Document ID: SEC-2014-1986-0001
Agency: sec
Document Type: Notice
Title: Self-Regulatory Organizations; Proposed Rule Changes: New York Stock Exchange, LLC
Posted Date: 2014-11-26T05:00Z

[Federal Register Volume 79, Number 228 (Wednesday, November 26, 2014)]
[Notices]
[Pages 70608-70609]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2014-27975]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-73657; File No. SR-NYSE-2014-62]

Self-Regulatory Organizations; New York Stock Exchange LLC; 
Notice of Filing of Proposed Rule Change Amending the Bylaws of Its 
Wholly-Owned Subsidiary NYSE Regulation, Inc. To Provide That Non-
Affiliated Directors Would Not Be Removed for Cause if They Are Acting 
in Good Faith in Exercising Their Responsibilities as Directors Related 
to NYSE Regulation's Functions and Responsibilities Delegated to It 
Under the Delegation Agreement Between the Exchange, NYSE Regulation 
and NYSE Market, Inc.

November 20, 2014.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 
(the ``Exchange Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is 
hereby given that on November 7, 2014, New York Stock Exchange LLC 
(``NYSE'' or the ``Exchange'') filed with the Securities and Exchange 
Commission (``Commission'') a 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 bylaws of its wholly-owned 
subsidiary NYSE Regulation, Inc. (``NYSE Regulation'') to provide that 
non-affiliated directors (as that term is defined in those bylaws) 
would not be removed for cause if they are acting in good faith in 
exercising their responsibilities as directors related to NYSE 
Regulation's functions and responsibilities delegated to it under the 
Delegation Agreement between the Exchange, NYSE Regulation and NYSE 
Market (DE), Inc. 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, on the Commission's Web site at http://www.sec.gov, 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 is proposing to amend Article III, Section 4 of NYSE 
Regulation's Sixth Amended and Restated Bylaws (the ``Bylaws'') to 
provide that ``non-affiliated directors'' \3\ would not be removed for 
cause if they are acting in good faith in exercising their 
responsibilities as directors related to NYSE Regulation's functions 
and responsibilities delegated to it under the delegation agreement 
between the Exchange, NYSE Regulation and NYSE Market (DE), Inc. (the 
``Delegation Agreement''),\4\ and to make conforming changes.
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    \3\ The Bylaws define ``non-affiliated directors'' as U.S. 
Persons who are not members of the board of directors of 
Intercontinental Exchange, Inc. (``ICE'') and qualify as independent 
under NYSE Regulation's director independence policy. See Bylaw 
[sic] of NYSE Regulation, Inc., Article III, Section 1(A); see also 
Securities [sic] Act Release No. 67564 (August 1, 2012), 77 FR 47161 
(August 7, 2012) (SR-NYSE-2012-17) (approving NYSE Regulation's 
director independence policy). The Bylaws require that a majority of 
NYSE Regulation's Board consist of non-affiliated directors. The 
remaining directors are NYSE Regulation's Chief Executive Officer 
(``CEO'') and members of the ICE board of directors that qualify as 
independent under NYSE Regulation's director independence policy. 
The Bylaws do not require any affiliated directors other than the 
NYSE Regulation CEO.
    \4\ See Securities [sic] Act Release No. 53382 (February 27, 
2006), 71 FR 11251 (March 6, 2006) (SR-NYSE-2005-77) (approving 
NYSE's business combination with Archipelago Holdings, Inc.).
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    Currently, Article III, Section 4 of the Bylaws provides that the 
Exchange may only remove non-affiliated directors for ``cause.'' The 
Exchange proposes to amend Article III, Section 4 to provide that 
``cause'' would not encompass ``decisions or actions taken in good 
faith by a Non-Affiliated Director in his or her capacity as a Director 
of [NYSE Regulation] and related'' to NYSE Regulation's delegated 
regulatory functions and responsibilities under the Delegation 
Agreement. A copy of the proposed Seventh Amended and Restated Bylaws 
is attached as Exhibit 5.\5\
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    \5\ The Commission notes the Exhibit 5 is attached to the filing 
submitted by the Exchange, but is not attached to the published 
notice of this filing.
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    The proposed amendment to the Bylaws makes explicit that conduct 
consistent with a non-affiliated director's duties and responsibilities 
related to NYSE Regulation's delegated functions and responsibilities 
does not constitute grounds for removal. The Exchange believes that 
approval of the proposed change would confirm to non-affiliated 
directors that they would not be removed for decisions or actions taken 
in the exercise of their fiduciary duties to NYSE Regulation and, 
accordingly, contribute to a more efficient and orderly decision-making 
process at the board level.
2. Statutory Basis
    The Exchange believes that the proposed rule change is consistent 
with Section 6(b) of the Exchange Act \6\ in general, and with Section 
6(b)(1) \7\ 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

[[Page 70609]]

associated with its exchange members, with the provisions of the 
Exchange Act, the rules and regulations thereunder, and the rules of 
the Exchange. The proposed amendment to the Bylaws would make explicit 
that a non-affiliated director cannot be removed for cause for 
decisions or actions taken in good faith related to the regulatory 
functions and responsibilities delegated to NYSE Regulation by the 
Exchange. The proposed amendment would therefore provide non-affiliated 
directors with reasonable assurances that actions or decisions 
consistent with their fiduciary duty and believed, in good faith, to be 
the proper exercise of NYSE Regulation's delegated functions and 
responsibilities could not be used as a basis to remove those directors 
from office. Accordingly, the Exchange believes that the proposed 
amendment would contribute to the orderly operation of the NYSE 
Regulation board of directors and its decision-making process, and 
would enable the Exchange to be so organized as to have the capacity to 
carry out the purposes of the Exchange Act and comply and enforce 
compliance by its members and persons associated with its members, with 
the provisions of the Exchange Act. The Exchange therefore believes 
that approval of the amendment to the Bylaws is consistent with Section 
6(b)(1).
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    \6\ 15 U.S.C. 78f(b).
    \7\ 15 U.S.C. 78f(b)(1).
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    The Exchange also believes that this filing furthers the objectives 
of Section 6(b)(5) of the Exchange Act \8\ because the proposed rule 
change would be consistent with and facilitate a governance and 
regulatory structure that 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 regulating, clearing, settling, processing 
information with respect to, and 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. As discussed above, the 
Exchange believes that the proposed amendment would remove potential 
uncertainty among non-affiliated directors that certain decisions or 
actions taken in good faith related to the delegated functions and 
responsibilities could result in their removal from NYSE Regulation's 
board of directors for cause and thereby would contribute to improved 
effectiveness in the board decision-making process. The proposed 
amendment is therefore consistent with and facilitates a governance and 
regulatory structure that furthers the objectives of Section 6(b)(5) of 
the Exchange Act. The orderly and efficient operation of NYSE 
Regulation and its board of directors is also designed to protect 
investors as well as the public interest.
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    \8\ 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 Exchange Act. The proposed rule 
change is not intended to address competitive issues but rather is 
concerned solely with the administration and functioning of the NYSE 
Regulation board of directors.

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 up to 90 days (i) as the Commission may designate 
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-NYSE-2014-62 on the subject line.

Paper Comments

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

All submissions should refer to File Number SR-NYSE-2014-62. 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 such filing also will be available 
for inspection and copying at the principal offices 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-NYSE-2014-62, 
and should be submitted on or before December 17, 2014.
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    \9\ 17 CFR 200.30-3(a)(12).

    For the Commission, by the Division of Trading and Markets, 
pursuant to delegated authority.\9\
Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2014-27975 Filed 11-25-14; 8:45 am]
BILLING CODE 8011-01-P