Self-Regulatory Organizations; New York Stock Exchange LLC; Notice of Filing of Proposed Rule Change Amending the Ninth Amended and Restated Operating Agreement of the Exchange, 51249-51251 [2016-18318]

Download as PDF Federal Register / Vol. 81, No. 149 / Wednesday, August 3, 2016 / Notices disapprove the proposed rule change (File Number SR–NYSEMKT–2016–58). For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.6 Robert W. Errett, Deputy Secretary. [FR Doc. 2016–18314 Filed 8–2–16; 8:45 am] A. Self-Regulatory Organization’s Statement of the Purpose of, and the Statutory Basis for, the Proposed Rule Change BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION 1. Purpose [Release No. 34–78436; File No. SR–NYSE– 2016–51] Self-Regulatory Organizations; New York Stock Exchange LLC; Notice of Filing of Proposed Rule Change Amending the Ninth Amended and Restated Operating Agreement of the Exchange July 28, 2016. 19(b)(1) 1 Pursuant to Section of the Securities Exchange Act of 1934 (the ‘‘Act’’) 2 and Rule 19b–4 thereunder,3 notice is hereby given that, on July 22, 2016, New York Stock Exchange LLC (‘‘NYSE’’ or the ‘‘Exchange’’) filed with the Securities and Exchange Commission (the ‘‘Commission’’) the proposed rule change as described in Items I, II, and III below, which Items have been prepared by the selfregulatory organization. The Commission is publishing this notice to solicit comments on the proposed rule change from interested persons. asabaliauskas on DSK3SPTVN1PROD with NOTICES I. Self-Regulatory Organization’s Statement of the Terms of Substance of the Proposed Rule Change The Exchange proposes to amend the Ninth Amended and Restated Operating Agreement of the Exchange (‘‘Operating Agreement’’) to change the process for nominating non-affiliated directors and remove an obsolete reference. The proposed rule change is available on the Exchange’s Web site at www.nyse.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 self-regulatory organization included statements concerning the purpose of, and basis for, the proposed rule change and discussed any comments it received 6 17 CFR 200.30–3(a)(31). U.S.C. 78s(b)(1). 2 15 U.S.C. 78a. 3 17 CFR 240.19b–4. 1 15 VerDate Sep<11>2014 18:21 Aug 02, 2016 Jkt 238001 on the proposed rule change. The text of those 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. The Exchange proposes to amend the Operating Agreement to change the process for nominating non-affiliated directors and replace an obsolete reference to NYSE Market (DE), Inc. (‘‘NYSE Market (DE)’’). Process for Nominating Non-Affiliated Directors Pursuant to the Operating Agreement, at least 20% of the Board of Directors of the Exchange (‘‘Board’’) is made up of ‘‘Non-Affiliated Directors’’ (commonly referred to as ‘‘fair representation directors’’).4 Pursuant to Section 2.03(a) of the Operating Agreement, the nominating and governance committee (‘‘NGC’’) of the board of directors of ICE, the indirect parent of the Exchange, nominates the candidates for NonAffiliated Directors, who are then elected by NYSE Group, as the sole member of the Exchange. The Exchange proposes to amend Section 2.03(a) to have the Director Candidate Recommendation Committee (‘‘DCRC’’) of the Exchange assume the role currently played by the ICE NGC, and to make a conforming change to Section 2.03(h)(i). In addition, if the Member Organizations endorse a petition candidate for Non-Affiliated Director, pursuant to Section 2.03(a)(iv) the ICE NGC makes the determination of whether the person is eligible.5 The Exchange proposes to amend Section 2.03(a)(iv) to have the Exchange make 4 Pursuant to Section 2.03(a) of the Operating Agreement, Non-Affiliated Directors are persons who are not members of the board of directors of Intercontinental Exchange, Inc. (‘‘ICE’’) but qualify as independent. A person may not be a NonAffiliated Director unless he or she is free of any statutory disqualification, as defined in Section 3(a)(39) of the Exchange Act. The Exchange’s independence requirements are set forth in the Company Director Independence Policy of the Exchange. See Securities Exchange Act Release No. 67564 (August 1, 2012), 77 FR 47161 (August 7, 2012) (SR–NYSE–2012–17) (approving, among other things, the Exchange’s Company Director Independence Policy). 5 Pursuant to Section 2.02 of the Operating Agreement, ‘‘Member Organizations’’ refers to members, allied members and member organizations of the Exchange. PO 00000 Frm 00076 Fmt 4703 Sfmt 4703 51249 such determination instead of the ICE NGC. Currently, the nomination by the ICE NGC is the final step in the process for electing a Non-Affiliated Director. First, the DCRC recommends a candidate, whose name then is announced to the Exchange’s Member Organizations. The Member Organizations may propose alternate candidates by petition. If there are no petition candidates, the DCRC recommends its candidate(s) to the ICE NGC. If petition candidates are proposed, the ICE NGC makes the determination of whether the candidates are eligible, and then all of the eligible candidates are submitted to the Member Organizations for a vote. The DCRC recommends to the ICE NGC the candidate receiving the highest number of votes. The ICE NGC is obligated to designate the DCRC-recommended candidate(s) as the nominee, and NYSE Group is obligated to elect such candidate(s) as a Non-Affiliated Director. The Exchange believes obligating the ICE NGC to nominate the candidate(s) for Non-Affiliated Directors based on the DCRC’s unalterable recommendation is neither necessary nor meaningful. Pursuant to Section 2.03(a)(iii), the ICE NGC is obligated to designate whomever the DCRC recommends or, if there is a petition candidate, whomever emerges from the petition process. The ICE NGC does not have any discretion. Removing this unnecessary step would make the NYSE process more efficient. The Exchange believes that having the Exchange determine whether persons endorsed to be petition candidates are eligible also would be more efficient, as it would not require action from the ICE NGC, thereby removing the possibility of any delay in the process. The proposed change would be consistent with the petition processes of the Exchange’s affiliate, NYSE MKT LLC (‘‘NYSE MKT’’), and the Nasdaq Stock Market LLC. In both cases the exchange determines the eligibility of proposed nominees.6 The Exchange believes that the proposed changes will make its process more consistent with the process by which its affiliates, NYSE MKT and NYSE Arca, Inc. (‘‘NYSE Arca’’), designate their fair representation 6 See Article II, Section 2.03(a) of the Ninth Amended and Restated Operating Agreement of NYSE MKT LLC; Securities Exchange Act Release No. 77901 (May 25, 2016), 81 FR 35092 (June 1, 2016) (SR–NYSEMKT–2016–26) (‘‘NYSE MKT 2016 Release’’) and By-Laws of the Nasdaq Stock Market LLC, Art. II, Sec. 1(b) (‘‘The Company may require any proposed nominee to furnish such other information as it may reasonably require to determine the eligibility of such proposed nominee to serve as a Member Representative Director.’’). E:\FR\FM\03AUN1.SGM 03AUN1 51250 Federal Register / Vol. 81, No. 149 / Wednesday, August 3, 2016 / Notices directors, in which the ICE NGC plays no role.7 Accordingly, the Exchange proposes to revise Section 2.03(a)(iii)–(v) of the Operating Agreement to amend the process for electing Non-Affiliated Directors. As proposed, the process would be as follows. First, as is currently the case, the DCRC would recommend a candidate, whose name would be announced to the Member Organizations, and the Member Organizations could propose alternate candidates by petition. Second, if there were no petition candidates, the DCRC would nominate the candidate(s) it had previously recommended. If there were petition candidates, the Exchange would make the eligibility determination of petition candidates, all eligible candidates would be submitted to the Member Organizations for a vote, and the DCRC would nominate the candidate receiving the highest number of votes. Finally, NYSE Group would be obligated to elect the DCRC-nominated candidate as a Non-Affiliated Director. The Exchange would make a conforming change to Section 2.03(h)(i) to state that the DCRC ‘‘will be responsible for nominating NonAffiliated Director Candidates.’’ Currently, the provision states that the DCRC ‘‘will be responsible for recommending Non-Affiliated Director Candidates to the ICE NGC.’’ asabaliauskas on DSK3SPTVN1PROD with NOTICES Reference to NYSE Market (DE), Inc. Section 2.02 of the Operating Agreement sets forth the Board’s general supervision over Member Organizations and approved persons in connection with their conduct with or affecting Member Organizations. It provides that the Board ‘‘shall have supervision relating to the collection, dissemination and use of quotations and of reports of prices on NYSE Market (DE), Inc.’’ The Exchange proposes to amend Section 2.02 to replace the reference to NYSE Market (DE) with a reference to ‘‘the exchange operated by the Company.’’ 8 Following the merger of New York Stock Exchange, Inc. with Archipelago Holdings, Inc., the Exchange and its 7 See Article II, Section 2.03(a) of the Ninth Amended and Restated Operating Agreement of NYSE MKT LLC; NYSE MKT 2016 Release, supra note 6; and Article III, Section 3.02 of the NYSE Arca Bylaws and NYSE Arca Rule 3.2(b)(2). Similarly, the board of directors of The NASDAQ OMX Group, Inc., the sole member of the Nasdaq Stock Market LLC, plays no role in nominating or determining the eligibility of Member Representative Directors. See By-Laws of the Nasdaq Stock Market LLC, Art. II, Sec. 1. 8 See Article II, Section 2.02 of the proposed Tenth Amended and Restated Operating Agreement of New York Stock Exchange LLC. References to the ‘‘Company’’ in the Operating Agreement are to the Exchange. VerDate Sep<11>2014 18:21 Aug 02, 2016 Jkt 238001 subsidiaries NYSE Market (DE) and NYSE Regulation, Inc. entered into a Delegation Agreement, pursuant to which the Exchange delegated its market functions to NYSE Market (DE) and its regulatory functions to NYSE Regulation, Inc.9 The Delegation Agreement terminated in April 2016. Accordingly, NYSE Market (DE) no longer is delegated the Exchange’s market functions, making the reference to NYSE Market (DE) in Section 2.02 obsolete. The Exchange therefore proposes to update the reference to NYSE Market (DE) with a reference to ‘‘the exchange operated by the Company.’’ The proposed change would be consistent with Article II, Section 2.02 of the operating agreement of the Exchange’s affiliate NYSE MKT, which states that its board of directors ‘‘shall have supervision relating to the collection, dissemination and use of quotations and of reports of prices on the exchange operated by the Company.’’ 10 Finally, the Exchange proposes to make technical and conforming changes to the recitals and signature page of the Operating Agreement. 2. Statutory Basis The Exchange believes that the proposed rule change is consistent with Section 6(b) of the Exchange Act 11 in general, and with Section 6(b)(1) 12 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 Exchange Act and to comply, and to enforce compliance by its exchange members and persons associated with its exchange members, with the provisions of the Exchange Act, the rules and regulations thereunder, and the rules of the Exchange. The proposed change would remove the requirement that the ICE NGC nominate the candidates for NonAffiliated Directors and have the DCRC nominate the candidates for NonAffiliated Director directly. This proposed change would remove an unnecessary step in the process of nominating candidates for NonAffiliated Directors and increase efficiency. In addition, the proposed change would remove the requirement that the ICE NGC make the determination whether persons 9 See Securities Exchange Act Release No. 75991 (September 28, 2015), 80 FR 59837 (October 2, 2015) (SR–NYSE–2015–27), at 59839. 10 Article II, Section 2.02 of the Ninth Amended and Restated Operating Agreement of NYSE MKT LLC. 11 15 U.S.C. 78f(b). 12 15 U.S.C. 78f(b)(1). PO 00000 Frm 00077 Fmt 4703 Sfmt 4703 endorsed to be petition candidates are eligible to be Non-Affiliated Directors, and have the Exchange make such determination instead. By not requiring action from the ICE NGC, the possibility of any resulting delay in the process is removed. For these reasons, the Exchange believes that the proposed rule change would contribute to the orderly operation of the Exchange and would enable the Exchange to be so organized as to have the capacity to carry out the purposes of the Exchange Act and comply and enforce compliance with the provisions of the Exchange Act by its members and persons associated with its members. The Exchange therefore believes that approval of the proposed is consistent with Section 6(b)(1) of the Act. The Exchange believes that amending Section 2.02 of the Operating Agreement to replace the reference to NYSE Market (DE) with a reference to ‘‘the exchange operated by the Company’’ would remove an obsolete reference to an entity that is no longer delegated the Exchange’s market functions, thereby reducing potential confusion that may result from retaining obsolete references in the Exchange’s Operating Agreement. The proposed replacement will clarify that the Board has supervision relating to the collection, dissemination and use of quotations and of reports of prices on the Exchange. The Exchange believes that replacing such obsolete reference would not be inconsistent with the public interest and the protection of investors because investors will not be harmed and in fact would benefit from increased transparency, thereby reducing potential confusion. Removing such obsolete reference will also further the goal of transparency and add clarity to the Exchange’s rules. The Exchange also believes that this filing furthers the objectives of Section 6(b)(5) of the Exchange Act 13 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. The Exchange believes that having the DCRC nominate the candidates for Non13 15 E:\FR\FM\03AUN1.SGM U.S.C. 78f(b)(5). 03AUN1 Federal Register / Vol. 81, No. 149 / Wednesday, August 3, 2016 / Notices Affiliated Director would remove impediments to and perfect a national market system because the proposed rule change would remove an unnecessary step in the process for nominating candidates for NonAffiliated Directors and would remove the ICE NGC from making the determination whether persons endorsed to be petition candidates are eligible to be Non-Affiliated Directors. By not requiring action from the ICE NGC, the possibility of any resulting delay in the process is removed. The Exchange believes that the proposed rule change is therefore consistent with and facilitates a governance and regulatory structure that furthers the objectives of Section 6(b)(5) of the Act. 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 Exchange Act. The proposed rule change is not intended to address competitive issues but rather is concerned solely with the administration and functioning of the Exchange and its Board. C. Self-Regulatory Organization’s Statement on Comments on the Proposed Rule Change Received From Members, Participants, or Others No written comments were solicited or received with respect to the proposed rule change. III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action asabaliauskas on DSK3SPTVN1PROD with NOTICES Within 45 days of the date of publication of this notice in the Federal Register or 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 the 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: VerDate Sep<11>2014 18:21 Aug 02, 2016 Jkt 238001 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– NYSE–2016–51 on the subject line. Paper Comments • Send paper comments in triplicate to Brent J. Fields, Secretary, Securities and Exchange Commission, 100 F Street NE., Washington, DC 20549–1090. All submissions should refer to File Number SR–NYSE–2016–51. 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 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–NYSE– 2016–51 and should be submitted on or before August 24, 2016. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.14 Robert W. Errett, Deputy Secretary. [FR Doc. 2016–18318 Filed 8–2–16; 8:45 am] BILLING CODE 8011–01–P 14 17 PO 00000 SECURITIES AND EXCHANGE COMMISSION [Release No. 34–78437; File No. SR– NASDAQ–2016–056] Self-Regulatory Organizations; The NASDAQ Stock Market LLC; Notice of Filing of Amendment No. 3 and Order Granting Accelerated Approval of a Proposed Rule Change, as Modified by Amendment No. 3, To List and Trade Shares of the PowerShares Variable Rate Investment Grade Portfolio, a Series of the PowerShares Actively Managed Exchange-Traded Fund Trust July 28, 2016. I. Introduction On April 13, 2016, The NASDAQ Stock Market LLC (‘‘Exchange’’ or ‘‘Nasdaq’’) filed with the Securities and Exchange Commission (‘‘Commission’’), pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (‘‘Act’’ or ‘‘Exchange Act’’) 1 and Rule 19b–4 thereunder,2 a proposed rule change to list and trade shares (‘‘Shares’’) of the PowerShares Variable Rate Investment Grade Portfolio (‘‘Fund’’), a series of the PowerShares Actively Managed Exchange-Traded Fund Trust (‘‘Trust’’) under Nasdaq Rule 5735. The proposed rule change was published for comment in the Federal Register on May 2, 2016.3 On May 5, 2016, the Exchange filed Amendment No. 1 to the proposed rule change. On June 14, 2016, pursuant to Section 19(b)(2) of the Act,4 the Commission designated a longer period within which to approve the proposed rule change, disapprove the proposed rule change, or institute proceedings to determine whether to disapprove the proposed rule change.5 On June 29, 2016, the Exchange filed Amendment No. 2 to the proposed rule change.6 On July 15, 2016, the Exchange filed Amendment No. 3 to the proposed rule change.7 The Commission received no 1 15 U.S.C. 78s(b)(1). CFR 240.19b–4. 3 See Securities Exchange Act Release No. 77715 (April 26, 2016), 81 FR 26285 (‘‘Notice’’). 4 15 U.S.C. 78s(b)(2). 5 See Securities Exchange Act Release No. 78063, 81 FR 39972 (June 20, 2016). The Commission designated July 29, 2016, as the date by which it should approve, disapprove, or institute proceedings to determine whether to disapprove the proposed rule change. 6 On July 15, 2016, the Exchange withdrew Amendment No. 2. 7 In Amendment No. 3, which amended and replaced the original filing as modified by Amendment No. 1, the Exchange: (a) Clarified the scope of mortgage-backed securities (‘‘MBS’’) that could be held by the Fund; (b) clarified that the Fund will not invest (i) in commercial loans, (ii) in leveraged, inverse, or inverse leveraged exchange2 17 CFR 200.30–3(a)(12). Frm 00078 Fmt 4703 Sfmt 4703 51251 Continued E:\FR\FM\03AUN1.SGM 03AUN1

Agencies

SECURITIES AND EXCHANGE COMMISSION

[Federal Register Volume 81, Number 149 (Wednesday, August 3, 2016)]
[Notices]
[Pages 51249-51251]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-18318]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-78436; File No. SR-NYSE-2016-51]

Self-Regulatory Organizations; New York Stock Exchange LLC;
Notice of Filing of Proposed Rule Change Amending the Ninth Amended and
Restated Operating Agreement of the Exchange

July 28, 2016.
Pursuant to Section 19(b)(1) \1\ of the Securities Exchange Act of
1934 (the ``Act'') \2\ and Rule 19b-4 thereunder,\3\ notice is hereby
given that, on July 22, 2016, New York Stock Exchange LLC (``NYSE'' or
the ``Exchange'') filed with the Securities and Exchange Commission
(the ``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\ 15 U.S.C. 78a.
\3\ 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 proposes to amend the Ninth Amended and Restated
Operating Agreement of the Exchange (``Operating Agreement'') to change
the process for nominating non-affiliated directors and remove an
obsolete reference. The proposed rule change is available on the
Exchange's Web site at www.nyse.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 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 those 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 the
Statutory Basis for, the Proposed Rule Change

1. Purpose
The Exchange proposes to amend the Operating Agreement to change
the process for nominating non-affiliated directors and replace an
obsolete reference to NYSE Market (DE), Inc. (``NYSE Market (DE)'').
Process for Nominating Non-Affiliated Directors
Pursuant to the Operating Agreement, at least 20% of the Board of
Directors of the Exchange (``Board'') is made up of ``Non-Affiliated
Directors'' (commonly referred to as ``fair representation
directors'').\4\ Pursuant to Section 2.03(a) of the Operating
Agreement, the nominating and governance committee (``NGC'') of the
board of directors of ICE, the indirect parent of the Exchange,
nominates the candidates for Non-Affiliated Directors, who are then
elected by NYSE Group, as the sole member of the Exchange. The Exchange
proposes to amend Section 2.03(a) to have the Director Candidate
Recommendation Committee (``DCRC'') of the Exchange assume the role
currently played by the ICE NGC, and to make a conforming change to
Section 2.03(h)(i).
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\4\ Pursuant to Section 2.03(a) of the Operating Agreement, Non-
Affiliated Directors are persons who are not members of the board of
directors of Intercontinental Exchange, Inc. (``ICE'') but qualify
as independent. A person may not be a Non-Affiliated Director unless
he or she is free of any statutory disqualification, as defined in
Section 3(a)(39) of the Exchange Act. The Exchange's independence
requirements are set forth in the Company Director Independence
Policy of the Exchange. See Securities Exchange Act Release No.
67564 (August 1, 2012), 77 FR 47161 (August 7, 2012) (SR-NYSE-2012-
17) (approving, among other things, the Exchange's Company Director
Independence Policy).
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In addition, if the Member Organizations endorse a petition
candidate for Non-Affiliated Director, pursuant to Section 2.03(a)(iv)
the ICE NGC makes the determination of whether the person is
eligible.\5\ The Exchange proposes to amend Section 2.03(a)(iv) to have
the Exchange make such determination instead of the ICE NGC.
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\5\ Pursuant to Section 2.02 of the Operating Agreement,
``Member Organizations'' refers to members, allied members and
member organizations of the Exchange.
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Currently, the nomination by the ICE NGC is the final step in the
process for electing a Non-Affiliated Director. First, the DCRC
recommends a candidate, whose name then is announced to the Exchange's
Member Organizations. The Member Organizations may propose alternate
candidates by petition. If there are no petition candidates, the DCRC
recommends its candidate(s) to the ICE NGC. If petition candidates are
proposed, the ICE NGC makes the determination of whether the candidates
are eligible, and then all of the eligible candidates are submitted to
the Member Organizations for a vote. The DCRC recommends to the ICE NGC
the candidate receiving the highest number of votes. The ICE NGC is
obligated to designate the DCRC-recommended candidate(s) as the
nominee, and NYSE Group is obligated to elect such candidate(s) as a
Non-Affiliated Director.
The Exchange believes obligating the ICE NGC to nominate the
candidate(s) for Non-Affiliated Directors based on the DCRC's
unalterable recommendation is neither necessary nor meaningful.
Pursuant to Section 2.03(a)(iii), the ICE NGC is obligated to designate
whomever the DCRC recommends or, if there is a petition candidate,
whomever emerges from the petition process. The ICE NGC does not have
any discretion. Removing this unnecessary step would make the NYSE
process more efficient.
The Exchange believes that having the Exchange determine whether
persons endorsed to be petition candidates are eligible also would be
more efficient, as it would not require action from the ICE NGC,
thereby removing the possibility of any delay in the process. The
proposed change would be consistent with the petition processes of the
Exchange's affiliate, NYSE MKT LLC (``NYSE MKT''), and the Nasdaq Stock
Market LLC. In both cases the exchange determines the eligibility of
proposed nominees.\6\
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\6\ See Article II, Section 2.03(a) of the Ninth Amended and
Restated Operating Agreement of NYSE MKT LLC; Securities Exchange
Act Release No. 77901 (May 25, 2016), 81 FR 35092 (June 1, 2016)
(SR-NYSEMKT-2016-26) (``NYSE MKT 2016 Release'') and By-Laws of the
Nasdaq Stock Market LLC, Art. II, Sec. 1(b) (``The Company may
require any proposed nominee to furnish such other information as it
may reasonably require to determine the eligibility of such proposed
nominee to serve as a Member Representative Director.'').
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The Exchange believes that the proposed changes will make its
process more consistent with the process by which its affiliates, NYSE
MKT and NYSE Arca, Inc. (``NYSE Arca''), designate their fair
representation

[[Page 51250]]

directors, in which the ICE NGC plays no role.\7\
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\7\ See Article II, Section 2.03(a) of the Ninth Amended and
Restated Operating Agreement of NYSE MKT LLC; NYSE MKT 2016 Release,
supra note 6; and Article III, Section 3.02 of the NYSE Arca Bylaws
and NYSE Arca Rule 3.2(b)(2). Similarly, the board of directors of
The NASDAQ OMX Group, Inc., the sole member of the Nasdaq Stock
Market LLC, plays no role in nominating or determining the
eligibility of Member Representative Directors. See By-Laws of the
Nasdaq Stock Market LLC, Art. II, Sec. 1.
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Accordingly, the Exchange proposes to revise Section 2.03(a)(iii)-
(v) of the Operating Agreement to amend the process for electing Non-
Affiliated Directors. As proposed, the process would be as follows.
First, as is currently the case, the DCRC would recommend a candidate,
whose name would be announced to the Member Organizations, and the
Member Organizations could propose alternate candidates by petition.
Second, if there were no petition candidates, the DCRC would nominate
the candidate(s) it had previously recommended. If there were petition
candidates, the Exchange would make the eligibility determination of
petition candidates, all eligible candidates would be submitted to the
Member Organizations for a vote, and the DCRC would nominate the
candidate receiving the highest number of votes. Finally, NYSE Group
would be obligated to elect the DCRC-nominated candidate as a Non-
Affiliated Director.
The Exchange would make a conforming change to Section 2.03(h)(i)
to state that the DCRC ``will be responsible for nominating Non-
Affiliated Director Candidates.'' Currently, the provision states that
the DCRC ``will be responsible for recommending Non-Affiliated Director
Candidates to the ICE NGC.''
Reference to NYSE Market (DE), Inc.
Section 2.02 of the Operating Agreement sets forth the Board's
general supervision over Member Organizations and approved persons in
connection with their conduct with or affecting Member Organizations.
It provides that the Board ``shall have supervision relating to the
collection, dissemination and use of quotations and of reports of
prices on NYSE Market (DE), Inc.'' The Exchange proposes to amend
Section 2.02 to replace the reference to NYSE Market (DE) with a
reference to ``the exchange operated by the Company.'' \8\
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\8\ See Article II, Section 2.02 of the proposed Tenth Amended
and Restated Operating Agreement of New York Stock Exchange LLC.
References to the ``Company'' in the Operating Agreement are to the
Exchange.
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Following the merger of New York Stock Exchange, Inc. with
Archipelago Holdings, Inc., the Exchange and its subsidiaries NYSE
Market (DE) and NYSE Regulation, Inc. entered into a Delegation
Agreement, pursuant to which the Exchange delegated its market
functions to NYSE Market (DE) and its regulatory functions to NYSE
Regulation, Inc.\9\
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\9\ See Securities Exchange Act Release No. 75991 (September 28,
2015), 80 FR 59837 (October 2, 2015) (SR-NYSE-2015-27), at 59839.
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The Delegation Agreement terminated in April 2016. Accordingly,
NYSE Market (DE) no longer is delegated the Exchange's market
functions, making the reference to NYSE Market (DE) in Section 2.02
obsolete. The Exchange therefore proposes to update the reference to
NYSE Market (DE) with a reference to ``the exchange operated by the
Company.''
The proposed change would be consistent with Article II, Section
2.02 of the operating agreement of the Exchange's affiliate NYSE MKT,
which states that its board of directors ``shall have supervision
relating to the collection, dissemination and use of quotations and of
reports of prices on the exchange operated by the Company.'' \10\
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\10\ Article II, Section 2.02 of the Ninth Amended and Restated
Operating Agreement of NYSE MKT LLC.
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Finally, the Exchange proposes to make technical and conforming
changes to the recitals and signature page of the Operating Agreement.
2. Statutory Basis
The Exchange believes that the proposed rule change is consistent
with Section 6(b) of the Exchange Act \11\ in general, and with Section
6(b)(1) \12\ 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 Exchange Act and to comply, and to enforce compliance by its
exchange members and persons associated with its exchange members, with
the provisions of the Exchange Act, the rules and regulations
thereunder, and the rules of the Exchange.
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\11\ 15 U.S.C. 78f(b).
\12\ 15 U.S.C. 78f(b)(1).
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The proposed change would remove the requirement that the ICE NGC
nominate the candidates for Non-Affiliated Directors and have the DCRC
nominate the candidates for Non-Affiliated Director directly. This
proposed change would remove an unnecessary step in the process of
nominating candidates for Non-Affiliated Directors and increase
efficiency. In addition, the proposed change would remove the
requirement that the ICE NGC make the determination whether persons
endorsed to be petition candidates are eligible to be Non-Affiliated
Directors, and have the Exchange make such determination instead. By
not requiring action from the ICE NGC, the possibility of any resulting
delay in the process is removed. For these reasons, the Exchange
believes that the proposed rule change would contribute to the orderly
operation of the Exchange and would enable the Exchange to be so
organized as to have the capacity to carry out the purposes of the
Exchange Act and comply and enforce compliance with the provisions of
the Exchange Act by its members and persons associated with its
members. The Exchange therefore believes that approval of the proposed
is consistent with Section 6(b)(1) of the Act.
The Exchange believes that amending Section 2.02 of the Operating
Agreement to replace the reference to NYSE Market (DE) with a reference
to ``the exchange operated by the Company'' would remove an obsolete
reference to an entity that is no longer delegated the Exchange's
market functions, thereby reducing potential confusion that may result
from retaining obsolete references in the Exchange's Operating
Agreement. The proposed replacement will clarify that the Board has
supervision relating to the collection, dissemination and use of
quotations and of reports of prices on the Exchange. The Exchange
believes that replacing such obsolete reference would not be
inconsistent with the public interest and the protection of investors
because investors will not be harmed and in fact would benefit from
increased transparency, thereby reducing potential confusion. Removing
such obsolete reference will also further the goal of transparency and
add clarity to the Exchange's rules.
The Exchange also believes that this filing furthers the objectives
of Section 6(b)(5) of the Exchange Act \13\ 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.
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\13\ 15 U.S.C. 78f(b)(5).
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The Exchange believes that having the DCRC nominate the candidates
for Non-

[[Page 51251]]

Affiliated Director would remove impediments to and perfect a national
market system because the proposed rule change would remove an
unnecessary step in the process for nominating candidates for Non-
Affiliated Directors and would remove the ICE NGC from making the
determination whether persons endorsed to be petition candidates are
eligible to be Non-Affiliated Directors. By not requiring action from
the ICE NGC, the possibility of any resulting delay in the process is
removed. The Exchange believes that the proposed rule change is
therefore consistent with and facilitates a governance and regulatory
structure that furthers the objectives of Section 6(b)(5) of the Act.

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 Exchange Act. The proposed rule
change is not intended to address competitive issues but rather is
concerned solely with the administration and functioning of the
Exchange and its Board.

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

No written comments were solicited or received with respect to the
proposed rule change.

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

Within 45 days of the date of publication of this notice in the
Federal Register or 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 the 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-NYSE-2016-51 on the subject line.

Paper Comments

Send paper comments in triplicate to Brent J. Fields,
Secretary, Securities and Exchange Commission, 100 F Street NE.,
Washington, DC 20549-1090.

All submissions should refer to File Number SR-NYSE-2016-51. 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 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-NYSE-2016-51 and should be
submitted on or before August 24, 2016.
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\14\ 17 CFR 200.30-3(a)(12).

For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\14\
Robert W. Errett,
Deputy Secretary.
[FR Doc. 2016-18318 Filed 8-2-16; 8:45 am]
BILLING CODE 8011-01-P

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