Document ID: SEC-2013-0399-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: NYSE Arca, Inc.
Posted Date: 2013-02-26T05:00Z

[Federal Register Volume 78, Number 38 (Tuesday, February 26, 2013)]
[Notices]
[Pages 13103-13105]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2013-04369]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-68959; File No. SR-NYSEArca-2013-17]

Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing 
of Proposed Rule Change Amending Its Rules To Reflect the Merger of 
NYSE Arca Holdings, Inc., an Intermediate Holding Company, Into and 
With NYSE Group, Inc., Thereby Eliminating NYSE Arca Holdings, Inc. 
From the Ownership Structure of the Exchange

February 20, 2013.
    Pursuant to Section 19(b)(1) \1\ of the Securities Exchange Act of 
1934 (the ``Act'') \2\ and Rule 19b-4 thereunder,\3\ notice is hereby 
given that, on February 7, 2013, NYSE Arca, Inc. (the ``Exchange'' or 
``NYSE Arca'') filed with the Securities and Exchange Commission (the 
``Commission'') the proposed rule change as described in Items I, II, 
and III below, which Items have been prepared by the self-regulatory 
organization. The Commission is publishing this notice to solicit 
comments on the proposed rule change from interested persons.
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    \1\ 15 U.S.C.78s(b)(1).
    \2\ 15 U.S.C. 78a.
    \3\ 17 CFR 240.19b-4.
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I. Self-Regulatory Organization's Statement of the Terms of Substance 
of the Proposed Rule Change

    The Exchange proposes to amend its rules to reflect the merger of 
NYSE Arca Holdings, Inc. (``NYSE Arca Holdings''), an intermediate 
holding company, into and with NYSE Group, Inc. (``NYSE Group''), 
thereby eliminating NYSE Arca Holdings from the ownership structure of 
the Exchange. The text of the proposed rule change is available on the 
Exchange's Web site at www.nyse.com, at the principal office of the 
Exchange, and at the Commission's Public Reference Room.

II. Self-Regulatory Organization's Statement of the Purpose of, and 
Statutory Basis for, the Proposed Rule Change

    In its filing with the Commission, the self-regulatory organization 
included statements concerning the purpose of, and basis for, the 
proposed rule change and discussed any comments it received on the 
proposed rule change. The text of those statements may be examined at 
the places specified in Item IV below. The Exchange has prepared 
summaries, set forth in sections A, B, and C below, of the most 
significant parts of such statements.

A. Self-Regulatory Organization's Statement of the Purpose of, and the 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The Exchange proposes to amend its rules to reflect the merger of 
NYSE Arca Holdings, an intermediate holding company, into and with NYSE 
Group, thereby eliminating NYSE Arca Holdings from the ownership 
structure of the Exchange.
    Currently, NYSE Arca Holdings owns 100% of the equity interest of 
the Exchange. NYSE Group owns 100% of the equity interest of NYSE Arca 
Holdings, as well as 100% of the equity interest of NYSE Arca's 
affiliates, New York Stock Exchange LLC (``NYSE'') and NYSE MKT, LLC 
(``NYSE MKT''). NYSE Euronext owns 100% of the equity interest of NYSE 
Group.
    NYSE Euronext intends to merge NYSE Arca Holdings with and into 
NYSE Group, effective following approval of this proposed rule change. 
The reason for the merger is to eliminate an unnecessary intermediate 
holding company. Following the merger, the Exchange would be 100% owned 
by NYSE Group (as its two affiliate exchanges, NYSE and NYSE MKT, are), 
and NYSE Group would continue to be 100% owned by NYSE Euronext.
    Article 9 of the Second Amended and Restated Certificate of 
Incorporation of NYSE Arca Holdings, Inc. (``NYSE Arca Holdings 
Certificate'') imposes certain ownership and voting restrictions on the 
shares of NYSE Arca Holdings for so long as it directly or indirectly 
controls the Exchange. In addition, Section 3.15 of the Amended and 
Restated NYSE Arca Holdings, Inc. Bylaws (``NYSE Arca Holdings 
Bylaws'') provides that for so long as NYSE Arca Holdings controls the 
Exchange, the Board of Directors, officers, employees and agents of 
NYSE Arca Holdings shall give due regard to the preservation of the 
independence of the self-regulatory function of the Exchange and all 
books and records of the Exchange reflecting confidential information 
pertaining to the self-regulatory function of the Exchange shall be 
retained in confidence and not be used for any non-regulatory purposes. 
Pursuant to Section 7.04 of the NYSE Arca Holdings Bylaws, NYSE Arca 
Holdings and its officers, directors, employees, and agents are subject 
to the jurisdiction of the Securities and Exchange Commission (the 
``Commission'').
    NYSE Group's Second Amended and Restated Certificate of 
Incorporation of NYSE Group, Inc. (``NYSE Group Certificate'') already 
contains

[[Page 13104]]

comparable provisions. Under Article IV, Section 4(b) of the NYSE Group 
Certificate, similar ownership and voting restrictions apply to shares 
of NYSE Group to the extent that the Exchange and NYSE Arca Equities, 
Inc. (``NYSE Arca Equities''), its wholly owned subsidiary, continue to 
be controlled directly or indirectly by NYSE Group. In addition, 
Article XI, Section 3 of the NYSE Group Certificate provides that NYSE 
Group and its directors, officers, and employees shall give due regard 
to the preservation of the independence of the self-regulatory function 
of the Exchange and NYSE Arca Equities. Under Article X of the NYSE 
Group Certificate, NYSE Group's books and records relating to the 
Exchange and NYSE Arca Equities must be maintained within the United 
States and all confidential information in such books and records must 
be retained in confidence,\4\ and under Article IX of the NYSE Group 
Certificate, NYSE Group's directors and officers already are subject to 
the jurisdiction of the Commission.
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    \4\ In addition, Section 6.04 of the NYSE Arca Bylaws requires 
that all books and records of the Exchange reflecting confidential 
information pertaining to the self-regulatory function of the 
Exchange (including but not limited to disciplinary matters, trading 
data, trading practices, and audit information) must be retained in 
confidence by the Exchange and its personnel and may not be used by 
the Exchange for any non-regulatory purposes and may not be made 
available to any persons (including, without limitation, any members 
of the Exchange) other than to those personnel of the Exchange and 
to members of the Board of Directors of the Exchange to the extent 
necessary or appropriate to properly discharge the self-regulatory 
responsibilities of the Exchange.
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    Thus, the Exchange proposes to delete in its entirety the text of 
the NYSE Arca Holdings Certificate and the NYSE Arca Holdings 
Bylaws.\5\ The Exchange also proposes conforming amendments to its 
rules and the NYSE Arca Bylaws. First, the Exchange proposes to delete 
the heading for and text of NYSE Arca Rule 1.1(ff), which provides a 
definition of NYSE Arca Holdings, and mark it ``Reserved.'' \6\
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    \5\ Article 9, Section 1(b)(i)(B) of the NYSE Arca Holdings 
Certificate provides that for so long as NYSE Arca Holdings directly 
or indirectly controls the Exchange, no Person either alone or 
together with its Related Persons, may own, directly or indirectly, 
of record or beneficially shares of the capital stock (whether 
common or preferred stock) of NYSE Arca Holdings constituting more 
than 40% of the outstanding shares of any class of capital stock of 
NYSE Arca Holdings unless the Board of Directors of NYSE Arca 
Holdings has adopted an amendment to the NYSE Arca Holdings Bylaws 
waiving such a restriction. Such an amendment was already adopted 
with respect to NYSE Group in connection with an earlier merger of 
an intermediate holding company. See Securities Exchange Act Release 
67435 (July 13, 2012), 77 FR 42533 (July 19, 2012) (SR-NYSE 2012-
45).
    \6\ The Exchange also proposes to remove the unnecessary heading 
for the term ``Related Person,'' which was deleted by SR-NYSE-2012-
45. See supra note 5.
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    Second, the Exchange proposes to amend Section 2.01 of the NYSE 
Arca Bylaws, which describes the Exchange as a non-stock corporation 
with one member, NYSE Arca Holdings, which is defined as the ``Holding 
Member.'' Section 2.01 would be amended to replace the reference to 
NYSE Arca Holdings with a reference to NYSE Group, thus designating it 
as the Holding Member for purposes of the NYSE Arca Bylaws.
    Third, certain other references to ``Holding Member'' in the NYSE 
Arca Bylaws would be amended. Sections 2.02, 2.04, and 2.05 of the NYSE 
Arca Bylaws set forth provisions for scheduling meetings of the Holding 
Member and the presiding officer and secretary for such meetings. 
Articles II and III of the Second Amended and Restated Bylaws of NYSE 
Group include provisions for meetings of NYSE Group's stockholders and 
Board of Directors, respectively. The operating agreements of the 
Exchange's affiliates, NYSE and NYSE MKT, do not contain provisions 
relating to annual meetings of NYSE Group.\7\ As such, the text of 
Sections 2.02, 2.04, and 2.05 of the NYSE Arca Bylaws is unnecessary 
and would be deleted and those sections would be marked ``Reserved.''
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    \7\ The operating agreements are available at https://usequities.nyx.com/sites/usequities.nyx.com/files/fourth_amended_and_restated_operating_agreement_of_nyse_llc.pdf and http://wallstreet.cch.com/MKT/pdf/operating_agreement.pdf, respectively.
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    Section 3.02(f) of the NYSE Arca Bylaws provides that, except as 
otherwise provided in the NYSE Arca Bylaws or rules, the Nominating 
Committee of NYSE Arca Holdings shall nominate directors for election 
at the annual meeting of the Holding Member. NYSE Arca Rule 3.2 sets 
forth a detailed process for the nomination and selection of fair 
representation directors for the NYSE Arca Board of Directors, and NYSE 
Arca Equities Rule 3.2 sets forth a similar process for the nomination 
and selection of fair representation directors for the NYSE Arca 
Equities Board of Directors.\8\ The NYSE Arca Bylaws and rules do not 
have any other provisions concerning the nomination of non-fair 
representation directors. As such, the Exchange proposes to amend 
Section 3.02(f) of the NYSE Arca Bylaws to provide that except as 
otherwise provided in the NYSE Arca Bylaws or rules, the Holding Member 
shall nominate directors for election at the Holding Member's annual 
meeting.\9\ The proposed rule change thus would not have any impact on 
the process for the nomination and selection of fair representation 
directors.
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    \8\ See also Securities Exchange Act Release No. 67619 (August 
8, 2012), 77 FR 49032 (August 15, 2012) (SR-NYSEArca-2012-67).
    \9\ Article IV of the Second Amended and Restated Bylaws of NYSE 
Group (``NYSE Group Bylaws'') does not specifically provide for a 
Nominating Committee. The NYSE Group Bylaws are available at http://usequities.nyx.com/sites/corporate.nyx.com/files/amendedandrestatedbylawsofnysegroup.pdf.
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    Finally, Section 3.13 of the NYSE Arca Bylaws provides that no 
member of the Board of Directors of NYSE Arca Holdings who is not also 
a member of the Board of Directors of the Exchange, and no officer, 
staff, counsel or other advisor of NYSE Arca Holdings who is not also 
an officer, staff, counsel or advisor of the Exchange, may participate 
in any meetings of the Exchange's Board of Directors (or any committees 
thereof) pertaining to the Exchange's self-regulatory function 
(including disciplinary matters) or relating to the structure of the 
market which the Exchange regulates. The references to NYSE Arca 
Holdings would be replaced with references to NYSE Group.
2. Statutory Basis
    The proposed rule change is consistent with Section 6(b) of the 
Act,\10\ in general, and furthers the objectives of Section 6(b)(5) of 
the Act,\11\ in particular, in that it is designed to prevent 
fraudulent and manipulative acts and practices, to promote just and 
equitable principles of trade, to foster cooperation and coordination 
with persons engaged in facilitating transactions in securities, and to 
remove impediments to and perfect the mechanism of a free and open 
market and a national market system. Specifically, the proposed rule 
change would result in the Exchange's rules correctly reflecting its 
ownership structure without having any substantive impact on the 
Exchange's rules, including those concerning the voting and ownership 
restrictions that currently apply to the Exchange and its affiliates.
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    \10\ 15 U.S.C. 78f(b).
    \11\ 15 U.S.C. 78f(b)(5).
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B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange does not believe that the proposed rule change will 
impose any burden on competition that is not necessary or appropriate 
in furtherance of the purposes of the Act. The proposed rule change is 
not designed to address any competitive issue or have any impact on 
competition; rather, it is intended solely to eliminate an

[[Page 13105]]

unnecessary intermediate holding company from the ownership structure 
of the Exchange.

C. Self-Regulatory Organization's Statement on Comments on the Proposed 
Rule Change Received From Members, Participants, or Others

    No written comments were solicited or received with respect to the 
proposed rule change.

III. Date of Effectiveness of the Proposed Rule Change and Timing for 
Commission Action

    Within 45 days of the date of publication of this notice in the 
Federal Register or within such longer period (i) as the Commission may 
designate up to 90 days of such date if it finds such longer period to 
be appropriate and publishes its reasons for so finding or (ii) as to 
which the self-regulatory organization consents, the Commission will:
    (A) By order approve or disapprove the proposed rule change, or
    (B) Institute proceedings to determine whether the proposed rule 
change should be disapproved.

IV. Solicitation of Comments

    Interested persons are invited to submit written data, views, and 
arguments concerning the foregoing, including whether the proposed rule 
change is consistent with the Act. Comments may be submitted by any of 
the following methods:

Electronic Comments

     Use the Commission's Internet comment form (http://www.sec.gov/rules/sro.shtml); or
     Send an email to rule-comments@sec.gov. Please include 
File Number SR-NYSEArca-2013-17 on the subject line.

Paper Comments

     Send paper comments in triplicate to Elizabeth M. Murphy, 
Secretary, Securities and Exchange Commission, 100 F Street NE., 
Washington, DC 20549-1090.

All submissions should refer to File Number SR-NYSEArca-2013-17. 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, on business days 
between the hours of 10 a.m. and 3 p.m., located at 100 F Street NE., 
Washington, DC 20549-1090. Copies of the 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-NYSEArca-2013-17 and should 
be submitted on or before March 19, 2013.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\12\
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    \12\ 17 CFR 200.30-3(a)(12).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2013-04369 Filed 2-25-13; 8:45 am]
BILLING CODE 8011-01-P