Self-Regulatory Organizations; Cboe Exchange, Inc.; Cboe C2 Exchange, Inc.; Order Granting Accelerated Approval to a Proposed Rule Change Relating to Its Nominating and Governance Committee and Regulatory Oversight and Compliance Committee as Well as Its Director Nomination and Committee Appointment Process, 60654-60656 [2017-27465]
Download as PDF
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60654
Federal Register / Vol. 82, No. 244 / Thursday, December 21, 2017 / Notices
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–Phlx–2017–79, and should
be submitted on or before January 11,
2018.
V. Accelerated Approval of
Amendment No. 2
VI. Conclusion
It is therefore ordered, pursuant to
Section 19(b)(2) of the Act,12 that the
proposed rule change (SR–Phlx–2017–
79), as modified by Amendment No. 1,
be approved, and Amendment No. 2
thereto be approved on an accelerated
basis, for a pilot period of twelve
months.
daltland on DSKBBV9HB2PROD with NOTICES
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.13
Robert W. Errett,
Deputy Secretary.
[FR Doc. 2017–27469 Filed 12–20–17; 8:45 am]
BILLING CODE 8011–01–P
11 15
U.S.C. 78s(b)(2).
U.S.C. 78s(b)(2).
13 17 CFR 200.30–3(a)(12).
12 15
20:57 Dec 20, 2017
[Release No. 34–82336; File No. SR–CBOE–
2017–072; SR–C2–2017–030]
Self-Regulatory Organizations; Cboe
Exchange, Inc.; Cboe C2 Exchange,
Inc.; Order Granting Accelerated
Approval to a Proposed Rule Change
Relating to Its Nominating and
Governance Committee and
Regulatory Oversight and Compliance
Committee as Well as Its Director
Nomination and Committee
Appointment Process
December 15, 2017.
The Commission finds good cause to
approve Amendment No. 2 prior to the
thirtieth day after the date of
publication of notice of Amendment No.
2 in the Federal Register. As described
above, the Exchange proposes to
establish a Nonstandard Expirations
Pilot Program based upon, and
substantially similar to, CBOE’s Rule
24.9(e), Nonstandard Expirations Pilot
Program, previously approved by the
Commission. Amendment No. 2
proposes to provide additional data to
the Commission that was not applicable
to CBOE’s Nonstandard Expirations
Pilot Program specifically because it
would provide data to the Commission
on the effect of a subsequent pilot
program on the CBOE’s existing pilot
program. The Exchange’s proposed
Amendment No. 2 does not otherwise
change its proposal. The Commission
finds good cause, pursuant to Section
19(b)(2) of the Act,11 to approve
Amendment No. 2 on an accelerated
basis.
VerDate Sep<11>2014
SECURITIES AND EXCHANGE
COMMISSION
Jkt 244001
I. Introduction
On November 14, 2017, Cboe C2
Exchange, Inc. (‘‘C2’’) and on November
15, 2017, Cboe Exchange, Inc. (‘‘Cboe’’
and, together with C2, the ‘‘Exchanges’’)
filed with the Securities and Exchange
Commission (‘‘Commission’’), pursuant
to Section 19(b)(1) of the Securities
Exchange Act of 1934 (‘‘Act’’),1 and
Rule 19b–4 thereunder,2 proposed rule
changes to eliminate their Nominating
and Governance Committees (‘‘N&G
Committee’’); amend the process by
which (i) directors are elected, (ii)
committee appointments are made, and
(iii) vacancies are filled; and rename
their Regulatory Oversight and
Compliance Committees (‘‘ROCC’’).3
The proposed rule changes were
published for comment in the Federal
Register on November 27, 2017.4 The
Commission received no comments on
the proposals. This order approves the
proposed rule changes on an accelerated
basis.
II. Description of the Proposal
First, the Exchanges propose to
eliminate their N&G Committees and
provide that the sole stockholder of the
Exchanges (Cboe Global Markets, Inc.)
shall nominate and elect directors at the
annual meetings of the sole stockholder,
except with respect to fairrepresentation directors
(‘‘Representative Directors’’).5 As a
consequence of the elimination of the
N&G Committee, the Exchanges propose
1 15
U.S.C. 78s(b)(1).
CFR 240.19b 4.
3 In addition, the Exchanges propose to make
several formatting changes throughout their Bylaws
as well as to change their names in the title and
signature lines in their Certificates of Incorporation
(‘‘Certificates’’) to reflect recent changes to their
legal names.
4 See Securities Exchange Act Release No. 82119
(November 20, 2017), 82 FR 56085 (SR–CBOE–
2017–072); Securities Exchange Act Release No.
82120 (November 20, 2017), 82 FR 56069 (SR–C2–
2017–030) (‘‘Notices’’).
5 See id. at 56086 and 56069, respectively.
2 17
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Sfmt 4703
conforming changes to reallocate its
responsibility. Specifically, the
Exchanges propose to amend the
definition of ‘‘Representative Director
Nominating Body’’ to provide that if an
Exchange’s Board of Directors (‘‘Board’’)
has two or more Industry Directors,
excluding directors that are Exchange
employees, those Industry Directors
shall act as the Representative Director
Nominating Body. If there are fewer
than two Industry Directors on the
Board (excluding directors that are
employees of the Exchange), then the
Trading Permit Holder Subcommittee of
the Advisory Board shall act as the
Representative Director Nominating
Body. The Exchanges further propose to
amend their Bylaws and Certificates 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, the Exchanges
each propose to amend Section 3.1 of
their Bylaws to provide that the Board
is responsible for determining whether
a director candidate satisfies the
applicable qualifications for election as
a director.
Second, the Exchanges propose to
transfer the N&G Committee’s current
authority with respect to committee
appointments to their Boards (or
appropriate subcommittee of the
Board).6 Specifically, the Exchanges
propose to amend Section 4.2 and 6.1 of
their Bylaws to state that members of
the Executive Committee and Advisory
Board will be appointed by the Board.
The Exchanges also propose to amend
Section 4.4 of their Bylaws to state that
members of the ROCC will be appointed
by the Board on the recommendation of
the Non-Industry Directors of the Board.
Lastly, Cboe proposes to amend its Rule
2.1 to provide that the Board shall
appoint the Chairman, Vice Chairman
(if any) and members to the Business
Conduct Committee (‘‘BCC’’) as well as
fill any vacancies on the BCC.
Third, the Exchanges propose to
amend their Bylaws to alter the process
for filling director vacancies.7
Specifically, the Exchanges propose to
amend Section 3.4 of their Bylaws to
provide that in the event any Industry
or Non-Industry Director fails to
maintain the required qualifications and
the director’s term is accordingly
terminated, the sole stockholder, instead
of the Board, shall be able to fill the
6 See
7 See
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id. at 56086 and 56070, respectively.
id. at 56086 and 56070, respectively.
21DEN1
Federal Register / Vol. 82, No. 244 / Thursday, December 21, 2017 / Notices
vacancy.8 The Exchanges also propose
to amend Section 3.5 of their Bylaws to
provide the sole stockholder with
authority to fill vacancies so long as the
elected director qualifies for the
position. Additionally, with respect to
vacancies among the Representative
Directors, the Representative Director
Nominating Body will recommend an
individual, or provide a list of
recommended individuals, to the sole
stockholder who shall select and fill the
position.
Fourth, the Exchanges propose to
change the name of the ROCC to the
‘‘Regulatory Oversight Committee’’
(‘‘ROC’’).9 As such, the Exchanges
propose to remove the word
‘‘Compliance’’ from references to the
‘‘ROCC’’ in the Bylaws and, as
applicable, Exchange rules.
Finally, the Exchanges propose to
change their names in the title and
signature lines in their Certificates to
reflect recent changes to their legal
names.10
daltland on DSKBBV9HB2PROD with NOTICES
III. Discussion and Commission
Findings
After careful review, the Commission
finds that the proposed rule changes are
consistent with the requirements of
Section 6 of the Act 11 and the rules and
regulations thereunder applicable to a
national securities exchange.12 In
particular, the Commission finds that
the proposed rule changes are consistent
with Sections 6(b)(1) the Act,13 which
require a national securities exchange to
be so organized and have the capacity
to be able to carry out the purposes of
the Act, and to comply and to enforce
compliance by its members and persons
associated with its members with the
provisions of the Act, the rules and
regulations thereunder, and the rules of
the Exchange. The Commission also
finds that the proposed rule changes are
consistent with Section 6(b)(3) of the
Act,14 which requires that the rules of
8 Amended Section 3.4 would also provide that
if such terminated director requalified, the sole
stockholder would have discretion to reappoint
such director, including by increasing the size of
the Board, should that be necessary.
9 The Exchanges note that the regulatory oversight
committees of its affiliated exchanges does not use
the term ‘‘Compliance’’ in their Committees’ name.
See Notices, supra note 5 at 56087 n.8 and 56070
n.8, respectively.
10 Other technical formatting changes occur
throughout the Bylaws as a result of the Exchanges
proposed changes. See Notices, supra note 5 at
56087 and 56070, respectively.
11 15 U.S.C. 78f(b).
12 In approving these proposed rule changes, the
Commission has considered the proposed rules’
impact on efficiency, competition, and capital
formation. See 15 U.S.C. 78c(f).
13 15 U.S.C. 78f(b)(1).
14 15 U.S.C. 78f(b)(3).
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20:57 Dec 20, 2017
Jkt 244001
a national securities exchange assure the
fair representation of its members in the
selection of its directors and
administration of its affairs, and provide
that one or more directors shall be
representative of issuers and investors
and not be associated with a member of
the exchange, broker, or dealer.
The Commission believes that the
Exchanges’ proposals to eliminate their
N&G Committees and reassign the N&G
Committees’ responsibilities are
consistent with the Act. In particular,
with respect to vesting the authority to
nominate and elect directors in the sole
stockholder, the Exchanges cite to the
rules of another Exchange that 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.15
Importantly, the Commission notes that
the proposed rule changes do not
substantively impact the provisions
concerning the nomination and
selection of fair representation directors
that currently apply to the Exchanges.
The sole stockholder will continue to be
bound to nominate and elect the
Representative Director nominees
recommended by the Representative
Director Nominating Body and there are
no other changes to the process for the
nomination and selection of
Representative Directors. Accordingly,
the Commission believes that members
of the Exchanges should continue to
have a voice in the governance of the
Exchanges through Board representation
and thus will have a voice in the
Exchanges’ exercise of their selfregulatory authority. The Exchanges
represent that they are not proposing to
amend any of the compositional
requirements currently set forth in the
Bylaws and that such existing
compositional requirements must
continue to be satisfied, including the
provision relating to the fair
representation of members.16
In addition, with respect to providing
the Board, as opposed to the N&G
Committee, with the authority to
recommend and approve members of
the Executive Committee, Advisory
Board, ROC and BCC, the Commission
notes that other exchanges provide that
their Boards, without input from a
nominating committee, may appoint
members to committees.17 While the
internal Exchange delegations 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 are being
amended, the Exchanges represent that
the substantive requirements of the
Exchanges applicable to those items will
remain the same.18
The Commission further believes that
the proposals to change the name of the
ROCC to the ROC are consistent with
the Act as they may clarify the scope of
the ROC’s activities. Moreover, the
Exchanges note that changing the name
of the committee would harmonize the
names with the name of the regulatory
oversight committee of their affiliated
exchanges.19
Finally, the Commission believes that
the proposals to update the exchanges’
names in their Certificates are consistent
with the Act as they may also serve to
reduce potential confusion by ensuring
the Exchanges’ corporate documents
reflect their recent name changes.
IV. Accelerated Approval of Proposed
Rule Changes
The Commission finds good cause,
pursuant to Section 19(b)(2) of the
Act,20 to approve the proposed rule
changes prior to the 30th day after the
date of publication of the Notices in the
Federal Register.21 The Commission
believes that the proposed rule changes
do not raise novel regulatory issues and
are substantively similar to the existing
rules of other national securities
exchanges.22 In particular, the
Commission notes that the proposed
rule changes do not substantively
impact the provisions concerning the
nomination and selection of fair
representation directors that currently
apply to the Exchanges. Members of the
Exchanges should continue to have an
opportunity to participate in the
selection of Board representation and
have input into the Exchanges’ exercise
of self-regulatory authority. In addition,
the Commission did not receive any
comment on the proposed changes.
Accordingly, the Commission finds that
good cause exists to approve the
proposed rule changes on an accelerated
basis.
18 See
15 See
Section 3.02(f) of the Amended and
Restated NYSE Arca, Inc. Bylaws. See also Notices,
supra note 5 at 56086 and 56069, respectively.
16 See id. at 56087 and 56071, respectively.
17 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 00078
Fmt 4703
Sfmt 4703
60655
id.
supra note 10.
20 15 U.S.C. 78s(b)(2).
21 As noted above, the Notices were published for
comment in the Federal Register on November 27,
2017 and the comment period closed on December
12, 2017. Accordingly, the 30th day after
publication of the Notices is December 27, 2017.
22 See notes 15 and 17, supra.
19 See
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60656
Federal Register / Vol. 82, No. 244 / Thursday, December 21, 2017 / Notices
V. Conclusion
It is therefore ordered, pursuant to
Section 19(b)(2) of the Act 23 that the
proposed rule changes (SR–CBOE–
2017–072; SR–C2–2017–030) be, and
hereby are, approved on an accelerated
basis.
For the Commission, by the Division of
Trading and Markets, pursuant to delegated
authority.24
Robert W. Errett,
Deputy Secretary.
[FR Doc. 2017–27465 Filed 12–20–17; 8:45 am]
BILLING CODE 8011–01–P
SECURITIES AND EXCHANGE
COMMISSION
[Release No. 34–82340; File No. SR–
NYSEArca–2017–112]
Self-Regulatory Organizations; NYSE
Arca, Inc.; Notice of Filing of
Amendment No. 2 and Order
Approving on an Accelerated Basis a
Proposed Rule Change, as Modified by
Amendment No. 2, To List and Trade
Shares of the GraniteShares Palladium
Trust Under NYSE Arca Rule 8.201–E
December 15, 2017.
I. Introduction
On September 12, 2017, NYSE Arca,
Inc. (‘‘NYSE Arca’’ or ‘‘Exchange’’) filed
with the Securities and Exchange
Commission (‘‘Commission’’), pursuant
to Section 19(b)(1) of the Securities
Exchange Act of 1934 (‘‘Exchange Act’’
or ‘‘Act’’) 1 and Rule 19b–4 thereunder,2
a proposed rule change to list and trade
shares of the GraniteShares Palladium
Trust under NYSE Arca Rule 8.201–E.
The proposed rule change was
published for comment in the Federal
Register on October 3, 2017.3 On
October 24, 2017, the Exchange filed
Amendment No. 1 to the proposed rule
change, which superseded the proposed
rule change as originally filed. On
November 16, 2017, the Exchange filed
Amendment No. 2 to the proposed rule
change, which superseded the proposed
rule change as modified by Amendment
No. 1.4 The Commission has not
23 15
U.S.C. 78s(b)(2).
CFR 200.30–3(a)(12).
1 15 U.S.C. 78s(b)(1).
2 17 CFR 240.19b–4.
3 See Securities Exchange Act Release No. 81737
(Sept. 27, 2017), 82 FR 46106.
4 In Amendment No. 2, the Exchange: (1) Clarified
the permitted investments of the Trust (as defined
herein); (2) supplemented its description of the
duties of the Trust Custodian (as defined herein);
(3) provided information about palladium futures;
(4) supplemented its description of the process of
Share (as defined herein)redemptions; (5)
supplemented its description of how the Trust’s net
daltland on DSKBBV9HB2PROD with NOTICES
24 17
VerDate Sep<11>2014
20:57 Dec 20, 2017
Jkt 244001
received any comments on the proposed
rule change. The Commission is
publishing this notice to solicit
comments on Amendment No.2 from
interested persons, and is approving the
proposed rule change, as modified by
Amendment No. 2, on an accelerated
basis.
II. Description of the Proposed Rule
Change, as Modified by Amendment
No. 2
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
Statutory Basis for, the Proposed Rule
Change
1. Purpose
The Exchange proposes to list and
trade shares (‘‘Shares’’) of the
GraniteShares Palladium Trust (the
‘‘Trust’’), under NYSE Arca Rule 8.201–
E.5 Under NYSE Arca Rule 8.201–E, the
asset value (‘‘NAV’’) will be calculated; (6)
increased the minimum number of Shares that the
Exchange will require to be outstanding at the
commencement of trading; (7) expanded the
circumstances in which the Exchange would or
might halt trading in the Shares; (8) specified that
the Shares would trade in all of the Exchange’s
trading sessions; (9) represented that palladium
futures trade on significant exchanges, including
the NYMEX (as defined herein), which is regulated
by the CFTC (as defined herein) and is a member
of ISG (as defined herein); and (10) made certain
technical corrections. Amendment No. 2 is
available at: https://www.sec.gov/comments/srnysearca-2017-112/nysearca2017112-2693354161503.pdf.
5 On September 8, 2017, the Trust submitted to
the Commission its draft registration statement on
Form S–1 (the ‘‘Registration Statement’’) under the
Securities Act of 1933 (15 U.S.C. 77a) (‘‘Securities
Act’’). The Jumpstart Our Business Startups Act,
enacted on April 5, 2012, added Section 6(e) to the
Securities Act. Section 6(e) of the Securities Act
provides that an ‘‘emerging growth company’’ may
confidentially submit to the Commission a draft
registration statement for confidential, non-public
review by the Commission staff prior to public
filing, provided that the initial confidential
submission and all amendments thereto shall be
publicly filed not later than 21 days before the date
on which the issuer conducts a road show, as such
term is defined in Securities Act Rule 433(h)(4). An
emerging growth company is defined in Section
2(a)(19) of the Securities Act as an issuer with less
than $1,000,000,000 total annual gross revenues
during its most recently completed fiscal year. The
Trust meets the definition of an emerging growth
company and consequently has submitted its Form
S–1 Registration Statement on a confidential basis
with the Commission.
PO 00000
Frm 00079
Fmt 4703
Sfmt 4703
Exchange may propose to list and/or
trade pursuant to unlisted trading
privileges (‘‘UTP’’) Commodity-Based
Trust Shares.6
The Trust will not be registered as an
investment company under the
Investment Company Act of 1940, as
amended,7 and is not required to
register under such act. The Trust is not
a commodity pool for purposes of the
Commodity Exchange Act, as amended.8
The Sponsor of the Trust is
GraniteShares LLC, a Delaware limited
liability company. The Bank of New
York Mellon is the trustee of the Trust
(the ‘‘Trustee’’) 9 and ICBC Standard
Bank PLC is the custodian of the Trust
(the ‘‘Custodian’’).10
The Commission has previously
approved listing on the Exchange under
NYSE Arca Rule 8.201–E of other
precious metals and palladium-based
commodity trusts, including the ETFS
Platinum Trust,11 the ETFS Palladium
6 Commodity-Based Trust Shares are securities
issued by a trust that represents investors’ discrete
identifiable and undivided beneficial ownership
interest in the commodities deposited into the
Trust.
7 15 U.S.C. 80a–1.
8 17 U.S.C. 1.
9 The Trustee is responsible for the day-to-day
administration of the Trust. The responsibilities of
the Trustee include (1) processing orders for the
creation and redemption of Baskets; (2)
coordinating with the Custodian the receipt and
delivery of palladium transferred to, or by, the Trust
in connection with each issuance and redemption
of Baskets; (3) calculating the net asset value of the
Trust on each business day; and (4) selling the
Trust’s palladium as needed to cover the Trust’s
expenses. The Trust does not have a Board of
Directors or persons acting in a similar capacity.
10 The Custodian is responsible for safekeeping
the palladium owned by the Trust. The Custodian
is appointed by the Trustee and is responsible to
the Trustee under the Trust’s palladium custody
agreements. The Custodian will facilitate the
transfer of palladium in and out of the Trust
through the unallocated palladium accounts it may
maintain for each Authorized Participant or
unallocated palladium accounts that may be
maintained for an Authorized Participant by
another palladium-clearing bank approved by the
London Palladium and Palladium Market
(‘‘LPPM’’), and through the loco London account
maintained for the Trust by the Custodian on an
unallocated basis pursuant to the Trust unallocated
account agreement (the ‘‘Trust Unallocated
Account’’). The Custodian is responsible for
allocating specific bars of palladium to the loco
London account maintained for the Trust by the
Custodian on an allocated basis pursuant to the
Trust agreement (the ‘‘Trust Allocated Account’’).
The Custodian will provide the Trustee with regular
reports detailing the palladium transfers in and out
of the Trust Unallocated Account with the
Custodian and identifying the palladium bars held
in the Trust Allocated Account.
11 Securities Exchange Act Release No. 61219
(December 22, 2009), 74 FR 68886 (December 29,
2009) (SR–NYSEArca–2009–95).
E:\FR\FM\21DEN1.SGM
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]]>Agencies
[Federal Register Volume 82, Number 244 (Thursday, December 21, 2017)]
[Notices]
[Pages 60654-60656]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2017-27465]
-----------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
[Release No. 34-82336; File No. SR-CBOE-2017-072; SR-C2-2017-030]
Self-Regulatory Organizations; Cboe Exchange, Inc.; Cboe C2
Exchange, Inc.; Order Granting Accelerated Approval to a Proposed Rule
Change Relating to Its Nominating and Governance Committee and
Regulatory Oversight and Compliance Committee as Well as Its Director
Nomination and Committee Appointment Process
December 15, 2017.
I. Introduction
On November 14, 2017, Cboe C2 Exchange, Inc. (``C2'') and on
November 15, 2017, Cboe Exchange, Inc. (``Cboe'' and, together with C2,
the ``Exchanges'') filed with the Securities and Exchange Commission
(``Commission''), pursuant to Section 19(b)(1) of the Securities
Exchange Act of 1934 (``Act''),\1\ and Rule 19b-4 thereunder,\2\
proposed rule changes to eliminate their Nominating and Governance
Committees (``N&G Committee''); amend the process by which (i)
directors are elected, (ii) committee appointments are made, and (iii)
vacancies are filled; and rename their Regulatory Oversight and
Compliance Committees (``ROCC'').\3\ The proposed rule changes were
published for comment in the Federal Register on November 27, 2017.\4\
The Commission received no comments on the proposals. This order
approves the proposed rule changes on an accelerated basis.
---------------------------------------------------------------------------
\1\ 15 U.S.C. 78s(b)(1).
\2\ 17 CFR 240.19b 4.
\3\ In addition, the Exchanges propose to make several
formatting changes throughout their Bylaws as well as to change
their names in the title and signature lines in their Certificates
of Incorporation (``Certificates'') to reflect recent changes to
their legal names.
\4\ See Securities Exchange Act Release No. 82119 (November 20,
2017), 82 FR 56085 (SR-CBOE-2017-072); Securities Exchange Act
Release No. 82120 (November 20, 2017), 82 FR 56069 (SR-C2-2017-030)
(``Notices'').
---------------------------------------------------------------------------
II. Description of the Proposal
First, the Exchanges propose to eliminate their N&G Committees and
provide that the sole stockholder of the Exchanges (Cboe Global
Markets, Inc.) shall nominate and elect directors at the annual
meetings of the sole stockholder, except with respect to fair-
representation directors (``Representative Directors'').\5\ As a
consequence of the elimination of the N&G Committee, the Exchanges
propose conforming changes to reallocate its responsibility.
Specifically, the Exchanges propose to amend the definition of
``Representative Director Nominating Body'' to provide that if an
Exchange's Board of Directors (``Board'') has two or more Industry
Directors, excluding directors that are Exchange employees, those
Industry Directors shall act as the Representative Director Nominating
Body. If there are fewer than two Industry Directors on the Board
(excluding directors that are employees of the Exchange), then the
Trading Permit Holder Subcommittee of the Advisory Board shall act as
the Representative Director Nominating Body. The Exchanges further
propose to amend their Bylaws and Certificates 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, the Exchanges each propose to amend Section 3.1 of their Bylaws
to provide that the Board is responsible for determining whether a
director candidate satisfies the applicable qualifications for election
as a director.
---------------------------------------------------------------------------
\5\ See id. at 56086 and 56069, respectively.
---------------------------------------------------------------------------
Second, the Exchanges propose to transfer the N&G Committee's
current authority with respect to committee appointments to their
Boards (or appropriate subcommittee of the Board).\6\ Specifically, the
Exchanges propose to amend Section 4.2 and 6.1 of their Bylaws to state
that members of the Executive Committee and Advisory Board will be
appointed by the Board. The Exchanges also propose to amend Section 4.4
of their Bylaws to state that members of the ROCC will be appointed by
the Board on the recommendation of the Non-Industry Directors of the
Board. Lastly, Cboe proposes to amend its Rule 2.1 to provide that the
Board shall appoint the Chairman, Vice Chairman (if any) and members to
the Business Conduct Committee (``BCC'') as well as fill any vacancies
on the BCC.
---------------------------------------------------------------------------
\6\ See id. at 56086 and 56070, respectively.
---------------------------------------------------------------------------
Third, the Exchanges propose to amend their Bylaws to alter the
process for filling director vacancies.\7\ Specifically, the Exchanges
propose to amend Section 3.4 of their Bylaws to provide that in the
event any Industry or Non-Industry Director fails to maintain the
required qualifications and the director's term is accordingly
terminated, the sole stockholder, instead of the Board, shall be able
to fill the
[[Page 60655]]
vacancy.\8\ The Exchanges also propose to amend Section 3.5 of their
Bylaws to provide the sole stockholder with authority to fill vacancies
so long as the elected director qualifies for the position.
Additionally, with respect to vacancies among the Representative
Directors, the Representative Director Nominating Body will recommend
an individual, or provide a list of recommended individuals, to the
sole stockholder who shall select and fill the position.
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\7\ See id. at 56086 and 56070, respectively.
\8\ Amended Section 3.4 would also provide that if such
terminated director requalified, the sole stockholder would have
discretion to reappoint such director, including by increasing the
size of the Board, should that be necessary.
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Fourth, the Exchanges propose to change the name of the ROCC to the
``Regulatory Oversight Committee'' (``ROC'').\9\ As such, the Exchanges
propose to remove the word ``Compliance'' from references to the
``ROCC'' in the Bylaws and, as applicable, Exchange rules.
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\9\ The Exchanges note that the regulatory oversight committees
of its affiliated exchanges does not use the term ``Compliance'' in
their Committees' name. See Notices, supra note 5 at 56087 n.8 and
56070 n.8, respectively.
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Finally, the Exchanges propose to change their names in the title
and signature lines in their Certificates to reflect recent changes to
their legal names.\10\
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\10\ Other technical formatting changes occur throughout the
Bylaws as a result of the Exchanges proposed changes. See Notices,
supra note 5 at 56087 and 56070, respectively.
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III. Discussion and Commission Findings
After careful review, the Commission finds that the proposed rule
changes are consistent with the requirements of Section 6 of the Act
\11\ and the rules and regulations thereunder applicable to a national
securities exchange.\12\ In particular, the Commission finds that the
proposed rule changes are consistent with Sections 6(b)(1) the Act,\13\
which require a national securities exchange to be so organized and
have the capacity to be able to carry out the purposes of the Act, and
to comply and to enforce compliance by its members and persons
associated with its members with the provisions of the Act, the rules
and regulations thereunder, and the rules of the Exchange. The
Commission also finds that the proposed rule changes are consistent
with Section 6(b)(3) of the Act,\14\ which requires that the rules of a
national securities exchange assure the fair representation of its
members in the selection of its directors and administration of its
affairs, and provide that one or more directors shall be representative
of issuers and investors and not be associated with a member of the
exchange, broker, or dealer.
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\11\ 15 U.S.C. 78f(b).
\12\ In approving these proposed rule changes, the Commission
has considered the proposed rules' impact on efficiency,
competition, and capital formation. See 15 U.S.C. 78c(f).
\13\ 15 U.S.C. 78f(b)(1).
\14\ 15 U.S.C. 78f(b)(3).
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The Commission believes that the Exchanges' proposals to eliminate
their N&G Committees and reassign the N&G Committees' responsibilities
are consistent with the Act. In particular, with respect to vesting the
authority to nominate and elect directors in the sole stockholder, the
Exchanges cite to the rules of another Exchange that 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.\15\ Importantly, the Commission
notes that the proposed rule changes do not substantively impact the
provisions concerning the nomination and selection of fair
representation directors that currently apply to the Exchanges. The
sole stockholder will continue to be bound to nominate and elect the
Representative Director nominees recommended by the Representative
Director Nominating Body and there are no other changes to the process
for the nomination and selection of Representative Directors.
Accordingly, the Commission believes that members of the Exchanges
should continue to have a voice in the governance of the Exchanges
through Board representation and thus will have a voice in the
Exchanges' exercise of their self-regulatory authority. The Exchanges
represent that they are not proposing to amend any of the compositional
requirements currently set forth in the Bylaws and that such existing
compositional requirements must continue to be satisfied, including the
provision relating to the fair representation of members.\16\
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\15\ See Section 3.02(f) of the Amended and Restated NYSE Arca,
Inc. Bylaws. See also Notices, supra note 5 at 56086 and 56069,
respectively.
\16\ See id. at 56087 and 56071, respectively.
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In addition, with respect to providing the Board, as opposed to the
N&G Committee, with the authority to recommend and approve members of
the Executive Committee, Advisory Board, ROC and BCC, the Commission
notes that other exchanges provide that their Boards, without input
from a nominating committee, may appoint members to committees.\17\
While the internal Exchange delegations 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 are being amended, the Exchanges represent
that the substantive requirements of the Exchanges applicable to those
items will remain the same.\18\
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\17\ 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.
\18\ See id.
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The Commission further believes that the proposals to change the
name of the ROCC to the ROC are consistent with the Act as they may
clarify the scope of the ROC's activities. Moreover, the Exchanges note
that changing the name of the committee would harmonize the names with
the name of the regulatory oversight committee of their affiliated
exchanges.\19\
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\19\ See supra note 10.
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Finally, the Commission believes that the proposals to update the
exchanges' names in their Certificates are consistent with the Act as
they may also serve to reduce potential confusion by ensuring the
Exchanges' corporate documents reflect their recent name changes.
IV. Accelerated Approval of Proposed Rule Changes
The Commission finds good cause, pursuant to Section 19(b)(2) of
the Act,\20\ to approve the proposed rule changes prior to the 30th day
after the date of publication of the Notices in the Federal
Register.\21\ The Commission believes that the proposed rule changes do
not raise novel regulatory issues and are substantively similar to the
existing rules of other national securities exchanges.\22\ In
particular, the Commission notes that the proposed rule changes do not
substantively impact the provisions concerning the nomination and
selection of fair representation directors that currently apply to the
Exchanges. Members of the Exchanges should continue to have an
opportunity to participate in the selection of Board representation and
have input into the Exchanges' exercise of self-regulatory authority.
In addition, the Commission did not receive any comment on the proposed
changes. Accordingly, the Commission finds that good cause exists to
approve the proposed rule changes on an accelerated basis.
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\20\ 15 U.S.C. 78s(b)(2).
\21\ As noted above, the Notices were published for comment in
the Federal Register on November 27, 2017 and the comment period
closed on December 12, 2017. Accordingly, the 30th day after
publication of the Notices is December 27, 2017.
\22\ See notes 15 and 17, supra.
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[[Page 60656]]
V. Conclusion
It is therefore ordered, pursuant to Section 19(b)(2) of the Act
\23\ that the proposed rule changes (SR-CBOE-2017-072; SR-C2-2017-030)
be, and hereby are, approved on an accelerated basis.
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\23\ 15 U.S.C. 78s(b)(2).
For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\24\
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\24\ 17 CFR 200.30-3(a)(12).
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Robert W. Errett,
Deputy Secretary.
[FR Doc. 2017-27465 Filed 12-20-17; 8:45 am]
BILLING CODE 8011-01-P
