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###### Securities and Exchange Commission

          - [Release No. 34-101397; File No. 10-244]

## I. Introduction

                    On May 9, 2024, Green Impact Exchange, LLC (“GIX”) filed with the Securities and Exchange Commission (“Commission”) a Form 1 application (“Form 1”) under the Securities Exchange Act of 1934 (“Act”), seeking registration as a national securities exchange under Section 6 of the Act.[1]                                          Notice of the application was published for comment in the                     **Federal Register**                     on July 23, 2024.[2]                                          The Commission received comments on the GIX Form 1,[3]                                          all expressing support for the Form 1.                

                    Section 19(a)(1) of the Act [4]                                          requires the Commission, within 90 days of the date of publication of notice of an application for registration as a national securities exchange, or such longer period as to which the applicant consents, to, by order, grant such registration [5]                                          or institute proceedings to determine whether such registration should be denied.[6]                                          This order is instituting proceedings under Section 19(a)(1)(B) of the Act [7]                                          to determine whether GIX's application for registration as a national securities exchange should be granted or denied, and provides notice of the grounds for denial under consideration by the Commission, as set forth below.                

## II. Overview of GIX's Form 1

### A. Description

                    GIX proposes to operate a fully automated electronic trading platform for the trading of listed equities and would not maintain a physical trading floor. Liquidity would be derived from orders to buy and orders to sell submitted to GIX electronically by GIX members from remote locations. GIX proposes to have one class of membership open to registered broker-dealers. GIX would be wholly owned by its parent company, Green Exchange, PBC (“GEPBC”).[8] 

                    With respect to the listing of securities, GIX proposes to permit an operating company whose securities are, or at the time of listing on GIX will be, listed on another national securities exchange registered with the Commission pursuant to Section 6(a) of the Act (its “primary listing exchange”) to apply to also list those securities on the Exchange.[9]                                          As a condition of                           ( print page 85265)                        continuing to dually list its securities on GIX, a company would have to at all times continue to be in good standing with its primary listing exchange.[10] 

                    A novel feature of GIX's proposed listing standards is that GIX would require all companies that list on GIX to comply with its Green Governance Standards which, according to GIX, are designed to provide investors with access to accountable and enforceable information about the quality of a listed company's commitment to sustainable ways of doing business.[11]                                          As proposed, GIX's Green Governance Standards do not include fixed targets or a single reporting framework, and generally are process or disclosure based.                

                    GIX proposes to enter into a technology services agreement with MEMX Technologies, LLC (“MEMX Technologies”) [12]                                          to license the technology underlying the GIX trading platform (“Agreement”).[13] 

A more detailed description of the manner of operation of GIX's proposed system can be found in Exhibit E to GIX's Form 1. Further information about GIX's proposed Green Governance Standards can be found in Exhibit H-5 to GIX's Form 1. GIX's proposed rulebook, which includes the Green Governance Standards, is Exhibit B to GIX's Form 1, and the governing documents for GIX and GEPBC can be found in Exhibit A and Exhibit C, respectively.

### B. Comments on GIX's Form 1

                    Commenters principally discuss the benefits that they believe GIX's proposed Green Governance Standards would provide. Commenters support the transparency and accountability for the sustainability initiatives that they believe would be provided through GIX's proposed Green Governance Standards.[14]                                          In particular, some commenters state that the proposed listing criteria should prevent “greenwashing.” [15]                                          Another commenter states that the transparency and accountability required through GIX's proposed Green Governance Standards would “promote[ ] investor protection by providing greater information about each listed company and allows easier comparisons across `green' companies leading to improved investment decision-making.” [16] 

                    Additionally, one commenter states that approving the GIX Form 1 would be consistent with Section 11A of the Act, which, according to this commenter, mandates the Commission to assure “fair competition among brokers and dealers, among exchange markets, and between exchange markets and markets other than exchange markets.” [17]                                          Fair competition, in the commenter's view, “implies minimal barriers to entry,” so the commenter states that “[a]s long as a proposed entrant can demonstrate that it can fulfill a national securities exchange's legal obligations under the [Act], then its registration should be approved.” [18]                                          Another commenter states that approval of GIX's application would contribute to investor protection.[19]                                          A different commenter offers specific additions regarding GIX's proposed Green Governance Standards, specifically suggesting that GIX: (1) designate only the IFRS Sustainability Reporting standards as a reporting framework to ensure comparability of information for investors; [20]                                          and (2) incorporate into its listing criteria socially responsible practices in line with the OECD Guidelines for Multinational Enterprises on Responsible Business Conduct and the UN Guiding Principles on Business and Human Rights.[21] 

                    Further, another commenter states that approval of the Form 1 would provide “much-needed competition” to a listings “duopoly” and “offer a specialized platform for companies and investors who prioritize sustainability and responsible business practices.” [22]                                          This commenter also states that GIX would “play a crucial role in directing capital toward companies that are genuinely committed to sustainable practices.” [23] 

## III. Proceedings To Determine Whether To Grant or Deny the Application and Grounds for Potential Denial Under Consideration

                    As required by Section 19(a)(1)(B) of the Act,[24]                                          the Commission is hereby providing notice of grounds for denial under consideration, as set forth below. Institution of such proceedings is appropriate at this time in view of the issues raised by the application. Institution of proceedings does not indicate that the Commission has reached any conclusions with respect to any of the issues involved.                

                    Under Section 19(a)(1) of the Act, the Commission shall grant an application for registration as a national securities exchange if the Commission finds that the requirements of the Act and the rules and regulations thereunder with respect to the applicant are satisfied. The Commission shall deny such application for registration if it does not make such a finding.[25]                                          Under Section 6(b) of the Act, an exchange shall not be registered as a national securities exchange unless the Commission determines that it has satisfied the relevant requirements of the Act.[26]                                          In particular, Section 6(b)(1) of the Act requires that the Commission determine that an exchange is so organized and has the capacity to carry out the purposes of the Act.[27]                                          In addition, under Section 6(b)(3) of the Act, the Commission must determine that the rules of the exchange assure a 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.[28]                                          Section 6(b)(5) of the Act requires that the rules of the exchange be designed, among other things, 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                           ( print page 85266)                        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.[29]                                          Finally, under Section 6(b)(8) of the Act, the Commission must determine that the rules of the exchange do not impose any burden on competition that is not necessary or appropriate in furtherance of the purposes of Act.[30] 

### A. Proposed Green Governance Standards

                    Generally, GIX's proposed Green Governance Standards would require the following: (1) establishment of board governance polices and processes to reinforce the issuer's “Green Goals”; [31]                                          (2) identification of stakeholders, classification of them, and evaluation of how they may be affected by the issuer's environmental practices; [32]                                          (3) definition of short-, medium-, and long-term goals for environmentally sustainable business practices that are materially meaningful in light of the listed company's specific business; [33]                                          (4) preparation of a plan reasonably designed to meet the listed company's stated environmental goals and disclosure of a summary of such plan; [34]                                          (5) provision of a framework for evaluating the issuer's environmental goals and an explanation of the propriety of the selected metrics; [35]                                          (6) disclosure of a summary of the listed company's year-over-year progress using these metrics; [36]                                          and (7) implementation of a green compliance program and appointment of a corporate officer to oversee this program.[37] 

                    Pursuant to its proposed Green Governance Standards, GIX would require the establishment of board governance polices and processes to reinforce the issuer's Green Goals.[38]                                          Specifically, a listed company's board would have to: (1) adopt a Green Values statement for the company and board; [39]                                          (2) adopt a charge to the company's board and/or appropriate board committee(s) regarding oversight of and responsibility for green strategy and the achievement of, and/or progress toward, the prospective listed company's Green Goals; (3) designate a Chief Sustainability Officer to report to the board or a committee of the board; [40]                                          and (4) direct management to implement a generally accepted sustainability reporting framework.[41]                                          As proposed, a “generally accepted sustainability reporting framework” is a third-party designed framework for collecting and reporting data and information regarding the listed company's green performance.[42]                                          GIX would recognize the following sustainability reporting frameworks as being “generally accepted”: Task Force for Climate-related Financial Disclosure; International Sustainability Standards Board/Sustainability Accounting Standards Board; Science-Based Targets Initiative; Global Reporting Initiative; CDP (formerly the Carbon Disclosure Project); World Economic Forum Stakeholder Capitalism Metrics; and the European Union Corporate Sustainability Reporting Directive.[43]                                          A listed company would have to develop and implement policies and procedures for itself and standards of conduct for vendors, and contractors of the listed company that support the company's Green Values.[44] 

                    A listed company would have to: (1) identify all stakeholders in its environmental impact, taking into consideration the customs and practices of the company's industry and ordinary business practices; (2) document the scope of each stakeholder's perceived interests in connection with the company's environmental impacts; (3) classify whether the stakeholder's perceived interest(s) is (are) direct, indirect, or general; and (4) publish a summary of its initial stakeholder analysis on its website either as a standalone page or as a component of its annual sustainability report.[45]                                          The listed company's management and board would have to review the stakeholder analysis at least annually and publish any updated analysis.[46] 

                    GIX would require a listed company to disclose on the listed company's website or in a sustainability report: (1) the listed company's short-, medium-, and long-term goals; (2) how the listed company defines short-, medium-, and long-term time horizons, and the criteria it employs for classifying each Green Goal as short-, medium- or long-term; (3) for each Green Goal that establishes quantitative targets, whether the listed company relied on science-based target setting methodology to determine such quantitative targets; and (4) the metrics by which the company will evaluate its progress toward the achievement of each of its Green Goals on an ongoing basis.[47]                                          Additionally, GIX would require a company to create a Green Business Plan that describes all material aspects of implementing its Green Goals. A Green Business Plan would                           ( print page 85267)                        have to specifically: identify key resources required for implementation; assign responsibility for action to one or more executive sponsors; describe material assumptions, timelines, and key dependencies; and describe any material contractual arrangements, communications, and operational systems to be employed in connection with the plan.[48]                                          A summary of the plan would have to be publicly disclosed.[49] 

                    GIX would require a listed company to disclose annually in its sustainability report: (1) the results of a self-evaluation with respect to its Green Goals, assessing whether it is on-track to meet its short-term Green Goals; and (2) its year-over-year progress toward achieving its Green Goals, as measured by its chosen sustainability reporting framework.[50] 

                    The Commission is evaluating whether the novel proposed Green Governance Standards are consistent with Section 6 of the Act, including Section 6(b)(1) of the Act,[51]                                          which requires among other things that a national securities exchange be organized and capable of complying with its own rules, and Section 6(b)(5) of the Act,[52]                                          which requires, among other things, that the rules of an exchange be designed 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. In Exhibit H-5 to its Form 1, GIX states why it believes the various aspects of the proposed Green Governance Standards are consistent with Section 6(b)(5) of the Act.                

### B. Technology Services Agreement With MEMX Technologies, LLC

                    GIX would not own the trading technology and systems (“System”) developed by MEMX Technologies LLC, but GIX proposes to enter into the Agreement with MEMX Technologies to license the technology underlying GIX. Generally, the Agreement would govern (1) the delivery and licensing of certain software for operation of the System, (2) the development and testing of software necessary for connectivity to other GIX and/or third party-developed functions and certain other software necessary to support trading on GIX, and (3) the operation of the System in an on-premises environment on behalf of the Exchange, including certain operational and support services.[53]                                          GIX represents that the Agreement and Service Levels Annex to the Agreement would also set forth certain service levels to ensure that GIX can meet its Regulation Systems Compliance and Integrity (“Regulation SCI”) obligations in light of the contractual relationship between GIX and MEMX Technologies.                

                    The Commission is evaluating whether the proposed Agreement between GIX and MEMX Technologies is consistent with Section 6(b)(1) of the Act,[54]                                          including Regulation SCI thereunder.[55]                                          The Commission is considering whether, under the terms of the Agreement, as described in the GIX Form 1, GIX would be so organized and have the capacity to be able to carry out the purposes of the Act and to comply and enforce compliance by its members and persons associated with its members with the Act and the rules thereunder. Specifically, the Commission is considering, and requests commenters' views on, whether GIX would be capable of exercising sufficient control over the operation of GIX, and be sufficiently independent from MEMX Technologies, to enable GIX to comply with requirements under the Act and applicable rules, including, among other things, Regulation SCI, which requires an SCI entity to have written policies and procedures reasonably designed to ensure that its SCI systems have levels of capacity, integrity, resilience, availability and security adequate to maintain the SCI entity's operation capability.[56] 

## IV. Request for Written Comment

The Commission requests that interested persons provide written views and data with respect to GIX's Form 1 and the questions included above or other relevant issues. Comments may be submitted by any of the following methods:

### Electronic Comments

    - Use the Commission's internet comment form ( https://www.sec.gov/​rules/​sro.shtml ); or                
    - Send an email to rule-comments@sec.gov.                      Please include File No. 10-244 on the subject line.                

### Paper Comments

    - Send paper comments in triplicate to Secretary, Securities and Exchange Commission, 100 F Street NE, Washington, DC 20549-1090.

                    All submissions should refer to File No. 10-244. This file number should be included on the subject line if email is used. To help the Commission process and review your comments more efficiently, please use only one method. The Commission will post all comments on the Commission's internet website (                    *https://www.sec.gov/​rules/​other*). Copies of the submission, all subsequent amendments, all written statements with respect to GIX's Form 1 filed with the Commission, and all written communications relating to the application between the Commission and any person, other than those that may be withheld from the public in accordance with the provisions of 5 U.S.C. 552, will be available for website viewing and printing in the Commission's Public Reference Room, 100 F Street NE, Washington, DC 20549, on official business days between the hours of 10 a.m. and 3 p.m. Do not include personal identifiable information in submissions; you should submit only information that you wish to make available publicly. We may redact in part or withhold entirely from publication submitted material that is obscene or subject to copyright protection. All submissions should refer to File No. 10-244 and should be submitted on or before November 15, 2024.                

By the Commission.

Sherry R. Haywood,

Assistant Secretary.

# Footnotes

1.                             15 U.S.C. 78f.                    
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2.                                                     *See*                         Securities Exchange Act Release No. 100547 (July 17, 2024), 89 FR 59795.                    
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3.                             The public comment file for GIX's Form 1 (File No. 10-244) is available on the Commission's website at:                         *https://www.sec.gov/​comments/​10-244/​10-244.htm.*
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4.                             15 U.S.C. 78s(a)(1).                    
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5.                             15 U.S.C. 78s(a)(1)(A).                    
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6.                             15 U.S.C. 78a(a)(1)(B).                    
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7.                             15 U.S.C. 78s(a)(1)(B).                    
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8.                                                     *See*                         Exhibit C to GIX's Form 1.                    
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9.                                                     *See*                         proposed GIX Rule 14.105(a). GIX's proposed rulebook, which includes its proposed Green Governance Standards (as described in section III.A. below), may be found in Exhibit B-1 to GIX's Form 1.                    
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10.                                                     *See*                         proposed GIX Rule 14.105(b).                    
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11.                                                     *See*                         Exhibit H-5 to GIX's Form 1, at 3-4.                    
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12.                             MEMX Technologies is affiliated with MEMX LLC (“MEMX Exchange”), a registered national securities exchange. MEMX Exchange is not a party to the Agreement.                         *See*                         Exhibit E to GIX's Form 1.                    
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13.                                                     *See infra*                         Section III (discussing the proposed Agreement between GIX and MEMX Technologies in greater detail).                         *See also*                         Exhibits C and E to GIX's Form 1.                    
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14.                                                     *See, e.g.,*                         letters from Hideto Nishitani, CEO, Virtuous Capital, LLC (September 4, 2024) (“Virtuous Capital Letter”) at 1; the Green Impact Exchange Advisory Council (August 30, 2024) (“GIEAC Letter”) at 2; Andrew Behar, CEO, As You Sow (August 26, 2024); Steven M. Rothstein, Managing Director, and Jake Rascoff, Director, Ceres (August 20, 2024) (“Ceres Letter”) at 2; Marcus Hooper, Board Advisor, Sustainable Footprints (August 13, 2024) at 1; John FX Dolan (July 27, 2024); J.G. Michalowski, SafeRock USA (July 30, 2024) (“SafeRock USA Letter”) at 1; Michael Capelli (August 8, 2024) at 2.                    
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15.                                                     *See, e.g.,*                         Virtuous Capital Letter at 1; GIEAC Letter at 1; SafeRock USA Letter at 1; letters from Andrea Schmitz (August 9, 2024); Nancy Reich (August 15, 2024) (“Reich Letter”) at 1; Pradiv Mahesh (August 15, 2024).                    
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16.                             Reich Letter at 2.                    
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17.                             Letter from James J. Angel, Associate Professor of Finance, Georgetown University (August 28, 2024) at 3.                    
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18.                                                     *Id.*
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19.                                                     *See*                         Ceres Letter at 1.                    
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20.                             In the commenter's view, these standards provide a global baseline for sustainability reporting, focusing on decision-useful information for investors.                         *See*                         letter from Jen Sisson, CEO, The International Corporate Governance Network (September 6, 2024) at 1.                    
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21.                                                     *See id.*
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22.                             Letter from Dave Lauer (September 16, 2024) (“Lauer Letter”) at 3.                    
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23.                             Lauer Letter at 2.                    
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24.                             15 U.S.C. 78s(a)(1)(B).                    
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25.                             15 U.S.C. 78s(a)(1).                    
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26.                             15 U.S.C. 78f.                    
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27.                             15 U.S.C. 78f(b)(1).                    
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28.                             15 U.S.C. 78f(b)(3).                    
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29.                             15 U.S.C. 78f(b)(5).                    
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30.                             15 U.S.C. 78f(b)(8).                    
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31.                                                     *See*                         proposed GIX Rule 14.426(b).                    
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32.                                                     *See*                         proposed GIX Rule 14.427(b). The proposed term “stakeholder” would mean any entities or individuals that can reasonably be expected to be significantly affected by a listed company's or prospective listed company's activities, products, or services; or whose actions can reasonably be expected to affect the ability of the company to implement its strategies or achieve its objectives.                         *See*                         proposed GIX Rule 14.425(a)(4). Stakeholders would include, but would not be limited to, the following: shareholders; employees; customers; suppliers (both direct and indirect); partners or joint venture participants; lenders or financers; potential customers; city, county or equivalent political subdivisions in which the listed company operates directly; regulators; and financial analysts and markets.                         *See*                         Supplementary Material .03(b) to proposed GIX Rule 14.427. As proposed, stakeholders may also include unidentified persons or groups who have interests in the preservation of local flora and fauna, specific ecosystems (                        *e.g.,*                         river basins or wetlands), or shared local natural resources (                        *e.g.,*                         groundwater) that could be affected by the company's actions.                         *See*                         Supplementary Material .03(c) to proposed GIX Rule 14.427.                    
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33.                                                     *See*                         proposed GIX Rule 14.427(c).                    
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34.                                                     *See*                         proposed GIX Rule 14.427(d).                    
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35.                                                     *See*                         proposed GIX Rule 14.426(d).                    
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36.                                                     *See*                         proposed GIX Rule 14.428(c).                    
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37.                                                     *See*                         proposed GIX Rules 14.426(c), 14.427(e).                    
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38.                             As proposed, “Green Goals” are a set of specific and measurable goals in line with the company's “Green Values” for (i) transitioning to a sustainable business model and green business practices; (ii) maintaining the listed company's mature green business practices; and (iii) evolving or iterating its mature green business practices as needed.                         *See*                         proposed GIX Rule 14.427(c)(1). As proposed, Green Goals must address three distinct time periods: short-term (reasonably achievable within two to four years), medium-term (reasonably achievable within four to ten years), and long-term (reasonably achievable in more than ten years).                         *See id.*                         and Supplementary Material .06 to proposed GIX Rule 14.427.                    
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39.                             As proposed, the board's “Green Values” statement would guide decision-making at the board and executive levels, establish a standard against which the prospective listed company's green actions can be assessed, and form the basis for an internal framework for evaluating initiatives, plans, and actions by leadership, managers, and employees with respect to whether such initiatives, plans, and actions take environmental impacts and green outcomes into account, and incorporate sustainable and green practices to the maximum extent possible.                         *See*                         Supplementary Material .02 to proposed GIX Rule 14.426.                    
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40.                             As proposed, GIX specifies qualifications necessary for a Chief Sustainability Officer.                         *See*                         Supplementary Material .04 to proposed GIX Rule 14.426. Alternatively, the board may assign green responsibilities to core business leaders and describe how such core business leaders will report to the board.                    
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41.                                                     *See*                         proposed GIX Rule 14.426(b). Correspondingly, a listed company would have to implement its generally accepted sustainability reporting framework as directed by the board.                         *See*                         proposed GIX Rule 14.427(g).                    
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42.                                                     *See*                         Supplementary Material .04(3) to proposed GIX Rule 14.426.                    
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43.                                                     *See id.*                         In the future, GIX may designate additional frameworks as “generally accepted.”                         *See id.*
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44.                                                     *See*                         proposed GIX Rule 14.427(e).                    
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45.                                                     *See*                         proposed GIX Rule 14.427(b). As proposed, a listed company may use another generally recognized taxonomy to classify stakeholders in lieu of the classification described above, provided that the listed company adheres to the requirements for applying such generally recognized taxonomy.                         *See*                         Supplementary Material .05 to proposed GIX Rule 14.427(b).                    
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46.                                                     *See*                         proposed GIX Rule 14.428(b).                    
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47.                                                     *See*                         proposed GIX Rule 14.427(c)(2).                    
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48.                                                     *See*                         proposed GIX Rule 14.427(d)(1).                    
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49.                                                     *See*                         proposed GIX Rule 14.427(d)(2). As proposed, the summary must contain sufficient information so as to not be materially misleading and provide investors and stakeholders with a clear understanding of management's key assumptions, estimates, and risks that could materially affect the listed company's achievement of its Green Goals.                         *See*                         Supplementary Material .08 to proposed GIX Rule 14.427.                    
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50.                                                     *See*                         proposed GIX Rule 14.428(c)(1).                    
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51.                             15 U.S.C. 78f(b)(1).                    
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52.                             15 U.S.C. 78f(b)(5).                    
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53.                                                     *See*                         Exhibit E to GIX's Form 1 at 3. Under the terms of the Agreement, (1) GIX may request that MEMX Technologies develop and implement technology changes that change the operation of the GIX System; and (2) GIX is not obligated to agree to, accept, or adopt changes to the System that are not essential to the operation of its instance of the System.                         *See*                         Exhibit E to GIX's Form 1 at 2-3.                    
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54.                             15 U.S.C. 78f(b)(1).                    
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55.                             17 CFR 242.1000-1007; Securities Exchange Act Release No. 73639 (Nov. 19, 2014), 79 FR 72252 (Dec. 5, 2014) (“SCI Adopting Release”).                    
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56.                             17 CFR 242.1000-1007. An SCI entity is responsible for having in place policies and procedures to ensure that it is able to satisfy the requirements of Regulation SCI for SCI systems operated on its behalf by a third party.                         *See*                         SCI Adopting Release, 79 FR at 72275-76.                    
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[FR Doc. 2024-24813 Filed 10-24-24; 8:45 am]

BILLING CODE 8011-01-P