Self-Regulatory Organizations; Cboe EDGX Exchange, Inc.; Notice of Filing of a Proposed Rule Change Relating to Its Director Nomination and Committee Appointment Process and Its Nominating and Governance Committee, 56072-56075 [2017-25470]

Download as PDF 56072 Federal Register / Vol. 82, No. 226 / Monday, November 27, 2017 / Notices Internet Web site (http://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. Persons submitting comments are cautioned that we do not redact or edit personal identifying information from comment submissions. You should submit only information that you wish to make available publicly. All submissions should refer to File Number SR–C2–2017–030, and should be submitted on or before December 12, 2017. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.17 Eduardo A. Aleman, Assistant Secretary. BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–82126; File No. SR– CboeEDGX–2017–001] Self-Regulatory Organizations; Cboe EDGX Exchange, Inc.; Notice of Filing of a Proposed Rule Change Relating to Its Director Nomination and Committee Appointment Process and Its Nominating and Governance Committee asabaliauskas on DSKBBXCHB2PROD with NOTICES November 20, 2017. Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (the ‘‘Act’’),1 and Rule 19b–4 thereunder,2 notice is hereby given that on November 14, 2017, Cboe EDGX Exchange, Inc. (the ‘‘Exchange’’ or ‘‘EDGX’’) filed with the Securities and Exchange Commission (the ‘‘Commission’’) the proposed rule change as described in CFR 200.30–3(a)(12). U.S.C. 78s(b)(1). 2 17 CFR 240.19b–4. 1 15 VerDate Sep<11>2014 16:59 Nov 24, 2017 Jkt 244001 I. Self-Regulatory Organization’s Statement of the Terms of Substance of the Proposed Rule Change The Exchange proposes to amend its governance documents with respect to changes relating to its director nomination and committee appointment process and its Nominating and Governance Committee. The text of the proposed rule change is available at the Exchange’s Web site at www.bats.com, at the principal office of the Exchange, and at the Commission’s Public Reference Room. II. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change In its filing with the Commission, the Exchange included statements concerning the purpose of and basis for the proposed rule change and discussed any comments it received on the proposed rule change. The text of these statements may be examined at the places specified in Item IV below. The Exchange has prepared summaries, set forth in sections A, B, and C below, of the most significant aspects of such statements. A. Self-Regulatory Organization’s Statement of the Purpose of, and the Statutory Basis for, the Proposed Rule Change [FR Doc. 2017–25466 Filed 11–24–17; 8:45 am] 17 17 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. 1. Purpose The Exchange proposes to amend its Bylaws and Certificate. Specifically the Exchange proposes to eliminate its Nominating and Governance Committee (‘‘N&G Committee’’), as well as amend the process by which (i) directors are elected, (ii) committee appointments are made and (iii) vacancies are filled. Additionally, the Exchange proposes to make other technical, non-substantive changes. Elimination of Nominating and Governance Committee (a) Nomination of Directors By way of background, Section 4.3 of the Bylaws provides, among other things, that the Exchange N&G Committee shall consist of at least five directors that are majority Non-Industry Directors and are appointed by the Board on the recommendation of the N&G Committee. Section 4.3 of the Bylaws also provides that the N&G PO 00000 Frm 00088 Fmt 4703 Sfmt 4703 Committee shall have the authority to nominate individuals for election as directors of the Corporation and such other duties as prescribed by resolution of the Board.3 Additionally, if the N&G Committee has two or more Industry Directors, those Industry Directors shall act as the Representative Director Nominating Body, which body is responsible for the nomination of the Representative Directors. If however, there are less than two Industry Directors on the N&G Committee, then the Exchange Member Subcommittee of the Advisory Board shall act as the Representative Director Nominating Body.4 The N&G Committee is bound to accept and nominate the Representative Director nominees recommended by the Representative Director Nominating Body or, in the event of a petition candidate, the Representative Director nominees who receive the most votes pursuant to a Run-off Election.5 Pursuant to Section 3.1 of the Bylaws, the N&G Committee is also responsible for determining whether a director candidate satisfies the applicable qualifications for election as a director, and the decision of the N&G Committee, subject to review, if any, by the Board, is final. The Exchange first proposes to eliminate its N&G Committee and amend the process by which Directors are nominated and elected. Specifically, the Exchange proposes to provide that the sole stockholder of the exchange shall nominate and elect directors for nomination at the annual meeting of the stockholder, except with respect to fairrepresentation directors (‘‘Representative Directors’’) as described below. The Exchange notes that another Exchange similarly does not maintain an exchange-level nominating committee and instead provides that the sole stockholder of the Exchange nominates and elects their non-fair representation Directors.6 With respect to the nomination of Representative Directors, the Exchange proposes to amend the definition of ‘‘Representative Director Nominating Body’’ and provide that if the Board has two or more Industry Directors, excluding directors that are exchange employees, those Industry Directors 3 Article Fifth, subparagraph (c) of the Certificate also provides that the N&G Committee nominates persons for election as directors. 4 See Sections 1.1(j) and 4.3 of the Bylaws. Section 3.2 of the Bylaws sets forth a detailed process for the nomination and selection of fair representation directors for the Board of Directors. 5 See Sections 3.1 and 3.2 of the Bylaws and Article Fifth, subparagraph (c) of the Certificate. 6 See Section 3.02 of the Amended and Restated NYSE Arca, Inc. Bylaws. E:\FR\FM\27NON1.SGM 27NON1 Federal Register / Vol. 82, No. 226 / Monday, November 27, 2017 / Notices shall act as the Representative Director Nominating Body. Additionally, similar to the current practice, if there are less than two Industry Directors on the Board (excluding directors that are employees of the Exchange), then the Exchange Member Subcommittee of the Advisory Board shall act as the Representative Director Nominating Body. The Bylaws and Certificate will also be amended to provide that the sole stockholder is bound to nominate and elect the Representative Directors nominees recommended by the Representative Director Nominating Body or, in the event of a petition candidate, the Representative Director nominees who receive the most votes pursuant to a Run-off Election. Lastly, as the N&G Committee is being eliminated, the Exchange proposes to amend Section 3.1 of the Bylaws to provide that the Board, instead of the N&G Committee, is responsible for determining whether a director candidate satisfies the applicable qualifications for election as a director, and the decision of the Board is final. There are no other changes with respect to the process for the nomination and selection of Representative Directors. The Exchange notes that it believes that the proposed changes continue to give Exchange members a voice in the Exchange’s use of self-regulatory authority. asabaliauskas on DSKBBXCHB2PROD with NOTICES (b) Committee Appointments The N&G Committee is also currently responsible for recommending to the Board of Directors appointments to certain Committees. Specifically, Section 4.2 and Section 6.1 of the Bylaws provides that the members of the Executive Committee and Advisory Board, respectively, be recommended by the N&G Committee for approval by the Board. Pursuant to Section 4.4 of the Bylaws, members of the Regulatory Oversight Committee (‘‘ROC’’) are recommended by the Non-Industry Directors on the N&G Committee for approval by the Board. In light of the elimination of the N&G Committee, the Exchange proposes to eliminate references to the N&G Committee with respect to committee appointments and transfer the N&G’s current authority to the Board (or appropriate subcommittee of the Board). Specifically the Exchange proposes that members of the Executive Committee and Advisory Board be appointed by the Board and members of the ROC be appointed by the Board on the recommendation of the Non-Industry Directors of the Board. The Exchange notes that Boards of other Exchanges VerDate Sep<11>2014 16:59 Nov 24, 2017 Jkt 244001 also have authority to appoint Board Committees.7 Filling of Director Vacancies Next, the Exchange proposes to amend the process to fill Director vacancies. Currently, Sections 3.4 of the Bylaws provides that in the event any Industry Director or Non-Industry Director fails to maintain the qualifications required for such category of director, his office shall become vacant and the vacancy may be filled by the Board with a person who qualifies for the category in which the vacancy exists. If a director is determined to have requalified, Section 3.4 provides the Board, in its sole discretion, may fill an existing vacancy in the Board or may increase the size of the Board, as necessary, to appoint such director to the Board; provided, however, that the Board shall be under no obligation to return such director to the Board. Section 3.5 of the Bylaws also provides that a vacancy on the Board may be filled by a vote of majority of the Directors then in office, or by the sole remaining Director, so long as the elected Director qualifies for the position. Additionally, for vacancies of Representative Directors, the Representative Director Nominating Body will recommend an individual to be elected, or provide a list of recommended individuals, and the position shall be filled by the vote of a majority of the Directors then in office. Consistent with the proposal to have the sole stockholder nominate and elect directors to the Board (and to be bound to accept and elect the Representative Director Nominating Body’s nominee(s)), the Exchange wishes to provide that the sole stockholder, instead of the Board, will also have the ability to fill the above described Director vacancies. Technical, Non-Substantive Changes Lastly, the Exchange proposes to change the Exchange’s name in the title and signature line in its Certificate from ‘‘Bats EDGX Exchange, Inc.’’ to ‘‘Cboe EDGX Exchange, Inc.’’ The Exchange notes that it recently changed its legal name, but was unable to update the Exchange’s name in the title or signature line in its Certificate as the name changes were not effective until the Exchange, as previously named, filed the proposed changes in Delaware. The Exchange had noted in the filing that proposed the name changes that it would later amend the Certificate to 7 See e.g., Eleventh Amended and Restated Operating Agreement of New York Stock Exchange, LLC, Section 2.03(h) and By-Laws of Nasdaq Phlx LLC, Section 5–3. PO 00000 Frm 00089 Fmt 4703 Sfmt 4703 56073 reflect the new name in the title and signature line and the Exchange is seeking to do so now. The Exchange also proposes to make clarifying amendments and cite to the applicable provisions of the General Corporation Law of the State of Delaware in connection with the proposed restatement and amendment. 2. Statutory Basis The Exchange believes the proposed rule change is consistent with the Securities Exchange Act of 1934 (the ‘‘Act’’) and the rules and regulations thereunder applicable to the Exchange and, in particular, the requirements of Section 6(b) of the Act.8 Specifically, the Exchange believes the proposed rule change is consistent with the Section 6(b)(5) 9 requirements that the rules of an exchange be 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. Additionally, the Exchange believes the proposed rule change is consistent with the Section 6(b)(5) 10 requirement that the rules of an exchange not be designed to permit unfair discrimination between customers, issuers, brokers, or dealers. The Exchange also believes that its proposal is consistent with Section 6(b) of the Act in general, and furthers the objectives of Section 6(b)(1) of the Act in particular, in that it enables the Exchange to be so organized as to have the capacity to be able to carry out the purposes of the Act and to comply, and to enforce compliance by its exchange members and persons associated with its exchange members, with the provisions of the Act, the rules and regulations thereunder, and the rules of the Exchange. The Exchange also believes that this proposal furthers the objectives of Section 6(b)(3) 11 of the Act in particular, in that it is designed to assure a fair representation of Exchange Members in the selection of its directors and administration of its affairs and provide that one or more directors would be representative of issuers and investors and not be associated with a member of the exchange, broker, or 8 15 U.S.C. 78f(b). U.S.C. 78f(b)(5). 10 Id. 11 15 U.S.C. 78f(b)(3). 9 15 E:\FR\FM\27NON1.SGM 27NON1 asabaliauskas on DSKBBXCHB2PROD with NOTICES 56074 Federal Register / Vol. 82, No. 226 / Monday, November 27, 2017 / Notices dealer. For instance, the proposed changes continue to include a process by which Exchange members can directly petition and vote for representation on the Board. The Exchange believes eliminating the exchange-level N&G Committee allows the Exchange to eliminate a board committee whose core responsibilities can be adequately handled by its sole stockholder or Board, as applicable. The Exchange believes the elimination of this board committee will streamline, make more efficient, and improve the Exchange’s governance structure and allow directors of the Exchange to continue to focus their attention on matters within the purview of the Exchange’s Board including its orderly discharge of regulatory duties to prevent fraudulent and manipulative acts and practices, to promote just and equitable principles of trade, to foster cooperation and coordination with persons engaged in regulating, clearing, settling, processing information with respect to, and facilitating transactions in securities, to remove impediments to and perfect the mechanism of a free and open market and a national market system, and, in general, to protect investors and the public interest. The Exchange also notes that it is not statutorily required to maintain a standing nominating committee. Indeed, another Exchange similarly does not do so and instead provides that its sole stockholder nominates and elects its non-fair representation directors.12 Other Exchanges also provide that their Board, without input from a nominating committee, appoint members to committees.13 The Exchange also believes that since it is being proposed that the sole stockholder have the authority to nominate (and elect) directors to the Board (and accept and elect Representative Director nominees), it is also consistent to transfer the authority to fill director vacancies from the Board to the sole stockholder. The Exchange importantly notes that it is not proposing to amend any of the compositional requirements currently set forth in the Bylaws and that notwithstanding the proposed changes, existing compositional requirements of the Exchange will still be required to be satisfied, including the provision relating to the fair representation of members. While the delegation of the authority relating to the (i) nomination 12 See Section 3.02 of the Amended and Restated NYSE Arca, Inc. Bylaws. 13 See e.g., Eleventh Amended and Restated Operating Agreement of New York Stock Exchange, LLC, Section 2.03(h) and By-Laws of Nasdaq Phlx LLC, Section 5–3. VerDate Sep<11>2014 16:59 Nov 24, 2017 Jkt 244001 and election of directors, (ii) nominating body for Representative Directors, (iii) filling of Director vacancies and (iv) appointment of committees is being modified, the substantive practices of the Exchange will remain the same. For example, the sole stockholder will be bound to nominate and elect the Representative Directors nominees recommended by the Representative Director Nominating Body or, in the event of a petition candidate, the Representative Director nominees who receive the most votes pursuant to a Run-off Election. Lastly, the Exchange believes the clarifying changes to the Exchange’s Certificate, including updating the Exchange’s name in the title and signature line, allows the Exchange to comply with Delaware law and reduce potential confusion. The alleviation of confusion removes impediments to, and perfects the mechanism for a free and open market and a national market system, and, in general, protects investors and the public interest of market participants. The Exchange believes the proposed changes do not affect the meaning, administration, or enforcement of any rules of the Exchange or the rights, obligations, or privileges of Exchange members or their associated persons is any way. B. Self-Regulatory Organization’s Statement on Burden on Competition The Exchange does not believe the proposed rule change will impose any burden on competition not necessary or appropriate in furtherance of the purposes of the Act. The proposed rule change relates to the corporate governance of the Exchange and not the operations of the Exchange. This is not a competitive filing and, therefore, imposes no burden on competition. C. Self-Regulatory Organization’s Statement on Comments on the Proposed Rule Change Received From Members, Participants, or Others The Exchange neither solicited nor received 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 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 Exchange consents, the Commission will: PO 00000 Frm 00090 Fmt 4703 Sfmt 4703 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 (http://www.sec.gov/ rules/sro.shtml); or • Send an email to rule-comments@ sec.gov. Please include File Number SR– CboeEDGX–2017–001 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–CboeEDGX–2017–001. 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 (http://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. Persons submitting comments are cautioned that we do not redact or edit personal identifying information from comment submissions. You should submit only information that you wish to make available publicly. All submissions should refer to File Number SR–CboeEDGX–2017–001, and E:\FR\FM\27NON1.SGM 27NON1 Federal Register / Vol. 82, No. 226 / Monday, November 27, 2017 / Notices 56075 should be submitted on or before December 12, 2017. the most significant aspects of such statements. necessary for Rule 713 which discusses priority. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.14 Eduardo A. Aleman, Assistant Secretary. A. Self-Regulatory Organization’s Statement of the Purpose of, and the Statutory Basis for, the Proposed Rule Change [FR Doc. 2017–25470 Filed 11–24–17; 8:45 am] 1. Purpose BILLING CODE 8011–01–P The Exchange previously filed a rule change to amend the All-Or-None Order so that it may only be entered into the trading system with a time-in-force designation of Immediate-Or-Cancel.3 Previously, an All-Or-None Order was a limit or market order that is to be executed in its entirety or not at all. It was designated as a market or limit order with any time-in-force designation. The Exchange filed to limit All-Or-None Orders to only be accepted with a time-in-force designation of Immediate-Or-Cancel.4 Today, an Immediate-Or-Cancel Order is a limit order that is to be executed in whole or in part upon receipt. Any portion not so executed is to be treated as cancelled. At that time, the Exchange also proposed to amend Supplementary Material .02 to Rule 713 to make clear that All-Or-None Orders will only be accepted with a time-in-force designation of ImmediateOr-Cancel and, therefore, would not persist in the Order Book.5 The Exchange proposes at this time to remove Supplementary Material .02 to Rule 713 as unnecessary as All-Or-None Orders do not rest on the Order Book. 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 not necessary or appropriate in furtherance of the purposes of the Act. This proposal seeks to delete rule text which is unnecessary and may lead to confusion. All-Or-None Orders do not rest on the order book and do not allocate differently than any other incoming order. SECURITIES AND EXCHANGE COMMISSION [Release No. 34–82130; File No. SR–ISE– 2017–99] Self-Regulatory Organizations; Nasdaq ISE, LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change Relating to All-Or-None Orders November 20, 2017. Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (‘‘Act’’),1 and Rule 19b–4 thereunder,2 notice is hereby given that on November 13, 2017, Nasdaq ISE, LLC (‘‘ISE’’ or ‘‘Exchange’’) filed with the Securities and Exchange Commission (‘‘Commission’’) the proposed rule change as described in Items I and II, 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. asabaliauskas on DSKBBXCHB2PROD with NOTICES I. Self-Regulatory Organization’s Statement of the Terms of Substance of the Proposed Rule Change The Exchange proposes to amend Rule 713 to delete Supplementary Material .02, which no longer is applicable. The text of the proposed rule change is available on the Exchange’s Web site at www.ise.com, at the principal office of the Exchange, and at the Commission’s Public Reference Room. II. Self-Regulatory Organization’s Statement of the Purpose of, and Statutory Basis for, the Proposed Rule Change In its filing with the Commission, the Exchange included statements concerning the purpose of and basis for the proposed rule change and discussed any comments it received on the proposed rule change. The text of these statements may be examined at the places specified in Item IV below. The Exchange has prepared summaries, set forth in sections A, B, and C below, of 14 17 CFR 200.30–3(a)(12). U.S.C. 78s(b)(1). 2 17 CFR 240.19b–4. 1 15 VerDate Sep<11>2014 16:59 Nov 24, 2017 Jkt 244001 2. Statutory Basis The Exchange believes that its proposal is consistent with Section 6(b) of the Act,6 in general, and furthers the objectives of Section 6(b)(5) of the Act,7 in particular, in that it is designed to promote just and equitable principles of trade, to remove impediments to and perfect the mechanism of a free and open market and a national market system, and, in general to protect investors and the public interest because the current notation in Supplementary Material .02 to Rule 713 is confusing and unnecessary. All-OrNone Orders do not rest on the order book and do not allocate differently than any other incoming order therefore no specific mention of this order type is 3 See Securities Exchange Act Release No. 80432 (April 11, 2017), 82 FR 18191 (April 17, 2017) (SR– ISE–2017–03) (Order Approving Proposed Rule Change, As Modified by Amendment No. 1, To Amend Various Rules in Connection with a System Migration to Nasdaq INET Technology). 4 Id. 5 Id. 6 15 U.S.C. 78f(b). 7 15 U.S.C. 78f(b)(5). PO 00000 Frm 00091 Fmt 4703 Sfmt 4703 C. Self-Regulatory Organization’s Statement on Comments on the Proposed Rule Change Received From Members, Participants, or Others No written comments were either solicited or received. III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action Because the proposed rule change does not (i) significantly affect the protection of investors or the public interest; (ii) impose any significant burden on competition; and (iii) become operative for 30 days from the date on which it was filed, or such shorter time as the Commission may designate if consistent with the protection of investors and the public interest, the proposed rule change has become effective pursuant to Section 19(b)(3)(A) of the Act 8 and Rule 19b–4(f)(6) thereunder.9 A proposed rule change filed under Rule 19b–4(f)(6) 10 normally does not become operative for 30 days after the date of filing. However, pursuant to Rule 19b–4(f)(6)(iii),11 the Commission may designate a shorter time if such action is consistent with the protection of investors and the public interest. The Exchange has asked the Commission to waive the 30-day operative delay so that the proposal may become operative immediately upon filing. The Commission believes that waiving the 30-day operative delay is consistent with the protection of investors and the public interest as it will allow the Exchange to immediately delete 8 15 U.S.C. 78s(b)(3)(A). CFR 240.19b–4(f)(6). In addition, Rule 19b– 4(f)(6)(iii) requires the Exchange to give the Commission written notice of the Exchange’s intent to file the proposed rule change, along with a brief description and text of the proposed rule change, at least five business days prior to the date of filing of the proposed rule change, or such shorter time as designated by the Commission. The Exchange has satisfied this requirement. 10 17 CFR 240.19b–4(f)(6). 11 17 CFR 240.19b–4(f)(6)(iii). 9 17 E:\FR\FM\27NON1.SGM 27NON1

Agencies

[Federal Register Volume 82, Number 226 (Monday, November 27, 2017)]
[Notices]
[Pages 56072-56075]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2017-25470]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-82126; File No. SR-CboeEDGX-2017-001]


Self-Regulatory Organizations; Cboe EDGX Exchange, Inc.; Notice 
of Filing of a Proposed Rule Change Relating to Its Director Nomination 
and Committee Appointment Process and Its Nominating and Governance 
Committee

November 20, 2017.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(the ``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given 
that on November 14, 2017, Cboe EDGX Exchange, Inc. (the ``Exchange'' 
or ``EDGX'') 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 Exchange. The 
Commission is publishing this notice to solicit comments on the 
proposed rule change from interested persons.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
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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 its governance documents with 
respect to changes relating to its director nomination and committee 
appointment process and its Nominating and Governance Committee.
    The text of the proposed rule change is available at the Exchange's 
Web site at www.bats.com, at the principal office of the Exchange, and 
at the Commission's Public Reference Room.

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

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

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

1. Purpose
    The Exchange proposes to amend its Bylaws and Certificate. 
Specifically the Exchange proposes to eliminate its Nominating and 
Governance Committee (``N&G Committee''), as well as amend the process 
by which (i) directors are elected, (ii) committee appointments are 
made and (iii) vacancies are filled. Additionally, the Exchange 
proposes to make other technical, non-substantive changes.
Elimination of Nominating and Governance Committee
(a) Nomination of Directors
    By way of background, Section 4.3 of the Bylaws provides, among 
other things, that the Exchange N&G Committee shall consist of at least 
five directors that are majority Non-Industry Directors and are 
appointed by the Board on the recommendation of the N&G Committee. 
Section 4.3 of the Bylaws also provides that the N&G Committee shall 
have the authority to nominate individuals for election as directors of 
the Corporation and such other duties as prescribed by resolution of 
the Board.\3\ Additionally, if the N&G Committee has two or more 
Industry Directors, those Industry Directors shall act as the 
Representative Director Nominating Body, which body is responsible for 
the nomination of the Representative Directors. If however, there are 
less than two Industry Directors on the N&G Committee, then the 
Exchange Member Subcommittee of the Advisory Board shall act as the 
Representative Director Nominating Body.\4\ The N&G Committee is bound 
to accept and nominate the Representative Director nominees recommended 
by the Representative Director Nominating Body or, in the event of a 
petition candidate, the Representative Director nominees who receive 
the most votes pursuant to a Run-off Election.\5\ Pursuant to Section 
3.1 of the Bylaws, the N&G Committee is also responsible for 
determining whether a director candidate satisfies the applicable 
qualifications for election as a director, and the decision of the N&G 
Committee, subject to review, if any, by the Board, is final.
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    \3\ Article Fifth, subparagraph (c) of the Certificate also 
provides that the N&G Committee nominates persons for election as 
directors.
    \4\ See Sections 1.1(j) and 4.3 of the Bylaws. Section 3.2 of 
the Bylaws sets forth a detailed process for the nomination and 
selection of fair representation directors for the Board of 
Directors.
    \5\ See Sections 3.1 and 3.2 of the Bylaws and Article Fifth, 
subparagraph (c) of the Certificate.
---------------------------------------------------------------------------

    The Exchange first proposes to eliminate its N&G Committee and 
amend the process by which Directors are nominated and elected. 
Specifically, the Exchange proposes to provide that the sole 
stockholder of the exchange shall nominate and elect directors for 
nomination at the annual meeting of the stockholder, except with 
respect to fair-representation directors (``Representative Directors'') 
as described below. The Exchange notes that another Exchange similarly 
does not maintain an exchange-level nominating committee and instead 
provides that the sole stockholder of the Exchange nominates and elects 
their non-fair representation Directors.\6\ With respect to the 
nomination of Representative Directors, the Exchange proposes to amend 
the definition of ``Representative Director Nominating Body'' and 
provide that if the Board has two or more Industry Directors, excluding 
directors that are exchange employees, those Industry Directors

[[Page 56073]]

shall act as the Representative Director Nominating Body. Additionally, 
similar to the current practice, if there are less than two Industry 
Directors on the Board (excluding directors that are employees of the 
Exchange), then the Exchange Member Subcommittee of the Advisory Board 
shall act as the Representative Director Nominating Body. The Bylaws 
and Certificate will also be amended to provide that the sole 
stockholder is bound to nominate and elect the Representative Directors 
nominees recommended by the Representative Director Nominating Body or, 
in the event of a petition candidate, the Representative Director 
nominees who receive the most votes pursuant to a Run-off Election. 
Lastly, as the N&G Committee is being eliminated, the Exchange proposes 
to amend Section 3.1 of the Bylaws to provide that the Board, instead 
of the N&G Committee, is responsible for determining whether a director 
candidate satisfies the applicable qualifications for election as a 
director, and the decision of the Board is final. There are no other 
changes with respect to the process for the nomination and selection of 
Representative Directors. The Exchange notes that it believes that the 
proposed changes continue to give Exchange members a voice in the 
Exchange's use of self-regulatory authority.
---------------------------------------------------------------------------

    \6\ See Section 3.02 of the Amended and Restated NYSE Arca, Inc. 
Bylaws.
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(b) Committee Appointments
    The N&G Committee is also currently responsible for recommending to 
the Board of Directors appointments to certain Committees. 
Specifically, Section 4.2 and Section 6.1 of the Bylaws provides that 
the members of the Executive Committee and Advisory Board, 
respectively, be recommended by the N&G Committee for approval by the 
Board. Pursuant to Section 4.4 of the Bylaws, members of the Regulatory 
Oversight Committee (``ROC'') are recommended by the Non-Industry 
Directors on the N&G Committee for approval by the Board.
    In light of the elimination of the N&G Committee, the Exchange 
proposes to eliminate references to the N&G Committee with respect to 
committee appointments and transfer the N&G's current authority to the 
Board (or appropriate subcommittee of the Board). Specifically the 
Exchange proposes that members of the Executive Committee and Advisory 
Board be appointed by the Board and members of the ROC be appointed by 
the Board on the recommendation of the Non-Industry Directors of the 
Board. The Exchange notes that Boards of other Exchanges also have 
authority to appoint Board Committees.\7\
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    \7\ See e.g., Eleventh Amended and Restated Operating Agreement 
of New York Stock Exchange, LLC, Section 2.03(h) and By-Laws of 
Nasdaq Phlx LLC, Section 5-3.
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Filling of Director Vacancies
    Next, the Exchange proposes to amend the process to fill Director 
vacancies. Currently, Sections 3.4 of the Bylaws provides that in the 
event any Industry Director or Non-Industry Director fails to maintain 
the qualifications required for such category of director, his office 
shall become vacant and the vacancy may be filled by the Board with a 
person who qualifies for the category in which the vacancy exists. If a 
director is determined to have requalified, Section 3.4 provides the 
Board, in its sole discretion, may fill an existing vacancy in the 
Board or may increase the size of the Board, as necessary, to appoint 
such director to the Board; provided, however, that the Board shall be 
under no obligation to return such director to the Board.
    Section 3.5 of the Bylaws also provides that a vacancy on the Board 
may be filled by a vote of majority of the Directors then in office, or 
by the sole remaining Director, so long as the elected Director 
qualifies for the position. Additionally, for vacancies of 
Representative Directors, the Representative Director Nominating Body 
will recommend an individual to be elected, or provide a list of 
recommended individuals, and the position shall be filled by the vote 
of a majority of the Directors then in office. Consistent with the 
proposal to have the sole stockholder nominate and elect directors to 
the Board (and to be bound to accept and elect the Representative 
Director Nominating Body's nominee(s)), the Exchange wishes to provide 
that the sole stockholder, instead of the Board, will also have the 
ability to fill the above described Director vacancies.
Technical, Non-Substantive Changes
    Lastly, the Exchange proposes to change the Exchange's name in the 
title and signature line in its Certificate from ``Bats EDGX Exchange, 
Inc.'' to ``Cboe EDGX Exchange, Inc.'' The Exchange notes that it 
recently changed its legal name, but was unable to update the 
Exchange's name in the title or signature line in its Certificate as 
the name changes were not effective until the Exchange, as previously 
named, filed the proposed changes in Delaware. The Exchange had noted 
in the filing that proposed the name changes that it would later amend 
the Certificate to reflect the new name in the title and signature line 
and the Exchange is seeking to do so now. The Exchange also proposes to 
make clarifying amendments and cite to the applicable provisions of the 
General Corporation Law of the State of Delaware in connection with the 
proposed restatement and amendment.
2. Statutory Basis
    The Exchange believes the proposed rule change is consistent with 
the Securities Exchange Act of 1934 (the ``Act'') and the rules and 
regulations thereunder applicable to the Exchange and, in particular, 
the requirements of Section 6(b) of the Act.\8\ Specifically, the 
Exchange believes the proposed rule change is consistent with the 
Section 6(b)(5) \9\ requirements that the rules of an exchange be 
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. Additionally, 
the Exchange believes the proposed rule change is consistent with the 
Section 6(b)(5) \10\ requirement that the rules of an exchange not be 
designed to permit unfair discrimination between customers, issuers, 
brokers, or dealers. The Exchange also believes that its proposal is 
consistent with Section 6(b) of the Act in general, and furthers the 
objectives of Section 6(b)(1) of the Act in particular, in that it 
enables the Exchange to be so organized as to have the capacity to be 
able to carry out the purposes of the Act and to comply, and to enforce 
compliance by its exchange members and persons associated with its 
exchange members, with the provisions of the Act, the rules and 
regulations thereunder, and the rules of the Exchange. The Exchange 
also believes that this proposal furthers the objectives of Section 
6(b)(3) \11\ of the Act in particular, in that it is designed to assure 
a fair representation of Exchange Members in the selection of its 
directors and administration of its affairs and provide that one or 
more directors would be representative of issuers and investors and not 
be associated with a member of the exchange, broker, or

[[Page 56074]]

dealer. For instance, the proposed changes continue to include a 
process by which Exchange members can directly petition and vote for 
representation on the Board.
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    \8\ 15 U.S.C. 78f(b).
    \9\ 15 U.S.C. 78f(b)(5).
    \10\ Id.
    \11\ 15 U.S.C. 78f(b)(3).
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    The Exchange believes eliminating the exchange-level N&G Committee 
allows the Exchange to eliminate a board committee whose core 
responsibilities can be adequately handled by its sole stockholder or 
Board, as applicable. The Exchange believes the elimination of this 
board committee will streamline, make more efficient, and improve the 
Exchange's governance structure and allow directors of the Exchange to 
continue to focus their attention on matters within the purview of the 
Exchange's Board including its orderly discharge of regulatory duties 
to prevent fraudulent and manipulative acts and practices, to promote 
just and equitable principles of trade, to foster cooperation and 
coordination with persons engaged in regulating, clearing, settling, 
processing information with respect to, and facilitating transactions 
in securities, to remove impediments to and perfect the mechanism of a 
free and open market and a national market system, and, in general, to 
protect investors and the public interest. The Exchange also notes that 
it is not statutorily required to maintain a standing nominating 
committee. Indeed, another Exchange similarly does not do so and 
instead provides that its sole stockholder nominates and elects its 
non-fair representation directors.\12\ Other Exchanges also provide 
that their Board, without input from a nominating committee, appoint 
members to committees.\13\ The Exchange also believes that since it is 
being proposed that the sole stockholder have the authority to nominate 
(and elect) directors to the Board (and accept and elect Representative 
Director nominees), it is also consistent to transfer the authority to 
fill director vacancies from the Board to the sole stockholder.
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    \12\ See Section 3.02 of the Amended and Restated NYSE Arca, 
Inc. Bylaws.
    \13\ See e.g., Eleventh Amended and Restated Operating Agreement 
of New York Stock Exchange, LLC, Section 2.03(h) and By-Laws of 
Nasdaq Phlx LLC, Section 5-3.
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    The Exchange importantly notes that it is not proposing to amend 
any of the compositional requirements currently set forth in the Bylaws 
and that notwithstanding the proposed changes, existing compositional 
requirements of the Exchange will still be required to be satisfied, 
including the provision relating to the fair representation of members. 
While the delegation of the authority relating to the (i) nomination 
and election of directors, (ii) nominating body for Representative 
Directors, (iii) filling of Director vacancies and (iv) appointment of 
committees is being modified, the substantive practices of the Exchange 
will remain the same. For example, the sole stockholder will be bound 
to nominate and elect the Representative Directors nominees recommended 
by the Representative Director Nominating Body or, in the event of a 
petition candidate, the Representative Director nominees who receive 
the most votes pursuant to a Run-off Election.
    Lastly, the Exchange believes the clarifying changes to the 
Exchange's Certificate, including updating the Exchange's name in the 
title and signature line, allows the Exchange to comply with Delaware 
law and reduce potential confusion. The alleviation of confusion 
removes impediments to, and perfects the mechanism for a free and open 
market and a national market system, and, in general, protects 
investors and the public interest of market participants.
    The Exchange believes the proposed changes do not affect the 
meaning, administration, or enforcement of any rules of the Exchange or 
the rights, obligations, or privileges of Exchange members or their 
associated persons is any way.

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

    The Exchange does not believe the proposed rule change will impose 
any burden on competition not necessary or appropriate in furtherance 
of the purposes of the Act. The proposed rule change relates to the 
corporate governance of the Exchange and not the operations of the 
Exchange. This is not a competitive filing and, therefore, imposes no 
burden on competition.

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

    The Exchange neither solicited nor received 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 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 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 (http://www.sec.gov/rules/sro.shtml); or
     Send an email to rule-comments@sec.gov. Please include 
File Number SR-CboeEDGX-2017-001 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-CboeEDGX-2017-001. 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 (http://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. Persons submitting 
comments are cautioned that we do not redact or edit personal 
identifying information from comment submissions. You should submit 
only information that you wish to make available publicly. All 
submissions should refer to File Number SR-CboeEDGX-2017-001, and

[[Page 56075]]

should be submitted on or before December 12, 2017.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\14\
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    \14\ 17 CFR 200.30-3(a)(12).
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Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2017-25470 Filed 11-24-17; 8:45 am]
 BILLING CODE 8011-01-P