Document ID: SEC-2018-1348-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: New York Stock Exchange, LLC
Posted Date: 2018-08-27T04:00Z

[Federal Register Volume 83, Number 166 (Monday, August 27, 2018)]
[Notices]
[Pages 43720-43722]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-18428]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-83892; File No. SR-NYSE-2018-38]

Self-Regulatory Organizations; New York Stock Exchange LLC; 
Notice of Filing and Immediate Effectiveness of Proposed Rule Change To 
Amend the Independence Policy of the Board of Directors of the Exchange

August 21, 2018.
    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 15, 2018, New York Stock Exchange LLC (``NYSE'' or the 
``Exchange'') filed with the Securities and Exchange Commission 
(``Commission'') the proposed rule change as described in Items I, II, 
and III, below, which Items have been prepared by the Exchange. 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\ 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 the Independence Policy of the Board 
of Directors of the Exchange by (a) streamlining references to 
Intercontinental Exchange, Inc. subsidiaries that are national 
securities exchanges, (b) removing obsolete references, and (c) adding 
references to national securities exchange affiliates of the Exchange. 
The proposed rule change is available on the Exchange's website 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 
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The Exchange proposes to amend the Independence Policy by (a) 
streamlining references to ICE subsidiaries that are national 
securities exchanges, (b) removing obsolete references, and (c) adding 
references to national securities exchange affiliates of the Exchange.
Definition of ``Exchange''
    The Independence Policy includes references to the Exchange and its 
national securities exchange affiliates NYSE American, Inc. (``NYSE 
American'') and NYSE Arca, Inc. (``NYSE Arca'').\3\ It does not include 
references to the Exchange's newest national securities exchange 
affiliates, NYSE National, Inc. (``NYSE National'') and Chicago Stock 
Exchange, Inc. (``CHX''). The Exchange proposes to replace lists of 
individual national securities exchange affiliates in the Independence 
Policy with the term ``Exchange,'' defined as any national securities 
exchange registered under Section 6 of the Exchange Act \4\ and 
controlled, directly or indirectly, by ICE. The definition would 
encompass the Exchange, NYSE American, NYSE Arca, NYSE National, and 
CHX (collectively, the ``SRO Affiliates'').
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    \3\ The independence policy of the board of directors of the 
Exchange's affiliate NYSE American is substantially the same as the 
Independence Policy. NYSE American has submitted substantially the 
same proposed rule change to its independence policy as described 
herein. See SR-NYSEAmer-2018-42.
    \4\ 15 U.S.C. 78f.
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    Specifically, the Exchange proposes to add a second paragraph under 
``Purpose'' with the definition of ``Exchange.'' \5\ In addition, the 
Exchange proposes to make the following changes in the section under 
``Independence Qualifications'':
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    \5\ The proposed text would include the definition of ``ICE.'' 
Accordingly, the Exchange proposes to delete the definition of ICE 
in ``Independence Requirements,'' category 1.
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     Replace ``New York Stock Exchange LLC, NYSE Arca, Inc. and 
NYSE American LLC'' with ``an Exchange'' in category 1(b) and (c);
     Replace ``New York Stock Exchange LLC, on NYSE Arca, Inc. 
or on NYSE American LLC'' with ``an Exchange'' in category 1(d) and 
category 4;
     Replace ``New York Stock Exchange LLC, and NYSE Arca, Inc. 
and NYSE American LLC exercise'' with ``each Exchange exercises'' in 
the final paragraph of category 1;

[[Page 43721]]

     Replace ``New York Stock Exchange LLC, NYSE Arca, Inc., 
NYSE Arca Equities, Inc. and NYSE American LLC'' with ``each Exchange'' 
in category 2; and
     Replace ``New York Stock Exchange LLC, NYSE Arca, Inc. or 
NYSE American LLC'' with ``an Exchange'' under ``Listed Companies.''
    The proposed changes would make the requirements under 
``Independence Qualifications'' and ``Listed Companies'' apply to all 
of the Affiliate SROs, and not just those specifically listed in the 
Independence Policy. In addition, it would make the Independence Policy 
consistent with the governing documents of ICE and the intermediate 
holding companies between the Exchange and ICE, which use the term 
``Exchange.'' \6\
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    \6\ See Securities Exchange Act Release No. 82081 (November 15, 
2017), 82 FR 55474 (November 21, 2017) (SR-NYSE-2017-57). NYSE 
Group, Inc. (``NYSE Group'') owns all of the equity interest in the 
Exchange. In turn, NYSE Group is a wholly-owned subsidiary of NYSE 
Holdings LLC, which is wholly owned by Intercontinental Exchange 
Holdings, Inc., which is wholly owned by ICE. ICE is a public 
company listed on the NYSE.
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Removal of Obsolete References
    The Exchange no longer has allied members.\7\ Accordingly, the 
Exchange proposes to delete the text ``paragraph (c) of Rule 2 of the 
New York Stock Exchange LLC and'' from category 1(b) of ``Independence 
Qualifications.''
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    \7\ See Securities Exchange Act Release No. 58549 (September 15, 
2008), 73 FR 54444 (September 19, 2008) (SR-NYSE-2008-80) (notice of 
filing and immediate effectiveness of proposed rule change and 
Amendment No. 1 thereto conforming certain NYSE rules to changes to 
NYSE incorporated rules recently filed by the Financial Industry 
Regulatory Authority, Inc.).
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    NYSE Arca Equities, Inc. merged with NYSE Arca, Inc., and therefore 
no longer exists.\8\ Accordingly, under ``Independence 
Qualifications,'' the text ``Rule 1.1(c) of NYSE Arca Equities, Inc.'' 
in category 1(b) and references to NYSE Arca Equities, Inc. in category 
5 would be deleted.\9\
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    \8\ See Securities Exchange Act Release No. 81419 (August 17, 
2017), 82 FR 40044 (August 23, 2017) (SR-NYSEArca-2017-40).
    \9\ The reference to NYSE Arca Equities, Inc. in category 2 
would be deleted and replaced with ``each Exchange,'' as proposed 
above.
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    The proposed removal of obsolete references would be consistent 
with changes made to the independence policy of the board of directors 
of ICE.\10\
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    \10\ See Securities Exchange Act Release No. 83342 (May 30, 
2018), 83 FR 26125 (June 5, 2018) (SR-NYSE-2018-19).
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References to SRO Affiliates
    NYSE National became an Affiliate SRO in 2017. Accordingly, the 
Exchange proposes to add ``Person Associated with an ETP Holder'' (as 
defined in Rule 1.5 of NYSE National, Inc.);'' in category 1(b), and 
add NYSE National to category 5 under ``Independence Qualifications.'' 
The changes would be consistent with changes made to the independence 
policy of the board of directors of ICE.\11\
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    \11\ See Securities Exchange Act Release No. 79901 (January 30, 
2017), 82 FR 9251 (February 3, 2017) (SR-NYSE-2016-90; SR-NYSEArca-
2016-167; SR-NYSEMKT-2016-122).
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    CHX became an Affiliate SRO in 2018.\12\ The Exchange proposes to 
add a reference to CHX to category 5 under ``Independence 
Qualifications.'' As CHX does not have terms equivalent to ``allied 
members'' or ``approved persons,'' the Exchange does not propose to add 
references to CHX to the clause following ``(collectively, `Members')'' 
in category (1)(b). The changes would be consistent with changes made 
to the independence policy of the board of directors of ICE.\13\
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    \12\ See Securities Exchange Act Release No. 83635 (July 13, 
2018), 83 FR 34182 (July 17, 2017) (SR-CHX-2018-004).
    \13\ See 83 FR 26125, supra note 10.
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    The Exchange proposes to update the link included in footnote 2 and 
make conforming changes to delete and replace connectors.
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with Section 6(b) of the Exchange Act \14\ in general, and with Section 
6(b)(1) \15\ in particular, in that it enables the Exchange to be so 
organized as to have the capacity to be able to carry out the purposes 
of the Exchange Act and to comply, and to enforce compliance by its 
exchange members and persons associated with its exchange members, with 
the provisions of the Exchange Act, the rules and regulations 
thereunder, and the rules of the Exchange. The Exchange also believes 
that the proposed rule change is consistent with Section 6(b)(5) of the 
Exchange Act,\16\ in that it is designed to prevent fraudulent and 
manipulative acts and practices, to promote just and equitable 
principles of trade, to foster cooperation and coordination with 
persons engaged in facilitating transactions in securities, to remove 
impediments to and perfect the mechanism of a free and open market and 
a national market system and, in general, to protect investors and the 
public interest.
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    \14\ 15 U.S.C. 78f(b).
    \15\ 15 U.S.C. 78f(b)(1).
    \16\ 15 U.S.C. 78f(b)(5).
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    The Exchange believes that the proposed replacement of lists of 
individual SRO Affiliates in the Independence Policy with the term 
``Exchange'' would contribute to the orderly operation of the Exchange, 
because use of the term would make the requirements under 
``Independence Qualifications'' and ``Listed Companies'' apply to all 
of the Affiliate SROs, and not just those specifically listed in the 
Independence Policy. The Exchange Act definition of ``exchange'' states 
that ``exchange'' ``includes the market place and the market facilities 
maintained by such exchange.'' \17\ Accordingly, all market places and 
market facilities maintained by an Exchange would fall within the 
definition of Exchange and therefore would fall within the scope of the 
Independence Policy. In addition, the Exchange notes that the proposed 
change would make the Independence Policy consistent with the governing 
documents of ICE and the intermediate holding companies between the 
Exchange and ICE, which use the term ``Exchange.'' Making the 
terminology used in the governing documents and the Independence Policy 
more consistent would add clarity and transparency to the Exchange 
Rules.
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    \17\ 15 U.S.C. 78c(a)(1).
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    For the same reason, the Exchange believes that the proposed 
replacement of lists of individual SRO Affiliates in the Independence 
Policy with the term ``Exchange'' would remove impediments to and 
perfect the mechanism of a free and open market. The changes would 
simplify and streamline the Exchange's rules while making them more 
consistent, thereby ensuring that persons subject to the Exchange's 
jurisdiction, regulators, and the investing public can more easily 
navigate and understand the Independence Policy and the Exchange Rules.
    The Exchange believes that the proposed change would remove 
impediments to, and perfect the mechanism of a free and open market and 
a national market system and, in general, protect investors and the 
public interest by (a) removing obsolete references to NYSE allied 
members and NYSE Arca Equities, Inc., and (b) incorporating NYSE 
National and CHX into the text of the Independence Policy. The Exchange 
believes that such changes would add clarity and transparency to the 
Exchange Rules by removing any confusion that may result if the 
Independence Policy retained obsolete references or did not encompass 
all of the Affiliate SROs. For the same reason, the Exchange believes 
that the proposed amendments to the Independence Policy would remove 
impediments to and perfect the mechanism of a free and open market and 
a national market system by

[[Page 43722]]

removing confusion that may result if the Independence Policy retained 
obsolete references or did not include all of the Affiliate SROs.
    The Exchange notes that the proposed change would be consistent 
with changes made to the independence policy of the board of directors 
of ICE, and believes that making the Independence Policy more 
consistent with the ICE policy would add clarity and transparency to 
the Exchange Rules, allowing persons subject to the Exchange's 
jurisdiction, regulators, and investors to more easily navigate and 
understand the Exchange Rules, contributing to the orderly operation of 
the Exchange. The Exchange further believes that the proposed changes 
would not be inconsistent with the public interest and the protection 
of investors because investors will not be harmed and in fact would 
benefit from increased clarity, thereby reducing potential confusion.

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 Exchange Act. The proposed rule 
change is not intended to address competitive issues but rather is 
concerned solely with updating the Independence Policy to (a) 
streamline references to ICE subsidiaries that are national securities 
exchanges, (b) remove obsolete references, and (c) add references to 
NYSE National and CHX.

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

    The Exchange has filed the proposed rule change pursuant to Section 
19(b)(3)(A)(iii) of the Act \18\ and Rule 19b-4(f)(6) thereunder.\19\ 
Because the proposed rule change does not: (i) Significantly affect the 
protection of investors or the public interest; (ii) impose any 
significant burden on competition; and (iii) become operative prior to 
30 days from the date on which it was filed, or such shorter time as 
the Commission may designate, if consistent with the protection of 
investors and the public interest, the proposed rule change has become 
effective pursuant to Section 19(b)(3)(A) of the Act and Rule 19b-
4(f)(6)(iii) thereunder.
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    \18\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \19\ 17 CFR 240.19b-4(f)(6).
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    A proposed rule change filed under Rule 19b-4(f)(6) \20\ normally 
does not become operative prior to 30 days after the date of the 
filing. However, pursuant to Rule 19b4(f)(6)(iii),\21\ the Commission 
may designate a shorter time if such action is consistent with the 
protection of investors and the public interest.
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    \20\ 17 CFR 240.19b-4(f)(6).
    \21\ 17 CFR 240.19b-4(f)(6)(iii).
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    At any time within 60 days of the filing of such proposed rule 
change, the Commission summarily may temporarily suspend such rule 
change if it appears to the Commission that such action is necessary or 
appropriate in the public interest, for the protection of investors, or 
otherwise in furtherance of the purposes of the Act. If the Commission 
takes such action, the Commission shall institute proceedings under 
Section 19(b)(2)(B) \22\ of the Act to determine whether the proposed 
rule change should be approved or disapproved.
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    \22\ 15 U.S.C. 78s(b)(2)(B).
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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 [email protected]. Please include 
File Number SR-NYSE-2018-38 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-NYSE-2018-38. 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 website (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 website 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 the filing also will be available for inspection 
and copying at the principal office of the Exchange. All comments 
received will be posted without change. Persons submitting comments are 
cautioned that we do not redact or edit personal identifying 
information from comment submissions. You should submit only 
information that you wish to make available publicly. All submissions 
should refer to File Number SR-NYSE-2018-38 and should be submitted on 
or before September 17, 2018.

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\23\
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    \23\ 17 CFR 200.30-3(a)(12).
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Eduardo A. Aleman,
Assistant Secretary.
[FR Doc. 2018-18428 Filed 8-24-18; 8:45 am]
BILLING CODE 8011-01-P