Federal Register / Vol. 76, No. 64 / Monday, April 4, 2011 / Notices 18591 

5When Nasdaq first proposed its options trading 

rules, it planned to resume trading by operating a 

‘‘Halt Cross,’’ which it originally described in 

Chapter VI, Section 8. Nasdaq later amended the 

proposed rules to remove the Halt Cross. See 

Securities Exchange Act Release Nos. 57478 (March 

12, 2008), 73 FR 14521 (March 18, 2008) (SR– 

NASDAQ–2007–004 and SR–NASDAQ–2007–080) 

(approval order regarding NOM Rules including 

Chapters III and XIV). 

6 15 U.S.C. 78f(b). 

7 15 U.S.C. 78f(b)(5). 

8 17 CFR 200.30–3(a)(12). 

1 15 U.S.C. 78s(b)(1). 

2 15 U.S.C. 78a. 

3 17 CFR 240.19b–4. 

Finally, NASDAQ is proposing to reestablish an Opening Cross to be 

executed upon the termination of a 

trading halt.5 Having operated NOM for 

almost two years, NASDAQ has 

determined in its experience that an 

auction will provide a more orderly 

opening of the market after a halt. This 

is particularly true because NOM has 

attracted significantly higher levels of 

liquidity, an important ingredient for a 

successful cross. Accordingly, NASDAQ 

is proposing to modify Chapter V, 

Section 4 (Resumption of Trading After 

a Halt) and various subsections of 

Chapter VI, Section 8. The Opening 

Cross will operate in the same manner 

following a trading halt as it operates at 

the start of the trading day, including 

dissemination of the Order Imbalance 

Indicator, matching algorithm, and 

posing or routing of interest that 

remains unexecuted following 

execution of the opening cross. The 

Opening Cross for halted options will 

differ only in the time at which it occurs 

and the fact that that time is determined 

pursuant to Chapter V, Section 4. 

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. 

Nasdaq believes that the proposal is 

consistent with this standard because 

the proposed rule change is designed to 

improve execution quality at the critical 

opening of the market both at the start 

of the trading day and following a 

trading halt. 

B. Self-Regulatory Organization’s 

Statement on Burden on Competition 

Nasdaq 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. 

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 

Within 45 days of the date of 

publication of this notice in the Federal 

Register or within such longer period (i) 

as the Commission may designate up to 

90 days of such date if it finds such 

longer period to be appropriate and 

publishes its reasons for so finding or 

(ii) as to which the self-regulatory 

organization 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, as amended, 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 e-mail to rulecomments@sec.gov. Please include File 

Number SR–NASDAQ–2011–037 on the 

subject line. 

Paper Comments 

• Send paper comments in triplicate 

to Elizabeth M. Murphy, Secretary, 

Securities and Exchange Commission, 

100 F Street, NE., Washington, DC 

20549–1090. 

All submissions should refer to File 

Number SR–NASDAQ–2011–037. This 

file number should be included on the 

subject line if e-mail 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 on official business 

days between the hours of 10 a.m. and 

3 p.m. Copies of such filing also will be 

available for inspection and copying at 

the principal offices of the Exchange. 

All comments received will be posted 

without change; the Commission does 

not edit personal identifying 

information from submissions. You 

should submit only information that 

you wish to make available publicly. All 

submissions should refer to File 

Number SR–NASDAQ–2011–037, and 

should be submitted on or before April 

25, 2011. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.8

Cathy H. Ahn, 

Deputy Secretary. 

[FR Doc. 2011–7836 Filed 4–1–11; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–64144; File No. SR– 

NYSEAmex-2011–18] 

Self-Regulatory Organizations; NYSE 

Amex LLC; Notice of Filing of 

Proposed Rule Change Relating to the 

Formation of a Joint Venture Between 

the Exchange, Its Ultimate Parent 

NYSE Euronext, and Seven Other 

Entities To Operate an Electronic 

Trading Facility for Options Contracts 

March 29, 2011. 

Pursuant to Section 19(b)(1) 1 of the 

Securities Exchange Act of 1934 (the 

‘‘Act’’) 2 and Rule 19b–4 thereunder,3

notice is hereby given that, on March 

23, 2011, NYSE Amex LLC (the 

‘‘Exchange’’ or ‘‘NYSE Amex’’) filed with 

the Securities and Exchange 

Commission (the ‘‘Commission’’ or 

‘‘SEC’’) the proposed rule change as 

described in Items I and II below, which 

Items have been prepared by the selfregulatory organization. The 

Commission is publishing this notice to 

solicit comments on the proposed rule 

change from interested persons. 


Emcdonald on DSK2BSOYB1PROD with NOTICES
18592 Federal Register / Vol. 76, No. 64 / Monday, April 4, 2011 / Notices 

4The activities of the Options Exchange are 

further described in Section 3.1(b) of the LLC 

Agreement. 

5Common Interests consist of Class A Common 

Interests and Class B Common Interests. 6Following the effective date of this Proposed 

Rule Change, additional Class B Common Interests 

will be issued to the Founding Firms based, in part, 

on each Founding Firm’s contribution to the annual 

volume of the Options Exchange from October 1, 

2009 to December 31, 2010, as described further 

under the heading ‘‘Volume-Based Equity Plan’’. 

The Exchange represents that this issuance of 

shares to the Founding Firms will not result in any 

Member (alone or together with its affiliates) other 

than NYSE Amex exceeding the 19.9% Maximum 

Percentage (as defined below). 

7A ‘‘Supermajority Vote,’’ as defined in the LLC 

Agreement, means, with respect to matters 

submitted to the Board at a validly called and 

validly noticed meeting, (x) for so long as NYSE 

Amex’s percentage ownership of Common Interests 

equals or exceeds fifteen percent (15%), (A) the 

affirmative vote of more than fifty percent (50%) of 

the directors designated by NYSE Amex entitled to 

vote thereon and present in person or by proxy and 

(B) the affirmative vote of more than fifty percent 

(50%) of those directors designated by Founding 

Firms entitled to vote thereon and present in person 

or by proxy, and (y) for so long as NYSE Amex’s 

percentage ownership of Common Interests is less 

than fifteen percent (15%), the affirmative vote of 

more than fifty percent (50%) of all directors 

entitled to vote thereon and present in person or by 

proxy (which excess of fifty percent (50%) must 

include more than two-thirds (2⁄3) of those directors 

designated by Founding Firms and NYSE Amex in 

the aggregate entitled to vote thereon and present 

in person or by proxy). 

I. Self-Regulatory Organization’s 

Statement of the Terms of Substance of 

the Proposed Rule Change 

The Exchange proposes to form a joint 

venture between the Exchange, its 

ultimate parent NYSE Euronext, a 

Delaware corporation, and the following 

entities (each, a ‘‘Founding Firm’’): 

Citadel Securities LLC (‘‘Citadel’’); 

Goldman, Sachs & Co. (‘‘Goldman 

Sachs’’); Banc of America Strategic 

Investments Corporation (‘‘BAML’’); 

Citigroup Financial Strategies, Inc. 

(‘‘Citigroup’’); Datek Online Management 

Corp. (‘‘TD Ameritrade’’); UBS Americas 

Inc. (‘‘UBS’’); and Barclays Electronic 

Commerce Holdings Inc. (‘‘Barclays’’). 

The joint venture will operate an 

electronic trading facility (the ‘‘Options 

Exchange’’) that will engage in the 

business of listing for trading options 

contracts permitted to be listed on a 

national securities exchange (or facility 

thereof) and related activities. The 

Options Exchange will be operated as a 

‘‘facility’’ (as such term is defined in 

Section 3(a)(2) of the Securities 

Exchange Act of 1934 (the ‘‘Act’’)) of the 

Exchange, which will act as the selfregulatory organization (‘‘SRO’’) for the 

Options Exchange. The Options 

Exchange will be operated by NYSE 

Amex Options LLC (the ‘‘Company’’), a 

Delaware limited liability company 

formed by NYSE Euronext, the 

Exchange and the Founding Firms and 

jointly owned by the Exchange and the 

Founding Firms. The text of the 

proposed rule change, consisting of the 

proposed Limited Liability Company 

Agreement of the Company (the ‘‘LLC 

Agreement’’) and a proposed Members 

Agreement of the Company setting forth 

certain additional terms (the ‘‘Members 

Agreement’’), is available at the 

Exchange, the Commission’s Public 

Reference Room, on the Commission’s 

Web site at 

http://www.sec.gov, and on http:// 

www.nyse.com. The LLC Agreement is 

the source of the Company’s governance 

and operating authority and, therefore, 

functions in a similar manner as articles 

of incorporation and by-laws function 

for a corporation. 

II. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

In its filing with the Commission, the 

self-regulatory organization included 

statements concerning the purpose of, 

and basis for, the proposed rule change 

and discussed any comments it received 

on the proposed rule change. The text 

of those statements may be examined at 

the places specified in Item IV below. 

The Exchange has prepared summaries, 

set forth in sections A, B, and C below, 

of the most significant parts of such 

statements. 

A. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

1. Purpose 

The Exchange is submitting this 

Proposed Rule Change to the 

Commission in connection with the 

proposed formation of a joint venture 

between the Exchange, its ultimate 

parent NYSE Euronext and the 

Founding Firms. The joint venture will 

operate an electronic trading facility, the 

Options Exchange, that will engage in 

the business of listing for trading 

options contracts permitted to be listed 

on a national securities exchange (or 

facility thereof) and related activities.4

The Options Exchange will be operated 

as a ‘‘facility’’ (as such term is defined 

in Section 3(a)(2) of the Act) of the 

Exchange, which will act as the SRO for 

the Options Exchange. The Options 

Exchange will be operated by the 

Company, the Exchange and the 

Founding Firms and jointly owned by 

the Exchange and the Founding Firms. 

The Exchange will have regulatory 

responsibility for the activities of the 

Options Exchange. The Exchange 

represents that it has adequate funds to 

discharge all regulatory functions 

related to the Options Exchange. 

The LLC Agreement is the source of 

the Company’s governance and 

operating authority and, therefore, 

functions in a similar manner as articles 

of incorporation and by-laws function 

for a corporation. No changes to the 

Exchange’s existing rules will be 

necessary in connection with the 

establishment of the Company and the 

operation of the Options Exchange. 

Summary 

This section contains a summary of 

certain provisions in the operative 

documents of the Company. The 

provisions are more fully described in 

the sections following the summary. 

Structure of the Company 

As a limited liability company, 

ownership of the Company is 

represented by limited liability 

company interests in the Company 

(‘‘Interests’’). The holders of interests are 

referred to as the members of the 

Company (the ‘‘Members’’). The Interests 

represent equity interests in the 

Company and entitle the holders thereof 

to participate in the Company’s 

allocations and distributions. Initially, 

NYSE Amex will own 100% of the 

preferred non-voting Interests 

(‘‘Preferred Interests’’) and 47.2% of the 

Common Interests,5 as Class A Common 

Interests. The Founding Firms will own 

the remaining 52.8% of the Common 

Interests, as Class B Common Interests, 

and no single Founding Firm (including 

its affiliates) will own Class B Common 

Interests comprising more than 19.9% of 

the issued and outstanding Common 

Interests. The 52.8% ownership of Class 

B Common Interests will initially be 

allocated as follows: 14.95% to each of 

Citadel and Goldman Sachs; 5.0% to 

each of BAML, Citigroup and TD 

Ameritrade; 4.9% to UBS; and 3.0% to 

Barclays.6

Capital Contributions 

Members may be subject to both 

voluntary and mandatory capital calls. 

Mandatory capital calls may be issued 

by the board of directors of the 

Company (the ‘‘Board’’), up to a cap, if 

the Company requires funds to maintain 

its status as a facility of an SRO or for 

other regulatory compliance purposes. 

In addition, during the first two years 

after the Company is formed, the Board, 

with the approval of a simple majority 

vote of the Board, may solicit voluntary 

capital calls up to a cap. In addition, a 

Supermajority Vote of the Board 7 will 

be able to approve: (i) Any voluntary 

capital call during the first two years 


Emcdonald on DSK2BSOYB1PROD with NOTICES
Federal Register / Vol. 76, No. 64 / Monday, April 4, 2011 / Notices 18593 

after the Company is formed in excess 

of the cap, (ii) any voluntary capital call 

after the two-year anniversary of the 

formation of the Company, and (iii) any 

voluntary capital call that is necessary 

for the Company to maintain its status 

as a facility of an SRO or any other 

regulatory compliance purposes and 

that is in excess of the cap for 

mandatory capital calls. Any Member 

that fails to participate in a mandatory 

capital call may be subject to certain 

customary sanctions. Any Member that 

fails to participate in a voluntary capital 

call will be diluted in its equity 

holdings. 

Term and Termination 

The Company will continue in 

perpetual existence until dissolved 

pursuant to the LLC Agreement or the 

Delaware Limited Liability Company 

Act, as amended (the ‘‘Delaware LLC 

Act’’). The LLC Agreement includes 

customary provisions for the dissolution 

of the Company and an orderly 

liquidation of its business. 

Ownership Limitations 

No Member, other than NYSE Amex, 

will be permitted to hold Common 

Interests in excess of nineteen and ninetenths percent (19.9%) of the issued and 

outstanding Common Interests or any 

lower percentage that may be imposed 

under applicable law. Any Member that 

holds Common Interests in excess of 

19.9% will be required to dispose of 

their excess Common Interests following 

a procedure outlined below under the 

heading ‘‘Ownership Limitations’’. In 

addition, any such excess interests will 

be deemed non-voting until they are 

transferred to a Member or another 

person or entity in whose hands they 

would not be in excess of 19.9% of the 

issued and outstanding Common 

Interests and who may vote such 

Common Interests under applicable law. 

Members and Membership 

Members will be required to comply 

with Federal securities laws (to the 

extent such laws relate to the Company) 

and cooperate with the SEC and NYSE 

Amex, pursuant to NYSE Amex’s 

regulatory authority. As explained more 

fully in the description of Section 7.6 of 

the LLC Agreement under the heading 

‘‘Members and Membership’’ below, the 

Members may, upon the affirmative 

written consent of NYSE Amex (in its 

capacity as SRO) and a Supermajority 

Vote of the Board (excluding the vote of 

the director designated by the Member 

subject to sanction), suspend or 

terminate a Member’s voting privileges 

in the event: (i) The Member has 

materially violated a Regulatory Matters 

Provision (as defined below) in the LLC 

Agreement or any applicable law; 

(ii) the Member is subject to any 

applicable ‘‘statutory disqualification’’ 

(within the meaning of Section 3(a)(39) 

of the Act); or (iii) such action is 

necessary or appropriate in the public 

interest or for the protection of 

investors. 

Persons or entities may become 

Members by acquiring Common 

Interests from an existing Member either 

pursuant to the transfer provisions 

described below or with approval by a 

Supermajority Vote. 

A Member may seek to be treated as 

a ‘‘Restricted Member’’ to comply with 

any legal restrictions applicable to its 

holdings of Common Interests. A 

Restricted Member will be subject to 

restrictions on the distributions it 

receives and its Common Interests may 

be deemed non-voting. This election 

may be reversed in certain 

circumstances. 

Governance 

Day-to-day operations of the Company 

and the management of its business and 

affairs will be delegated to the 

Company’s officers and to NYSE Group, 

Inc. (‘‘NYSE Group’’), a subsidiary of 

NYSE Euronext, in accordance with a 

services agreement (the ‘‘NYSE Euronext 

Agreement’’) between NYSE Group and 

the Company. Under the NYSE 

Euronext Agreement, NYSE Group will 

agree to provide the Options Exchange 

with a broad range of operational and 

support services. 

The Board will be responsible for the 

oversight of the Company’s officers and 

of NYSE Group’s performance under the 

NYSE Euronext Agreement. The Board 

will consist of thirteen members. Each 

Founding Firm so authorized pursuant 

to the LLC Agreement will have the 

right to designate one director to the 

Board—for a total of six directors 

designated by Founding Firms—and 

NYSE Amex will have the right to 

designate the remaining seven directors. 

The LLC Agreement outlines the basic 

qualifications of the directors and 

specifies grounds for their removal. 

Most decisions of the Board will be 

taken by a simple majority vote; 

however, a specified list of actions will 

require the approval of a Supermajority 

Vote. An action requiring a simple 

majority vote of the Board may be taken 

even if none of the directors appointed 

by Founding Firms have voted in favor 

of such an action. Most matters subject 

to a Supermajority Vote will be 

essentially commercial and business 

issues, such as the offering of additional 

equity to new investors, certain capital 

calls and other dilutive measures, or the 

sale or liquidation of the business. 

Matters relating to market governance, 

surveillance, discipline, regulatory 

compliance, and similar oversight issues 

will not be subject to Supermajority 

Vote. 

In the event that there are two or 

fewer directors designated by Founding 

Firms or in the event that Founding 

Firms cease to own, in the aggregate, at 

least twenty percent (20%) of the 

outstanding Common Interests, most of 

the matters subject to a Supermajority 

Vote will cease to require approval by 

a simple majority of Founding Firms, 

and will instead require only a simple 

majority of the Board. In addition, in the 

event that the Founding Firms cease to 

own, in the aggregate, at least fifteen 

percent (15%) of the outstanding 

Common Interests, only actions that 

would have a materially and 

disproportionally disadvantageous 

effect on the Founding Firms will 

require a Supermajority Vote. 

If NYSE Amex’s equity interest falls 

below fifteen percent (15%), NYSE 

Amex will lose the right to appoint one 

(or more) directors (as necessary to 

result in a board evenly split between 

NYSE Amex and Founding Firms). A 

Founding Firm may also lose its right to 

appoint a director under a variety of 

circumstances. 

The Company will have a Founding 

Firm Advisory Committee (the 

‘‘Advisory Committee’’), which will 

advise the Board on certain matters, 

including new products and market 

structure. 

Transfers of Interests 

Transfers of Common Interests will be 

governed by customary provisions and 

subject to certain restrictions. In 

particular, Founding Firms wishing to 

transfer their Common Interests will be 

subject to certain limitations on the 

amount of Common Interests they may 

transfer in each year. NYSE Amex will 

have an initial right of first offer to 

purchase Common Interests that a 

Founding Firm intends to transfer, at a 

price at least equal to their fair market 

value. In the event NYSE Amex does not 

exercise its right of first offer, the 

transferring Founding Firm will have 

the right, subject to certain conditions, 

to sell its Common Interests to NYSE 

Amex at a price equal to their fair 

market value or to sell its Common 

Interests to a third party. In addition, 

following the tenth anniversary of the 

formation of the Company, NYSE Amex 

will have the right to buy some or all of 

the Class B Common Interests from the 

Founding Firms at a price equal to their 

fair market value. 


Emcdonald on DSK2BSOYB1PROD with NOTICES
18594 Federal Register / Vol. 76, No. 64 / Monday, April 4, 2011 / Notices 

8A ‘‘Majority Vote’’ is defined as (i) with respect 

to matters submitted to the Board at a validly called 

meeting, the affirmative vote by those directors 

representing greater than fifty percent (50%) of the 

directors entitled to vote thereon and present in 

person or by proxy at such meeting, including, in 

the event that NYSE Amex’s percentage ownership 

of Common Interests exceeds fifteen percent (15%), 

the affirmative vote of directors representing greater 

than fifty percent (50%) of the NYSE Amex 

directors that are present in person or by proxy at 

the meeting and (ii) with respect to matters 

submitted to Members at a validly called meeting, 

the affirmative vote of those Members holding 

greater than fifty percent (50%) of the Common 

Interests entitled to vote thereon and present in 

person or by proxy at such meeting. 

9Regulatory Capital Contributions required to be 

made to the Company by the Members cannot 

exceed $5,000,000 in the aggregate in any thirty-six 

(36)-month period following the effective date of 

the LLC Agreement (the ‘‘Regulatory Capital Call 

Cap’’). 

In the event NYSE Amex intends to 

transfer any of its Common Interests, the 

Founding Firms will have certain rights 

of first offer to purchase these Common 

Interests. However, no Founding Firm 

will be able to acquire Common 

Interests in this way if such acquisition 

would result in the Founding Firm’s 

equity holdings exceeding nineteen and 

nine tenths percent (19.9%) of the total 

equity of the Company. 

In the event that NYSE Amex acquires 

any Class B Common Interests, such 

Class B Common Interests will 

automatically be converted into Class A 

Common Interests. Similarly, in the 

event any Founding Firms acquire Class 

A Common Interests, such Class A 

Common Interests will be automatically 

converted into Class B Common 

Interests. 

Subject to certain conditions, 

Members will be obligated to transfer 

their Common Interests where another 

Member, acting along or together with 

other Members, intends to make a 

transfer of 75% of the then-outstanding 

Common Interests and the Board, by 

Supermajority Vote, approves the sale of 

the Company to a person or entity who 

is not an affiliate of the Company. 

Redemptions of Interests 

The Board may, by Majority Vote,8

redeem the equity interests of a 

Founding Firm under specified 

circumstances, such as (i) a transfer of 

equity interests by such Founding Firm 

to certain entities specified in the LLC 

Agreement, (ii) such Founding Firm’s 

failure to satisfy a certain minimum 

volume threshold in connection with 

the Plan (as defined below) during 

certain twelve-month periods or (iii) 

such Founding Firm’s entry into certain 

economic arrangements as further 

detailed below under the heading 

‘‘Redemption of Interests’’ coupled with 

such Founding Firm’s failure to satisfy 

a certain minimum volume threshold in 

connection with the Plan during certain 

three-month periods. 

Certain Regulatory and Compliance 

Matters 

The LLC Agreement includes 

regulatory provisions that govern the 

actions of the Company, the Member, 

NYSE Group, NYSE Euronext, NYSE 

Amex, as SRO for the Options 

Exchange, and the employees and 

directors of each of these entities. The 

Company, NYSE Euronext, NYSE 

Group, each Member and the officers, 

directors, agents and employees of each 

of these entities will be required to 

comply with Federal securities laws and 

cooperate with the SEC and NYSE 

Amex, pursuant to NYSE Amex’s 

regulatory authority. In addition, the 

Board will adopt corporate compliance 

policies that will govern the conduct of 

employees. 

NYSE Amex, as SRO for the Options 

Exchange, will have broad authority to 

direct any action that it deems necessary 

or appropriate to fulfill its obligations as 

an SRO. 

Volume-Based Equity Plan 

A volume-based equity plan (the 

‘‘Plan’’) will be in place for an initial 

period of five (5) years and three (3) 

months following the formation of the 

Company, pursuant to which each 

Founding Firm will be entitled to 

receive, for no additional consideration, 

a predetermined amount of new Class B 

Common Interests (‘‘Annual Incentive 

Shares’’) based on the degree to which 

such Founding Firm has satisfied 

certain minimum volume requirements. 

The Plan may reallocate the equity 

interests of the Founding Firms among 

each other. However, the Plan will not 

affect the equity holdings of NYSE 

Amex and the Plan will not increase or 

decrease the aggregate equity interest of 

the Founding Firms relative to NYSE 

Amex. The Company will not allocate 

Annual Incentive Shares to a Founding 

Firm if such allocation would result in 

the Founding Firm holding Common 

Interests representing in excess of 

nineteen and nine tenths percent 

(19.9%) of the total equity of the 

Company, or any lower percentage that 

may be imposed under applicable law. 

Confidentiality 

Members will be subject to customary 

confidentiality obligations with respect 

to information relating to the Company 

or any Member. Customary exceptions 

to these obligations will allow 

disclosure of information to the SEC or 

to NYSE Amex in its capacity as an 

SRO. 

Capital Contributions 

Regulatory Capital Contributions 

At any time, and from time to time, 

the Board may require each of the 

Members to participate on a pro rata 

basis in accordance with each Member’s 

Common Interests in calls for additional 

capital contributions to the Company 

that may be necessary for the Company 

to ensure that the Options Exchange 

maintains, and complies with any 

regulatory requirements applicable to, 

its status as a facility of an SRO 

pursuant to the Act or to satisfy any 

other regulatory obligation (any such 

capital call, a ‘‘Regulatory Capital Call’’, 

and each such contribution, a 

‘‘Regulatory Capital Contribution’’). The 

Board must provide each Member with 

not less than thirty (30) days written 

notice of such Regulatory Capital Call, 

which notice shall specify (i) the 

aggregate dollar amount of the 

Regulatory Capital Call and the 

individual dollar amount required to be 

contributed by such Member; (ii) the 

date by which the Regulatory Capital 

Contribution must be made; (iii) such 

Member’s percentage ownership of the 

Common Interests as of the date of the 

notice; and (iv) the reason for the 

Regulatory Capital Call.9

Voluntary Capital Contributions 

At any time during the period 

commencing on the effective date of the 

LLC Agreement, and ending on the 

second anniversary of that effective 

date, the Board may solicit the Members 

to make one or more additional capital 

contributions to the Company (each 

such solicitation, a ‘‘Voluntary Capital 

Call’’, and each such contribution, a 

‘‘Voluntary Capital Contribution’’) for 

the benefit of the Company, up to an 

amount not to exceed $5,000,000 in the 

aggregate in any twelve (12) month 

period following the effective date of the 

LLC Agreement (the ‘‘Voluntary Capital 

Call Cap’’). Notwithstanding the 

foregoing, however, the Board may, by 

Supermajority Vote, among other things, 

solicit Voluntary Capital Contributions 

at any time, if such Voluntary Capital 

Contribution is necessary for the 

Company to ensure that the Options 

Exchange maintains, and complies with 

any regulatory requirements applicable 

to, its status as a facility of an SRO 

pursuant to the Act or to satisfy any 

other regulatory obligation, to the extent 

of any amount exceeding the Regulatory 


Emcdonald on DSK2BSOYB1PROD with NOTICES
Federal Register / Vol. 76, No. 64 / Monday, April 4, 2011 / Notices 18595 

Capital Call Cap. No Member shall have 

any obligation at any time to make any 

Voluntary Capital Contribution. 

Non-Funding Members 

Any Member that fails to make its 

Regulatory Capital Contribution on or 

before the payment due date or any 

Member that elects to participate in a 

Voluntary Capital Call but subsequently 

fails to make its Voluntary Capital 

Contribution on or before the payment 

due date, as applicable, will be 

considered a ‘‘Non-Funding Member.’’ 

The unpaid subscription amount will 

bear interest payable to the Company 

equal to a specified default interest rate, 

from and after the applicable payment 

due date and until such non-payment 

has been cured by the Non-Funding 

Member or the Non-Funded Interest (as 

defined below) has been purchased by 

another Member or other person or 

entity as described in the following 

paragraph. No such interest paid by a 

Non-Funding Member to the Company 

will be treated as a capital contribution 

but will be treated as interest income of 

the Company. 

In addition to the foregoing, upon 

thirty (30) days written notice by the 

Company to any Member that becomes 

a Non-Funding Member (and provided 

that such non-payment has not been 

cured by the Non-Funding Member 

within such 30-day period), the Board, 

in its sole discretion, may (i) sell to any 

of the other Members, on a pro rata 

basis, all or any portion of (A) in the 

case of a Voluntary Capital Call, the 

Common Interests that the Non-Funding 

Member would have received had the 

amount requested been paid in full and 

(B) in the case of a Regulatory Capital 

Call, the amount of Common Interests 

corresponding to the amount requested 

(in both cases, ‘‘Non-Funded Interests’’); 

or (ii) in the event that the entire 

amount of Non-Funded Interests of the 

Non-Funding Member is not acquired 

by the Members pursuant to clause (i) 

above, so notify the Members and 

designate one or more persons or 

entities (subject to the agreement of 

such persons or entities), which may 

include Members, to acquire all or any 

portion of the Non-Funding Member’s 

Non-Funded Interests not so acquired; 

provided that (A) any purchase of such 

Non-Funded Interest by any Member, in 

whole or in part, shall result in a 

corresponding increase to such 

Member’s Common Interest and (B) any 

purchase of such Non-Funded Interest 

by a party that is not a Member shall be 

treated as a transfer by the Non-Funding 

Member to such person and shall be 

subject to conditions and limitations in 

the LLC Agreement relating to 

admission of Members and transfers of 

Interests. 

Term and Termination 

Pursuant to Section 2.3 of the LLC 

Agreement, the Company shall continue 

in perpetual existence until dissolved 

pursuant to the LLC Agreement or the 

Delaware LLC Act. However, Section 

12.1 of the LLC Agreement provides that 

the Company may be dissolved in the 

event of (i) a Supermajority Vote by the 

Board to that effect, (ii) the sale or other 

disposition of all or substantially all of 

the Company’s assets and the receipt of 

all consideration therefrom, or (iii) the 

entry of a decree of judicial dissolution 

under Section 18–802 of the Delaware 

LLC Act (involving a situation where it 

is not reasonably practicable to carry on 

the business in conformity with a 

limited liability company agreement); 

provided that no Member may make an 

application for the dissolution of the 

Company pursuant to Section 18–802 of 

the Delaware LLC Act without approval 

by a Supermajority Vote of the Board. 

The dissolution of the Company will be 

effective as of the day on which the 

event occurs giving rise to the 

dissolution, but the Company will not 

terminate until the winding up of the 

Company has been completed, the 

assets of the Company have been 

distributed as provided in Section 12.2 

of the LLC Agreement (see following 

paragraph) and the Certificate of 

Formation of the Company has been 

canceled. 

Section 12.2 of the LLC Agreement 

provides that, upon the termination and 

dissolution of the Company, the Board 

must take all steps necessary and proper 

to effect an orderly liquidation of the 

Company’s business and shall apply 

and distribute the net proceeds of such 

liquidation in the following order of 

priority: (a) First, to creditors, including 

Members who are creditors (but 

excluding liabilities to Members for 

distributions under Section 18–606 of 

the Delaware LLC Act), to the extent 

otherwise permitted by applicable law, 

in satisfaction of liabilities of the 

Company (other than contingent, 

conditional or unmatured liabilities for 

which reserves are established by the 

Board), whether by payment or the 

making of reasonable provision for 

payment thereof, (b) second, to the 

establishment of any reserves 

determined by the Board to be 

reasonably necessary or appropriate to 

provide for any contingent, conditional 

or unmatured Company liabilities and 

obligations (which reserves may be paid 

over to a bank or trust company, as 

escrow agent, to be held by such escrow 

agent for the purpose of disbursing such 

reserves in payment of the referenced 

liabilities and obligations) and, at the 

expiration of such period as the Board 

shall deem advisable, to pay over the 

balance thereafter remaining for 

distribution, (c) third, to the holder of 

Preferred Interests, to the extent of the 

Priority Claim (as defined below), and 

(d) finally, subject to such other 

arrangements as the Members may 

agree, to the Members, pro rata, in 

accordance with their percentage 

ownership of Common Interests; subject 

to any applicable limitations imposed 

by a Member’s maximum percentage of 

distributions as provided in Section 7.5 

of the LLC Agreement or such other 

arrangements as the Members may 

agree. In the latter situation, any 

distribution so limited shall be made to 

the other Members in proportion to their 

respective percentage ownership of 

Common Interests. 

The ‘‘Priority Claim’’ is the right of the 

Preferred Interest holder, upon any 

liquidation, dissolution or sale of the 

Company or other similar event, to 

receive the sum of (i) the amount of the 

non-cash capital contribution for the 

Preferred Interests identified on 

Schedule A–1 to the Amended and 

Restated Contribution Agreement dated 

as of February 22, 2011, by and among 

NYSE Euronext, the Company and the 

Members (the ‘‘Contribution 

Agreement’’), reduced by the amount(s) 

paid by the Company (x) in respect of 

any redemptions of Preferred Interests 

pursuant to Section 11.5(a) of the LLC 

Agreement as described herein under 

‘‘Redemption of Interests’’ or (y) 

pursuant to Section 3.2(i) of the 

Members Agreement relating to certain 

redemptions of Class B Common 

Interests plus (ii) any unpaid amount 

that has accrued on the Preferred 

Interests. In any winding up and 

dissolution of the Company, NYSE 

Amex may elect to receive Company 

property-in-kind, provided that the fair 

market value of such property-in-kind 

will be determined by a Supermajority 

Vote of the Board or, if the Board is 

unable to so agree, pursuant to an 

appraisal thereof by an independent 

valuation firm approved by a 

Supermajority Vote of the Board. To the 

extent the fair market value of the 

Company property distributed to NYSE 

Amex is in excess of the amount it 

would otherwise receive under Section 

12.2 of the LLC Agreement, it shall 

make a cash payment to the Company 

in the amount of the difference, with the 

proceeds to be distributed, pro rata, to 

all the Members other than NYSE Amex. 

Section 12.4 of the LLC Agreement 

establishes that, upon the occurrence of 

an event of dissolution as described 


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10A ‘‘Permitted Transfer’’ is defined in the LLC 

Agreement as (i) any transfer of Interests by any 

Member among any of its affiliates, (ii) any transfer 

by merger, consolidation or similar business 

combination or through the acquisition of 

substantially all of the assets and liabilities of the 

transferring party (except for a transfer to a person 

or entity whose assets subsequent to the transfer 

would be comprised principally of Interests) or (iii) 

any transfer required under, or effected to enable a 

Member to be in compliance with, applicable law 

or the requirements of a governmental authority or 

any SRO. Any transferee under clauses (i) and (ii) 

of the previous sentence is a ‘‘Permitted Transferee,’’ 

and any transferee under clause (iii) of the previous 

sentence is a ‘‘Required Transferee.’’ 

11 ‘‘Non-voting Common Interests’’ are defined in 

the LLC Agreement as Class B Common Interests (i) 

designated as non-voting at the time of issuance; (ii) 

deemed to be non-voting pursuant to Section 7.5(b) 

or Section 7.5(d) of the LLC Agreement; or (iii) held 

by a Member, constituting Common Interests in 

excess of the 19.9% Maximum Percentage, absent 

SEC approval. 

above, the Company shall be dissolved 

unless, within fifteen (15) days of such 

event, those Members representing 

greater than fifty percent (50%) of the 

Common Interests agree in writing to 

continue the business of the Company. 

Ownership Limitations 

Section 4.9 of the LLC Agreement 

provides that no Member (other than 

NYSE Amex alone or, subject to receipt 

of SEC approval pursuant to the rule 

filing process under Section 19(b) of the 

Act, together with its Permitted 

Transferees 10) shall be permitted to 

own or vote (alone or together with its 

affiliates), directly or indirectly, 

Common Interests in excess of the lower 

of (x) nineteen and nine-tenths percent 

(19.9%) of the then issued and 

outstanding Common Interests (the 

‘‘19.9% Maximum Percentage’’) or (y) 

the maximum amount of Common 

Interests such Member (alone or 

together with its affiliates) may own or 

vote under applicable law and without 

subjecting the Company to material 

regulatory obligations or material 

liabilities or a reasonable likelihood of 

material regulatory obligations or 

material liabilities arising as a result of 

the extent of such ownership or voting 

interest (such maximum Common 

Interests a Member (alone or together 

with its affiliates) may own or vote 

under this clause (y), the ‘‘Alternate 

Maximum Percentage’’, and the amount 

in excess thereof or in excess of the 

19.9% Maximum Percentage, as 

applicable, ‘‘Excess Interests’’). 

In the event that the Company 

believes that a Member other than NYSE 

Amex (alone or together with its 

affiliates) has or may, as a result of thencontemplated events, in the near future, 

have Excess Interests (other than as a 

result of exceeding the 19.9% Maximum 

Percentage), the Company shall provide 

such Member with notice of this belief, 

setting forth the basis for the Company’s 

position, and the Company and such 

Member shall discuss in good faith the 

proposed determination. If the Company 

and such Member agree that such 

Member (alone or together with its 

affiliates) holds Excess Interests (other 

than as a result of exceeding the 19.9% 

Maximum Percentage), the Member 

must, within a reasonable period after 

such agreement is reached, implement 

remedial measures including those 

described in the paragraph immediately 

below. If the Company and a Member 

fail to reach agreement as to whether the 

Member (alone or together with its 

affiliates) holds Excess Interests (other 

than as a result of exceeding the 19.9% 

Maximum Percentage), the Company 

shall be entitled to bring a dispute 

resolution proceeding in accordance 

with the dispute resolution provisions 

in Article XV of the LLC Agreement to 

resolve the dispute; and in the event the 

Company prevails in any such dispute 

resolution proceeding, the applicable 

Interests shall be deemed to be Excess 

Interests for purposes of the remedial 

measures described in the paragraph 

immediately below. In the event a 

Member (alone or together with its 

affiliates) holds Excess Interests as a 

result of exceeding the 19.9% Maximum 

Percentage, the Member shall, subject to 

applicable law, implement the remedial 

measures described in the paragraph 

immediately below and such Excess 

Interests shall automatically and 

immediately constitute Non-voting 

Common Interests 11 as described in and 

subject to the paragraph immediately 

below. 

A Member (alone or together with its 

affiliates) that (x) holds Excess Interests 

as a result of exceeding the 19.9% 

Maximum Percentage or (y) pursuant to 

the paragraph immediately above, 

agrees that it holds or is found to hold 

Excess Interests as a result of exceeding 

the applicable Alternate Maximum 

Percentage shall promptly implement 

the following remedial measures 

accordingly and in a manner consistent 

with the LLC Agreement and applicable 

law: (i) the offer of such Excess Interests 

at a price equal to the pro rata portion 

of the fair market value of the Member’s 

(or its affiliates’, if applicable) Common 

Interests attributable to the Excess 

Interests: first, to the remaining 

Members (other than NYSE Amex) pro 

rata in accordance with their relative 

Common Interests; second, if the 

remaining Members do not purchase all 

such Excess Interests, to NYSE Amex; 

and third, if NYSE Amex does not 

purchase all such Excess Interests, to 

any other person or entity approved by 

NYSE Amex (which approval must not 

be unreasonably withheld, conditioned 

or delayed), subject to the conditions 

and limitations in the LLC Agreement 

on the admission of Members, (ii) 

subject to applicable law, retention of 

the Excess Interests as Non-voting 

Common Interests, pursuant to the 

provisions of Section 7.5 of the LLC 

Agreement on Restricted Members (as 

defined and discussed below), or (iii) 

except in the case of Excess Interests 

arising as a result of such Member 

(alone or together with its affiliates) 

exceeding the 19.9% Maximum 

Percentage, any other remedial action 

discussed in good faith by the Member 

and the Company, in each case, as 

determined by the relevant Member to 

be least burdensome. A Member’s 

Excess Interests arising as a result of 

such Member (alone or together with its 

affiliates) exceeding the 19.9% 

Maximum Percentage shall 

automatically and immediately 

constitute, absent regulatory approval 

(including SEC approval pursuant to the 

rule filing process under Section 19(b) 

of the Act) to the contrary, Non-voting 

Common Interests and the Aggregate 

Class A Voting Allocation and Aggregate 

Class B Voting Allocation (each as 

defined below) shall be adjusted 

accordingly. Such an adjustment may 

have the effect of concentrating the 

Common Interest Percentages of the 

other Members. The requirements of 

this provision shall be applied 

iteratively in the event that any such 

adjustment would result in any Member 

(alone or together with its affiliates) 

exceeding the 19.9% Maximum 

Percentage. Subject to applicable law, 

Excess Interests of a Member that 

constitute Non-voting Common Interests 

solely as a result of such Member (alone 

or together with its affiliates) exceeding 

the 19.9% Maximum Percentage shall 

cease to constitute Non-voting Common 

Interests (and the Aggregate Class A 

Voting Allocation and Aggregate Class B 

Voting Allocation shall be adjusted 

accordingly) in the event that, and to the 

extent that, (I) such Member (or, if 

applicable, its affiliates) transfers, in 

accordance with Article XI (Transfers) 

of the LLC Agreement, such Excess 

Interests to another Member or third 

party that (taking into account such 

Excess Interests then being transferred) 

does not hold Common Interests that 

would constitute Excess Interests in the 

hands of such transferee Member or 

third party due to such transferee 

Member or third party (in each case, 

alone or together with its affiliates) 

exceeding the 19.9% Maximum 


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12 ‘‘Common Interest Percentage’’ is defined in the 

LLC Agreement as (i) with respect to NYSE Amex 

or a transferee of Class A Common Interests, the 

product of (w) the Aggregate Class A Economic 

Allocation multiplied by (x) a fraction, (A) the 

numerator of which shall be the number of Class 

A Common Interests then held by NYSE Amex or 

the transferee and (B) the denominator of which 

shall be the number of Class A Common Interests 

then held NYSE Amex and all such transferees, and 

(ii) with respect to any Founding Firm or a 

transferee of Class B Common Interests, the product 

of (y) the Aggregate Class B Economic Allocation 

multiplied by (z) a fraction, (A) the numerator of 

which shall be the number of Class B Common 

Interests then held by such Founding Firm or the 

transferee, including, for the purpose of 

determining any economic entitlement or 

entitlement to designate a director, any Non-voting 

Common Interests and (B) the denominator of 

which shall be the number of Class B Common 

Interests then held by all Founding Firms and all 

such transferees, including, for the purpose of 

determining any economic entitlement or 

entitlement to designate a director, any Non-voting 

Common Interests. 

13 ‘‘Specified Entity’’ is defined in the LLC 

Agreement as (i) any U.S. securities option 

exchange (or facility thereof) or U.S. alternative 

trading system on which securities option contracts 

are executed (other than NYSE Amex or any of its 

affiliates) that lists for trading any option contract 

that competes with a contract listed for trading on 

the Options Exchange or a contract that is 

contemplated by the then-current business plan of 

the Company to be listed for trading by the Options 

Exchange within ninety (90) days of such date, (ii) 

any person or entity that owns or controls a U.S. 

securities option exchange or U.S. alternative 

trading system described in clause (i), and (iii) any 

affiliate of a person or entity described in clause (i) 

or (ii) above; provided that, in the event of a change 

in applicable law permitting the execution of 

transactions in exchange-listed securities options 

otherwise than on a national securities exchange or 

facility thereof (including, but not limited to, 

internalization of orders for exchange-listed 

securities options or the execution of such orders 

on an alternative trading system), (x) a system 

operated by or on behalf of a Founding Firm or its 

affiliates for purposes of the internalization or 

crossing of: (i) Orders of customers of such 

Founding Firm or its affiliates, (ii) orders of such 

Founding Firm or its affiliates or (iii) orders routed 

from a retail broker-dealer or retail brokerage unit, 

shall not be considered a Specified Entity and (y) 

in addition to the matters covered in clause (x), 

NYSE Amex and the Founding Firms will negotiate 

in good faith the terms of an exception from the 

definition of Specified Entity for any alternative 

trading system owned solely by an individual 

Founding Firm or its affiliates that performs order 

crossing in a manner that does not substantially 

compete with the Options Exchange in terms of 

market share and other relevant factors. 

Percentage or (II) such Excess Interests 

cease to be Excess Interests (due to such 

Member (alone or together with its 

affiliates) exceeding the 19.9% 

Maximum Percentage) because of a 

reduction in such Member’s Common 

Interest Percentage.12 Notwithstanding 

the foregoing, nothing in Section 4.9 of 

the LLC Agreement limits Section 7.5 of 

the LLC Agreement (Restricted 

Members) or the ability of a Member to 

make a Restricted Member Election (as 

defined below), which shall impose 

separate and additional limitations with 

respect to Common Interests covered 

thereby. NYSE Amex may assign to one 

of its affiliates the right to purchase 

Excess Interests pursuant to clause (i) of 

this paragraph, subject to providing 

notice to, and receiving approval from, 

the SEC under Section 19(b) of the Act. 

In the event that material regulatory 

obligations or material liabilities of the 

Company arise as a result of a Member 

(alone or together with its affiliates) 

holding Excess Interests (other than as 

a result of exceeding the 19.9% 

Maximum Percentage) and such 

material obligations or liabilities may be 

mitigated by the Member becoming a 

Restricted Member pursuant to Section 

7.5(a) of the LLC Agreement, the 

Member will be deemed to have elected 

to become a Restricted Member upon 

such obligation or liability arising; 

provided that, to the extent permitted 

under applicable law and consistent 

with the proviso in Section 7.5(a)(iii) of 

the LLC Agreement relating to the 

reversal of an election to be treated as 

a Restricted Member, the Member may 

revoke such election to be a Restricted 

Member in connection with either 

(i) the sale of such Member’s Interests or 

(ii) any other remedial action taken by 

such Member, each as described in the 

preceding paragraph. 

Members and Membership 

Section 7.3 of the LLC Agreement 

provides that, except as otherwise 

provided in Article XI (Transfers) of the 

LLC Agreement (discussed below), 

persons or entities that acquire Common 

Interests or Preferred Interests in 

accordance with the terms of, and 

subject to the restrictions provided in, 

the LLC Agreement may be admitted 

from time to time as new Members by 

Supermajority Vote of the Board, subject 

to the following: (a) Any new Member 

must make a capital contribution in 

such amount and on such terms as the 

Board deems appropriate based upon 

the needs of the Company, the net value 

of its assets, the Company’s financial 

condition, and the benefits anticipated 

to be realized by such additional 

Member; and (b) the additional Member 

must agree to be bound by the terms of 

the LLC Agreement and the Members 

Agreement. In addition, pursuant to 

Section 7.4 of the LLC Agreement, each 

Member must maintain commercially 

reasonable policies and procedures, 

taking into account the structure and 

organization of its operations, to prevent 

disclosure of confidential information of 

the Company by any director, alternate 

director, observer to the Board or any 

committee of the Board or member of 

the Advisory Committee (as defined 

below) to any other individual 

appointed by such Member to perform 

a similar role with respect to, or who is 

an officer or employee of, a Specified 

Entity.13 Any individual designated to 

be a director, alternate director, observer 

to the Board or any committee of the 

Board, or member of the Advisory 

Committee may be required to 

acknowledge in writing the foregoing 

requirements. 

As referenced above, the number of 

Class A Common Interests and Class B 

Common Interests that will be issued 

and outstanding to the initial Members 

will result in (i) the percentage of the 

aggregate number of Common Interests 

represented by the Class A Common 

Interests (the ‘‘Aggregate Class A 

Economic Allocation’’) initially being 

equal to 47.2% and (ii) the percentage 

of the aggregate number of Common 

Interests represented by the Class B 

Common Interests (the ‘‘Aggregate Class 

B Economic Allocation’’) initially being 

equal to 52.8%. The Class A Common 

Interests will also initially represent 

47.2% of the aggregate number of 

Common Interests entitled to vote (such 

percentage, the ‘‘Aggregate Class A 

Voting Allocation’’ and together with the 

Aggregate Class A Economic Allocation, 

the ‘‘Aggregate Class A Allocation’’), 

while the Class B Common Interests will 

initially represent 52.8% of the 

aggregate number of Common Interests 

entitled to vote (such percentage, the 

‘‘Aggregate Class B Voting Allocation’’ 

and together with the Aggregate Class B 

Economic Allocation, the ‘‘Aggregate 

Class B Allocation’’). From time to time, 

the Aggregate Class A Economic 

Allocation and the Aggregate Class A 

Voting Allocation shall be separately or 

together subject to adjustment upwards 

or downwards, as applicable, in 

accordance with the provisions of the 

LLC Agreement and/or the Members 

Agreement, as will the Aggregate Class 

B Economic Allocation and the 

Aggregate Class B Voting Allocation. 

Restricted Members 

Section 7.5 of the LLC Agreement 

provides that each Member (other than 

NYSE Amex alone or together with its 

Permitted Transferees) then owning 

(alone or together with its affiliates) any 

Excess Interests (other than as a result 

of exceeding the 19.9% Maximum 

Percentage) or then owning an Interest 

entitling that Member to distributions in 

excess of the Member’s Maximum 

Percentage (as defined below) of the 

distributions (the ‘‘Capped Distribution 

Amount’’) then being made to all 

Members may from time to time make 

an irrevocable election (‘‘Restricted 

Member Election’’) (but subject to 


Emcdonald on DSK2BSOYB1PROD with NOTICES
18598 Federal Register / Vol. 76, No. 64 / Monday, April 4, 2011 / Notices 

reversal under certain specific 

circumstances), by written notice to the 

Company, to be treated for purposes of 

the LLC Agreement as a ‘‘Restricted 

Member,’’ solely with respect to such 

Excess Interests or Capped Distribution 

Amount. ‘‘Maximum Percentage’’ means, 

for a Member, the lesser of the 19.9% 

Maximum Percentage and such 

Member’s Alternate Maximum 

Percentage, if any. With respect to each 

Restricted Member, for so long as the 

election to be a Restricted Member 

remains in effect: 

(i) In the event of any distribution of 

Class B Common Interests, at the request 

of that Restricted Member by written 

notice to the Company, the Restricted 

Member will receive in lieu of Class B 

Common Interests, at the Company’s 

sole option based on a Majority Vote of 

the disinterested directors, either (x) the 

cash equivalent of such distribution to 

be paid by the Company within ninety 

(90) days of the date such distribution 

would have otherwise been made, and 

the allocations of net profits and losses 

shall be adjusted accordingly to reflect 

each Member’s share of such 

distribution or (y) a promissory note 

from the Company (i) in a principal 

amount equivalent to the amount of 

such distribution; (ii) having a maturity 

determined by Supermajority Vote of 

the disinterested directors not to exceed 

5 years; and (iii) having additional 

commercially reasonable terms to be 

determined by Supermajority Vote of 

the disinterested directors that are 

consistent with customary market 

practice (provided that the Company 

shall not enter into any contractual 

restrictions that specifically and directly 

limit the Company’s ability to repay or 

redeem such promissory note except as 

required under applicable law), and the 

allocations of net profits and losses shall 

be adjusted accordingly to reflect each 

Member’s share of such distribution; 

(ii) In the event of any distribution 

that is not a distribution of Class B 

Common Interests, and if such 

Restricted Member has so elected, then 

the amount of any distribution that 

would otherwise be made to the 

Restricted Member in excess of the 

Capped Distribution Amount shall be 

distributed to all other Members who 

are entitled to participate in such 

distribution on a pro rata basis with 

respect to the Common Interests held by 

such Members and the allocations of net 

profits and losses shall be adjusted 

accordingly to reflect each Member’s 

share of such distribution; provided that 

with respect to any Restricted Member, 

including in the event that such 

distribution permits any Member to 

elect to be treated as a Restricted 

Member and such Member so elects, the 

distributions to any such Restricted 

Member shall not exceed the Capped 

Distribution Amount; and 

(iii) Such Restricted Member agrees to 

transfer the proceeds of any transfer of 

Common Interests by that Restricted 

Member (taking into account any 

proceeds received by the Restricted 

Member for previous transfers) in excess 

of the Restricted Member’s Maximum 

Percentage of the proceeds of such 

transfer of Common Interests to all other 

Members who are not Restricted 

Members on a pro rata basis with 

respect to the number of Common 

Interests held by such Members; 

provided that with respect to any 

Restricted Member, including in the 

event that such transfer permits any 

Member to elect to be treated as a 

Restricted Member and such Member so 

elects, the amount transferred to any 

such Restricted Member shall be limited 

so as to not cause the Restricted 

Member’s total ownership interest to 

exceed the Restricted Member’s 

Maximum Percentage or the Capped 

Distribution Amount, as applicable. 

An election to become a Restricted 

Member will be binding upon the 

Restricted Member and its direct and 

indirect transferees, provided, however, 

that the Restricted Member, in its 

capacity as a Member and a Restricted 

Member, may (x) upon written notice to 

the Company at any time and without 

precondition, reverse its election with 

respect to paragraph (ii) above and (y) 

only under the following circumstances, 

reverse its election to be treated as a 

Restricted Member upon written notice 

to the Company: 

(A) The Restricted Member owns such 

Restricted Member’s Maximum 

Percentage or less of the Common 

Interests then issued and outstanding 

(in which case such reversal may occur 

without any further consent of the 

Board or any other condition 

precedent); 

(B) With the written approval of the 

Board granted in the sole discretion of 

the majority of the disinterested 

directors; or 

(C) The Restricted Member provides 

the Board with appropriate written 

notice that such Common Interests have 

been transferred to the extent 

permissible under the LLC Agreement 

(1) as part of a widespread public or 

private offering where no single 

transferee (together with its affiliates) 

acquires more than 2% of the total 

Common Interests, (2) to an underwriter 

for the purpose of underwriting a 

widely distributed public or private 

offering, (3) in one or more open market 

transactions effected on a stock 

exchange, electronic communication 

network or similar execution system, or 

in the over-the-counter market (which 

may include a sale to one or more 

broker-dealers acting as market makers 

or otherwise intending to resell the 

Common Interests sold to them in 

accordance with their normal business 

practices), (4) to an acquirer which has 

acquired control of a majority of the 

total Common Interests, or (5) with the 

written approval of the U.S. Board of 

Governors of the Federal Reserve 

System or its staff. 

Common Interests with a voting 

interest in excess of the Maximum 

Percentage of the then issued and 

outstanding Common Interests of each 

Member who elects to be treated as a 

Restricted Member will be deemed Nonvoting Common Interests, and the 

Aggregate Class A Voting Allocation and 

Aggregate Class B Voting Allocation will 

be adjusted accordingly. Non-voting 

Common Interests will not be included 

in determining whether the requisite 

percentage in interest of the Members 

have consented to, approved, adopted or 

taken any action pursuant to the LLC 

Agreement. Except as provided in this 

paragraph, Non-voting Common 

Interests will be identical in all regards 

to all other Common Interests held by 

Members. 

A Member may elect to become a 

Restricted Member with respect to any 

of its Class B Common Interests, even if 

such Class B Common Interests do not 

constitute Excess Interests. Upon such 

election, such Class B Common Interests 

shall be deemed Non-voting Common 

Interests and the provisions of the 

preceding paragraph will apply with 

respect to such Member, provided that 

such Member may only reverse such 

election under the circumstances 

described in subparagraph (C) above. 

The LLC Agreement specifies that, 

absent SEC approval, the Excess 

Interests of a Member (other than NYSE 

Amex alone or together with its 

affiliates) arising as a result of such 

Member (alone or together with its 

affiliates) exceeding the 19.9% 

Maximum Percentage shall immediately 

and automatically constitute Non-voting 

Common Interests. 

Section 7.6 of the LLC Agreement 

provides that the Company and, to the 

extent it relates to the Company, each 

Member, agrees to comply with the 

Federal securities laws and the rules 

and regulations promulgated thereunder 

and to cooperate with NYSE Amex 

pursuant to its regulatory authority and 

with the SEC. Furthermore, each 

Member must take into consideration 

whether its actions would cause the 

Options Exchange or the Company to 


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14A ‘‘Regulatory Matters Provision’’ is defined in 

the LLC Agreement as any of Section 4.9 of the LLC 

Agreement with respect to provisions related to the 

19.9% Maximum Percentage; Section 7.6 of the LLC 

Agreement relating to Member compliance with the 

federal securities laws and cooperation with NYSE 

Amex pursuant to its regulatory authority and with 

the SEC; Section 8.1(d)(i) of the LLC Agreement 

relating to designation of directors to the Board; 

Sections 8.1(e)(ii) and 8.1(e)(iii) of the LLC 

Agreement relating to a director’s suspension or 

removal in certain circumstances; Section 8.1(h) of 

the LLC Agreement relating to the qualification of 

directors; Section 8.1(m) of the LLC Agreement 

relating to director compliance with the federal 

securities laws and cooperation with NYSE Amex 

pursuant to its regulatory authority and with the 

SEC; Section 9.3 of the LLC Agreement prohibiting 

Members from entering voting trust agreements 

with respect to their Common Interests; Section 

11.8 of the LLC Agreement relating to (i) notice and 

rule filing requirements to the SEC on any 

acquisition of Interests that results in a Member’s 

ownership of Common Interests reaching certain 

threshold levels and (ii) requirements regarding 

direct and indirect ownership of the Company; 

Section 13.2(c) of the LLC Agreement granting 

NYSE Amex and the SEC access to the books and 

records of the Company; Section 14.1(j) of the LLC 

Agreement providing for the confidentiality of 

Confidential Information (as defined below) 

pertaining to the self-regulatory functions of NYSE 

Amex; Section 14.1(k) of the LLC Agreement 

granting NYSE Amex and the SEC access to 

confidential information; Section 16.1 of the LLC 

Agreement relating to regulatory approvals and 

compliance; or Section 16.10 of the LLC Agreement 

relating to amendments to the LLC Agreement and 

the requirement to file such amendments with the 

SEC. 

engage in conduct that fosters and does 

not interfere with NYSE Amex’s or the 

Company’s ability to carry out their 

respective responsibilities under the Act 

and to prevent fraudulent and 

manipulative acts and practices, 

promote just and equitable principles of 

trade, foster cooperation and 

coordination with persons engaged in 

regulating, clearing, settling, processing 

information with respect to, and 

facilitating transactions in securities, 

remove impediments to and perfect the 

mechanism of a free and open market 

and a national market system, and, in 

general, protect investors and the public 

interest. The Members may, upon (A) 

the affirmative written consent of NYSE 

Amex (in its capacity as SRO) and (B) 

a Supermajority Vote of the Board 

(excluding the vote of the director 

designated by the Member subject to 

sanction), suspend or terminate a 

Member’s voting privileges, including 

the ability to designate directors 

pursuant to Section 8.1(d) of the LLC 

Agreement in the event: (i) The Member 

has materially violated any ‘‘Regulatory 

Matters Provision’’ 14 or any applicable 

law; (ii) the Member is subject to any 

applicable ‘‘statutory disqualification’’ 

(within the meaning of Section 3(a)(39) 

of the Act); or (iii) such action is 

necessary or appropriate in the public 

interest or for the protection of 

investors. Prior to any suspension or 

termination, (x) the Company will 

deliver to the Member a written notice 

specifying in reasonable detail the basis 

for such proposed suspension or 

termination and (y) representatives of 

the Member will be given an 

opportunity to address the Board 

regarding such proposed suspension or 

termination prior to the Board voting 

thereon. In the event of a suspension or 

termination, the director (if any) 

designated by such Member will 

immediately cease to be a director and 

the authorized number of directors will 

be reduced accordingly. 

Article IX of the LLC Agreement 

provides that meetings of the Members 

may be called by (i) the Board or (ii) by 

a Member or Members holding not less 

than thirty-five percent (35%) of the 

then issued and outstanding Common 

Interests. Written or printed notice 

stating the place, day and hour of the 

meeting and, in the case of a special 

meeting of the Members, describing the 

purposes for which the meeting is called 

shall be delivered not fewer than ten 

(10) days, but not more than sixty (60) 

days, before the date of the meeting. 

Such notice must include an agenda 

specifying in reasonable detail the 

matters to be discussed at the meeting 

and identifying any specific items to be 

considered that require a Supermajority 

Vote. Except as otherwise provided in 

the LLC Agreement or under applicable 

law, Members which both (x) represent 

greater than forty-five percent (45%) of 

the Common Interests outstanding and 

are entitled to vote at such time and (y) 

constitute an absolute majority of 

Members entitled to vote at such time, 

represented in person or by proxy, shall 

constitute a quorum of Members for 

purposes of conducting business. Except 

as otherwise required by the LLC 

Agreement or applicable law, 

resolutions of the Members at any 

meeting of Members shall be adopted by 

Majority Vote of the Members at such 

meeting at which a quorum is present. 

Section 9.3 of the LLC Agreement 

prohibits Members from entering into 

voting trust agreements with respect to 

their Common Interests. 

Governance of the Company 

Section 8.1(a) of the LLC Agreement 

establishes the Board, which will be a 

‘‘manager’’ of the Company within the 

meaning of the Delaware LLC Act. Each 

director shall be entitled to one vote. 

Section 8.1(b) of the LLC Agreement 

provides that the Board shall delegate 

the day-to-day operation of the 

Company and the management of the 

business and affairs of the Company to 

the officers of the Company and NYSE 

Group, a wholly-owned subsidiary of 

NYSE Euronext, in accordance with the 

NYSE Euronext Agreement pursuant to 

which NYSE Group will perform certain 

information technology, operational, 

financial, compliance, management and 

other general corporate support services 

for the Company (except as otherwise 

provided in the LLC Agreement). The 

Board shall oversee the conduct and 

performance of the duties so delegated. 

Pursuant to Section 8.1(c) of the LLC 

Agreement, the authorized number of 

directors is thirteen (13) as of the 

effective date of the LLC Agreement. 

The Board may be expanded by 

Supermajority Vote of the Board to 

include any number of independent 

directors as may be required by 

applicable law, provided that in the 

event the Board is so expanded, the 

Board shall determine, by Supermajority 

Vote, applicable independence criteria 

in accordance with, among other 

appropriate considerations, the 

requirements of applicable law which 

shall include, for this purpose, SEC 

guidelines, if any, regarding such 

criteria. The directors shall be 

appointed by the Members as described 

in the immediately following 

paragraphs and shall hold office until 

their respective successors are elected 

and qualified or until their earlier death, 

resignation or removal. In the event that 

the Company is not required to appoint 

independent directors, the Company 

will authorize one individual to be 

designated by NYSE Amex to 

participate as a non-voting observer in 

meetings of the Board, so long as the 

Options Exchange is operated as a 

facility of NYSE Amex. 

Under Section 8.1(d) of the LLC 

Agreement, each Member agrees that it 

shall vote all of such Member’s 

Common Interests and any other voting 

equity securities of the Company over 

which that Member has voting control 

and shall take all other actions 

reasonably necessary or desirable within 

that Member’s control (whether in the 

Member’s capacity as a Member, 

director, member of a Board committee 

or officer or otherwise, and including 

attendance at meetings in person or by 

proxy for purposes of obtaining a 

quorum and execution of written 

consents in lieu of meetings), and the 

Company shall take all necessary and 

desirable actions within its control 

(including calling special Board and 

Member meetings), so that the following 

persons shall be elected to the Board: 

(i) Up to seven (7) representatives 

designated by NYSE Amex who shall 

initially be as specified in the LLC 

Agreement and, after the effective date 

of the LLC Agreement, such other 

persons who are designated by NYSE 


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Amex from time to time pursuant to this 

clause (i), one of whom may, in NYSE 

Amex’s sole discretion, be the chief 

executive officer of the Company; 

provided that (x) upon any expansion of 

the Board to include any independent 

directors as described above, for so long 

as NYSE Amex’s percentage ownership 

of Common Interests equals or exceeds 

fifteen percent (15%), NYSE Amex shall 

have the right to designate a number of 

additional directors equal to the 

aggregate number of independent 

directors added to the Board pursuant to 

Section 8.1(c) of the LLC Agreement or, 

if fewer, the largest number of 

additional directors allowable under 

applicable law, and the authorized 

number of directors shall be 

correspondingly increased and (y) upon 

any expansion of the Board to include 

any additional directors appointed by 

Members other than NYSE Amex 

pursuant to the LLC Agreement, NYSE 

Amex shall have the right to designate 

a number of additional directors equal 

to the aggregate number of directors so 

added to the Board and the authorized 

number of directors shall be 

correspondingly increased; provided, 

further, that each individual designated 

by NYSE Amex to serve as a director 

shall be reasonably acceptable to the 

Founding Firms; and provided, further, 

that NYSE Amex will appoint at least 

such number (not to exceed seven (7) 

directors) as is necessary to ensure that 

no single Founding Firm’s designees to 

the Board constitute twenty percent 

(20%) or a greater percentage of the total 

number of directors on the Board; and 

(ii) One (1) representative designated 

by each Founding Firm authorized to 

designate a representative pursuant to 

Section 8.1(d)(ii) of the LLC Agreement, 

who shall initially be as specified in the 

LLC Agreement and, after the effective 

date of the LLC Agreement, such other 

person who is designated by such 

Founding Firm from time to time 

pursuant to this clause (ii); provided 

that each individual designated by the 

Founding Firms to serve as a director 

shall be reasonably acceptable to NYSE 

Amex; provided, further, that if such 

Founding Firm’s percentage ownership 

of Common Interests falls below, in the 

case of Goldman Sachs and Citadel, five 

percent (5%), and in all other cases, 

three percent (3%), the individual 

designated by such Founding Firm shall 

immediately cease to be a director, such 

Founding Firm shall cease to be 

authorized to designate a director, and 

the authorized number of directors shall 

be reduced accordingly; provided, 

further, that if such Founding Firm’s 

Class B Common Interests are subject to 

redemption, the Board (A) may require 

the individual designated by such 

Founding Firm to resign, (B) may 

permanently, or for such shorter period 

as the Board may designate, disqualify 

such Founding Firm from designating 

representatives to the Board pursuant to 

this clause (ii), and (C) pursuant to 

subclause (A) or (B) above, reduce the 

authorized number of directors 

accordingly; provided that the affected 

director shall not be authorized to 

participate in any such decision by the 

Board; 

(iii) In the event the Board is 

expanded to include independent 

directors as described above and NYSE 

Amex’s percentage ownership of 

Common Interests equals or exceeds 

fifteen percent (15%), NYSE Amex shall 

designate one-half of the total number of 

independent directors to be so included, 

in consultation with the Founding 

Firms, and the Founding Firms shall 

designate one-half of the total number of 

independent directors to be so included, 

in consultation with NYSE Amex; 

provided that if the number of 

independent directors to be so included 

is odd, NYSE Amex shall designate a 

number of independent directors that is 

equal to the number of independent 

directors designated by the Founding 

Firms plus one; provided further that if 

(A) two or fewer Members have the right 

to designate a director pursuant to 

clause (ii) above or (B) the aggregate 

Common Interests held by all Founding 

Firms, excluding any Non-voting 

Common Interests, falls below fifteen 

percent (15%) of the then issued and 

outstanding Common Interests, NYSE 

Amex shall have the exclusive right to 

designate all of the independent 

directors. The independent directors 

designated by NYSE Amex and the 

Founding Firms shall be subject to 

approval by a Supermajority Vote of the 

Board. In the event that NYSE Amex’s 

percentage ownership of Common 

Interests is less than fifteen percent 

(15%), the independent directors shall 

be appointed by mutual agreement of 

NYSE Amex and a majority of the 

Founding Firms; and 

(iv) If and for so long as NYSE Amex’s 

then-current percentage ownership of 

Common Interests is less than fifteen 

percent (15%), the number of directors 

designated by NYSE Amex shall be 

decreased to a number equal to the thencurrent number of directors designated 

by Founding Firms, the aggregate 

number of representatives of the Board 

to be designated by NYSE Amex shall be 

decreased accordingly, and the number 

of directors shall be reduced 

accordingly, until such time as either (x) 

one or more Founding Firms become 

eligible to designate a director, in which 

case the aggregate number of 

representatives of the Board to be 

designated by NYSE Amex shall 

simultaneously be increased to a 

number equal to the number of directors 

designated by Founding Firms or (y) 

NYSE Amex’s then-current percentage 

ownership of Common Interests again 

equals or exceeds fifteen percent (15%), 

in which case the aggregate number of 

representatives of the Board to be 

designated by NYSE Amex shall be 

increased to a number equal to the 

number of directors designated by 

Founding Firms plus one (1) and, in 

each case, the number of directors shall 

be increased accordingly. 

Section 8.1(e)(i) of the LLC Agreement 

provides that a director may be removed 

as a director at any time and for any 

reason by the Board, pursuant to the 

written request of the person(s) or 

entit(ies) entitled to designate such 

director as discussed above. A director 

may also be removed for cause (as 

defined in the LLC Agreement) by 

Majority Vote of the Board; provided 

that (i) representatives of the Member 

entitled to designate such director shall 

be given the opportunity to speak to the 

Board regarding such proposed removal 

prior to the Board voting on the removal 

of such director and (ii) the affected 

director shall not be authorized to 

participate in any such decision by the 

Board. In the event that a director 

designated by a Founding Firm fails to 

attend a majority of Board meetings 

during any 12-month period, the Board 

may require that Founding Firm to 

designate a replacement director. 

In addition, Section 8.1(e)(ii) of the 

LLC Agreement provides that the Board 

may, by Supermajority Vote (excluding 

the vote of the directors designated by 

the Member subject to sanction), 

suspend or terminate a director’s service 

as such to the Company in the event: (A) 

the director has materially violated any 

Regulatory Matters Provision or any 

applicable law or (B) such action is 

necessary or appropriate in the public 

interest or for the protection of 

investors. Prior to any such suspension 

or termination, (x) the Board shall 

deliver to the Founding Firm that 

appointed the director a written notice 

specifying in reasonable detail the basis 

for the proposed suspension or 

termination and (y) representatives of 

the Founding Firm shall be given an 

opportunity to address the Board 

regarding such proposed suspension or 

termination prior to the Board voting 

thereon. In the event of such suspension 

or termination, the individual 

designated by the Founding Firm shall 

immediately cease to be a director and 


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the resulting vacancy shall be filled 

pursuant to Section 8.1(f) of the LLC 

Agreement (as discussed below). 

Section 8.1(e)(iii) of the LLC 

Agreement provides that any director 

who becomes subject to any applicable 

‘‘statutory disqualification’’ (within the 

meaning of Section 3(a)(39) of the Act) 

shall be deemed to have automatically 

resigned from the Board. 

Pursuant to Section 8.1(f) of the LLC 

Agreement, in the event that any 

director designated pursuant to the 

terms of the LLC Agreement for any 

reason ceases to serve as a director 

during his or her term of office, the 

resulting vacancy shall be filled by a 

representative designated by the person 

or persons entitled to designate such 

director. 

Pursuant to Section 8.1(g) of the LLC 

Agreement, each Founding Firm will be 

permitted to appoint an alternate 

director, who will have the right to 

serve, act and vote as the director 

designated by that Founding Firm in the 

absence of the principal director from 

time to time in cases of necessity. The 

alternate will be permitted to attend all 

meetings of the Board even if the 

principal director is present at such 

meetings (it being understood that in 

such case the alternate will attend as an 

observer and shall not have the right to 

act or vote as a director at any such 

meeting). In the event a director is 

removed pursuant to Section 8.1(e)(ii) of 

the LLC Agreement as described above, 

the then-appointed alternate to such 

director shall immediately cease to be 

an alternate and shall, instead, become 

a director (unless the related Founding 

Firm appoints another person as its 

director, in which case the alternate 

shall remain an alternate). In the event 

a director is removed pursuant to 

Section 8.1(d)(ii) of the LLC Agreement 

as described above, any alternate to 

such director will immediately cease to 

be an alternate and will not become a 

director. To the extent a Founding Firm 

lacks representation on the Board, that 

Founding Firm shall have the right to 

appoint a non-voting observer to the 

Board. 

Section 8.1(h) of the LLC Agreement 

outlines the basic qualifications of 

directors and alternate directors. Each 

individual designated to the Board as a 

director or as an alternate, prior to 

serving on the Board, must certify in 

writing to the Company that he or she 

is not subject to a ‘‘statutory 

disqualification’’ within the meaning of 

Section 3(a)(39) of the Act. Each 

Founding Firm, prior to designating an 

individual to the Board (as a director, 

alternate or observer) must certify in 

writing to the Company that such 

individual is not then a director (or an 

alternate director or observer to the 

board or any committee of the board), 

officer or employee of a ‘‘Specified 

Entity,’’ which is defined, as of any date, 

as (i) any U.S. securities option 

exchange (or facility thereof) or U.S. 

alternative trading system on which 

securities option contracts are executed 

(other than NYSE Amex or any of its 

affiliates) that lists for trading any 

option contract that competes with a 

contract listed for trading on the 

Options Exchange or a contract that is 

contemplated by the then-current 

business plan of the Company to be 

listed for trading by the Options 

Exchange within ninety (90) days of 

such date, (ii) any person or entity that 

owns or controls a U.S. securities option 

exchange or U.S. alternative trading 

system described in clause (i), and (iii) 

any affiliate of a person or entity 

described in clause (i) or (ii) above; 

provided that, in the event of a change 

in applicable law permitting the 

execution of transactions in exchangelisted securities options otherwise than 

on a national securities exchange or 

facility thereof (including, but not 

limited to, internalization of orders for 

exchange-listed securities options or the 

execution of such orders on an 

alternative trading system), (x) a system 

operated by or on behalf of a Founding 

Firm or its affiliates for purposes of the 

internalization or crossing of: (i) orders 

of customers of such Founding Firm or 

its affiliates, (ii) orders of such 

Founding Firm or its affiliates or (iii) 

orders routed from a retail broker-dealer 

or retail brokerage unit, shall not be 

considered a Specified Entity and (y) in 

addition to the matters covered in 

clause (x), NYSE Amex and the 

Founding Firms will negotiate in good 

faith the terms of an exception from the 

definition of Specified Entity for any 

alternative trading system owned solely 

by an individual Founding Firm or its 

affiliates that performs order crossing in 

a manner that does not substantially 

compete with the Options Exchange in 

terms of market share and other relevant 

factors. In the event an individual 

designated by a Founding Firm or 

appointed as an alternate becomes a 

member of the board of directors or 

similar governing body of a Specified 

Entity, that individual shall 

immediately cease to be a director, 

alternate or observer, as applicable, and 

the resulting vacancy shall be filled 

pursuant to the applicable procedures 

described above. 

As provided in Section 8.1(i) of the 

LLC Agreement, a quorum of the Board 

for purposes of conducting business 

consists of a combination of the 

directors representing greater than fifty 

percent (50%) of the votes of all 

directors who are elected and entitled to 

vote on such matter under the LLC 

Agreement, including, in the case of any 

matter subject to a Supermajority Vote, 

a combination of directors representing 

greater than fifty percent (50%) of the 

votes of all directors designated by 

Founding Firms. At all times when the 

Board is conducting business at a 

meeting of the Board, a quorum must be 

present at such meeting. If a quorum 

shall not be present at any meeting of 

the Board, then the directors present at 

the meeting may adjourn the meeting 

from time to time, without notice other 

than announcement at the meeting, 

until a quorum is present, provided that 

if, at any duly called meeting wherein 

a matter subject to a Supermajority Vote 

is being considered, a quorum is not met 

solely due to the fact that a requisite 

number of Founding Firm directors are 

not present, such meeting shall be 

rescheduled on, absent exigent 

circumstances, at least three (3) business 

days’ prior written notice of such 

rescheduled meeting and, for purposes 

of such rescheduled meeting, the 

absence of the requisite number of 

Founding Firm directors shall not 

prevent the Board from taking action by 

Supermajority Vote. A director may vote 

or be present at a meeting either in 

person or by proxy. 

The matters specified on Schedule 

8.1(i)(v) of the LLC Agreement may only 

be taken (whether by the Company or 

any subsidiary) with approval by a 

Supermajority Vote of the Board; 

provided that any matter excepted from 

that schedule by any item on the 

schedule shall be deemed to be 

excepted from all items on the schedule 

except where expressly covered by 

another item on such schedule. Certain 

matters specified in Schedule 8.1(i)(v) of 

the LLC Agreement do not require a 

Supermajority Vote where NYSE Amex, 

acting in its capacity as an SRO, 

requires that such action be taken. 

These matters are (i) material 

amendments to the LLC Agreement or 

any other governing document of the 

Company or any subsidiary; (ii) 

approval of a capital expenditure (other 

than those approved in connection with 

the annual budget) that in the aggregate 

would exceed $3 million, (iii) entering 

into, amending in any material respect 

or terminating any material contract and 

(iv) any material change to fees charged 

by the Options Exchange. In the event 

that at any given time, (A) two or fewer 

Founding Firms have the right to 

designate a director or (B) the aggregate 


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15The six specified items are (1) material 

amendments to or termination of any of the NYSE 

Euronext Agreement; (2) material amendments to 

the LLC Agreement or any other governing 

document of the Company or any subsidiary 

(including to increase/decrease the number or 

makeup of the directors) other than any amendment 

directed by NYSE Amex in its capacity as an SRO 

in accordance with Section 16.1(a) of the LLC 

Agreement; (3) approval of any material related 

party transactions except (i) any transaction or 

arrangement that has been approved pursuant to a 

different item on Schedule 8.1(i)(v) of the LLC 

Agreement or explicitly excluded from approval by 

any item on that schedule, (ii) participation in any 

cash pooling program of NYSE Euronext and any 

of its affiliates, or (iii) any transaction or 

arrangement that requires the Company or any 

subsidiary to receive services under the NYSE 

Euronext Agreement; (4) approval of any dividend 

policy and any declaration, allocation or 

distributions of profits or capital other than a tax 

distribution and other than pursuant to the terms 

of the LLC Agreement or a Board adopted (by 

Supermajority Vote) dividend policy (and for the 

avoidance of doubt, other than the payment of the 

annual coupon on the Preferred Interest); (5) any 

action that would be likely to result in material 

change in the legal or tax structure of the Company 

or any subsidiary or entering into any new business 

that would subject the Options Exchange to a 

regulatory regime that previously it was not subject 

to and that would impose on Members, in their 

capacity as members, material additional regulatory 

obligations; and (6) any material change to fees 

charged by the Options Exchange other than any 

amendment directed by NYSE Amex in its capacity 

as an SRO in accordance with Section 16.1(a) of the 

LLC Agreement, to fund the operations and/or the 

regulation of the Options Exchange. An action 

directed by NYSE Amex in accordance with Section 

16.1(a) of the LLC Agreement includes any action 

NYSE Amex deems necessary or appropriate to 

fulfill its obligations as an SRO and is not limited 

to those actions required by applicable law. 

number of Class B Common Interests 

held by all Founding Firms, excluding 

Non-voting Common Interests, falls 

below twenty percent (20%) of the then 

issued and outstanding Common 

Interests, the list of matters that may be 

taken only with approval by a 

Supermajority Vote of the Board shall 

include only those actions specified in 

items 8, 12, 15, 16, 24 and 25 on 

Schedule 8.1(i)(v) of the LLC 

Agreement,15 provided that in the event 

that the aggregate number of Class B 

Common Interests held by all Founding 

Firms, excluding Non-voting Common 

Interests, falls below fifteen percent 

(15%) of the then issued and 

outstanding Common Interests, a 

Supermajority Vote of the Board on 

such actions shall only be required to 

the extent that any such action would 

have a materially and 

disproportionately disadvantageous 

effect on the economic or voting rights 

of the Founding Firms; provided further 

that a material change to the pricing of 

the NYSE Euronext Agreement, subject 

to the provisions therein, that is not in 

good faith consideration of (i) 

documented additional or enhanced 

services (subject to such additional or 

enhanced services being provided at 

cost) or (ii) a documented increase in 

the aggregate cost of the services 

provided thereunder (net of any 

reductions in other costs of services 

provided thereunder) will per se be 

deemed to have a materially and 

disproportionately disadvantageous 

effect on the economic rights of 

Founding Firms. 

Pursuant to Section 8.3 of the LLC 

Agreement, the Board will establish on 

the effective date of the LLC Agreement 

the Advisory Committee comprised of 

natural persons having the capacity to 

provide advice to the Board, which 

advice the Board will consider in good 

faith but shall not be bound by, with 

respect to subjects identified by the 

Board from time to time, including new 

products and market structure. 

The authorized number of Advisory 

Committee members is initially nine (9), 

but may be increased or decreased by 

Majority Vote of the Board; provided, 

that at all times each Founding Firm 

shall be entitled to have one (1) 

representative on the Advisory 

Committee (except as otherwise 

provided in the LLC Agreement). The 

Advisory Committee members shall be 

appointed by the Members as follows: 

two (2) Advisory Committee members 

appointed by NYSE Amex and one (1) 

Advisory Committee member appointed 

by each Founding Firm. Advisory 

Committee members shall hold office 

until their respective successors are 

appointed or until their earlier death, 

resignation or removal. 

Any Advisory Committee member 

may resign at any time and may be 

removed at any time and for any reason 

by the Board, at the request of the 

Member entitled to appoint such 

Advisory Committee member. In the 

event that any Advisory Committee 

member for any reason ceases to serve 

as an Advisory Committee member 

during his or her term of office, the 

resulting vacancy shall be filled by the 

Member entitled to appoint such 

Advisory Committee member. 

Each individual designated to the 

Advisory Committee, prior to serving on 

the Advisory Committee, shall certify in 

writing to the Company that he or she 

is not subject to a ‘‘statutory 

disqualification’’ within the meaning of 

Section 3(a)(39) of the Act. Each 

Founding Firm, prior to designating an 

individual to the Advisory Committee 

shall certify in writing to the Company 

that such individual is not then a 

director (or an alternate director or 

observer to the board or any committee 

of the board), officer or employee of a 

Specified Entity. In the event an 

individual designated to the Advisory 

Committee becomes a member of the 

board of directors or similar governing 

body of a Specified Entity, such 

individual shall immediately cease to be 

an Advisory Committee member and the 

resulting vacancy shall be filled as 

described above. 

Transfers of Interests 

Article XI of the LLC Agreement and 

Article III of the Members Agreement 

contain numerous requirements and 

restrictions relating to transfers of 

Interests by a Member. Section 11.1 of 

the LLC Agreement provides that the 

admission of any substitute Member 

will not become effective until (i) the 

Board gives its written consent, which 

shall be deemed given with respect to 

transfers made in accordance with 

Section 4.9 of the LLC Agreement 

relating to ownership limitations and 

Sections 11.3 and/or 11.4 of the LLC 

Agreement (whose provisions are 

discussed below) and/or Sections 3.2, 

3.3 and/or 3.4 of the Members 

Agreement (whose provisions are 

discussed below) and (ii) such 

substitute Member and the withdrawing 

Member and/or the transferor Member, 

as the case may be, shall have executed, 

acknowledged and delivered such 

instruments as are required by the 

Board. Pursuant to Section 11.1 of the 

LLC Agreement, the additional or 

substitute Member shall thereafter have 

all of the rights and obligations of a 

Member and may, in the sole discretion 

of the Board, be deemed a Founding 

Firm and granted all of the rights and 

obligations of a Founding Firm. Further, 

unless approved by the Board, no 

transfer of Common Interests shall be 

permitted, nor shall any transferee 

become a beneficial owner of Common 

Interests pursuant to a transfer, if that 

transfer (i) could cause the Company to 

be treated as a publicly traded 

partnership within the meaning of 

Section 7704 of the Internal Revenue 

Code of 1986, as amended (the ‘‘Code’’); 

or (ii) would result in the sale or 

exchange of fifty percent (50%) or more 

of the total Interests in the Company’s 

capital and profits in one or more 

transactions in the aggregate within a 

12-month period. No transfer of shares 

to any person or entity that is a 

Sanctioned Person will be permitted. A 

‘‘Sanctioned Person’’ is a person or 

entity that the United States, the United 

Nations, Switzerland or the European 

Union (or any of its member states) has 

subjected to economic sanctions such as 

(i) blocking of assets, (ii) prohibiting any 

transactions with or involving such 

person or entity or (iii) any other 

regulatory action that restricts the 

ability of another person or entity 

lawfully to engage in business with, 


Emcdonald on DSK2BSOYB1PROD with NOTICES
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16A ‘‘Qualified Transferee’’ is defined as (i) with 

respect to a transfer of Class B Common Interests 

pursuant to Section 3.2 of the Members Agreement, 

any person or entity that meets all of the following 

criteria: (a) such person or entity is not a Specified 

Entity, (b) the affiliation of such person or entity 

with the Company would not, as reasonably 

determined by NYSE Amex, cause reputational 

damage to NYSE Amex or any of its affiliates, and 

(c)(I) such person or entity can reasonably be 

expected to provide either (A) material liquidity to 

the Options Exchange or (B) other material 

commercial or strategic support to the Company or 

(II) NYSE Amex provides its prior written waiver 

to satisfaction of the conditions specified in clause 

(c)(I) of this definition, which waiver shall not be 

unreasonably withheld, conditioned or delayed or 

(ii) with respect to a transfer of Class A Common 

Interests pursuant to Section 3.3(a)(ii) of the 

Members Agreement, any person or entity that 

meets all of the following criteria: (a) the affiliation 

of such person or entity with the Company would 

not, as reasonably determined by NYSE Amex, 

cause reputational damage to the Members or the 

Company, and (b) such person or entity can 

reasonably be expected to provide either (A) 

material liquidity to the Options Exchange or (B) 

other material commercial or strategic support to 

the Company. 

make payments or distributions to, or 

receive payments or contributions from, 

such person or entity. 

Section 11.2 of the LLC Agreement 

and Section 3.1 of the Members 

Agreement provide that no Member, or 

any assignee or successor in interest of 

any Member, will be permitted to sell, 

assign or otherwise transfer any 

Common Interests to any third party 

except, (i) in the case of a transfer of 

Class A Common Interests or Class B 

Common Interests, as applicable, 

pursuant to Section 4.9 of the LLC 

Agreement relating to ownership 

limitations or Sections 11.3, 11.4 or 11.6 

of the LLC Agreement (whose 

provisions are discussed below) or 

Sections 3.3 or 3.4 of the Members 

Agreement (whose provisions are 

discussed below) or (ii) in the case of a 

transfer of Class B Common Interests, 

subject to Section 3.2 of the Members 

Agreement (whose provisions are 

discussed below), with the prior written 

consent of directors representing a 

Majority Vote of the Board without 

regard to the directors appointed by the 

Member or Members seeking such 

consent (which consent (a) may be 

withheld with or without cause in the 

Board’s sole discretion in the case of a 

transferee that is not a Qualified 

Transferee 16 and (b) may not be 

unreasonably withheld, conditioned or 

delayed in the case of a transferee that 

is a Qualified Transferee); provided, in 

each case, that no such transfer may be 

made to any person or entity whose 

affiliation with the Company would, as 

reasonably determined by NYSE Amex, 

cause reputational damage to NYSE 

Amex or any of its affiliates. In addition, 

also subject to Section 11.3 of the LLC 

Agreement, no transfers of Class B 

Common Interests shall be permitted to 

a Specified Entity; provided, subject to 

the provisions of Section 11.4(c) of the 

LLC Agreement relating to such 

transfers, Class B Common Interests may 

be transferred to a Specified Entity if 

such transfer is a Permitted Transfer. No 

equity securities of the Company may be 

pledged except on terms and conditions 

satisfactory to the Board. 

Following any transfer of Class A 

Common Interests or Class B Common 

Interests (including redemptions of the 

latter by the Company), the Aggregate 

Class A Allocation, the Aggregate Class 

B Allocation and each Member’s 

percentage ownership of the Common 

Interests will be adjusted as provided in 

Section 11.2(b) of the LLC Agreement. 

Upon any transfer of Class A Common 

Interests to the Founding Firms or Class 

B Common Interests to NYSE Amex or 

its affiliates, as applicable, such Class A 

Common Interests or Class B Common 

Interests, as applicable, shall cease to be 

Class A Common Interests or Class B 

Common Interests, as applicable, and 

shall instead become Class B Common 

Interests or Class A Common Interests, 

respectively. Unless waived at the 

discretion of the Board, an opinion of 

counsel will be required in connection 

with the transfer of Interests by a 

Member stating that the transfer would 

not violate any Federal securities laws 

or any State or provincial securities or 

‘‘blue sky’’ laws (including any investor 

suitability standards) applicable to the 

Company or the Interest to be 

transferred, or cause the Company to be 

required to register as an investment 

company under the Investment 

Company Act of 1940, as amended, or 

cause the Company to become a 

publicly traded partnership under 

Section 7704 of the Code. 

Section 11.3 of the LLC Agreement 

provides for ‘‘drag-along rights’’ with 

respect to Common Interests being sold 

under certain circumstances. 

Specifically, if (i) a Member (the 

‘‘Selling Member’’), acting alone or 

together with any other Members, 

intends to make a transfer of seventyfive percent (75%) or more of the thenoutstanding Common Interests (other 

than by a public offering or a transfer to 

a Permitted Transferee), and (ii) the 

Board, by Supermajority Vote, approves 

a sale of the Company to a person or 

entity that is not an affiliate of the 

Company (any such transfer of Common 

Interests, an ‘‘Approved Sale’’), then (x) 

the Selling Member or the Board (as 

applicable) may deliver written notice 

to the Members notifying them of the 

exercise of the provisions described in 

Section 11.3 of the LLC Agreement, and 

(y) all the Members (other than the 

Selling Member(s)) shall be obligated to 

participate in such transfer on a pro rata 

basis and/or to consent to, vote in favor 

of and raise no objections against the 

sale of the Company, as applicable. 

Additional provisions of Section 11.3 of 

the LLC Agreement require each 

Member to take certain affirmative 

actions in connection with an Approved 

Sale, such as making certain 

representations and warranties and to 

enter into certain indemnification 

obligations. Further, each holder of 

Common Interests shall, to the extent 

requested by the Company, pay such 

holder’s pro rata portion of the expenses 

incurred by the holders in connection 

with an Approved Sale. 

Section 11.4(a) of the LLC Agreement 

provides that the restrictions on 

transfers of Interests specified in Article 

XI of the LLC Agreement do not apply 

to Permitted Transfers (other than those 

restrictions in Section 11.1(c)(ii) relating 

to the admission of substitute Members, 

those in Section 11.1(d) relating to 

transfers that could cause the Company 

to be treated as a publicly traded 

partnership or would result in the sale 

or exchange of 50% or more of the total 

Interests in the Company’s capital and 

profits within a 12-month period, those 

in Section 11.2(d) relating to potential 

violations of Federal, State or local 

securities laws or transfers that could 

cause the Company to be required to 

register as an investment company, 

those in Section 11.8 relating to (i) 

notice and rule filing requirements to 

the SEC on any acquisition of Interests 

that results in a Member’s ownership of 

Common Interests exceeding certain 

thresholds and (ii) requirements 

regarding direct and indirect ownership 

of the Company and the rights triggered 

by Section 11.5(b) relating to the 

Company’s right to redeem any or all of 

a Member’s Class B Common Interests). 

In the case of a transfer required under, 

or effected to enable a Member to be in 

compliance with, applicable law or the 

requirements of a governmental 

authority or any SRO, any Founding 

Firm that is so required to make any 

such transfer shall submit the names of 

any potential transferees to the Board 

along with any information reasonably 

requested by the Board, and the Board 

shall identify which, if any, of the rights 

and obligations of a Founding Firm such 

potential transferees would have and 

any reasonable and conforming 

amendments to the LLC Agreement that 

would be appropriate as a result thereof 

and, in the event one of such transferees 

actually becomes a transferee pursuant 

to such transfer, then that transferee 


Emcdonald on DSK2BSOYB1PROD with NOTICES
18604 Federal Register / Vol. 76, No. 64 / Monday, April 4, 2011 / Notices 

shall have the rights and obligations of 

a Founding Firm so determined by the 

Board, provided that (x) the Board shall 

not unreasonably withhold, condition or 

delay its consent to granting such 

Required Transferee the rights of a 

Founding Firm, and (y) the transferring 

Founding Firm shall not have an 

obligation to be responsible for the 

performance of such Required 

Transferee under the LLC Agreement. 

Pursuant to Section 11.4(c) of the LLC 

Agreement, in the event of a Permitted 

Transfer to a Specified Entity by a 

Founding Firm, the Board may: 

(i) Require any individual, alternate or 

observer appointed by or representing 

such Founding Firm to the Board or 

individual appointed by such Founding 

Firm to the Advisory Committee to 

resign; (ii) disqualify such Specified 

Entity from voting for individuals to 

serve on the Board or the Advisory 

Committee (permanently or for such 

shorter period as the Board may 

designate), and (iii) redeem such 

Specified Entity’s Interests pursuant to 

Section 11.5(b)(iii) of the LLC 

Agreement. 

Section 3.2(a) of the Members 

Agreement provides that, each year, 

Founding Firms will be able to transfer, 

outside of a Public Offering, a certain 

amount of Class B Common Interests 

during a the 3-week period commencing 

on the day that NYSE Euronext files its 

Form 10–K with the SEC (such period, 

the ‘‘Sale Period’’). This provision does 

not restrict Permitted Transfers. 

Pursuant to Section 3.2(b) of the 

Members Agreement, NYSE Amex will 

deliver to the Founding Firms relevant 

financial information for purposes of 

determining the pro rata portion of fair 

market value (over the twelve-calendarmonth period ended at the end of the 

immediately preceding month) 

represented by such Class B Common 

Interests the Founding Firms seek to 

transfer. Any Founding Firm that 

wishes to transfer any of its transferrable 

Class B Common Interests will disclose, 

by written notice to NYSE Amex and 

the other Founding Firms, the amount 

of Common Interests it intends to 

transfer. NYSE Amex may, by written 

notice to the transferring Founding 

Firm, elect to offer to purchase such 

Common Interests at a price equal to or 

greater than the pro rata portion of fair 

market value (over the twelve-calendarmonth period ended at the end of the 

immediately preceding month) 

represented by such Class B Common 

Interests. NYSE Amex may, in lieu of 

consummating the transfer 

contemplated hereunder, cause the 

Company to redeem any or all of such 

Common Interests at the same price and 

on the same terms and conditions as 

were negotiated by NYSE Amex and the 

transferring Founding Firm. Any 

redemption by the Company pursuant to 

this provision shall be funded 

exclusively by the Redemption Reserve 

(as defined below) until the Redemption 

Reserve is exhausted, and thereafter no 

redemption pursuant to this provision 

may be made by the Company. 

Pursuant to Section 3.2(c) of the 

Members Agreement, in the event that 

the transferring Founding Firm elects to 

reject NYSE Amex’s offer, NYSE Amex 

elects not to make an offer, or the 

transfer has not occurred within the 

specified time period, the transferring 

Founding Firm may: 

(i) Transfer such Common Interests to 

a third party; provided that no transferee 

under this provision, shall acquire the 

Founding Firm Right (as defined below) 

unless, in such transfer, such transferee 

acquires all of the Class B Common 

Interests of the transferring Founding 

Firm; 

or 

(ii) Require that NYSE Amex acquire 

such Common Interests at a price equal 

to the pro rata portion of fair market 

value (over the twelve-calendar-month 

period ended at the end of the 

immediately preceding month) 

represented by such Class B Common 

Interests (this right to require NYSE 

Amex to acquire the Common Interests, 

the ‘‘Founding Firm Right’’). NYSE 

Amex may cause the Company to 

redeem any or all of such Common 

Interests at the same price and on the 

same terms and conditions (as 

applicable) as were negotiated by NYSE 

Amex and the transferring Founding 

Firm. Any such redemption by the 

Company pursuant to this provision 

shall be funded exclusively by the 

Redemption Reserve (as defined below) 

until the Redemption Reserve shall be 

exhausted, and no other funds of the 

Company may be used to fund any 

redemption by the Company pursuant to 

this provision. Subject to Section 4.9 of 

the LLC Agreement, which governs 

ownership limitations, NYSE Amex may 

assign to one of its affiliates the 

obligation to purchase Common 

Interests pursuant to the Founding Firm 

Right. Upon the acquisition of any Class 

B Common Interests by an affiliate 

pursuant to such an assignment, such 

Class B Common Interests will instead 

become Class A Common Interests in 

accordance with Section 11.2 of the LLC 

Agreement. 

Pursuant to Section 3.2(d) of Members 

Agreement, if (x) a transferring 

Founding Firm desires to exercise a 

Founding Firm Right and (y) prior to 

notifying NYSE Amex of its Founding 

Firm Right, NYSE Amex has notified in 

writing such transferring Founding Firm 

that it has identified one or more bona 

fide third party purchasers to which 

such Common Interests could be 

transferred pursuant to Section 3.1 of 

the Members Agreement and that are 

interested in purchasing all of such 

transferring Founding Firm’s Common 

Interests (such sale, an ‘‘Alternative 

Sale’’), then such transferring Founding 

Firm shall engage in good faith 

discussions and negotiations with 

respect to the sale of the Common 

Interests; provided that (A) the 

transferring Founding Firm shall not be 

obligated to transfer its Common 

Interests at a price less than the fair 

market value of such Common Interests 

(nor will it insist on a higher price than 

such fair market value) and (B) such 

transfer shall be on terms no less 

favorable to the transferring Founding 

Firm than the terms agreed to between 

NYSE Amex and such transferring 

Founding Firm. 

Section 3.2(e) of the Members 

Agreement provides that the transferring 

Founding Firm must notify the 

Company of its intent to either pursue 

the Alternate Sale or exercise the 

Founding Firm Right, provided that if 

such transferring Founding Firm 

determines to pursue an Alternate Sale, 

such transferring Founding Firm shall 

forfeit the right to exercise the Founding 

Firm Right with respect to the 

applicable Sale Period. 

Section 3.2(f) of the Members 

Agreement provides that NYSE Amex 

may elect to acquire any of the Class B 

Common Interests to be purchased by it 

pursuant to Section 3.2 of the Members 

Agreement by installment payments: 

one-third of the purchase price payable 

upon tender and the remainder in equal 

payments made on each of the two 

succeeding calendar year anniversaries 

of such date of tender, with the unpaid 

portion of the purchase price bearing 

interest at a specified rate, reset daily 

and payable on each payment date. 

Notwithstanding any installment 

payment, NYSE Amex shall become the 

owner of the entirety of such Class B 

Common Interests and the transferring 

Founding Firm shall cease to be a 

Member of the Company with respect to 

such Class B Common Interests upon 

tender and payment by NYSE Amex of 

the first installment payment. In the 

event that NYSE Amex causes the 

Company to redeem such Class B 

Common Interests pursuant to Sections 

3.2(b)(iii) or 3.2(c)(ii) of the Members 

Agreement, the Company shall not be 

entitled to acquire such Class B 


Emcdonald on DSK2BSOYB1PROD with NOTICES
Federal Register / Vol. 76, No. 64 / Monday, April 4, 2011 / Notices 18605 

17Consider, by way of example, an Aggregate 

Class A Allocation of 60% and an Aggregate Class 

B Allocation of 40% prior to a redemption of Class 

B Common Interests corresponding to 10% of the 

aggregate number of Common Interests. If NYSE 

Amex elected to treat such a redemption as though 

it were a purchase of these Class B Common 

Interests by NYSE Amex, it could direct an increase 

in the Class A Allocation equal to the entire 10% 

represented by the redeemed Class B Common 

Interests. The result would be an Aggregate Class 

A Allocation of 70% and an Aggregate Class B 

Allocation of 30%. 

Alternatively, if NYSE Amex elected to treat such 

a redemption as an ordinary redemption, the 10% 

represented by the redeemed Class B Shares would 

effectively cease to exist and the Aggregate Class A 

Allocation would increase to (60/90)% or 66.6% 

(and the Aggregate Class B Allocation would 

decrease to (30/90)% or 33.3%). NYSE Amex could 

cause this result by directing a pro rata increase to 

the Aggregate Class A Allocation (and 

corresponding decrease in the Aggregate Class B 

Allocation), proportional to the aggregate Class A 

and Class B allocations. 

Finally, if NYSE Amex elected a hybrid 

treatment, it could direct that the Aggregate Class 

A Allocation be increased to a value between 66.6% 

and 70% (and that the Aggregate Class B Allocation 

be correspondingly decreased). As further described 

below, such a direction would reduce the Priority 

Claim by the amount paid in respect of the 

allocation in excess of 66.6%. 

Common Interests by installment 

payments. 

Section 3.2(h) of the Members 

Agreement provides that, in the event 

that the financial information regarding 

the Company delivered pursuant to 

Section 3.2(b) of the Members 

Agreement is not provided at least five 

(5) business days prior to end of the Sale 

Period, NYSE Amex shall have the right 

to rescind its offer to purchase the 

Common Interests or the transferring 

Founding Firm shall have the right to 

rescind its election to exercise its 

Founding Firm Right, if the initial 

determination of the pro rata portion of 

fair market value (over the twelvecalendar-month period ended at the end 

of the immediately preceding month) 

represented by the Class B Common 

Interests the Founding Firms seek to 

transfer differs by more than an agreed 

percent from the final determination. 

A redemption of Class B Common 

Interests by the Company under 

Sections 3.2(b)(iii) or 3.2(c)(ii) of the 

Members Agreement is required to be 

funded by the Redemption Reserve 

(originally funded by NYSE Amex). 

Pursuant to Section 3.2(i) of the 

Members Agreement, NYSE Amex has 

the right to determine the size of the 

increase in the Aggregate Class A 

Allocation (and corresponding decrease 

in the Aggregate Class B Allocation) 

and, thereby, (x) cause the Company to 

treat such a redemption as if it were a 

purchase of Class B Common Interests 

by NYSE Amex, by directing an increase 

in the Aggregate Class A Allocation (and 

a corresponding decrease in the 

Aggregate Class B Allocation) equal to 

the entire percentage represented by the 

Class B Common Interests so redeemed; 

(y) cause the Company to treat such a 

redemption as an ordinary redemption, 

by directing only a pro rata increase in 

the Aggregate Class A Allocation (and a 

corresponding decrease in the Aggregate 

Class B Allocation) proportional to the 

aggregate Class A and Class B 

allocations; or (z) cause the Company to 

treat such a redemption as a hybrid 

purchase and redemption, by directing 

a disproportional increase in the 

Aggregate Class A Allocation (and a 

corresponding decrease in the Aggregate 

Class B Allocation) that is less than the 

entire percentage represented by the 

redeemed Class B Common Interests.17

If NYSE Amex elects to receive an 

upward adjustment of the Aggregate 

Class A Allocation Percentage described 

above, the Priority Claim of NYSE Amex 

will be reduced by the amount paid by 

the Company that is attributable to the 

excess of such allocation over the 

allocation NYSE Amex would have 

received on a pro rata basis. 

The Company is required to update 

and distribute to each Member a revised 

Members’ Schedule reflecting the 

adjustments made pursuant to Section 

3.2(i) of the Members Agreement. Any 

Member that would exceed the 19.9% 

Maximum Percentage as a result of these 

adjustments will be subject to the 

provisions of Section 4.9(c) of the LLC 

Agreement. 

Section 3.2(j) of the Member’s 

Agreement provides that, in the event 

that the effective date of the LLC 

Agreement occurs on or after March 11, 

2011 and before June 30, 2011, then, 

solely with respect to the Sale Period 

occurring in 2011, (i) the phrase ‘‘during 

any Sale Period’’ in Section 3.2(a) of the 

Members Agreement shall be deemed to 

be a reference to ‘‘during the 10 day 

period following the later of (x) effective 

date of the LLC Agreement and (y) the 

day on which NYSE Euronext files its 

Form 10–K with the SEC,’’ (ii) NYSE 

Amex and the Company shall deliver on 

the effective date of the LLC Agreement 

the financial information specified in 

Section 3.2(b)(i) of the Members 

Agreement and required to be delivered 

by NYSE Amex and the Company, 

respectively, prior to or concurrent with 

the start of the Sale Period, (iii) any 

disputes referred to in Section 3.2(b)(i) 

of the Members Agreement shall be 

resolved as promptly as practicable 

following the effective date of the LLC 

Agreement, and (iv) the reference to 

‘‘end of the Sale Period’’ in Section 

3.2(h) of the Members Agreement shall 

be deemed to be a reference to the end 

of the period referred to in clause (i) of 

this paragraph. 

Section 3.3 of the Members 

Agreement provides for a limited ‘‘right 

of first offer’’ exercisable by each 

Founding Firm with respect to any 

Common Interests NYSE Amex 

proposes to transfer. Pursuant to Section 

4.9 of the LLC Agreement, no Founding 

Firm will be permitted to so acquire 

Common Interests if such acquisition 

would result in the Founding Firm 

holding Excess Interests. 

Pursuant to Section 3.3(a) of the 

Members Agreement, in the event that 

NYSE Amex intends to transfer any 

Class A Common Interests (other than 

by a Public Offering or a transfer to a 

Permitted Transferee), NYSE Amex 

shall deliver a written notice to the 

Founding Firms disclosing the amount 

of Class A Common Interests proposed 

to be transferred and the identity of the 

prospective transferee, which transferee 

shall be an NYSE Amex Qualified 

Transferee. 

Pursuant to Section 3.3(b) of the 

Members Agreement, each Founding 

Firm may elect to offer to purchase 

(each such Founding Firm, an ‘‘Offering 

Founding Firm’’), by written notice to 

NYSE Amex, its pro rata portion of the 

Class A Common Interests proposed to 

be so transferred. If the Founding Firms 

have not elected to fully purchase all of 

the Interests proposed to be transferred, 

NYSE Amex shall provide written 

notice to all Offering Founding Firms 

specifying the number of remaining 

Class A Common Interests, and each 

Offering Founding Firm may elect to 

purchase such remaining Class A 

Common Interests by written notice to 

NYSE Amex; provided that if the 

Offering Founding Firms collectively 

elect to purchase more than the 

remaining number of Class A Common 

Interests, each Offering Founding Firm 

shall be entitled to purchase its pro rata 

portion thereof (with such pro rata 

portion determined solely by reference 

to the Offering Founding Firms’ 

respective percentage of Common 

Interests). The Founding Firms’ right to 

purchase Class A Common Interests 

pursuant to this provision shall be 

contingent on the purchase by one or 

more Founding Firms of all of the Class 

A Common Interests proposed to be 

transferred by NYSE Amex. The 

Offering Founding Firms shall 

collectively determine the proposed 

price and such other terms and 

conditions of the proposed transfer. If 

NYSE Amex rejects the offer(s) of the 

Founding Firm(s), NYSE Amex may 

transfer such Class A Common Interests 

to the prospective transferee identified 


Emcdonald on DSK2BSOYB1PROD with NOTICES
18606 Federal Register / Vol. 76, No. 64 / Monday, April 4, 2011 / Notices 

by NYSE Amex in its notice at a price 

greater than the price offered by the 

Offering Founding Firms and on other 

terms and conditions no more favorable 

to the transferee(s) thereof than the 

terms offered by the Founding Firms. In 

the event that the Founding Firms elect 

not to make an offer, NYSE Amex may 

transfer such Class A Common Interests 

to the prospective transferee identified 

by NYSE Amex at a price and on other 

terms and conditions as determined by 

NYSE Amex. 

Pursuant to Section 3.3(c) of the 

Members Agreement, prior to, and 

subject to the completion by NYSE 

Amex of a transfer of Class A Common 

Interests that would result in NYSE 

Amex and its affiliates, in the aggregate, 

ceasing to own at least an agreed 

percent of the Aggregate Class A 

Allocation (such transfer a ‘‘Complete 

Transfer’’) (other than pursuant to 

Section 3.3(d) of the Members 

Agreement described below), the 

Members and NYSE Euronext shall, 

acting reasonably and in good faith, 

consider and implement any applicable 

and necessary amendments to the 

Members Agreement and the LLC 

Agreement. Until such time as NYSE 

Amex has completed a Complete 

Transfer, NYSE Euronext shall provide 

to or procure services for the Company 

materially similar to those provided by 

NYSE Group pursuant to the NYSE 

Euronext Agreement and on the pricing 

terms and other terms provided in the 

NYSE Euronext Agreement. Upon a 

Complete Transfer, at NYSE Euronext’s 

discretion, the NYSE Euronext 

Agreement may be terminated or 

assigned and the NYSE Amex Qualified 

Transferee shall agree to provide to or 

procure services for the Company or 

NYSE Euronext shall agree to continue 

to provide such services pursuant to 

such terms. NYSE Amex shall 

reasonably compensate the Company to 

the extent the NYSE Amex Qualified 

Transferee agrees to provide or procure 

services on pricing terms less favorable 

to the Company or on other terms which 

are materially more disadvantageous to 

the Company than those provided for by 

the NYSE Euronext Agreement. NYSE 

Amex shall continue to provide services 

or compensate the Company as 

described above for a period of time 

equal to the lesser of (x) four years from 

the time of such transfer and (y) the 

minimum time necessary, at the time of 

such transfer, for all Founding Firms to 

transfer their Class B Common Interests 

in accordance with the limitations of 

Section 3.2(a) of the Members 

Agreement, assuming such Founding 

Firms transfer the maximum amount of 

Class B Common Interests permitted 

thereunder as quickly as permitted 

thereunder. Following such period, to 

the extent not previously terminated or 

assigned, the NYSE Euronext Agreement 

shall terminate. 

Section 3.3(d) of the Members 

Agreement provides that, in the event of 

a Complete Transfer by NYSE Amex to 

one of its affiliates, such transferee shall 

be deemed to be NYSE Amex for all 

purposes under the Members Agreement 

and the LLC Agreement and be subject 

to the same rights and obligations as 

NYSE Amex thereunder, except in 

respect to NYSE Amex’s rights and 

obligations as the SRO of the Options 

Exchange, which rights and obligations 

shall remain with NYSE Amex 

irrespective of any such Complete 

Transfer. 

Section 3.4 of the Members 

Agreement provides for a ‘‘call option’’ 

exercisable by NYSE Amex. 

Specifically, the Members grant NYSE 

Amex, the right and the option to 

require the Members (other than NYSE 

Amex) (and a transferee of a Member or 

a transferee of a transferee) collectively 

to transfer to NYSE Amex any or all of 

the aggregate Class B Common Interests 

held by all Members (other than NYSE 

Amex) (and such transferees) at a price 

equal to the pro rata portion of the fair 

market value (over the twelve-calendarmonth period ended at the end of the 

immediately preceding month) 

represented by such Class B Common 

Interests (such right, the ‘‘Call Option’’). 

NYSE Amex shall have the right, but not 

the obligation, to exercise the Call 

Option, in whole or in part, in its sole 

discretion at any time on or after the 

tenth anniversary of the effective date of 

the LLC Agreement. Each Member 

(other than NYSE Amex) (and each such 

transferee, if any) shall tender to NYSE 

Amex such person’s pro rata portion of 

the Class B Common Interests NYSE 

Amex desires to purchase and NYSE 

Amex shall pay to each such Member 

(other than NYSE Amex) (and 

transferee) the purchase price. Subject 

to Section 4.9 of the LLC Agreement, 

which governs ownership limitations, 

NYSE Amex may assign to one of its 

affiliates the right to purchase Class B 

Common Interests pursuant to the Call 

Option. Upon the acquisition of any 

Class B Common Interests by an affiliate 

pursuant to such an assignment, such 

Class B Common Interests will instead 

become Class A Common Interests in 

accordance with Section 11.2 of the LLC 

Agreement. 

Redemption of Interests 

Section 11.5(a) of the LLC Agreement 

provides that the Company may, by 

Majority Vote of the Board, redeem any 

or all of the Preferred Interests at any 

time; provided that only such funds as 

are available in the Redemption Reserve 

may be used to fund any such 

redemption. The ‘‘Redemption Reserve’’ 

is an independent cash reserve 

established by the Board as of the 

effective date of the LLC Agreement and 

which will be designated for the sole 

purpose of funding any redemptions of 

(i) Preferred Interests (at any time, by 

Majority Vote of the Board) or (ii) Class 

B Common Interests, and shall not be 

used for any other purpose. The amount 

of the Redemption Reserve will be 

agreed upon by the Members and will 

be increased to the extent of any amount 

accrued and unpaid on the unpaid 

Priority Claim. 

With respect to the Class B Common 

Interests, Section 11.5(b) of the LLC 

Agreement provides that the Company 

shall have the right, by Majority Vote of 

the Board, to redeem any or all of a 

Member’s Class B Common Interests, at 

a redemption price equal to the lower of 

(x) the balance of that Member’s capital 

account (subject to certain adjustments) 

with respect to the Class B Common 

Interests so redeemed and (y) the pro 

rata portion of fair market value (over 

the twelve-calendar-month period 

ended at the end of the immediately 

preceding month) represented by such 

Class B Common Interests: 

(i) If that Member fails to make a 

Regulatory Capital Contribution on or 

before the payment date identified in 

the relevant written notice and fails to 

timely cure such non-payment; 

(ii) If that Member directly or 

indirectly acquires a controlling interest 

in or becomes the direct or indirect 

beneficial owner of a controlling interest 

in, grants a controlling interest to or 

becomes directly or indirectly 

beneficially owned by, or comes under 

common control with, a Specified Entity 

(for purposes hereof, ‘‘controlling 

interest’’ means greater than fifty percent 

(50%) of the voting equity of the 

applicable entity) and, in the event such 

Member becomes directly or indirectly 

beneficially owned by or comes under 

common control with a Specified Entity, 

has not cured such event within a 

specified time period; 

(iii) If such Member makes a 

Permitted Transfer to a Specified Entity; 

or 

(iv) Pursuant to Section 2.1(i) of the 

Members Agreement (as described 

below). 

In connection with the Plan, Section 

2.1(i) of the Members Agreement 

provides that the Company also has the 

right, by Majority Vote of the Board, to 

redeem on the same terms as above any 


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or all of the Class B Common Interests 

of a Founding Firm that, as of a 

quarterly determination date, (i) has 

failed to satisfy a minimum volume 

threshold during the preceding 12- 

month period or (ii) has (A) failed to 

satisfy a minimum volume threshold 

during the preceding three-month 

period and (B) entered into an 

agreement or economic arrangement 

with (i) a Specified Entity or (ii) an 

affiliate of NYSE Amex that is a U.S. 

securities option exchange (or facility 

thereof) or U.S. alternative trading 

system on which securities option 

contracts are executed (an ‘‘Affiliate 

Exchange’’) under which such Founding 

Firm receives equity (whether provided 

through a primary issuance or a 

secondary sale) or equity-like 

consideration in exchange for market 

making or the provision of liquidity, 

order flow or volume (except under any 

volume-based fee discount or rebate 

program or any program or arrangement 

open to market participants generally) 

in any contract that competes with a 

contract that is then listed for trading by 

the Options Exchange or that is 

contemplated by the then current 

business plan of the Company to be 

listed for trading by the Options 

Exchange within ninety (90) days 

following the date on which such 

Founding Firm has entered into the 

agreement with the Specified Entity or 

an Affiliate Exchange, subject to certain 

exceptions. 

The Redemption Reserve shall not be 

used to fund any purchase of Class B 

Common Interests pursuant to Section 

11.5(b) of the LLC Agreement or Section 

2.1(i) of the Members Agreement. 

Section 11.5(c) of the LLC Agreement 

provides that in the event a Founding 

Firm (A) determines that (x) a Member 

has become a Sanctioned Person and (y) 

regulatory or other requirements 

necessitate such Member’s withdrawal 

as a Member if such Founding Firm 

were to remain a Member and (B) 

provides notice of such determination to 

the Company, the Company may redeem 

all Common Interests owned by the 

Sanctioned Person by Supermajority 

Vote of the Board (excluding the vote of 

the affected Member), at a redemption 

price equal to the lower of (I) the 

balance of the Member’s capital account 

(subject to certain adjustments) and (II) 

the fair market value of the Sanctioned 

Person’s Common Interests; provided 

that if the Company fails to redeem the 

Sanctioned Member’s Common 

Interests, such Founding Firm shall 

have the right to put its Common 

Interests to the Company at a price 

equal to one dollar ($1). 

Section 11.5(f) of the LLC Agreement 

provides that all redemptions of Class B 

Common Interests by the Company 

pursuant to Section 11.5 of the LLC 

Agreement shall be subject to applicable 

restrictions contained in the Delaware 

LLC Act and in the Company’s debt 

financing agreements, and if any such 

restrictions prohibit the redemption of 

Class B Common Interests pursuant to 

Section 11.5 of the LLC Agreement 

which the Company is otherwise 

entitled or required to make, the time 

periods provided in Section 11.5(e) of 

the LLC Agreement will be suspended, 

and the Company may make such 

redemptions as soon as any applicable 

restrictions allow; provided that the 

price at which such redemption is made 

shall be fixed as of the date such 

redemption would have occurred had 

there not existed any restrictions on 

such redemption. Furthermore, nothing 

shall require the Company to segregate 

or set aside any funds or other property 

for the purpose of making any payment 

or distribution pursuant to Section 11.5 

of the LLC Agreement. The right of any 

Member or beneficiary thereof to receive 

any payment or distribution under those 

provisions will be an unsecured claim 

against the general assets of the 

Company. Notwithstanding anything to 

the contrary in the LLC Agreement, if 

the application of the restrictions in 

Section 11.5(f) described in this 

paragraph prohibits the redemption of 

the Class B Common Interests of a 

Sanctioned Person, the Company must 

redeem such Class B Common Interests 

by providing the Sanctioned Person a 

promissory note, the terms of which 

will be determined by the Majority Vote 

of disinterested directors, in a principal 

amount equal to the lower of (I) the 

balance of that Member’s capital 

account (subject to certain adjustments) 

and (II) the fair market value of the 

Sanctioned Person’s Common Interests, 

in each case, determined as of the date 

the Company determines to redeem the 

Sanctioned Person’s Common Interests, 

payable at such time as any applicable 

restrictions allow, and the Company 

shall become the owner of such Class B 

Common Interests upon tender of the 

promissory note. 

In the event the Company elects not 

to exercise its option to redeem all or 

any portion of the Class B Common 

Interests under Section 11.5(b) of the 

LLC Agreement as discussed above, 

NYSE Amex shall have the right, but not 

the obligation, within thirty (30) days of 

the event triggering such right, to 

require the applicable Founding Firm to 

transfer any or all of such unredeemed 

Class B Common Interests to NYSE 

Amex at a price equal to the pro rata 

portion of fair market value (over the 

twelve-calendar-month period ended at 

the end of the immediately preceding 

calendar month) represented by such 

Class B Common Interests. NYSE Amex 

may assign to an affiliate the right to 

purchase Class B Common Interests 

pursuant to this paragraph. 

Section 11.6 of the LLC Agreement 

provides the requirements for an initial 

public offering of the Company’s 

securities, whether primary or 

secondary, pursuant to a registration 

statement filed under the Securities Act 

of 1933, as amended (the ‘‘Securities 

Act’’). At any time upon the 

determination of the Board that an 

initial public offering is in the best 

interests of the Company and the 

Members, and upon approval by a 

Supermajority Vote of the Board if such 

initial public offering does not 

constitute a Qualified Public Offering 

(defined as giving rise to at least 

$175,000,000 in gross proceeds and 

resulting in an implied valuation for the 

equity securities of the Company as a 

whole that will be no less than 

$550,000,000), subject to applicable law 

and receipt of applicable regulatory 

approvals, either (a) the Company shall 

be required to contribute all or a 

specified portion of the assets of the 

Company to a corporation newly formed 

under the laws of the State of Delaware 

(the ‘‘New Company’’), or (b) the 

Members shall be required to contribute 

their Interests to the New Company, in 

each case in exchange for shares of the 

New Company’s stock having 

substantially the same equity interests 

and voting rights as the Interests being 

contributed (the ‘‘New Company 

Shares’’), and the Company shall cause 

the New Company to file and use its 

best efforts to have declared effective a 

registration statement under the 

Securities Act for an initial public 

offering, and to cause the New Company 

and its officers and employees to use 

their best efforts to market the New 

Company Shares, subject to all 

applicable Securities Act restrictions. 

To the extent required by the 

underwriters managing a registered 

public offering of the New Company 

Shares, each Member agrees to complete 

and execute all customary 

questionnaires and similar documents 

so required under the terms of such 

underwriting agreements. Upon the 

consummation of an initial public 

offering, certain specified portions of 

the LLC Agreement and such other 

provisions as the Board may determine, 

including the LLC Agreement in its 

entirety, shall terminate automatically 


Emcdonald on DSK2BSOYB1PROD with NOTICES
18608 Federal Register / Vol. 76, No. 64 / Monday, April 4, 2011 / Notices 

and be of no further force and effect. 

Notwithstanding anything to the 

contrary in the LLC Agreement, as a 

condition to an initial public offering, 

the Company or any successor thereto 

shall enter into a registration rights 

agreement, upon commercially 

reasonable terms, with any Member 

requesting such agreement with respect 

to the registration of its equity securities 

with customary terms and conditions 

and in form and substance reasonably 

satisfactory to the Board and such 

Member; provided that such registration 

rights agreement shall include (i) 

demand registration rights that apply 

(A) equally to all Members, (B) only 

after an initial public offering, and (C) 

subject to customary minimum 

thresholds and (ii) piggyback 

registration rights for all Members on a 

pro rata basis in proportion with their 

relative common equity interests. 

Certain Regulatory and Compliance 

Matters 

As provided in Section 8.1(m) of the 

LLC Agreement, (A) the Board in 

carrying out its duties and without 

limitation on its other obligations under 

applicable law or otherwise and 

(B) each director, in carrying out his or 

her duties and without limitation on his 

or her other obligations under 

applicable law or otherwise (but subject 

to the waiver of fiduciary duties 

otherwise provided for in the LLC 

Agreement), shall be obligated to 

(x) comply with the Federal securities 

laws and the rules and regulations 

promulgated thereunder and 

(y) cooperate with NYSE Amex 

pursuant to its regulatory authority and 

the provisions of the LLC Agreement 

and with the SEC. Furthermore, each 

director must take into consideration 

whether his or her actions would cause 

the Options Exchange or the Company 

to engage in conduct that fosters and 

does not interfere with NYSE Amex’s or 

the Company’s ability to carry out their 

respective responsibilities under the Act 

and to prevent fraudulent and 

manipulative acts and practices, 

promote just and equitable principles of 

trade, foster cooperation and 

coordination with persons engaged in 

regulating, clearing, settling, processing 

information with respect to, and 

facilitating transactions in securities, 

remove impediments to and perfect the 

mechanism of a free and open market 

and a national market system, and, in 

general, protect investors and the public 

interest. 

As further provided in Section 8.1(m) 

of the LLC Agreement, NYSE Amex 

must receive notice of planned or 

proposed changes to the Company (but 

not to include changes relating solely to 

non-market matters) or the Options 

Exchange and NYSE Amex must not 

object affirmatively to such changes 

prior to implementation, not 

inconsistent with the LLC Agreement. 

NYSE Amex, in the performance of its 

obligations as the SRO for the Options 

Exchange, shall following receipt of 

such notice and without undue delay, 

notify the Company whether or not it 

has any objection to such a change 

based on the potential for such change 

to give rise to a Regulatory Deficiency 

(as defined below). In the event that 

NYSE Amex, in its sole discretion, 

determines that such planned or 

proposed changes to the Company or 

the Options Exchange could cause a 

Regulatory Deficiency if implemented, 

NYSE Amex may direct the Company 

to, and the Company shall, modify the 

planned or proposed changes as 

necessary to ensure that it does not 

cause a Regulatory Deficiency. In the 

event that NYSE Amex, in its sole 

discretion, determines that a Regulatory 

Deficiency exists or is planned, NYSE 

Amex may direct the Company to, and 

the Company shall, undertake such 

modifications to the Company (other 

than as to non-market matters) as are 

necessary or appropriate to eliminate or 

prevent the Regulatory Deficiency and 

allow NYSE Amex to perform and fulfill 

its regulatory responsibilities under the 

Act. 

A ‘‘Regulatory Deficiency’’ is defined 

in the LLC Agreement as the operation 

of the Options Exchange or the 

Company (in connection with matters 

other than non-market matters) in a 

manner that is not consistent with any 

Regulatory Matters Provision, the rules 

of NYSE Amex, as amended from time 

to time, or the Federal securities laws 

and the rules and regulations 

promulgated thereunder, applicable to 

the Exchange or NYSE Amex options 

trading permit holders, or that otherwise 

impedes NYSE Amex’s ability to 

regulate the Options Exchange or NYSE 

Amex options trading permit holders or 

to fulfill its obligations under the Act as 

a SRO. 

Section 8.1(n) of the LLC Agreement 

states that NYSE Euronext has 

developed corporate compliance 

policies that govern the conduct of its 

employees, officers, and directors and 

the employees, officers, and directors of 

its affiliates. The Board will adopt these 

policies on the effective date of the LLC 

Agreement, but these policies shall not 

apply to directors, alternate directors or 

observers to the Board appointed by a 

Founding Firm except as described in 

Sections 8.1(n)(ii) and 8.1(n)(iii) of the 

LLC Agreement (as described below). 

These policies (except for their 

application to directors, alternate 

directors or observers to the Board 

appointed by a Founding Firm) may be 

revised from time to time by NYSE 

Euronext, provided that the personal 

trading policy referred to in Section 

8.1(n)(ii) of the LLC Agreement, as it 

applies to directors, alternate directors 

and observers to the Board appointed by 

a Founding Firm, may only apply to 

stock and other securities issued by 

NYSE Euronext and its affiliates. Any 

such revised policies will be promptly 

provided to the Company. Subject to 

applicable law, all employees, officers, 

and directors (other than directors, 

alternate directors and observers to the 

Board appointed by a Founding Firm) of 

the Company or its affiliates will be 

expected to comply with these policies, 

except as described in Sections 8.1(n)(ii) 

and 8.1(n)(iii) of the LLC Agreement. 

Section 8.1(n)(ii) of the LLC Agreement 

provides that the personal trading 

policy of NYSE Euronext, including any 

modifications or revisions thereto, shall 

apply to directors, alternate directors, 

and observers to the Board appointed by 

the Founding Firms solely in their 

personal capacities and not in such a 

director’s capacity as an employee of 

any Founding Firm. Section 8.1(n)(iii) of 

the LLC Agreement provides for a 

representation by NYSE Euronext that it 

has obtained a waiver by the audit 

committee of the board of directors of 

NYSE Euronext exempting the directors, 

alternate directors and observers to the 

Board appointed by the Founding Firms 

from all of its corporate compliance 

policies (other than its personal trading 

policy, as and to the extent described in 

Section 8.1(n)(ii)). 

Section 8.1(o) of the LLC Agreement 

provides that NYSE Euronext or one of 

its affiliates has the right to conduct 

audits of all operations of the Company. 

The NYSE Euronext internal audit 

group will have access to all records and 

employees of the Company and will 

determine which audits to conduct and 

the timetable for such work. Any such 

audit will be considered in a manner 

consistent with the NYSE Euronext 

audit group charter, which mandates the 

independent role of the group and 

which is approved by the NYSE 

Euronext Audit Committee. If the 

Company engages an external party to 

conduct an audit, the NYSE Euronext 

audit group will have the right to review 

with the external party the nature and 

extent of the work and any resulting 

report and supporting written work 

product. NYSE Euronext will bear all of 

the costs and expenses incurred by the 

Company and its representatives related 


Emcdonald on DSK2BSOYB1PROD with NOTICES
Federal Register / Vol. 76, No. 64 / Monday, April 4, 2011 / Notices 18609 

to the exercise of its rights pursuant to 

this paragraph. 

Pursuant to Section 11.8(a) of the LLC 

Agreement, beginning after SEC 

approval of the LLC Agreement, the 

Company shall provide the SEC with 

written notice ten (10) days prior to the 

closing date of any acquisition of an 

Interest by a person or entity that results 

in a Member’s ownership of Common 

Interests, alone or together with any 

affiliate, meeting or crossing the 

threshold level of five percent (5%) or 

the successive five percent (5%) 

ownership levels of ten percent (10%) 

and fifteen percent (15%) of the 

aggregate Common Interests. 

Section 11.8(b) of the LLC Agreement 

establishes certain requirements 

regarding direct ownership of the 

Company. Beginning after SEC approval 

of the LLC Agreement, no person or 

entity that is not a Member as of the 

effective date of the LLC Agreement, 

either alone or together with its 

affiliates, at any time, may directly own 

Common Interests that would result in 

such person or entity having ownership 

of Common Interests representing more 

than the 19.9% Maximum Percentage or 

any successive five percent (5%) 

ownership threshold (i.e., 24.9%, 

29.9%, etc) (the ‘‘Concentration 

Limitation’’). The Concentration 

Limitation shall apply to each person or 

entity (other than NYSE Amex alone or 

together with its affiliates, as applicable) 

unless and until: (A) Such person or 

entity has delivered to the Board a 

notice in writing, not less than forty-five 

(45) days (or such shorter period as the 

Board shall expressly consent to) prior 

to the acquisition of any Common 

Interests that would cause such person 

or entity (either alone or together with 

its affiliates) to exceed the 

Concentration Limitation, of such 

person or entity’s intention to acquire 

such Common Interests; (B) such notice 

has been filed with, and approved by, 

the SEC under Section 19(b) of the Act 

and has become effective thereunder; 

and (C) the Board has not determined to 

oppose such person or entity’s 

acquisition of such Common Interests. 

Pursuant to Section 11.8(b)(iii) of the 

LLC Agreement, the Board shall oppose 

an ownership of Common Interests by a 

person or entity if the Board shall have 

determined, in its sole discretion, that 

(A) such ownership of Common 

Interests by the person or entity, either 

alone or together with its affiliates, will 

impair the ability of the Company and 

the Board to carry out their functions 

and responsibilities, including but not 

limited to, under the Act, or is 

otherwise not in the best interests of the 

Company; (B) such ownership of 

Common Interests by the person or 

entity, either alone or together with its 

affiliates, will impair the ability of the 

SEC to enforce the Act; (C) the person 

or entity or its affiliates are subject to 

any applicable ‘‘statutory 

disqualification’’ (within the meaning of 

Section 3(a)(39) of the Act); or (D) if 

such Common Interests would result in 

the person or entity (alone or together 

with its affiliates) having an ownership 

interest of more than twenty percent 

(20%) of the aggregate Common 

Interests and the person or entity or one 

of its affiliates is either a ‘‘member’’ or 

‘‘member organization’’ of NYSE Amex 

(as defined in the rules of NYSE Amex, 

as such rules may be in effect from time 

to time). In making a determination 

pursuant to clause (C) of the preceding 

paragraph, the Board may impose such 

conditions and restrictions on the 

person or entity and its affiliates owning 

any Common Interests as the Board may 

in its sole discretion deem necessary, 

appropriate or desirable in furtherance 

of the objectives of the Act and the 

governance of the Company. 

Section 11.8(c) of the LLC Agreement 

establishes certain requirements 

regarding NYSE Amex’s ownership of 

the Company. Beginning after SEC 

approval of the LLC Agreement, the 

aggregate percentage of Common 

Interests held by NYSE Amex and its 

affiliates, as applicable, shall not 

decline below fifteen percent (15%) 

unless and until: (A) NYSE Amex has 

delivered to the Board a notice in 

writing, not less than forty-five (45) days 

(or such shorter period as the Board 

shall expressly consent to) prior to the 

transfer of any Common Interests that 

would result in such a decline, of NYSE 

Amex’s intention to transfer such 

Common Interests; and (B) such notice 

has been filed with, and approved by, 

the SEC under Section 19(b) of the Act 

and has become effective thereunder. 

Section 11.8(d) of the LLC Agreement 

establishes certain requirements 

regarding indirect ownership of the 

Company. Except as described in the 

last sentence of this paragraph, a 

‘‘Controlling Person’’ (defined as a 

person or entity that, alone or together 

with any affiliate, owns a Controlling 

Interest in a Member, where a 

‘‘Controlling Interest’’ means the direct 

or indirect ownership of 25% or more 

of the total voting power of that Member 

by any person or entity, alone or 

together with any affiliate) will be 

required to execute, and the relevant 

Member shall take such action as is 

necessary to ensure that each of its 

Controlling Persons executes, an 

amendment to the LLC Agreement upon 

establishing a Controlling Interest in any 

Member that, alone or together with any 

affiliate, holds an ownership interest in 

the Company equal to or greater than 

20% of the aggregate Common Interests. 

In such an amendment, the Controlling 

Person must agree (A) to become a party 

to the LLC Agreement and (B) to abide 

by all the provisions of the LLC 

Agreement relating to regulatory 

matters. Notwithstanding the foregoing, 

a person or entity will not be required 

to execute an amendment to the LLC 

Agreement pursuant to Section 11.8(d) 

of the LLC Agreement if the person or 

entity does not, directly or indirectly, 

hold any interest in a Member. 

Beginning after SEC approval of the 

LLC Agreement, any amendment to the 

LLC Agreement executed pursuant to 

Section 11.8(d) of the LLC Agreement is 

subject to the rule filing process 

pursuant to Section 19 of the Act. The 

non-economic rights and privileges, 

including all voting rights, of the 

Member in which a Controlling Interest 

is held under the LLC Agreement and 

the Act will be suspended until such 

time as the amendment executed 

pursuant to Section 11.8(d) of the LLC 

Agreement has become effective 

pursuant to Section 19 of the Act or the 

Controlling Person no longer holds a 

Controlling Interest in the Member. 

Section 13.2(c) of the LLC Agreement 

requires the books and records of the 

Company to be subject at all times to 

inspection and copying by the SEC and 

NYSE Amex at no additional charge to 

the SEC or NYSE Amex. The books, 

records, premises, officers, directors, 

agents and employees of the Company 

shall be deemed the books, records, 

premises, officers, directors, agents and 

employees of NYSE Amex for purposes 

of and subject to oversight pursuant to 

the Act. To the extent related to the 

Company’s business, the books, records, 

premises, officers, directors, agents and 

employees of each Member will be 

deemed the books, records, premises, 

officers, directors, agents and employees 

of NYSE Amex for purposes of and 

subject to oversight pursuant to the Act. 

Section 16.1 of the LLC Agreement 

provides requirements regarding 

regulatory approvals and compliance. 

Section 16.1(a) provides that so long as 

the Options Exchange is a facility of 

NYSE Amex, in the event that NYSE 

Amex, in its sole discretion, determines 

that any action, transaction or aspect of 

an action or transaction, is necessary or 

appropriate for, or interferes with, the 

performance or fulfillment of NYSE 

Amex’s regulatory functions, its 

responsibilities under the Act or as 

specifically required by the SEC, NYSE 

Amex shall have the sole and exclusive 

authority to direct that any such 


Emcdonald on DSK2BSOYB1PROD with NOTICES
18610 Federal Register / Vol. 76, No. 64 / Monday, April 4, 2011 / Notices 

18Nothing contained in the LLC Agreement or the 

Members Agreement limits the ability of NYSE 

Amex, in its capacity as an SRO, (i) to take any 

action or to direct the taking of any action that it 

determines is necessary or appropriate for the 

performance or fulfillment of its obligations as an 

SRO or (ii) to direct that an action that it determines 

interferes with the performance or fulfillment of its 

obligations as an SRO not be taken. 

19 It is the Exchange’s view that the Plan does not 

constitute a proposed rule change within the 

meaning of Section 19(b)(1) of the Act and Rule 

19b–4 thereunder. 

required, necessary or appropriate 

action, as it may determine in its sole 

discretion, be taken or transaction be 

undertaken by or on behalf of the 

Company without regard to the vote, act 

or failure to vote or act by any other 

party in any capacity.18

Pursuant to Section 16.1(b) of the LLC 

Agreement, the Company will use 

commercially reasonable efforts to 

obtain such regulatory approval(s) as 

may be necessary for the Company to 

engage in its business on such schedule 

as shall be reasonably determined by the 

Board to be in the best interests of the 

Company. The Founding Firms will 

agree to cooperate with the Company as 

reasonable and necessary to obtain and 

maintain all regulatory approvals. 

Section 16.1(d) of the LLC Agreement 

provides that the Company, NYSE 

Euronext, NYSE Group, each Member, 

and the officers, directors, agents, and 

employees of the Company, NYSE 

Euronext, NYSE Group and each 

Member irrevocably submit to the 

jurisdiction of the U.S. Federal courts, 

the SEC and NYSE Amex (in its capacity 

as an SRO) for purposes of any suit, 

action or proceeding pursuant to U.S. 

Federal securities laws, and the rules 

and regulations promulgated 

thereunder, arising out of, or relating to, 

activities of the Company and agree to 

waive, and not to assert by way of 

motion, as a defense or otherwise in any 

such suit, action or proceeding, any 

claims that they are not personally 

subject to the jurisdiction of the SEC, 

that the suit, action or proceeding is an 

inconvenient forum or that the venue of 

the suit, action or proceeding is 

improper, or that the subject matter 

thereof may not be enforced in or by 

such courts or agency. 

Section 16.1(e) of the LLC Agreement 

provides that the Company, NYSE 

Euronext, NYSE Group, each Member, 

and the officers, directors, agents, and 

employees of the Company, NYSE 

Euronext, NYSE Group and each 

Member agree to comply with the 

Federal securities laws and the rules 

and regulations promulgated thereunder 

and to cooperate with NYSE Amex 

pursuant to its regulatory authority and 

the provisions of the LLC Agreement 

and with the SEC; and to engage in 

conduct that fosters and does not 

interfere with the Company’s and NYSE 

Amex’s ability 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 

mechanisms of a free and open market 

and a national market system; and, in 

general, to protect investors and the 

public interest. 

Section 16.1(f) of the LLC Agreement 

provides that the Company, NYSE 

Euronext, NYSE Group and each 

Member shall take such action as is 

necessary to ensure that the officers, 

directors, agents, and employees of the 

Company, NYSE Euronext, NYSE Group 

and such Member who are involved in 

the activities of the Company or the 

Options Exchange, with respect to their 

activities relating to the Company or the 

Options Exchange, consent in writing to 

the application to them of Section 

13.2(c) of the LLC Agreement relating to 

inspection of books and records for 

purposes of oversight pursuant to the 

Act; Section 16.1(d) of the LLC 

Agreement relating to submission to the 

jurisdiction of the U.S. Federal courts, 

the SEC and NYSE Amex (in its capacity 

as an SRO) and waiver of certain legal 

claims; Section 16.1(e) of the LLC 

Agreement relating to the matters 

described in the immediately preceding 

paragraph; the last sentence of Section 

8.1(d)(iv) of the LLC Agreement and 

Section 8.1(m)(i) of the LLC Agreement 

relating to each director’s compliance 

with Federal securities laws and the 

rules and regulations thereunder and 

cooperation with NYSE Amex pursuant 

to its regulatory authority and with the 

SEC; Section 8.1(m)(ii) of the LLC 

Agreement relating to NYSE Amex’s 

authority and responsibility to eliminate 

or prevent Regulatory Deficiencies; 

Section 14.1(i) of the LLC Agreement 

relating to the prompt return of certain 

confidential information to the other 

Members who disclosed it; as 

applicable, with respect to their 

activities relating to the Company upon 

the dissolution or termination of the 

Company; and Section 14.1(j) of the LLC 

Agreement relating to the 

confidentiality of all Confidential 

Information (as defined below) 

pertaining to the self-regulatory function 

of NYSE Amex. 

Volume-Based Equity Plan 19

Pursuant to Section 2.1 of the 

Members Agreement, for an initial 

period of five (5) years and three (3) 

months, each Founding Firm will have 

to satisfy certain minimum volume 

requirements. Under the Plan, for each 

measurement period, the Company will 

issue Annual Incentive Shares. Each 

Founding Firm will be entitled to 

receive, for no additional consideration, 

a portion of the Annual Incentive Shares 

such that it dilutes, maintains or 

increases its equity interest in the 

Company (relative to the other 

Founding Firms) based on the degree to 

which the Founding Firm has failed to 

achieve, achieved or exceeded its 

‘‘Individual Target’’ during the 

measurement period. A Founding 

Firm’s Individual Target will be its pro 

rata portion of an aggregate Founding 

Firm target contribution to the annual 

volume of the Options Exchange. This 

pro rata calculation will be performed 

once, based on the Founding Firm’s 

holdings of Class B Common Interests 

relative to the other Founding Firms at 

the time the Company is formed and 

will not change as a Founding Firm’s 

equity holdings fluctuate as a result of 

the Plan. The Plan will not affect the 

equity holdings of NYSE Amex and the 

Plan will not increase or decrease the 

aggregate equity interest of the 

Founding Firms relative to NYSE Amex. 

The Annual Incentive Shares not 

allocated to one or more Founding 

Firms by virtue of each such Founding 

Firm failing to achieve its respective 

Individual Target will be either partially 

or fully reallocated among those 

Founding Firms that exceed their 

respective Individual Targets. 

The Company will not allocate 

Annual Incentive Shares to a Founding 

Firm if such allocation would result in 

the Founding Firm holding Common 

Interests in excess of the 19.9% 

Maximum Percentage or the Alternate 

Maximum Percentage. Rather, the 

Company will allocate such Annual 

Incentive Shares at the direction of the 

affected Founding Firm or, if the 

Founding Firm is prohibited from 

directing the allocation of these Annual 

Incentive Shares, at the direction of a 

Supermajority Vote of the Board. 

Pursuant to Section 2.2 of the 

Members Agreement, Annual Incentive 

Shares that are not allocated 

(or reallocated) as described above will 

be included in a pool of undistributed 

Annual Incentive Shares. The Board 

will, in its discretion, determine 

whether and how to dispose of this pool 

of undistributed Annual Incentive 

Shares; provided that (i) NYSE Amex 

will work in good faith with Founding 


Emcdonald on DSK2BSOYB1PROD with NOTICES
Federal Register / Vol. 76, No. 64 / Monday, April 4, 2011 / Notices 18611 

Firms that achieve their respective 

Individual Targets in determining 

whether and how to distribute this pool 

and (ii) the Company will be obligated 

to dispose of this pool within eighteen 

(18) months unless otherwise agreed by 

a Supermajority Vote of the Board. 

Confidentiality 

Article XIV of the LLC Agreement 

contains provisions for the protection of 

‘‘Confidential Information,’’ which is 

defined in Section 14.1(a) of the LLC 

Agreement as any confidential 

information (i) relating to the Company 

or any Member, or the business, 

financial structure, financial position or 

financial results, clients or affairs of the 

Company or any Member or (ii) that is 

provided to any Member or the 

Company or their representatives or to 

which the Company or any Member or 

their representatives has access as a 

result of the LLC Agreement, activities 

conducted pursuant to or in connection 

with the LLC Agreement or activities 

conducted by the Company or on behalf 

of the Company that is either (x) marked 

as confidential, (y) the disclosing party 

informs the receiving party at or prior to 

the time of disclosure is confidential or 

(z) should be reasonably understood by 

the receiving party to be confidential. 

Certain exceptions are provided for 

information that is otherwise publicly 

available; was previously known to the 

receiving party; was received by the 

receiving party from a source lawfully 

having possession of such information 

and the right to disclose it; is released 

or disclosed to the public by the 

disclosing party; or is independently 

developed by the receiving party. When 

the Company or any Member or its 

representative directly or indirectly 

receives Confidential Information, or 

access to it, from another person or 

entity, Section 14.1(b) of the LLC 

Agreement requires that the receiving 

party will not directly or indirectly (i) 

disclose any of the Confidential 

Information to any third party except as 

specifically permitted by the LLC 

Agreement or (ii) use any of the 

Confidential Information for any 

purpose except as specifically permitted 

by the LLC Agreement or otherwise 

required to conduct the activities 

contemplated by the LLC Agreement. 

Section 14.1(c) of the LLC Agreement 

requires the party receiving Confidential 

Information to take all reasonable 

precautions and actions, which must be 

at least the same precautions and 

actions as the receiving party takes to 

prevent the disclosure of its own 

comparable confidential information, to 

prevent the disclosure to third parties of 

the Confidential Information of the 

disclosing party, or any part of it, and 

to ensure that the receiving party’s 

representatives comply with Article XIV 

of the LLC Agreement. 

Notwithstanding the foregoing, 

Section 14.1(e) of the LLC Agreement 

provides that a receiving party or its 

affiliates may provide the Confidential 

Information to those third parties who 

have a legitimate ‘‘need to know’’ if 

specifically permitted by the LLC 

Agreement. Other exceptions to nondisclosure requirements are provided in 

the case of (i) information that is 

required to be filed with any 

governmental authority or SRO, 

(ii) information that is requested by a 

governmental authority or SRO having 

regulatory authority over the receiving 

party or its affiliates or (iii) a 

determination by the receiving party in 

its sole discretion that it is necessary or 

appropriate to provide such 

Confidential Information to a 

governmental authority or SRO. 

Additional exceptions are provided for 

information (a) required by an auditor 

for the purpose of an audit, 

(b) necessary in connection with any tax 

return, (c) provided to a lender, 

professional adviser, vendor or service 

provider for a bona fide business 

purpose (subject to customary 

restrictions on further disclosure or 

use), (d) provided to a third party to 

which the receiving party sells or offers 

to sell its Interest or any part thereof (if 

the third party has agreed in writing to 

be bound by confidentiality obligations 

at least as protective of the disclosing 

party as the provisions of Article XIV of 

the LLC Agreement), or (e) reasonably 

necessary in connection with the 

enforcement or defense of any rights or 

remedies under the LLC Agreement or 

arising out of the transactions 

contemplated thereby or the related 

transaction documents. 

Section 14.1(i) of the LLC Agreement 

provides that the confidentiality 

obligations in Article XIV of the LLC 

Agreement will be effective from the 

effective date of said agreement and will 

continue to apply (A) with respect to the 

Company, after dissolution or 

termination of the Company pursuant to 

Article XII of the LLC Agreement for a 

period of three (3) years, (B) with 

respect to any Member, for a period of 

three (3) years after the date on which 

such Member ceases to be a Member of 

the Company and (C) with respect to 

NYSE Euronext, for a period of three (3) 

years after the date on which NYSE 

Amex ceases to be a Member of the 

Company. Section 14.1(i) also contains 

requirements, with exceptions, for the 

prompt return of Confidential 

Information to the disclosing party upon 

written request, or the prompt 

destruction (with prior written consent) 

of such Confidential Information by the 

party that received it, upon the effective 

date of dissolution or termination of the 

Company. 

Pursuant to Section 14.1(j) of the LLC 

Agreement, all Confidential Information 

pertaining to the self-regulatory function 

of NYSE Amex (including but not 

limited to disciplinary matters, trading 

data or information about trading 

practices and audit information) 

contained in the books and records of 

the Company shall: (i) Not be made 

available to any persons or entities other 

than to those officers, directors, 

employees and agents of the Company 

that have a reasonable need to know the 

contents thereof; (ii) be retained in 

confidence by the Company and its 

officers, directors, employees and 

agents; and (iii) not be used for any nonregulatory purposes. This provision 

shall not limit a Founding Firm’s ability 

to use its own trading data. 

Section 14.1(k) of the LLC Agreement 

states that nothing in the LLC 

Agreement shall be interpreted to limit 

or impede the rights of the SEC or NYSE 

Amex to access and examine 

confidential information of the 

Company pursuant to U.S. Federal 

securities laws and the rules and 

regulations promulgated thereunder, or, 

subject to the notice requirements of 

Section 14.1 of the LLC Agreement, to 

limit or impede the ability of a member 

of the Board, Member, officer, director, 

agent or employee of a Member or of the 

Company to disclose confidential 

information of the Company to the SEC 

or NYSE Amex. 

Amendment 

Unless the contrary is otherwise 

specifically stated in the LLC 

Agreement, the LLC Agreement and the 

Members Agreement may be amended 

by Supermajority Vote of the Board; 

provided, that: (i) Section 8.1(d)(ii) of 

the LLC Agreement relating to the 

designation of directors by Founding 

Firms and Article XIV of the LLC 

Agreement relating to confidentiality 

may not be materially amended, Section 

13.8 of the LLC Agreement relating to 

restrictions on foreign operations and 

Section 3.1 of the Members Agreement 

relating to the transfer of Interests may 

not be amended, without the prior 

written consent of each Member; (ii) any 

amendment that would have a 

disproportionate, material and adverse 

effect on the rights of one or more 

Members (other than amendments of the 

type described in clause (iii) below) 

shall require such Member’s prior 

written consent; (iii) any amendment 


Emcdonald on DSK2BSOYB1PROD with NOTICES
18612 Federal Register / Vol. 76, No. 64 / Monday, April 4, 2011 / Notices 

20 15 U.S.C. 78f(b). 

21 15 U.S.C. 78. 

22 15 U.S.C. 78f(b)(1). 

that would have a material adverse 

effect on the rights of the Members of a 

class of Interests (irrespective of 

whether such amendment has a material 

adverse effect on the rights of NYSE 

Amex) shall require the prior written 

consent of Members (other than NYSE 

Amex) representing two thirds (2⁄3) of 

the Interests held by such Members; (iv) 

any amendment that would impose a 

new and material obligation or liability 

applicable by its terms to any Member 

or materially increase any existing 

material obligation or liability of any 

Member shall require the prior written 

consent of such Member and (v) any 

matter specified in the LLC Agreement 

as subject to agreement by the Members 

may be modified by Supermajority Vote 

of the Board if so agreed by the 

Members, provided that this clause (v) 

does not apply to the matters addressed 

in clause (i) above and the application 

of this clause (v) shall nevertheless be 

subject to the application of clauses (ii), 

(iii) and (iv) above. Notwithstanding any 

of the foregoing, for so long as the 

Company operates a facility of NYSE 

Amex or a successor of NYSE Amex that 

is an SRO, any proposed amendment or 

repeal of any provision of the LLC 

Agreement or Members Agreement shall 

be submitted to the board of directors of 

NYSE Amex and, if such amendment or 

repeal is required under Section 19 of 

the Act and the rules promulgated 

thereunder, to be filed with, or filed 

with and approved by, the SEC before 

such amendment or repeal may be 

effective, then such amendment or 

repeal shall not be effective until filed 

with, or filed with and approved by, the 

SEC, as the case may be. 

Redactions to the Members Agreement 

Certain information in the Members 

Agreement has been redacted in order to 

preserve the confidentiality of 

commercially sensitive information. The 

redacted provisions are limited to 

(i) numerical dollar amounts and 

percentage thresholds, (ii) commercially 

sensitive terms and provisions related to 

the calculation of ‘‘Fair Market Value’’ 

and (iii) certain competitive 

information. 

Regulation 

NYSE Regulation, Inc. (‘‘NYSE 

Regulation’’), an indirect wholly-owned 

subsidiary of NYSE Euronext, and the 

Exchange entered into a regulatory 

services agreement (an ‘‘RSA’’) dated 

October 1, 2008 pursuant to which 

NYSE Regulation performs all of the 

Exchange’s regulatory functions on the 

Exchange’s behalf. However, certain of 

these member and market regulatory 

functions, which include surveillance, 

examination, investigation and related 

disciplinary functions, are performed by 

FINRA pursuant to a June 14, 2010 RSA 

among FINRA, NYSE Group, Inc., New 

York Stock Exchange LLC, NYSE 

Regulation, NYSE Arca, Inc. and the 

Exchange. FINRA and the Exchange 

have also entered into an allocation 

agreement pursuant to Section 17(d)(1) 

of the Act, and Rule 17d–2 thereunder, 

whereby FINRA assumed regulatory 

responsibility for specified rules that are 

common to FINRA and the Exchange 

and for common members. Because the 

Options Exchange is a facility of the 

Exchange, FINRA performs the 

applicable regulatory functions and 

responsibilities with respect to activity 

on or through the Options Exchange, 

including both general regulatory 

functions, as noted above, and targeted 

regulatory reviews as applicable. 

Pursuant to the RSA between NYSE 

Regulation and the Exchange, NYSE 

Regulation exercises oversight, on 

behalf of the Exchange, of FINRA’s 

performance of the regulatory functions 

performed by FINRA as described 

above. NYSE Regulation also has 

responsibilities with respect to the 

Options Exchange for rule 

interpretation, regulatory policy and 

participation in rule development. 

NYSE Regulation periodically reports 

on regulatory matters to the board of 

directors of the Exchange, which has 

appointed a Chief Regulatory Officer 

(‘‘CRO’’) who is also the Chief Executive 

Officer of NYSE Regulation. The 

Exchange does not have a regulatory 

oversight committee of the board, but 

the CRO is also an officer of the 

Exchange, and in that capacity is 

charged with reporting on regulatory 

matters to the Exchange board. 

Notwithstanding the foregoing, the 

Exchange will still retain ultimate legal 

responsibility for the performance of all 

of its regulatory obligations as an SRO, 

including with respect to the Options 

Exchange, as well as the ability to take 

action as required to meet that 

responsibility. 

The board of directors of the 

Exchange currently consists of five (5) 

directors, a majority of whom are 

required to be individuals domiciled in 

the U.S. who are classified as 

independent members of the NYSE 

Euronext board of directors. At least 

twenty percent of the Exchange’s 

directors (currently one individual) 

must be ‘‘non-affiliated’’ directors who 

are not members of the NYSE Euronext 

board of directors and need not be 

independent under the independence 

requirements of NYSE Euronext. Any 

required non-affiliated directors of the 

Exchange are nominated and elected 

through a process designed to ensure 

fair representation of members of the 

Exchange on the Exchange’s board. The 

Exchange does not have any committees 

of its board that perform functions 

relating to audit, governance and 

compensation. Instead, such functions 

are performed for the Exchange by 

related committees of the NYSE 

Euronext board of directors that are 

comprised solely of NYSE Euronext 

directors who meet the independence 

requirements of NYSE Euronext. 

Decisions on the listing of options 

that will trade on the Options Exchange 

will be made by the business side at the 

Exchange in accordance with the 

Exchange’s rules. The business side will 

also continue to be responsible for new 

product development, participation in 

rule development, strategic analysis, 

administering Exchange programs, 

business development and client 

outreach. 

2. Statutory Basis 

The Exchange believes the proposed 

rule change is consistent with Section 

6(b) 20 of the Act,21 in general, and 

furthers the objectives of Section 

6(b)(1) 22 of the Act, which requires a 

national securities exchange to be so 

organized and have the capacity 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 proposed rule change does 

not modify the Option Exchange’s 

trading or compliance rules and 

preserves the existing mechanisms for 

ensuring the Exchange’s compliance 

with the Act. The structure of the 

proposed joint venture maintains NYSE 

Amex’s regulatory control over the 

Options Exchange and includes 

provisions specifically designed to 

ensure the independence of its selfregulatory function and to ensure that 

any regulatory determinations by NYSE 

Amex, as SRO, are controlling with 

respect to the actions and decisions of 

the Options Exchange. 

Additionally, the LLC Agreement 

requires the Company, its Members and 

its directors to comply with the Federal 

securities laws and the rules and 

regulations promulgated thereunder and 

to engage in conduct that fosters and 

does not interfere with the Exchange’s 

or the Company’s ability to carry out its 

respective responsibilities under the 

Act. 

The Exchange believes the proposed 

rule change is also consistent with, and 


Emcdonald on DSK2BSOYB1PROD with NOTICES
Federal Register / Vol. 76, No. 64 / Monday, April 4, 2011 / Notices 18613 

23 15 U.S.C. 78f(b)(5). 24 17 CFR 200.30–3(a)(12). 

furthers the objectives of Section 

6(b)(5) 23 of the Act, in that it preserves 

all of NYSE Amex’s existing rules and 

mechanisms 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 

facilitating transactions in securities, to 

remove impediments to and perfect the 

mechanisms of a free and open market 

and a national market system and, in 

general, to protect investors and the 

public interest. 

Furthermore, by establishing a new 

corporate structure for the Company 

that includes new owners and a new 

governance structure, the Exchange 

believes the proposed rule change will 

increases [sic] the breadth of 

representation in the governance of the 

Options Exchange to include buy side, 

principal trading and sell side 

representatives. The increased 

representation of different market 

constituencies in the governance of the 

Options Exchange will foster 

cooperation and coordination with 

persons engaged in facilitating 

transactions in securities, will 

contribute to the identification of 

opportunities for innovation and will 

enhance competition. 

Finally, the Exchange believes that 

the proposed rule change accomplishes 

the goals of Section 6(b) of the Act by 

improving the quality and depth of the 

listed options market. Specifically, with 

the approval of this proposed rule 

change, Members will have an 

incentive, through equity ownership, to 

offer an options market that provides 

products, services and fees that are 

competitive with those of other options 

markets. Moreover, given the substantial 

options experience and resources of the 

Members, the approval of this proposed 

rule change will provide the 

opportunity for enhanced liquidity and 

price discovery for the Options 

Exchange, thereby creating the 

opportunity for better-priced executions 

for options investors. A more 

competitive marketplace within the 

Options Exchange will also foster 

increased competition across all options 

markets with concomitant benefits to all 

U.S. options investors. 

B. Self-Regulatory Organization’s 

Statement on Burden on Competition 

The Exchange does not believe that 

the proposed rule change will impose 

any burden on competition that is not 

necessary or appropriate in furtherance 

of the purposes of the Act. 

C. Self-Regulatory Organization’s 

Statement on Comments on the 

Proposed Rule Change Received From 

Members, Participants or Others 

No written comments were solicited 

or received with respect to the proposed 

rule change. 

III. Date of Effectiveness of the 

Proposed Rule Change and Timing for 

Commission Action 

Within 45 days of the date of 

publication of this notice in the Federal 

Register or 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 self-regulatory organization 

consents, the Commission will: 

(A) By order approve or disapprove 

the proposed rule change, or 

(B) Institute proceedings to determine 

whether the proposed rule change 

should be disapproved. 

IV. Solicitation of Comments 

Interested persons are invited to 

submit written data, views, and 

arguments concerning the foregoing, 

including whether the proposed rule 

change is consistent with the Act. 

Comments may be submitted by any of 

the following methods: 

Electronic Comments 

• Use the Commission’s Internet 

comment form (http://www.sec.gov/ 

rules/sro.shtml); or 

• Send an e-mail to rulecomments@sec.gov. Please include File 

Number SR–NYSEAmex–2011–18 on 

the subject line. 

Paper Comments 

• Send paper comments in triplicate 

to Elizabeth M. Murphy, Secretary, 

Securities and Exchange Commission, 

100 F Street, NE., Washington, DC 

20549–1090. 

All submissions should refer to File 

Number SR–NYSEAmex–2011–18. This 

file number should be included on the 

subject line if e-mail 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 a.m. and 3 p.m. Copies of the filing 

will also be available for inspection and 

copying at the Exchange’s principal 

office. All comments received will be 

posted without change; the Commission 

does not edit personal identifying 

information from submissions. You 

should submit only information that 

you wish to make publicly available. All 

submissions should refer to File 

Number SR–NYSEAmex–2011–18 and 

should be submitted on or before April 

25, 2011. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.24

Cathy H. Ahn, 

Deputy Secretary. 

[FR Doc. 2011–7935 Filed 4–1–11; 8:45 am] 

BILLING CODE 8011–01–P 

SMALL BUSINESS ADMINISTRATION 

[Disaster Declaration #12503 and #12504] 

Hawaii Disaster #HI–00022 

AGENCY: U.S. Small Business 

Administration. 

ACTION: Notice. 

SUMMARY: This is a notice of an 

Administrative declaration of a disaster 

for the State of Hawaii dated 03/29/ 

2011. 

Incident: Honshu Tsunami. 

Incident Period: 03/11/2011. 

Effective Date: 03/29/2011. 

Physical Loan Application Deadline 

Date: 05/31/2011. 

Economic Injury (EIDL) Loan 

Application Deadline Date: 12/29/2011. 

ADDRESSES: Submit completed loan 

applications to: U.S. Small Business 

Administration, Processing and 

Disbursement Center, 14925 Kingsport 

Road, Fort Worth, TX 76155. 

FOR FURTHER INFORMATION CONTACT: A. 

Escobar, Office of Disaster Assistance, 

U.S. Small Business Administration, 

409 3rd Street, SW., Suite 6050, 

Washington, DC 20416. 

SUPPLEMENTARY INFORMATION: Notice is 

hereby given that as a result of the 

Administrator’s disaster declaration, 

applications for disaster loans may be 

filed at the address listed above or other 

locally announced locations. 


Emcdonald on DSK2BSOYB1PROD with NOTICES