Federal Register / Vol. 74, No. 65 / Tuesday, April 7, 2009 / Notices 15799 

20 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

3See Securities Exchange Act Release No. 59400 

(February 12, 2009), 74 FR 7945. 

4The Exchange has represented that fair 

representation candidates on the NYSE Board 

qualify as NYSE non-affiliated directors. 

5The Exchange has represented that fair 

representation candidates on the NYSE Market 

Board qualify as NYSE Market non-affiliated 

directors. 

trade differently than singly-listed 

securities that do not require a license? 

Does it matter whether any such 

required license must be obtained from 

ISE or a third party? ISE represents that 

it would license its proprietary index 

products to any other exchange on 

commercially reasonable terms. How 

should this representation be factored 

into the Commission’s evaluation? What 

impact, if any, would the trading 

volume represented by such singlylisted securities have on the analysis? 

Are there any factors with respect to 

singly-listed securities that would 

impact an analysis of whether ISE’s 

proposed fees are 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–ISE–2007–97 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. 

All submissions should refer to File 

Number SR–ISE–2007–97. 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, 100 F Street, NE., Washington, 

DC 20549, 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 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 File 

Number SR–ISE–2007–97 and should be 

submitted on or before April 28, 2009. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.20

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. E9–7836 Filed 4–6–09; 8:45 am] 

BILLING CODE 8010–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–59683; File No. SR–NYSE– 

2009–12] 

Self-Regulatory Organizations; New 

York Stock Exchange LLC; Order 

Approving a Proposed Rule Change 

Amending Its Limited Liability 

Company Operating Agreement and 

the Bylaws of Its Wholly-Owned 

Subsidiary NYSE Market, Inc. To 

Eliminate, in Each Case, a 

Requirement That Not Less Than Two 

Members of the Board of Directors 

Must Qualify as ‘‘Non-Affiliated 

Directors’’ and a Related Requirement 

That Not Less Than Two Members of 

the Board of Directors Must Qualify as 

‘‘Fair Representation Candidates’’ 

April 1, 2009. 

I. Introduction 

On February 2, 2009, the New York 

Stock Exchange LLC (‘‘NYSE’’ or the 

‘‘Exchange’’) filed with the Securities 

and Exchange Commission 

(‘‘Commission’’), pursuant to Section 

19(b)(1) of the Securities Exchange Act 

of 1934 (‘‘Act’’) 1 and Rule 19b–4 

thereunder,2 a proposed rule change to 

amend: (i) its Second Amended and 

Restated Operating Agreement (‘‘NYSE 

Operating Agreement’’); and (ii) the 

bylaws of its wholly-owned subsidiary 

NYSE Market, Inc. (‘‘NYSE Market’’) 

(‘‘NYSE Market Bylaws’’), to eliminate 

the requirement that not less than two 

members of the board of directors of 

NYSE (‘‘NYSE Board’’) and of NYSE 

Market (‘‘NYSE Market Board’’), 

respectively, must qualify as ‘‘nonaffiliated directors’’ and the requirement 

that not less than two members of such 

boards must qualify as ‘‘fair 

representation candidates’’ (as each of 

those terms is defined in the NYSE 

Operating Agreement and NYSE Market 

Bylaws, respectively). The requirements 

that at least 20% of NYSE Board’s 

directors and NYSE Market Board’s 

directors must be ‘‘non-affiliated 

directors’’ and ‘‘fair representation 

candidates’’ would remain in place. The 

proposed rule change was published for 

comment in the Federal Register on 

February 20, 2009.3 The Commission 

received no comments on the proposal. 

II. Description of the Proposal 

The Exchange proposes that its parent 

company, NYSE Group, Inc., as the sole 

member of the Exchange, amend the 

NYSE Operating Agreement to eliminate 

the requirements that: (i) not less than 

two members of NYSE Board must be 

persons who are not members of the 

board of directors of NYSE Euronext 

(‘‘NYSE Euronext Board’’), and who 

qualify as independent under the 

independence policy of the NYSE 

Euronext Board (‘‘NYSE non-affiliated 

directors’’); and (ii) not less than two 

members of the NYSE Board must be 

‘‘fair representation candidates’’ (as 

defined in the NYSE Operating 

Agreement). In each case, however, the 

current requirements that a minimum of 

20% of NYSE Board’s directors must be 

NYSE non-affiliated directors and that a 

minimum of 20% of NYSE Board’s 

directors must be fair representation 

candidates would continue to apply.4

The Exchange also proposes that the 

Exchange, as the sole stockholder of 

NYSE Market, amend the NYSE Market 

Bylaws to eliminate the requirements 

that: (i) not less than two members of 

the NYSE Market Board must be persons 

who are not members of the NYSE 

Euronext Board, although such directors 

need not be independent (‘‘NYSE 

Market non-affiliated directors’’); and 

(ii) not less than two members of the 

NYSE Market Board must be ‘‘fair 

representation candidates’’ (as defined 

in the NYSE Market Bylaws). In each 

case, however, the current requirements 

that a minimum of 20% of NYSE Market 

Board’s directors must be NYSE Market 

non-affiliated directors and that a 

minimum of 20% of NYSE Market 

Board’s directors must be fair 

representation candidates would 

continue to apply.5

The Exchange also proposes to specify 

in the NYSE Operating Agreement and 

the NYSE Market Bylaws that, for 

purposes of calculating the minimum 

number of non-affiliated directors and 

15800 Federal Register / Vol. 74, No. 65 / Tuesday, April 7, 2009 / Notices 

6See Section 2.03(a)(i) and (iii) of the NYSE 

Operating Agreement and Article III, Section 1(A) 

and (B) of the NYSE Market Bylaws. 

7As defined in the NYSE Operating Agreement, 

fair representation candidates are NYSE Board 

members that are determined by member 

organizations of the Exchange through a specified 

petition process (‘‘Petition Candidates’’) or, in the 

absence of Petition Candidates, candidates 

recommended jointly by the Director Candidate 

Recommendation Committee (‘‘DCRC’’) of NYSE 

Market and of NYSE Regulation, Inc. In the case of 

NYSE Market, fair representation candidates on the 

Market Board are determined similarly except that, 

in the absence of Petition Candidates, they are 

individuals recommended by the DCRC of NYSE 

Market. 

8See Article I, paragraph (q) of the By-Laws of the 

NASDAQ Stock Market LLC, which states that, 

‘‘ ‘Membership Representative Director’ means a 

Director who has been elected or appointed after 

having been nominated by the Member Nominating 

Committee or by a Nasdaq Member pursuant to 

these By-Laws.’’ 

9See Section 9(a) of the NASDAQ Stock Market 

LLC Agreement. 

10See Securities Exchange Act Release No. 58673 

(September 29, 2008), 73 FR 57707 (October 3, 

2008) (SR–Amex–2008–62). 

11 In approving this proposed rule change, the 

Commission notes that it has considered the 

proposed rule’s impact on efficiency, competition, 

and capital formation. 15 U.S.C. 78c(f). 

12 15 U.S.C. 78f(b)(3). 

13See supra notes 4 and 5. 

14See, e.g., Section 9(a) of the NASDAQ Stock 

Market LLC Agreement and Article IV, Section 4– 

1 of the NASDAQ OMX PHLX, Inc. By-Laws. 

15 15 U.S.C. 78f(b)(3). 

16 15 U.S.C. 78s(b)(2). 

17 17 CFR 200.30–3(a)(12). 

fair representation candidates for each 

the NYSE Board and the NYSE Market 

Board, if the number that is equal to 

20% of the total number of directors on 

their respective boards is not a whole 

number, such number would be 

rounded up to the next whole number.6

The Exchange has stated that the 

practical effect of the proposed rule 

change would be to enable the size of 

both the NYSE Board and the NYSE 

Market Board to be reduced from ten 

members to five members. The 

Exchange has represented that the 

initial implementation of the proposed 

changes immediately following 

approval by the Commission would be 

accomplished through the voluntary 

resignation of five of the ten directors 

from the NYSE Board and NYSE Market 

Board, respectively, including one ‘‘fair 

representation’’ director from each of 

the boards, in connection with a 

reduction in the size of each board to 

five directors. The Exchange’s proposal 

would not revise the current fair 

representation candidate selection and 

petition process for, or the appointment 

or election of a fair representation 

candidate to, the NYSE Board and the 

NYSE Market Board.7

The Exchange has stated that its 

proposal is consistent with the 

governance structures of other national 

securities exchanges that have been 

approved by the Commission. The 

Exchange has noted, for example, that 

The NASDAQ Stock Market LLC 

(‘‘Nasdaq’’) has a 20% fair 

representation requirement, without 

specifying a minimum number of fair 

representation directors,8 and that 

Nasdaq has complete discretion as to 

the number of board members.9 The 

Exchange also has noted that in the 

approval order relating to the 

acquisition of the American Stock 

Exchange LLC by NYSE Euronext, the 

Commission similarly approved a 

discretionary board size (noting that 

Amex intended to have a five-member 

board), a 20% fair representation 

requirement, and no minimum number 

of fair representation directors.10 The 

Exchange indicated that, by eliminating, 

for itself and NYSE Market, the current 

requirements for a minimum of two 

non-affiliated directors and two fair 

representation candidates, it will be able 

to improve administrative efficiency 

and effectiveness by operating with a 

smaller number of directors, while 

continuing to fulfill its statutory 

obligations regarding the fair 

representation of its members. 

III. Discussion and Commission 

Findings 

The Commission finds that the 

proposed rule change is consistent with 

the Act and the rules and regulations 

thereunder applicable to a national 

securities exchange.11 In particular, the 

Commission finds that the proposal is 

consistent with the requirements of 

Section 6(b)(3) of the Act, which 

provides that the rules of an exchange 

must 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 issues and investors 

and not be associated with a member of 

the exchange, broker, or dealer.12

The fair representation requirement in 

Section 6(b)(3) of the Act is intended to 

give members a voice in the selection of 

the exchange’s directors and the 

administration of its affairs. Moreover, 

the Section 6(b)(3) requirement helps to 

ensure that members are protected from 

unfair, unfettered actions by an 

exchange and that, in general, an 

exchange is administered in a way that 

is equitable to all those who trade on its 

market or through its facilities. The 

Commission notes that the requirement 

that at least 20% of the directors on the 

NYSE and NYSE Market boards be nonaffiliated directors and fair 

representation candidates is designed to 

ensure the fair representation of NYSE 

members on the NYSE Board and the 

NYSE Market Board.13 The Commission 

notes that, while the proposal 

eliminates the requirement regarding a 

specific minimum number of nonaffiliated directors and fair 

representation candidates on the boards, 

it does not alter the minimum 20% 

requirement for non-affiliated directors 

or fair representation candidates or the 

process by which members can directly 

petition and vote for representatives on 

the boards. Moreover, the proposal adds 

to the NYSE Operating Agreement and 

NYSE Market Bylaws a provision that: 

whenever 20% of the board would not 

result in a whole number, such number 

would in all cases be rounded up to the 

nearest whole number, thus ensuring 

that the non-affiliated directors and fair 

representation candidates never 

constitute less than 20% of the board. 

The Commission further notes that the 

proposed changes to the NYSE 

Operating Agreement and NYSE Market 

Bylaws are consistent with previous 

proposals approved by the Commission 

for other exchanges, which also do not 

specify the number of fair 

representation directors and which 

allow discretion as to the size of their 

boards.14 The Commission therefore 

finds that the Exchange’s proposal is 

consistent with Section 6(b)(3) of the 

Act.15

IV. Conclusion 

It is therefore ordered, pursuant to 

Section 19(b)(2) of the Act,16 that the 

proposed rule change (SR–NYSE–2009– 

12) is approved. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.17

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. E9–7834 Filed 4–6–09; 8:45 am] 

BILLING CODE 8010–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–59677; File No. SR–NYSE– 

2009–38] 

Self-Regulatory Organizations; New 

York Stock Exchange LLC; Notice of 

Filing and Immediate Effectiveness of 

Proposed Rule Change To Revise 

Transaction Fees for the New York 

Block Exchange 

April 1, 2009. 

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

Securities Exchange Act of 1934