38734 Federal Register / Vol. 82, No. 156 / Tuesday, August 15, 2017 / Notices 

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

2 17 CFR 240.19b–4. 

3See Securities Exchange Act Release No. 79474 

(December 6, 2016), 81 FR 89543 (‘‘Notice’’). 

4 15 U.S.C. 78s(b)(2)(B). 

5See Securities Exchange Act Release No. 79781, 

82 FR 6669 (January 19, 2017). 

6See letters from: (1) Representative Robert 

Pittenger, Representative Earl L. ‘‘Buddy’’ Carter, 

Representative Peter DeFazio, Representative Collin 

Peterson, and Representative David Joyce, dated 

December 22, 2016 (‘‘Pittenger Letter 1’’); (2) James 

N. Hill, dated December 23, 2016; (3) John 

Ciccarelli, dated January 2, 2017 (‘‘Ciccarelli 

Letter’’); (4) Anonymous, dated January 3, 2017 

(‘‘Anonymous Letter’’); (5) David E. Kaplan, 

Executive Director, Global Investigative Journalism 

Network, dated January 4, 2017; (6) Reddy Dandolu, 

Founder, Chief Executive Officer, Las Vegas Stock 

Exchange, dated February 4, 2017 (‘‘Dandolu 

Letter’’); (7) David Ferris, Senior Research Analyst, 

The Public Interest Review, dated February 16, 

2017 (‘‘Ferris Letter 1’’); (8) Michael Brennan, 

Independent Market Commentator, dated February 

17, 2017 (‘‘Brennan Letter’’); (9) Lawrence Bass, 

Individual Member, Alliance for American 

Manufacturing, dated February 20, 2017 (‘‘Bass 

Letter’’); (10) Steven Mayer, dated February 20, 

2017 (‘‘Mayer Letter’’); (11) William Park, dated 

February 21, 2017 (‘‘Park Letter’’); (12) Jason Blake, 

Commentator, The Wall Street Journal, dated 

February 25, 2017; (13) John Meagher, Freelance 

Journalist, dated March 1, 2017; (14) Yong Xiao, 

Chief Executive Officer, North America Casin 

Holdings, Inc., dated March 1, 2017 (‘‘NA Casin 

Holdings Letter’’); (15) Steven Caban, dated March 

1, 2017 (‘‘Caban Letter’’); (16) Harley Seyedin, 

President, American Chamber of Commerce in 

South China, dated March 2, 2017 (‘‘Seyedin 

Letter’’); (17) Salvatore Nobile, dated March 2, 2017 

(‘‘Nobile Letter’’); (18) Olga Gouroudeva, dated 

March 3, 2017 (‘‘Gouroudeva Letter’’); (19) John R. 

Prufeta, dated March 3, 2017 (‘‘Prufeta Letter’’); (20) 

Anthony J. Saliba, Saliba Ventures Holdings, LLC, 

dated March 3, 2017 (‘‘Saliba Letter’’); (21) Aileen 

Zhong, dated March 5, 2017 (‘‘Zhong Letter’’); (22) 

Duncan Karcher, dated March 5, 2017 (‘‘Karcher 

Letter’’); (23) Ira Gottlieb, Principal, Healthcare 

Practice, Mazars USA LLP, dated March 5, 2017 

(‘‘Gottlieb Letter’’); (24) James N. Hill, dated March 

6, 2017 (‘‘Hill Letter 2’’); (25) David Ferris, Senior 

Research Analyst, The Public Interest Review, dated 

March 6, 2017 (‘‘Ferris Letter 2’’); (26) Sean Casey, 

dated April 24, 2017; (27) Representative Robert 

Pittenger, Representative Chris Smith, 

Representative Peter DeFazio, Representative Ted 

Yoho, Representative Rosa DeLauro, Representative 

Steve King, Representative Walter Jones, 

Representative David Joyce, Representative Brian 

Babin, Representative Bill Posey, and 

Representative Tom Marino, dated July 10, 2017 

(‘‘Pittenger Letter 2’’); and (28) Senator Joe 

Manchin, III, dated July 20, 2017 (‘‘Manchin 

Letter’’). All of the comments are available at: 

https://www.sec.gov/comments/sr-chx-2016-20/ 

chx201620.shtml. 

7See letters from John K. Kerin, President and 

Chief Executive Officer, CHX, dated January 5, 2017 

(‘‘CHX Response Letter 1’’); Albert J. Kim, Vice 

President and Associate General Counsel, CHX, 

dated January 6, 2017 (‘‘CHX Response Letter 2’’) 

(responding specifically to the Ciccarelli Letter); 

and John K. Kerin, President and Chief Executive 

of view represented and functions to be 

performed. 

The Charter provides that the duties 

of the Committee are to be solely 

advisory. The Commission alone will 

make any determinations of actions to 

be taken and policies to be expressed 

with respect to matters within the 

Commission’s jurisdiction as to which 

the Committee provides advice or makes 

recommendations. The Committee will 

meet at such intervals as are necessary 

to carry out its functions. The charter 

contemplates that the full Committee 

will meet one time. Meetings of 

subgroups or subcommittees of the full 

Committee may occur more frequently. 

The Committee will terminate five 

months from the date it is renewed or 

such earlier date as determined by the 

Commission unless, before the 

expiration of that time period, it is 

renewed in accordance with the Federal 

Advisory Committee Act. A copy of the 

charter for the Committee has been filed 

with the Chairman of the Commission, 

the Committee on Banking, Housing, 

and Urban Affairs of the United States 

Senate, the Committee on Financial 

Services of the United States House of 

Representatives, the Committee 

Management Secretariat of the General 

Services Administration, and the 

Library of Congress. It also has been 

posted on the Commission’s Web site at 

www.sec.gov. 

By the Commission. 

Dated: August 9, 2017. 

Brent J. Fields, 

Secretary. 

[FR Doc. 2017–17138 Filed 8–14–17; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

Sunshine Act Meeting 

Notice is hereby given, pursuant to 

the provisions of the Government in the 

Sunshine Act, Public Law 94–409, that 

the Securities and Exchange 

Commission will hold a closed meeting 

on Thursday, August 17, 2017 at 2 p.m. 

Commissioners, Counsel to the 

Commissioners, the Secretary to the 

Commission, and recording secretaries 

will attend the closed meeting. Certain 

staff members who have an interest in 

the matters also may be present. 

The General Counsel of the 

Commission, or his designee, has 

certified that, in his opinion, one or 

more of the exemptions set forth in 5 

U.S.C. 552b(c)(3), (5), (7), 9(B) and (10) 

and 17 CFR 200.402(a)(3), (a)(5), (a)(7), 

(a)(9)(ii) and (a)(10), permit 

consideration of the scheduled matters 

at the closed meeting. 

Commissioner Piwowar, as duty 

officer, voted to consider the items 

listed for the closed meeting in closed 

session. 

The subject matters of the closed 

meeting will be: 

Institution and settlement of 

injunctive actions; 

Institution and settlement of 

administrative proceedings; 

Consideration of amici participation; 

Resolution of litigation claims; 

Post Argument Discussion; and 

Other matters relating to enforcement 

proceedings. 

At times, changes in Commission 

priorities require alterations in the 

scheduling of meeting items. 

For further information and to 

ascertain what, if any, matters have been 

added, deleted or postponed, please 

contact Brent J. Fields from the Office of 

the Secretary at (202) 551–5400. 

Dated: August 10, 2017. 

Robert W. Errett, 

Deputy Secretary. 

[FR Doc. 2017–17286 Filed 8–11–17; 11:15 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–81366; File No. SR–CHX– 

2016–20] 

Self-Regulatory Organizations; 

Chicago Stock Exchange, Inc.; Notice 

of Filing of Amendment No. 1 and 

Order Granting Accelerated Approval 

of a Proposed Rule Change, as 

Modified by Amendment No. 1, 

Regarding the Acquisition of CHX 

Holdings, Inc. by North America Casin 

Holdings, Inc. 

August 9, 2017. 

I. Introduction 

On December 2, 2016, the Chicago 

Stock Exchange, Inc. (‘‘CHX’’ or 

‘‘Exchange’’) filed with the Securities 

and Exchange Commission 

(‘‘Commission’’), pursuant to Section 

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

of 1934 (‘‘Exchange Act’’) 1 and Rule 

19b–4 thereunder,2 a proposed rule 

change in connection with the 

acquisition (‘‘Transaction’’) of CHX 

Holdings, Inc. (‘‘CHX Holdings’’) by 

North America Casin Holdings, Inc. 

(‘‘NA Casin Holdings’’). The proposed 

rule change was published for comment 

in the Federal Register on December 12, 

2016.3 On January 12, 2017, the 

Commission instituted proceedings 

under Section 19(b)(2)(B) of the 

Exchange Act 4 to determine whether to 

approve or disapprove the proposed 

rule change.5 The Commission received 

28 comments on the proposed rule 

change,6 and three responses from the 

Exchange in response to certain 

comments.7 On June 6, 2017, pursuant 

mstockstill on DSK30JT082PROD with NOTICES

Federal Register / Vol. 82, No. 156 / Tuesday, August 15, 2017 / Notices 38735 

Officer, CHX, dated March 6, 2017 (‘‘CHX Response 

Letter 3’’). 

8 15 U.S.C. 78s(b)(2). 

9See Securities Exchange Act Release No. 80864, 

82 FR 26966 (June 12, 2017). 

10 In Amendment No. 1, the Exchange modified 

its proposal to respond to concerns expressed by 

certain commenters. Specifically, in Amendment 

No. 1, the Exchange: (1) Amends the proposed 

certificates of incorporation of CHX Holdings and 

NA Casin Holdings to require that: (a) Owners of 

the corporation provide notice to the corporation of 

certain changes to their ownership levels, and that 

the Exchange provide the Commission notice of 

certain changes; (b) each person having voting 

rights or beneficial ownership of stock of the 

corporation to promptly provide the corporation 

with written notice of any change in its status as 

a related person of another person that owns voting 

share of stock of the corporation; and (c) each 

stockholder of the corporation to annually attest 

directly to the Commission and the corporation as 

to its equity ownership level in the corporation and 

the identity of its related persons and to whether 

any agreement to act together exists between the 

stockholder and any other person for the purpose 

of acquiring, voting, holding, or disposing of shares 

of stock of the corporation; (2) amends the 

certificate of incorporation of CHX Holdings to: (a) 

Require the chief compliance officer of CHX 

Holdings to monitor compliance with the 

limitations on voting and ownership applicable to 

all upstream beneficial owners, and to ensure that 

each beneficial owner of the corporation provides 

the corporation with certain annual attestations; 

and (b) require that CHX Holdings will engage an 

independent and Public County Accounting 

Oversight Board (‘‘PCAOB’’)-registered auditor that 

will perform within one year of the closing date of 

the Transaction and every two years thereafter, an 

audit of the corporation’s oversight of compliance 

with the ownership and voting limitations; (3) 

amends the bylaws of CHX, CHX Holdings, and NA 

Casin Holdings to require that each corporation 

contemporaneously provides the Commission with 

any information it provides to any other U.S. 

governmental entity or U.S. authority pursuant to 

any agreement; (4) amends the CHX Rules to: (a) 

Require that, before reporting data to Consolidated 

Audit Trail (‘‘CAT’’) or having access to CAT data, 

it will adopt policies and procedures to ensure that 

only CHX regulatory personnel have access to any 

‘‘CAT Data’’ (as defined in the National Market 

System Plan Governing the Consolidated Audit 

Trail approved by the U.S. Securities and Exchange 

Commission on November 15, 2016, as such plan 

may be amended from time to time) and that CHX 

regulatory personnel would not provide access to 

any CAT Data to (i) any personnel of CHX and CHX 

Holdings (except such personnel that may also be 

CHX regulatory personnel); (ii) any personnel of NA 

Casin Holdings; or (iii) any upstream beneficial 

owner, regardless of citizenship of such personnel 

and owners (except such personnel that may also 

be CHX regulatory personnel); (b) confirm that any 

regulatory services agreement (‘‘RSA’’) it may enter 

into would comply with the U.S. federal securities 

laws at the time of the execution and on an ongoing 

basis; (c) require the chief regulatory officer of CHX 

to monitor Exchange compliance with the provision 

of each RSA to which the Exchange is party; and 

(d) and require the Exchange to engage an 

independent and PCAOB-registered auditor to 

perform within one year of the closing date of the 

Transaction and every two years thereafter, an audit 

of the Exchange’s oversight of: (i) All RSAs to 

which the Exchange is a party and (ii) compliance 

with the CHX rule restricting access to CAT Data 

to CHX regulatory personnel; (5) supplements 

certain of its representations with certifications 

from each owner of NA Casin Holdings, attesting to 

CHX and the Commission (a) the identities of all 

related persons, if any; (b) that it does not directly, 

or indirectly through one or more intermediaries, 

control, and is not, directly or indirectly through 

one or more intermediaries, controlled or owned by, 

or under common control or ownership with, a 

governmental entity or political subdivision thereof; 

(c) that it nor any of its related persons is subject 

to any ‘‘statutory disqualification’’ as defined in 

Section 3(a)(39) of the Exchange Act; and (d) that 

no agreement, arrangement, or understanding to 

acquire, vote, hold, or dispose of stock of NA Casin 

Holdings, exists between such owner and any of the 

other owners of NA Casin Holdings; (6) provides a 

statement from each of the owners of NA Casin 

Holdings in which such owner (a) irrevocably 

submits to the jurisdiction of the U.S. federal 

courts, the Commission, and CHX, for the purposes 

of any suit, action or proceeding relating to the 

certifications it provided to the Exchange and CHX 

regarding among other things, its related persons, or 

arising pursuant to the U.S. federal securities laws, 

or the rules and regulations thereunder, arising out 

of, or relating to, the activities of CHX, and waive, 

and agree not to assert by way of motion, as a 

defense or otherwise in any such suit, action or 

proceeding, any claims that it is not personally 

subject to the jurisdiction of the U.S. federal courts, 

the Commission or CHX, that the suit, action or 

proceeding is an inconvenient forum or that the 

venue of the suit, action or proceeding is improper, 

or that the subject matter of that suit, action or 

proceeding may not be enforced in or by such 

courts or agency; (b) designates, authorizes and 

identifies to the Commission an agent in the U.S. 

for the service of process of a claim arising out of, 

or relating to, the activities of CHX, including the 

certificates it provided to the Exchange and the 

Commission; and (c) agrees to promptly inform the 

Commission in writing of any change to its 

designated and authorized agent; and (7) changes 

the name of one of the proposed upstream owners 

from ‘‘Cheevers & Co., Inc.’’ (‘‘Cheevers’’) to 

‘‘Penserra Securities, LLC’’ (‘‘Penserra’’) to reflect 

that Cheevers merged with Penserra, with Penserra 

as the surviving entity. Amendment No. 1 is 

available at: https://www.sec.gov/comments/sr-chx2016-20/chx201620.shtml. 

11See Notice, supra note 3, 81 FR at 89544. See 

also CHX Rules Article 1, Rule 1(s) (defining 

‘‘Participant’’). 

12See Notice, supra note 3, 81 FR at 89544. 

13See id. 

14See id. 

15According to the Exchange, Jay Lu is associated 

with an affiliate of Chongqing Casin and is the son 

of Shengju Lu, the Chairman of Chongqing Casin. 

See Notice, supra note 3, 81 FR at 89545, n.18. The 

Exchange represents that the only Related Persons 

among the upstream owners are Castle YAC and NA 

Casin Group. See id. 

to Section 19(b)(2) of the Exchange Act,8

the Commission designated a longer 

period for Commission action on 

proceedings to determine whether to 

disapprove the proposed rule change.9

On August 7, 2017, the Exchange filed 

Amendment No. 1 to the proposed rule 

change.10 The Commission is 

publishing this notice to solicit 

comments on Amendment No. 1 from 

interested persons and is approving the 

proposed rule change, as modified by 

Amendment No. 1, on an accelerated 

basis. 

II. Summary of the Proposal, As 

Modified by Amendment No. 1 

Currently, the Exchange is a whollyowned subsidiary of CHX Holdings, and 

CHX Holdings is beneficially owned by 

193 firms or individuals, including 

certain Participants or affiliates of 

Participants.11 Pursuant to the terms of 

an Agreement and Plan of Merger, dated 

February 4, 2016 (‘‘Merger Agreement’’), 

by and among NA Casin Holdings, 

Exchange Acquisition Corporation, 

Chongqing Casin Enterprise Group Co., 

LTD. (‘‘Chongqing Casin’’), Richard G. 

Pane solely in his capacity as the 

Stockholders Representative thereunder, 

and CHX Holdings, Exchange 

Acquisition Corporation would merge 

into CHX Holdings, which would then 

become a wholly-owned direct 

subsidiary of NA Casin Holdings.12

Current CHX Holdings stockholders 

would receive the right to receive cash 

in exchange for their shares under the 

terms of the Transaction.13 The 

Exchange would continue to be a 

wholly-owned subsidiary of CHX 

Holdings. Consummation of the 

Transaction is subject to the satisfaction 

of certain conditions precedent, 

including approval by the Commission 

of the proposed rule change.14

The Exchange represents that, after 

the closing of the Transaction, all of the 

outstanding and issued shares of NA 

Casin Holdings would be held by the 

following firms and individuals 

(referred to collectively as the 

‘‘upstream owners’’) in the following 

percentages: 

Upstream Owners 

• NA Casin Group, Inc. (‘‘NA Casin 

Group’’), a corporation incorporated 

under the laws of the State of Delaware 

and wholly-owned by Chongqing Casin, 

a limited company organized under the 

laws of the People’s Republic of China 

(‘‘PRC’’)—20% 

• Chongqing Jintian Industrial Co., 

Ltd., a corporation incorporated under 

the laws of the PRC—15% 

• Chongqing Longshang Decoration 

Co., Ltd., a corporation incorporated 

under the laws of the PRC—14.5% 

• Castle YAC Enterprises, LLC 

(‘‘Castle YAC’’), a limited liability 

company organized under the laws of 

the State of New York, the sole member 

of which is Jay Lu,15 a U.S. citizen and 

Vice President of NA Casin Group— 

19% 

• Raptor Holdco LLC (‘‘Raptor’’), a 

limited liability company organized 

under the laws of the State of 

Delaware—11.75% 

• Saliba Ventures Holdings, LLC 

(‘‘Saliba’’), a limited liability company 

organized under the laws of the State of 

Illinois—11.75% 

• Xian Tong Enterprises, Inc., a 

corporation incorporated under the laws 

of the State of New York—6.94% 

mstockstill on DSK30JT082PROD with NOTICES

38736 Federal Register / Vol. 82, No. 156 / Tuesday, August 15, 2017 / Notices 

16See id. at 89544–55; see Amendment No. 1, 

supra note 10, at 7 (explaining that Cheevers 

merged with Penserra, with Penserra as the 

surviving entity). 

17 15 U.S.C. 78f. 

18 15 U.S.C. 78c(a)(26). 

19See Exhibits 5C and 5D. All Exhibits to the 

proposed rule change are available at: https://

www.sec.gov/rules/sro/chx/chxarchive/ 

chxarchive2016.shtml. 

20See Exhibits 5A and 5B. 

21See Exhibit 5E. The current CHX Holdings 

Certificate and CHX Holdings Bylaws require that, 

for so long as CHX Holdings controls the Exchange, 

either directly or indirectly, any changes to the CHX 

Holdings Certificate or CHX Holdings Bylaws must 

be submitted to the board of directors of the 

Exchange and, if the Exchange’s board determines 

that the change must be filed with, or filed with and 

approved by, the Commission under Section 19 of 

the Exchange Act and the rules thereunder, then the 

changes will not be effective until filed with, or 

filed with and approved by, the Commission. See 

Article THIRTEENTH of the current CHX Holdings 

Certificate; and Article VIII of the current CHX 

Holdings Bylaws. Section 19(b) of the Exchange Act 

and Rule 19b–4 thereunder require an SRO to file 

proposed rule changes with the Commission. 

Although CHX Holdings is not an SRO, its 

certificate of incorporation and bylaws are rules of 

the Exchange if they are stated policies, practices, 

or interpretations (as defined in Rule 19b–4 under 

the Exchange Act) of the exchange, and must 

therefore be filed with the Commission pursuant to 

section 19(b)(4) of the Exchange Act and Rule 19b– 

4 thereunder. Accordingly, the Exchange filed the 

CHX Holdings Certificate and CHX Holdings 

Bylaws with the Commission. 

22See Exhibits 5F and 5G. The proposed NA 

Casin Holdings Certificate and NA Casin Holdings 

Bylaws require that, for so long as NA Casin 

Holdings controls the Exchange, either directly or 

indirectly, any change to those documents must be 

submitted to the board of directors of the Exchange 

and, if the Exchange’s board determines that the 

change must be filed with, or filed with and 

approved by, the Commission under Section 19 of 

the Exchange Act and the rules thereunder, then the 

changes will not be effective until filed with, or 

filed with and approved by, the Commission. See 

proposed NA Casin Holdings Certificate, Article X; 

proposed NA Casin Holdings Bylaws, Article 11. 

Although NA Casin Holdings is not an SRO, its 

certificate of incorporation and bylaws are rules of 

the Exchange if they are stated policies, practices, 

or interpretations (as defined in Rule 19b–4 under 

the Exchange Act) of the exchange, and must 

therefore be filed with the Commission pursuant to 

section 19(b)(4) of the Exchange Act and Rule 19b– 

4 thereunder. Accordingly, the Exchange filed the 

NA Casin Holdings Certificate and NA Casin 

Holdings Bylaws with the Commission. 

23See Exhibit 5H. 

24See Exhibit 5I. 

25See Exhibit 5J. 

26See Exhibit 5K. 

27See infra Section III.A. 

28See id. 

29The NA Casin Holdings Certificate and CHX 

Holdings Certificate define ‘‘Person’’ to mean ‘‘a 

natural person, partnership (general or limited), 

corporation, limited liability company, trust or 

unincorporated organization, or a governmental 

entity or political subdivision thereof.’’ See 

proposed CHX Holdings Certificate Article 

FOURTH, Section (b); proposed NA Casin Holdings 

Certificate Article IX, Section (4). 

30CHX proposes to define the term ‘‘Related 

Persons’’ in the NA Casin Holdings Certificate and 

CHX Holdings Certificate to mean: (1) With respect 

to any Person, any executive officer (as such term 

is defined in Rule 3b–7 under the Exchange Act), 

director, general partner, manager or managing 

member, as applicable, and all ‘‘affiliates’’ and 

‘‘associates’’ of such Person (as those terms are 

defined in Rule 12b–2 under the Exchange Act), 

and other Person(s) whose beneficial ownership of 

shares of stock of NA Casin Holdings or CHX 

Holdings, as applicable, with the power to vote on 

any matter would be aggregated with such first 

Person’s beneficial ownership of such stock or 

deemed to be beneficially owned by such first 

Person pursuant to Rules 13d–3 and 13d–5 under 

the Exchange Act; and (2) in the case of any 

Participant, for so long as CHX remains a registered 

national securities exchange, such Person and any 

broker or dealer with which such Person is 

associated; and (3) any other Person(s) with which 

such Person has any agreement, an arrangement or 

understanding (whether or not in writing) to act 

together for the purpose of acquiring, voting, 

holding or disposing of shares of the stock of NA 

Casin Holdings or CHX Holdings, as applicable; and 

(4) in the case of a Person that is a natural person, 

any relative or spouse of such Person, or any 

relative of such spouse, who has the same home as 

such Person or who is a director or officer of NA 

Casin Holdings or CHX Holdings, as applicable, or 

any of its parents or subsidiaries. See proposed 

CHX Holdings Certificate Article FOURTH, Section 

(b); and proposed NA Casin Holdings Certificate 

Article IX, Section (4). 

31See proposed CHX Holdings Certificate Article 

FOURTH, Section (c)(i); and proposed NA Casin 

Holdings Certificate Article IX, Section (9). 

32See proposed CHX Holdings Certificate Article 

FOURTH, Section (c)(ii); proposed NA Casin 

Holdings Certificate Article IX, Section (10). 

33See proposed CHX Holdings Certificate Article 

FOURTH, Section (d); and proposed NA Casin 

Holdings Certificate Article IX, Section (13). 

• Five members of the CHX Holdings 

management team, all U.S. citizens— 

0.88% (as equity incentives) 

• Penserra, a limited liability 

company organized under the laws of 

the State of New York—0.18%16

After the closing of the Transaction, 

CHX would remain a national securities 

exchange, registered under Section 6 of 

the Exchange Act,17 and a selfregulatory organization (‘‘SRO’’), as 

defined in Section 3(a)(26) of the 

Exchange Act.18 In addition, following 

the closing, the Exchange’s affiliated 

routing broker, CHXBD, would remain a 

Delaware limited liability corporation of 

which CHX Holdings would remain the 

sole member. 

To effect the Transaction, the 

Exchange proposes to amend its 

certificate of incorporation and bylaws 

(‘‘CHX Bylaws’’),19 the certificate of 

incorporation (‘‘CHX Holdings 

Certificate’’) and bylaws (‘‘CHX 

Holdings Bylaws’’) of CHX Holdings,20

and the Exchange’s rules.21 The 

Exchange has also filed the following 

documents in connection with the 

Transaction: (1) the certificate of 

incorporation (‘‘NA Casin Holdings 

Certificate’’) and bylaws (‘‘NA Casin 

Holdings Bylaws’’) of NA Casin 

Holdings; 22 (2) text of a proposed 

resolution of CHX Holdings’ board of 

directors to waive certain ownership 

and voting limitations to permit the 

Transaction; 23 (3) the proposed NA 

Casin Holdings Stockholders’ 

Agreement,24 which includes transferof-share provisions for the upstream 

owners that provide a right of first offer, 

a right to acquire interest upon change 

of control, and a right to purchase new 

securities; and (4) put agreements 

between Saliba, NA Casin Group, and 

NA Casin Holdings (‘‘Saliba Put 

Agreement’’),25 and Raptor, NA Casin 

Group, and NA Casin Holdings (‘‘Raptor 

Put Agreement’’),26 which would grant 

Saliba and Raptor, respectively, the 

right to compel NA Casin Holdings to 

purchase or arrange for an unspecified 

third-party to purchase a specified 

amount of Saliba’s or Raptor’s equity 

interest in NA Casin Holdings, 

respectively. 

The Exchange proposes several 

substantive and technical amendments 

to its corporate governance documents, 

rules, and the governing documents of 

CHX Holdings. Among other items, the 

proposed amendments revise provisions 

in the CHX Holdings Certificate relating 

to ownership and voting limitations.27

In addition, to govern the upstream 

owners, the Exchange proposes to 

establish in the NA Casin Holdings’ 

Certificate ownership and voting 

limitations that are identical to those 

contained in the proposed CHX 

Holdings documents.28 In particular, 

these provisions prohibit any Person,29

either alone or with its Related 

Persons,30 from beneficially owning 

shares of stock of CHX Holdings or NA 

Casin Holdings representing in the 

aggregate more than 40% of the then 

outstanding votes entitled to be cast on 

any matter unless specific procedures 

are followed prior to acquiring shares in 

excess of the ownership limitation.31 In 

addition, no Participant, either alone or 

with its Related Persons, would be 

permitted at any time to beneficially 

own shares of stock of CHX Holdings or 

NA Casin Holdings representing in the 

aggregate more than 20% of the then 

outstanding votes entitled to be cast on 

any matter.32 Further, no Person that is 

subject to any statutory disqualification 

as defined in Section 3(a)(39) of the 

Exchange Act would be permitted at any 

time to beneficially own, either alone or 

with its Related Persons, shares of stock 

of CHX Holdings or NA Casin Holdings 

representing in the aggregate more than 

20% of the then outstanding votes 

entitled to be cast on any matter.33 CHX 

also proposes cure provisions that 

would require CHX Holdings or NA 

Casin Holdings, as applicable, to call 

shares held in excess of these ownership 

limits, and to not register any shares 

transferred in violation of these 

mstockstill on DSK30JT082PROD with NOTICES

Federal Register / Vol. 82, No. 156 / Tuesday, August 15, 2017 / Notices 38737 

34See proposed CHX Holdings Certificate Article 

FOURTH, Sections (c)(i)(C), (c)(ii)–(iii), and (d); 

proposed NA Casin Holdings Certificate Article IX, 

Sections (9)(iii), (10), (11), and (13). 

35See proposed CHX Holdings Certificate 

FOURTH (b)(i); and proposed NA Casin Holdings 

Certificate Article IX, Section (5). 

36See id. 

37See id. 

38See proposed NA Casin Holdings Certificate 

Article IX, Section (19)(i); proposed CHX Holdings 

Certificate Article Fourth(g)(i). 

39See proposed NA Casin Holdings Certificate 

Article IX, Section (19)(ii); proposed CHX Holdings 

Certificate Article Fourth(g)(ii). 

40See proposed CHX Holdings Bylaws, Article 

XIII, Section 13.1. 

41See proposed CHX Bylaws, Article XIII, Section 

13.1 

42See proposed NA Casin Holdings Bylaws, 

Article 10, Section 10.1.3. 

43See infra Sections III.A and III.B. 

44See id. 

45See Amendment No. 1, supra note 10, at 5. 

46 In approving this proposed rule change, the 

Commission has considered the proposed rule 

change’s impact on efficiency, competition, and 

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

47 15 U.S.C. 78f(b)(1) and f(b)(3). 

48 15 U.S.C. 78f(b)(5). 

49See infra note 85 and accompanying text. 

ownership limits.34 These restrictions 

are described herein as the ‘‘ownership 

limitations.’’ 

In addition, both the CHX Holdings 

Certificate and NA Casin Holdings 

Certificate contain voting restrictions 

that would preclude any stockholder, 

either alone or with its Related Persons, 

from voting more than 20% of the then 

outstanding shares entitled to be cast on 

any matter unless specific procedures 

are followed prior to voting in excess of 

the limitation.35 Similarly, no Person, 

either alone or with its Related Persons, 

would be permitted to enter into an 

agreement, plan, or other arrangement 

that would result in an aggregate of 

more than 20% of the then outstanding 

votes entitled to be cast on a matter to 

not be voted unless specific procedures 

are followed prior to entering into such 

an agreement, plan, or arrangement.36

The certificates of incorporation would 

also require that CHX Holdings and NA 

Casin Holdings disregard any votes cast 

in excess of the voting limitations.37

These restrictions are described herein 

as the ‘‘voting limitations.’’ 

In addition, the Exchange has 

proposed revisions to the corporate 

governance documents of NA Casin 

Holdings and CHX Holdings to provide 

notice requirements with respect to 

changes in ownership that may affect 

the ownership and voting limitations. 

Specifically, the NA Casin Holdings 

Certificate and CHX Holdings Certificate 

will provide that: (1) Each Person 

involved in an acquisition for shares of 

stock of the corporation shall provide 

the corporation with written notice 14 

days prior to the closing date of any 

acquisition that would result in a Person 

having voting rights or beneficial 

ownership, alone or together with its 

Related Persons, of record or 

beneficially, of five percent or more of 

the then outstanding shares of stock of 

the corporation entitled to vote on any 

matter; (2) NA Casin Holdings and CHX 

Holdings will be required to provide 10- 

day advance written notice to the 

Commission of any such changes in 

ownership; (3) any Person that, either 

alone or together with its Related 

Persons, has voting rights or beneficial 

ownership of, five percent or more of 

the outstanding voting shares of CHX 

Holdings or NA Casin Holdings 

(whether by acquisition or by change in 

the number of shares outstanding or 

otherwise), will be required, 

immediately upon acquiring knowledge 

of its ownership, to give the board of 

directors of CHX Holdings or NA Casin 

Holdings, as applicable, notice of such 

ownership; (4) any Person that, either 

alone or together with its Related 

Persons, of record or beneficially, has 

voting rights or beneficial ownership of 

five percent or more of NA Casin 

Holdings or CHX Holdings must 

promptly update the corporation if its 

ownership stake in or voting power 

regarding NA Casin Holdings or CHX 

Holdings increases or decreases by one 

percent or more;38 and (5) each Person 

having voting rights or beneficial 

ownership of stock of the NA Casin 

Holdings or CHX Holdings will be 

required to provide prompt written 

notice to the corporation regarding any 

changes to its Related Person status with 

respect to other Persons that own voting 

shares of stock of the corporation.39

Furthermore, CHX is amending the 

CHX Holdings Bylaws,40 CHX Bylaws,41

and NA Casin Holdings Bylaws,42 to 

adopt provisions in each respective 

document to require that each of CHX 

Holdings, CHX, and NA Casin Holdings, 

as applicable, contemporaneously 

provide the Commission with any 

information it provides to any other U.S. 

governmental entity or U.S. authority 

pursuant to any agreement. 

The proposed rule change also 

includes changes to CHX Holdings’ and 

the Exchange’s certificates of 

incorporation and bylaws addressing, 

among other items, board and 

committee composition and procedures, 

procedures regarding stockholder 

meetings, consent to U.S. federal court 

and Commission jurisdiction, and 

Commission access to certain corporate 

books and records.43 The proposed rule 

change also adopts provisions in the 

new NA Casin Holdings Certificate and 

NA Casin Holdings Bylaws relating to 

these matters.44

III. Discussion and Commission 

Findings 

The Commission has carefully 

considered the proposed rule change, 

comments on the proposal, and the 

commitments undertaken by the 

Exchange in Amendment No. 1, which 

was filed to respond to comments.45 The 

Commission has also considered 

additional information provided by the 

Exchange, some of which was provided 

on a confidential basis. Based on this 

consideration, the Commission finds 

that the proposed rule change is 

consistent with the requirements of the 

Exchange Act and the rules and 

regulations thereunder applicable to a 

national securities exchange.46 In 

particular, the Commission finds that 

the proposed rule change is consistent 

with Sections 6(b)(1) and 6(b)(3) of the 

Exchange Act,47 which require, among 

other things, that: (1) A national 

securities exchange be organized and 

have the capacity to be able to carry out 

the purposes of the Exchange Act and to 

enforce compliance by its members and 

persons associated with its members 

with the provisions of the Exchange Act, 

the rules and regulations thereunder, 

and the rules of the exchange; and (2) 

the rules of a national securities 

exchange assure the fair representation 

of its members in the selection of its 

directors and administration of its 

affairs, and provide that one or more 

directors shall be representative of 

issuers and investors and not be 

associated with a member of the 

exchange, broker, or dealer. The 

Commission also finds that the proposal 

is consistent with Section 6(b)(5) of the 

Exchange Act,48 which requires that the 

rules of a national securities exchange 

be designed to promote just and 

equitable principles of trade, to remove 

impediments to and 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 Commission notes that, as 

discussed below, several commenters 

assert that the proposed rule change is 

inconsistent with Sections 6(b)(1) and 

6(b)(5) of the Exchange Act because they 

believe that the proposed ownership 

structure is opaque and therefore it 

would be difficult for the Exchange to 

monitor for compliance with the 

Exchange Act and the rules of the 

Exchange,49 and for the Commission to 

exercise regulatory oversight, following 

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50See infra notes 91–95 and accompanying text. 

51See infra Section III.A. 

52See supra notes 12–14 and accompanying text. 

53See supra note 16 and accompanying text. 

54See supra notes 28–37 and accompanying text. 

55See infra Section III.D. 

56See proposed NA Casin Holdings Certificate 

Article IX, Section (9). 

57See proposed NA Casin Holdings Certificate 

Article IX, Section (10). 

58See proposed NA Casin Holdings Certificate 

Article IX, Section (13). 

59See proposed NA Casin Holdings Certificate 

Article IX, Section (9)(i)–(ii). 

60See proposed NA Casin Holdings Certificate 

Article IX, Section (19)(i); proposed CHX Holdings 

Certificate Article FOURTH(g)(i). 

61See proposed NA Casin Holdings Certificate 

Article IX, Section (9)(i)–(ii). 

62See proposed NA Casin Holdings Certificate 

Article IX, Sections (9)(iii), (10), and (13). 

63See proposed NA Casin Holdings Certificate 

Article IX, Section (11). 

64See proposed NA Casin Holdings Certificate 

Article IX, Section (5). 

65See id. 

the closing of the Transaction.50 After 

careful consideration, as discussed 

further below, the Commission believes 

that the commenters’ concerns are 

adequately addressed by the following 

safeguards: The ownership and voting 

limitations as well as the related 

monitoring provisions and related 

remedies; the notice requirements 

regarding changes in ownership and 

Related Person relationships; provisions 

relating to compliance with U.S. law; 

consents to jurisdiction; requirements to 

give due regard to the regulatory 

obligations and functions of the 

Exchange; and provisions ensuring 

access to books and records.51

A. Voting and Ownership Limitations; 

Consent to Jurisdiction; Due Regard; 

Books and Records 

As noted above,52 under the terms of 

the Transaction, CHX will continue to 

be a wholly-owned subsidiary of CHX 

Holdings, and CHX Holdings will 

become a wholly-owned subsidiary of 

NA Casin Holdings. Furthermore, NA 

Casin Holdings will be owned by a 

consortium of both U.S. and non-U.S. 

entities.53

The rules of each exchange provide 

for limitations on ownership and voting 

rights, which are designed to prevent 

any stockholder from exercising undue 

control over the operation of an 

exchange and to assure that the 

exchange and the Commission are able 

to carry out their regulatory obligations 

under the Exchange Act. Here, CHX 

represents that the CHX Holdings 

Certificate and the NA Casin Holdings 

Certificate contain substantially 

identical ownership and voting 

limitations (other than the requirement 

that NA Casin Holdings take reasonable 

to steps to cause CHX Holdings to be in 

compliance with the voting and 

ownership limitations contained in the 

CHX Holdings Certificate).54 Under the 

proposal, the board of directors of CHX 

Holdings would waive CHX Holdings’ 

40% ownership limitation with respect 

to the proposed acquisition by NA Casin 

Holdings so that NA Casin Holdings 

could own 100% of CHX Holdings.55

But the relevant ownership and voting 

limitations will be contained in the NA 

Casin Holdings Certificate. The 

Commission notes that these limitations 

are designed to prevent any stockholder 

from exercising undue control over the 

operation of CHX and to assure that 

CHX and the Commission are able to 

carry out their regulatory obligations 

under the Exchange Act. The proposed 

governing documents of CHX Holdings 

and NA Casin Holdings contain 

provisions relating to compliance with 

U.S. law, consent to jurisdiction, due 

regard to the regulatory obligations and 

functions of the Exchange, and books 

and records that are designed to address 

CHX’s ability to carry out its regulatory 

obligations and the Commission to 

exercise its regulatory oversight over 

CHX after the acquisition. 

1. Proposed Ownership and Voting 

Limitations 

With regard to ownership, the NA 

Casin Holdings Certificate restricts the 

ability of any Person, either alone or 

with its Related Persons, to vote or own 

shares of stock of NA Casin Holdings 

above certain thresholds. Specifically, 

the NA Casin Holdings Certificate 

provides that unless otherwise 

provided, no Person, either alone or 

with its Related Persons, shall be 

permitted at any time to beneficially 

own shares of stock of NA Casin 

Holdings representing in the aggregate 

more than 40% of the then outstanding 

votes entitled to be cast on any matter.56

In addition, the NA Casin Holdings 

Certificate prohibits any Participant, 

either alone or with its Related Persons, 

from beneficially owning shares of stock 

of NA Casin Holdings representing in 

the aggregate more than 20% of the then 

outstanding votes entitled to be cast on 

any matter.57 The NA Casin Holdings 

Certificate also prohibits a Person that is 

subject to any statutory disqualification 

as defined in Section 3(a)(39) of the 

Exchange Act from at any time 

beneficially owning, either alone or 

with its Related Persons, shares of stock 

of NA Casin Holdings representing in 

the aggregate more than 20% of the then 

outstanding votes entitled to be cast on 

any matter.58

The NA Casin Holdings Certificate 

provides that if any Person, either alone 

or with its Related Persons, intends on 

acquiring ownership in excess of these 

ownership limitations, such Person 

must provide the board of directors of 

NA Casin Holdings with advance notice, 

the board must adopt a resolution 

permitting such ownership, and such 

resolution must be filed with and 

approved by the Commission under 

Section 19(b) of the Exchange Act.59 In 

addition, the NA Casin Holdings and 

CHX Holdings Certificates both provide 

that the Commission will be given prior 

notice of any acquisition that would 

result in a Person, alone or together with 

its Related Persons, owning or voting 

five percent or more of the voting stock 

of the NA Casin Holdings or CHX 

Holdings, as applicable.60

In addition, the NA Casin Holdings 

Certificate provides that, if any Person, 

either alone or with its Related Persons, 

at any time beneficially owns shares of 

stock of NA Casin Holdings in excess of 

the ownership limitations described 

above and such proposed ownership has 

not been approved by the board of 

directors of NA Casin Holdings and the 

Commission in accordance with the NA 

Casin Holdings Certificate,61 NA Casin 

Holdings will call from such Person and 

its Related Persons the number of shares 

of stock of NA Casin Holdings entitled 

to vote on any matter that exceeds the 

ownership limitation at a price equal to 

the par value of the shares of stock.62 In 

addition, the NA Casin Holdings 

Certificate provides that NA Casin 

Holdings will not register the purported 

transfer of any shares of its stock in 

violation of the 40% ownership 

limitation set forth in Article IX, Section 

(9).63

The NA Casin Holdings Certificate 

also contains voting restrictions. It 

provides that no Person, either alone or 

with its Related Persons, as of any 

record date for the determination of 

stockholders entitled to vote on any 

matter, shall be entitled to vote or cause 

the voting of shares of stock of NA Casin 

Holdings, in person or by proxy or 

through any voting agreement or other 

arrangement, to the extent such shares 

represent in the aggregate more than 

20% of the then outstanding votes 

entitled to be cast on such matter.64 The 

NA Casin Holdings Certificate also 

provides that NA Casin Holdings will 

disregard any votes cast in excess of the 

voting limitation.65 Further, the NA 

Casin Holdings Certificate requires NA 

Casin Holdings to take reasonable steps 

necessary to cause CHX Holdings to 

comply with the voting and ownership 

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66See proposed NA Casin Holdings Certificate 

Article IX, Section (4). 

67See supra note 15. 

68See Amendment No. 1, supra note 10 at Exhibit 

2. 

69See Amendment No. 1, supra note 10, at 9–10 

(see CHX Holdings Certificate, Article FOURTH(h); 

NA Casin Holdings Certificate, Article IX, Section 

(20)). 

70See Notice, supra note 3, 81 FR at 89545. The 

put agreements contemplate that the closing of the 

purchase of shares pursuant to the put agreements 

may be delayed in the event that the parties need 

to seek regulatory approval. See Saliba Put 

Agreement, Section 3(c); Raptor Put Agreement, 

Section 3(c). In accordance with Article IX, Section 

(9) of the NA Casin Holdings Certificate, if exercise 

of the put agreements would result in any party 

owning more than 40% of the outstanding voting 

stock in NA Casin Holdings, the parties would need 

to seek approval of NA Casin Holdings’ board of 

directors to waive the 40% ownership limitation 

and the proposed rule change approving such 

waiver would need to be filed with and approved 

by the Commission. Therefore, before the exercise 

of the put rights could close and transfer shares in 

violation of the 40% ownership limitation, the 

Commission would have an opportunity to evaluate 

whether the transfer of shares would be consistent 

with the Exchange Act. Accordingly, these put 

rights should not result in any entity holding over 

40% of ownership without first receiving 

Commission approval. 

71See Amendment No. 1, supra note 10, at 

Exhibit 2. 

72See Amendment No. 1, supra note 10, at 10; 

proposed CHX Holdings Certificate, Article 

FOURTH(i)(i). 

73See Amendment No. 1, supra note 10, at 10; 

proposed CHX Holdings Certificate, Article 

FOURTH(i)(ii). 

limitations set forth in the CHX 

Holdings Certificate.66

Relevant to the ownership and voting 

limitations, the Exchange represents 

that the only Related Persons among the 

upstream owners are Castle YAC and 

NA Casin Group.67 Together, Castle 

YAC and NA Casin Group would hold 

a 39% ownership interest in NA Casin 

Holdings, which is lower than the 40% 

ownership limitation. In addition, they 

would not be permitted to exercise their 

collective voting interest in excess of the 

20% voting limitation. In connection 

with the proposed rule change, the 

Exchange has submitted to the 

Commission and to CHX a certification 

from each of the upstream owners 

attesting: (1) To the identities of its 

Related Persons; (2) that such owner 

does not directly, or indirectly through 

one or more intermediaries, control, and 

is not, directly or indirectly through one 

or more intermediaries, controlled or 

owned by, or under common control or 

ownership with, a governmental entity 

or political subdivision thereof; (3) that 

no agreement, arrangement, or 

understanding for the purpose of 

acquiring, voting, holding, or disposing 

of stock of NA Casin Holdings exist 

between the stockholder and any of the 

upstream owners; and (4) that neither 

such owner nor any of its Related 

Persons is subject to any applicable 

‘‘statutory disqualification’’ as defined 

in Section 3(a)(39) of the Exchange 

Act.68

In addition, by September 1, 2018, 

and for every year thereafter, each 

stockholder of NA Casin Holdings and 

CHX Holdings would be required to 

submit to the Commission and the 

corporation an attestation regarding: (1) 

Its equity ownership level in the 

corporation and the identity of its 

Related Persons and (2) the existence of 

any agreement, arrangement or 

understanding (whether or not in 

writing) between the stockholder and 

any other person to act together for the 

purpose of acquiring, voting, holding or 

disposing of shares of stock of the 

corporation.69 The Exchange further 

represents that the NA Casin Holdings 

Stockholders’ Agreement and the Raptor 

and Saliba put agreements would not 

violate the proposed ownership and 

voting limitations.70

2. Proposed Provisions on Consent to 

Jurisdiction; Books and Records; Due 

Regard 

Proposed Article IX, Section 2 of the 

NA Casin Holdings Certificate and 

proposed Section 3.4 of the CHX 

Holdings Bylaws provide that each of 

NA Casin Holdings and CHX Holdings, 

respectively, and its officers, directors, 

employees, and agents, by virtue of their 

acceptance of their positions, shall 

comply with the federal securities laws 

and rules and regulations thereunder 

and shall cooperate, and shall take 

reasonable steps necessary to cause its 

agents to cooperate, with respect to such 

agents’ activities related to CHX, with 

the Commission and the Exchange, 

pursuant to, and to the extent of, CHX’s 

regulatory authority. In addition, 

pursuant to proposed Article 10, Section 

10.1 of the NA Casin Holdings Bylaws 

and Article III, Section 3.5 of the CHX 

Holdings Bylaws, each entity and its 

officers, directors, employees, and 

agents, by virtue of their acceptance of 

their positions, submit to the 

jurisdiction of the U.S. federal courts, 

the Commission, and the Exchange, and 

agree to maintain an agent in the U.S. 

for service of process of a claim arising 

out of, or relating to, the activities of the 

Exchange. 

In addition, CHX has filed a statement 

from each of the upstream owners in 

which each such owner (1) irrevocably 

submits to the jurisdiction of the U.S. 

federal courts, the Commission, and 

CHX, for the purposes of any suit, action 

or proceeding relating to the 

certification it provided to the 

Commission and CHX arising pursuant 

to the U.S. federal securities laws, or the 

rules and regulations thereunder, arising 

out of, or relating to, the activities of 

CHX, and waive, and agree not to assert 

by way of motion, as a defense or 

otherwise in any such suit, action or 

proceeding, any claims that it is not 

personally subject to the jurisdiction of 

the U.S. federal courts, the Commission 

or CHX, that the suit, action or 

proceeding is an inconvenient forum or 

that the venue of the suit, action or 

proceeding is improper, or that the 

subject matter of that suit, action or 

proceeding may not be enforced in or by 

such courts or agency; (2) designates, 

authorizes and identifies to the 

Commission an agent in the U.S. for the 

service of process of a claim arising out 

of, or relating to, the activities of CHX, 

including the certificates provided to 

CHX and the Commission regarding, 

among other things, its ownership level 

and Related Person status; and (3) agrees 

to promptly inform the Commission in 

writing of any change to its designated 

and authorized agent.71

CHX Holdings also proposes to amend 

its certificate of incorporation to state 

that its chief compliance officer shall (1) 

monitor compliance with the ownership 

and voting limitations applicable to all 

upstream beneficial owners and (2) 

ensure that each beneficial owner of the 

corporation provides certain annual 

attestations.72 The CHX Holdings 

Certificate also provides that CHX 

Holdings shall engage an independent 

and PCAOB-registered auditor that will 

perform within one year of the closing 

date of the Transaction, and every two 

years thereafter, an audit of CHX 

Holdings’ oversight of compliance with 

the ownership and voting limitations.73

Proposed Article IX, Section 3 of the 

NA Casin Holdings Certificate and 

proposed Article III, Section 3.1 of the 

CHX Holdings Bylaws require that, for 

as long as NA Casin Holdings and CHX 

Holdings control the Exchange, each of 

NA Casin Holdings and CHX Holdings, 

respectively, and its board of directors, 

officers, employees, and agents, shall 

give due regard to the preservation of 

the independence of the self-regulatory 

function of the Exchange and to its 

obligations to investors and the general 

public, and shall not take any actions 

that would interfere with the 

effectuation of any decisions by the 

board of directors of the Exchange 

relating to its regulatory functions 

(including enforcement and disciplinary 

matters) or the structure of the market 

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74These provisions also state that they shall not 

be interpreted as to limit or impeded the rights of 

the Commission or the Exchange to access and 

examine such confidential information pursuant to 

the federal securities laws and the rules and 

regulations promulgated thereunder or the ability of 

any officers, directors, employees or agents of each 

entity to disclose such confidential information to 

the Commission or the Exchange. 

75See proposed CHX Rules Article 24, Rule 2(a). 

76See proposed CHX Rules Article 24, Rule 2(b). 

77For purposes of proposed CHX Rule Article 24, 

Rule 1, CHX defines ‘‘Authorized Personnel’’ to 

mean (1) regulatory, compliance and legal 

personnel of the Exchange and (2) information 

technology personnel of the Exchange working 

under the supervision of regulatory, compliance or 

legal personnel of the Exchange. 

78See proposed CHX Rules Article 24, Rule 1(b). 

79See proposed CHX Rules Article 24, Rule 3(a). 

80See Ciccarelli Letter, supra note 6; Ferris Letter 

1, supra note 6; Ferris Letter 2, supra note 6; 

Brennan Letter, supra note 6; Mayer Letter, supra 

note 6; Bass Letter, supra note 6, at 2–4. Another 

commenter asserts: ‘‘[m]urky Chinese ownership 

laws, poor property ownership rights and deficient 

IP protection rules’’ make it ‘‘unclear who would 

actually own CHX under Chinese law.’’ See Park 

Letter, supra note 6, at 4. 

81See Ciccarelli Letter, supra note 6, at 2–9; 

Mayer Letter, supra note 6; Brennan Letter, supra 

note 6, at 1–2; Ferris Letter 1, supra note 6, at 2– 

3; Ferris Letter 2, supra note 6, at 1–3; Park Letter, 

supra note 6, at 2; and Bass Letter, supra note 6, 

at 2–4. 

82See Ciccarelli Letter, supra note 6, at 2–3; 

Ferris Letter 1, supra note 6, at 2–3; Bass Letter, 

supra note 6, at 2; and Ferris Letter 2, supra note 

6, at 4. See also Mayer Letter, supra note 4 

(asserting that certain of the proposed upstream 

owners are shell companies put in place by 

Chongqing Casin to avoid ‘‘explicit violation’’ of the 

40% ownership limitation, and should be examined 

for independence from Chongqing Casin). 

83See Ciccarelli Letter, supra note 6, at 1–2. See 

also Ferris Letter 2, supra note 6, at 4; and Bass 

Letter, supra note 6, at 3. 

84See Brennan Letter, supra note 6, at 1; 

Ciccarelli Letter, supra note 6, at 2; Ferris Letter 1, 

supra note 6, at 1; Bass Letter, supra note 6, at 1; 

Ferris Letter 2, supra note 6, at 4. 

that the Exchange regulates or that 

would interfere with the ability of the 

Exchange to carry out its responsibilities 

under the Exchange Act. 

Proposed Article IX, Sections 3 and 

17 of the NA Casin Holdings Certificate 

and proposed Sections 3.1 and 3.3 of the 

CHX Holdings Bylaws provide that each 

entity’s respective books and records 

related to the activities of the Exchange 

will be maintained within the U.S. 

Proposed Article IX, Section 17 of the 

NA Casin Holdings Certificate and 

proposed Section 3.3 of the CHX 

Holdings Bylaws also provide that for so 

long as NA Casin Holdings and CHX 

Holdings control, directly or indirectly, 

the Exchange, the books, records, 

premises, officers, directors, and 

employees of the NA Casin Holdings 

and CHX Holdings, respectively, will be 

deemed to be the books, records, 

premises, officers, directors, and 

employees of the Exchange for the 

purposes of and subject to oversight 

pursuant to the Exchange Act, but only 

to the extent that such books and 

records are related to, or such officers, 

directors, and employees are involved 

in, the activities of the Exchange. These 

provisions further provide that the NA 

Casin Holdings and CHX Holdings 

books and records relating to the 

activities of Exchange will also be 

subject at all times to inspection and 

copying by the Commission and the 

Exchange. In addition, proposed Article 

IX, Section 16 of the NA Casin Holdings 

Certificate and proposed Article III, 

Section 3.2 of the CHX Holdings Bylaws 

require each entity to maintain the 

confidentiality of all confidential 

information pertaining to the selfregulatory functions of the Exchange 

(including, but not limited to, 

confidential information regarding 

disciplinary matters, trading data, 

trading practices and audit information) 

contained in the books and records of 

the Exchange that come into the 

possession of each entity and preclude 

each entity from using such confidential 

information for any non-regulatory 

purpose.74

Finally, proposed Article IX, Section 

18 of the NA Casin Holdings Certificate 

and proposed Article III, Section 3.7 of 

the CHX Holdings Bylaws provide that 

for so long as a stockholder shall 

maintain a direct or indirect equity 

interest in the Exchange: (1) The books, 

records, officers, directors (or 

equivalent), and employees of the 

stockholder shall be deemed to be the 

books, records, officers, directors, and 

employees of the Exchange for purposes 

of and subject to oversight pursuant to 

the Exchange Act to the extent that such 

books and records are related to, or such 

officers, directors (or equivalent) and 

employees are involved in, the activities 

of the Exchange; (2) the stockholder’s 

books and records related to the 

activities of the Exchange shall at all 

times be made available for inspection 

and copying by the Commission and the 

Exchange; and (3) the stockholder’s 

books and records related to the 

activities of the Exchange shall be 

maintained within the United States. 

CHX also proposes to amend its rules 

to require the Exchange to confirm that 

any RSA to which the Exchange is a 

party must comply with the U.S. federal 

securities laws, and the rules and 

regulations thereunder, at the time of 

the execution of the RSA and on an 

ongoing basis.75 In addition, CHX is 

amending its rules to require that its 

chief regulatory officer monitor 

Exchange compliance with the 

provisions of each RSA to which the 

Exchange is a party.76 CHX also 

proposes to amend its rules to require 

that, before reporting data to CAT or 

having access to CAT Data, the 

Exchange will adopt policies and 

procedures to ensure that only CHX 

‘‘Authorized Personnel’’ 77 have access 

to any CAT Data, and that CHX 

regulatory personnel would not provide 

access to any CAT Data to the following 

persons, regardless of citizenship: (1) 

Any personnel of CHX and CHX 

Holdings that are not Authorized 

Personnel; (2) any personnel of NA 

Casin Holdings; or (3) any upstream 

beneficial owners of the Exchange that 

are not Authorized Personnel.78 Further, 

CHX proposes to amend its rules to 

provide that it will engage an 

independent and PCAOB-registered 

auditor that would perform, within one 

year after the closing of the Transaction 

and every two years thereafter, an audit 

of CHX’s oversight of: (1) Any RSA; and 

(2) compliance with the policies and 

procedures relating to access to CAT 

Data.79

3. Summary of Comments and the 

Exchange’s Response 

The Commission received comments 

regarding the proposed rule change 

generally, and the ownership and voting 

limitations and corporate governance 

provisions in particular. First, several 

commenters express concern about the 

proposed ownership structure of CHX 

following the close of the Transaction as 

it relates to the ownership and voting 

limitations. Some of these commenters 

question the identities of the proposed 

upstream owners and the validity of the 

Exchange’s representation that there are 

no Related Persons among the proposed 

upstream owners other than Castle YAC 

and NA Casin Group.80 Several 

commenters also question the 

Exchange’s representations regarding 

the backgrounds and identities of the 

upstream owners.81 In addition, 

commenters assert that contrary to the 

Exchange’s representations, several of 

the proposed upstream owners may be 

affiliated.82 Some of these commenters 

state that, after the closing of the 

Transaction, approximately 99% of the 

voting stock in CHX would be 

controlled by what the commenters 

believe to be Chinese entities or 

affiliated shell nominees.83 Several of 

these commenters state that they believe 

that the post-Transaction ownership 

would deviate from the 40% ownership 

limitation.84

Several commenters also opine that 

the proposed upstream ownership of 

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85See Pittenger Letter 2, supra note 6, at 1; Bass 

Letter, supra note 6 at 1–5; Mayer Letter, supra note 

6; Ciccarelli Letter, supra note 6, at 1–4; Ferris 

Letter 1, supra note 6, at 1–4; Ferris Letter 2, supra 

note 6, at 1–5. See also Hill Letter 2, supra note 6 

(stating that ‘‘it is easy to become confused about 

exactly who wants to own this exchange’’). 

86See Pittenger Letter 2, supra note 6, at 1. 

87See id. 

88See Pittenger Letter 2, supra note 6, at 1. 

89See Park Letter, supra note 6, at 3. See also 

Ferris Letter 2, supra note 6, at 2 (stating that 

concerns over possible money laundering are not 

addressed by NA Casin, therefore are conceded). 

90See id. 

91See Pittenger Letters 1 and 2, supra note 6, at 

2; Ciccarelli Letter, supra note 6, at 1–2; Bass Letter, 

supra note 6, at 1; and Ferris Letter 1, supra note 

6, at 4. 

92See Brennan Letter, supra note 6, at 1. In 

addition, three commenters express concern about 

the source of funding for the Transaction. See Park 

Letter, supra note 6, at 2–3 (stating that none of 

foreign upstream owners are on the published State 

Administration of Foreign Exchange’s list of entities 

that ‘‘have applied and received approvals for 

foreign currencies’’ and questioning the legitimacy 

of the funds being used to pay for the Transaction); 

Ferris Letter 1, supra note 6, at 2; Ferris Letter 2, 

supra note 6, at 3; and Bass Letter, supra note 6, 

at 3. 

93See Ferris Letter 1, supra note 6, at 4. 

94See CHX Response Letter 2, supra note 7, at 2, 

5–6. The Exchange states that, as described in the 

Notice, Xian Tong Enterprises, Inc. and Castle YAC 

are controlled by U.S. citizens, Quiling Luo and Jay 

Lu, respectively. See id. at 4–6. 

95See id. at 2. 

96See id. at 5. 

97See id. 

98See CHX Response Letter 3, supra note 7, at 3– 

5; Saliba Letter, supra note 6, at 2; NA Casin 

Holdings Letter, supra note 6, at 7. 

99See CHX Response Letter 3, supra note 7, at 3; 

NA Casin Holdings Letter, supra note 6, at 7; 

Gouroudeva Letter, supra note 6; and Prufeta Letter, 

supra note 6. 

100See CHX Response Letter 2, supra note 7 at 

5; and CHX Response Letter 3, supra note 7, at 6. 

101See Ferris Letter 1, supra note 6, at 3; Brennan 

Letter, supra note 6, at 2; and Bass Letter, supra 

note 6, at 4–5. Another commenter expresses 

concern that CFIUS disregarded the concerns of 

Congress when it closed its review of the 

Transaction. See Hill Letter 2, supra note 6. 

102See CHX Response Letter 3, supra note 7, at 

6. 

103See id. 

104See id. 

105See Pittenger Letter 1, supra note 6, at 1–2; 

Pittenger Letter 2, supra note 6, at 1; Bass Letter at 

4, supra note 6; Mayer Letter, supra note 6; and Hill 

Letter 2, supra note 6. 

106See Pittenger Letter 1, supra note 6, at 1–2; 

Bass Letter, supra note 6, at 4 (asserting that 

Chongqing Casin could be 40% owned and 

controlled by Chinese government entities and 

Chinese government officials); Mayer Letter, supra 

note 6; and Hill Letter 2, supra note 6 (asserting that 

the Chinese government may be a minority 

stockholder in one of the upstream owners and that 

the Chinese government should not be given 

protections afforded to SROs). 

CHX is opaque.85 Some of these 

commenters state their views that 

approval of the proposal would promote 

the improper consolidation of 

ownership and coordinate voting 

control over CHX, and also materially 

harm the public trust in the 

independent and objective operation of 

U.S. capital markets.86 These 

commenters believe that the Transaction 

would concentrate ownership and 

voting power under Chongqing Casin 

and its ‘‘coordinate’’ investment entities 

in China, and with little or no insight 

and transparency into what the 

commenters state are governmentdominated Chinese markets, the 

commenters believe that the 

Commission will be unable to monitor 

the ownership structure of Chongqing 

Casin after approval.87 The commenters 

believe that this scenario would leave 

CHX open to undue, improper, and 

possibly state driven influence via 

coordinated voting control by its 

upstream ownership.88 In addition, one 

commenter states that as a result of the 

proposed ownership, there would be 

‘‘reputational risks’’ for CHX, and that 

‘‘compliance frustrations’’ related to the 

Foreign Corrupt Practices Act and AntiMoney Laundering rules would be at the 

‘‘front and center’’ in the Commission’s 

oversight of CHX.89 Accordingly, the 

commenters state that, given these 

actual or potential outcomes, the 

Transaction appears inconsistent with 

Sections 6(b)(l) and 6(b)(5) of the 

Exchange Act.90

Commenters also express concern 

about the ability of the Commission to 

exercise regulatory oversight over the 

Exchange following the closing of the 

Transaction.91 One commenter 

questions whether the Commission can 

effectively regulate the Exchange and 

protect the market from abuses if the 

Commission staff does not know, and 

cannot independently confirm, the 

backgrounds of what the commenter 

characterizes as ‘‘Chinese shell 

companies’’ involved in the 

Transaction.92 Another commenter 

argues that for the sake of the public 

interest, the Commission should take 

extreme caution in reviewing the 

proposed rule change and reject the 

Exchange’s representations, which the 

commenter believes to be misleading.93

In response to these concerns, the 

Exchange states that it has not 

misrepresented any facts regarding the 

Transaction.94 It also states that 50.5% 

of CHX will be indirectly owned by U.S. 

citizens.95 The Exchange reaffirms the 

representations that it made in the 

Notice that the only Related Persons 

among the upstream owners are Castle 

YAC and NA Casin Group, that there are 

no other Related Persons among the 

upstream owners, and that none of the 

upstream owners directly, or indirectly 

through one or more intermediaries, 

controls, or is controlled by, or is under 

common control with, a governmental 

entity or subdivision thereof.96 The 

Exchange asserts that each of these 

representations is supported by an 

opinion of counsel provided to the 

Commission by outside counsel for CHX 

on a confidential basis.97 The Exchange, 

NA Casin Holdings, and one of the 

proposed upstream owners also assert 

that some of the comment letters 

contain false accusations regarding the 

identity, ownership, relationships, and 

business activities of certain upstream 

owners.98 In addition, the Exchange, NA 

Casin Holdings, and two other 

commenters assert that the proposed 

upstream owners are reputable 

businesses.99

Moreover, the Exchange asserts that it 

provided detailed information regarding 

the upstream owners to the Committee 

for Foreign Investment in the United 

States (‘‘CFIUS’’) and the Exchange 

asserts that CFIUS determined that there 

are no unresolved national security 

concerns with respect to the 

Transaction.100 In response to this 

assertion, some of the commenters state 

that CFIUS’s approval of the 

Transaction has no relevance to the 

Commission’s determination because 

CFIUS’s review focuses solely on 

national security concerns, and does not 

relate to the ownership and voting 

restrictions applicable to exchanges.101

The Exchange responds that, with 

respect to the financial services sector, 

CFIUS review involves an examination 

of the potential disruptions to U.S. stock 

markets or the U.S. financial system as 

a whole, cybersecurity vulnerabilities, 

and the vulnerabilities associated with 

the fact that the U.S. business obtains 

and preserves personal information.102

The Exchange also states that CFIUS 

review includes a full and detailed 

assessment of the foreign investing 

entities, including all of their individual 

senior executives and major 

stockholders, and the extent of any 

foreign government control over the 

investors.103 The Exchange again asserts 

that CFIUS conducted a thorough, deep, 

and wide-ranging investigation of the 

Transaction and the proposed upstream 

owners, and that it concluded that there 

were no unresolved national security 

concerns.104

Furthermore, commenters express 

concern about whether the Chinese 

government could have influence or 

control over the Exchange and its 

upstream owners.105 Some of these 

commenters assert that one of the 

proposed upstream owners has ties to 

the Chinese government.106 Several 

commenters question whether the 

Chinese government could influence 

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38742 Federal Register / Vol. 82, No. 156 / Tuesday, August 15, 2017 / Notices 

107See Pittenger Letter 1, supra note 6, at 1. See 

also Pittenger Letter 2, supra note 6, at 1 (stating 

that the Chinese government dominates all sectors 

of society and consistently fails to abide by 

international agreements). 

108See Pittenger Letter 1, supra note 6, at 1. In 

addition, some commenters express concern that 

the Exchange may list securities of Chinese 

companies following the Transaction, citing recent 

accounting and disclosure violations by Chinese 

companies. See Mayer Letter, supra note 6; and 

Park Letter, supra note 6. But see Nobile Letter, 

supra note 6 (stating that listing of legitimate 

foreign entities on a U.S. platform strictly regulated 

under Commission rules and regulations will instill 

confidence in prospective investors who normally 

shy away from trading and engaging in foreign 

exchanges due to well-intentioned concerns 

regarding lack of regulation or the perception 

thereof). The Commission notes that the Exchange 

does not currently list such companies, and the 

proposed rule change under consideration would 

not modify the Exchange’s listing rules. Thus any 

new listings would be subject to the rules of the 

Exchange, and any changes to the Exchange’s listing 

rules would be subject to Commission review under 

to Section 19(b)(1) of the Exchange Act and Rule 

19b–4 thereunder. 

109See Pittenger Letter 1, supra note 6, at 1. 

110See id. 

111See Pittenger Letters 1 and 2, supra note 6, at 

1; Manchin Letter, supra note 6, at 1; Anonymous 

Letter, supra note 6; and Dandolu Letter, supra note 

6. 

112See Pittenger Letter 2, supra note 6, at 1. 

113See Manchin Letter, supra note 6, at 1. 114See Anonymous Letter, supra note 6. 115CHX Response Letter 1, supra note 7, at 5. 116See Caban Letter, supra note 6 (stating that 

having an exchange that would help attract 

additional foreign investment in Chicago is an 

important way to help create well-paying jobs); NA 

Casin Holdings Letter, supra note 6, at 8 (stating 

that the Transaction will help establish links 

between the capital markets of China and the U.S. 

and explaining how the Transaction will attract 

Chinese investors to buy stocks listed on CHX and 

companies in Asia to list their stock on CHX); 

Seyedin Letter, supra note 6, at 1 (stating the beliefs 

that the Transaction will make CHX an important 

bridge between capital markets in US and China 

and that connecting US and Chinese stock markets 

would allow the US to benefit further from China’s 

growth); Nobile Letter, supra note 6 (stating that the 

Transaction will result in some very clear benefits 

to the global financial community and that Casin 

Group may seek less well known, but legitimate 

foreign entities that would be listed on a U.S. 

platform strictly regulated under Commission rules 

and regulations); Gouroudeva Letter, supra note 6 

(stating the belief that ownership of CHX by a 

respected Chinese company will greatly increase 

direct Chinese investment into the U.S. economy.); 

Prufeta Letter, supra note 6 (stating the belief that 

the Transaction will provide a unique and 

exceedingly valuable window to major cross-border 

investment between the world’s largest economies); 

Saliba Letter, supra note 6, at 2 (stating that in order 

for the U.S. financial markets to remain at the 

forefront globally, the U.S. must continually 

innovate and attract business from all over the 

globe, which the Transaction will enable); Zhong 

Letter, supra note 6 (expressing support for the 

Transaction because, among other reasons, there are 

positive effects of trade and commerce between top 

Chinese companies and U.S.-based companies and 

that trade is the fundamental basis for positive 

foreign relations); Karcher Letter, supra note 6 

(expressing support for investment by Chinese 

companies in the U.S. because the increased ties 

through trade will benefit both countries); and 

Gottlieb Letter, supra note 6 (stating that the 

Transaction will provide a needed opportunity and 

valuable window for cross-border investments and 

world economies). 117See CHX Response Letter 1, supra note 7, at 

2; CHX Response Letter 3, supra note 7, at 2–3. 

118See Mayer Letter, supra note 6. 

119See CHX Response Letter 1, supra note 7, at 

2. 

120See Brennan Letter, supra note 6, at 2; Mayer 

Letter, supra note 6; Ferris Letter 1, supra note 6, 

at 2; Ferris Letter 2, supra note 6, at 3–4; Bass 

Letter, supra note 6, at 2; and Park Letter, supra 

note 6, at 4. 

121See CHX Response Letter 2, supra note 7, at 

6. 

122See Ferris Letter 1, supra note 6, at 2, n. 5; 

and Brennan Letter, supra note 6, at 2. 

123See NA Casin Holdings Letter, supra note 6, 

at 7; and Saliba Letter, supra note 6, at 2. 

124See Ciccarelli Letter, supra note 6, at 3. 

125See CHX Response Letter 2, supra note 7, at 

6. In addition, some commenters assert that a 

conflict of interest exists because one of the 

upstream owners, Anthony Saliba, serves on the 

Exchange’s and CHX Holdings’ boards of directors. 

See Brennan Letter, supra note 6, at 2–3; Ferris 

Letter 1, supra note 6, at 2; Ferris Letter 2, supra 

note 6, at 5; Bass Letter, supra note 6, at 2; and Park 

Letter, supra note 6, at 4. In response, the Exchange 

notes that its current rules require a CHX board 

position to be reserved for certain CHX Holdings 

stockholders and asserts that there is no unresolved 

conflict of interest because Mr. Saliba recused 

Chongqing Casin, stating that Chongqing 

Casin is involved in a number of 

Chinese market sectors that require 

close ties to the state, such as 

environmental protection.107 The 

commenters assert that Chinese markets 

are non-transparent and ‘‘heavily 

dominated’’ by the Chinese State 

Council and that companies in China 

often receive significant illegal subsidies 

from the government and are used as 

conduits for the Chinese Communist 

Party to ‘‘disrupt and distort foreign 

markets, businesses, and 

governments.’’ 108 Some commenters 

also state that Chongqing Casin’s 

financial assets were originally statecontrolled, and that its chairman sits on 

an industry council overseen directly by 

the mayor of the Chongqing 

Municipality.109 These commenters 

state that, in particular, Chinese 

ownership or involvement presents 

risks as Chinese government-sponsored 

cyber-attacks have been conducted to 

devalue foreign businesses and steal 

intellectual property and proprietary 

data; the commenters assert that this has 

cost American companies billions of 

dollars annually.110 Commenters also 

state that the Transaction may present 

financial security risks to investors and 

the U.S. marketplace.111 Some 

commenters believe that the proposal 

will materially harm the public trust in 

the independent and objective operation 

of U.S. capital markets.112 Similarly, 

another commenter believes that the 

proposal is a threat to Americans’ faith 

in the U.S.’s national financial market 

infrastructure.113 One commenter also 

raises concerns that a bad actor with 

access to an exchange’s data could use 

information available through brokerage 

records and the Consolidated Audit 

Trail to engage in spear phishing, 

blackmail attempts, and other similar 

attacks.114 In response, the Exchange 

states that CFIUS investigated the 

Transaction and ‘‘determined that there 

were no unresolved national security 

concerns with respect to the [p]roposed 

Transaction.’’ 115 Furthermore, some 

commenters believe that the Transaction 

would benefit the U.S. capital markets 

and have positive economic effects.116

The Exchange also states that the 

Transaction will enable it to accelerate 

implementation of its strategic plan, 

which includes implementing a primary 

listing program focused on capital 

formation for emerging growth 

companies.117

Another commenter expresses 

concern that the proposed upstream 

ownership leaves CHX and U.S. markets 

open to ‘‘undetectable manipulation’’ by 

Chongqing Casin and the Chinese 

government.118 In response, the 

Exchange affirms that no prospective 

investor controls, is controlled by, or is 

under common control with, a 

governmental entity or any political 

subdivision thereof, including the 

Chinese government.119

In addition, some commenters express 

concern that the Saliba Put Agreement 

and the Raptor Put Agreement could 

create voting collusion between Raptor 

and Saliba, resulting in a combined 24% 

voting interest that exceeds the 20% 

voting limitation.120 The Exchange 

responds that under the terms of the put 

agreements, NA Casin Holdings could 

not compel Saliba or Raptor to exercise 

its respective put option and that, in the 

event that either put agreement is 

exercised, CHX rules would require the 

resulting ownership structure to 

comport with the ownership and voting 

limitations.121 Some of the commenters 

assert that Raptor is Saliba’s nominee or 

business partner.122 NA Casin Holdings 

and Saliba respond that Raptor and 

Saliba have never had any relationship, 

are located in different cities, and are 

owned by different families.123 In 

addition, one commenter asserts that 

these put agreements are specifically 

designed to skirt the Commission’s 

exchange ownership restrictions, which 

would give Chongqing Casin virtual 

control over the Exchange.124 In 

response, the Exchange explains that the 

put agreements only grant Saliba and 

Raptor the right to exercise their 

respective put options and do not grant 

NA Casin Holdings the right to compel 

the exercise of those rights.125 The 

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himself from all material CHX Holdings and CHX 

board votes related to the Transaction. See CHX 

Response Letter 3, supra note 7, at 5. 

126See CHX Response Letter 2, supra note 7, at 

6. 

127See Ciccarelli Letter, supra note 6, at 1; and 

Mayer Letter, supra note 6. 

128See Ciccarelli Letter, supra note 6, at 2. 

129See Mayer Letter, supra note 6. The 

commenter asserts that restricting voting of shares 

would not remedy ‘‘back-room voting collusion, 

share re-sale or collateralization to an unknown 

party or state entity in China.’’ See id. 

130See id. 

131See id. 

132See CHX Response Letter 1, supra note 7, at 

3–4; and CHX Response Letter 2, supra note 7, at 

2–3. 

133See CHX Response Letter 1, supra note 7, at 

3; and CHX Response Letter 2, supra note 7, at 2. 

134See CHX Response Letter 1, supra note 7, at 

3. See also CHX Response Letter 2, supra note 7, 

at 3. 

135See CHX Response Letter 2, supra note 7, at 

2–4 (specifically noting: (1) The ownership and 

voting limitations; (2) provisions in which the 

upstream owners consent to U.S. regulatory 

jurisdiction and agree to maintain an agent in the 

U.S. for service of process; and (3) provisions 

requiring the upstream owners to maintain their 

books and records related to CHX in the U.S. and 

to refrain from interfering with, and to give due 

consideration to, the SRO function of CHX). See 

also CHX Response Letter 3, supra note 7, at 2. 

136See Pittenger Letters 1 and 2, supra note 6, at 

2; Ciccarelli Letter, supra note 6, at 1–2; Bass Letter, 

supra note 6, at 1; and Ferris Letter 1, supra note 

6, at 4. 

137See Pittenger Letter 2, supra note 6, at 1. 

138See id. 

139See id. at 2. 

140See id. 

141See id. 

142See Manchin Letter, supra note 6, at 1. 

143See id. at 1–2. 

144See id. at 2. 

145See Ciccarelli Letter, supra note 6, at 1–2. 

146See Bass Letter, supra note 6, at 5; and Ferris 

Letter 1, supra note 6, at 4. See also Pittenger Letter 

1, supra note 6, at 2 (asserting that the Public 

Company Accounting Oversight Board must be able 

to ‘‘penetrate Chinese opacity’’ before a Chinese 

firm is allowed to purchase an American stock 

exchange). 

147See Ciccarelli Letter, supra note 6, at 3–4; and 

Mayer Letter, supra note 6. 

148See Hill Letter 2, supra note 6. This 

commenter also alleges that the Exchange has a 

record of non-compliance with regulations and 

failure to fully enforce its rules. 

Exchange also notes that any exercise of 

the put rights would be subject to 

compliance with the ownership and 

voting limitations.126

Moreover, two commenters express 

concern that CHX and the Commission 

may not be aware of or able to control 

future transfers of ownership or voting 

in contravention of the ownership and 

voting limitations.127 One of these 

commenters asserts that there are little 

to no controls in place at the upstream 

corporate ownership level that would 

prevent the upstream owners from 

transferring their voting power in CHX 

to even more opaque owners or 

ownership that involves the Chinese 

government.128 The other commenter 

asserts that neither the Exchange nor the 

Commission would know if capital 

stock in China is being consolidated, 

resold, collateralized, or collusively 

voted in violation of the 20% voting 

limitation.129 The commenter expresses 

concern that collusion or changes in 

ownership that are unknown to the 

Exchange or the Commission could 

hinder the Exchange’s and the 

Commission’s obligations to prevent 

conflicts of interest and improper 

influence under Section 6(b)(5) of the 

Exchange Act.130 In addition, the 

commenter asserts that the upstream 

owners are not being required to amend 

their governing documents to restrict 

collusive voting or resale of the 

Exchange.131

In response, the Exchange states that 

to the contrary, the governing 

documents of NA Casin Holdings and 

CHX Holdings do indeed restrict the 

voting and sale of the Exchange.132 In 

addition, as noted above, the Exchange 

affirms its representation that no 

prospective owner or any of its Related 

Persons would maintain an equity 

interest, or exercise voting power, in 

violation of the ownership and voting 

limitations.133 The Exchange also 

responds that the proposed governance 

documents for NA Casin Holdings and 

CHX Holdings provide robust 

enforcement mechanisms for the 

ownership and voting limitations, and 

that the CHX board’s composition 

would be required to meet certain 

independence requirements.134 The 

Exchange also notes that the CHX rules 

and Exchange Act contain various 

provisions that would facilitate the 

ability of U.S. regulators, including the 

Commission, to monitor, compel, and 

enforce compliance by each of the 

upstream owners.135

Commenters also express concern 

about the ability of the Commission to 

exercise regulatory oversight over the 

Exchange following the closing of the 

Transaction.136 Characterizing the 

proposed upstream ownership of CHX 

as ‘‘opaque,’’ several commenters state 

that approval of the proposal would 

strip the Commission of its ability to 

carry out its statutorily mandated 

oversight of exchange ownership.137

These commenters also state that given 

ongoing concerns with the severe lack of 

transparency in China, the commenters 

have substantial concerns related to the 

Commission’s ability to monitor and 

regulate the upstream ownership of 

Chongqing Casin.138 These commenters 

note that neither Chongqing Casin nor 

any of its coordinate foreign entities 

have provided U.S. regulators with any 

power to monitor or regulate their 

activities with respect to CHX.139 These 

commenters further state that, in the 

past, Chinese entities have limited 

visibility into post-acquisition activities 

and have attempted to interpose 

arguments—such as sovereign immunity 

or limits to the extraterritorial 

application of U.S. laws—to avoid 

compliance with U.S. regulatory 

requirements.140 The commenters 

believe that these actions erode investor 

trust and adversely affect U.S. 

regulatory interests.141

Similarly, another commenter opines 

that what the commenter cites as the 

Chinese government’s continued 

rejection of fundamental free-market 

norms and property rights of private 

citizens makes the commenter strongly 

doubt whether an Exchange operating 

under the direct control of a Chinese 

entity can be trusted to self-regulate 

now and in the future.142 The 

commenter states that while the harms 

caused by NA Casin Group’s acquisition 

of the CHX may not become apparent 

immediately, allowing this acquisition 

to proceed could have a devastating 

effect on the health of U.S. financial 

markets, which the commenter states 

are ‘‘the envy of the world.’’ 143 The 

commenter further states that the 

commenter remains unconvinced of the 

following: (1) That no prospective 

investor is influenced or controlled by 

the Chinese government; (2) that 

Exchange rules could stand against the 

levels of deceit employed by the 

Chinese government; and (3) that the 

Chinese government would not employ 

influence to affect exchange decisions or 

votes.144

Furthermore, another commenter 

asserts that, due to jurisdiction 

limitations and transparency concerns, 

under the current proposal, the 

Commission would not be able to 

exercise proper regulatory oversight.145

Some commenters also express concern 

about the ability of U.S. regulators to 

access the books and records of the 

Chinese-owned upstream owners.146

Two commenters state that they believe 

that the proposed foreign upstream 

owners will not submit to U.S. 

jurisdiction.147 Another commenter 

states its view that foreign ownership of 

the Exchange may result in lax 

enforcement of its rules.148

The Exchange responds that it 

believes that its rules are consistent 

with the requirements of the Exchange 

Act, and that its rules and the Exchange 

Act contain various provisions that 

would facilitate the ability of U.S. 

regulators, including the Commission, 

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149See CHX Response Letter 1, supra note 7, at 

4; and CHX Response Letter 2, supra note 7, at 3– 

4. 150See CHX Response Letter 2, supra note 7, at 

3–4. 151See NA Casin Holdings Letter, supra note 6, 

at 1–2. Specifically, NA Casin Holdings observes 

that 50% of the board of the Exchange would be 

required to consist of ‘‘Non-Industry Directors’’ 

(which NA Casin Holdings notes is defined in the 

CHX Bylaws), who cannot be employed by any 

affiliate of CHX. 

152See Prufeta Letter, supra note 6 (stating that 

‘‘the continual scrutiny of the US financial system 

is both essential and firmly in place’’ and that the 

commenter believes that ‘‘all the controls necessary 

to monitor the investment group exist now and will 

be sufficient’’). See also Zhong Letter, supra note 6 

(expressing confidence that the current controls of 

the U.S. regulatory system serve as an ‘‘effective 

check and balance’’ on both foreign and domestic 

investors); Karcher Letter, supra note 6 (stating that 

commenter ‘‘trust[s] [the Commission’s] process 

much more than relying on the ad hominum attacks 

[the commenter] read[s] within the comments 

section’’). 

153See, e.g., Securities Exchange Act Release Nos. 

79585 (December 16, 2016), 81 FR 93988 (December 

22, 2016) (SR–BatsBZX–2016–68) (approving 

similar restrictions in connection with the merger 

of Bats Global Markets, Inc. and CBOE Holdings, 

Inc.) (‘‘BATS–CBOE Approval Order’’); 78119 (June 

21, 2016), 81 FR 41611 (June 27, 2016) (SR–ISE– 

2016–11, SR–ISE Gemini–2016–05, SR–ISE 

Mercury–2016–10) (approving similar restrictions 

proposed in connection with Nasdaq, Inc. becoming 

the indirect parent of International Securities 

Exchange, ISE Gemini, LLC, and ISE Mercury, LLC); 

74270 (February 13, 2015), 80 FR 9286 (February 

20, 2015) (SR–NSX–2014–017) (approving similar 

restrictions in connection with National Stock 

Exchange, Inc. becoming a wholly-owned 

subsidiary of National Stock Exchange Holdings, 

Inc.) (‘‘NSX Approval Order’’); 71449 (January 30, 

2014), 79 FR 6961 (February 5, 2014) (SR–EDGA– 

2013–34; SR–EDGX–2013–43) (approving similar 

restrictions in connection with the merger of BATS 

Global Markets, Inc. and Direct Edge Holdings LLC); 

71375 (January 23, 2014), 79 FR 4771 (January 29, 

2014) (SR–BATS–2013–059, SR–BYX–2013–039) 

(approving similar restrictions in connection with 

the merger of BATS Global Markets, Inc. and Direct 

Edge Holdings LLC); 70210 (August 15, 2013), 78 

FR 51758 (August 21, 2013) (SR–NYSE–2013–42, 

SR–NYSEMKT–2013–50 and SR–NYSEArca–2013– 

62) (approving similar restrictions in connection 

with NYSE Euronext Holdings, LLC becoming a 

wholly-owned subsidiary of Intercontinental 

Exchange Group, Inc.); 62716 (August 13, 2010), 75 

FR 51295 (August 19, 2010) (File No. 10–198) 

(approving similar restrictions in connection with 

the registration Bats BYX Exchange, Inc. as a 

national securities exchange); 61698 (March 12, 

2010), 75 FR 13151 (March 18, 2010) (File Nos. 10– 

194 and 10–196) (approving similar restrictions in 

connection with the registrations of EDGX 

Exchange, Inc. and EDGA Exchange, Inc. as national 

securities exchanges) (‘‘EDGX and EDGA 

Registrations’’); 58375 (August 18, 2008), 73 FR 

49498 (August 21, 2008) (File No. 10–182) 

(approving similar restrictions in connection with 

the registration of BATS Exchange, Inc. as a 

national securities exchange); 56955 (December 13, 

2007), 72 FR 71979, 71982–84 (December 19, 2007) 

(SR–ISE–2007–101) (approving similar restrictions 

in connection with International Securities 

Exchange Holdings, Inc. becoming a wholly-owned 

indirect subsidiary of Eurex Frankfurt AG) (‘‘ISE 

Approval Order’’); 55293 (February 14, 2007), 72 FR 

8033 (February 22, 2007) (SR–NYSE–2006–120) 

(approving similar restrictions in connection with 

the combination of NYSE Group, Inc. and Euronext 

N.V.) (‘‘NYSE Euronext Approval Order’’); 53382 

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

(SR–NYSE–2005–77) (approving similar restrictions 

in connection with the merger of New York Stock 

Exchange, Inc. and Archipelago); 53963 (June 8, 

2006), 71 FR 34660 (June 15, 2006) (File No. SR– 

NSX–2006–03) (approving similar restrictions in 

connection with the demutualization of the 

National Stock Exchange); 53128 (January 13, 2006), 

71 FR 3550 (January 23, 2006) (File No. 10–131) 

(approving similar restrictions in connection with 

the registration the Nasdaq Stock Market LLC as a 

national securities exchange); 51149 (February 8, 

2005), 70 FR 7531 (February 14, 2005) (SR–CHX– 

2004–26) (approving similar restrictions in 

connection with the demutualization of CHX); and 

49098 (January 16, 2004), 69 FR 3974 (January 27, 

2004) (SR–Phlx–2003–73) (approving similar 

restrictions in connection with the demutualization 

of the Philadelphia Stock Exchange, Inc.). 

154See, e.g., NYSE Euronext Approval Order, 

supra note 153; EDGX and EDGA Registrations, 

supra note 153; and ISE Approval Order, supra note 

153. 

155See supra note 57 and accompanying text. 

156See, e.g., BATS–CBOE Order, supra note 153, 

at 93990. 

to monitor, compel, and enforce 

compliance by each of the upstream 

owners. In particular, upstream owners 

would be required to adhere to the 

ownership and voting limitations, 

submit to U.S. regulatory jurisdiction 

and maintain agents in the U.S. for the 

service of process, maintain open books 

and records related to their ownership 

of CHX and keep such books and 

records in the U.S., and refrain from 

interfering with, and give due 

consideration to, the SRO function of 

the Exchange.149 The Exchange also 

asserts that, pursuant to the Exchange 

Act, the Exchange is subject to ‘‘direct 

and rigorous’’ oversight by the 

Commission, which, the Exchange 

describes as including among other 

things, frequent examinations of various 

aspects of its operations by Commission 

staff, including security and trading 

protocols, as well as the requirement for 

Commission approval of certain 

regulatory, operational, and strategic 

initiatives prior to implementation by 

the Exchange.150

In addition, NA Casin Holdings 

asserts that extensive regulatory and 

governance safeguards would empower 

the Commission and the Exchange to 

prevent any influence over the 

Exchange and its operations that is 

improper or a violation of U.S. 

securities laws and regulations.151 Other 

commenters express confidence that the 

regulatory controls currently in place 

are adequate to monitor the proposed 

investors.152

4. Commission Findings 

The Commission believes that, in 

light of the proposed restrictions on the 

ownership and voting of stockholders, 

the above-discussed corporate 

governance provisions relating to 

compliance with U.S. law, consent to 

jurisdiction, due regard to the regulatory 

obligations and functions of the 

Exchange, and books and records, and 

the statements from the upstream 

owners committing to submit to 

jurisdiction and designating an agent for 

service of process, the proposed rule 

change is consistent with the 

requirements of Section 6(b) of the 

Exchange Act. The Commission believes 

that the proposed ownership and voting 

limitations are reasonably designed to 

prevent any stockholder from exercising 

undue control over the operation of NA 

Casin Holdings, and in turn, over the 

operation of the Exchange. The 

Commission also notes that these 

ownership and voting limitations are 

consistent with those approved by the 

Commission for other SROs 153

(including for other SROs with foreign 

ownership),154 and believes that they 

are reasonably designed to assure that 

the Exchange and the Commission are 

able to carry out their regulatory 

obligations under the Exchange Act and 

in administering and complying with 

the requirements of the Exchange Act. 

Moreover, the Commission believes that 

the proposed ownership and voting 

limits are reasonably designed to 

eliminate the potential that the control 

of the Exchange by one or few 

stockholders would improperly interfere 

with or impair the ability of the 

Commission or the Exchange to 

effectively carry out their regulatory 

oversight responsibilities under the 

Exchange Act. 

In addition to being designed to 

eliminate the potential of any 

stockholder from exercising undue 

control over the Exchange, the 

Commission also notes that other 

proposed ownership and voting 

limitations applicable to members of the 

Exchange are designed to address the 

conflicts of interests that might result 

from a member of a national securities 

exchange owning interests in the 

exchange.155 As the Commission has 

noted in the past, a member’s interest in 

an exchange could become so large as to 

cast doubts on whether the exchange 

may fairly and objectively exercise its 

self-regulatory responsibilities with 

respect to such member.156 A member 

that is a controlling stockholder of an 

exchange could seek to exercise that 

controlling influence by directing the 

exchange to refrain from, or the 

exchange may hesitate to, diligently 

monitor and conduct surveillance of the 

member’s conduct or diligently enforce 

the exchange’s rules and the federal 

securities laws with respect to conduct 

by the member that violates such 

provisions. As such, these restrictions 

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157See supra note 38 and accompanying text. 158See supra note 72 and accompanying text. 159See supra note 73 and accompanying text. 160See supra notes 80–84 and accompanying text. 161See supra notes 120 and 129 and 

accompanying text. 162See supra note 105 and accompanying text. 163See supra note 69 and accompanying text. 

164See supra notes 87, 127–131, and 138–139 and 

accompanying text. 

165See supra note 69 and accompanying text. See 

also infra note 185 and accompanying text. 

166See supra note 72 and accompanying text. 

167See supra note 79 and accompanying text. 

168See infra note 71 and accompanying text. 

169 15 U.S.C. 78f(b) and 15 U.S.C. 78s(g), 

respectively. 

170The Commission notes that these requirements 

are consistent with other such provisions 

previously approved by the Commission. See supra 

note 153. 

171See supra notes 145 and 147 and 

accompanying text. 

172See Amendment No. 1, supra note 10, Exhibit 

2. 

173See supra note 92 and accompanying text. 

174CHX makes representations regarding the 

identities of the upstream owners, the relationships 

between the upstream owners, and their 

relationship to the Chinese government. 

Specifically, the Exchange states that the only 

Related Persons among the Indirect Upstream 

Owners are Castle YAC and NA Casin Group; there 

are no other Related Persons among the Indirect 

Upstream Owners; none of the Indirect Upstream 

Owners directly, or indirectly through one or more 

intermediaries, controls, or is controlled by, or is 

under common control with, a governmental entity 

Continued 

on Exchange members’ ownership and 

voting of NA Casin Holdings stock are 

expected to minimize the potential that 

a person or entity can improperly 

interfere with or restrict the ability of 

CHX to effectively carry out its 

regulatory oversight responsibilities 

under the Exchange Act. 

The Commission also believes that the 

proposed rule change, as modified by 

Amendment No. 1, is reasonably 

designed to: (1) Safeguard against 

violations of the ownership and voting 

limitations and (2) facilitate the ability 

of the Exchange to comply with its 

responsibilities under the Exchange Act. 

In particular, the Commission notes the 

requirements that: (1) Certain 

stockholders of CHX Holdings and NA 

Casin Holdings must notify the 

corporation of changes to the 

stockholder’s voting power or 

ownership; 157 (2) the chief compliance 

officer of CHX Holdings monitor for 

compliance with the limits on 

ownership and voting applicable to the 

upstream beneficial owners; 158 and (3) 

CHX Holdings hire an independent and 

PCAOB-registered auditor to regularly 

monitor CHX Holdings’ oversight of 

those limits.159 The Commission 

believes this will assist CHX Holdings 

in exercising its oversight obligations of 

the ownership and voting limits after 

the closing of the Transaction. 

With regards to commenters’ concerns 

that the upstream owners in fact may be 

Related Persons,160 or that the upstream 

owners may vote or act collusively,161

or may be under the control of a foreign 

government,162 CHX has responded to 

these concerns by providing 

certifications from each of the upstream 

owners, each of which: Identifies its 

Related Persons; states that it does not 

directly, or indirectly through one or 

more intermediaries, control, and is not, 

directly or indirectly through one or 

more intermediaries, controlled or 

owned by, or under common control or 

ownership with, a governmental entity 

or political subdivision thereof; and 

attests that no agreement, arrangement, 

or understanding exists between the 

stockholder and any other person for the 

purpose of acquiring, voting, holding or 

disposing of shares of stock of NA Casin 

Holdings.163 In response to these 

concerns, as well as commenters’ 

concerns regarding the ability of the 

Exchange to exercise its self-regulatory 

obligations and monitor for compliance 

with its ownership and voting 

limitations after the closing of the 

Transaction,164 the Commission notes 

that: (1) By September 1, 2018, and 

every year thereafter, each stockholder 

of NA Casin Holdings as well as CHX 

Holdings will be required to submit 

directly to the Commission and the 

corporation an attestation as to (a) its 

equity ownership level in the 

corporation and the identity of its 

Related Persons and (b) the existence of 

any agreement, arrangement or 

understanding (whether or not in 

writing) to act together exists between 

the stockholder, on the one hand, and 

any other person, on the other hand, for 

the purpose of acquiring, voting, 

holding or disposing of shares of stock 

of the corporation; 165 (2) the chief 

compliance officer of CHX Holdings 

will monitor for compliance with the 

corporation’s voting and ownership 

limitations and ensure that each of the 

upstream owners provides to the 

Commission and CHX on a yearly basis 

relevant attestations; 166 (3) within one 

year of the closing of the Transaction 

and every two years thereafter, an 

independent auditor will audit CHX 

Holdings’ oversight of compliance with 

such voting and ownership 

limitations; 167 and (4) each of the 

upstream owners has irrevocably 

submitted to the jurisdiction of U.S. 

federal courts, the Commission and 

CHX, designated and authorized an 

agent in the United States for service of 

process, and committed to promptly 

inform the Commission in writing of 

any change of its designated and 

authorized agent.168 The Commission 

believes that these requirements are 

reasonably designed to assist the 

Exchange in monitoring for and 

enforcing compliance with the voting 

and ownership limitations. 

The Commission also notes that 

although neither NA Casin Holdings nor 

CHX Holdings would directly perform 

any regulatory function, their activities 

with respect to the operation of the 

Exchange must be consistent with, and 

must not interfere with, the selfregulatory obligations of the Exchange 

and the Commission’s oversight of the 

Exchange. The Commission believes 

that the above-discussed corporate 

governance provisions of the NA Casin 

Holdings Certificate, the NA Casin 

Holdings Bylaws, and the CHX Holdings 

Bylaws relating to compliance with U.S. 

law, consent to jurisdiction, due regard 

to the regulatory obligations and 

functions of the Exchange, and books 

and records are reasonably designed to 

allow: (1) CHX to independently 

perform its self-regulatory function; (2) 

CHX to operate in a manner that 

complies with federal securities laws, 

including Sections 6(b) and 19(g) of the 

Exchange Act; 169 and (3) the 

Commission to fulfill its regulatory and 

oversight obligations under the 

Exchange Act with respect to the 

Exchange.170 The Commission believes 

that these provisions should assist CHX 

in fulfilling its self-regulatory 

obligations in administering and 

complying with the requirements of the 

Exchange Act. 

In response to commenters’ concerns 

regarding the ability of CHX and the 

Commission to exercise jurisdiction 

over the upstream owners,171 the 

Commission notes that each upstream 

owner has irrevocably submitted to the 

jurisdiction of the U.S. federal courts, 

the Commission, and CHX for the 

purposes of any action relating to the 

certification to the Commission and 

CHX regarding its ownership levels and 

Related Persons, among other things, or 

the activities of CHX, and designated an 

agent for the service of process of such 

claims.172 The Commission believes that 

this will enhance the ability of the 

Commission to fulfill its regulatory and 

oversight obligations and of CHX to 

fulfill its self-regulatory obligations 

under the Exchange Act. 

As discussed above, various 

commenters express concern about the 

identity and motives of the upstream 

owners and, in light of these issues, the 

Commission’s ability to effectively 

regulate the Exchange.173 Based on the 

information in the record,174 the 

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or any political subdivision thereof. See Notice, 

supra note 3, 81 FR at 89545. 

175As CHX states, the Commission directly 

oversees national securities exchanges (such as 

CHX), which are subject to inspections that 

examine various aspects of their exchange 

operations and which must submit for prior 

Commission approval certain regulatory, 

operational, and strategic initiatives. See supra note 

150 and accompanying text. In light of the 

description of the owners provided by CHX, the 

Commission agrees with NA Casin that the 

Commission’s jurisdiction coupled with the 

proposed governance safeguards will empower the 

Commission and the Exchange to prevent any 

influence over CHX and its operations that is 

improper or a violation of U.S. securities laws and 

regulations. See supra note 151 and accompanying 

text. 

176See supra note 71 and accompanying text. 

177See supra notes 108–112, and 114 and 

accompanying text. 

178These concerns are discussed above. See supra 

notes 111–114. 

179See supra note 78 and accompanying text. 180This requirement is discussed above. See 

supra note 79 and accompanying text. 181See supra notes 40–42 and accompanying text. 182See supra note 75 and accompanying text. 183See supra note 76 and accompanying text. 184See supra note 79 and accompanying text. 185See, e.g., 18 U.S.C. 1001. 

186See 15 U.S.C. 78s(h)(1). 

187See 15 U.S.C. 78s(h)(4). 

Commission believes that the proposed 

requirements applicable to the 

Exchange, CHX Holdings, and NA Casin 

Holdings are reasonably designed to 

allow the Commission to oversee the 

Exchange and for CHX to independently 

discharge its SRO responsibilities.175 In 

particular, the Commission notes that, 

under the NA Casin Holdings 

Certificate, for as long as a stockholder 

maintains a direct or indirect equity 

interest in the Exchange, (1) the books, 

records, officers, directors (or 

equivalent) and employees of the 

stockholder will be deemed to be the 

books, records, officers, directors, and 

employees of the Exchange for purposes 

of and subject to oversight pursuant to 

the Exchange Act to the extent that such 

books and records are related to, or such 

officers, directors (or equivalent) and 

employees are involved in, the activities 

of the Exchange; (2) the stockholder’s 

books and records related to the 

activities of the Exchange must be made 

available for inspection and copying by 

the Commission and the Exchange at all 

times; and (3) the stockholder’s books 

and records related to the activities of 

the Exchange must be maintained 

within the United States. The 

Commission also notes that the 

upstream owners have irrevocably 

submitted to the jurisdiction of U.S. 

federal courts, the Commission, and 

CHX.176

Commenters also express concern 

regarding the potential for malfeasance 

whether by individuals or on behalf of 

government actor.177 We note that the 

Exchange stated that CFIUS investigated 

the Transaction and the upstream 

owners, and concluded that there are no 

unresolved national security concerns. 

Furthermore, in response to 

commenters’ concerns regarding 

potential financial security risks of the 

proposed ownership structure,178 the 

Commission notes that CHX will limit 

access to CAT Data to only CHX 

regulatory personnel.179 In addition, the 

requirement that CHX engage an 

independent auditor to monitor for 

CHX’s oversight of compliance with the 

policies and procedures relating to 

access to CAT Data will assist CHX in 

meeting its self-regulatory 

obligations.180

In addition, if NA Casin Holdings, 

CHX Holdings, or CHX provides 

information of any kind to a U.S. 

governmental entity or U.S. authority 

pursuant to any agreement, then the 

company will contemporaneously 

provide such information to the 

Commission as well.181 The 

Commission believes that receiving 

such information will further assist the 

Commission in fulfilling its mission to 

oversee and regulate the Exchange by 

helping to ensure that the Commission 

is aware of activities—by CHX, CHX 

Holdings, NA Casin Holdings, and 

perhaps the upstream beneficial 

owners—that may be relevant under the 

Exchange Act. 

The Commission believes that CHX’s 

rule changes requiring it to confirm that 

any RSA it may enter into will comply 

with U.S. federal securities laws and the 

rules and regulations thereunder,182 that 

its chief regulatory officer will monitor 

provisions of the RSA on an on-going 

basis,183 and that it will engage an 

independent and PCAOB-registered 

auditor that would perform oversight of 

the RSA within one year after the 

closing of the Transaction and every two 

years thereafter,184 respond to concerns 

and will assist the Exchange in 

complying with federal securities laws 

and monitoring for compliance with 

federal securities laws on an on-going 

basis. 

Furthermore, the Commission notes 

that the attestations submitted by the 

stockholders of NA Casin Holdings, and 

the annual attestations that will be 

submitted by the shareholders of NA 

Casin Holdings and CHX Holdings 

starting September 1, 2018, will be 

made directly to the Commission, and 

therefore potential liability for 

misrepresentations would attach.185

Additionally, to the extent that CHX (a) 

violated any provision of the Exchange 

Act, including Section 19(b), any rule or 

regulation under the Exchange Act, or 

any Exchange rule, (b) is unable to 

comply with any provision of the 

Exchange Act, any rule or regulation 

under the Exchange Act, or any 

Exchange rule, or (c) without reasonable 

justification or excuse failed to enforce 

compliance with any such provision by 

any Participant or person associated 

with a Participant, the Commission may 

take action to either revoke or suspend 

for up to 12 months its registration as a 

national securities exchange or limit 

CHX’s activities, functions, and 

operations.186 Further, to the extent that 

any officer or director of the Exchange 

either willfully violated any provision 

of the Exchange Act, including Section 

19(b), any rule or regulation under the 

Exchange Act, or any Exchange rule, or 

without reasonable justification or 

excuse failed to enforce compliance 

with any such provision by any 

Participant or person associated with a 

Participant, the Commission may take 

action to remove such person from 

office.187

Finally, the Commission notes that: 

(1) Under Section 20(a) of the Exchange 

Act, any person with a controlling 

interest in CHX shall be jointly and 

severally liable with and to the same 

extent that the CHX is liable under any 

provision of the Exchange Act, unless 

the controlling person acted in good 

faith and did not directly or indirectly 

induce the act or acts constituting the 

violation or cause of action; (2) Section 

20(e) of the Exchange Act creates aiding 

and abetting liability for any person 

who knowingly provides substantial 

assistance to another person in violation 

of any provision of the Act or rule 

thereunder; and (3) Section 21C of the 

Exchange Act authorizes the 

Commission to enter a cease-and-desist 

order against any person who has been 

‘‘a cause of’’ a violation of any provision 

of the Exchange Act through an act or 

omission that the person knew or 

should have known would contribute to 

the violation. 

For these reasons, the Commission 

believes that the proposed rule change— 

including restrictions on the ownership 

and voting of stockholders and the 

above-discussed corporate governance 

provisions relating to compliance with 

U.S. law, consent to jurisdiction, due 

regard to the regulatory obligations and 

functions of the Exchange, and books 

and records, and statements from the 

upstream owners committing to submit 

to jurisdiction—is consistent with the 

Exchange Act, including Section 6(b)(1). 

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188See proposed CHX Bylaws Article III, Section 

3.2. 

189CHX would define ‘‘Non-Industry Director’’ as 

a member of the board who is (1) an Independent 

Director (as defined below); or (2) any other 

individual who would not be an Industry Director 

(as defined in Article I, Section 1.1(m) of the CHX 

Bylaws). See proposed CHX Bylaws Article I, 

Section 1.1(n). 

190CHX would define ‘‘Independent Director’’ as 

a member of the board that the board has 

determined to have no material relationship with 

the Exchange or any affiliate of the Exchange or any 

Participant or any affiliate of any such Participant 

other than as a member of the board. See proposed 

CHX Bylaws Article I, Section 1.1(l). 

191CHX would define ‘‘Participant Director’’ as a 

director who is a Participant or a director, officer, 

managing member or partner of an entity that is or 

is an affiliate of, a Participant. See proposed CHX 

Bylaws Article I, Section 1.1(g). 

192CHX would define ‘‘CHX Holdings Director’’ 

as a member of the Board who is a director of CHX 

Holdings, Inc. See proposed CHX Bylaws Article I, 

Section 1.1(g). 

193See CHX Bylaws Article III, Section 3.2(b). 

194Under the CHX Bylaws, ‘‘cause’’ means only 

(a) a breach of a director’s duty of loyalty to the 

corporation or its stockholders, (b) acts or omissions 

not in good faith or which involve intentional 

misconduct or a knowing violation of law, (c) 

actions resulting in liability under Section 174 of 

the General Corporation Law of Delaware, or (d) 

transactions from which a director derived an 

improper personal benefit. See proposed CHX 

Bylaws Article III, Section 3.8. 

195See CHX Bylaws Article V, Section 5.7. 

196See proposed CHX Bylaws Article III, Section 

3.6. In addition, proposed CHX Bylaws Article V, 

Section 5.11 provides that the Participant Director 

Nominating Committee will be composed solely of 

Participant Directors or representatives of 

Participant Directors and will be responsible for 

submitting names of candidates for the position of 

Participant Director. 

197See proposed CHX Bylaws Article III, Section 

3.13. 

198See id. 

199See proposed CHX Bylaws Article III, Section 

3.7. 

200See proposed CHX Bylaws Article IV, Section 

4.2. 

201See proposed CHX Holdings Bylaws Article II, 

Section 2.2(a). 

202See proposed CHX Holdings Bylaws Article II, 

Section 2.2(c). 

203See proposed CHX Holdings Bylaws Article II, 

Section 2.3. 

204See proposed CHX Holdings Bylaws Article 

IV, Section 4.2. 

205See proposed CHX Holdings Bylaws Article II, 

Section 2.16. 

206See Notice, supra note 3, 81 FR at 89556. 

207See proposed NA Casin Holdings Certificate 

Article V, Section (5). 

208See proposed NA Casin Holdings Certificate 

Article V, Section (6). 

209See id. 

210See proposed NA Casin Holdings Bylaws 

Article 3, Section 3.2. 

211See Notice, supra note 3, 81 FR at 89556. 

B. Board Composition and Procedures; 

Committees; Special Meetings of the 

Stockholders 

The Exchange proposes to amend the 

composition of the CHX and CHX 

Holdings boards of directors, and to 

make other changes to the governance of 

these entities. For example, CHX 

proposes that the CHX board of 

directors consist of at least 10 and not 

more than 25 directors.188 The CHX 

board of directors would be comprised 

as follows: (1) The Chief Executive 

Officer of CHX; (2) at least 50% NonIndustry Directors 189 (at least one of 

whom must be an Independent 

Director 190); (3) such number of 

Participant Directors 191 as necessary to 

comprise at least 20% of the board; and 

(4) such number of CHX Holdings 

Directors 192 as necessary to comprise at 

least 20% of the board.193 The directors 

(other than the Chief Executive Officer) 

shall serve one-year terms, and any 

director may be removed from office by 

a majority vote of the stockholders at 

any time with or without cause, 

provided that any Participant Director 

or CHX Holdings Director may only be 

removed for cause.194

In addition, CHX proposes to amend 

its bylaws to require that the board’s 

Regulatory Oversight Committee be 

composed entirely of Non-Industry 

Directors.195 The proposed CHX Bylaws 

also require that the Nominating and 

Governance Committee will have four 

members and be comprised of at least 

two Non-Industry Directors, and set 

forth the process that the Nominating 

and Governance Committee will follow 

in submitting nominees for board 

positions.196 Among other things, the 

proposed CHX Bylaws also provide that 

a majority of the directors would 

constitute a quorum,197 action by the 

board requires a majority of directors,198

and that vacancies on the board may be 

filled by a majority of directors then in 

office, or by a sole remaining director, 

except that vacancies in the Participant 

Director or CHX Holding director 

position must be recommended by the 

Participant Director Nominating 

Committee, or the CHX Holdings board, 

as applicable.199 In addition, CHX 

proposes that special meetings of its 

stockholders may be called at any time 

by the board of directors or the chief 

executive officer, or upon written notice 

to CHX by the stockholders holding onethird of the votes entitled to be cast.200

With respect to CHX Holdings, CHX 

proposes that the number of directors on 

the board be established by resolution, 

eliminating the requirement that the 

board have no less than 10 and no more 

than 16 directors.201 CHX also proposes 

to eliminate the three classes of CHX 

Holdings directors and their associated 

three-year staggered terms and to 

instead provide that each CHX Holdings 

Director shall hold office until his or her 

successor is elected and qualified or 

until his or her earlier resignation or 

removal.202 In addition, CHX proposes 

to amend the CHX Holdings Bylaws to 

change the required number of directors 

on the Nominating and Governance 

Committee from six to one or more 

directors.203 CHX also proposes that 

special meetings of the CHX Holdings 

stockholders may be called at any time 

by the board of directors or the Chief 

Executive Officer, or upon written 

notice to CHX Holdings by the 

stockholders holding one-third of the 

votes entitled to be cast.204 In addition, 

CHX proposes that any director or the 

entire board of directors may be 

removed, with or without cause, by the 

holders of a majority of the shares then 

entitled to vote.205

With respect to NA Casin Holdings, 

its proposed certificate of incorporation 

contains provisions that, according to 

the Exchange, are designed to ensure 

that a new NA Casin Holdings board is 

elected by the upstream owners as soon 

as practicable after closing of the 

Transaction, as well as provisions to 

facilitate the ability of NA Casin 

Holdings to maintain board members 

that are experienced with the operation 

of the Exchange.206 Specifically, within 

30 days after the consummation of the 

Transaction, NA Casin Holdings must 

convene a special meeting of its 

stockholders for the purpose of electing 

a new board of directors.207 The NA 

Casin Holdings board will be divided 

into three classes from and after that 

initial special meeting, with the term of 

each Class I director expiring in 2017, 

the term of each Class II director 

expiring in 2018, and the term of each 

Class III director expiring in 2019.208

Other than those initial terms, each 

director will serve for a term ending on 

the date of the third annual meeting 

following the meeting at which such 

director was elected.209 The number of 

directors on the NA Casin Holdings 

board will be determined by the board 

of directors.210 The Exchange asserts 

that the proposed class board structure 

of NA Casin Holdings would ensure 

overlap of board member terms, which 

would provide continuity and stability 

in the board’s composition and, thereby, 

facilitate the ability of the NA Casin 

Holdings board to meet its obligations 

with regard to CHX as set forth in 

Article IX of the NA Casin Holdings 

Certificate.211

The Commission believes that the 

proposed changes to the CHX Bylaws 

related to the structure, composition, 

and committee composition of CHX’s 

board of directors are consistent with 

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

that they assure the fair representation 

of CHX members on the CHX board and 

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212See supra Section III.B. 

213One commenter asserts that foreigners will be 

ultimately in charge of oversight of enforcement of 

trading rules and regulations on CHX. See Hill 

Letter 2, supra note 6. As discussed above, the 

Commission believes the proposal is designed to 

mitigate the ability of stockholders from exercising 

undue influence over CHX through the ownership 

structure, the governance arrangements, the 

attestations of the stockholders, and the 

requirements for CHX Holdings to monitor the 

ownership structure on an ongoing basis. 

214See proposed CHX Holdings Certificate Article 

ELEVENTH; proposed CHX Holdings Bylaws 

Article VIII; proposed NA Casin Holdings 

Certificate Article X; proposed NA Casin Bylaws, 

Article 11.1. 

215See id. 

216See CHX Holdings Certificate Article FIFTH, 

Sections (b)(ii)(A) and (C). The CHX Holdings board 

of directors may waive these voting and ownership 

limitations, if, in connection with taking such 

action, the board of directors adopts a resolution 

determining that: (1) The waiver will not impair the 

ability of CHX to carry out its functions and 

responsibilities as an ‘‘exchange’’ under the 

Exchange Act, and the rules under the Exchange 

Act; (2) the waiver is otherwise in the best interests 

of CHX Holdings, its stockholders, and CHX; (3) the 

waiver will not impair the ability of the 

Commission to enforce the Exchange Act; and (4) 

the action will not be effective until approved by 

the Commission. See CHX Holdings Certificate 

Article FIFTH, Section (b)(iii)(B). 

217See Notice, supra note 3, 81 FR at 89551–52. 

218See text accompanying notes 28–33. 

219See supra Section III.A. 

220The ownership and voting of CHX Holdings 

stock would continue to be subject to certain 

limitations discussed above following the 

Transaction. See supra notes 57–66 and 

accompanying text. 

in the administration of exchange 

affairs, and provide that one or more 

directors shall be representative of 

issuers and investors and not be 

associated with a member of the 

exchange, broker, or dealer. In 

particular, the Commission finds that 

the requirement that at least 20% of the 

board be comprised of Participant 

Directors is consistent with the fair 

representation requirements under 

Section 6(b)(3) In addition, the 

Commission finds that the proposed 

provisions of the CHX, CHX Holdings, 

and NA Casin Holdings governing 

documents relating to the proposed 

structure, composition, and governance 

of their boards of directors,212 are 

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

Exchange Act in that they are designed 

to assist the Exchange in fulfilling its 

self-regulatory obligations and in 

administering and complying with the 

requirements of the Exchange Act. For 

example, the Commission believes that 

the requirement that the CHX board of 

directors be comprised of at least 50% 

Non-Industry Directors, and that the 

CHX Regulatory Oversight Committee 

be comprised entirely of Non-Industry 

Directors, is consistent with Section 

6(b)(1) because it reduces the likelihood 

of conflicts of interest and therefore, 

enables the independence of the 

Exchange in administering and 

complying with the requirements of the 

Exchange Act. The Commission 

emphasizes that following the 

Transaction, the board of directors of 

the Exchange—not its parent companies 

or the upstream owners 213—will 

continue to be the governing body of the 

Exchange and possess all the authority 

necessary for the management of the 

business and affairs of the Exchange and 

the execution of the responsibilities of 

the Exchange as an SRO. 

C. Future Amendments to the Governing 

Documents of CHX Holdings and NA 

Casin Holdings 

The Exchange also has proposed to 

harmonize provisions under the CHX 

Holdings Bylaws, the CHX Holdings 

Certificate, the NA Casin Holdings 

Certificate, and the NA Casin Holdings 

Bylaws regarding the effectuation of 

amendments to those documents. The 

proposed CHX Holdings Bylaws, 

proposed CHX Holdings Certificate, NA 

Casin Holdings Bylaws, and NA Casin 

Holdings Certificate provide that, for so 

long as CHX Holdings and NA Casin 

Holdings control CHX, they must 

submit any changes to their bylaws or 

certificates of incorporation to the board 

of directors of CHX.214 If the board of 

directors of CHX determines that the 

changes must be filed with or filed with 

and approved by the Commission under 

Section 19 of the Exchange Act and the 

rules thereunder, then the proposed 

changes would not be effective until 

filed with or filed with and approved by 

the Commission, as the case may be.215

The Commission believes that these 

provisions are consistent with the 

Exchange Act because they enable 

continued oversight of CHX Holdings 

and NA Holdings by the Exchange and 

the Commission, which should help 

assure that the Exchange remains 

organized in a manner that will allow it 

to fulfill its self-regulatory obligations 

and to comply with the requirements of 

the Exchange Act. 

D. Waiver of CHX Holdings’ Ownership 

and Voting Limitations 

With respect to the Transaction, 

pursuant to the CHX Holdings 

Certificate, CHX has filed for approval 

of a waiver of certain restrictions on 

ownership and voting contained in the 

CHX Holdings Certificate. Specifically, 

the current certificate prohibits, among 

other things: (1) Any Person, either 

alone or together with its Related 

Persons, from owning, directly or 

indirectly, of record or beneficially, 

shares of stock of the CHX Holdings 

representing in the aggregate more than 

40% of the then outstanding votes 

entitled to be cast on any matter; and (2) 

any Person, either alone or together with 

its Related Persons, from directly, 

indirectly or pursuant to any voting 

trust, agreement, plan or other 

arrangement, voting or causing the 

voting of shares of the capital stock 

(whether such shares be common stock 

or preferred stock) of CHX Holdings or 

giving any consent or proxy with 

respect to shares representing more than 

20% of the voting power of the then 

issued and outstanding capital stock of 

CHX Holdings.216 A waiver of these 

ownership and voting limitations is 

required to effect the Transaction 

because, after the closing of the 

Transaction, CHX Holdings would 

become a wholly-owned subsidiary of 

NA Casin Holdings. CHX states that the 

board of directors of CHX Holdings 

adopted resolutions necessary to waive 

the ownership and voting limitations, 

and that Commission approval of the 

proposed rule change will effectuate a 

waiver of these requirements under the 

CHX Holdings Bylaws.217

The Commission believes that it is 

consistent with the Exchange Act to 

allow NA Casin Holdings to own and 

vote all of the outstanding common 

stock of CHX Holdings. In particular, 

NA Casin Holdings will be subject to the 

ownership and voting limitations 

described above, which are consistent 

with CHX Holdings’ current ownership 

and voting limitations.218 In addition, 

and as discussed above, CHX Holdings 

and NA Casin Holdings have also 

included in their corporate documents 

certain provisions designed to maintain 

the independence of the Exchange’s 

regulatory functions.219 Accordingly, 

the Commission believes that the 

revised rules of the Exchange, including 

the corporate documents of NA Casin 

Holdings, CHX Holdings, and the 

Exchange, are reasonably designed to 

support the ability of the Exchange to 

carry out its responsibilities under the 

Exchange Act and the rules and 

regulations promulgated thereunder and 

the Commission to enforce the Exchange 

Act and the rules and regulations 

promulgated thereunder. 

Going forward, the proposed CHX 

Holdings Certificate provides that, for 

any Person to acquire ownership or 

exercise voting rights in excess of the 

ownership and voting limitations: 220 (1) 

Such Person must deliver, not less than 

45 days prior to such acquisition of 

ownership or exercise of voting rights, 

a notice in writing to the board of 

directors expressing its intention to 

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Federal Register / Vol. 82, No. 156 / Tuesday, August 15, 2017 / Notices 38749 

221The CHX Holdings Bylaws require that the 

board must make a determination that: (1) Such 

acquisition of ownership or exercise of voting rights 

will not impair any of CHX Holdings’ or the 

Exchange’s ability to discharge its responsibilities 

under the Exchange Act and the rules and 

regulations thereunder and is otherwise in the best 

interests of CHX Holdings and its stockholders; (2) 

such acquisition of ownership or exercise of voting 

rights will not impair the Commission’s ability to 

enforce the Exchange Act; and (3) neither such 

Person nor any of its Related Persons is subject to 

any statutory disqualification as defined in Section 

3(a)(39) of the Exchange Act. See CHX Holdings 

Certificate Article FOURTH, Sections (b)(iii) and 

(c)(i)(B). 

222See CHX Holdings Certificate Article 

FOURTH, Sections (b)(ii)–(iii) and (c)(ii)(A)–(B). 

223See NA Casin Holdings Certificate Article IX, 

Sections (6)–(7), and (9). 

224See supra Section III.A. 

225See, e.g., NSX Approval Order, supra note 

153, 80 FR at 9288–89. 

226See supra note 10. 

227 15 U.S.C. 78s(b)(2). 

228 15 U.S.C. 78s(b)(2). 

229 17 CFR 200.30–3(a)(12). 

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

2 17 CFR 240.19b–4. 

acquire such ownership or exercise such 

voting rights; (2) the CHX Holdings 

board must resolve to expressly permit 

such ownership or exercise of voting 

rights; 221 and (3) such resolution must 

be filed with and approved by the 

Commission under Section 19(b) of the 

Exchange Act.222 The proposed NA 

Casin Holdings Certificate contains 

substantially identical provisions.223

The Commission believes that these 

provisions are reasonably designed to 

assist the Exchange in fulfilling its selfregulatory obligations, and in 

administering and complying with the 

requirements of the Exchange Act, by 

ensuring that the Commission will 

review and approve, if appropriate, any 

future change in ownership or voting 

power that gives rise to its concerns 

about a stockholder exercising undue 

control over the operation of the 

Exchange.224 Similarly, the Commission 

believes that this protection against 

such future changes in ownership or 

voting concentration without careful 

Commission review and approval is 

reasonably designed to promote just and 

equitable principles of trade and to 

protect investors and the public interest 

under the standards set forth in Section 

6(b)(5) of the Exchange Act. The 

Commission also notes that these 

requirements for acquiring ownership or 

exercising voting rights in excess of the 

ownership and voting limitations are 

consistent with other such provisions 

previously approved by the 

Commission.225

IV. Solicitation of Comments on 

Amendment No. 1 

Interested persons are invited to 

submit written data, views, and 

arguments concerning the foregoing, 

including whether Amendment No. 1 to 

the proposed rule change is consistent 

with the Exchange 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 email to rule-comments@

sec.gov. Please include File Number SR– 

CHX–2016–20 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–CHX–2016–20. This file 

number should be included on the 

subject line if email is used. To help the 

Commission process and review your 

comments more efficiently, please use 

only one method. The Commission will 

post all comments on the Commission’s 

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

rules/sro.shtml). Copies of the 

submission, all subsequent 

amendments, all written statements 

with respect to the proposed rule 

change that are filed with the 

Commission, and all written 

communications relating to the 

proposed rule change between the 

Commission and any person, other than 

those that may be withheld from the 

public in accordance with the 

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

available for Web site viewing and 

printing in the Commission’s Public 

Reference Room, 100 F Street NE., 

Washington, DC 20549, on official 

business days between the hours of 

10:00 a.m. and 3:00 p.m. Copies of this 

filing will also 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–CHX– 

2016–20 and should be submitted on or 

before September 5, 2017. 

V. Accelerated Approval of Proposed 

Rule Change, as Modified by 

Amendment No. 1 

The Commission finds good cause to 

approve the proposed rule change, as 

modified by Amendment No. 1, prior to 

the 30th day after the date of 

publication of notice of Amendment No. 

1 in the Federal Register. As noted 

above, Amendment No. 1 does not 

change the structure or purpose of the 

proposed rule change as it was 

previously published for notice and 

comment.226 Rather, the Exchange 

modified its proposed rule change to 

address certain concerns raised by 

commenters. The Commission believes 

that an additional notice and comment 

period for Amendment No. 1 before 

approval of the proposed rule change 

would not be in furtherance of the 

public interest or the protection of 

investors. Accordingly, the Commission 

finds good cause, pursuant to Section 

19(b)(2) of the Exchange Act,227 to 

approve the proposed rule change, as 

modified by Amendment No. 1, on an 

accelerated basis. 

VI. Conclusion 

For the foregoing reasons, the 

Commission finds that the proposed 

rule change, as modified by Amendment 

No. 1, is consistent with the Exchange 

Act and the rules and regulations 

thereunder applicable to a national 

securities exchange. 

It is therefore ordered, pursuant to 

Section 19(b)(2) of the Exchange Act 228

that the proposed rule change (SR– 

CHX–2016–20), as modified by 

Amendment No. 1, be, and hereby is, 

approved on an accelerated basis. 

For the Commission, by the Division of 

Trading and Markets, pursuant to delegated 

authority.229

Brent J. Fields, 

Secretary. 

[FR Doc. 2017–17179 Filed 8–14–17; 8:45 am] 

BILLING CODE 8011–01–P 

SECURITIES AND EXCHANGE 

COMMISSION 

[Release No. 34–81361; File No. SR– 

NASDAQ–2017–080] 

Self-Regulatory Organizations; The 

NASDAQ Stock Market LLC; Notice of 

Filing and Immediate Effectiveness of 

Proposed Rule Change To Amend the 

Exchange’s Transaction Fees 

August 9, 2017. 

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 August 1, 

2017, The NASDAQ Stock Market LLC 

(‘‘Nasdaq’’ or ‘‘Exchange’’) filed with the 

Securities and Exchange Commission 

(‘‘Commission’’) the proposed rule 

change as described in Items I, II, and 

III, below, which Items have been 

prepared by the Exchange. The 

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