or as required by Delaware Law. In such case, the 
board of directors would be permitted to fix the same date or an 
earlier date as the record date for stockholders entitled to notice of 
such adjourned meeting. The New Bylaws would also remove Section 
6.04(b) of the Current Bylaws, which relates to the fixing of a record 
date for determining the stockholders entitled to consent to corporate 
action in writing without a meeting. This provision would be removed 
because the New Bylaws would remove the ability of stockholders to 
authorize or take corporate action by written consent.
p. Indemnification
    Article X of the Current Bylaws contains certain provisions for the 
indemnification of directors, officers, employees and certain other 
agents of the Corporation. The New Bylaws will eliminate such 
provisions in their entirety. These provisions are being eliminated 
because provisions regarding indemnification are already contained in 
Article Ninth of the Current Certificate of Incorporation and will 
remain in Article Ninth of the New Certificate of Incorporation.
q. Notices
    Article XI of the Current Bylaws contains provisions governing the 
delivery of notices to stockholders and directors. Section 11.01(b) of 
the Current Bylaws, for example, states that notices to directors may 
be given through U.S. mail, facsimile, telex or telegram, except that 
such notice, other than one which is delivered personally, must be sent 
to such address as such director shall have filed in writing with the 
secretary of the Corporation, or, in the absence of such filing, to the 
last known post office address of such director. The corresponding 
section of the New Bylaws, Section 10.01(b), would be revised to 
additionally permit notice to directors to be given through electronic 
mail, in addition to the other forms of delivery currently permitted. 
The Exchange believes that it has become customary to deliver business 
communications through electronic mail. The remainder of the notice 
provisions would not be substantively amended in the New Bylaws.
r. Future Bylaws Amendments
    Article Eighth of the Current Certificate of Incorporation (as 
proposed to be maintained in the New Certificate of Incorporation) 
provides that the bylaws may be adopted, amended or repealed by the 
board of directors or by action of the stockholders, in accordance with 
the procedures set out in the bylaws. Article XII of the Current Bylaws 
permits the bylaws to be amended or repealed only by action of the 
stockholders holding 70 percent of the shares entitled to vote. Article 
XI of the New Bylaws would amend Article XII to provide that the bylaws 
may be altered, adopted, amended or repealed either by a majority of 
the board of directors, or by the stockholders with the affirmative 
vote of not less than 66\2/3\ of the total voting power then entitled 
to vote at a meeting of stockholders, unless a higher percentage is 
required under the New Certificate of Incorporation. The New 
Certificate of Incorporation does not include a higher percentage, so 
the threshold set forth in the New Bylaws would govern. The Current 
Bylaws require a vote of at least 70 percent of the total stockholder 
voting power in order to maintain consistency with the threshold that 
was separately agreed to in the Investor Rights Agreement.\18\ As noted 
above, the Investor Rights Agreement is expected to terminate upon the 
IPO, except with respect to certain registration rights provisions, so 
the 70 percent threshold is no longer contractually necessary to 
maintain.\19\ The requirement to obtain 70 percent stockholder approval 
for any amendments to the Corporation's bylaws was practical while the 
Corporation was closely-held. However, the Exchange believes that it is 
customary for amendments to a publicly-held corporation's bylaws to be 
predominantly a matter for the corporation's board of directors, both 
as a matter of convenience, and to make

[[Page 9060]]

unwanted corporate takeovers more difficult. As a result, the New 
Bylaws require that, should the stockholders wish to amend the 
Corporation's bylaws, a supermajority of 66\2/3\ percent would be 
required. The threshold reduction from 70 percent to 66\2/3\ is 
intended to be consistent with other publicly-held companies.
---------------------------------------------------------------------------

    \18\ See Investor Rights Agreement, Section 4.3(d).
    \19\ See supra note 14 and accompanying text.
---------------------------------------------------------------------------

    In addition to the board of directors and stockholder approval 
requirements, Article XI of the New Bylaws would maintain the 
provisions contained in Article XII of the Current Bylaws requiring 
that, for so long as the Corporation will control a national securities 
exchange registered with the Commission under Section 6 of the Act, 
before any amendment to the New Bylaws may become effective, the 
amendment must be submitted to the board of directors of such exchange, 
and if required by Section 19 of the Act,\20\ filed with or filed with 
and approved by the Commission.
---------------------------------------------------------------------------

    \20\ 15 U.S.C. 78s.
---------------------------------------------------------------------------

s. Loans to Officers
    Article XIII of the Current Bylaws authorizes the Corporation to 
lend money to or guarantee obligations of any officer of the company 
under certain circumstances. In order to comply with Section 13(k)(1) 
of the Act,\21\ which will apply to the Corporation after the IPO, the 
New Bylaws eliminate this authority.
---------------------------------------------------------------------------

    \21\ 15 U.S.C. 78m(k)(1).
---------------------------------------------------------------------------

t. Other Amendments
    The New Bylaws also remove references to the Investor Rights 
Agreement, as the provisions of that agreement, other than certain 
registration rights, is expected to terminate upon the occurrence of 
the IPO.\22\ In addition, the New Bylaws make various non-substantive, 
stylistic changes throughout. For example, as with the New Certificate 
of Incorporation, the New Bylaws would reflect a change in the name of 
the Corporation from ``BATS Global Markets, Inc.'' to ``Bats Global 
Markets, Inc.''
---------------------------------------------------------------------------

    \22\ See supra note 14 and accompanying text.
---------------------------------------------------------------------------

 2. Statutory Basis
    The Exchange believes that its proposal is consistent with the 
requirements of the Act and rules and regulations thereunder that are 
applicable to a national securities exchange and, in particular, with 
the requirements of Section 6(b)(1) of the Act, 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 members and persons associated with its members, with the 
provisions of the Act, the rules and regulations thereunder, and the 
rules of the Exchange.\23\ In particular, the New Certificate of 
Incorporation is consistent with Section 6(b)(1) of the Act because it 
would retain the limitations on ownership and total voting power that 
currently exist and would adopt super-majority requirements for certain 
amendments to the New Certificate of Incorporation. These provisions 
would help prevent any stockholder, including any member of the 
Exchange along with its Related Persons, from exercising undue control 
over the operation of the Exchange. In addition, Sections 2.03 and 
2.10(c) of the New Bylaws would prohibit the ability of the 
stockholders to call a special meeting of the stockholders and to act 
by written consent. Therefore, as with the New Certificate of 
Incorporation, the New Bylaws would help prevent any stockholder from 
exercising undue control over the operation of the Exchange and assure 
that the Exchange is able to carry out its regulatory obligations under 
the Act.
---------------------------------------------------------------------------

    \23\ 15 U.S.C. 78f(b).
---------------------------------------------------------------------------

(B) Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange does not believe that the proposed rule change will 
impose any burden on competition that is not necessary or appropriate 
in furtherance of the purposes of the Act. Indeed, the Exchange 
believes that the proposed rule change would enhance competition. The 
other major operators of registered national securities exchanges are 
currently public companies, with the access to the public markets that 
this facilitates. The amendments to the Corporation's certificate of 
incorporation and bylaws will facilitate the Corporation's IPO, 
facilitating capital formation and allowing the Corporation to better 
compete with other public companies operating national securities 
exchanges and other markets.

(C) Self-Regulatory Organization's Statement on Comments on the 
Proposed Rule Change Received From Members, Participants or Others

    The Exchange has not solicited or received written comments on the 
proposed rule change.

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 (i) as the Commission may 
designate up to 90 days of such date if it finds such longer period to 
be appropriate and publishes its reasons for so finding or (ii) as to 
which the Exchange 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-BYX-2016-02 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-BYX-2016-02. This file 
number should be included on the subject line if email is used. To help 
the Commission process and review your comments more efficiently, 
please use only one method. The Commission will post all comments on 
the Commission's Internet Web site (https://www.sec.gov/rules/sro.shtml). Copies of the submission, all subsequent amendments, all 
written statements with respect to the proposed rule change that are 
filed with the Commission, and all written communications relating to 
the proposed rule change between the Commission and any person, other 
than those that may be withheld from the public in accordance with the 
provisions of 5 U.S.C. 552, will be available for Web site viewing and 
printing in the Commission's Public Reference Room, 100 F Street NE., 
Washington, DC 20549, on official business days between the hours of 
10:00 a.m. and 3:00 p.m. Copies of the filing will also be available 
for inspection and copying at the principal

[[Page 9061]]

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-BYX-2016-02 and should be submitted on or before March 15, 2016.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\24\
Robert W. Errett,
Deputy Secretary.
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    \24\ 17 CFR 200.30-3(a)(12).
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[FR Doc. 2016-03664 Filed 2-22-16; 8:45 am]
 BILLING CODE 8011-01-P