46086 Federal Register / Vol. 73, No. 153 / Thursday, August 7, 2008 / Notices 

27 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

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 the Amex 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–Amex–2008–63 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 

Number SR–Amex–2008–63. 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, 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 submissions 

should refer to File Number SR–Amex–

2008–63 and should be submitted on or 

before August 28, 2008. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.27

Florence E. Harmon, 

Acting Secretary. 

[FR Doc. E8–18073 Filed 8–6–08; 8:45 am] 

BILLING CODE 8010–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–58284; File No. SR–Amex–

2008–62] 

Self-Regulatory Organizations; 

American Stock Exchange LLC; Notice 

of Filing of Proposed Rule Change and 

Amendment No. 1 Thereto Relating to 

the Acquisition of the Exchange by 

NYSE Euronext 

August 1, 2008. 

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

Securities Exchange Act of 1934 

(‘‘Exchange Act’’) 1 and Rule 19b–4 

thereunder,2 notice is hereby given that 

on July 23, 2008, American Stock 

Exchange LLC, a Delaware limited 

liability company (‘‘Amex’’ or the 

‘‘Exchange’’), filed with the Securities 

and Exchange Commission 

(‘‘Commission’’ or ‘‘SEC’’) the proposed 

rule change as described in Items I, II, 

and III below, which Items have been 

substantially prepared by the Exchange. 

On July 30, 2008, the Exchange filed 

Amendment No. 1 to the proposed rule 

change. The Commission is publishing 

this notice to solicit comments on the 

proposed rule change, as amended, from 

interested persons. 

I. Self-Regulatory Organization’s 

Statement of the Terms of Substance of 

the Proposed Rule Change 

The Exchange is submitting the 

proposed rule change in connection 

with the AMCAS Merger, the Holdings 

Merger, the LLC Merger and the NYSE/ 

Amex Merger (each as defined in 

Section 1.(a). of Item II.A. below and 

collectively, the ‘‘Mergers’’) and related 

transactions which will result in the 

successor to Amex, to be renamed 

‘‘NYSE Alternext U.S. LLC’’ (‘‘NYSE 

Alternext U.S.’’), becoming an indirect 

wholly-owned subsidiary of NYSE 

Euronext, a Delaware Corporation 

(‘‘NYSE Euronext’’). 

In connection with the Mergers, New 

York Stock Exchange LLC (‘‘NYSE’’), an 

indirect wholly-owned subsidiary of 

NYSE Euronext, is proposing that 

certain organizational documents of 

NYSE Euronext and its wholly-owned 

subsidiaries, NYSE Group, Inc. (‘‘NYSE 

Group’’) and NYSE Regulation, Inc. 

(‘‘NYSE Regulation’’) and the 

Independence Policy of NYSE Euronext 

(‘‘NYSE Euronext Independence 

Policy’’) be amended substantially 

concurrently with the Mergers. In 

addition, Amex is proposing to adopt 

the operating agreement of NYSE 

Alternext U.S. (‘‘NYSE Alternext U.S. 

Operating Agreement’’) and to amend its 

rules (‘‘Amex Rules’’), which will 

become the rules of NYSE Alternext 

U.S. (‘‘NYSE Alternext U.S. Rules’’), to 

reflect the Mergers and related 

transactions. In connection with the 

Mergers, Amex also proposes that the 

present Constitution of Amex (‘‘Amex 

Constitution’’) will be eliminated and 

relevant provisions thereof will be 

included in the NYSE Alternext U.S. 

Operating Agreement or the NYSE 

Alternext U.S. Rules, as applicable. 

The text of the proposed rule change 

is available at Amex, the Commission’s 

Public Reference Room, and on Amex’s 

Web site at http://www.amex.com. The 

text of Exhibits 5A through 5J is also 

available on the Commission’s Web site 

(http://www.sec.gov/rules/sro.shtml). 

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 

Exchange included statements 

concerning the purpose of, and basis for, 

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 purpose of the proposed rule 

change is to permit the Mergers as well 

as certain other changes relating to 

corporate governance and other items to 

accommodate the transformation of the 

Exchange from its current status as a 

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3The term ‘‘U.S. Regulated Subsidiary’’ is defined 

under Article VII, Section 7.3(G) of the Bylaws of 

NYSE Euronext. 

4For a discussion of the current governance 

structure of MC and Amex, see Securities Exchange 

Act Release No. 50057 (July 22, 2004) (Notice of 

filing of proposed rule change relating to the 

NASD’s sale of its interest in Amex to MC) and 

Securities Exchange Act Release No. 50927 

(December 23, 2004) (Order approving proposed 

rule change relating to the NASD’s sale of its 

interest in Amex to MC). SR–Amex–2004–50. 

5The term ‘‘MC members’’ herein refers to 

persons eligible to vote on the Mergers. 

6 ‘‘Memberships’’ used herein refer to Regular 

Memberships and OPMs (defined below) and not to 

the membership interests held by allied members or 

associate members, which membership interest 

granted certain limited rights but did not grant 

voting rights. 

owned corporation into its post-merger 

status as a U.S. Regulated Subsidiary 3

of NYSE Euronext. 

(a) Description of the Mergers 

Amex is a wholly-owned subsidiary 

of The Amex Membership Corporation, 

a New York not-for-profit corporation 

(‘‘MC’’).4 MC owns 99% of Amex’s 

ownership interest directly and owns 

the remaining 1% ownership interest 

indirectly through MC’s direct whollyowned subsidiary, AMC Acquisition 

Sub, Inc., a Delaware corporation 

(‘‘AMCAS’’). To effect the Mergers, MC 

has established: (i) A new direct whollyowned subsidiary of MC, American 

Stock Exchange Holdings, Inc., a 

Delaware for-profit, stock corporation 

(‘‘Holdings’’); and (ii) a new direct 

wholly-owned subsidiary of Holdings, 

American Stock Exchange 2, LLC, a 

Delaware limited liability company 

(‘‘Amex 2’’). Consummation of the 

Mergers, which have been approved by 

MC members,5 is conditioned upon 

satisfaction or waiver (subject to 

applicable law) of the conditions set 

forth in the terms of the Agreement and 

Plan of Merger, dated as of January 17, 

2008 (as may be amended, ‘‘Merger 

Agreement’’), by and among NYSE 

Euronext, Amsterdam Merger Sub, LLC, 

a Delaware limited liability company 

and a wholly-owned subsidiary of NYSE 

Euronext created by NYSE Euronext in 

connection with the Mergers 

(‘‘Amsterdam Merger Sub’’), MC, 

AMCAS, Holdings, Amex and Amex 2. 

The proxy statement/prospectus sent to 

MC members in connection with their 

approval of the Mergers has been filed 

with the Commission by NYSE 

Euronext. The Mergers were approved 

by the requisite vote of MC members at 

the special meeting of MC members 

held on June 17, 2008. In addition, the 

Board of Governors of Amex (‘‘Amex 

Board’’) approved the proposed rule 

change on May 21, 2008. 

The following transactions are 

contemplated to effect the Mergers: 

(i) AMCAS Merger. Prior to the 

Effective Time (as defined below), 

AMCAS will be merged with and into 

MC (‘‘AMCAS Merger’’) and the 

separate corporate existence of AMCAS 

will thereupon cease. MC will be the 

surviving entity in the AMCAS Merger 

and will hold 100 percent of the 

ownership interest in Amex. At the 

effective time of the AMCAS Merger, 

each outstanding share of AMCAS 

common stock, par value $.01 per share, 

will be cancelled and retired without 

payment of any consideration therefor 

and will cease to exist or be 

outstanding. 

(ii) Holdings Merger. Following the 

effective time of the AMCAS Merger but 

prior to the Effective Time (as defined 

below), MC will be merged with and 

into Holdings (‘‘Holdings Merger’’) and 

the separate corporate existence of MC 

will thereupon cease. Holdings will be 

the surviving entity in the Holdings 

Merger. At the effective time of the 

Holdings Merger, shares of Holding 

common stock, par value $0.01 per 

share (‘‘Holdings Common Stock’’), will 

be issued to persons owning MC 

memberships 6 immediately prior to the 

Holdings Merger, with each Regular 

Membership and each Options Principal 

Membership (‘‘OPM’’) receiving a 

certain number of shares of Holdings 

Common Stock, as determined in the 

manner set forth in the Merger 

Agreement, which, among other things, 

takes into account a $36,000 discount 

on the consideration issued to each 

OPM vis-a`-vis each Regular 

Membership. Upon the Holdings 

Merger, each Regular Membership and 

OPM held by MC will be cancelled and 

retired without payment of any 

consideration therefor and will cease to 

exist or be outstanding. 

(iii) LLC Merger. Contemporaneously 

with the Holdings Merger, Amex will be 

merged with and into Amex 2 (‘‘LLC 

Merger’’), and the separate limited 

liability company existence of Amex 

will thereupon cease. At the effective 

time of the LLC Merger, each 

outstanding ownership interest in Amex 

held by MC will be cancelled and 

retired without payment of any 

consideration therefor and will cease to 

exist or be outstanding. Amex 2 will be 

renamed NYSE Alternext U.S. LLC. 

(iv) NYSE/Amex Merger. Following 

the completion of the AMCAS Merger, 

the Holdings Merger and the LLC 

Merger, Holdings (as the surviving 

corporation of the Holdings Merger) will 

be merged with and into Amsterdam 

Merger Sub (‘‘NYSE/Amex Merger’’) and 

the separate corporate existence of 

Holdings shall thereupon cease. At the 

effective time of the NYSE/Amex 

Merger (‘‘Effective Time’’), each share of 

Holdings Common Stock issued and 

outstanding immediately prior to the 

Effective Time will be converted into 

the right to receive one fully paid and 

nonassessable share of the common 

stock of NYSE Euronext and cash in lieu 

of fractional shares, if any, into which 

such shares of Holdings Common Stock 

has been converted. In addition, under 

the terms of the Merger Agreement, 

persons owning MC memberships 

immediately prior to the Holdings 

Merger will be entitled to receive 

additional shares of NYSE Euronext 

common stock measured by reference to 

the ‘‘Net Building Sale Proceeds’’ (as 

defined in the Merger Agreement), if 

any, from the sale of two buildings in 

New York City currently owned by 

Amex’s realty subsidiary, to the extent 

such sale occurs prior to the date that 

is four years and 240 days following the 

Effective Time and certain other 

conditions are satisfied, as set forth in 

the Merger Agreement. Immediately 

following the NYSE/Amex Merger, 

NYSE Euronext will contribute 100% of 

the limited liability company interest of 

Amsterdam Merger Sub to NYSE Group 

(such contribution, the ‘‘Contribution’’), 

causing Amsterdam Merger Sub to 

become a direct wholly-owned 

subsidiary of NYSE Group. Immediately 

following the Contribution, Amsterdam 

Merger Sub will merge with and into 

NYSE Alternext U.S. a direct whollyowned subsidiary of Amsterdam Merger 

Sub (‘‘Internal Merger’’). As a result of 

the Contribution and the Internal 

Merger, NYSE Alternext U.S. will 

become a direct wholly-owned 

subsidiary of NYSE Group. 

The NYSE Euronext Bylaws, the 

NYSE Group Charter, the NYSE Group 

Bylaws, the NYSE Regulation Bylaws, 

the Trust Agreement (each as defined in 

Section 1.(c). of this Item II.A. below) 

and the NYSE Euronext Independence 

Policy will be amended in connection 

with the Mergers. The NYSE Euronext 

Bylaws, the NYSE Euronext 

Independence Policy, the NYSE 

Regulation Bylaws and the Trust 

Agreement will become effective at the 

Effective Time. The NYSE Group 

Charter and the NYSE Group Bylaws 

will become effective at or prior to the 

time of the Contribution. In addition, 

upon the Contribution and the Internal 

Merger, the NYSE Alternext U.S. 

Operating Agreement will become 

effective. 

Upon completion of the NYSE/Amex 

Merger, NYSE Alternext U.S. will 

continue to engage in the business of 

operating a national securities exchange 


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7 15 U.S.C. 78f. 

8Following the Mergers, NYSE Alternext U.S. 

will not use any regulatory fees, fines or penalties 

collected by NYSE Regulation for commercial 

purposes. Earnings of NYSE Alternext U.S. not 

retained in its business, other than regulatory fees, 

fines or penalties will be distributed to its parent, 

NYSE Group, which may in turn distribute such 

earnings to its parent, NYSE Euronext. See Section 

4.05 of the proposed NYSE Alternext U.S. 

Operating Agreement. NYSE Euronext, at its 

discretion, may use such distributions from NYSE 

Alternext U.S. to pay dividends to its stockholders. 

9Separate filings will be made to the Commission 

relating to the rule changes associated with such 

relocation. 

10The requirements for 86 Trinity Permits in the 

NYSE Alternext U.S. Rules will be the same as the 

current requirements for memberships in the Amex 

Rules and such requirements may be satisfied by 

persons or entities that were not previously 

authorized to trade on the Exchange immediately 

prior to the Mergers. 

11Certain application processing fees may be 

charged for persons or entities that were not 

previously authorized to trade on the Exchange 

immediately prior to the Mergers. In addition, 

certain charges may be applicable to the 86 Trinity 

Permits once issued. See proposed NYSE Alternext 

U.S. Rule 358. 

12See proposed NYSE Alternext U.S. Rule 353. 

13Currently, the Amex Constitution provides for 

a Gratuity Fund which makes an assessment on the 

participants upon the death of a participant and 

provides benefit to the surviving family of the 

deceased participant. Active traders on Amex who 

may be the owner, lessee, or nominee of a 

membership are eligible to participate in the 

Gratuity Fund. Certain owners of a membership 

who are not currently active are also eligible 

through the operation of certain transition 

provisions in the Amex Constitution. See Article IX 

of the current Amex Constitution for the provisions 

relating to the Gratuity Fund currently in place. 

registered under Section 6 of the 

Exchange Act,7 and will continue to 

have self-regulatory responsibilities over 

its members. NYSE Alternext U.S. will 

contract for the performance of its 

regulatory responsibilities with NYSE 

Regulation, an indirect wholly-owned 

subsidiary of NYSE Euronext, pursuant 

to a regulatory services agreement 

(‘‘NYSE Regulation RSA’’), as further 

described in Section 1.(c).(E).a. of this 

Item II.A. below.8

The Mergers will have the effect of 

‘‘demutualizing’’ MC because equity 

ownership will be separated from the 

rights to trade on NYSE Alternext U.S. 

As described in greater detail above, in 

connection with the Mergers, persons 

owning MC memberships immediately 

prior to the Holdings Merger will 

receive shares and cash in lieu of 

fractional shares, if any, of the common 

stock of NYSE Euronext. Upon the 

completion of the Holdings Merger, all 

trading rights appurtenant to either 

Regular Memberships or OPMs existing 

immediately prior to the Holdings 

Merger will be cancelled. In addition, 

the lessees will cease to have any 

trading rights under any applicable 

leases upon the completion of the 

Holdings Merger. Neither NYSE 

Alternext U.S. nor NYSE Euronext will 

have any obligations under any leases 

that existed immediately prior to the 

Holdings Merger to any party thereto. 

Physical and electronic access to NYSE 

Alternext U.S.’s trading facilities will be 

made available to individuals and 

organizations that obtain an equity 

trading license, an options trading 

permit (‘‘OTP’’) or prior to the issuance 

of the equity trading licenses and OTPs, 

a temporary trading permit (to be known 

as an ‘‘86 Trinity Permit’’), from NYSE 

Alternext U.S. Unless the context 

otherwise requires, persons or entities to 

whom such trading licenses or permits 

are issued following the Mergers are 

referred to as ‘‘trading license or permit 

holders.’’

NYSE Alternext U.S. intends to issue 

equity trading licenses and OTPs upon 

relocation of the NYSE Alternext U.S. 

equities and options trading facilities to 

the NYSE trading floor or the electronic 

trading platform of NYSE or NYSE Arca, 

Inc. (‘‘NYSE Arca’’), as applicable.9

Until such new trading licenses or 

permits are issued, NYSE Alternext U.S. 

intends to make available to persons 

and entities that apply and meet certain 

specified requirements 10 86 Trinity 

Permits for which certain additional 

fees 11 will be waived. 86 Trinity 

Permits will allow the holders to trade 

products currently traded on the 

Exchange, including equities and 

options, prior to relocation of the NYSE 

Alternext U.S. equities and options 

trading facilities. To ensure continuity 

of trading following the Mergers, 

persons and entities who were 

authorized to trade on the Exchange 

immediately prior to the LLC Merger, 

including: (i) Owners, lessees or 

nominees of Regular Memberships or 

OPMs; (ii) limited trading permit 

holders; and (iii) associate members, in 

each case who were authorized to trade 

on the Exchange immediately prior to 

the LLC Merger, will be deemed to have 

satisfied applicable requirements 

necessary to receive an 86 Trinity 

Permit. 86 Trinity Permits will 

authorize owners, lessees or nominees 

of Regular Memberships, OPMs, limited 

trading permit holders and associate 

members who were authorized to trade 

on the Exchange immediately prior to 

the LLC Merger, to trade the products 

which they were previously authorized 

to trade and, subject to meeting the 

qualifications currently in place for 

trading products which they previously 

were not authorized to trade, to trade 

such other products. 

It is currently anticipated that NYSE 

Alternext U.S. will issue equity trading 

licenses prior to OTPs. Upon the initial 

effective date of the equity trading 

licenses, only holders of such equity 

trading licenses will have the right to 

trade equities and any other products 

associated with such equity trading 

licenses. Therefore, following the initial 

effective date of the equity trading 

licenses, a holder of an 86 Trinity 

Permit shall only be entitled to trade 

products other than those associated 

with the equity trading licenses. Upon 

the initial effective date of the OTPs, 

only holders of such OTPs will have the 

right to trade in options, and all 86 

Trinity Permits will be cancelled. 

Pursuant to the requirements of 

Section 19 of the Exchange Act, NYSE 

Alternext U.S. intends to set forth in a 

separate rule filing the qualifications for 

equity trading licenses and OTPs and 

the application process for such trading 

licenses or permits. The Exchange 

currently expects that the qualifications 

for trading license or permit holders 12

will be based on the current 

requirements for memberships on the 

NYSE or NYSE Arca, respectively. 

Pursuant to the requirements of Section 

19 of the Exchange Act, NYSE Alternext 

U.S. also intends to set forth in a 

separate rule filing the fees for a trading 

license or permit that will be assessed. 

For a more detailed discussion of the 86 

Trinity Permits, the equity trading 

licenses and OTPs, see Section 1(c)(C) of 

this Item II.A. below. 

Finally, in connection with the 

Mergers, the Board of Directors of MC 

and the Amex Board (collectively, the 

‘‘Boards’’) have approved the 

termination of the Gratuity Fund.13 As 

a result, the Gratuity Fund will be 

terminated upon the LLC Merger and 

neither NYSE Euronext nor NYSE 

Alternext U.S. will offer a Gratuity Fund 

following the Mergers. There will be no 

further payment of gratuities other than 

those related to any deaths that occurred 

prior to the completion of the Mergers. 

Upon the completion of the NYSE/ 

Amex Merger, NYSE Alternext U.S. 

currently expects to allocate the assets 

then remaining in the Gratuity Fund 

(net of any administrative expenses 

incurred in the distribution of such 

amount), first to pay out any death 

benefits that are accrued but unpaid as 

of the completion of the NYSE/Amex 

Merger, and then to distribute the 

remaining balance, if any, in a manner 

as the Boards deem appropriate, taking 

into account the length of time each 

person was a participant in the Gratuity 

Fund. 


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14See Section 3.03 of the proposed NYSE 

Alternext U.S. Operating Agreement. 

15The NYSE Euronext Charter is not being 

amended in connection with the Mergers. 

16The NYSE Euronext Bylaws are being amended 

to provide similar protections to NYSE Alternext 

U.S. relating to its self-regulatory functions as are 

currently provided to the NYSE and NYSE Arca. 

Please see the proposed rule filing that the NYSE 

has filed with the Commission in connection with 

the Mergers for more detail. 

17The NYSE Group Charter is being amended to 

provide similar protections to NYSE Alternext U.S. 

relating to its self-regulatory functions as are 

currently provided to NYSE and NYSE Arca. Please 

see the proposed rule filing that the NYSE has filed 

with the Commission in connection with the 

Mergers for more detail. 

18The NYSE Group Bylaws are being amended to 

provide that any amendment to or repeal of the 

bylaws of NYSE Group must either be (i) filed with 

or filed with and approved by the Commission, or 

(ii) submitted to the boards of directors of NYSE 

Alternext U.S., as well as the other Regulated 

Subsidiaries of NYSE Group, to the extent that such 

entity continues to be controlled by NYSE Group, 

and if any or all of such boards of directors shall 

determine that such amendment or repeal must be 

filed with or filed with and approved by the 

Commission before such amendment or repeal may 

be effectuated, then such amendment or repeal shall 

not be effectuated until filed with or filed with and 

approved by the Commission, as the case may be. 

Please see the proposed rule filing that the NYSE 

has filed with the Commission in connection with 

the Mergers for more detail. 

19The NYSE Euronext Independence Policy is 

being amended to ensure independence of the 

NYSE Euronext directors from NYSE Alternext 

U.S., similar to the independence from NYSE and 

NYSE Arca. Please see the proposed rule filing that 

the NYSE has filed with the Commission in 

connection with the Mergers for more detail. 

20NYSE Regulation Bylaws are being amended to 

provide that the Committee for Review be expanded 

to include certain individuals who are associated 

with member organizations of NYSE Alternext U.S. 

Please see the proposed rule filing that the NYSE 

has filed with the Commission in connection with 

the Mergers for more detail. 

21The Trust Agreement is being amended to make 

certain technical changes designed to provide NYSE 

Alternext U.S. with the same protections against 

certain material adverse changes in European Law 

that it currently provides for NYSE and NYSE Arca. 

Please see the proposed rule filing that the NYSE 

has filed with the Commission in connection with 

the Mergers for more detail. 

22Following the Holdings Merger and the LLC 

Merger, Holdings will be the sole member of Amex 

2, as the successor of Amex. Upon the effectiveness 

of the NYSE/Amex Merger, Amsterdam Merger Sub, 

as the successor to Holdings, will become the sole 

member of Amex 2, whose name will then be 

changed to ‘‘NYSE Alternext U.S. LLC.’’ Following 

the Contribution and upon the effectiveness of the 

Internal Merger, NYSE Group will be substituted as 

the sole member of NYSE Alternext U.S. The 

discussion of the NYSE Alternext U.S. Operating 

Agreement herein refers to the operating agreement 

that will become effective upon the Internal Merger. 

23The Exchange is also proposing, in connection 

with the Mergers, the elimination of the 

undertakings made by the Exchange to the 

Commission (Securities Exchange Act Release No. 

50927 (December 23, 2004), 69 FR 78494 (December 

30, 2004)). 

(b) Reasons for the Proposed Mergers 

The Mergers will have the effect of 

‘‘demutualizing’’ MC and causing Amex 

to become and operate as a for-profit 

subsidiary market of NYSE Euronext 

(other than with respect to the 

regulatory responsibilities currently 

conducted by Amex, which will be 

carried out by NYSE Regulation, a notfor-profit entity). The Exchange believes 

that changing its focus to that of a forprofit business and joining the group of 

exchanges operated by NYSE Euronext 

along with modifying its corporate and 

governance structures to reflect its 

status as a subsidiary of NYSE Euronext 

will provide the Exchange with greater 

flexibility to respond to the demands of 

a rapidly changing business 

environment. In addition, the NYSE 

Euronext common stock issued in the 

NYSE/Amex Merger will provide the 

MC members with greater liquidity than 

the MC memberships they currently 

hold. Furthermore, by bringing NYSE 

Euronext’s leadership together with 

Amex’s historically strong position in 

options, exchange traded funds, closedend funds, structured products and cash 

equities, the combined company will be 

in a position to create a diversified 

business model, ensuring its ability to 

grow into, and compete using, new 

products and services, such as a second 

U.S. options exchange license, which 

will enable the combined company to 

operate a compelling dual market 

structure making available to all 

customers the choice of price-time 

priority on NYSE Arca and Amex’s 

traditional market-maker model and a 

third, complementary U.S. cash equities 

exchange, in addition to NYSE and 

NYSE Arca. 

The Exchange remains committed to 

its role as a national securities exchange 

and does not believe that the Mergers 

will undermine its responsibilities for 

regulating its marketplace. While it is 

currently contemplated that NYSE 

Alternext U.S. will contract for the 

performance of its regulatory 

responsibilities with NYSE Regulation 

through the NYSE Regulation RSA, as 

further described in Section 1(c)(E) a. of 

this Item II.A. below, NYSE Alternext 

U.S. will retain ultimate responsibility 

for the fulfillment of its statutory and 

self-regulatory obligations under the 

Exchange Act. Indeed, as further 

described below, the NYSE Alternext 

U.S. Operating Agreement and the 

NYSE Alternext U.S. Rules will have 

specific provisions that reinforce the 

responsibility of NYSE Alternext U.S. 

for its self-regulatory obligations, 

including, without limitation, the 

requirement that NYSE Group seek the 

Commission’s consent before 

transferring its limited liability 

company interests in NYSE Alternext 

U.S.14

(c) Summary of Proposed Rule Change 

The proposed rule change is outlined 

below. In general, the proposed rule 

change consists of: (i) The Amended 

and Restated Certificate of Incorporation 

of NYSE Euronext (‘‘NYSE Euronext 

Charter’’),15 (ii) the adoption of the 

Amended and Restated Bylaws of NYSE 

Euronext (the ‘‘NYSE Euronext 

Bylaws’’), which will become effective 

at the Effective Time,16 (iii) the adoption 

of the Second Amended and Restated 

Certificate of Incorporation of NYSE 

Group (the ‘‘NYSE Group Charter’’), 

which will become effective at or prior 

to the time of the Contribution,17 (iv) the 

adoption of the Second Amended and 

Restated Bylaws of NYSE Group 

(‘‘NYSE Group Bylaws’’), which will 

become effective at or prior to the time 

of the Contribution,18 (v) the adoption of 

the NYSE Euronext Independence 

Policy, to become effective at the 

Effective Time,19 (vi) the adoption of the 

Third Amended and Restated Bylaws of 

NYSE Regulation (‘‘NYSE Regulation 

Bylaws’’), to become effective at the 

Effective Time,20 (vii) the adoption of 

certain amendments to the Trust 

Agreement of the NYSE Group Trust I 

by and among NYSE Euronext, NYSE 

Group, Wilmington Trust Company, as 

Delaware Trustee, Jacques de Larosiore 

de Champfeu, as Trustee, Charles K. 

Gifford, as Trustee and John Shepard 

Reed, as Trustee and the Amendment 

No. 1 thereto (such Trust Agreement, as 

amended, the ‘‘Trust Agreement’’), 

which will become effective at the 

Effective Time,21 (viii) the adoption of 

the NYSE Alternext U.S. Operating 

Agreement, to become effective upon 

the Internal Merger,22 and (ix) the 

amendment of the Amex Rules, which 

will become the NYSE Alternext U.S. 

Rules upon the completion of the LLC 

Merger, necessary to issue trading 

licenses or permits following the 

Mergers, to incorporate certain 

provisions in the Amex Constitution, 

which will be eliminated in connection 

with the Mergers and to effect certain 

other changes as described more fully 

below.23 The proposed rule change will 

become operative upon completion of 

the Internal Merger. The proposed 

NYSE Alternext U.S. Operating 

Agreement will reflect that Amex 2, to 

be renamed ‘‘NYSE Alternext U.S. LLC’’

upon the consummation of the Mergers, 

will be a wholly-owned Regulated 

Subsidiary of NYSE Group and a 

wholly-owned U.S. Regulated 

Subsidiary of NYSE Euronext. 


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46090 Federal Register / Vol. 73, No. 153 / Thursday, August 7, 2008 / Notices 

24A copy of the current independence policy of 

the NYSE Euronext board of directors is available 

at http://www.nyse.com/pdfs/ 

director_independence_policy.pdf. See also the 

proposed NYSE Euronext Independence Policy. See 

also Section 3.4 of the proposed NYSE Euronext 

Bylaws for the independence requirements of the 

board of director of NYSE Euronext. 

25See Section 2.03 of the proposed NYSE 

Alternext U.S. Operating Agreement. 

26The term ‘‘NYSE Alternext U.S. members’’

refers to the persons or entities that trade on Amex 

after the Mergers, including the 86 Trinity Permit 

Holders, to the extent such permits are outstanding. 

27See Section 2.03 of the proposed NYSE 

Alternext U.S. Operating Agreement. 

28 Id. 

29 Id. 

30 Id. 

31 Id. 32 Id. 

A. Governance Structure of NYSE 

Alternext U.S. Following the Mergers 

Following the Mergers, the 

governance structure of NYSE Alternext 

U.S. will be substantially similar to that 

of the NYSE, a New York limited 

liability company and an indirect 

wholly-owned subsidiary of NYSE 

Euronext. 

a. Board of Directors of NYSE 

Alternext U.S. Upon the effectiveness of 

the Mergers, the Contribution and the 

Internal Merger, the Board of Directors 

of NYSE Alternext U.S. (‘‘NYSE 

Alternext U.S. Board’’) will consist of a 

number of directors as determined by 

NYSE Group from time to time; 

provided that: (i) A majority of the 

directors of the NYSE Alternext U.S. 

Board shall be U.S. Persons (as defined 

below) who are members of the NYSE 

Euronext board that satisfy the 

independence requirements of the board 

of directors of NYSE Euronext (each a 

‘‘NYSE Euronext Independent 

Director’’); and (ii) at least 20 percent of 

the directors shall be persons who are 

not members of the board of directors of 

NYSE Euronext and who do not need to 

be independent under the independence 

policy of the board of directors of NYSE 

Euronext 24 (‘‘Non-Affiliated 

Directors’’).25 Such Non-Affiliated 

Directors shall be appointed and 

nominated pursuant to the procedures 

set forth in Section 1.(c).(A).c. of this 

Item II.A. below. For purposes of 

calculation of the minimum number of 

Non-Affiliated Directors, if 20 percent of 

the directors is not a whole number, 

such number of directors to be 

nominated and selected by NYSE 

Alternext U.S. members 26 will be 

rounded up to the next whole number.27

A ‘‘U.S. Person’’ shall mean, as of the 

date of his or her most recent election 

or appointment as a director any person 

whose domicile as of such date is and 

for the immediately preceding 24 

months shall have been the United 

States.28

Immediately following the Mergers, 

the Contribution and the Internal 

Merger, the NYSE Alternext U.S. Board 

will have five directors, one of which 

shall be a Non-Affiliated Director 

selected by NYSE Group from among 

the Industry Governors serving on the 

Amex Board immediately prior to the 

NYSE/Amex Merger. 

b. Board Term. Following the 

Mergers, the Contribution and the 

Internal Merger, the directors of NYSE 

Alternext U.S. will serve for one-year 

terms and will hold office until their 

successors are elected.29 There will be 

no limit on the number of terms a 

director may serve on the NYSE 

Alternext U.S. Board. 

c. Nomination and Election of the 

NYSE Alternext U.S. Directors. i. 

General. Following the Internal Merger, 

NYSE Group will effectively appoint as 

directors of NYSE Alternext U.S.: (i) The 

NYSE Euronext Independent Directors 

designated by it; and (ii) the NonAffiliated Directors nominated by the 

nominating and governance committee 

of the board of directors of NYSE 

Euronext (‘‘NYSE Euronext NGC’’).30 To 

ensure fair representation of NYSE 

Alternext U.S. members, the NYSE 

Euronext NGC shall be obligated to 

designate as Non-Affiliated Director 

candidates the persons recommended 

by the Director Candidate 

Recommendation Committee of NYSE 

Alternext U.S. (‘‘NYSE Alternext U.S. 

DCRC’’), as described more fully under 

Section 1.(c).(A).e. of this Item II.A. 

below; provided, however, if there are 

candidates who have received a 

plurality of the votes cast by the NYSE 

Alternext U.S. members in accordance 

with the provisions set forth in the 

NYSE Alternext U.S. Operating 

Agreement relating to the petition 

process and described in the paragraph 

immediately below, the NYSE Euronext 

NGC will be obligated to designate such 

candidates as Non-Affiliated Director 

candidates.31 Notwithstanding the 

forgoing, as described under Section 

1(c)(A) a. of this Item II.A. above, one 

Non-Affiliated Director on the initial 

NYSE Alternext U.S. Board will be 

selected by NYSE Group from among 

the six Industry Governors serving on 

the Amex Board immediately prior to 

the Mergers. The initial NYSE Alternext 

U.S. Board will serve one-year terms 

until their successors are duly elected. 

ii. Petition by the NYSE Alternext U.S. 

Members. To ensure fair representation 

of members on the NYSE Alternext U.S. 

Board, at the end of the initial one-year 

term of each of the directors on the 

NYSE Alternext U.S. Board, the NonAffiliated Directors will be nominated 

and elected in the following manner.32

A newly established NYSE Alternext 

U.S. DCRC will announce to the NYSE 

Euronext NGC on a date in each year 

sufficient to accommodate the process 

described, the names of candidates 

nominated by the NYSE Alternext U.S. 

DCRC as Non-Affiliated Director 

candidates. 

NYSE Alternext U.S. members may 

nominate candidates for Non-Affiliated 

Director by written petition filed with 

NYSE Alternext U.S. within two weeks 

after the announcement. For any such 

petition to be valid, it must be, among 

other things, endorsed by at least 10 

percent of the signatures eligible to 

endorse a candidate. For purposes of 

determining whether a person has been 

endorsed by the requisite 10 percent, 

each trading license or permit holder in 

good standing shall be entitled to one 

signature for each trading license or 

permit held by it; provided, however, 

that no trading license or permit holder, 

either alone or together with its affiliates 

may account for more than 50 percent 

of the signatures endorsing a particular 

candidate, and any signatures of such 

trading license or permit holder, either 

alone or together with its affiliates, in 

excess of such 50 percent limitation 

shall be disregarded. 

Each petition must include a 

completed questionnaire used to gather 

information concerning Non-Affiliated 

Director candidates. The eligibility of 

any Non-Affiliated Director candidate 

nominated in any such petition will be 

determined by the NYSE Euronext NGC, 

in its sole discretion. 

If no petitions are submitted within 

two weeks after the dissemination of the 

report of the NYSE Euronext NGC, the 

NYSE Euronext NGC will nominate the 

candidates for Non-Affiliated Director 

that the NYSE Alternext U.S. DCRC 

initially identified. If one or more valid 

petitions are submitted, NYSE Alternext 

U.S. members will be allowed to vote on 

the entire group of potential candidates. 

Each trading license or permit holder 

will have one vote per trading license or 

permit held by it; provided, however, 

that no trading license or permit holder, 

either alone or together with its 

affiliates, may account for more than 20 

percent of the votes cast for a particular 

candidate, and any votes cast by such 

trading license or permit holder, either 

alone or together with its affiliates, in 

excess of such 20 percent limitation will 

be disregarded. The persons with the 

highest number of votes will be 

nominated. 


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33See Section 2.04 of the proposed NYSE 

Alternext U.S. Operating Agreement. 

34See Section 2.03 of the proposed NYSE 

Alternext U.S. Operating Agreement. 

35See Section 2.03(h) of the proposed NYSE 

Alternext U.S. Operating Agreement. 

36 It is currently anticipated that NYSE Alternext 

U.S. will retain the Committee on Securities, but 

will not retain the Committee for Appointment and 

Approval of Supplemental Registered Options 

Traders and Remote Registered Options Traders, 

each a non-board committee of Amex. The 

Exchange, along with NYSE Euronext, are currently 

evaluating whether other non-board committees of 

Amex should be retained by NYSE Alternext U.S. 

and what changes to the NYSE Alternext U.S. Rules 

such decision may require. NYSE Alternext U.S. 

will submit a separate rule filing as necessary. 

37Rule 22 describes the authority and 

responsibilities of Floor Officials, Senior Floor 

Officials, and the Senior Supervisory Officer, which 

responsibilities are to generally promote fair and 

orderly operations on the floor of the Exchange. 

38For example, the proposed Rule 118–AEMI will 

require the approval of a Senior Floor Official for 

the dissemination of price indicators prior to 9:30 

a.m. and the proposed Rule 933–ANTE will provide 

for the determination by a Senior Floor Official that 

quotes from another options exchange are not 

reliable before those quotes can be excluded from 

the National Best Bid and Offer (NBBO). 

39For example, the proposed Rule 27(g) will 

require the Chief Executive Officer to consult the 

Senior Supervisory Officer prior to restoring to a 

specialist a specialty security previously reallocated 

under emergency circumstances. 

d. Officers of NYSE Alternext U.S. 

The day-to-day business of NYSE 

Alternext U.S. will be managed by the 

officers of NYSE Alternext U.S. 

appointed by, and subject to the 

directions of, the NYSE Alternext U.S. 

Board.33 NYSE Alternext U.S. will have 

such officers as its Board may deem 

advisable. The NYSE Alternext U.S. 

Operating Agreement provides that for 

so long as NYSE Euronext directly or 

indirectly owns all of the equity interest 

of NYSE Group and NYSE Group holds 

100 percent of the limited liability 

company interest of NYSE Alternext 

U.S. the Chief Executive Officer of 

NYSE Alternext U.S. shall be a U.S. 

Person.34

NYSE Alternext U.S. will also have a 

Chief Regulatory Officer, who will 

either be the Chief Executive Officer of 

NYSE Regulation or an employee of 

NYSE Regulation who reports to the 

Chief Executive Officer of NYSE 

Regulation. Such Chief Regulatory 

Officer will also be an officer of NYSE 

Alternext U.S. appointed by the NYSE 

Alternext U.S. Board, with reporting 

obligation to the NYSE Alternext U.S. 

Board. 

e. Committees of NYSE Alternext U.S. 

Board of Directors. Following the 

Mergers, the NYSE Alternext U.S. Board 

may create one or more committees 

comprised of NYSE Alternext U.S. 

directors.35 It is expected that the 

committees of the NYSE Euronext board 

of directors will perform the board 

committee functions relating to audit, 

governance and compensation. The 

NYSE Alternext U.S. Board may also 

create committees comprised in whole 

or in part of individuals who are not 

directors.36

In addition, as described under 

Section 1(c)(A)c.i. of this Item II.A. 

above, the NYSE Alternext U.S. Board 

will, on an annual basis, appoint a new 

standing committee, the NYSE Alternext 

U.S. DCRC, which will be charged with 

the responsibility of recommending the 

Non-Affiliated Director candidates to 

the NYSE Euronext NGC. The NYSE 

Alternext U.S. Operating Agreement 

provides that the NYSE Alternext U.S. 

DCRC shall include individuals who are 

(i) associated with a member 

organization that engages in a business 

involving substantial direct contact with 

securities customers, (ii) associated with 

a member organization and registered as 

a specialist and spend a substantial part 

of their time on the NYSE Alternext U.S. 

trading floor, (iii) associated with a 

member organization and spend a 

majority of their time on the NYSE 

Alternext U.S. trading floor and have as 

a substantial part of their business the 

execution of transactions on the NYSE 

Alternext U.S. trading floor for other 

than their own account or the account 

of their member organization, but are 

not registered as a specialist, or (iv) 

associated with a member organization 

and spend a majority of their time on 

the NYSE Alternext U.S. trading floor 

and have as a substantial part of their 

business the execution of transactions 

on the NYSE Alternext U.S. trading 

floor for their own account or the 

account of their member organization, 

but are not registered as a specialist. The 

NYSE Alternext U.S. Board will appoint 

such individuals after appropriate 

consultation with representatives of 

member organizations. 

f. Floor Officials, Senior Floor 

Officials, Exchange Officials and Senior 

Supervisory Officer. The Floor Officials, 

Senior Floor Officials, and Exchange 

Officials in place at Amex immediately 

prior to the Mergers will continue in 

such capacity for the period prior to the 

relocation of the NYSE Alternext U.S. 

equities and options trading facilities to 

the NYSE trading floor or the electronic 

trading platform of the NYSE or NYSE 

Arca, as applicable.37 However, the 

Exchange’s Rule 21, which provides for 

the appointment of such officials, is 

proposed to be amended to reflect that 

such appointments will be made by the 

Chief Executive Officer or the Chief 

Regulatory Officer of NYSE Alternext 

U.S. or their respective designee rather 

than the Chairman of the Board of 

Directors or the Chief Executive Officer 

(if delegated by the Chairman) and to 

allow qualified NYSE Alternext U.S. 

employees who spend a substantial 

portion of their time on the trading floor 

to be appointed to serve as Floor 

Officials. Rule 21 will be further 

amended to reflect the elimination of 

the two Floor Governors, i.e., the 

Industry Governors on the Amex Board 

who are required to spend a substantial 

portion of their time on the trading 

floor. Rule 21 currently provides that 

Floor Governors are deemed to be 

Senior Floor Officials and if one of the 

Floor Governors is also the vice 

chairman of the Amex Board, he is the 

Senior Supervisory Officer on the 

trading floor. Rule 21 further provides 

that if the vice chairman is not a Floor 

Governor, then one of the Floor 

Governors is appointed Senior 

Supervisory Officer. Rule 22(a) 

describes the authority of the Senior 

Supervisory Officer, which includes 

among other duties, the supervision of 

Floor Officials and Senior Floor 

Officials in the performance of their 

responsibilities. As described in Section 

1(c)(A)a. of this Item II.A. above, the 

NYSE Alternext U.S. Board of Directors 

will not have a category of directors 

who are required to spend a substantial 

portion of their time on the trading 

floor. Therefore, Rule 21, which 

describes the appointment of the Senior 

Supervisory Officer and Floor Officials, 

and other rules referencing Floor 

Governor are proposed to be amended. 

For the most part when the reference to 

Floor Governor in a rule relates to the 

approval or review of activities on the 

trading floor and the chairing of certain 

committees (e.g., the Performance and 

Allocation committees), it is proposed 

that Senior Floor Officials replace the 

Floor Governors.38 Pursuant to current 

Rule 21(a), a Senior Floor Official has 

the same authority and responsibilities 

as a Floor Governor with respect to 

matters that arise on the Floor and 

require review or action by a Floor 

Governor or Senior Floor Official. Thus, 

these changes will not expand the 

authority or responsibilities of Senior 

Floor Officials, but will simply 

eliminate the concept of Floor 

Governors. In situations where a rule 

calls upon the Floor Governors to advise 

the Chief Executive Officer of the 

Exchange in connection with floor 

facilities and administration, it is 

proposed that the Senior Supervisory 

Officer replace the Floor Governors.39


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40See Article IV, Section 4(b)(1)(A)(w) of the 

proposed NYSE Group Charter for the definition of 

Regulated Subsidiaries. 

41See Article VII, Section 7.3(G) of the proposed 

NYSE Euronext Bylaws. 

42 15 U.S.C. 78f(b). Section 6(b) of the Exchange 

Act requires, among other things, that the 

Exchange’s Rules must be designed to protect 

investors and the public interest. It also requires 

that the Exchange be organized so that it can carry 

out the purposes of the Exchange Act and enforce 

compliance by its participants with the Exchange 

Act, the rules and regulations under that Act, and 

the Rules of the Exchange. 

43See Section 2.03(k) of the proposed NYSE 

Alternext U.S. Operating Agreement. 

44See Articles VII, VIII and IX of the proposed 

NYSE Euronext Bylaws. 

45See Article XI, Sections 2 and 3 of the proposed 

NYSE Group Charter. 

46See Article VII of the proposed NYSE Alternext 

U.S. Operating Agreement. 47See Article VIII of the proposed NYSE Euronext 

Bylaws and Article X of the proposed NYSE Group 

Charter. 

48See Section 3.03 of the proposed NYSE 

Alternext U.S. Operating Agreement. 

49See Article IV, Section 4 of the proposed NYSE 

Group Charter. 

50See Article V of NYSE Euronext Charter. 

51See Section 10.12 of the proposed NYSE 

Euronext Bylaws. 

52See Section 7.3(G) of the proposed NYSE 

Euronext Bylaws. 

B. Provisions Relating to, or Arising 

From, the Self-Regulatory Functions of 

the Exchange 

The NYSE Alternext U.S. Operating 

Agreement will contain specific 

provisions relating to the self-regulatory 

function of NYSE Alternext U.S. In 

addition, the NYSE Group Charter and 

the NYSE Group Bylaws currently 

contain specific provisions relating to 

the self-regulatory functions of its 

Regulated Subsidiaries, and the 

definition of Regulated Subsidiaries will 

be amended in connection with the 

Mergers to also include NYSE Alternext 

U.S.40 Furthermore, the ultimate parent, 

NYSE Euronext has provisions in place 

relating to the self-regulatory functions 

of the U.S. Regulated Subsidiaries of 

NYSE Euronext and such provisions 

will be amended in connection with the 

Mergers to provide that NYSE Alternext 

U.S. will thereafter be considered to be 

one of the NYSE Euronext’s U.S. 

Regulated Subsidiaries.41

a. Management of NYSE Alternext U.S. 

As is the case with the Amex Board, 

the NYSE Alternext U.S. Board must 

consider applicable requirements under 

Section 6(b) of the Exchange Act 42 in 

connection with the management of 

NYSE Alternext U.S. The NYSE 

Alternext U.S. Operating Agreement, for 

instance, imposes obligations on the 

NYSE Alternext U.S. Board, officers and 

employees relating to the self-regulatory 

functions of NYSE Alternext U.S. The 

NYSE Alternext U.S. Operating 

Agreement requires that, in discharging 

his or her responsibilities as a member 

of the Board of Directors of NYSE 

Alternext U.S., each member of the 

Board of Directors shall take into 

consideration the effect that his or her 

actions would have on the ability of 

NYSE Alternext U.S. to carry out its 

responsibilities under the Exchange 

Act.43 In addition, the NYSE Euronext 

Bylaws 44 and the NYSE Group 

Charter 45 also impose obligations on 

NYSE Euronext’s and NYSE Group’s 

respective boards, officers and 

employees relating to the self-regulatory 

functions of their Regulated 

Subsidiaries, and the definition of 

‘‘Regulated Subsidiaries’’ will be 

amended in connection with the 

Mergers to also include NYSE Alternext 

U.S. 

b. Confidentiality. 

As is the case with the Amex 

Constitution, under the NYSE Alternext 

U.S. Operating Agreement, all 

confidential information of NYSE 

Alternext U.S. pertaining to the selfregulatory function of NYSE Alternext 

U.S., including all books and records of 

NYSE Alternext U.S. reflecting such 

confidential information (including but 

not limited to disciplinary matters, 

trading data, trading practices and audit 

information) will (i) not be made 

available to any persons (including, 

without limitation, any NYSE Alternext 

U.S. members) other than to those 

officers, directors, employees and agents 

of NYSE Alternext U.S. that have a 

reasonable need to know the contents 

thereof; (ii) be retained in confidence by 

NYSE Alternext U.S. and the officers, 

directors, employees and agents of 

NYSE Alternext U.S.; and (iii) not be 

used for any commercial purposes.46

The purpose of this provision is to help 

ensure that confidential information 

relating to NYSE Alternext U.S.’s selfregulatory function is accorded 

appropriate confidential treatment and 

is not misused. 

Notwithstanding the foregoing, such 

confidential information of NYSE 

Alternext U.S. shall be subject at all 

times to inspection and copying by the 

Commission at no cost to the 

Commission. Nothing in the NYSE 

Alternext U.S. Operating Agreement 

shall be interpreted as to limit or 

impede the rights of the Commission to 

access and examine such confidential 

information of NYSE Alternext U.S. 

pursuant to the U.S. federal securities 

laws and the rules thereunder, or to 

limit or impede the ability of a director, 

NYSE Alternext U.S. and its personnel 

to disclose such confidential 

information to the Commission. In 

addition, the NYSE Euronext Bylaws 

and the NYSE Group Charter also 

currently contain similar provisions 

relating to protecting the confidential 

information of its Regulated 

Subsidiaries,47 and the definition of 

Regulated Subsidiaries will be amended 

in connection with the Mergers to also 

include NYSE Alternext U.S. 

c. Ownership and Voting Limitations 

General The NYSE Alternext U.S. 

Operating Agreement will provide that 

NYSE Group, which will be the sole 

member of NYSE Alternext U.S. may 

not transfer or assign its limited liability 

company interest in NYSE Alternext 

U.S. in whole or in part, to any person 

or entity, unless such transfer or 

assignment shall be filed with and 

approved by the Commission under 

Section 19 of the Exchange Act and the 

rules promulgated thereunder.48 In 

addition, the NYSE Group Charter 

provides that NYSE Euronext, as the 

owner of all the issued and outstanding 

shares of stock of NYSE Group, may not 

transfer or assign its ownership interest 

in NYSE Group, in whole or in part, to 

any person or entity, unless such 

transfer or assignment shall be filed 

with and approved by the Commission 

under Section 19 of the Exchange Act 

and the rules promulgated thereunder.49

The NYSE Euronext Charter,50 in 

turn, imposes, and the NYSE Euronext 

Bylaws,51 which will be amended in 

connection with the Mergers to include 

NYSE Alternext U.S. in the definition of 

U.S. Regulated Subsidiaries and which 

will become effective upon the closing 

of the Mergers, will impose, specific 

limitations on the ability to own and 

vote shares of NYSE Euronext stock, 

which are designed to protect the 

independence of the self-regulatory 

function of NYSE Euronext’s U.S. 

Regulated Subsidiaries (as defined in 

the NYSE Euronext Bylaws),52

including NYSE Alternext U.S. 

following the Mergers. Following the 

Mergers, for so long as NYSE Euronext 

shall control, directly or indirectly, 

NYSE Alternext U.S. the board of 

directors of NYSE Euronext shall not 

adopt any resolution to repeal or amend 

any provision of the NYSE Euronext 

Charter or the NYSE Euronext Bylaws 

unless such amendment or repeal has 

been (i) filed with or filed with and 

approved by the Commission, or (ii) 

submitted to the boards of directors of 

NYSE Alternext U.S. as well as the other 

U.S. Regulated Subsidiaries of NYSE 

Euronext, and if any or all of such 

boards of directors shall determine that 

such amendment or repeal must be filed 


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53Following the ArcaEx-PCX merger, Archipelago 

merged with the NYSE and the PCX was later 

renamed NYSE Arca. 

54See Securities Exchange Act Release No. 52497 

(Sept. 22, 2005), 70 FR 56949 (Sept. 29, 2005) (order 

approving SR–PCX–2005–90). The Commission’s 

approval was subject to several conditions and 

undertakings which remain in effect, specifically 

that: (1) Arca Securities would continue to operate 

and be regulated as a facility of the PCX; (2) the 

scope of the exception would be limited to 

outbound routing; (3) the primary regulatory 

responsibility for Arca Securities would lie with an 

unaffiliated SRO; and (4) the use of Arca Securities 

for outbound routing is only available to—and 

optional for—other PCX members. 

55 Id. 

56See Securities Exchange Act Release No. 55590 

(April 5, 2007), 72 FR 18707 (April 13, 2007) (notice 

of immediate effectiveness of SR–NYSE–2007–29). 

57See Rule 17(b)(1) of the NYSE. 

58 Id. 

59See Securities Exchange Act Release No. 57648 

(April 11, 2008), 73 FR 20981 (April 17, 2008) 

(order abrogating NYSE Arca Rule 7.31(x)). 

60Neither Seamount Trading LLC, a whollyowned subsidiary of the Exchange, nor Seamount 

Execution Services LLC, a wholly-owned subsidiary 

of Seamount Trading LLC, is currently operational. 

If, in the future, one or both entities, neither of 

which is an Amex member, become(s) operational, 

NYSE Alternext U.S. will provide the Commission 

with the details relating to the function performed 

by such entity or entities for NYSE Alternext U.S. 

and the conditions relating to the provision by such 

entity of such services. 

61See supra note 59. 

62 In the event the Umbrella 17d–2 Agreement is 

not entered into at the Effective Time, Arca 

Securities will be subject to the regulation of FINRA 

with respect to its obligations as a member 

organization of NYSE Alternext U.S. pursuant to the 

New Multi-Party FINRA RSA (defined below). 

with or filed with and approved by the 

Commission before such amendment or 

repeal may be effectuated, then such 

amendment or repeal shall not be 

effectuated until filed with or filed with 

and approved by the Commission, as the 

case may be. 

Finally, the Exchange proposes to 

adopt Rule 1, which will mirror in all 

material respects NYSE Rule 2B. 

According to Rule 1(a), without prior 

SEC approval, NYSE Alternext U.S. or 

any entity with which it is affiliated 

shall not, directly or indirectly, acquire 

or maintain an ownership interest in a 

member organization. The Exchange 

notes, however, that upon completion of 

the Mergers, Archipelago Securities, 

LLC (‘‘Arca Securities’’), which is a 

member organization of the Exchange, 

will be an affiliate of NYSE Alternext 

U.S. Accordingly, the Exchange requests 

that the Commission approve NYSE 

Alternext U.S.’s affiliation with Arca 

Securities following the Mergers. Arca 

Securities is the approved outbound 

routing facility of both NYSE Arca and 

the NYSE. In its Order approving the 

merger of the Archipelago Exchange 

(‘‘ArcaEx’’) with the Pacific Exchange 

(‘‘PCX’’),53 the Commission permitted 

ArcaEx’s holding company, Archipelago 

Holdings, Inc. (‘‘Archipelago’’), to own 

and operate Arca Securities, in its 

capacity as a facility of the PCX that 

routes orders from ArcaEx to other 

market centers.54 This approval remains 

in effect insofar as Arca Securities acts 

in the capacity of a facility of NYSE 

Arca for the routing of orders from 

NYSE Arca to other market centers, 

including the NYSE and NYSE 

Alternext U.S. subject to the applicable 

conditions.55

Arca Securities performs a similar 

outbound routing function on behalf of 

the NYSE. On April 5, 2007, in a notice 

of immediate effectiveness, the 

Commission published the NYSE’s rule 

change that established Arca Securities 

as a facility of the NYSE for purposes of 

routing orders to away market centers 

for execution in compliance with NYSE 

Rules and Regulation NMS.56 Pursuant 

to NYSE Rule 17, Arca Securities 

receives its routing instructions from the 

NYSE and reports any such executions 

back to the NYSE.57 Arca Securities has 

no discretion and cannot change the 

terms of an order or the routing 

instructions.58 Moreover, each type of 

order is subject to the same principles 

governing the NYSE’s authority to route 

orders to away market centers, namely: 

use of Arca Securities for outbound 

routing is only available to—and is 

optional for—NYSE members, the 

primary regulatory responsibility for 

Arca Securities lies with an unaffiliated 

self-regulatory organization (‘‘SRO’’), 

and, as clarified herein, appropriate 

procedures are in place to manage any 

conflicts of interest or potential 

information advantages. In this capacity 

as a facility of the NYSE, Arca Securities 

receives the routing instructions from 

the NYSE and routes the orders to 

various away market centers, including 

NYSE Arca and NYSE Alternext U.S. for 

execution. 

Policy and Procedure Regarding 

Affiliation 

In the past, the Commission has noted 

the potential for informational 

advantages that could place an affiliated 

member of an exchange at a competitive 

advantage vis-a`-vis other non-affiliated 

members.59 As a result, the Exchange 

proposes to adopt Rule 1(b), which 

mirrors in all material respects NYSE 

Rule 2B(2). Specifically, NYSE 

Alternext U.S. Rule 1(b) will provide as 

follows: ‘‘The holding company owning 

both the Exchange and Archipelago 

Securities LLC shall establish and 

maintain procedures and internal 

controls reasonably designed to ensure 

that Archipelago Securities, LLC does 

not develop or implement changes to its 

system on the basis of non-public 

information regarding planned changes 

to Exchange systems, obtained as a 

result of its affiliation with the 

Exchange, until such information is 

available generally to similarly situated 

members of the Exchange in connection 

with the provision of inbound order 

routing to the Exchange.’’ The Exchange 

believes these measures will effectively 

address the concerns the Commission 

may have regarding the potential for 

informational advantages favoring Arca 

Securities vis-a-vis other non-affiliated 

NYSE Alternext U.S. members. 

There is no member organization 

which is an affiliate of NYSE Alternext 

U.S. or an entity with which NYSE 

Alternext U.S. is affiliated or in which 

NYSE Alternext U.S. or an entity with 

which NYSE Alternext U.S. is affiliated 

holds ownership interest other than 

Arca Securities.60

Record Keeping Procedure 

The Exchange notes that the 

Commission has previously expressed 

concern regarding the potential for 

conflicts of interest in instances where 

a member firm is affiliated with an 

exchange to which it is routing orders.61

In order to manage these concerns, 

with respect to orders routed to NYSE 

Alternext U.S. by Arca Securities, an 

NYSE Alternext U.S. member, in its 

capacity as a facility of either NYSE 

Arca or the NYSE, the Exchange notes 

that Arca Securities is subject to 

independent oversight and enforcement 

by the Financial Industry Regulatory 

Authority (‘‘FINRA’’), an unaffiliated 

SRO that is Arca Securities’ designated 

examining authority. In this capacity, 

FINRA is responsible for examining 

Arca Securities with respect to its books 

and records and capital obligations, and 

shares with NYSE Regulation the 

responsibility for reviewing Arca 

Securities’ compliance with intermarket 

trading rules such as SEC Regulation 

NMS. In addition, through an agreement 

by and among NYSE, FINRA and NYSE 

Alternext U.S. pursuant to the 

provisions of SEC Rule 17d–2 under the 

Exchange Act (‘‘Umbrella 17d–2 

Agreement’’), FINRA’s staff will review 

for Arca Securities’ compliance with 

other NYSE Alternext U.S. Rules 

through FINRA’s examination 

program 62. NYSE Regulation will 

monitor Arca Securities for compliance 

with NYSE Alternext U.S. trading rules, 

subject, of course, to SEC oversight of 

NYSE Regulation’s regulatory program. 

In order to alleviate any residual 

concerns the Commission may have 

regarding the potential for conflicts of 


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63See proposed NYSE Alternext U.S. Rule 353. 

64The requirements for 86 Trinity Permits will be 

the same as the current requirements for 

memberships in the Amex Rules and such 

requirements may be satisfied by persons or entities 

that were not previously authorized to trade on the 

Exchange immediately prior to the Mergers. 

65Certain application processing fees may be 

charged for persons or entities that were not 

previously authorized to trade on the Exchange 

immediately prior to the Mergers. See proposed 

NYSE Alternext U.S. Rule 358. 

66See proposed definition of ‘‘member’’ in the 

NYSE Alternext U.S. Rules. 

67See proposed definition of ‘‘member 

organization’’ in the NYSE Alternext U.S. Rules. 

interest, the Exchange notes that NYSE 

Regulation has agreed with NYSE 

Alternext U.S. that it will collect and 

maintain the following information of 

which NYSE Regulation staff becomes 

aware—namely, all alerts, complaints, 

investigations and enforcement actions 

where Arca Securities (in its capacity as 

a facility of NYSE Arca or the NYSE, 

routing orders to NYSE Alternext U.S.) 

is identified as a participant that has 

potentially violated NYSE Alternext 

U.S. or applicable SEC rules—in an 

easily accessible manner, so as to 

facilitate any review conducted by the 

SEC’s Office of Compliance Inspections 

and Examinations. 

Pilot Period 

The Exchange proposes that the 

Commission authorize NYSE Alternext 

U.S. to receive inbound routes from 

Arca Securities (in its capacity as a 

facility of both NYSE Arca and the 

NYSE, routing orders to NYSE Alternext 

U.S.), for a pilot period of twelve 

months from the date of the approval of 

this rule filing. The Exchange believes 

that this pilot period is of sufficient 

length to permit both NYSE Alternext 

U.S. and the Commission to assess the 

impact of the rule change described 

herein. 

C. Trading Licenses or Permits 

Upon the completion of the Holdings 

Merger, all trading rights appurtenant to 

either Regular Memberships or OPMs 

existing immediately prior to the 

Holdings Merger will be cancelled. In 

addition, the lessees will cease to have 

any trading rights under any applicable 

leases upon the completion of the 

Holdings Merger. Neither NYSE 

Alternext U.S. nor NYSE Euronext will 

have any obligations under the leases 

that existed immediately prior to the 

Holdings Merger to any party thereto. 

Physical and electronic access to NYSE 

Alternext U.S.’s trading facilities will be 

made available to individuals and 

organizations that obtain an 86 Trinity 

Permit, an equity trading license or an 

OTP from NYSE Alternext U.S. 

For a period of one year following the 

Effective Time, as long as the market 

structure of NYSE Alternext U.S. 

remains substantially the same as it was 

on the date of the Merger Agreement, 

the Exchange expects to make equity 

trading licenses available at a price no 

greater than the cost of licenses to trade 

on the NYSE and to make NYSE 

Alternext U.S. OTPs available at a price 

no greater than the price of NYSE Arca 

options trading permits. Only persons or 

entities that are registered brokerdealers may be granted trading licenses 

or permits by NYSE Alternext U.S. 

through an application process and 

payment of applicable fees to be set 

forth in a separate rule filing. Pursuant 

to the requirements of Section 19 of the 

Exchange Act, NYSE Alternext U.S. 

intends to set forth in a separate rule 

filing the qualifications for trading 

license or permit holders and the 

application process for trading licenses 

or permits. The Exchange currently 

expects that the qualifications for 

trading license or permit holders 63 will 

be based on the current requirements for 

memberships on the NYSE or NYSE 

Arca, respectively. Pursuant to the 

requirements of Section 19 of the 

Exchange Act, NYSE Alternext U.S. also 

intends to set forth in a separate rule 

filing the fees for a trading license or 

permit that will be assessed. 

Until such new trading licenses or 

permits are issued, NYSE Alternext U.S. 

intends to make available to persons 

and entities that apply and meet certain 

specified requirements 64 86 Trinity 

Permits for which certain additional 

fees 65 will be waived. 86 Trinity 

Permits will allow the holders to trade 

products currently traded on the 

Exchange, including equities and 

options, prior to relocation of the NYSE 

Alternext U.S. equities and options 

trading facilities to the NYSE trading 

floor or the electronic trading platform 

of the NYSE or NYSE Arca, as 

applicable. To ensure continuity of 

trading following the Mergers, persons 

and entities who were authorized to 

trade on the Exchange immediately 

prior to the LLC Merger, including (i) 

owners, lessees or nominees of Regular 

Memberships or OPMs, (ii) limited 

trading permit holders, and (iii) 

associate members, in each case who 

were authorized to trade on the 

Exchange immediately prior to the LLC 

Merger, will be deemed to have satisfied 

applicable requirements necessary to 

receive an 86 Trinity Permit. 86 Trinity 

Permits will authorize owners, lessees 

or nominees of Regular Memberships, 

OPMs, limited trading permit holders 

and associate members who were 

authorized to trade on the Exchange 

immediately prior to the LLC Merger, to 

trade the products which they were 

previously authorized to trade and, 

subject to meeting the qualifications 

currently in place for trading products 

which they previously were not 

authorized to trade, to trade such other 

products. 

It is currently anticipated that NYSE 

Alternext U.S. will issue the equity 

trading licenses prior to the OTPs. Upon 

the initial effective date of the equity 

trading licenses, only holders of such 

equity trading licenses will have the 

right to trade equities and any other 

products associated with such equity 

trading licenses. Therefore, following 

the initial effective date of the equity 

trading licenses, a holder of an 86 

Trinity Permit shall only be entitled to 

trade products other than those 

associated with the equity trading 

licenses. Upon the initial effective date 

of the OTPs, only holders of such OTPs 

will have the right to trade in options, 

and all 86 Trinity Permits will be 

cancelled. 

D. Amendment of the Amex Rules 

The Amex Rules, which will become 

the NYSE Alternext U.S. Rules upon the 

completion of the LLC Merger, will be 

amended to incorporate certain 

provisions in the Amex Constitution, 

which will be eliminated in connection 

with the Mergers, and to reflect that 

following the Mergers, among others, (i) 

access to NYSE Alternext U.S.’s trading 

facilities will be granted through the 

issuance of 86 Trinity Permits, as 

described in Section 1(c)(C) of this Item 

II.A. above, until the equity trading 

licenses and OTPs are issued by NYSE 

Alternext U.S. (ii) the associate member 

concept will be deleted and the term 

‘‘member’’ shall mean the 86 Trinity 

Permit Holders who are natural persons 

and allied members 66 and the term 

‘‘member organization’’ shall mean a 

partnership, corporation or such other 

entity as NYSE Alternext U.S. may, by 

Rule, permit to become a member 

organization, and which meets the 

requirements specified in the Rules 67, 

(iii) an owner, lessee or nominee of 

regular membership or OPM, a limited 

trading permit holder or an associate 

member that was authorized to trade on 

the Exchange immediately prior to the 

LLC Merger will be deemed to satisfy 

the requirements for receiving an 86 

Trinity Permit, (iv) the procedures for 

the re-allocation of equity securities to 

specialists will be simplified with the 

elimination of the mediation process 

currently required when a listed 

company requests a change of its 

specialist firm, (v) the procedures for 

the allocation of options will be 


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68The Committee for Review will be charged, in 

the discretion of the NYSE Alternext U.S. Board of 

Directors, with hearing appeals of disciplinary 

decisions and advising the NYSE Alternext U.S. 

Board of Directors thereof. With or without the 

advice of the Committee for Review, the NYSE 

Alternext U.S. Board of Directors, may affirm, 

modify, reverse, or remand a hearing panel’s or a 

hearing officer’s determination, penalty, or both. 

Unless the NYSE Alternext U.S. Board of Directors 

otherwise specifically directs further action, the 

determination and penalty, if any, of the NYSE 

Alternext U.S. Board of Directors after review shall 

be final and conclusive subject to the provisions for 

review under the Exchange Act. 

69Amex anticipates that a certain number of 

Exchange disciplinary cases arising prior to the 

closing of the Mergers will be pending at the time 

of the closing of the Mergers. With respect to such 

cases which have been formally commenced at or 

prior to the time of the Effective Time, Amex Rule 

345, the Rules of Procedure in Disciplinary Matters 

and the disciplinary rules in the current Amex 

Constitution (‘‘Legacy Disciplinary Procedural 

Rules’’) will govern such pending disciplinary 

cases. The Exchange will advise its members and 

member organizations of changes to the disciplinary 

procedures that will be implemented, including 

application of the Legacy Disciplinary Procedural 

Rules, through an Information Memorandum. 

Please see the proposed rule filing that the 

Exchange expects to file with the Commission in 

connection with the Legacy Disciplinary Procedural 

Rules for more detail. 

70See proposed NYSE Alternext U.S. Rule 320. 

Currently, under Article IV, Section 2(m) of the 

Amex Constitution, members and member 

organizations are allowed to establish branch offices 

with the consent of the Exchange; provided, 

however, that the Exchange’s consent is not 

required for members and member organizations of 

the Exchange that are members or member 

organizations of another exchange, which exchange 

has comparable rules or regulations, unless the 

Amex Board shall so direct. The change to Rule 320 

to require notice without adopting the provision 

from Article IV, Section 2(m) of the Amex 

Constitution is consistent with the rules of other 

SROs including NYSE Arca, Chicago Board Options 

Exchange and Philadelphia Stock Exchange. 

71See Securities Exchange Act Release No. 50927 

(December 23, 2004), 69 FR 78494 (December 30, 

2004) (order approving SR–Amex–2004–50). 

streamlined, (vi) the Gratuity Fund will 

be terminated, (vii) the responsibilities 

of the Adjudicatory Council will be 

transferred to the Committee for Review 

of NYSE Regulation since NYSE 

Regulation will be handling disciplinary 

matters for NYSE Alternext U.S.68

through the replacement of Amex Rule 

345 and the Rules of Procedure in 

Disciplinary Matters with proposed 

Rules 475, 476 and 477, which are 

substantially identical to the 

disciplinary rules of the NYSE with 

certain changes necessary to apply such 

rules to NYSE Alternext U.S. and to 

reflect the application of the American 

Stock Exchange Sanctions Guidelines,69

(viii) the concept of Floor Governors 

will be eliminated and the functions of 

the Floor Governors will be performed 

by Senior Floor Officials or the Senior 

Supervisory Officer, as the case may be, 

as described in greater detail under 

Section 1.(c).(A).f of this Item II.A. 

above, (ix) the administrative decisions 

regarding the approval of applications to 

become a supplemental registered 

options trader and determinations 

regarding remote quoting rights for 

remote registered options traders will be 

handled by designated staff of NYSE 

Alternext U.S. rather than by a 

committee of members as set forth in 

Rules 993—ANTE and 994—ANTE and 

(x) members and member organizations 

will be required to notify NYSE 

Alternext U.S. of their branch offices, 

but will not be required to seek approval 

from NYSE Alternext U.S. to establish 

such branch offices 70. In addition, 

certain obsolete rules, including the 

rules relating to the Intermarket Trading 

System Plan, certain rules which have 

been replaced by Auction and 

Electronic Market Integration Rules and 

certain arbitration rules will be deleted. 

E. Other Proposed Changes Relating to 

the Mergers 

a. Regulatory Service Agreement. The 

Exchange is currently a party to a 

regulatory services agreement with 

FINRA, dated as of April 30, 2004, as 

amended (‘‘FINRA RSA’’). Under the 

FINRA RSA, FINRA performs market 

and trade practice surveillance and 

analysis, financial and operational 

regulation, options sales practice 

regulation, enforcement investigations 

and disciplinary processes and dispute 

resolution services for the Exchange. 

Upon the consummation of the Mergers, 

it is contemplated that NYSE Alternext 

U.S. will contract with NYSE Regulation 

for the performance of all of its 

regulatory functions. NYSE Euronext 

has agreed to provide adequate funding 

to NYSE Regulation to conduct its 

regulatory activities with respect to 

NYSE, NYSE Arca and, from and after 

closing of the transaction, NYSE 

Alternext U.S. In addition, it is 

contemplated that NYSE Alternext U.S. 

will participate in a multi-party 

regulatory services agreement by and 

among NYSE Regulation, NYSE Arca, 

FINRA and NYSE Alternext U.S. (‘‘New 

Multi-Party FINRA RSA’’), pursuant to 

which FINRA will in turn perform some 

of NYSE Alternext U.S.’s regulatory 

functions on an ongoing basis. NYSE 

Regulation together with NYSE 

Alternext U.S. may from time to time 

contract out to a third party other than 

FINRA certain of NYSE Alternext U.S.’s 

regulatory functions. In doing so, NYSE 

Regulation and NYSE Alternext U.S. 

must comply with proposed Rule 1B, 

which requires regulatory services 

agreements may only be entered into by 

NYSE Alternext U.S. with another SRO. 

In addition, regardless of the fact that 

NYSE Alternext U.S. will contract for 

the provision of regulatory services from 

NYSE Regulation, FINRA and/or other 

SROs, NYSE Alternext U.S. will retain 

ultimate responsibility for the 

fulfillment of its statutory and selfregulatory obligations under the 

Exchange Act. In connection with such 

responsibility, NYSE Alternext U.S. will 

retain the authority to direct NYSE 

Regulation, FINRA and any other SROs 

that provide regulatory service to take 

any action necessary to fulfill its 

statutory and self-regulatory obligations, 

consistent with the independence of the 

regulatory functions performed by 

NYSE Regulation, the NYSE Alternext 

U.S. rules, policies and procedures and 

the federal securities laws. 

b. Gratuity Fund. In connection with 

the Mergers, the Boards have approved 

the termination of the Gratuity Fund. As 

a result, the Gratuity Fund will be 

terminated upon the LLC Merger and 

neither NYSE Euronext nor NYSE 

Alternext U.S. will offer a Gratuity Fund 

following the Mergers. There will be no 

further payment of gratuities other than 

those related to any deaths that occurred 

prior to the completion of the Mergers. 

Upon the completion of the NYSE/ 

Amex Merger, NYSE Alternext U.S. 

currently expects to allocate the assets 

then remaining in the Gratuity Fund 

(net of any administrative expenses 

incurred in the distribution of such 

amount), first to pay out any death 

benefits that are accrued but unpaid as 

of the completion of the NYSE/Amex 

Merger, and then to distribute the 

remaining balance, if any, in a manner 

as the Boards deem appropriate, taking 

into account the length of time each 

person was a participant in the Gratuity 

Fund. 

c. Relief from the Exchange’s Periodic 

Financial Reporting Undertaking. The 

Exchange requests to be relieved from 

the undertakings adopted by the Amex 

Board on December 4, 2004 and 

approved by the Commission as part of 

an Amex proposed rule change filed 

under Section 19 of the Exchange Act 

(‘‘Undertakings’’).71 Section 1 of the 

Undertakings prohibits Amex from 

terminating the FINRA RSA unless on 

or prior to the date of such termination, 

Amex has entered into an alternative 

arrangement relating to the provision of 

regulatory services that has been 

approved by the Commission pursuant 

to the rule filing procedures of Rule 19b4 under the Exchange Act and requires 

Amex to use its best efforts to comply 

in all material respects with its 

obligations under the FINRA RSA. 

Under Section 2 of the Undertakings, 


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72 Id. In addition, Amex has separately submitted 

a letter to the staff of Division of Trading and 

Markets to request temporary waiver of Section 3(ii) 

of the Undertakings for the calendar year 2008. 

73 15 U.S.C. 78f(b). 

74 15 U.S.C. 78f(b)(5). 

75 Id. 

76 15 U.S.C. 78f(b)(8). 

Amex’s Chief Regulatory Officer is 

required, and Amex is required to use 

its reasonable efforts to cause the staff 

of FINRA responsible for providing 

services under the FINRA RSA, to 

periodically confer with staff of the 

Division of Trading and Markets and the 

Office of Compliance Inspections and 

Examinations regarding the status of 

Amex’s regulatory program. 

The reason for the request to be 

relieved from Sections 1 and 2 of the 

Undertakings is that the Exchange 

believes that it has demonstrated that 

Amex’s regulatory program has been 

maintained consistent with the 

guidelines of the Commission Staff 

since the Exchange adopted such 

undertaking and that the new 

arrangements for contracting out 

regulatory services through the NYSE 

Regulation RSA, the New Multi-Party 

FINRA RSA and the Umbrella 17d–2 

agreement among NYSE, FINRA and 

NYSE Alternext U.S. would ensure that 

NYSE Alternext U.S.’s regulatory 

program continues to be maintained 

consistent with the guidelines of the 

Commission Staff. In addition, 

following the Mergers, NYSE Alternext 

U.S. will be a wholly-owned U.S. 

Regulated Subsidiary of NYSE Euronext 

and other U.S. Regulated Subsidiaries of 

NYSE Euronext are not subject to such 

obligation. 

The Exchange also requests to be 

permanently relieved from Sections 3 of 

the Undertakings.72 Section 3 of the 

Undertakings mandates Amex to 

provide to the Director of the Division 

of Trading and Markets (i) within 75 

days after the end of each fiscal year of 

Amex (unless otherwise directed in 

writing by the Director of the Division 

of Trading and Markets), financial 

statements certified by Amex’s chief 

financial officer and reviewed by 

Amex’s independent accountants, 

together with evidence of such review, 

(ii) within 40 days after the end of each 

fiscal quarter of Amex (unless otherwise 

directed in writing by the Director of the 

Division of Trading and Markets), 

unaudited financial statements certified 

by Amex’s chief financial officer and 

reviewed by Amex’s independent 

accountants, together with evidence of 

such review, (iii) within 30 days after 

the end of each fiscal month of Amex 

(unless otherwise directed in writing by 

the Director of the Division of Trading 

and Markets), (a) financial data of Amex 

certified by Amex’s chief financial 

officer, together with projected and 

budget financial information concerning 

Amex, (b) a schedule reflecting the 

available borrowings under each of 

Amex’s credit facilities, together with 

computations of compliance with all 

financial covenants contained therein, 

certified by Amex’s chief financial 

officer, (c) a schedule of projected cash 

and working capital trends, including 

calculations of Amex’s working capital 

and current ratio, (d) a schedule of 

actual year-to-date and inception-to-date 

expenditures in connection with any 

material trading technology system or 

platform being implemented by Amex, 

certified by Amex’s chief financial 

officer, together with a narrative 

summary of the status of such 

implementation, (e) a schedule of 

material off-balance sheet liabilities, if 

any, certified by Amex’s chief financial 

officer and (f) a narrative summary of 

Amex’s financial results for such month 

and for then year-to-date, certified by 

Amex’s chief financial officer, and (iv) 

such other financial information as may 

be reasonably requested by the Director 

of the Division of Trading and Markets. 

The reason for the request is that 

following the Mergers, NYSE Alternext 

U.S. will be a wholly-owned subsidiary 

of NYSE Euronext. As such, NYSE 

Alternext U.S.’s financial results will be 

consolidated with those of NYSE 

Euronext. Furthermore, NYSE Euronext 

is a reporting company under the 

Exchange Act with obligations to report 

its financial results. 

2. Statutory Basis 

The Exchange believes the proposed 

rule change is consistent with the 

requirements of the Exchange Act and 

the rules and regulations thereunder 

that are applicable to a national 

securities exchange, and, in particular, 

with the requirements of Section 6(b) of 

the Exchange Act.73 The Exchange 

believes the proposal is consistent with 

Section 6(b)(3) of the Exchange Act 74 in 

that it would assure a fair representation 

of its members in the selection of the 

Non-Affiliated Directors of NYSE 

Alternext U.S. and administration of its 

affairs. The candidates for directors that 

will serve on the NYSE Alternext U.S. 

Board will include at least one person 

intended to allow the NYSE Alternext 

U.S. Board to meet the requirements of 

Section 6(b)(3) of the Exchange Act 

concerning issuers and at least one 

person intended to allow the NYSE 

Alternext U.S. Board to meet the 

requirements of Section 6(b)(3) of the 

Exchange Act concerning investors. 

The Exchange believes the proposal is 

also consistent with Section 6(b)(5) of 

the Exchange Act 75 in that it would 

create a governance and regulatory 

structure of NYSE Alternext U.S. that is 

designed to promote just and equitable 

principles of trade, to remove 

impediments, and to perfect the 

mechanism of, a free and open market 

and a national market system, and, in 

general, to protect investors and the 

public interest. The Exchange represents 

that it remains committed to its role as 

a national securities exchange and does 

not believe that the proposed change to 

a for-profit institution will undermine 

its responsibilities for regulating its 

marketplace. Indeed, as described 

above, following the Mergers, the 

regulatory functions of NYSE Alternext 

U.S. will be carried out by NYSE 

Regulation, whose status as a New York 

Type A not-for-profit entity will 

facilitate NYSE Alternext U.S. in 

managing conflicts between its business 

and regulatory objectives, maintaining 

regulatory standards and complying 

with its obligations as a registered 

national securities exchange and SRO. 

Further, the Exchange believes that it 

has proposed specific provisions in the 

NYSE Alternext U.S. Operating 

Agreement that reinforce the 

responsibility of NYSE Alternext U.S. 

for its self-regulatory obligations. 

The Exchange also believes that the 

proposed rule change is consistent with 

Section 6(b)(8) of the Exchange Act 76

which requires that the rules of the 

Exchange do not impose any burden on 

competition not necessary or 

appropriate in furtherance of the 

purposes of the Exchange Act. With a 

new corporate and governance 

structure, NYSE Alternext U.S. will be 

better positioned to improve its 

technology and engage in valueenhancing transactions designed to 

facilitate its long-term success. 

B. Self-Regulatory Organization’s 

Statement on Burden on Competition 

The Exchange does not believe that 

the proposed rule change will impose 

any inappropriate burden on 

competition. 

C. Self-Regulatory Organization’s 

Statement on Comments on the 

Proposed Rule Change Received From 

Members, Participants or Others 

The Exchange has not solicited, and 

does not intend to solicit, comments on 

this proposed rule change. The 

Exchange has not received any 

unsolicited written comments from 


sroberts on PROD1PC70 with NOTICES
Federal Register / Vol. 73, No. 153 / Thursday, August 7, 2008 / Notices 46097 

77 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

persons or entities that trade on the 

Exchange or other interested parties. 

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 Amex 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. 

The Exchange is targeting a closing 

date of August 29, 2008 for the Mergers. 

In the event that it is necessary in order 

to facilitate that timetable, the Exchange 

requests that the Commission accelerate 

effectiveness of the filing pursuant to 

Section 19(b)(2) to a date no later than 

August 29, 2008. 

IV. Solicitation of Comments 

Interested persons are invited to 

submit written data, views, and 

arguments concerning the foregoing, 

including whether the proposed rule 

change, as amended, 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–Amex–2008–62 on the 

subject line. 

Paper Comments 

• Send paper comments in triplicate 

to Secretary, Securities and Exchange 

Commission, 100 F Street, NE., 

Washington, DC 20549. 

All submissions should refer to File 

Number SR–Amex–2008–62. 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–Amex–2008–62 and should 

be submitted on or before August 28, 

2008. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.77

Florence E. Harmon, 

Acting Secretary. 

[FR Doc. E8–18145 Filed 8–6–08; 8:45 am] 

BILLING CODE 8010–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–58286; File No. SR–Amex–

2008–64] 

Self-Regulatory Organizations; 

American Stock Exchange LLC; Notice 

of Filing of Proposed Rule Change To 

Adopt New Rule 478T To Set Forth the 

Temporary Procedures That Will Apply 

to Disciplinary Proceedings Pending 

as of the Closing Date of the 

Acquisition of the Exchange by NYSE 

Euronext 

August 1, 2008. 

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 July 28, 

2008, American Stock Exchange LLC, a 

Delaware limited liability company 

(‘‘Amex’’ or ‘‘Exchange’’), filed with the 

Securities and Exchange Commission 

(the ‘‘Commission’’) the proposed rule 

change as described in Items I, II, and 

III below, which Items have been 

substantially prepared by the Exchange. 

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 

In connection with its pending 

acquisition by NYSE Euronext, the 

parent company of the New York Stock 

Exchange LLC (‘‘NYSE’’) and NYSE 

Arca, Inc. (‘‘NYSE Arca’’), Amex is 

seeking to revise its procedural rules 

governing disciplinary proceedings to 

more closely align such rules with the 

NYSE’s disciplinary procedural rules. 

The rule changes that would implement 

this change are proposed in SR–Amex–

2008–62. However, in order to avoid 

any potential confusion to respondents 

in pending disciplinary matters that 

have been commenced prior to the date 

of closing of the transaction, the 

Exchange believes it is advisable to 

apply its current procedural rules 

governing disciplinary proceedings to 

such matters. Accordingly, the 

Exchange proposes to adopt new Rule 

478T to set forth the temporary 

procedures that will apply to those 

pending disciplinary proceedings, and 

which rule will only become operative 

as of the closing of the acquisition. 

The text of the proposed rule change 

is available on the Amex’s Web site at 

http://www.amex.com, the Office of the 

Secretary, the Amex and at the 

Commission’s Public Reference Room. 

The text of Exhibit 5 is available on the 

Commission’s Web site (http:// 

www.sec.gov/rules/sro.shtml). 

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 

Exchange 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 

Pursuant to an agreement dated 

January 17, 2008, the Amex is being 

acquired by NYSE Euronext—the parent 

company of the NYSE and NYSE Arca—

through a series of mergers as described 

in SR–Amex–2008–62 (the 

‘‘Transaction’’). Following completion 

of the Transaction, Amex will be 


sroberts on PROD1PC70 with NOTICES