Self-Regulatory Organizations; Nasdaq BX, Inc.; Order Approving Proposed Rule Changes Regarding the Transfer of Ownership of Nasdaq BX Equities LLC and the Merger of Nasdaq BX Equities LLC With and Into the Exchange, 73831-73833 [2021-28108]

Download as PDF Federal Register / Vol. 86, No. 246 / Tuesday, December 28, 2021 / Notices B. Self-Regulatory Organization’s Statement on Burden on Competition Commission, 100 F Street NE, Washington, DC 20549–1090. SECURITIES AND EXCHANGE COMMISSION IEX does not believe that the proposed rule change will result in any burden on competition that is not necessary or appropriate in furtherance of the purposes of the Act, as amended. Specifically, the Exchange believes that the proposed fees will result in the same regulatory fees being charged to all Members required to report information to the CRD system and for services performed by FINRA, regardless of whether or not such Members are FINRA members. All submissions should refer to File Number SR–IEX–2021–18. 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 website (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 website viewing and printing in the Commission’s Public Reference Room, 100 F Street NE, Washington, DC 20549, on official business days between the hours of 10:00 a.m. and 3:00 p.m. Copies of the filing will also be available for inspection and copying at the IEX’s principal office and on its internet website at www.iextrading.com. 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–IEX–2021–18 and should be submitted on or before January 18, 2022. [Release No. 34–93848; File Nos. SR–BX– 2021–050; SR–BX–2021–051] C. Self-Regulatory Organization’s Statement on Comments on the Proposed Rule Change Received From Members, Participants, or Others Written comments were neither solicited nor received. III. Date of Effectiveness of the Proposed Rule Change and Timing for Commission Action The foregoing rule change has become effective pursuant to Section 19(b)(3)(A)(ii) 17 of the Act. At any time within 60 days of the filing of the proposed rule change, the Commission summarily may temporarily suspend such rule change if it appears to the Commission that such action is necessary or appropriate in the public interest, for the protection of investors, or otherwise in furtherance of the purposes of the Act. If the Commission takes such action, the Commission shall institute proceedings under Section 19(b)(2)(B) 18 of the Act to determine whether the proposed rule change should be approved or 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: For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.19 J. Matthew DeLesDernier, Assistant Secretary. [FR Doc. 2021–28109 Filed 12–27–21; 8:45 am] BILLING CODE 8011–01–P Electronic Comments khammond on DSKJM1Z7X2PROD with NOTICES 73831 VerDate Sep<11>2014 22:45 Dec 27, 2021 II. Description of the Proposals The Exchange proposes, through the Transfer Proposal and the Merger Proposal, a two-step process that will first allow the Exchange to become the 100% direct owner and sole LLC member of BX Equities, and subsequently allow the merger of BX Equities with and into the Exchange (‘‘Transactions’’). U.S.C. 78s(b)(1). CFR 240.19b–4. 3 See Securities Exchange Act Release No. 93514 (November 3, 2021), 86 FR 62229 (‘‘Transfer Notice’’). 4 15 U.S.C. 78s(b)(1). 5 17 CFR 240.19b–4. 6 See Securities Exchange Act Release No. 93513 (November 3, 2021), 86 FR 62222 (‘‘Merger Notice’’). 2 17 19 17 Jkt 256001 On October 22, 2021, Nasdaq BX, Inc. (‘‘BX’’ or ‘‘Exchange’’) 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 a proposed rule change regarding the transfer of Nasdaq, Inc.’s (‘‘Nasdaq HoldCo’’) entire ownership interest in Nasdaq BX Equities LLC (‘‘BX Equities’’) to the Exchange (‘‘Transfer Proposal’’). The Transfer Proposal was published for comment in the Federal Register on November 9, 2021.3 Also on October 22, 2021, the Exchange filed with the Commission, pursuant to Section 19(b)(1) of the Act 4 and Rule 19b–4 thereunder,5 a proposed rule change regarding the merger of BX Equities with and into the Exchange (‘‘Merger Proposal’’). The Merger Proposal was published for comment in the Federal Register on November 9, 2021.6 The Commission received no comment letters on the proposed rule changes. This order approves the proposed rule changes. 1 15 • Send paper comments in triplicate to Secretary, Securities and Exchange U.S.C. 78s(b)(3)(A)(ii). U.S.C. 78s(b)(2)(B). I. Introduction BX Equities was acquired by Nasdaq HoldCo in 2008, and was established as a facility of and controlled subsidiary Paper Comments 18 15 December 21, 2021. A. Transfer Proposal • 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– IEX–2021–18 on the subject line. 17 15 Self-Regulatory Organizations; Nasdaq BX, Inc.; Order Approving Proposed Rule Changes Regarding the Transfer of Ownership of Nasdaq BX Equities LLC and the Merger of Nasdaq BX Equities LLC With and Into the Exchange PO 00000 CFR 200.30–3(a)(12). Frm 00112 Fmt 4703 Sfmt 4703 E:\FR\FM\28DEN1.SGM 28DEN1 73832 Federal Register / Vol. 86, No. 246 / Tuesday, December 28, 2021 / Notices owned and operated by the Exchange for the listing and trading of cash equity securities.7 Currently, Nasdaq HoldCo 8 directly owns 100% of the Exchange, and the Exchange and Nasdaq HoldCo are the only owners and LLC members of BX Equities—the Exchange directly owns 53.21% of BX Equities and Nasdaq HoldCo directly owns the remaining 46.79% of BX Equities.9 BX Equities is currently governed by, among other things, the Nasdaq BX Equities LLC Fifth Amended and Restated Operating Agreement (‘‘Operating Agreement’’), which provides that management of BX Equities is vested in the Exchange.10 Nasdaq HoldCo has no direct management role in the operation of BX Equities, with the exception of its limited role as tax matters member 11 and its limited rights with regard to capital contributions in and dissolution of BX Equities.12 As proposed, Nasdaq HoldCo will transfer its entire ownership interest in BX Equities to the Exchange, which will result in the Exchange becoming the 100% direct owner and sole LLC member of BX Equities.13 The Exchange represents that the Transfer Proposal merely seeks to simplify the corporate structure of BX Equities, that the Exchange will operate in a substantially similar manner following the transfer as it currently operates (with the addition of the Exchange’s role as the tax matters 7 See Transfer Notice, supra note 3, at 62229. HoldCo was formerly known as NASDAQ OMX Group, Inc. See id. at 62229 n.5. The Transactions will have no effect on Nasdaq HoldCo’s direct ownership of the Exchange. See id. at 62229; Merger Notice, supra note 6, at 62222. 9 See Transfer Notice, supra note 3, at 62229–30. Nasdaq HoldCo previously remained an LLC member of BX Equities to avoid certain adverse tax consequences that would be associated with contributing its ownership interest to the Exchange, but according to the Exchange, these tax considerations have since expired. See id. at 62230 n.7. See also Securities Exchange Act Release No. 59154 (December 23, 2008), 73 FR 80468, 80469– 70 n.20 (December 31, 2008). 10 See Transfer Notice, supra note 3, at 62230. 11 See definitions of ‘‘Capital Account’’ and ‘‘Tax Amount’’ in Section 1.1, and Sections 10.9 and 12.6 of the Operating Agreement. 12 See Sections 7.4 and 11.1 of the Operating Agreement. See also Transfer Notice, supra note 3, at 62230. 13 Section 8.1 of the Operating Agreement states that the Exchange must obtain Commission approval for transfers of ownership interest in BX Equities. According to the Exchange, upon Commission approval of the Transfer Proposal, the Exchange and Nasdaq HoldCo will enter into a contribution and assignment agreement (‘‘Contribution Agreement’’) pursuant to which Nasdaq HoldCo will transfer its entire 46.79% ownership interest in BX Equities, and all of its other rights and obligations arising thereunder, to the Exchange, resulting in the Exchange directly owning 100% of BX Equities. See Transfer Notice, supra note 3, at 62230. khammond on DSKJM1Z7X2PROD with NOTICES 8 Nasdaq VerDate Sep<11>2014 22:45 Dec 27, 2021 Jkt 256001 member of BX Equities), and that the transfer will have no impact on how the Exchange operates its equities market.14 The Exchange proposes to amend the Operating Agreement to reflect the transfer. In particular, the Exchange proposes to add a description of the Contribution Agreement,15 remove references to Nasdaq HoldCo as an LLC member of BX Equities,16 replace references to Nasdaq HoldCo with references to the Exchange to reflect that Nasdaq HoldCo will no longer be the tax matters member of BX Equities; 17 provide that Nasdaq HoldCo will no longer have limited rights with respect to capital contributions in BX Equities 18 and the dissolution of BX Equities; 19 and delete a provision relating to the books, records, premises, officers, directors, agents, and employees of Nasdaq HoldCo.20 B. Merger Proposal Following the transfer of ownership interest in BX Equities as described above, the Exchange proposes to merge BX Equities with and into the Exchange.21 As a result, BX Equities will be eliminated, the Exchange will be the surviving entity, and the Exchange will directly operate its equities market.22 Currently, the Exchange has delegated certain responsibilities to BX Equities to operate the Exchange’s equities market under a Delegation Agreement.23 The delegation is limited to the Exchange’s equities market functions and does not include other functions not specifically mentioned in the limited delegation.24 Pursuant to the Delegation Agreement, the Exchange retains ultimate responsibility for its equities market, including the responsibility to ensure the fulfillment of statutory and selfregulatory obligations under the Act.25 In connection with the proposed 14 See id. proposed changes to the Recitals section of the Operating Agreement. 16 See proposed changes to the introductory paragraphs, Sections 1.1 and 7.2, and Schedules 1 and 2 of the Operating Agreement. 17 See proposed changes to the definitions of ‘‘Capital Account’’ and ‘‘Tax Amount’’ in Section 1.1, and Sections 10.9 and 12.6 of the Operating Agreement. 18 See proposed changes to Section 7.4 of the Operating Agreement. 19 See proposed changes to Section 11.1 of the Operating Agreement. 20 See proposed changes to Section 18.6 of the Operating Agreement. 21 See Merger Notice, supra note 6, at 62222–23. The Exchange anticipates that the merger will occur immediately after the transfer. See id. at 62223. 22 See id. at 62222–23. 23 See id. at 62222. 24 See id. at 62223. 25 See id. 15 See PO 00000 Frm 00113 Fmt 4703 Sfmt 4703 merger, the Exchange proposes to terminate the delegation of functions to BX Equities and delete the Delegation Agreement from its rules. With the termination of the Delegation Agreement, all of the functions previously delegated to BX Equities will be performed by the Exchange, and the Exchange will directly operate its equities market.26 The Exchange will continue to bear responsibility over its equities market of ensuring the fulfillment of its statutory and selfregulatory obligations.27 As described above, BX Equities is also currently governed by the Operating Agreement, which provides that management of BX Equities is vested in the Exchange.28 In connection with the proposed merger and the proposed termination of the Delegation Agreement, BX Equities will no longer be operating the Exchange’s equities market and the Operating Agreement will become obsolete.29 Accordingly, the Exchange proposes to delete the Operating Agreement from its rules. Finally, the Exchange proposes to make conforming changes to its rules to reflect the proposed merger and the proposed deletion of the Delegation Agreement and Operating Agreement. In particular, the Exchange proposes to delete General 2, Section 8, which relates to the Delegation Agreement and the staff, books, records, premises, officers, employees, and agents of BX Equities. The Exchange also proposes to amend Equity 1, Section 1 to remove references to the Operating Agreement, Delegation Agreement, and BX Equities. III. Discussion and Commission Findings The Commission finds that the proposed rule changes are consistent with the requirements of the Act and the rules and regulations thereunder applicable to a national securities exchange.30 In particular, the Commission finds that the proposed rule changes are consistent with Section 6(b)(1) of the Act,31 which requires that a national securities exchange be so organized and have the capacity to be able to carry out the purposes of the Act 26 See id. id. 28 The Exchange also states that BX Equities can only act through the action of the Exchange and the Exchange’s officers and directors, because there is no separate BX Equities board of directors and all BX Equities officers are officers of the Exchange. See id. 29 See id. 30 In approving the proposed rule changes, the Commission has considered the proposed rules’ impact on efficiency, competition, and capital formation. See 15 U.S.C. 78c(f). 31 15 U.S.C. 78f(b)(1). 27 See E:\FR\FM\28DEN1.SGM 28DEN1 Federal Register / Vol. 86, No. 246 / Tuesday, December 28, 2021 / Notices 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)(5) of the Act,32 which requires, among other things, that the rules of a national securities exchange be designed to prevent fraudulent and manipulative acts and practices, 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. As described above, the proposed rule changes will allow (i) the transfer of Nasdaq HoldCo’s ownership interest in BX Equities to the Exchange, and (ii) the merger of BX Equities with and into the Exchange. The proposed transfer will have no impact on how the Exchange operates its equities market and, as described above, the Exchange anticipates that the merger will occur immediately after the transfer. Following the merger, the Exchange will directly operate its equities market and perform the functions that were previously delegated to BX Equities. Moreover, the Exchange will continue to have ultimate responsibility over its equities market, including the responsibility to ensure the fulfillment of its statutory and self-regulatory obligations under the Act.33 Because the proposed rule changes will allow the Exchange to directly operate its equities market (rather than through a subsidiary) and the Exchange will continue to have ultimate regulatory responsibility over its equities market, the Commission believes that the proposed rule changes are consistent with the Act and will not impair the ability of the Commission or the Exchange to discharge their respective responsibilities under the Act. The Commission also believes that the Exchange’s proposals to amend the Operating Agreement in connection with the transfer, and to subsequently remove the Delegation Agreement and the amended Operating Agreement and make conforming changes to its rules in connection with the merger, are consistent with the Act and will allow the Exchange’s rulebook to reflect the Transactions. IV. Conclusion It is therefore ordered, pursuant to Section 19(b)(2) of the Act,34 that the proposed rule changes (SR–BX–2021– 050; SR–BX–2021–051) be, and hereby are, approved. For the Commission, by the Division of Trading and Markets, pursuant to delegated authority.35 J. Matthew DeLesDernier, Assistant Secretary. [FR Doc. 2021–28108 Filed 12–27–21; 8:45 am] BILLING CODE 8011–01–P SECURITIES AND EXCHANGE COMMISSION [Release No. 34–93845; File No. SR–ICEEU– 2021–020] Self-Regulatory Organizations; ICE Clear Europe Limited; Order Approving Proposed Rule Change Relating to Amendments to the ICE Clear Europe Liquidity Management Procedures and Investment Management Procedures December 21, 2021. I. Introduction On October 22, 2021, ICE Clear Europe Limited (‘‘ICE Clear Europe’’) filed with the Securities and Exchange Commission (‘‘Commission’’), pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 (the ‘‘Act’’),1 and Rule 19b–4,2 a proposed rule change to amend its Liquidity Management Procedures and Investment Management Procedures. The proposed rule change was published for comment in the Federal Register on November 10, 2021.3 The Commission did not receive comments regarding the proposed rule change. For the reasons discussed below, the Commission is approving the proposed rule change. II. Description of the Proposed Rule Change A. Liquidity Management Procedures The proposed rule change would make three changes to the Liquidity khammond on DSKJM1Z7X2PROD with NOTICES 34 15 32 15 U.S.C. 78f(b)(5). 33 The Exchange states that its independent regulatory oversight committee (‘‘ROC’’) will continue to oversee the Exchange’s regulatory and self-regulatory organization responsibilities with regard to both its equities and options markets, and the Exchange’s regulatory department will continue to carry out its regulatory functions with respect to both markets under the oversight of the ROC. See Merger Notice, supra note 6, at 62224. VerDate Sep<11>2014 22:45 Dec 27, 2021 Jkt 256001 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 Self-Regulatory Organizations; ICE Clear Europe Limited; Notice of Filing of Proposed Rule Change Relating to Amendments to the ICE Clear Europe Liquidity Management Procedures and Investment Management Procedures, Exchange Act Release No. 93523 (Nov. 4, 2021); 86 FR 62588 (Nov. 10, 2021) (SR–ICEEU–2021–020) (‘‘Notice’’). 35 17 PO 00000 Frm 00114 Fmt 4703 Sfmt 4703 73833 Management Procedures, as described below.4 In addition, the proposed rule change would correct typographical errors in Section 2.4.1 and Section 2.7.2. First, Section 2.1.1 of the Liquidity Management Procedures provides an overview of ICE Clear Europe’s payment obligations and liquidity needs. Currently, this section describes three sources of payment obligations relevant to liquidity management: (i) Paying variation margin; (ii) paying delivery or settlement monies when trades deliver or settle; and (iii) returning surplus Initial Margin or other margin to Clearing Members. The proposed rule change would add to this, as a fourth payment obligation, cash substitution requests by Clearing Members. ICE Clear Europe is making this change to make the list more comprehensive, by expressly taking into account cash substitution, which, as a current practice, ICE Clear Europe allows Clearing Members to request.5 Second, the proposed rule change would add a new section relating to special considerations for account opening. This section would provide that when ICE Clear Europe is adding new accounts or amending existing accounts with counterparties, the Treasury Department would advise the Legal and Compliance Departments in accordance with relevant departmental procedures to ensure that relevant banking agreements are modified, any side or acknowledgement letters are obtained, and any required regulatory submissions are timely made, as appropriate. This section would provide that this process would include, for example, the opening of new accounts for futures customer funds in accordance with CFTC Rule 1.20(g).6 Finally, the proposed rule change would amend provisions relating to haircutting (i.e., risk-based discounting) of non-cash collateral and cash collateral in currencies other than the required currency. Section 2.3.1 currently provides that the Clearing Risk Team monitors the price of non-cash collateral and cash that is in currencies other than the required currency during the day and calls for additional Initial Margin if there is a shortfall in the value of the collateral held. The proposed rule change would amend this provision so that it is the Credit Risk Team, not the Clearing Risk Team, which monitors the price of such assets. This change is 4 Capitalized terms not otherwise defined herein have the meanings assigned to them in the ICE Clear Europe Rules, Liquidity Management Procedures, or Investment Management Procedures, as applicable. 5 Notice, 86 FR at 62588. 6 17 CFR 1.20(g). E:\FR\FM\28DEN1.SGM 28DEN1

Agencies

[Federal Register Volume 86, Number 246 (Tuesday, December 28, 2021)]
[Notices]
[Pages 73831-73833]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2021-28108]


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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-93848; File Nos. SR-BX-2021-050; SR-BX-2021-051]


Self-Regulatory Organizations; Nasdaq BX, Inc.; Order Approving 
Proposed Rule Changes Regarding the Transfer of Ownership of Nasdaq BX 
Equities LLC and the Merger of Nasdaq BX Equities LLC With and Into the 
Exchange

December 21, 2021.

I. Introduction

    On October 22, 2021, Nasdaq BX, Inc. (``BX'' or ``Exchange'') 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\ a proposed rule change regarding the 
transfer of Nasdaq, Inc.'s (``Nasdaq HoldCo'') entire ownership 
interest in Nasdaq BX Equities LLC (``BX Equities'') to the Exchange 
(``Transfer Proposal''). The Transfer Proposal was published for 
comment in the Federal Register on November 9, 2021.\3\ Also on October 
22, 2021, the Exchange filed with the Commission, pursuant to Section 
19(b)(1) of the Act \4\ and Rule 19b-4 thereunder,\5\ a proposed rule 
change regarding the merger of BX Equities with and into the Exchange 
(``Merger Proposal''). The Merger Proposal was published for comment in 
the Federal Register on November 9, 2021.\6\ The Commission received no 
comment letters on the proposed rule changes. This order approves the 
proposed rule changes.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ See Securities Exchange Act Release No. 93514 (November 3, 
2021), 86 FR 62229 (``Transfer Notice'').
    \4\ 15 U.S.C. 78s(b)(1).
    \5\ 17 CFR 240.19b-4.
    \6\ See Securities Exchange Act Release No. 93513 (November 3, 
2021), 86 FR 62222 (``Merger Notice'').
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II. Description of the Proposals

    The Exchange proposes, through the Transfer Proposal and the Merger 
Proposal, a two-step process that will first allow the Exchange to 
become the 100% direct owner and sole LLC member of BX Equities, and 
subsequently allow the merger of BX Equities with and into the Exchange 
(``Transactions'').

A. Transfer Proposal

    BX Equities was acquired by Nasdaq HoldCo in 2008, and was 
established as a facility of and controlled subsidiary

[[Page 73832]]

owned and operated by the Exchange for the listing and trading of cash 
equity securities.\7\ Currently, Nasdaq HoldCo \8\ directly owns 100% 
of the Exchange, and the Exchange and Nasdaq HoldCo are the only owners 
and LLC members of BX Equities--the Exchange directly owns 53.21% of BX 
Equities and Nasdaq HoldCo directly owns the remaining 46.79% of BX 
Equities.\9\ BX Equities is currently governed by, among other things, 
the Nasdaq BX Equities LLC Fifth Amended and Restated Operating 
Agreement (``Operating Agreement''), which provides that management of 
BX Equities is vested in the Exchange.\10\ Nasdaq HoldCo has no direct 
management role in the operation of BX Equities, with the exception of 
its limited role as tax matters member \11\ and its limited rights with 
regard to capital contributions in and dissolution of BX Equities.\12\
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    \7\ See Transfer Notice, supra note 3, at 62229.
    \8\ Nasdaq HoldCo was formerly known as NASDAQ OMX Group, Inc. 
See id. at 62229 n.5. The Transactions will have no effect on Nasdaq 
HoldCo's direct ownership of the Exchange. See id. at 62229; Merger 
Notice, supra note 6, at 62222.
    \9\ See Transfer Notice, supra note 3, at 62229-30. Nasdaq 
HoldCo previously remained an LLC member of BX Equities to avoid 
certain adverse tax consequences that would be associated with 
contributing its ownership interest to the Exchange, but according 
to the Exchange, these tax considerations have since expired. See 
id. at 62230 n.7. See also Securities Exchange Act Release No. 59154 
(December 23, 2008), 73 FR 80468, 80469-70 n.20 (December 31, 2008).
    \10\ See Transfer Notice, supra note 3, at 62230.
    \11\ See definitions of ``Capital Account'' and ``Tax Amount'' 
in Section 1.1, and Sections 10.9 and 12.6 of the Operating 
Agreement.
    \12\ See Sections 7.4 and 11.1 of the Operating Agreement. See 
also Transfer Notice, supra note 3, at 62230.
---------------------------------------------------------------------------

    As proposed, Nasdaq HoldCo will transfer its entire ownership 
interest in BX Equities to the Exchange, which will result in the 
Exchange becoming the 100% direct owner and sole LLC member of BX 
Equities.\13\ The Exchange represents that the Transfer Proposal merely 
seeks to simplify the corporate structure of BX Equities, that the 
Exchange will operate in a substantially similar manner following the 
transfer as it currently operates (with the addition of the Exchange's 
role as the tax matters member of BX Equities), and that the transfer 
will have no impact on how the Exchange operates its equities 
market.\14\
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    \13\ Section 8.1 of the Operating Agreement states that the 
Exchange must obtain Commission approval for transfers of ownership 
interest in BX Equities. According to the Exchange, upon Commission 
approval of the Transfer Proposal, the Exchange and Nasdaq HoldCo 
will enter into a contribution and assignment agreement 
(``Contribution Agreement'') pursuant to which Nasdaq HoldCo will 
transfer its entire 46.79% ownership interest in BX Equities, and 
all of its other rights and obligations arising thereunder, to the 
Exchange, resulting in the Exchange directly owning 100% of BX 
Equities. See Transfer Notice, supra note 3, at 62230.
    \14\ See id.
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    The Exchange proposes to amend the Operating Agreement to reflect 
the transfer. In particular, the Exchange proposes to add a description 
of the Contribution Agreement,\15\ remove references to Nasdaq HoldCo 
as an LLC member of BX Equities,\16\ replace references to Nasdaq 
HoldCo with references to the Exchange to reflect that Nasdaq HoldCo 
will no longer be the tax matters member of BX Equities; \17\ provide 
that Nasdaq HoldCo will no longer have limited rights with respect to 
capital contributions in BX Equities \18\ and the dissolution of BX 
Equities; \19\ and delete a provision relating to the books, records, 
premises, officers, directors, agents, and employees of Nasdaq 
HoldCo.\20\
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    \15\ See proposed changes to the Recitals section of the 
Operating Agreement.
    \16\ See proposed changes to the introductory paragraphs, 
Sections 1.1 and 7.2, and Schedules 1 and 2 of the Operating 
Agreement.
    \17\ See proposed changes to the definitions of ``Capital 
Account'' and ``Tax Amount'' in Section 1.1, and Sections 10.9 and 
12.6 of the Operating Agreement.
    \18\ See proposed changes to Section 7.4 of the Operating 
Agreement.
    \19\ See proposed changes to Section 11.1 of the Operating 
Agreement.
    \20\ See proposed changes to Section 18.6 of the Operating 
Agreement.
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B. Merger Proposal

    Following the transfer of ownership interest in BX Equities as 
described above, the Exchange proposes to merge BX Equities with and 
into the Exchange.\21\ As a result, BX Equities will be eliminated, the 
Exchange will be the surviving entity, and the Exchange will directly 
operate its equities market.\22\
---------------------------------------------------------------------------

    \21\ See Merger Notice, supra note 6, at 62222-23. The Exchange 
anticipates that the merger will occur immediately after the 
transfer. See id. at 62223.
    \22\ See id. at 62222-23.
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    Currently, the Exchange has delegated certain responsibilities to 
BX Equities to operate the Exchange's equities market under a 
Delegation Agreement.\23\ The delegation is limited to the Exchange's 
equities market functions and does not include other functions not 
specifically mentioned in the limited delegation.\24\ Pursuant to the 
Delegation Agreement, the Exchange retains ultimate responsibility for 
its equities market, including the responsibility to ensure the 
fulfillment of statutory and self-regulatory obligations under the 
Act.\25\ In connection with the proposed merger, the Exchange proposes 
to terminate the delegation of functions to BX Equities and delete the 
Delegation Agreement from its rules. With the termination of the 
Delegation Agreement, all of the functions previously delegated to BX 
Equities will be performed by the Exchange, and the Exchange will 
directly operate its equities market.\26\ The Exchange will continue to 
bear responsibility over its equities market of ensuring the 
fulfillment of its statutory and self-regulatory obligations.\27\
---------------------------------------------------------------------------

    \23\ See id. at 62222.
    \24\ See id. at 62223.
    \25\ See id.
    \26\ See id.
    \27\ See id.
---------------------------------------------------------------------------

    As described above, BX Equities is also currently governed by the 
Operating Agreement, which provides that management of BX Equities is 
vested in the Exchange.\28\ In connection with the proposed merger and 
the proposed termination of the Delegation Agreement, BX Equities will 
no longer be operating the Exchange's equities market and the Operating 
Agreement will become obsolete.\29\ Accordingly, the Exchange proposes 
to delete the Operating Agreement from its rules.
---------------------------------------------------------------------------

    \28\ The Exchange also states that BX Equities can only act 
through the action of the Exchange and the Exchange's officers and 
directors, because there is no separate BX Equities board of 
directors and all BX Equities officers are officers of the Exchange. 
See id.
    \29\ See id.
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    Finally, the Exchange proposes to make conforming changes to its 
rules to reflect the proposed merger and the proposed deletion of the 
Delegation Agreement and Operating Agreement. In particular, the 
Exchange proposes to delete General 2, Section 8, which relates to the 
Delegation Agreement and the staff, books, records, premises, officers, 
employees, and agents of BX Equities. The Exchange also proposes to 
amend Equity 1, Section 1 to remove references to the Operating 
Agreement, Delegation Agreement, and BX Equities.

III. Discussion and Commission Findings

    The Commission finds that the proposed rule changes are consistent 
with the requirements of the Act and the rules and regulations 
thereunder applicable to a national securities exchange.\30\ In 
particular, the Commission finds that the proposed rule changes are 
consistent with Section 6(b)(1) of the Act,\31\ which requires that a 
national securities exchange be so organized and have the capacity to 
be able to carry out the purposes of the Act

[[Page 73833]]

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)(5) of the Act,\32\ which requires, among other 
things, that the rules of a national securities exchange be designed to 
prevent fraudulent and manipulative acts and practices, 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.
---------------------------------------------------------------------------

    \30\ In approving the proposed rule changes, the Commission has 
considered the proposed rules' impact on efficiency, competition, 
and capital formation. See 15 U.S.C. 78c(f).
    \31\ 15 U.S.C. 78f(b)(1).
    \32\ 15 U.S.C. 78f(b)(5).
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    As described above, the proposed rule changes will allow (i) the 
transfer of Nasdaq HoldCo's ownership interest in BX Equities to the 
Exchange, and (ii) the merger of BX Equities with and into the 
Exchange. The proposed transfer will have no impact on how the Exchange 
operates its equities market and, as described above, the Exchange 
anticipates that the merger will occur immediately after the transfer. 
Following the merger, the Exchange will directly operate its equities 
market and perform the functions that were previously delegated to BX 
Equities. Moreover, the Exchange will continue to have ultimate 
responsibility over its equities market, including the responsibility 
to ensure the fulfillment of its statutory and self-regulatory 
obligations under the Act.\33\ Because the proposed rule changes will 
allow the Exchange to directly operate its equities market (rather than 
through a subsidiary) and the Exchange will continue to have ultimate 
regulatory responsibility over its equities market, the Commission 
believes that the proposed rule changes are consistent with the Act and 
will not impair the ability of the Commission or the Exchange to 
discharge their respective responsibilities under the Act. The 
Commission also believes that the Exchange's proposals to amend the 
Operating Agreement in connection with the transfer, and to 
subsequently remove the Delegation Agreement and the amended Operating 
Agreement and make conforming changes to its rules in connection with 
the merger, are consistent with the Act and will allow the Exchange's 
rulebook to reflect the Transactions.
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    \33\ The Exchange states that its independent regulatory 
oversight committee (``ROC'') will continue to oversee the 
Exchange's regulatory and self-regulatory organization 
responsibilities with regard to both its equities and options 
markets, and the Exchange's regulatory department will continue to 
carry out its regulatory functions with respect to both markets 
under the oversight of the ROC. See Merger Notice, supra note 6, at 
62224.
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IV. Conclusion

    It is therefore ordered, pursuant to Section 19(b)(2) of the 
Act,\34\ that the proposed rule changes (SR-BX-2021-050; SR-BX-2021-
051) be, and hereby are, approved.
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    \34\ 15 U.S.C. 78s(b)(2).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\35\
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    \35\ 17 CFR 200.30-3(a)(12).
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J. Matthew DeLesDernier,
Assistant Secretary.
[FR Doc. 2021-28108 Filed 12-27-21; 8:45 am]
BILLING CODE 8011-01-P
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