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[Federal Register Volume 89, Number 234 (Thursday, December 5, 2024)]
[Notices]
[Pages 96696-96698]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-28427]

[[Page 96696]]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-101781; File Nos. SR-CBOE-2024-041; SR-C2-2024-016; SR-
CboeBZX-2024-087; SR-CboeBYX-2024-034; SR-CboeEDGA-2024-037; SR-
CboeEDGX-2024-059]

Self-Regulatory Organizations; Cboe Exchange, Inc.; Cboe C2 
Exchange, Inc.; Cboe BYX Exchange, Inc.; Cboe BZX Exchange, Inc.; Cboe 
EDGA Exchange, Inc.; Cboe EDGX Exchange, Inc.; Order Approving Proposed 
Rule Changes To Amend the Bylaws of Cboe Global Markets, Inc.

November 29, 2024.

I. Introduction

    On October 11, 2024, each of the Cboe Exchange, Inc.; Cboe C2 
Exchange, Inc.; Cboe BYX Exchange, Inc.; Cboe BZX Exchange, Inc.; Cboe 
EDGA Exchange, Inc.; Cboe EDGX Exchange, Inc. (collectively, the 
``SROs''), 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\ 
proposed rule changes (the ``Proposals'') with respect to the bylaws of 
Cboe Global Markets, Inc. (``CGM''), the parent company of the SROs 
(the ``CGM Bylaws''). The Proposals amend the CGM Bylaws to provide 
stockholders owning a combined 25% or more of CGM's outstanding stock 
with the right to request a special meeting of the stockholders, to 
refine CGM's current advance notice bylaws for annual stockholder 
meetings, and to make other miscellaneous changes to the CGM Bylaws. 
The Proposals were published for comment in the Federal Register on 
October 29, 2024.\3\ The Commission did not receive any comment letters 
on the Proposals. This order approves the Proposals.
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    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
    \3\ Securities Exchange Act Release Nos. 101415 (October 23, 
2024), 89 FR 86019 (SR-CBOE-2024-041) (``CBOE Notice''), 101421 
(October 23, 2024), 89 FR 86016 (SR-C2-2024-016) (``C2 Notice''), 
101420 (October 23, 2024), 89 FR 85999 (SR-CboeBYX-2024-034) 
(``CboeBYX Notice''), 101419 (October 23, 2024), 89 FR 86051 (SR-
CboeBZX-2024-087) (``CboeBZX Notice''), 101416 (October 23, 2024), 
89 FR 86046 (SR-CboeEDGA-2024-037) (``CboeEDGA Notice''); 101417 
(October 23, 2024), 89 FR 86065 (SR-CboeEDGX-2024-059) (``CboeEDGX 
Notice,'' and, collectively, ``Notices'').
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II. Description of the Proposal

    First, The SROs propose to amend certain provisions of the CGM 
Bylaws that relate to the power of stockholders to call a special 
meeting. Specifically, the SROs propose to amend Section 2.3 of the CGM 
Bylaws, which sets forth how a special meeting of the stockholders can 
be called. Currently, Section 2.3 of the CGM Bylaws provides that only 
the Chair of the CGM Board, the Chief Executive Officer or the CGM 
Board itself may call a special meeting of the stockholders. The SROs 
propose to amend Section 2.3(a) to state that a special meeting of 
stockholders may be called: (i) at any time by the CGM Board pursuant 
to a resolution adopted by the affirmative vote of a majority of the 
total number of CGM directors then in office; or (ii) by CGM's 
Corporate Secretary following the receipt of a written request in 
proper form for a special meeting (a ``Special Meeting Request'') by 
one or more stockholders.\4\ In order to call a special meeting, the 
stockholders must hold, in the aggregate, at least 25% of CGM's 
outstanding shares of common stock entitled to vote on matters brought 
before the special meeting (the ``Requisite Percentage'').\5\ As such, 
in addition to allowing stockholders with the Requisite Percentage to 
call a special meeting, the SROs also propose to remove the Chair of 
the CGM Board, the Chief Executive Officer, and the President of CGM 
from Section 2.3(a) so that they may not individually call a special 
meeting of the stockholders.
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    \4\ Id.
    \5\ Id.
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    The SROs also propose to add new Sections 2.3(b), 2.3(c), 2.3(d), 
2.3(e), 2.3(f), 2.3(g) and 2.3(h) of the CGM Bylaws to set forth the 
procedures to implement the Proposals to allow a stockholder to call a 
special meeting of stockholders (a ``Stockholder Requested Special 
Meeting''). In summation, the SRO's proposal for these sections 
includes instructions to properly submit a written request to call a 
Stockholder Requested Special Meeting, explanations of the detailed 
information required for a Special Meeting Request to have been 
properly delivered, and explanations for how the CGM Board shall review 
and process a Special Meeting Request. The SROs state that the proposed 
amendments are designed to help ensure that the SROs are able to comply 
with their disclosure and other requirements under applicable law and 
to help ensure that that the CGM Board and its stockholders are able to 
assess the proposed business and meeting request adequately.\6\
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    \6\ See, e.g., CboeEDGX Notice, supra note 3, at 86067.
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    Second, the SROs propose to amend Section 2.9 of the CGM Bylaws, 
which govern proxy representation. The SROs propose to add language to 
clarify that white colored proxy cards are reserved for exclusive use 
by the CGM Board, and that stockholders soliciting proxies from other 
stockholders of the CGM may use any other color proxy card.
    Third, the SROs propose to amend Section 2.11 of the CGM Bylaws, 
which are the advance notice bylaws, to reflect what the SROs assess 
and represent are recent developments in Delaware Law.\7\ Section 2.11 
sets forth that stockholders must notify CGM, during a specified period 
in advance of an annual meeting or special meeting called by the CGM 
Board, of an intention to nominate persons to the CGM Board or to 
present a business proposal at the meeting. The SROs state that while 
designing the proposed requirements for stockholders to call a special 
meeting, they evaluated the existing requirements and determined that 
the advance notice bylaws could be enhanced to help achieve more 
fulsome disclosure and explanations from stockholders bringing business 
or potential nominees before a stockholder meeting.\8\ Thus, the SROs 
propose to amend Sections 2.11(a)(iii)(C), 2.11(a)(iii)(D), 
2.11(a)(iii)(F), 2.11(c)(ii), 2.11(c)(iii), 2.11(c)(vi) and 
2.11(a)(iii)(B).
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    \7\ See, e.g., CboeBZX Notice, supra note 3, at 86053-54.
    \8\ Id.
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    The SROs propose to amend Section 2.11(a)(iii)(C) to clarify the 
information a stockholder is required to disclose relating to 
arrangements between the stockholder, a Stockholder Associated Person, 
and any other stockholder, and to eliminate disclosures on performance 
related fees to which such stockholder or Stockholder Associated Person 
may be entitled as a result of any increase or decrease in the stock of 
the CGM, and the prospectus or similar document of the stockholder 
providing notice or any Stockholder Associated Person. The SROs state 
that while the current provisions in Section 2.11(a)(iii)(C) provide 
valuable information, the proposal should help ensure the objectives of 
the provisions are met without burdening stockholders with potentially 
overbroad requests for information.\9\
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    \9\ See, e.g. C2 Notice, supra note 3, at 86063.
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    Section 2.11(a)(iii)(D) of the CGM Bylaws currently sets forth 
representations to be made by a stockholder regarding whether such 
stockholder is part of a group which intends to deliver or solicit 
proxies from stockholders when bringing business or a Stockholder 
Nominee before a stockholder meeting. The SROs state they are proposing 
changes to make this provision more consistent with the universal proxy 
rules provided for in

[[Page 96697]]

Rule 14a-19 of the Act.\10\ The SROs also propose requiring the 
stockholder to confirm whether it intends, or is part of a group which 
intends, to engage in a solicitation (within the meaning of Rule 14a-
1(1) of the Act) with respect to the nomination of any proposed nominee 
or proposed business to be considered at the meeting. The SROs state 
that any stockholder providing notice that they intend to solicit 
proxies in support of a proposed nominee must do so in accordance with 
Rule 14a-19 of the Exchange Act.\11\
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    \10\ See, e.g. CboeEDGA Notice, supra note 3, at 86049.
    \11\ See, e.g. id.
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    Section 2.11(a)(iii)(F) of the CGM Bylaws currently requires that a 
Stockholder Nominee provide any information that is required to 
determine the qualifications of such Stockholder Nominee to serve as a 
director of CGM. The SROs propose to add language clarifying that any 
required information must be consistent with the parameters set forth 
in CGM's Corporate Governance Guidelines or the CGM Board's past 
practice for assessing potential director nominees.
    Existing Section 2.11(c)(ii) of the CGM Bylaws requires a 
stockholder providing notice to notify the CGM Secretary of any 
inaccuracy or change in any information submitted pursuant to Section 
2.11. The SROs propose to modify this requirement by narrowing the 
scope to require the stockholder to provide notice of any material 
inaccuracies or changes to information that they previously provided.
    For Section 2.11(c)(iii) of the CGM Bylaws, the SROs propose that 
any stockholder or Stockholder Associated Person providing notice with 
respect to any Stockholder Nominee is required to do so in a manner 
consistent with the requirements for universal proxy rules pursuant to 
Rule 14a-19 of the Exchange Act.
    The SROs propose to amend Section 2.11(c)(vi) of the CGM Bylaws to 
add specificity to the definition of ``Stockholder Associated Person,'' 
limit which individuals may be determined to be a Stockholder 
Associated Person and make other clarifying changes. The SROs state 
that these changes to reflect recent developments in Delaware law and 
to provide clarifications should help prevent confusion.\12\
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    \12\ Id.
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    The SROs further propose to add a note to Section 2.11(a)(ii) that 
any proposed business for a stockholder meeting must be a proper matter 
for stockholder action. Additionally, the SROs propose to amend Section 
2.11(a)(iii)(B) to state that a Stockholder Nominee's written consent 
must be included in the CGM's proxy statement before they may be 
brought before a meeting, and that a Stockholder Nominee will not enter 
into any commitment to vote in a certain manner if nominated to the CGM 
Board. The SROs state that these proposals add specificity with regard 
to the CGM.\13\ The SROs also propose to amend this section to require 
that a Stockholder Nominee not omit facts that are necessary to ensure 
statements made are not misleading in any material respect, which adds 
a materiality threshold to the current provision.
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    \13\ Id.
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    Fourth, the SROs propose to make changes to Section 3.10 of the CGM 
Bylaws. Current Section 3.10 allows, among other things, for the Chair 
of the Board or the Chief Executive Officer to call a special meeting 
of the CGM Board. The proposal would additionally allow the Lead 
Director of CGM to call a special meeting of the CGM Board. The SROs 
state that revising this section to allow the Lead Director to call a 
special meeting of the CGM Board addresses a potential scenario in 
which the Chair of the Board and the Chief Executive Officer positions 
are jointly held by one individual and a special meeting of the CGM 
Board is not able to be called by individual independent directors.\14\
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    \14\ See, e.g., CBOE Notice, supra note 3, at 86022.
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III. Discussion and Commission's Findings

    After careful review, the Commission finds that the Proposals are 
consistent with the requirements of the Act and the rules and 
regulations thereunder applicable to a national securities 
exchange.\15\ In particular, the Commission finds that the Proposals 
are consistent with the requirements of the Act and the rules and 
regulations thereunder applicable to a national securities 
exchange.\16\ Specifically, the Commission believes that the Proposals 
are consistent with Section 6(b) of the Act \17\ in general, and with 
Section 6(b)(1) \18\ in particular, in that it enables the SROs to be 
so organized as to have the capacity to be able to carry out the 
purposes of the Act and to comply, and to enforce compliance by its 
exchange members and persons associated with its exchange members, with 
the provisions of the Act, the rules and regulations thereunder, and 
the rules of the SROs.
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    \15\ Additionally, in approving the Proposals, the Commission 
has considered the proposed rules' impact on efficiency, 
competition, and capital formation. See 15 U.S.C. 78c(f).
    \16\ Certain provisions of the CGM Bylaws are considered rules 
of the SROs if they are stated policies, practices, or 
interpretations, as defined in Rule 19b-4 under the Act, and 
therefore, must be filed with the Commission pursuant to Section 
19(b) of the Act and Rule 19b-4 thereunder. 15 U.S.C. 78s(b); 17 CFR 
240.19b-4.
    \17\ 15 U.S.C. 78f(b).
    \18\ 15 U.S.C. 78f(b)(1).
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    The SROs assert that the Proposals would strengthen the corporate 
governance of CGM by now permitting stockholders to bring business or 
Stockholder Nominees before CGM via a special meeting of the 
stockholders.\19\ Under the current text of Section 2.3(a) of the CGM 
Bylaws, special meetings of CGM stockholders may only be called by the 
Chairman of the CGM Board, the Chief Executive Officer of CGM, the 
President of CGM or the CGM Board of Directors. Under the Proposals, 
only the CGM Board of Directors or a group of stockholders that meets 
the Requisite Percentage may call a special meeting of stockholders 
pursuant to revised Section 2.3(a).
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    \19\ See, e.g., CboeBYX Notice, supra note 3, at 6002.
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    Furthermore, the SROs propose to expand the provisions of Section 
2.3 of the CGM Bylaws to set forth detailed provisions regarding, among 
other things, the procedural requirements for CGM stockholders to call 
a special meeting of stockholders, the duties and deadlines of the CGM 
Secretary upon receiving a request for a special meeting of 
stockholders, and a process for cancelling a special meeting called by 
the Requisite Percentage of stockholders should those stockholder 
subsequently call below the requisite percentage. The SROs assert that 
these provisions will ensure both timely notices of special meeting 
requests and the ability of stockholders to adequately assess the 
proposed business for a given special meeting of stockholders.\20\ The 
Commission believes that the proposed changes to Section 2.3(a)--
coupled with the aforementioned procedural requirements and limitations 
set forth in new subsections (b)-(h) of Section 2.3 of the CGM Bylaws--
are reasonably designed to comply with the requirements under Section 
6(b)(1) \21\ of Act in that they allow the Exchange to carry out the 
purposes of the Exchange Act and to comply, and to enforce compliance 
by its exchange members and persons associated with its exchange 
members, with the provisions of the Act, the rules and regulations 
thereunder, and the rules of the SROs.
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    \20\ See, e.g., CBOE Notice, supra note 3, at 86020.
    \21\ 15 U.S.C. 78f(b)(1).

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[[Page 96698]]

    As outlined above,\22\ the SROs also propose to amend Section 2.11 
of the CGM Bylaws, which are the advance notice bylaws, to reflect what 
the SROs assess and represent are recent developments in Delaware 
Law.\23\ Among other things, the SROs aim to ensure the objectives of 
the advance notice bylaws are met without burdening stockholders with 
potentially overbroad requests for information in a manner that is 
consistent with what the SROs represent and assess are recent 
developments in Delaware Law.\24\ The Commission believes that these 
proposed changes are also reasonably designed to comply with the 
requirements under Section 6(b)(1) \25\ of Act in that they allow the 
Exchange to carry out the purposes of the Exchange Act and to comply, 
and to enforce compliance by its exchange members and persons 
associated with its exchange members, with the provisions of the Act, 
the rules and regulations thereunder, and the rules of the SROs.
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    \22\ See supra notes 9-14 and accompanying text.
    \23\ See, e.g., CboeBZX Notice, supra note 3, at 86053-54.
    \24\ Id.
    \25\ 15 U.S.C. 78f(b)(1).
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    Finally, SROs proposed to revise revisions to Sections 2.9 and 3.10 
of the CGM Bylaws to address proxy card color categorization and to 
allow the Lead Director to call a special meeting of the board in order 
to mitigate circumstances in which the CGM Bylaws would not otherwise 
empower a second Independent Director to call a special meeting, 
respectively. The Commission believes that these changes are reasonably 
designed to facilitate more efficient and effective corporate 
governance of CGM in accordance with the requirements of Section 
6(b)(1) \26\ of Act.
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    \26\ 15 U.S.C. 78f(b)(1).
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IV. Conclusion

    For the foregoing reasons, the Commission finds that the Proposals 
are consistent with the 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 
Act,\27\ that the Proposals (SR-CBOE-2024-041; SR-C2-2024-016; SR-
CboeBZX-2024-087; SR-CboeBYX-2024-034; SR-CboeEDGX-2024-059; SR-
CboeEDGA-2024-037) be, and hereby are, approved.
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    \27\ 15 U.S.C. 78s(b)(2).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\28\
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    \28\ 17 CFR 200.30-3(a)(12).
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J. Matthew DeLesDernier,
Deputy Secretary.
[FR Doc. 2024-28427 Filed 12-4-24; 8:45 am]
BILLING CODE 8011-01-P
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