8046 Federal Register / Vol. 72, No. 35 / Thursday, February 22, 2007 / Notices 

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

2 17 CFR 240.19b–4. 

3See Securities Exchange Act Release No. 55109 

(January 16, 2007), 72 FR 2578 (‘‘Notice’’). 

4See Partial Amendment dated February 13, 2007 

(‘‘Amendment No. 1’’). The text of Amendment No. 

1 and Exhibits 5C, 5D, 5G, and 5H, which set forth 

certain governing documents as proposed to be 

amended, are available on the Commission’s Web 

site (http://www.sec.gov/rules/sro.shtml), at the 

Commission’s Public Reference Room, at the 

Exchange, and on the Exchange’s Web site (http:// 

www.nysearca.com). 

5 In approving the proposed rule change, the 

Commission has considered its impact on 

efficiency, competition, and capital formation. See 

15 U.S.C. 78c(f). 

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

7 Id. 

8See Securities Exchange Act Release No. 55026 

(December 29, 2006), 72 FR 814 (January 8, 2007) 

(‘‘NYSE LLC Rule Filing’’). 

9Similar changes have been proposed for NYSE 

Group. See proposed NYSE Group Certificate of 

Incorporation, Article IV, Section 4. 

10See Securities Exchange Act Release No. 55293 

(February 14, 2007) (approval order for SR–NYSE–

2006–120 (‘‘NYSE LLC Approval Order’’)). 

11 15 U.S.C. 78s(b)(2). Pursuant to Section 19(b)(2) 

of the Exchange Act, the Commission may not 

approve any proposed rule change, or amendment 

thereto, prior to the thirtieth day after the date of 

publication of the notice thereof, unless the 

Commission finds good cause for so doing. 

12 In the Notice, the Exchange mistakenly showed 

proposed deletions to the current quorum 

requirements. The Exchange is not proposing to 

change the quorum requirements that exist in the 

current NYSE Group Certificate of Incorporation. 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–55294; File No. SR–

NYSEArca–2007–05] 

Self-Regulatory Organizations; NYSE 

Arca, Inc.; Order Granting Accelerated 

Approval of Proposed Rule Change 

and Notice of Filing and Order 

Granting Accelerated Approval to 

Amendment No. 1 Regarding a 

Proposed Combination Between NYSE 

Group, Inc. and Euronext N.V. 

February 14, 2007. 

I. Introduction 

On January 12, 2007, NYSE Arca, Inc. 

(‘‘NYSE Arca’’ or ‘‘Exchange’’) filed 

with the Securities and Exchange 

Commission (‘‘Commission’’), pursuant 

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

Exchange Act of 1934, as amended, 

(‘‘Exchange Act’’) 1 and Rule 19b–4 

thereunder,2 a proposed rule change 

regarding the proposed business 

combination (‘‘Combination’’) between 

NYSE Group, Inc. (‘‘NYSE Group’’) and 

Euronext N.V. (‘‘Euronext’’). The 

proposed rule change was published for 

comment in the Federal Register on 

January 19, 2007.3 The Commission 

received no comments on the proposal. 

On February 13, 2007, the Exchange 

filed Amendment No. 1 to the proposed 

rule change.4 This order grants 

accelerated approval to the proposed 

rule change, grants accelerated approval 

to Amendment No. 1, and solicits 

comments from interested persons on 

Amendment No. 1. 

The Commission has reviewed 

carefully the proposed rule change and 

finds that the proposed rule change is 

consistent with the requirements of the 

Exchange Act and the rules and 

regulations thereunder applicable to a 

national securities exchange.5 In 

particular, the Commission finds that 

the proposed rule change is consistent 

with Section 6(b) of the Exchange Act,6

which, among other things, requires a 

national securities exchange to be so 

organized and have the capacity to be 

able to carry out the purposes of the 

Exchange Act and to enforce 

compliance by its members and persons 

associated with its members with the 

provisions of the Exchange Act, the 

rules and regulations thereunder, and 

the rules of the exchange, and assure the 

fair representation of its members in the 

selection of its directors and 

administration of its affairs, and provide 

that one or more directors shall be 

representative of issuers and investors 

and not be associated with a member of 

the exchange, broker, or dealer. Section 

6(b) of the Exchange Act 7 also requires 

that the rules of the exchange be 

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. 

The Commission finds good cause for 

approving this proposed rule change 

before the thirtieth day after the 

publication of notice thereof in the 

Federal Register. This proposed rule 

change seeks to make changes to the 

following documents: The Amended 

and Restated Certificate of Incorporation 

of NYSE Euronext (‘‘NYSE Euronext 

Certificate of Incorporation’’); the 

Amended and Restated Bylaws of NYSE 

Euronext (‘‘NYSE Euronext Bylaws’’); 

the NYSE Euronext Director, 

Independence Policy (‘‘Independence 

Policy’’), which policy will replace the 

current NYSE Group Director 

Independence Policy; the proposed 

Amended and Restated Certificate of 

Incorporation of NYSE Group (‘‘NYSE 

Group Certificate of Incorporation’’); the 

proposed Amended and Restated 

Bylaws of NYSE Group (‘‘NYSE Group 

Bylaws’’); the resolutions of the board of 

directors of NYSE Group; and the 

proposed Trust Agreement for the 

Delaware Trust (‘‘Trust Agreement’’). 

All of the proposed changes to these 

documents were published for comment 

in connection with the proposed rule 

change submitted by the New York 

Stock Exchange LLC (‘‘NYSE LLC’’) in 

connection with the Combination.8 In 

addition to these changes, the Exchange 

has proposed changes to the proposed 

Amended and Restated Certificate of 

Incorporation of Archipelago Holdings, 

Inc. (‘‘Arca Holdings’’) to allow for the 

ownership and voting of shares of Arca 

Holdings by the Delaware Trust 

(‘‘Trust’’).9 The Commission has 

received no comment letters on this 

proposal. The Commission finds good 

cause to accelerate approval of this 

proposal to allow the timing of this 

approval to coincide with the approval 

of the corresponding filing by the NYSE 

LLC.10

A. Accelerated Approval of Amendment 

No. 1 

The Commission also finds good 

cause for approving Amendment No. 1 

prior to the thirtieth day after 

publishing notice of Amendment No. 1 

in the Federal Register pursuant to 

Section 19(b)(2) of the Exchange Act.11

In Amendment No. 1, the Exchange 

made technical revisions to proposed 

Article VII, Section 2 of the proposed 

NYSE Group Certificate of Incorporation 

relating to quorum requirements for 

each meeting of stockholders.12 These 

changes are necessary to clarify the 

proposal. The Commission finds good 

cause to accelerate approval of these 

changes prior to the thirtieth day after 

publication in the Federal Register 

because they clarify the Exchange’s 

rules, which should facilitate the 

Exchange’s compliance with its rules, 

and the Commission’s ability to ensure 

compliance with such rules, and assist 

members and investors in 

understanding the application and 

scope of the rules. 

In addition, the Exchange made 

certain clarifying, conforming, 

technical, non-material, and nonsubstantive changes to the proposed 

Amended and Restated Certificate of 

Incorporation of Arca Holdings (‘‘Arca 

Holdings Certificate of Incorporation’’), 

the proposed NYSE Group Certificate of 

Incorporation, the Independence Policy, 

and the proposed Trust Agreement, 

which raise no new or novel issues. 

These changes are non-substantive and 

technical in nature and are necessary to 

reflect the changes from the current 

rules of the Exchange and clarify the 

proposal. The Commission finds good 

cause exists to accelerate approval of 

these changes prior to the thirtieth day 


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Federal Register / Vol. 72, No. 35 / Thursday, February 22, 2007 / Notices 8047 

13 15 U.S.C. 78s(b)(2). 

14For a description of the Combination and 

related rule changes regarding NYSE Euronext, 

NYSE Group, and the Trust, see the NYSE LLC 

Approval Order, supra note 10. See also NYSE LLC 

Rule Filing, supra note 8. The Combination 

involves certain modifications to the organizational 

documents of NYSE Group and of NYSE Euronext, 

which upon consummation of the Combination will 

be the new indirect parent company of NYSE LLC 

and of the Exchange. Provisions of the 

organizational documents of NYSE Group and 

NYSE Euronext and the Trust Agreement constitute 

rules of NYSE LLC and of the Exchange. The 

resolutions of the board of directors of NYSE Group 

are also rules of NYSE LLC and of the Exchange 

requiring Commission approval. Accordingly, 

NYSE LLC and the Exchange have each submitted 

proposed rule changes to reflect the rule changes to 

be implemented in connection with the 

Combination. 

15See section 3(a)(27) of the Exchange Act, 15 

U.S.C. 78c(a)(27). If NYSE Euronext decides to 

change its Amended and Restated Certificate of 

Incorporation or Amended and Restated Bylaws, 

NYSE Euronext must submit such change to the 

board of directors of NYSE LLC, NYSE Market, 

NYSE Regulation, NYSE Arca, and NYSE Arca 

Equities, and if any or all of such board of directors 

shall determine that such amendment or repeal 

must be filed with or filed with and approved by 

the Commission pursuant to section 19 of the 

Exchange Act and the rules thereunder, such 

change shall not be effective until filed with or filed 

with and approved by the Commission, as 

applicable. See proposed NYSE Euronext Certificate 

of Incorporation, Article X and proposed NYSE 

Euronext Bylaws, Article X, section 10.10(C). 

after publication in the Federal Register 

because they clarify the Exchange’s 

rules, which should facilitate the 

Exchange’s compliance with its rules, 

the Commission’s ability to ensure 

compliance with such rules, and assist 

members and investors in 

understanding the application and 

scope of the rules. 

The Commission finds that the 

changes proposed in Amendment No. 1 

are consistent with the Exchange Act 

and therefore finds good cause to 

accelerate approval of Amendment No. 

1, pursuant to Section 19(b)(2) of the 

Exchange Act.13

B. Solicitation of Comments 

Interested persons are invited to 

submit written data, views, and 

arguments concerning Amendment No. 

1, including whether Amendment No. 1 

is consistent with the Exchange 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–NYSEArca–2007–05 on the 

subject line. 

Paper Comments 

• Send paper comments in triplicate 

to Nancy M. Morris, Secretary, 

Securities and Exchange Commission, 

100 F Street, NE., Washington, DC 

20549–1090. 

All submissions should refer to File 

Number SR–NYSEArca–2007–05. 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 inspection and copying in 

the Commission’s Public Reference 

Room. Copies of such filing also will be 

available for inspection and copying at 

the principal office of the Exchange. All 

comments received will be posted 

without change; the Commission does 

not edit personal identifying 

information from submissions. You 

should submit only information that 

you wish to make available publicly. All 

submissions should refer to Amendment 

No. 1 of File Number SR–NYSEArca–

2007–05 and should be submitted on or 

before March 15, 2007. 

II. Discussion 

The Exchange has submitted the 

proposed rule change in connection 

with the Combination of NYSE Group 

with Euronext. As a result of the 

Combination, the businesses of NYSE 

Group (including the businesses of the 

Exchange and NYSE LLC (a New York 

limited liability company, registered 

national securities exchange and selfregulatory organization)), and Euronext 

will be held under a single, publicly 

traded holding company named NYSE 

Euronext, a Delaware corporation 

(‘‘NYSE Euronext’’). Following the 

Combination, each of NYSE Group and 

Euronext will be a separate subsidiary of 

NYSE Euronext, and their respective 

businesses and assets will continue to 

be held as they are currently held 

(subject to any post-closing corporate 

reorganization of Euronext). The 

proposed rule change is necessary to 

effectuate the consummation of the 

Combination and will not be operative 

until the consummation of the 

Combination. 

A. Corporate Structure 

After the Combination, Arca 

Holdings, a Delaware corporation, will 

remain a wholly owned subsidiary of 

NYSE Group. NYSE Arca Holdings, Inc., 

a Delaware corporation (‘‘NYSE Arca 

Holdings’’), and NYSE Arca L.L.C., a 

Delaware limited liability company 

(‘‘NYSE Arca LLC’’), will remain wholly 

owned subsidiaries of Arca Holdings. 

NYSE Arca will remain a wholly owned 

subsidiary of NYSE Arca Holdings, and 

NYSE Arca Equities, Inc. (‘‘NYSE Arca 

Equities’’), a Delaware corporation 

formerly known as PCX Equities, Inc., 

will remain a wholly owned subsidiary 

of NYSE Arca. NYSE Arca will continue 

to maintain its status as a registered 

national securities exchange and selfregulatory organization. Arca Holdings’

businesses and assets will continue to 

be held by it and its subsidiaries. NYSE 

LLC will remain a wholly owned 

subsidiary of NYSE Group. NYSE 

Market, Inc. (‘‘NYSE Market’’), a 

Delaware corporation, and NYSE 

Regulation, Inc. (‘‘NYSE Regulation’’), a 

New York Type A not-for-profit 

corporation, will remain wholly owned 

subsidiaries of NYSE LLC.14

The Exchange represents that the 

Combination will also have no effect on 

the ability of any party to trade 

securities on NYSE Arca, NYSE Arca 

Equities, or NYSE Market. Euronext and 

its subsidiaries will continue to operate 

their business and operations in 

substantially the same manner as they 

are conducted currently, with any 

changes subject to the approval of the 

European Regulators to the extent 

required. 

1. NYSE Euronext 

Following the Combination, NYSE 

Euronext will be a for-profit, publicly 

traded stock corporation and will act as 

a holding company for the businesses of 

NYSE Group and Euronext. NYSE 

Euronext will own all of the equity 

interests in NYSE Group and its 

subsidiaries, including the Exchange 

and NYSE Arca, and a majority (if not 

all) of the equity interests in Euronext 

and its respective subsidiaries. Section 

19(b) of the Exchange Act and rule 19b–

4 thereunder require a self-regulatory 

organization (‘‘SRO’’) to file proposed 

rule changes with the Commission. 

Although NYSE Euronext is not an SRO, 

certain provisions of the NYSE Euronext 

Certificate of Incorporation and NYSE 

Euronext Bylaws are rules of an 

exchange 15 if they are stated policies, 

practice, or interpretations, as defined 

in rule 19b–4 under the Exchange Act, 


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16For a detailed description of the provisions 

regarding the composition of, and the selection 

process for, the NYSE Euronext board of directors, 

see NYSE LLC Approval Order, supra note 10. 

17The organizational documents of the Exchange 

and NYSE Arca Equities (unlike the organizational 

documents of NYSE LLC, NYSE Market and NYSE 

Regulation) do not require that any of the members 

of the board of directors of the Exchange and NYSE 

Arca Equities be members of the board of directors 

of NYSE Euronext. See Bylaws of NYSE Arca, 

Article III, Section 3.02, and Bylaws of NYSE Arca 

Equities, Article III, Section 3.02. 

18See NYSE LLC Approval Order, supra note 10, 

for a detailed description of the provisions 

regarding restrictions on the ability to vote and own 

shares of stock of NYSE Euronext. 

19See Securities Exchange Act Release Nos. 

53382 (February 27, 2006), 71 FR 11251 (March 6, 

2006) (SR–NYSE–2005–77) (order approving merger 

of New York Stock Exchange, Inc. and Archipelago, 

and demutualization of New York Stock Exchange, 

Inc. (‘‘NYSE Inc.-Archipelago Merger Order’’)); 

53128 (January 13, 2006), 71 FR 3550 (January 23, 

2006) (File No. 10–131); 51149 (February 8, 2005), 

70 FR 7531 (February 14, 2005) (SR–CHX–2004–

26); 49718 (May 17, 2004), 69 FR 29611 (May 24, 

2004) (SR–PCX–2004–08); 49098 (January 16, 2004), 

69 FR 3974 (January 27, 2004) (SR–Phlx–2003–73); 

and 49067 (January 13, 2004), 69 FR 2761 

(January 20, 2004) (SR–BSE–2003–19). 

20See Section 3(a)(27) of the Exchange Act, 15 

U.S.C. 78c(a)(27). If NYSE Group decides to change 

its Amended and Restated Certificate of 

Incorporation or Amended and Restated Bylaws, 

NYSE Group must submit such change to the board 

of directors of NYSE LLC, NYSE Market, NYSE 

Regulation, NYSE Arca, and NYSE Arca Equities, 

and if any or all of such board of directors shall 

determine that such amendment or repeal is 

required by law or regulation to be filed with or 

filed with and approved by the Commission 

pursuant to Section 19 of the Exchange Act and the 

rules thereunder, such change shall not be effective 

until filed with or filed with and approved by the 

Commission, as applicable. See proposed NYSE 

Group Certificate of Incorporation, Article XII and 

proposed Amended and Restated Bylaws of NYSE 

Group (‘‘NYSE Group Bylaws’’), Article VII, Section 

7.9(b). 

21See proposed NYSE Group Certificate of 

Incorporation, Article IV, Section 4(a). 

22See proposed NYSE Group Certificate of 

Incorporation, Article IV, Section 4(b). 

23The Exchanged clarified in Amendment No. 1 

that NYSE Euronext alone be permitted to wholly 

own and vote such shares. See Amendment No. 1 

supra note 4. 

24See NYSE LLC Approval Order, supra note 10, 

for a description of the proposal that NYSE 

Euronext wholly own and vote all of the 

outstanding stock of NYSE Group upon the 

consummation of the Combination. 

of the exchange, and must be filed with 

the Commission pursuant to section 

19(b)(4) of the Exchange Act and rule 

19b–4 thereunder. Accordingly, the 

Exchange has filed the NYSE Euronext 

Certificate of Incorporation and NYSE 

Euronext Bylaws with the Commission. 

a. Board of Directors 

It is currently contemplated that 

immediately after the Combination, the 

NYSE Euronext board of directors will 

consist of twenty-two directors.16 Each 

member of the NYSE Euronext board of 

directors (other than the chief executive 

officer and deputy chief executive 

officer of NYSE Euronext if they are 

members of the board of directors) must 

satisfy the independence requirements 

set forth in the Independence Policy, as 

amended from time to time. This 

Independence Policy, however, is not 

referenced in the organizational 

documents of the Exchange or NYSE 

Arca Equities,17 and is therefore not 

relevant to the Commission’s 

consideration of whether the boards of 

directors of the Exchange or NYSE Arca 

Equities are consistent with the 

Exchange Act. 

b. Voting and Ownership Limitations; 

Changes in Control of the Exchange 

The NYSE Euronext Certificate of 

Incorporation includes restrictions on 

the ability to vote and own shares of 

stock of NYSE Euronext.18 Members 

that trade on an exchange traditionally 

have ownership interests in such 

exchange. As the Commission has noted 

in the past, however, a member’s 

interest in an exchange could become so 

large as to cast doubt on whether the 

exchange can fairly and objectively 

exercise its self-regulatory 

responsibilities with respect to that 

member.19 A member that is a 

controlling shareholder of an exchange 

might be tempted to exercise that 

controlling influence by directing the 

exchange to refrain from, or the 

exchange may hesitate to, diligently 

monitor and surveil the member’s 

conduct or diligently enforce its rules 

and the federal securities laws with 

respect to conduct by the member that 

violates such provisions. 

The Commission finds the ownership 

and voting restrictions in the NYSE 

Euronext Certificate of Incorporation are 

consistent with the Exchange Act. These 

requirements should minimize the 

potential that a person could improperly 

interfere with or restrict the ability of 

the Commission, the Exchange, or its 

subsidiaries to effectively carry out their 

regulatory oversight responsibilities 

under the Exchange Act. 

2. NYSE Group 

Following the Combination, NYSE 

Group will merge with a wholly owned 

subsidiary of NYSE Euronext and the 

surviving corporation will be a wholly 

owned subsidiary of NYSE Euronext. 

Section 19(b) of the Exchange Act and 

Rule 19b–4 thereunder require an SRO 

to file proposed rule changes with the 

Commission. Although NYSE Group is 

not an SRO, certain provisions of its 

Amended and Restated Certificate of 

Incorporation and Amended and 

Restated Bylaws are rules of an 

exchange 20 if they are stated policies, 

practices, or interpretations, as defined 

in Rule 19b–4 of the Exchange Act, of 

the exchange, and must be filed with the 

Commission pursuant to Section 

19(b)(4) of the Exchange Act and Rule 

19b–4 thereunder. Accordingly, the 

Exchange has filed the proposed NYSE 

Group Certificate of Incorporation and 

proposed NYSE Group Bylaws with the 

Commission. 

The Exchange has proposed to change 

the voting and ownership limitations of 

NYSE Group to include a statement that 

such limitations will not be applicable 

so long as NYSE Euronext and the Trust 

collectively own all of the capital stock 

of NYSE Group. Instead, while NYSE 

Group is a wholly owned subsidiary of 

NYSE Euronext, or as provided for in 

the Trust Agreement, there shall be no 

transfer of the shares of NYSE Group 

held by NYSE Euronext without the 

approval of the Commission.21 If NYSE 

Group ceases to be wholly owned by 

NYSE Euronext or the Trust, the current 

voting and ownership limitations will 

apply.22

The Commission finds the changes to 

the ownership and voting restrictions in 

the proposed NYSE Group Certificate of 

Incorporation are consistent with the 

Exchange Act. These requirements 

should minimize the potential that a 

person could improperly interfere with 

or restrict the ability of the Commission 

or the ability of the Exchange, NYSE 

Market, NYSE Regulation, NYSE Arca 

LLC, NYSE Arca, and NYSE Arca 

Equities (together, the ‘‘U.S. Regulated 

Subsidiaries’’) to effectively carry out 

their regulatory oversight 

responsibilities under the Exchange Act. 

The Exchange requested that the 

Commission allow NYSE Euronext to 

wholly own and vote all of the 

outstanding common stock of NYSE 

Group.23 The Commission believes it is 

consistent with the Exchange Act to 

allow NYSE Euronext to wholly own 

and vote all of the outstanding common 

stock of NYSE Group.24 The 

Commission notes that NYSE Euronext 

represents that neither NYSE Euronext 

nor any of its related persons is subject 

to any statutory disqualification (as 

defined in Section 3(a)(39) of the 

Exchange Act), or is an ETP Holder of 

NYSE Arca Equities, OTP Holder or 

OTP Firm of NYSE Arca or member or 

member organization of NYSE LLC. 

Moreover, NYSE Euronext has 

comparable voting and ownership 

limitations to NYSE Group. NYSE 

Euronext has also included in its 

corporate documents certain provisions 

designed to maintain the independence 

of the U.S. Regulated Subsidiaries’ selfVerDate Aug<31>2005 14:11 Feb 21, 2007 Jkt 211001 PO 00000 Frm 00098 Fmt 4703 Sfmt 4703 E:\FR\FM\22FEN1.SGM 22FEN1

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25See proposed Arca Holdings Certificate of 

Incorporation, Article Fourth (C)(1) and (D)(1). 

26 15 U.S.C. 78f(b) and 15 U.S.C. 78s(g). 

27See NYSE LLC Approval Order, Section II.B., 

supra note 10, for a detailed discussion of proposed 

provisions in the NYSE Euronext Bylaws regarding 

NYSE Euronext compliance with U.S. federal 

securities laws; NYSE Euronext books and records; 

jurisdiction of the U.S. federal courts and the 

Commission; confidential information pertaining to 

self-regulation; and responsibilities of NYSE 

Euronext directors with respect to the ability of U.S. 

Regulated Subsidiaries, NYSE Euronext, and NYSE 

Group to carry out their responsibilities under the 

Exchange Act, including referring rule violations 

and providing funding to NYSE Regulation. 

28 17 CFR 240.17a–1(b). 

29See NYSE LLC Rule Filing, supra note 8, at 

822. 

30 15 U.S.C. 78q. 

31 15 U.S.C. 78t(a). 

32 15 U.S.C. 78t(e). 

33 15 U.S.C. 78u–3. 

34See NYSE LLC Approval Order, supra note 10, 

for a detailed discussion of the Delaware Trust and 

Dutch Foundation. 

35See proposed Trust Agreement, by and among 

NYSE Euronext, NYSE Group, the Delaware trustee 

and the trustees, attached as Exhibit H to 

Amendment No. 1. 

regulatory functions from NYSE 

Euronext and NYSE Group. 

Accordingly, the Commission believes 

that the acquisition of ownership and 

exercise of voting rights of NYSE Group 

common stock by NYSE Euronext will 

not impair the ability of the Commission 

or any of the U.S. Regulated 

Subsidiaries to discharge their 

respective responsibilities under the 

Exchange Act. 

3. The Exchange and NYSE Arca 

Equities 

Following the Combination, NYSE 

Arca, which is registered as a national 

securities exchange and is an SRO, will 

remain a wholly owned subsidiary of 

NYSE Arca Holdings, and NYSE Arca 

Equities will remain a wholly owned 

subsidiary of NYSE Arca. The 

Combination will have no effect on the 

ability of any party to trade securities on 

NYSE Arca or NYSE Arca Equities. 

Pursuant to a regulatory services 

agreement, NYSE Regulation will 

continue to perform many of the 

regulatory functions of NYSE Arca. 

There will be no change to the current 

manner of election or appointment of 

the directors and officers of Arca 

Holdings, NYSE Arca Holdings, NYSE 

Arca LLC, NYSE Arca, or NYSE Arca 

Equities as a result of the Combination. 

Article Fourth of the proposed Arca 

Holdings Certificate of Incorporation 

will be amended to provide for voting 

or ownership of the shares of stock of 

Arca Holdings by the Trust pursuant to 

the terms and conditions of the Trust 

Agreement by and among NYSE 

Euronext, Inc., NYSE Group, Inc. and 

the trustees and Delaware trustee 

thereto.25 The Commission finds that 

these changes to the ownership and 

voting restrictions in the proposed Arca 

Holdings Certificate of Incorporation are 

consistent with the Exchange Act. These 

requirements should minimize the 

potential that a person could improperly 

interfere with or restrict the ability of 

the Commission or the U.S. Regulated 

Subsidiaries to effectively carry out 

their regulatory oversight 

responsibilities under the Exchange Act. 

B. Relationship of NYSE Euronext, 

NYSE Group, and the U.S. Regulated 

Subsidiaries; Jurisdiction Over NYSE 

Euronext 

Although NYSE Euronext itself will 

not carry out regulatory functions, its 

activities with respect to the operation 

of any of the U.S. Regulated 

Subsidiaries must be consistent with, 

and not interfere with, the U.S. 

Regulated Subsidiaries’ self-regulatory 

obligations. The NYSE Euronext 

corporate documents include certain 

provisions that are designed to maintain 

the independence of the U.S. Regulated 

Subsidiaries’ self-regulatory functions 

from NYSE Euronext and NYSE Group, 

enable the U.S. Regulated Subsidiaries 

to operate in a manner that complies 

with the federal securities laws, 

including the objectives of Sections 6(b) 

and 19(g) of the Exchange Act,26 and 

facilitate the ability of the U.S. 

Regulated Subsidiaries and the 

Commission to fulfill their regulatory 

and oversight obligations under the 

Exchange Act.27

The Commission finds that the 

provisions proposed by the Exchange 

are consistent with the Exchange Act, 

and that they will assist the Exchange in 

fulfilling its self-regulatory obligations 

and in administering and complying 

with the requirements of the Exchange 

Act. With respect to the maintenance of 

books and records of NYSE Euronext, 

the Commission notes that while NYSE 

Euronext has the discretion to maintain 

books and records that relate to both the 

U.S. Regulated Subsidiaries and the 

European Market Subsidiaries (each 

such book and record, an ‘‘Overlapping 

Record’’) in either the United States or 

the home jurisdiction of one or more of 

the European Market Subsidiaries, 

NYSE Euronext has represented to the 

Commission that it will maintain in the 

United States originals or copies of 

Overlapping Records covered by Rule 

17a–1(b) under the Exchange Act 28

promptly after creation of such 

Overlapping Records.29 The 

Commission believes that such actions 

by NYSE Euronext with respect to its 

books and records are necessary to 

ensure that the U.S. Regulated 

Subsidiaries comply with the 

requirements of Section 17 of the 

Exchange Act 30 and Rule 17a–1(b) 

thereunder. 

Under Section 20(a) of the Exchange 

Act,31 any person with a controlling 

interest in NYSE LLC or NYSE Arca 

shall be jointly and severally liable with 

and to the same extent that NYSE LLC 

and NYSE Arca are liable under any 

provision of the Exchange Act, unless 

the controlling person acted in good 

faith and did not directly or indirectly 

induce the act or acts constituting the 

violation or cause of action. In addition, 

Section 20(e) of the Exchange Act 32

creates aiding and abetting liability for 

any person who knowingly provides 

substantial assistance to another person 

in violation of any provision of the Act 

or rules thereunder. Further, Section 

21C of the Exchange Act 33 authorizes 

the Commission to enter a cease-anddesist order against any person who has 

been ‘‘a cause of’’ a violation of any 

provision of the Exchange Act through 

an act or omission that the person knew 

or should have known would contribute 

to the violation. These provisions are 

applicable to NYSE Euronext’s and 

NYSE Group’s dealings with the U.S. 

Regulated Subsidiaries. 

C. Trust 

NYSE Euronext will operate several 

regulated entities located in the United 

States and in various jurisdictions in 

Europe. In connection with obtaining 

regulatory approval of the Combination, 

NYSE Euronext proposed to implement 

two standby structures, one involving a 

Delaware trust and one involving a 

Dutch foundation (‘‘Dutch 

Foundation’’).34 Pursuant to the terms of 

the Trust Agreement,35 the Trust will be 

empowered to take actions to mitigate 

the effects of any material adverse 

change in European law that has an 

‘‘extraterritorial’’ impact on the nonEuropean issuers listed on NYSE Group 

securities exchanges, non-European 

financial services firms that are 

members of any NYSE Group securities 

exchange, or any NYSE Group securities 

exchange. 

Upon the occurrence of a material 

adverse change of law that continues 

after the designated cure periods, the 

Trust may exercise certain remedies that 

result in a total or partial loss by NYSE 

Euronext of operating control over some 

of its securities exchanges. The Trust 

may require that NYSE Euronext 

transfer control over a substantial 

portion of its business and assets to the 

direction of the Trust. As a result, 


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8050 Federal Register / Vol. 72, No. 35 / Thursday, February 22, 2007 / Notices 

36See Section 3(a)(27) of the Exchange Act, 15 

U.S.C. 78c(a)(27). 

37 17 CFR 240.19b–4. 

38 15 U.S.C. 78s(b). 

39See NYSE LLC Approval Order, Sections II.C 

and II.D, supra note 10, for a detailed description 

of the provisions contained in the Trust Agreement. 

40 15 U.S.C. 78f(b) and 15 U.S.C. 78s(g). 

41See Trust Agreement, Articles V, VI, and VIII. 

42See, e.g., NYSE Inc.-Archipelago Merger Order, 

supra note 19. 

43 15 U.S.C. 78t(a). 

44 15 U.S.C. 78t(e). 

45 15 U.S.C. 78u–3. 

46These include the requirement that European 

Persons are represented in a certain proportion on 

the NYSE Euronext board of directors and the 

nominating and governance committee of the NYSE 

Euronext board of directors; the requirement of 

supermajority board or shareholder approval for 

certain extraordinary transactions; the provisions 

granting jurisdiction to European regulators over 

certain actions of NYSE Euronext and the NYSE 

Euronext board of directors; and references to 

European regulators, European market subsidiaries 

and European disqualified persons appearing in the 

NYSE Euronext Bylaws. 

47These include the provisions of the NYSE 

Euronext Bylaws subject to suspension; the 

references in the NYSE Euronext Certificate of 

Incorporation and NYSE Euronext Bylaws to 

European regulators, European exchange 

regulations, European market subsidiaries, 

European regulated markets, Europe and European 

disqualified persons; the provisions in the NYSE 

Euronext Certificate of Incorporation and NYSE 

Euronext Bylaws requiring that amendments to 

such certificate of incorporation or bylaws be 

submitted to the European market subsidiaries and, 

if applicable, filed with and approved by a 

European regulator; and the provisions in the NYSE 

Euronext Bylaws requiring approval of either twothirds or more of the NYSE Euronext directors or 

80% of the votes entitled to be cast by the holders 

of the then-outstanding shares of capital stock of 

NYSE Euronext entitled to vote generally in the 

election of directors to amend certain bylaw 

provisions. 

48 15 U.S.C. 78s(b)(2). 

control of NYSE Group of any NYSE 

Group securities exchange may be 

assumed by the Trust. As discussed 

above, Section 19(b) of the Exchange 

Act and Rule 19b–4 thereunder require 

an SRO to file a proposed rule change 

with the Commission. Although the 

Trust is not an SRO, certain provisions 

of the Trust Agreement are rules of an 

exchange 36 if they are stated policies, 

practices, or interpretations, as defined 

in Rule 19b–4 under the Exchange 

Act,37 of the exchange, and must be 

filed with the Commission pursuant to 

Section 19(b)(4) of the Exchange Act 38

and Rule 19b–4 thereunder. 

Accordingly, the Exchange has filed the 

Trust Agreement with the Commission. 

The Trust Agreement contains 

detailed provisions with respect to 

governance of the Trust; remedies that 

may be exercised by trustees upon the 

occurrence of a material adverse change 

in law; the relationship of the Trust, 

NYSE Group, and the U.S. Regulated 

Subsidiaries; and jurisdiction over the 

Trust.39 The Commission finds that the 

Trust Agreement’s provisions are 

designed to enable the U.S. Regulated 

Subsidiaries to operate in a manner that 

complies with the federal securities 

laws, including the objectives and 

requirements of Sections 6(b) and 19(g) 

of the Exchange Act,40 and to facilitate 

the ability of the U.S. Regulated 

Subsidiaries and the Commission to 

fulfill their regulatory and oversight 

obligations under the Exchange Act,41

and are consistent with the provisions 

other entities that directly or indirectly 

own or control an SRO have instituted 

and that have been approved by the 

Commission.42 The Commission finds 

that the Trust’s provisions are consistent 

with the Exchange Act, and that they are 

intended to assist the Exchange in 

fulfilling its self-regulatory obligations 

and in administering and complying 

with the requirements of the Exchange 

Act. 

Under Section 20(a) of the Exchange 

Act,43 any person with a controlling 

interest in NYSE LLC and NYSE Arca 

shall be jointly and severally liable with 

and to the same extent that NYSE LLC 

and NYSE Arca are liable under any 

provision of the Exchange Act, unless 

the controlling person acted in good 

faith and did not directly or indirectly 

induce the act or acts constituting the 

violation or cause of action. In addition, 

Section 20(e) of the Exchange Act 44

creates aiding and abetting liability for 

any person who knowingly provides 

substantial assistance to another person 

in violation of any provision of the 

Exchange Act or rule thereunder. 

Further, Section 21C of the Exchange 

Act 45 authorizes the Commission to 

enter a cease-and-desist order against 

any person who has been ‘‘a cause of’’

a violation of any provision of the 

Exchange Act through an act or 

omission that the person knew or 

should have known would contribute to 

the violation. These provisions are 

applicable to the Trust and all other 

entities controlling the U.S. Regulated 

Subsidiaries. 

D. Automatic Suspension and Repeal of 

Certain Provisions in the NYSE 

Euronext Organizational Documents 

Under the organizational documents 

of NYSE Euronext, immediately 

following the exercise of a call option 

over a substantial portion of Euronext’s 

business (a ‘‘Euronext call option’’), 

whereby the priority shares or ordinary 

shares of Euronext are transferred from 

NYSE Euronext to the Dutch 

Foundation, and for so long as the 

Dutch Foundation shall continue to 

hold any priority shares or ordinary 

shares of Euronext, or the voting 

securities of one or more of the 

subsidiaries of Euronext that, taken 

together, represent a substantial portion 

of Euronext’s business, then certain 

provisions of the NYSE Euronext 

Bylaws shall be suspended.46

In addition, if after a period of six 

months following the exercise of a 

Euronext call option, the Dutch 

Foundation shall continue to hold any 

ordinary or priority shares of Euronext 

or any ordinary or priority shares or 

similar voting securities of one or more 

subsidiaries of Euronext that, taken 

together, represent a substantial portion 

of Euronext’s business, or if at any time, 

NYSE Euronext no longer holds a direct 

or indirect controlling interest in 

Euronext or in one or more subsidiaries 

of Euronext that, taken together, 

represent a substantial portion of 

Euronext’s business, then certain 

provisions of the NYSE Euronext 

Bylaws and the NYSE Euronext 

Certificate of Incorporation shall be 

revoked.47 In addition, any officer or 

director of NYSE Euronext who is a 

European Person shall resign or be 

removed from his or her office. 

The Commission finds the suspension 

or repeal of the above described 

provisions of the NYSE Euronext 

Bylaws and the NYSE Euronext 

Certificate of Incorporation under 

circumstances in which the Dutch 

Foundation controls a substantial 

portion of Euronext’s business, is 

consistent with the Exchange Act. 

III. Conclusion 

For the foregoing reasons, the 

Commission finds that the proposed 

rule change is consistent with the 

Exchange Act and the rules and 

regulations thereunder applicable to a 

national securities exchange. 

It is therefore ordered, pursuant to 

Section 19(b)(2) of the Exchange Act 48

that the proposed rule change (SR–

NYSEArca–2007–05), as amended by 

Amendment No. 1, is approved on an 

accelerated basis. 

By the Commission. 

Nancy M. Morris, 

Secretary. 

[FR Doc. E7–2910 Filed 2–21–07; 8:45 am] 

BILLING CODE 8011–01–P 


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