26304 Federal Register / Vol. 75, No. 90 / Tuesday, May 11, 2010 / Notices 

6 15 U.S.C. 78s(b)(3)(A). 

7 17 CFR 240.19b–4(f)(6). 

8 Id. 

9 17 CFR 240.19b–4(f)(6)(iii). 

10For purposes only of waiving the 30-day 

operative delay, the Commission has considered the 

proposed rule change’s impact on efficiency, 

competition, and capital formation. 15 U.S.C. 78c(f). 11 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

C. Self-Regulatory Organization’s 

Statement on Comments on the 

Proposed Rule Change Received From 

Members, Participants, or Others 

The Exchange neither solicited nor 

received comments on the proposal. 

III. Date of Effectiveness of the 

Proposed Rule Change and Timing for 

Commission Action 

Because the proposed rule change 

does not (i) significantly affect the 

protection of investors or the public 

interest; (ii) impose any significant 

burden on competition; and (iii) become 

operative for 30 days from the date on 

which it was filed, or such shorter time 

as the Commission may designate, the 

proposed rule change has become 

effective pursuant to Section 19(b)(3)(A) 

of the Act 6 and Rule 19b–4(f)(6) 

thereunder.7 A proposed rule change 

filed under Rule 19b–4(f)(6) 8 normally 

does not become operative prior to 30 

days after the date of filing. However, 

pursuant to Rule 19b–4(f)(6)(iii),9 the 

Commission may designate a shorter 

time if such action is consistent with the 

protection of investors and the public 

interest. CBOE has asked the 

Commission to waive the 30-day 

operative delay so that the proposal may 

become operative immediately upon 

filing. Because the proposed rule change 

will harmonize the CBOE rules 

pertaining to guarantees and profit 

sharing, confirmations to customers, 

and options communications with the 

comparable FINRA rules pursuant to the 

17d–2 Agreement, the Commission 

finds that it is consistent with the 

protection of investors and the public 

interest to waive the 30-day operative 

delay, and hereby grants such waiver.10

IV. Solicitation of Comments 

Interested persons are invited to 

submit written data, views, and 

arguments concerning the foregoing, 

including whether the proposed rule 

change is consistent with the Act. 

Comments may be submitted by any of 

the following methods: 

Electronic Comments 

• Use the Commission’s Internet 

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

rules/sro.shtml); or 

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

Number SR–CBOE–2010–035 on the 

subject line. 

Paper Comments 

• Send paper comments in triplicate 

to Elizabeth M. Murphy, Secretary, 

Securities and Exchange Commission, 

100 F Street, NE., Washington, DC 

20549–1090. 

All submissions should refer to File 

Number SR–CBOE–2010–035. This file 

number should be included on the 

subject line if e-mail is used. To help the 

Commission process and review your 

comments more efficiently, please use 

only one method. The Commission will 

post all comments on the Commission’s 

Internet Web site (http://www.sec.gov/ 

rules/sro.shtml). Copies of the 

submission, all subsequent 

amendments, all written statements 

with respect to the proposed rule 

change that are filed with the 

Commission, and all written 

communications relating to the 

proposed rule change between the 

Commission and any person, other than 

those that may be withheld from the 

public in accordance with the 

provisions of 5 U.S.C. 552, will be 

available for Web site viewing and 

printing in the Commission’s Public 

Reference Room, 100 F Street, NE., 

Washington, DC 20549, on official 

business days between the hours of 10 

a.m. and 3 p.m. Copies of such filing 

also will be available for inspection and 

copying at the principal office of CBOE. 

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–CBOE–2010–035 and 

should be submitted on or before June 

1, 2010. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.11

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. 2010–11096 Filed 5–10–10; 8:45 am] 

BILLING CODE 8010–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–62032; File No. SR– 

NYSEArca-2010–31] 

Self-Regulatory Organizations; Notice 

of Filing of Proposed Rule Change by 

NYSE Arca, Inc. Amending NYSE Arca 

Rule 3.3(a) and Section 401(a) of the 

Exchange’s Bylaws to Eliminate the 

Exchange’s Audit Committee, 

Compensation Committee, and 

Regulatory Oversight Committee 

May 4, 2010. 

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

Securities Exchange Act of 1934 

(‘‘Act’’) 1, and Rule 19b–4 2 thereunder, 

notice is hereby given that on April 20, 

2010, NYSE Arca, Inc. (‘‘Exchange’’ or 

‘‘NYSE Arca’’) filed with the Securities 

and Exchange Commission 

(‘‘Commission’’) the proposed rule 

change as described in Items I, II, and 

III below, which Items have been 

prepared by the self-regulatory 

organization. The Commission is 

publishing this notice to solicit 

comments on the proposed rule change 

from interested persons. 

I. Self-Regulatory Organization’s 

Statement of the Terms of Substance of 

the Proposed Rule Change 

The Exchange proposes to amend 

NYSE Arca Rule 3.3 to eliminate its 

audit committee (the ‘‘NYSE Arca Audit 

Committee’’), its compensation 

committee (the ‘‘NYSE Arca 

Compensation Committee’’) and its 

regulatory oversight committee (‘‘ROC’’) 

as committees of the board of directors 

of the Exchange. References to those 

board committees will also be deleted 

from Section 4.01(a) of the Exchange’s 

Bylaws. The formal responsibilities of 

the NYSE Arca Audit Committee and 

the NYSE Arca Compensation 

Committee will, following elimination, 

be exercised by the committees of the 

board of directors of the Exchange’s 

ultimate parent company, NYSE 

Euronext. The formal responsibilities of 

the ROC will be exercised by the board 

of directors of NYSE Regulation, Inc. 

(‘‘NYSER’’) in part, pursuant to the terms 

of a regulatory services agreement with 

the Exchange, and the board of directors 

of the Exchange in other respects. 

The text of the proposed rule change 

is available on the Exchange’s Web site 

at http://www.nyse.com, at the principal 

office of the Exchange, on the 

Commission’s Web site at http:// 

www.sec.gov, and at the Commission’s 

Public Reference Room. 


emcdonald on DSK2BSOYB1PROD with NOTICES
Federal Register / Vol. 75, No. 90 / Tuesday, May 11, 2010 / Notices 26305 

3See Securities Exchange Act Release No. 53382 

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

(SR–NYSE–2005–77) (order approving NYSE’s 

business combination with Archipelago Holdings, 

Inc.) at 11257. 

4Securities Exchange Act Release No. 55293 

(February 14, 2007), 72 FR 8033 (February 22, 2007) 

(SR–NYSE–2006–120) (‘‘NYSE Euronext Approval 

Order’’). 

5See NYSE Euronext Approval Order, 72 FR at 

8036. 

6 Id. 

7Securities Exchange Act Release No. 58673 

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

2008) (SR–Amex–2008–62, SR–NYSE–2008–60) 

(‘‘NYSE Amex Approval Order’’). 

8NYSE Amex Approval Order, 73 FR at 57712. 

Note 66 following this language reiterates that, 

‘‘Each of these NYSE Euronext committees is 

composed solely of directors meeting the 

independence requirements of NYSE Euronext.’’ 

II. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

In its filing with the Commission, the 

self-regulatory organization included 

statements concerning the purpose of, 

and basis for, the proposed rule change 

and discussed any comments it received 

on the proposed rule change. The text 

of these statements may be examined at 

the places specified in Item IV below. 

The Exchange has prepared summaries, 

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

of the most significant aspects of such 

statements. 

A. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

1. Purpose 

The Exchange proposes to delete 

NYSE Arca Rule 3.3(a)(3) and the NYSE 

Arca Audit Committee provided for 

therein, thereby making the audit 

committee of the NYSE Euronext board 

(the ‘‘NYSE Euronext Audit Committee’’) 

the sole committee responsible for all 

Exchange-related audit functions. 

Similarly, the Exchange proposes to 

delete NYSE Arca Rule 3.3(a)(4) and the 

NYSE Arca Compensation Committee 

provided for therein, thereby making the 

human resources and compensation 

committee of the NYSE Euronext board 

(the ‘‘NYSE Euronext Human Resources 

and Compensation Committee’’) the sole 

committee responsible for all Exchangerelated compensation functions. Finally, 

the Exchange proposes to delete NYSE 

Arca Rule 3.3(a)(2) and the ROC 

provided for therein, with the board of 

directors of NYSER and the board of 

directors of the Exchange each 

exercising some portion of the former 

responsibilities of the ROC related to 

ensuring (i) the independence of 

Exchange regulation, (ii) adequate 

resources for the Exchange to properly 

fulfill its SRO regulatory obligations and 

(iii) that Exchange management fully 

supports the execution of the regulatory 

process. NYSER performs regulatory 

responsibilities on behalf of the 

Exchange pursuant to the terms of a 

regulatory services agreement (‘‘RSA’’) 

between NYSER and the Exchange. As 

described in more detail below, the 

Exchange board receives reports on 

regulatory matters from NYSER and 

from the Exchange’s Chief Regulatory 

Officer (‘‘CRO’’), and the Exchange will 

still retain ultimate legal responsibility 

for the performance of its regulatory 

obligations as well as the ability to take 

action as required to meet that 

responsibility. References to the three 

aforementioned NYSE Arca board 

committees will also be deleted from 

Section 4.01(a) of the Exchange’s 

Bylaws. 

Background 

Since the demutualization of the New 

York Stock Exchange LLC (‘‘NYSE’’) in 

2006 in connection with the merger of 

New York Stock Exchange, Inc. and 

Archipelago Holdings, Inc. 

(‘‘Archipelago’’), the audit and 

compensation functions of NYSE have 

been carried out at the parent holding 

company level.3 This principle was 

extended in 2007 with the merger of 

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

Euronext, N.V. to form NYSE Euronext 

(the ‘‘NYSE–Euronext Merger’’). As 

noted in the Commission’s order 

approving the NYSE–Euronext Merger,4

upon consummation, the board of 

directors of NYSE Euronext (the 

‘‘Company’) was expected to have an 

audit committee, a human resource and 

compensation committee, and a 

nominating and governance committee, 

each consisting solely of directors 

meeting the independence requirements 

of the Company.5 The order further 

stated that these committees also would 

perform relevant functions for NYSE 

Group, NYSE, NYSE Market, Inc., NYSE 

Regulation, Inc., Archipelago, NYSE 

Arca Equities, Inc., and the Exchange, as 

well as other subsidiaries of the 

Company, except that the board of 

directors of NYSE Regulation, Inc. 

would continue to have its own 

compensation committee and 

nominating and governance committee.6

In addition, on October 1, 2008, the 

American Stock Exchange LLC (‘‘Amex’’) 

was acquired by the Company. In 

connection with the merger, the Amex 

self-regulatory organization ultimately 

became known as NYSE Amex LLC 

(‘‘NYSE Amex’’). In its order approving 

the acquisition,7 the Commission again 

noted that, ‘‘Amex expects that the 

committees of the NYSE Euronext board 

of directors will perform for NYSE 

[Amex] the board committee functions 

relating to audit, governance and 

compensation.’’ 8

The NYSE Euronext Audit Committee 

Will Become the Sole Committee To 

Handle All Audit Responsibilities for 

the Exchange 

Among the various U.S. consolidated 

subsidiary corporations of the Company, 

only the Exchange has an audit 

committee that is separate and apart 

from the NYSE Euronext Audit 

Committee. Moreover, in practice, the 

audit responsibilities of the NYSE Arca 

Audit Committee overlap with those of 

the NYSE Euronext Audit Committee 

because the latter reviews the financial 

condition of the Exchange as part of its 

audit responsibilities. 

Under its charter, the NYSE Euronext 

Audit Committee has broad authority to 

assist the board of directors of the 

Company in its oversight of (a) the 

integrity of the Company’s financial 

statements and internal controls, (b) 

compliance with legal and regulatory 

requirements, including the Company’s 

ethical standards and policies, (c) the 

qualifications, independence and 

performance of the Company’s 

independent auditor, (d) the process 

relating to internal risk management and 

control systems, (e) the performance of 

the Company’s internal audit function 

and its independent auditors, and (f) the 

Company’s tax policy. It also prepares 

the Audit Committee report to 

shareholders for inclusion in the 

Company’s annual proxy statement. 

Because the Company’s financial 

statements are prepared on a 

consolidated basis that includes the 

financial results of all of the Company’s 

subsidiaries, including the Exchange 

and any subsidiaries of the Exchange, 

the NYSE Euronext Audit Committee’s 

purview necessarily includes these 

subsidiaries. The committee is 

composed of at least three members, all 

of whom must meet the independence 

and experience requirements of the New 

York Stock Exchange and Rule 10A–3 

under the Securities Exchange Act of 

1934 (the ‘‘Act’’). Each member of the 

committee must be financially literate or 

become financially literate within a 

reasonable time after appointment to the 

committee, and at least one member 

must have accounting or related 

financial management expertise. 

By contrast, the NYSE Arca Audit 

Committee has a more limited role, 

focused solely on the exchange entity 

and its subsidiary NYSE Arca Equities, 


emcdonald on DSK2BSOYB1PROD with NOTICES
26306 Federal Register / Vol. 75, No. 90 / Tuesday, May 11, 2010 / Notices 

Inc. which operates as a facility of the 

Exchange. As described in current 

Exchange Rule 3.3(a)(3)(B), the primary 

functions of that audit committee are (i) 

to conduct an annual review with the 

independent auditors, to determine the 

scope of their examination and the cost 

thereof, (ii) to periodically review with 

the independent auditors and the 

internal auditor the Exchange’s internal 

controls and the adequacy of the 

internal audit program, (iii) to review 

the annual reports submitted both 

internally and externally, and take such 

action with respect thereto as it may 

deem appropriate, and (iv) to 

recommend to the board independent 

public accountants as auditors of the 

Exchange and its subsidiaries. However, 

to the extent that the committee 

performs these functions, its activities 

are duplicative of the activities of the 

NYSE Euronext Audit Committee 

which, for example, is specifically 

responsible under its charter for 

appointing, overseeing the work of, 

evaluating the qualifications, 

performance and independence of, and 

determining compensation for, the 

independent auditor. That 

responsibility also specifically includes 

reviewing and pre-approving the scope 

and general extent of the auditor’s 

services and the estimated fees for those 

services. The independent auditor, in 

turn, is required to report directly to the 

NYSE Euronext Audit Committee. 

Similarly, the NYSE Euronext Audit 

Committee is responsible under its 

charter for assessing the effectiveness of 

the internal audit function and 

reviewing with management and the 

independent auditor any major issues as 

to the adequacy of the Company’s 

internal risk management and internal 

controls. The NYSE Euronext Audit 

Committee is also charged with meeting 

to review and discuss with management 

and the independent auditor the 

Company’s annual audited financial 

statements, quarterly financial 

statements prior to the filing of Form 

10–Q, and significant financial reporting 

issues and judgments made in 

connection with the preparation of the 

financial statements. These specific 

responsibilities of the NYSE Euronext 

Audit Committee, as well as numerous 

others in its charter relating to oversight 

of both the independent and internal 

auditors, financial statement and 

disclosure matters, and corporate 

oversight, result in the responsibilities 

of the NYSE Arca Audit Committee 

being fully duplicated by the 

responsibilities of the NYSE Euronext 

Audit Committee. 

To make the practices of the Exchange 

consistent with the company-wide 

corporate practices of the Company, the 

Exchange is now proposing to delete 

NYSE Arca Rule 3.3(a)(3) to eliminate 

the NYSE Arca Audit Committee and 

thereby formally establish the NYSE 

Euronext Audit Committee as the sole 

committee responsible for audit 

functions with regard to the Exchange. 

As has been the case since the creation 

of the NYSE Euronext Audit Committee, 

it will continue to be composed at all 

times of independent directors and will 

continue to review the financial 

condition of the Exchange as part of its 

oversight of the financial processes of 

the Company and of each of its 

consolidated subsidiaries. 

NYSER, a not-for-profit indirect 

subsidiary of the Company, has broad 

authority to oversee the regulatory 

activities of the Exchange and the other 

self-regulatory organizations whose 

ultimate parent is the Company, through 

delegated authority and regulatory 

services agreements. It is the practice of 

the Company’s Global Risk and Audit 

Services Department (‘‘RAS’’), which 

performs internal audit functions, to 

report to the board of directors of 

NYSER (‘‘NYSER Board’’) on all internal 

audit matters relating to the Exchange’s 

regulatory responsibilities. The 

Exchange represents that, to ensure that 

NYSER has the appropriate authority to 

oversee RAS’s activities with respect to 

the Exchange’s regulatory 

responsibilities pursuant to the 

provisions of the RSA between the 

Exchange and NYSER as described 

below, RAS’s written procedures will be 

amended to stipulate that the NYSER 

Board may, at any time, request that 

RAS conduct an audit of a matter of 

concern to it and report the results of 

the audit both to the NYSER Board and 

the NYSE Euronext Audit Committee. 

The CRO of the Exchange, whose role is 

described below in more detail and who 

attends meetings of both the NYSER 

Board and the Exchange’s board of 

directors, would be in attendance at any 

meeting of the NYSER Board at which 

the results of any such audit would be 

reported by RAS. The CRO would 

discuss these audit results with each of 

the NYSER Board and the Exchange’s 

board of directors, as appropriate. 

NYSER also provides reports on 

regulatory matters at Exchange board 

meetings. The Exchange retains the 

authority to direct NYSER to request 

that RAS conduct such an audit of a 

matter of concern to it. 

The NYSE Euronext Human Resources 

and Compensation Committee Will 

Become the Sole Committee To Handle 

All Human Resources and 

Compensation Responsibilities for the 

Exchange 

The Exchange also currently has a 

separate Compensation Committee 

whose assigned responsibilities with 

respect to compensation and personnel 

matters overlap with the broader 

mandate of the NYSE Euronext Human 

Resources and Compensation 

Committee. The latter committee is 

charged under its charter with 

discharging the responsibilities of the 

Company’s board of directors relating to 

human resources policies and 

procedures, executive benefit plans, and 

compensation and compensation 

disclosure with respect to the Company. 

The primary functions of the NYSE 

Arca Compensation Committee, as 

described in current Exchange Rule 

3.3(a)(4)(B), are relatively limited. The 

committee is required to (i) review and 

approve corporate goals and objectives 

relevant to the Exchange CEO’s 

compensation, (ii) evaluate the CEO’s 

performance in light of those goals and 

objectives, (iii) set the CEO’s 

compensation level based on this 

evaluation, and (iv) make 

recommendations to the board of the 

Exchange with respect to the design of 

incentive compensation and equitybased plans. The first three of these 

functions relate to the determination of 

the Exchange CEO’s compensation. 

However, the Exchange CEO, as an 

executive officer of the Company, 

already has his/her compensation 

established by the Company’s board of 

directors, in conjunction with 

recommendations from the NYSE 

Euronext Human Resources and 

Compensation Committee. 

Regarding the fourth and last primary 

function of the NYSE Arca 

Compensation Committee as stated in 

Exchange Rule 3.3(a)(4)(B), involving 

recommendations to the Exchange board 

‘‘with respect to the design of incentive 

compensation and equity-based plans,’’ 

the charter of the NYSE Euronext 

Human Resources and Compensation 

Committee states that a primary 

responsibility of that committee of the 

Company is to ‘‘[r]eview and make 

recommendations to the Board with 

respect to incentive-compensation and 

equity based plans that are subject to 

Board approval.’’ The direct 

responsibility of the NYSE Euronext 

Human Resources and Compensation 

Committee for making such 

recommendations to the board of the 

Company is also a requirement for the 


emcdonald on DSK2BSOYB1PROD with NOTICES
Federal Register / Vol. 75, No. 90 / Tuesday, May 11, 2010 / Notices 26307 

9NYSE Amex Approval Order, 73 FR at 57717. 

10See id. [‘‘First, NYSE [Amex] will enter into a 

regulatory contract with NYSE Regulation * * * 

under which NYSE [Amex] will contract with 

NYSE Regulation to perform all of NYSE [Amex]’s 

regulatory functions on NYSE [Amex]’s behalf. 

However, FINRA may perform some of the 

regulatory functions contracted out to NYSE 

Regulation pursuant to a separate multi-party 

regulatory services agreement * * *. 

Notwithstanding these regulatory contracts, NYSE 

[Amex] will retain ultimate legal responsibility for 

the regulation of its members and its market.’’] The 

Exchange represents that its contractual 

arrangements with NYSER and FINRA with respect 

to the performance of its regulatory functions are 

fully equivalent to the contractual arrangements 

that NYSE Amex has entered into with NYSER and 

FINRA as described in this footnote, and that the 

Exchange retains ultimate legal responsibility for 

the performance of its regulatory functions and the 

ability to take action to assure the performance of 

those functions. 

11Some of the specific reasons cited by the 

Commission in support of its conclusion that 

independence of SRO regulation would exist under 

NYSE Amex’s contractual arrangements with 

NYSER are that ‘‘all directors on the Board of NYSE 

Regulation (other than its CEO) are, and will be, 

required to be independent of management of NYSE 

Euronext and its subsidiaries, as well as of NYSE, 

NYSE Arca, and NYSE [Amex] members and listed 

companies.’’ The Commission further noted that, ‘‘In 

addition, a majority of the members of the NYSE 

Regulation board must be directors that are not also 

directors of NYSE Euronext.’’ See id. 

12 Id. 

13 Id. 

14Permit holders at the Exchange are ‘‘members’’ 

of the Exchange as that term is defined in Section 

3 of the Act. 

Company as a listed company, as 

provided in Section 303A.05 of the 

NYSE Listed Company Manual. Because 

there is no incentive compensation nor 

any equity-based plans for employees 

other than as determined at the parent 

company level, the NYSE Arca 

Compensation Committee is precluded 

from exercising its stated function of 

making such recommendations to the 

Exchange board (which could not act on 

any such recommendations in any case). 

To make the practices of the Exchange 

consistent with the company-wide 

corporate practices of the Company, the 

Exchange is now proposing to delete 

NYSE Arca Rule 3.3(a)(4) to eliminate 

the NYSE Arca Compensation 

Committee and thereby formally 

establish the NYSE Euronext Human 

Resources and Compensation 

Committee as the sole committee 

responsible for human resources and 

compensation functions with regard to 

the Exchange as anticipated in those 

Commission orders referenced herein. 

As has been the case since the creation 

of the NYSE Euronext Human Resources 

and Compensation Committee, it will 

continue to be composed at all times of 

independent directors and will continue 

to address human resources policies and 

procedures, executive benefit plans, and 

compensation and compensation 

disclosure with respect to the Company 

and of each of its consolidated 

subsidiaries, including the Exchange 

(and excepting, with respect to certain 

items, NYSE Regulation, Inc.). 

The NYSER Board and the Board of 

Directors of the Exchange Will Each 

Exercise a Portion of the Current 

Responsibilities of the ROC, and the 

Board of Directors of the Exchange Will 

Retain Ultimate Legal Responsibility for 

the Regulation of Its Permit Holders and 

Its Market 

The proposed elimination of the ROC 

will result in the exercise of the current 

formal responsibilities of that position 

being divided between the NYSER 

Board and the board of directors of the 

Exchange as described below. Those 

responsibilities are to ensure (i) the 

independence of Exchange regulation, 

(ii) adequate resources for the Exchange 

to properly fulfill its SRO regulatory 

obligations and (iii) that Exchange 

management fully supports the 

execution of the regulatory process. The 

Exchange believes that the performance 

of its regulatory functions following 

elimination of the ROC will closely 

parallel the current performance by 

NYSE Amex of its regulatory functions 

as previously considered and approved 

by the Commission. 

In the NYSE Amex Approval Order, 

the Commission noted that ‘‘upon the 

consummation of the Mergers and the 

Related Transactions, NYSE [Amex] will 

no longer have a Regulatory Oversight 

Committee (‘‘ROC’’). Instead, NYSE 

[Amex] will contract with NYSE 

Regulation to perform all of its 

regulatory functions. The Commission 

believes that it is consistent with the 

Act for NYSE [Amex] to eliminate its 

ROC and instead contract with NYSE 

Regulation to perform its regulatory 

functions because the governance of 

NYSE Regulation will provide a 

comparable level of independence that 

a ROC would provide.’’ 9 The Exchange 

has previously entered into the RSA 

with NYSER to perform all of the 

Exchange’s regulatory functions on the 

Exchange’s behalf. The Financial 

Industry Regulatory Authority 

(‘‘FINRA’’) performs some of the 

regulatory functions contracted out to 

NYSER pursuant to a separate multiparty regulatory services agreement with 

FINRA. These regulatory contractual 

arrangements closely parallel the 

regulatory arrangements for NYSE Amex 

that the Commission reviewed and 

approved in the NYSE Amex Approval 

Order.10

Regarding the ROC’s current formal 

responsibility to ensure the 

independence of Exchange regulation, 

the Exchange notes the Commission’s 

comment cited in the prior paragraph 

that the governance of NYSER will 

provide a comparable level of 

independence as that of a ROC. The 

Exchange represents that the 

aforementioned statement in the NYSE 

Amex Approval Order will be equally 

valid with respect to regulation of the 

Exchange because of the very similar 

regulatory contractual arrangements.11

Further, regarding the ROC’s current 

formal responsibility to ensure adequate 

resources for the Exchange to properly 

fulfill its SRO regulatory obligations, the 

Exchange notes the Commission’s 

statement in the NYSE Amex Approval 

Order that ‘‘NYSE Euronext has agreed 

to provide adequate funding to NYSE 

Regulation to conduct its regulatory 

activities with respect to NYSE, NYSE 

Arca and * * * NYSE [Amex].’’ 12 That 

funding arrangement led the 

Commission to state that ‘‘the 

Commission believes that NYSE 

Euronext’s commitment to provide 

adequate funding to NYSE Regulation to 

conduct its regulatory activities is 

designed to ensure that NYSE [Amex] 

can perform its obligations under the 

Act.’’ 13 Because that funding 

commitment by NYSE Euronext is also 

applicable by its terms to the Exchange, 

the Commission’s conclusion in the 

preceding sentence regarding adequate 

funding of NYSER for the conduct of 

regulatory activities is equally valid as 

applied to the Exchange’s SRO 

regulatory obligations. 

As with NYSE Amex, and 

notwithstanding these regulatory 

agreements, the Exchange retains 

ultimate legal responsibility for the 

regulation of its permit holders 14 and its 

market and has full authority to take 

action to assure that its regulatory 

responsibilities are met. In addition, the 

Exchange board of directors will 

directly assume the ROC’s current 

formal responsibility to ensure that 

Exchange management fully supports 

the execution of the regulatory process. 

In connection with the foregoing 

arrangements, as stated above, the 

Exchange retains the authority to direct 

NYSER and FINRA to take any action 

necessary to fulfill the Exchange’s 

statutory and self-regulatory obligations, 

and NYSER provides a report on 

regulatory matters at each meeting of the 

Exchange board. The Exchange board 

appoints its CRO who is also an officer 

of NYSER and reports to the Chief 

Executive Officer of NYSER. The CRO is 

also an officer of the Exchange, and in 

that capacity is charged with reporting 

on regulatory matters to the Exchange 


emcdonald on DSK2BSOYB1PROD with NOTICES
26308 Federal Register / Vol. 75, No. 90 / Tuesday, May 11, 2010 / Notices 

15See NYSE Amex Approval Order, 73 FR at 

57717. [‘‘NYSE [Amex] also will retain the authority 

to direct NYSE Regulation, FINRA, or any other 

SRO that provides regulatory services to take any 

action necessary to fulfill NYSE [Amex]’s statutory 

and self-regulatory obligations. In addition, the 

NYSE [Amex] Board will appoint a CRO, who will 

be an officer of NYSE [Amex] and will report 

directly to the NYSE [Amex] Board.’’] 

16NYSE Amex Approval Order, 73 FR at 57717. 

17 Id. 

18 15 U.S.C. 78f(b). 

19 15 U.S.C. 78. 

20 15 U.S.C. 78f(b)(1). 21 15 U.S.C. 78f(b)(5). 

board. These arrangements also closely 

track the current arrangements for NYSE 

Amex that were considered by the 

Commission in issuing the NYSE Amex 

Approval Order 15 and will assure that 

the Exchange board receives reports on 

regulatory matters that are sufficient to 

enable it to take action as necessary in 

the performance of its regulatory 

responsibilities. 

As a consequence of realigning its 

regulatory arrangements to closely 

match those of NYSE Amex, which 

arrangements were previously 

considered and approved by the 

Commission, the Exchange believes that 

the proposed rule change is noncontroversial and presents no new or 

novel issues. In the NYSE Amex 

Approval Order, the Commission found 

that NYSE Amex’s proposed regulatory 

structure ‘‘is consistent with the Act, 

including Section 6(b)(1) of the Act 

***’’ and further stated that, ‘‘The 

Commission believes that it is 

consistent with the Act to allow NYSE 

[Amex] to contract with NYSE 

Regulation and FINRA to perform its 

regulatory functions, including its 

examination, enforcement, and 

disciplinary functions.’’ 16 The 

Commission also determined that NYSE 

Amex’s ‘‘proposal to appoint a CRO 

reporting to the NYSE [Amex] Board 

will further NYSE [Amex]’s ability to 

satisfy these self-regulatory obligations 

consistent with Section 6(b)(1) of the 

Act.’’ 17 Because all of the same elements 

will be present in the Exchange’s 

regulatory arrangements following the 

elimination of the ROC, the Exchange 

believes that the proposed rule change 

is fully consistent with the Act. 

2. Statutory Basis 

The proposed rule change is 

consistent with Section 6(b) 18 of the 

Act,19 in general, and furthers the 

objectives of Section 6(b)(1) 20 of the 

Act, which requires a national securities 

exchange to be so organized and have 

the capacity to carry out the purposes of 

the Act and to comply, and to enforce 

compliance by its members and persons 

associated with its members, with the 

provisions of the Act. The proposed rule 

change is also consistent with, and 

furthers the objectives of Section 

6(b)(5) 21 of the Act, in that it is 

designed to prevent fraudulent and 

manipulative acts and practices, to 

promote just and equitable principles of 

trade, to foster cooperation and 

coordination with persons engaged in 

facilitating transactions in securities, to 

remove impediments to and perfect the 

mechanisms of a free and open market 

and a national market system and, in 

general, to protect investors and the 

public interest. 

More specifically, the Exchange 

believes that the proposed rule change 

will promote efficiency and just and 

equitable principles of trade by 

simplifying the corporate structure of 

the Exchange through allowing the 

Exchange to eliminate two board 

committees whose responsibilities 

overlap with, and are adequately 

handled by, corresponding committees 

of the board of directors of the 

Exchange’s ultimate parent. This will 

allow directors of the Exchange to focus 

their attention on matters falling 

directly within the purview of the 

Exchange’s board. Similarly, 

elimination of the ROC will further 

simplify the corporate structure of the 

Exchange, thereby promoting efficiency, 

by aligning the structure relating to the 

performance of the regulatory functions 

of the Exchange more closely with the 

structure of NYSE Amex relating to its 

performance of those same functions. As 

discussed above, the Commission has 

previously determined that the 

regulatory structure of NYSE Amex is 

consistent with the Act, including 

Section 6(b)(1) of the Act. 

B. Self-Regulatory Organization’s 

Statement on Burden on Competition 

The Exchange does not believe that 

the proposed rule change will impose 

any burden on competition not 

necessary or appropriate in furtherance 

of the purposes of the Act. 

C. Self-Regulatory Organization’s 

Statement on Comments on the 

Proposed Rule Change Received From 

Members, Participants, or Others 

No written comments were either 

solicited or received with respect to the 

proposed rule change. 

III. Date of Effectiveness of the 

Proposed Rule Change and Timing for 

Commission Action 

Within 35 days of the date of 

publication of this notice in the Federal 

Register or within such longer period (i) 

as the Commission may designate up to 

90 days of such date if it finds such 

longer period to be appropriate and 

publishes its reasons for so finding or 

(ii) as to which NYSE consents, the 

Commission will: 

(A) By order approve such proposed 

rule change, or 

(B) Institute proceedings to determine 

whether the proposed rule change 

should be disapproved. 

IV. Solicitation of Comments 

Interested persons are invited to 

submit written data, views, and 

arguments concerning the foregoing, 

including whether the proposed rule 

change is consistent with the Act. 

Comments may be submitted by any of 

the following methods: 

Electronic Comments 

• Use the Commission’s Internet 

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

rules/sro.shtml; or 

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

Number SR–NYSEArca–2010–31 on the 

subject line. 

Paper Comments 

• Send paper comments in triplicate 

to Elizabeth M. Murphy, Secretary, 

Securities and Exchange Commission, 

100 F Street, NE., Washington, DC 

20549–1090. 

All submissions should refer to File 

Number SR–NYSEArca–2010–31. This 

file number should be included on the 

subject line if e-mail is used. To help the 

Commission process and review your 

comments more efficiently, please use 

only one method. The Commission will 

post all comments on the Commission’s 

Internet Web site (http://www.sec.gov/ 

rules/sro.shtml). Copies of the 

submission, all subsequent 

amendments, all written statements 

with respect to the proposed rule 

change that are filed with the 

Commission, and all written 

communications relating to the 

proposed rule change between the 

Commission and any person, other than 

those that may be withheld from the 

public in accordance with the 

provisions of 5 U.S.C. 552, will be 

available for Web site viewing and 

printing in the Commission’s Public 

Reference Room, on official business 

days between the hours of 10 a.m. and 

3 p.m. Copies of the 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 


emcdonald on DSK2BSOYB1PROD with NOTICES
Federal Register / Vol. 75, No. 90 / Tuesday, May 11, 2010 / Notices 26309 

22 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

3 15 U.S.C. 78s(b)(3)(A)(ii). 

4 17 CFR 240.19b–4(f)(2). 

5The ORF was established in January 2010. See 

Securities Exchange Act Release No. 61388 (January 

20, 2010), 75 FR 4431 (January 27, 2010) (SR–BX– 

2010–001) (Notice of Filings and Immediate 

Effectiveness of Proposed Rule Change Relating to 

Registered Representative Fee and Options 

Regulatory Fee). 

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

7 15 U.S.C. 78f(b)(4). 

8See Securities Exchange Act Release Nos. 61529 

(February 17, 2010), 75 FR 8421 (February 24, 2010) 

(SR–PHLX–2010–17) and 61641 (March 3, 2010) 75 

FR 11220 (March 10, 2010) (SR–CBOE–2010–20). 9 15 U.S.C. 78s(b)(3)(A)(ii). 

10 17 CFR 240.19b–4(f)(2). 

submissions should refer to File 

Number SR–NYSEArca–2010–31 and 

should be submitted on or before June 

1, 2010. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.22

Florence E. Harmon, 

Deputy Secretary. 

[FR Doc. 2010–11094 Filed 5–10–10; 8:45 am] 

BILLING CODE 8010–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–62043; File No. SR–BX– 

2010–033] 

Self-Regulatory Organizations; 

NASDAQ OMX BX, Inc.; Notice of Filing 

and Immediate Effectiveness of 

Proposed Rule Change Relating to the 

Options Regulatory Fee 

May 5, 2010. 

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

Securities Exchange Act of 1934 

(‘‘Act’’),1 and Rule 19b-4 thereunder,2

notice is hereby given that on April 30, 

2010, NASDAQ OMX BX, Inc. (the 

‘‘Exchange’’) filed with the Securities 

and Exchange Commission 

(‘‘Commission’’) the proposed rule 

change as described in Items I, II, and 

III below, which Items have been 

prepared by the self-regulatory 

organization. The Exchange filed the 

proposed rule change pursuant to 

Section 19(b)(3)(A)(ii) of the Act,3 and 

Rule 19b-4(f)(2) thereunder,4 which 

renders the proposal effective upon 

filing with the Commission. The 

Commission is publishing this notice to 

solicit comments on the proposed rule 

from interested persons. 

I. Self-Regulatory Organization’s 

Statement of the Terms of Substance of 

the Proposed Rule Change 

NASDAQ OMX BX, Inc. (the 

‘‘Exchange’’) proposes to amend the Fee 

Schedule of the Boston Options 

Exchange Group, LLC (‘‘BOX’’) to 

eliminate the minimum one-cent 

Options Regulatory Fee charged per 

trade. The text of the proposed rule 

change is available from the principal 

office of the Exchange, at the 

Commission’s Public Reference Room, 

on the Exchange’s Internet Web site at 

http://nasdaqomxbx.cchwallstreet.com/ 

NASDAQOMXBX/Filings/, and on the 

Commission’s Web site at http:// 

www.sec.gov. 

II. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

In its filing with the Commission, the 

self-regulatory organization included 

statements concerning the purpose of, 

and basis for, the proposed rule change 

and discussed any comments it received 

on the proposed rule change. The text 

of these statements may be examined at 

the places specified in Item IV below. 

The self-regulatory organization has 

prepared summaries, set forth in 

Sections A, B, and C below, of the most 

significant aspects of such statements. 

A. Self-Regulatory Organization’s 

Statement of the Purpose of, and 

Statutory Basis for, the Proposed Rule 

Change 

1. Purpose 

The Exchange charges an Options 

Regulatory Fee (‘‘ORF’’) of $0.0030 per 

contract to each BOX Options 

Participant for all options transactions 

executed or cleared by the BOX Options 

Participant that are cleared by the 

Options Clearing Corporation (‘‘OCC’’) in 

the customer range, excluding Linkage 

orders, regardless of the exchange on 

which the transaction occurs.5 The ORF 

is collected indirectly from BOX 

Options Participants through their 

clearing firms by OCC on behalf of the 

Exchange. 

There is presently a minimum onecent ($0.01) ORF charged per trade. The 

Exchange proposes to eliminate this 

minimum charge from its fee schedule 

and that this fee change be operative on 

May 3, 2010. 

2. Statutory Basis 

The Exchange believes that the 

proposal is consistent with the 

requirements of Section 6(b) of the Act,6

in general, and Section 6(b)(4) of the 

Act,7 in particular, in that it provides for 

the equitable allocation of reasonable 

dues, fees, and other charges among its 

members and issuers and other persons 

using its facilities. In particular, the 

Exchange believes that this proposal 

will align the calculation of the ORF 

with that of other options exchanges 8

while also simplifying the Exchange’s 

administration of the ORF. 

B. Self-Regulatory Organization’s 

Statement on Burden on Competition 

The Exchange does not believe that 

the proposed rule change will impose 

any burden on competition that is not 

necessary or appropriate in furtherance 

of the purposes of the Act. 

C. Self-Regulatory Organization’s 

Statement on Comments on the 

Proposed Rule Change Received From 

Members, Participants or Others 

The Exchange has neither solicited 

nor received comments on the proposed 

rule change. 

III. Date of Effectiveness of the 

Proposed Rule Change and Timing for 

Commission Action 

The foregoing rule change has become 

effective pursuant to Section 

19(b)(3)(A)(ii) of the Exchange Act 9 and 

Rule 19b-4(f)(2) 10 thereunder, because it 

establishes or changes a due, fee, or 

other charge applicable only to a 

member. 

At any time within 60 days of the 

filing of the proposed rule change, the 

Commission may summarily abrogate 

the rule change if it appears to the 

Commission that the action is necessary 

or appropriate in the public interest, for 

the protection of investors, or would 

otherwise further the purposes of the 

Act. 

IV. Solicitation of Comments 

Interested persons are invited to 

submit written data, views, and 

arguments concerning the foregoing, 

including whether the proposed rule 

change is consistent with the Act. 

Comments may be submitted by any of 

the following methods: 

Electronic Comments 

• Use the Commission’s Internet 

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

rules/sro.shtml); or 

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

Number SR–BX–2010–033 on the 

subject line. 

Paper Comments 

• Send paper comments in triplicate 

to Elizabeth M. Murphy, Secretary, 

Securities and Exchange Commission, 

100 F Street, NE., Washington DC 

20549–1090. 


emcdonald on DSK2BSOYB1PROD with NOTICES